Children’s Place Looks for New Financing as Losses Widen

The Children's Place is looking at 'strategic alternatives' as losses widen.

The Children’s Place — which owns and operates The Children’s Place, Gymboree, Sugar & Jade and PJ Place brands — is working with advisors and lenders to find new financing as it projects a wider loss than initially expected in its Q4 for fiscal 2023, which ended Jan. 28, 2023.

The company is now projecting sales for the quarter of $454 to $456 million, down from prior guidance of $460 to $465 million. Adjusted operating loss for the quarter is expected to be higher than anticipated, in the range of 9% to 8% of net sales, where prior guidance projected losses of just 2% to 3% of net sales.

The company blamed lower than expected margins following aggressive holiday promotions in the fourth quarter as well as higher than anticipated split shipments for ecommerce orders and increased inventory valuation adjustments. Children’s Place does expect to end its fiscal year in a clean inventory position, with inventory expected to be down 16% to 20% from the prior year. 

Children’s Place’s total liquidity as of Feb. 3, 2024 is expected to be approximately $45 million. As previously anticipated, total indebtedness is expected to decrease by more than $100 million in Q4 versus Q3 of fiscal 2023 from $408 million as of the end of the third quarter to approximately $277 million at the end of Q4.

The revised projections are from the company’s preliminary unaudited Q4 results, with official earnings data expected on March 14, 2024. However, the company, which operates 500 stores in North America, said it is already actively working with its advisors, including Centerview Partners, as well as current and potential lenders. to obtain new financing in order to support ongoing operations. If new financing is not secured, the company said it will consider other strategic alternatives.