Childrens Place, Inc 10-Q for FY2025 Q2

Childrens Place, Inc. (PLCE)

10-Q 2024-09-11 For: 2024-08-03

Added on April 10, 2026

About this 10-Q

Childrens Place, Inc filed this 10-Q on September 11, 2024, covering the quarter ended August 3, 2024 (FY2025 Q2).

Headline figures

Quarter ended August 3, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $319.66M; down 7.5% from $345.6M a year earlier
Net loss: $32.11M; compared with a net loss of $35.36M a year earlier
Diluted EPS: -$2.51; compared with -$2.82 a year earlier

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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 August 3, 2024, February 3, 2024 and July 29, 2023	1
	Consolidated Statements of Operations for the thirteen weeks and twenty-six weeks ended August 3, 2024 and July 29, 2023	2
	Consolidated Statements of Comprehensive Loss for the thirteen weeks and twenty-six weeks ended August 3, 2024 and July 29, 2023	3
	Consolidated Statements of Changes in Stockholders’ (Deficit) Equity for the thirteen weeks and twenty-six weeks ended August 3, 2024 and July 29, 2023	4
	Consolidated Statements of Cash Flows for the twenty-six weeks ended August 3, 2024 and July 29, 2023	6
	Notes to C onsolidated F inancial S tatements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	25
Item 3.	Quantitative and Qualitative Disclosures A bout Market Risk.	37
Item 4.	Controls and Procedures.	38

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings.	39
Item 1A.	Risk Factors.	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	39
Item 5.	Other Information.	39
Item 6.	Exhibits.	40


	August 3, 2024		February 3, 2024		July 29, 2023

	(in thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents	$	9,573	$	13,639	$	18,846

Accounts receivable	61,926		33,219		33,073
Inventories	520,593		362,099		536,980
Prepaid expenses and other current assets	35,251		43,169		65,108

Total current assets	627,343		452,126		654,007
Long-term assets:
Property and equipment, net	111,296		124,750		141,244
Right-of-use assets	163,539		175,351		112,325
Tradenames, net	13,000		41,123		70,491
Deferred income taxes	—		—		35,798
Other assets	6,236		6,958		9,220
Total assets	$	921,414	$	800,308	$	1,023,085

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Revolving loan	$	316,655	$	226,715	$	347,546

Accounts payable	215,793		225,549		262,369
Current portion of operating lease liabilities	67,610		69,235		65,266
Income taxes payable	3,384		5,297		2,938
Accrued expenses and other current liabilities	95,074		89,608		122,032
Total current liabilities	698,516		616,404		800,151
Long-term liabilities:

Long-term debt	—		49,818		49,785
Related party long-term debt	165,354		—		—
Long-term portion of operating lease liabilities	110,596		118,073		63,714
Income taxes payable	—		9,486		9,610
Other tax liabilities	5,073		4,664		2,905
Other long-term liabilities	10,747		10,882		10,990
Total liabilities	990,286		809,327		937,155
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; 12,779, 12,585, and 12,544 issued; 12,718, 12,529, and 12,473 outstanding	1,278		1,259		1,254
Additional paid-in capital	151,859		141,083		145,117
Treasury stock, at cost (61, 56, and 71 shares)	(2,975)		(2,909)		(3,884)
Deferred compensation	2,975		2,909		3,884
Accumulated other comprehensive loss	(17,235)		(16,496)		(15,964)
Accumulated deficit	(204,774)		(134,865)		(44,477)
Total stockholders’ (deficit) equity	(68,872)		(9,019)		85,930
Total liabilities and stockholders’ (deficit) equity	$	921,414	$	800,308	$	1,023,085


	Thirteen Weeks Ended				Twenty-six Weeks Ended
	August 3, 2024		July 29, 2023		August 3, 2024		July 29, 2023
	(in thousands, except loss per common share)
Net sales	$	319,655	$	345,599	$	587,533	$	667,239
Cost of sales	207,861		257,840		382,998		483,019

Gross profit	111,794		87,759		204,535		184,220

Selling, general, and administrative expenses	96,065		111,965		205,159		224,895
Depreciation and amortization	9,505		11,953		21,140		23,801
Asset impairment charges	28,000		782		28,000		2,532



Operating loss	(21,776)		(36,941)		(49,764)		(67,008)
Related party interest expense	(2,087)		—		(2,476)		—
Other interest expense	(7,158)		(7,658)		(14,501)		(13,594)
Interest income	14		17		25		51
Loss before provision (benefit) for income taxes	(31,007)		(44,582)		(66,716)		(80,551)
Provision (benefit) for income taxes	1,107		(9,227)		3,193		(16,363)

Net loss	$	(32,114)	$	(35,355)	$	(69,909)	$	(64,188)

Loss per common share
Basic	$	(2.51)	$	(2.82)	$	(5.50)	$	(5.16)
Diluted	$	(2.51)	$	(2.82)	$	(5.50)	$	(5.16)

Weighted average common shares outstanding
Basic	12,772		12,522		12,707		12,448
Diluted	12,772		12,522		12,707		12,448


☒						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 August 3, 2024
										Accumulated
				Additional						Other					Total
	Common Stock			Paid-In		Deferred		Accumulated		Comprehensive		Treasury Stock			Stockholders’
(in thousands)	Shares	Amount		Capital		Compensation		Deficit		Loss		Shares	Amount		(Deficit)











































Balance, May 4, 2024	12,739	$	1,274	$	153,358	$	2,957	$	(172,660)	$	(16,822)	(60)	$	(2,957)	$	(34,850)


Vesting of stock awards	61	6		(6)											—
Stock-based compensation benefit				(1,248)											(1,248)

Purchase and retirement of common stock	(21)	(2)		(245)											(247)
Other comprehensive loss										(413)					(413)





Deferral of common stock into deferred compensation plan						18						(1)	(18)		—
Net loss								(32,114)							(32,114)
Balance, August 3, 2024	12,779	$	1,278	$	151,859	$	2,975	$	(204,774)	$	(17,235)	(61)	$	(2,975)	$	(68,872)



Twenty-six Weeks Ended August 3, 2024
										Accumulated
				Additional						Other					Total
	Common Stock			Paid-In		Deferred		Accumulated		Comprehensive		Treasury Stock			Stockholders’
(in thousands)	Shares	Amount		Capital		Compensation		Deficit		Loss		Shares	Amount		(Deficit)
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	265	26		(26)											—
Stock-based compensation expense				11,361											11,361
Purchase and retirement of common stock	(71)	(7)		(559)				—							(566)
Other comprehensive loss										(739)					(739)




Deferral of common stock into deferred compensation plan						66						(5)	(66)		—
Net loss								(69,909)							(69,909)
Balance, August 3, 2024	12,779	$	1,278	$	151,859	$	2,975	$	(204,774)	$	(17,235)	(61)	$	(2,975)	$	(68,872)


Thirteen Weeks Ended July 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, April 29, 2023	12,473	$	1,247	$	150,846	$	3,810	$	(9,207)	$	(17,065)	(68)	$	(3,810)	$	125,821


Vesting of stock awards	119	12		(12)											—
Stock-based compensation benefit				(4,762)											(4,762)

Purchase and retirement of common stock	(48)	(5)		(955)				85							(875)

Other comprehensive income										1,101					1,101


Deferral of common stock into deferred compensation plan						74						(3)	(74)		—
Net loss								(35,355)							(35,355)
Balance, July 29, 2023	12,544	$	1,254	$	145,117	$	3,884	$	(44,477)	$	(15,964)	(71)	$	(3,884)	$	85,930



Twenty-six Weeks Ended July 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	455	46		(46)											—
Stock-based compensation benefit				(1,679)											(1,679)
Purchase and retirement of common stock	(203)	(21)		(4,114)				(2,829)							(6,964)




Other comprehensive income										283					283

Deferral of common stock into deferred compensation plan						148						(4)	(148)		—
Net loss								(64,188)							(64,188)
Balance, July 29, 2023	12,544	$	1,254	$	145,117	$	3,884	$	(44,477)	$	(15,964)	(71)	$	(3,884)	$	85,930



	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

Cash Payments	(304)		(185)		(489)
Balance at August 3, 2024	$	248	$	319	$	567



	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


		August 3, 2024
	Useful Life	Gross Amount		Accumulated Amortization		Net Amount
		(in thousands)
Gymboree tradename	Indefinite	$	13,000	$	—	$	13,000


Total intangible assets		$	13,000	$	—	$	13,000


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


	Twenty-six Weeks Ended
	August 3, 2024		July 29, 2023
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(69,909)	$	(64,188)


Reconciliation of net loss to net cash used in operating activities:
Non-cash portion of operating lease expense	39,184		37,757
Depreciation and amortization	21,140		23,801

Non-cash stock-based compensation expense (benefit), net	11,361		(1,679)
Asset impairment charges	28,000		2,532

Deferred income tax provision	—		828



Other non-cash charges, net	1,072		331
Changes in operating assets and liabilities:
Inventories	(159,211)		(88,959)
Accounts receivable and other assets	(27,831)		19,215
Prepaid expenses and other current assets	(5,050)		(798)
Income taxes payable, net of prepayments	4,016		(23,334)
Accounts payable and other current liabilities	(861)		105,912
Lease liabilities	(36,461)		(41,886)
Other long-term liabilities	(137)		(2,237)

Net cash used in operating activities	(194,687)		(32,705)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(12,478)		(18,152)


Change in deferred compensation plan	—		(109)
Net cash used in investing activities	(12,478)		(18,261)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility	618,891		317,144
Repayments under revolving credit facility	(528,951)		(256,588)
Purchase and retirement of common stock, including shares surrendered for tax withholdings and transaction costs	(566)		(6,964)


	August 3, 2024		February 3, 2024		July 29, 2023
	(in thousands)
Property and equipment:
Land and land improvements	$	3,403	$	3,403	$	3,403
Building and improvements	36,309		36,187		36,187
Material handling equipment	89,427		90,637		89,389
Leasehold improvements	164,054		162,898		178,536
Store fixtures and equipment	164,795		173,667		200,201
Capitalized software	335,762		333,953		347,343
Construction in progress	5,992		3,386		7,134
	799,742		804,131		862,193
Less: accumulated depreciation and amortization	(688,446)		(679,381)		(720,949)
Property and equipment, net	$	111,296	$	124,750	$	141,244


	August 3, 2024
	(in thousands)
Remainder of 2024	$	45,889
2025	64,141
2026	35,225
2027	16,619
2028	13,831
Thereafter	40,589
Total operating lease payments	216,294
Less: imputed interest	(38,088)
Present value of operating lease liabilities	$	178,206


	August 3, 2024		February 3, 2024		July 29, 2023
	(in millions)
Total borrowing base availability (1)	$	396.2	$	258.4	$	422.3
Credit facility availability (2)	433.0		400.5		400.5
Maximum borrowing availability (3)	396.2		258.4		400.5

Outstanding borrowings	316.7		226.7		347.5

Letters of credit outstanding—standby	12.2		7.4		7.4
Utilization of credit facility at end of period	328.9		234.1		354.9

Availability (4)	$	67.3	$	24.3	$	45.6

Interest rate at end of period	8.6%		8.1%		8.1%


		July 29, 2023
	Useful Life	Gross Amount		Accumulated Amortization		Net Amount
		(in thousands)
Gymboree tradename	Indefinite	$	69,953	$	—	$	69,953
Crazy 8 tradename	5 years	4,000		(3,462)		538
Total intangible assets		$	73,953	$	(3,462)	$	70,491


	Year-To-Date 2024		Fiscal 2023		Year-To-Date 2023
	(in millions)
Average end of day loan balance during the period	$	252.7	$	315.5	$	315.2
Highest end of day loan balance during the period	$	328.0	$	379.4	$	379.4

Average interest rate	9.3%		7.5%		6.3%


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
5/5/24-6/1/24 (1)	22,998	$	11.56	21,474	$	156,657
6/2/24-7/6/24	—	—		—	156,657
7/7/24-8/3/24	—	—		—	156,657
Total	22,998	$	11.56	21,474	$	156,657









10.3(+)						Separation and Release Agreement dated June 14, 2024, between Maegan Markee and The Children’s Place, Inc.

10.4(+)						Letter Agreement dated August 9, 2024 between Claudia Lima-Guinehut and The Children’s Place, Inc.

10.5 (+)						Amendment No. 1 to Commitment Letter for $40 Million Senior Unsecured Credit Facility (Third), dated as of September 10, 2024, among the Company, certain subsidiaries of the Company, and Mithaq Capital SPC.

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:	September 11, 2024	By:	/S/ Muhammad Umair
			Muhammad Umair
			President and Interim Chief Executive Officer
			(Principal Executive Officer)


Date:	September 11, 2024	By:	/S/ Sheamus Toal
			Sheamus Toal
			Chief Operating Officer and Chief Financial Officer
			(Principal Financial Officer and Principal Accounting Officer)


			Sincerely,

			MITHAQ CAPITAL SPC

			By:			/S/ TURKI SALEH A. ALRAJHI

			Name:			Turki Saleh A. AlRajhi

			Title:			Director


Agreed to and accepted as of the date first above written:

THE CHILDREN’S PLACE, INC., for itself and on behalf of the Borrower Parties

By:	/S/ SHEAMUS TOAL

	Name:	Sheamus Toal

	Title:	Chief Operating Officer & Chief Financial Officer