PLCE Childrens Place Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

Date of report (Date of earliest event reported): September 11, 2024

 

THE CHILDREN’S PLACE, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

 

0-23071	31-1241495
(Commission File Number)	(IRS Employer Identification No.)
500 Plaza Drive, Secaucus, New Jersey	07094
(Address of Principal Executive Offices)	(Zip Code)

 

(201) 558-2400

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12-b-2 of this chapter).

 

Emerging growth company  ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ¨

 

Securities registered pursuant to Section 12(b) of the Act:

 

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

 

 

Item 2.02

Results of Operations and Financial Condition.

 

On September 11, 2024, the Company issued a press release containing the Company’s financial results for the second quarter of the fiscal year ending February 1, 2025 (“Fiscal 2024”). A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K.

 

The preliminary unaudited information in this Current Report is being furnished pursuant to Item 2.02 of Form 8-K, insofar as it discloses historical information regarding the Company’s results of operations and financial condition as of and for the second quarter of Fiscal 2024. In accordance with General Instruction B.2 of Form 8-K, such information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statement and Exhibits.

 

(d)   Exhibits

 

Exhibit 99.1	Press Release, dated September 11, 2024, issued by the Company (Exhibit 99.1 is furnished as part of this Current Report on Form 8-K).
Exhibit 104	Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document.

 

 

Forward-Looking Statements

 

This Current Report on Form 8-K, including Exhibit 99.1, contains or may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the Company’s strategic initiatives and results of operations, including adjusted net income (loss) per diluted share. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “project,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. These forward-looking statements are based upon the Company’s current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results and performance to differ materially. Some of these risks and uncertainties are described in the Company’s filings with the Securities and Exchange Commission, including in the “Risk Factors” section of its annual report on Form 10-K for the fiscal year ended February 3, 2024. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unable to achieve operating results at levels sufficient to fund and/or finance the Company’s current level of operations and repayment of indebtedness, the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Company’s business and its dependence on consumer spending patterns, which may be affected by changes in economic conditions (including inflation), the risk that changes in the Company’s plans and strategies with respect to pricing, capital allocation, capital structure, investor communications and/or operations may have a negative effect on the Company’s business, the risk that the Company’s strategic initiatives to increase sales and margin, improve operational efficiencies, enhance operating controls, decentralize operational authority and reshape the Company’s culture are delayed or do not result in anticipated improvements, the risk of delays, interruptions, disruptions and higher costs in the Company’s global supply chain, including resulting from disease outbreaks, foreign sources of supply in less developed countries, more politically unstable countries, or countries where vendors fail to comply with industry standards or ethical business practices, including the use of forced, indentured or child labor, the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, various types of litigation, including class action litigations brought under securities, consumer protection, employment, and privacy and information security laws and regulations, the imposition of regulations affecting the importation of foreign-produced merchandise, including duties and tariffs, risks related to the existence of a controlling shareholder, and the uncertainty of weather patterns. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. The Company undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: September 11, 2024

 

	THE CHILDREN’S PLACE, INC.
	By:	/s/ Jared Shure
	Name:	Jared Shure
	Title:	Chief Administrative Officer, General Counsel & Corporate Secretary

 

 

 

Exhibit 99.1

 

 

 

THE CHILDREN’S PLACE REPORTS SECOND QUARTER 2024 RESULTS

 

Significant Improvement in Gross Profit Margin to 35%

 

Lowest Level of SG&A spending in more than 15 Years during Q2

 

Incurred a Non-Cash Impairment Charge of $28 Million for Gymboree Tradename

 

Adjusted Operating Income of $14.2 Million after Two Years of Losses during Q2

 

Positive Adjusted EBITDA, Improving $37.4 Million versus the Prior Year Loss

 

Secaucus, New Jersey – September 11, 2024 – The Children’s Place, Inc. (Nasdaq: PLCE), an omni-channel children’s specialty portfolio of brands, today announced financial results for the second quarter ended August 3, 2024.

 

Muhammad Umair, President and Interim Chief Executive Officer said, “During the second quarter we proactively made certain strategic and operational changes to improve the profitability of the business and provide a foundation for future growth and we were pleased with the results. While we anticipated that these efforts would provide pressure to topline sales, we drove significant improvements in gross profit margin versus the prior year’s second quarter and sequential improvement in margin for two quarters, which is particularly important moving from the first quarter to the second quarter. In addition, we were also able to significantly decrease Adjusted SG&A expenses as we reduced payroll costs and eliminated unprofitable marketing spend, all of which has combined to show more than a $39 million improvement in Adjusted operating income despite the lower top line sales. While these first steps to improve operating results have been promising, we still believe that we have significant work ahead of us in future quarters as we rationalize profitability.”

 

Second Quarter 2024 Results

 

Net sales decreased $25.9 million, or 7.5%, to $319.7 million in the three months ended August 3, 2024, compared to $345.6 million in the three months ended July 29, 2023. The decrease in net sales was primarily driven by an anticipated decrease in ecommerce revenue, as the Company proactively rationalized its unprofitable promotional strategies, inflated marketing spend and “free shipping” offers to significantly improve profitability, which was successful during the second quarter. These efforts not only improved the profitability of the Company’s ecommerce business, despite the lower revenue, but also benefited the brick-and-mortar channel, as the stores business experienced positive comparable store sales for the first time in ten quarters. The wholesale business also rebounded with double-digit growth after a decline in the first quarter.

 

Comparable retail sales decreased 7.2% for the quarter, largely driven by the planned decrease in ecommerce as this business decreased by a double-digit percentage as the Company proactively sacrificed unprofitable sales to improve profitability. Stores experienced a positive comparable store sales result for the first time since the post COVID-19 period of 2021, driven by stronger units per transaction and conversion metrics, and improving traffic trends.

 

Gross profit increased $24.0 million to $111.8 million in the three months ended August 3, 2024, compared to $87.8 million in the three months ended July 29, 2023. The gross margin rate increased by 960 basis points to 35.0% during the three months ended August 3, 2024, compared to 25.4% in the prior year period. The increase was caused by a combination of factors, including reductions in product input costs, including cotton and supply chain costs, which negatively impacted margins in the prior year. These improvements were combined with the success of the Company’s rationalization of profit-draining promotional strategies and shipping offers, which resulted in a significant improvement in the leverage of ecommerce freight costs due to the Company’s new shipping threshold for free shipping.

 

 

Selling, general, and administrative expenses were well controlled at $96.1 million in the three months ended August 3, 2024, compared to $112.0 million in the three months ended July 29, 2023. Adjusted selling, general & administrative expenses were $88.3 million in the three months ended August 3, 2024, compared to $101.7 million in the comparable period last year, and leveraged 180 basis points to 27.6% of net sales, primarily as a result of significant reductions in store payroll and home office payroll, and the elimination of inflated and unprofitable marketing costs. This represents the lowest level of Adjusted selling, general, and administrative expenses in over 15 years for the second quarter.

 

Operating loss was $(21.8) million in the three months ended August 3, 2024, compared to $(36.9) million in the three months ended July 29, 2023. Operating loss was impacted by incremental expenses of $36.0 million, which included an impairment charge of $28.0 million on the Gymboree tradename, primarily due to reductions in Gymboree sales forecasts and a reduction in the royalty rate used to value the tradename, and restructuring costs of $6.1 million due to recent changes in the senior leadership team. These charges have been classified as non-GAAP adjustments, leading to a shift back to profitability with an adjusted operating income of $14.2 million in the three months ended August 3, 2024, or an improvement of $39.2 million compared to an adjusted operating loss of $(25.0) million in the comparable period last year, and leveraged 1,170 basis points to 4.5% of net sales.

 

Net interest expense was $9.2 million in the three months ended August 3, 2024, compared to $7.6 million in the three months ended July 29, 2023. The increase in interest expense was primarily driven by higher average interest rates associated with the Company’s revolving credit facility due to the impact of refinancings and continued market-based rate increases, partially offset by continued benefits associated with certain non-interest bearing loans from the Company’s majority shareholder, Mithaq Capital SPC (“Mithaq”).

 

As previously announced, in the three months ended February 3, 2024, the Company established a valuation allowance against its net deferred tax assets and, as such, continues to adjust the allowance based upon the ongoing operating results. The provision for income taxes, which is reflected net of these adjustments, was $1.1 million in the three months ended August 3, 2024, compared to a benefit for income taxes of $(9.2) million during the three months ended July 29, 2023. The change in the provision (benefit) for income taxes was primarily driven by the establishment of the valuation allowance against the Company’s net deferred tax assets.

 

Net loss, which included certain non-cash impairment charges and non-operating restructuring charges, was $(32.1) million, or $(2.51) per diluted share, in the three months ended August 3, 2024, compared to $(35.4) million, or $(2.82) per diluted share, in the three months ended July 29, 2023. Adjusted net income shifted back to profitability after two years of losses during the second quarter, improving by $30.4 million versus the prior year to $3.9 million, or $0.30 per diluted share, compared to an adjusted net loss of $(26.5) million, or $(2.12) per diluted share, in the comparable period last year.

 

Fiscal Year-To-Date 2024 Results

 

Net sales decreased $79.7 million, or 11.9%, to $587.5 million in the six months ended August 3, 2024, compared to $667.2 million in the six months ended July 29, 2023. The decrease in net sales was primarily due to reductions in retail sales due to lower store count, and anticipated declines in ecommerce demand due to the rationalization of promotions, reductions in inflated and unprofitable marketing spend and the strategic decision to change “free shipping” offers, as the Company proactively sacrificed unprofitable sales in an effort to improve profitability. Comparable retail sales decreased 9.4% for the six months ended August 3, 2024. 

 

 

Gross profit increased $20.3 million to $204.5 million in the six months ended August 3, 2024, compared to $184.2 million in the six months ended July 29, 2023. The gross margin rate increased by 720 basis points to 34.8% during the six months ended August 3, 2024 compared to 27.6% in the prior year period. The increase was primarily due to reductions in product input costs, including cotton and supply chain costs, which negatively impacted margins in the prior year. These improvements were combined with the success of the Company’s rationalization of profit-draining promotional strategies and shipping offers, which resulted in a significant improvement in the leverage of ecommerce freight costs due to the Company’s new shipping threshold for free shipping.

 

Selling, general, and administrative expenses were $205.2 million in the six months ended August 3, 2024, compared to $224.9 million in the six months ended July 29, 2023. Adjusted selling, general & administrative expenses were $177.0 million in the six months ended August 3, 2024, compared to $210.8 million in the comparable period last year, and leveraged 150 basis points to 30.1% of net sales, primarily as a result of significant reductions in store payroll and home office payroll, and the elimination of inflated and unprofitable marketing costs. This represents the lowest level of Adjusted selling, general and administrative expenses in over 15 years for the first two quarters of a fiscal year.

 

Operating loss was $(49.8) million in the six months ended August 3, 2024, compared to $(67.0) million in the six months ended July 29, 2023. Operating loss was impacted by incremental expenses of $58.9 million, which included an impairment charge of $28.0 million on the Gymboree tradename, primarily due to reductions in Gymboree sales forecasts and a reduction in the royalty rate used to value the tradename, restructuring costs of $6.4 million primarily due to recent changes in the senior leadership team, and several charges due to the Company’s recent change of control, due to the investment in the Company by Mithaq, and several new financing initiatives, which include $10.8 million of non-cash equity compensation charges and $3.8 million in other fees associated with the change of control, and $6.7 million of financing-related charges. These charges have been classified as non-GAAP adjustments leading to a shift back to profitability with an adjusted operating income of $9.2 million for year-to-date 2024, or an improvement of $58.7 million compared to an adjusted operating loss of $(49.5) million in the comparable period last year, and leveraged 900 basis points to 1.6% of net sales.

 

Net interest expense was $17.0 million in the six months ended August 3, 2024, compared to $13.5 million in the six months ended July 29, 2023. The increase in interest expense was primarily driven by higher average interest rates associated with the Company’s revolving credit facility due to the impact of refinancings and continued market-based rate increases, partially offset by continued benefits associated with certain non-interest bearing loans from Mithaq.

 

The provision for income taxes was $3.2 million in the six months ended August 3, 2024, compared to a benefit for income taxes of $(16.4) million during the six months ended July 29, 2023. The change in the provision (benefit) for income taxes was primarily driven by the establishment of a valuation allowance against the Company’s net deferred tax assets in the Company’s fiscal year for 2023.

 

Net loss, which included certain non-cash impairment charges and non-operating restructuring charges, was $(69.9) million, or $(5.50) per diluted share, in the six months ended August 3, 2024, compared to $(64.2) million, or $(5.16) per diluted share, in the six months ended July 29, 2023. Adjusted net loss, which was driven by losses in the first quarter and partially offset by profits in the second quarter, was $(11.0) million, or $(0.87) per diluted share, compared to $(51.2) million, or $(4.12) per diluted share, in the comparable period last year.

 

 

Store Update 

 

The Company closed 3 stores in the three months ended August 3, 2024 and ended the quarter with 515 stores and square footage of 2.5 million.

 

Balance Sheet and Cash Flow

 

As of August 3, 2024, the Company had $9.6 million of cash and cash equivalents and $316.7 million outstanding on its revolving credit facility. Additionally, the Company used $194.7 million in operating cash flows in the six months ended August 3, 2024.

 

Inventories were $520.6 million as of August 3, 2024, compared to $537.0 million as of July 29, 2023.

 

Non-GAAP Reconciliation

 

The Company’s results are reported in this press release on a GAAP and as adjusted, non-GAAP basis. Adjusted net income (loss), adjusted net income (loss) per diluted share, adjusted gross profit, adjusted selling, general, and administrative expenses, adjusted operating income (loss) and adjusted EBITDA are non-GAAP measures, and are not intended to replace GAAP financial information, and may be different from non-GAAP measures reported by other companies. The Company believes the income and expense items excluded as non-GAAP adjustments are not reflective of the performance of its core business, and that providing this supplemental disclosure to investors will facilitate comparisons of the past and present performance of its core business.

 

Please refer to the “Reconciliation of Non-GAAP Financial Information to GAAP” later in this press release, which sets forth the non-GAAP operating adjustments for the 13-week periods and 26-week periods ended August 3, 2024, and July 29, 2023.

 

About The Children’s Place

 

The Children’s Place is an omni-channel children’s specialty portfolio of brands. Its global retail and wholesale network includes two digital storefronts, more than 500 stores in North America, wholesale marketplaces and distribution in 15 countries through five international franchise partners. The Children’s Place designs, contracts to manufacture, and sells fashionable, high-quality apparel, accessories and footwear predominantly at value prices, primarily under its proprietary brands: “The Children’s Place”, “Gymboree”, “Sugar & Jade”, and “PJ Place”. For more information, visit: www.childrensplace.com and www.gymboree.com, as well as the Company’s social media channels on Instagram, Facebook, X, formerly known as Twitter, YouTube and Pinterest.  

 

 

“Forward-Looking Statements”

 

This press release contains or may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the Company’s strategic initiatives and results of operations, including adjusted net income (loss) per diluted share. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “project,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. These forward-looking statements are based upon the Company’s current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results and performance to differ materially. Some of these risks and uncertainties are described in the Company’s filings with the Securities and Exchange Commission, including in the “Risk Factors” section of its annual report on Form 10-K for the fiscal year ended February 3, 2024. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unable to achieve operating results at levels sufficient to fund and/or finance the Company’s current level of operations and repayment of indebtedness, the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Company’s business and its dependence on consumer spending patterns, which may be affected by changes in economic conditions (including inflation), the risk that changes in the Company’s plans and strategies with respect to pricing, capital allocation, capital structure, investor communications and/or operations may have a negative effect on the Company’s business, the risk that the Company’s strategic initiatives to increase sales and margin, improve operational efficiencies, enhance operating controls, decentralize operational authority and reshape the Company’s culture are delayed or do not result in anticipated improvements, the risk of delays, interruptions, disruptions and higher costs in the Company’s global supply chain, including resulting from disease outbreaks, foreign sources of supply in less developed countries, more politically unstable countries, or countries where vendors fail to comply with industry standards or ethical business practices, including the use of forced, indentured or child labor, the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, various types of litigation, including class action litigations brought under securities, consumer protection, employment, and privacy and information security laws and regulations, the imposition of regulations affecting the importation of foreign-produced merchandise, including duties and tariffs, risks related to the existence of a controlling shareholder, and the uncertainty of weather patterns. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. The Company undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

Contact:  Investor Relations (201) 558-2400 ext. 14500

 

 

THE CHILDREN’S PLACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 

		Second Quarter Ended								Year-to-Date Ended
		August 3, 2024				July 29, 2023				August 3, 2024				July 29, 2023
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	)
Interest expense, net			(9,231	)			(7,641	)			(16,952	)			(13,543	)
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

 

 

THE CHILDREN’S PLACE, INC.

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP

(In thousands, except per share amounts)

(Unaudited)

 

		Second Quarter Ended								Year-to-Date Ended
		August 3, 2024				July 29, 2023				August 3, 2024				July 29, 2023
Net loss		$	(32,114	)		$	(35,355	)		$	(69,909	)		$	(64,188	)
Non-GAAP adjustments:
Asset impairment charges			28,000				782				28,000				2,532
Restructuring costs			6,104				9,659				6,367				9,928
Credit agreement/lender-required consulting			1,102				—				1,852				—
Professional and consulting fees			422				—				422				—
Accelerated depreciation			256				907				1,813				907
Fleet optimization			123				81				708				1,168
Change of control			—				—				14,589				—
Broken financing and restructuring fees			—				—				6,661				—
Canada distribution center closure			—				—				781				—
Reversal of legal settlement accrual			—				—				(2,279	)			—
Contract termination costs			—				546				—				2,962
Aggregate impact of non-GAAP adjustments			36,007				11,975				58,914				17,497
Income tax effect (1)			—				(3,113	)			—				(4,549	)
Net impact of non-GAAP adjustments			36,007				8,862				58,914				12,948
Adjusted net income (loss)		$	3,893			$	(26,493	)		$	(10,995	)		$	(51,240	)
GAAP net loss per common share		$	(2.51	)		$	(2.82	)		$	(5.50	)		$	(5.16	)
Adjusted net income (loss) per common share		$	0.30			$	(2.12	)		$	(0.87	)		$	(4.12	)

 

⁽¹⁾ The tax effects of the non-GAAP items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides, adjusted for the impact of any valuation allowance.

 

 

THE CHILDREN’S PLACE, INC.

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP

(In thousands, except per share amounts)

(Unaudited)

 

		Second Quarter Ended								Year-to-Date Ended
		August 3, 2024				July 29, 2023				August 3, 2024				July 29, 2023
Operating loss		$	(21,776	)		$	(36,941	)		$	(49,764	)		$	(67,008	)
Non-GAAP adjustments:
Asset impairment charges			28,000				782				28,000				2,532
Restructuring costs			6,104				9,659				6,367				9,928
Credit agreement/lender-required consulting			1,102				—				1,852				—
Professional and consulting fees			422				—				422				—
Accelerated depreciation			256				907				1,813				907
Fleet optimization			123				81				708				1,168
Change of control			—				—				14,589				—
Broken financing and restructuring fees			—				—				6,661				—
Canada distribution center closure			—				—				781				—
Reversal of legal settlement accrual			—				—				(2,279	)			—
Contract termination costs			—				546				—				2,962
Aggregate impact of non-GAAP adjustments			36,007				11,975				58,914				17,497
Adjusted operating income (loss)		$	14,231			$	(24,966	)		$	9,150			$	(49,511	)

 

 

THE CHILDREN’S PLACE, INC.

RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP

(In thousands, except per share amounts)

(Unaudited)

 

		Second Quarter Ended								Year-to-Date Ended
		August 3, 2024				July 29, 2023				August 3, 2024				July 29, 2023
Gross profit		$	111,794			$	87,759			$	204,535			$	184,220
Non-GAAP adjustments:
Change of control			—				—				905				—
Aggregate impact of non-GAAP adjustments			—				—				905				—
Adjusted gross profit		$	111,794			$	87,759			$	205,440			$	184,220

 

		Second Quarter Ended								Year-to-Date Ended
		August 3, 2024				July 29, 2023				August 3, 2024				July 29, 2023
Selling, general and administrative expenses		$	96,065			$	111,965			$	205,159			$	224,895
Non-GAAP adjustments:
Restructuring costs			(6,104	)			(9,659	)			(6,367	)			(9,928	)
Credit agreement/lender-required consulting			(1,102	)			—				(1,852	)			—
Professional and consulting fees			(422	)			—				(422	)			—
Fleet optimization			(123	)			(81	)			(708	)			(1,168	)
Change of control			—				—				(13,684	)			—
Broken financing deal			—				—				(6,661	)			—
Canada distribution center closure			—				—				(781	)			—
Reversal of legal settlement accrual			—				—				2,279				—
Contract termination costs			—				(546	)							(2,962	)
Aggregate impact of non-GAAP adjustments			(7,751	)			(10,286	)			(28,196	)			(14,058	)
Adjusted selling, general and administrative expenses		$	88,314			$	101,679			$	176,963			$	210,837

 

 

THE CHILDREN’S PLACE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

 

		August 3, 2024				February 3, 2024*				July 29, 2023
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
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
Other assets, net			6,236				6,958				45,018
Total assets		$	921,414			$	800,308			$	1,023,085
Liabilities and Stockholders' (Deficit) Equity:
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
Accrued expenses and other current liabilities			98,458				94,905				124,970
Total current liabilities			698,516				616,404				800,151
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
Other long-term liabilities			15,820				25,032				23,505
Total liabilities			990,286				809,327				937,155
Stockholders' (deficit) equity			(68,872	)			(9,019	)			85,930
Total liabilities and stockholders' (deficit) equity		$	921,414			$	800,308			$	1,023,085

 

* Derived from the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended February 3, 2024.

 

 

THE CHILDREN’S PLACE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

		Second Quarter Ended
		August 3, 2024				July 29, 2023
Net loss		$	(69,909	)		$	(64,188	)
Non-cash adjustments			100,757				63,570
Working capital			(225,535	)			(32,087	)
Net cash used in operating activities			(194,687	)			(32,705	)
Net cash used in investing activities			(12,478	)			(18,261	)
Net cash provided by financing activities			203,652				52,969
Effect of exchange rate changes on cash and cash equivalents			(553	)			154
Net (decrease) increase in cash and cash equivalents			(4,066	)			2,157
Cash and cash equivalents, beginning of period			13,639				16,689
Cash and cash equivalents, end of period		$	9,573			$	18,846

 

 

v3.24.2.u1

Cover	Sep. 11, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Sep. 11, 2024
Entity File Number	0-23071
Entity Registrant Name	THE CHILDREN’S PLACE, INC.
Entity Central Index Key	0001041859
Entity Tax Identification Number	31-1241495
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	500 Plaza Drive
Entity Address, City or Town	Secaucus
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07094
City Area Code	201
Local Phone Number	558-2400
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.10 par value
Trading Symbol	PLCE
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

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