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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 2.02Results 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 9.01Financial 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.

 

2

 

 

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.

 

3

 

 

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

 

4

 

 

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.

 

1

 

 

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. 

 

2

 

 

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.

 

3

 

 

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.  

 

4

 

 

“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

 

5

 

 

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 

 

6

 

 

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.

 

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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)

 

8

 

 

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 

 

9

 

 

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.

 

10

 

 

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 

 

11

 

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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