PLCE 10-Q

Childrens Place, Inc. (PLCE)

10-Q 2024-06-13 For: 2024-05-04

View Original

Added on April 10, 2026


Delaware						31-1241495
(State or other jurisdiction of						(I.R.S. Employer
incorporation or organization)						Identification No.)

500 Plaza Drive
Secaucus, New Jersey						07094
(Address of principal executive offices)						(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 par value	PLCE	Nasdaq Global Select Market


PART I — FINANCIAL INFORMATION		PAGE

Item 1.	F inancial S tatements.
	Consolidated Balance Sheets as of May 4, 2024, February 3, 2024 and April 29, 2023	1
	Consolidated Statements of Operations for the thirteen weeks ended May 4, 2024 and April 29, 2023	2
	Consolidated Statements of Comprehensive Loss for the thirteen weeks ended May 4, 2024 and April 29, 2023	3
	Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the thirteen weeks ended May 4, 2024 and April 29, 2023	4
	Consolidated Statements of Cash Flows for the thirteen weeks ended May 4, 2024 and April 29, 2023	5
	Notes to C onsolidated F inancial S tatements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	23
Item 3.	Quantitative and Qualitative Disclosures A bout Market Risk.	33
Item 4.	Controls and Procedures.	34

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings.	35
Item 1A.	Risk Factors.	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	35
Item 5.	Other Information.	36
Item 6.	Exhibits.	37


	May 4, 2024		February 3, 2024		April 29, 2023

	(in thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	12,960	$	13,639	$	18,242

Accounts receivable	28,286		33,219		25,659
Inventories	425,156		362,099		504,194
Prepaid expenses and other current assets	43,210		43,169		58,504

Total current assets	509,612		452,126		606,599
Long-term assets:
Property and equipment, net	116,779		124,750		146,315
Right-of-use assets	173,987		175,351		144,781
Tradenames, net	41,000		41,123		70,691
Deferred income taxes	—		—		36,432
Other assets	6,957		6,958		10,052
Total assets	$	848,335	$	800,308	$	1,014,870

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Revolving loan	$	226,100	$	226,715	$	300,835

Accounts payable	193,100		225,549		223,244
Current portion of operating lease liabilities	70,668		69,235		74,741
Income taxes payable	3,476		5,297		3,534
Accrued expenses and other current liabilities	79,872		89,608		116,933
Total current liabilities	573,216		616,404		719,287
Long-term liabilities:

Long-term debt	166,635		49,818		49,768
Long-term portion of operating lease liabilities	118,363		118,073		87,905
Income taxes payable	9,486		9,486		17,199
Other tax liabilities	4,928		4,664		2,885
Other long-term liabilities	10,557		10,882		12,005
Total liabilities	883,185		809,327		889,049
Commitments and contingencies (see Note 8)
Stockholders’ (deficit) equity:
Preferred stock, $1.00 par value, 1,000 shares authorized, 0 shares issued and outstanding	—		—		—
Common stock, $0.10 par value, 100,000 shares authorized; 12,739, 12,585, and 12,473 issued; 12,679, 12,529, and 12,405 outstanding	1,274		1,259		1,247
Additional paid-in capital	153,358		141,083		150,846
Treasury stock, at cost (60, 56, and 68 shares)	(2,957)		(2,909)		(3,810)
Deferred compensation	2,957		2,909		3,810
Accumulated other comprehensive loss	(16,822)		(16,496)		(17,065)
Accumulated deficit	(172,660)		(134,865)		(9,207)
Total stockholders’ (deficit) equity	(34,850)		(9,019)		125,821
Total liabilities and stockholders’ (deficit) equity	$	848,335	$	800,308	$	1,014,870


	Thirteen Weeks Ended
	May 4, 2024		April 29, 2023
	(in thousands, except loss per common share)
Net sales	$	267,878	$	321,640
Cost of sales (exclusive of depreciation and amortization)	175,137		225,178

Gross profit	92,741		96,462

Selling, general, and administrative expenses	109,094		112,931
Depreciation and amortization	11,635		11,848
Asset impairment charges	—		1,750



Operating loss	(27,988)		(30,067)
Interest expense	(7,731)		(5,937)
Interest income	10		34
Loss before provision (benefit) for income taxes	(35,709)		(35,970)
Provision (benefit) for income taxes	2,086		(7,136)

Net loss	$	(37,795)	$	(28,834)

Loss per common share
Basic	$	(2.99)	$	(2.33)
Diluted	$	(2.99)	$	(2.33)

Weighted average common shares outstanding
Basic	12,643		12,374
Diluted	12,643		12,374


☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Thirteen Weeks Ended May 4, 2024
										Accumulated					Total
				Additional						Other					Stockholders’
	Common Stock			Paid-In		Deferred		Accumulated		Comprehensive		Treasury Stock			(Deficit)
(in thousands)	Shares	Amount		Capital		Compensation		Deficit		Loss		Shares	Amount		Equity











































Balance, February 3, 2024	12,585	$	1,259	$	141,083	$	2,909	$	(134,865)	$	(16,496)	(56)	$	(2,909)	$	(9,019)


Vesting of stock awards	204	20		(20)											—
Stock-based compensation expense				12,610											12,610

Purchase and retirement of common stock	(50)	(5)		(315)											(320)
Other comprehensive loss										(326)					(326)





Deferral of common stock into deferred compensation plan						48						(4)	(48)		—
Net loss								(37,795)							(37,795)
Balance, May 4, 2024	12,739	$	1,274	$	153,358	$	2,957	$	(172,660)	$	(16,822)	(60)	$	(2,957)	$	(34,850)



Thirteen Weeks Ended April 29, 2023
										Accumulated
				Additional						Other					Total
	Common Stock			Paid-In		Deferred		Accumulated		Comprehensive		Treasury Stock			Stockholders’
(in thousands)	Shares	Amount		Capital		Compensation		Deficit		Loss		Shares	Amount		Equity
Balance, January 28, 2023	12,292	$	1,229	$	150,956	$	3,736	$	22,540	$	(16,247)	(67)	$	(3,736)	$	158,478


Vesting of stock awards	336	34		(34)											—
Stock-based compensation expense				3,083											3,083
Purchase and retirement of common stock	(155)	(16)		(3,159)				(2,913)							(6,088)
Other comprehensive loss										(818)					(818)




Deferral of common stock into deferred compensation plan						74						(1)	(74)		—
Net loss								(28,834)							(28,834)
Balance, April 29, 2023	12,473	$	1,247	$	150,846	$	3,810	$	(9,207)	$	(17,065)	(68)	$	(3,810)	$	125,821



	Employee-Related Costs		TODC Costs		Total
	(in thousands)
Balance at February 3, 2024	$	1,666	$	—	$	1,666
Provision	—		751		751
Cash payments	(1,114)		(247)		(1,361)
Balance at May 4, 2024	$	552	$	504	$	1,056



	Employee-Related Costs		Lease Termination Costs		Professional Fees		Total
	(in thousands)
Balance at April 29, 2023	$	—	$	—	$	—	$	—
Provision	5,433		4,040		186		9,659
Cash Payments	(2,602)		(4,040)		—		(6,642)
Balance at July 29, 2023	2,831		—		186		3,017
Provision	674		—		82		756
Cash Payments	(2,652)		—		(268)		(2,920)
Balance at October 28, 2023	853		—		—		853
Provision	1,275		—		—		1,275
Cash Payments	(462)		—		—		(462)
Balance at February 3, 2024	$	1,666	$	—	$	—	$	1,666


		May 4, 2024
	Useful Life	Gross Amount		Accumulated Amortization		Net Amount
		(in thousands)
Gymboree tradename (1)	Indefinite	$	41,000	$	—	$	41,000
Crazy 8 tradename (1)	5 years	4,000		(4,000)		—

Total intangible assets		$	45,000	$	(4,000)	$	41,000


		February 3, 2024
	Useful Life	Gross Amount		Accumulated Amortization		Net Amount
		(in thousands)
Gymboree tradename (1)	Indefinite	$	41,000	$	—	$	41,000
Crazy 8 tradename (1)	5 years	4,000		(3,877)		123
Total intangible assets		$	45,000	$	(3,877)	$	41,123


		April 29, 2023
	Useful Life	Gross Amount		Accumulated Amortization		Net Amount
		(in thousands)
Gymboree tradename (1)	Indefinite	$	69,953	$	—	$	69,953
Crazy 8 tradename (1)	5 years	4,000		(3,262)		738
Total intangible assets		$	73,953	$	(3,262)	$	70,691


	May 4, 2024
	(in thousands)
Remainder of 2024	$	66,253
2025	59,954
2026	31,507
2027	16,113
2028	13,931
Thereafter	40,603
Total operating lease payments	228,361
Less: imputed interest	(39,330)
Present value of operating lease liabilities	$	189,031


	Thirteen Weeks Ended
	May 4, 2024		April 29, 2023
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(37,795)	$	(28,834)


Reconciliation of net loss to net cash (used in) provided by operating activities:
Non-cash portion of operating lease expense	19,212		18,441
Depreciation and amortization	11,635		11,848

Non-cash stock-based compensation expense	12,610		3,083
Asset impairment charges	—		1,750

Deferred income tax provision	—		112



Other non-cash charges, net	361		149
Changes in operating assets and liabilities:
Inventories	(63,452)		(57,085)
Accounts receivable and other assets	5,565		25,239
Prepaid expenses and other current assets	(2,250)		641
Income taxes payable, net of prepayments	5,783		(9,697)
Accounts payable and other current liabilities	(45,987)		61,598
Lease liabilities	(16,117)		(20,874)
Other long-term liabilities	(321)		(1,237)

Net cash (used in) provided by operating activities	(110,756)		5,134
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(4,694)		(10,982)


Change in deferred compensation plan	—		(55)
Net cash used in investing activities	(4,694)		(11,037)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility	248,035		135,583
Repayments under revolving credit facility	(248,649)		(121,738)
Purchase and retirement of common stock, including shares surrendered for tax withholdings and transaction costs	(320)		(6,088)


	May 4, 2024		February 3, 2024		April 29, 2023
	(in thousands)
Property and equipment:
Land and land improvements	$	3,403	$	3,403	$	3,403
Building and improvements	36,187		36,187		36,187
Material handling equipment	89,427		90,637		71,404
Leasehold improvements	161,922		162,898		179,949
Store fixtures and equipment	165,887		173,667		200,040
Capitalized software	335,523		333,953		343,132
Construction in progress	4,939		3,386		24,145
	797,288		804,131		858,260
Less accumulated depreciation and amortization	(680,509)		(679,381)		(711,945)
Property and equipment, net	$	116,779	$	124,750	$	146,315


	May 4, 2024		February 3, 2024		April 29, 2023
	(in millions)
Total borrowing base availability (1)	$	286.0	$	258.4	$	408.9
Credit facility availability (2)	433.0		400.5		315.0
Maximum borrowing availability (3)	286.0		258.4		315.0

Outstanding borrowings	226.1		226.7		300.8

Letters of credit outstanding—standby	12.2		7.4		7.4
Utilization of credit facility at end of period	238.3		234.1		308.2

Availability (4)	$	47.7	$	24.3	$	6.8

Interest rate at end of period	9.9%		8.1%		6.5%


	Year-To-Date 2024		Fiscal 2023		Year-To-Date 2023
	(in millions)
Average end of day loan balance during the period	$	228.2	$	315.5	$	297.1
Highest end of day loan balance during the period	$	251.6	$	379.4	$	305.9

Average interest rate	9.6%		7.5%		5.9%


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value (in thousands) of Shares that May Yet Be Purchased Under the Plans or Programs
2/4/24-3/2/24 (1)	4,824	$	9.98	—	$	157,223
3/3/24-4/6/24 (2)	4,952	8.46		4,952	157,181
4/7/24-5/4/24 (3)	38,330	7.21		38,330	156,905
Total	48,106	$	7.62	43,282	$	156,905









3.1(+)						Clawback Policy of The Children’s Place, Inc.

3.2(+)						Insider Trading Policy of The Children’s Place, Inc.

10.1(+)						Separation and Release Agreement dated May 20, 2024, between Jane T. Elfers and The Children’s Place, Inc.

10.2(+)						Letter Agreement dated May 29, 2024 between Muhammad Umair and The Children’s Place, Inc.

31.1(+)						Certificate of Principal Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

31.2(+)						Certificate of Principal Financial Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002.

32(+)						Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*						Inline XBRL Instance Document.

101.SCH*						Inline XBRL Taxonomy Extension Schema.

101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase.

101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase.

101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase.

101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase.

104*						Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).


		THE CHILDREN’S PLACE, INC.


Date:	June 12, 2024	By:	/S/ Muhammad Umair
			Muhammad Umair
			President and Interim Chief Executive Officer
			(Principal Executive Officer)


Date:	June 12, 2024	By:	/S/ Sheamus Toal
			Sheamus Toal
			Chief Operating Officer and Chief Financial Officer
			(Principal Financial Officer and Principal Accounting Officer)