Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS.
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
November 1,
2025 February 1,
2025 November 2,
2024
(in thousands, except par value)
ASSETS
Current assets:
Cash and cash equivalents $ 7,253 $ 5,347 $ 5,749
Accounts receivable 43,433 42,701 62,214
Inventories 390,330 399,602 491,619
Prepaid expenses and other current assets 49,178 20,354 43,109
Total current assets 490,194 468,004 602,691
Long-term assets:
Property and equipment, net 92,230 97,487 105,486
Right-of-use assets 159,785 161,595 159,374
Tradenames, net 13,000 13,000 13,000
Other assets 7,300 7,466 8,242
Total assets $ 762,509 $ 747,552 $ 888,793
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Revolving loan $ 297,214 $ 245,659 $ 362,375
Accounts payable 86,151 126,716 125,912
Current portion of operating lease liabilities 56,253 67,407 65,151
Income taxes payable 2,229 2,441 2,413
Accrued expenses and other current liabilities 90,830 75,895 93,142
Total current liabilities 532,677 518,118 648,993
Long-term liabilities:
Related party long-term debt 107,377 165,974 165,664
Long-term portion of operating lease liabilities 116,854 107,287 108,390
Other tax liabilities 5,589 5,291 5,061
Other long-term liabilities 8,623 10,293 10,259
Total liabilities 771,120 806,963 938,367
Commitments and contingencies (see Note 7)
Stockholders’ deficit:
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; 22,171 , 12,785 , and 12,779 issued; 22,168 , 12,782 , and 12,776 outstanding
2,217 1,279 1,278
Additional paid-in capital 242,673 151,485 151,359
Treasury stock, at cost ( 3 , 3 , and 3 shares)
( 90 ) ( 90 ) ( 110 )
Deferred compensation 90 90 110
Accumulated other comprehensive loss ( 17,109 ) ( 19,491 ) ( 17,517 )
Accumulated deficit ( 236,392 ) ( 192,684 ) ( 184,694 )
Total stockholders’ deficit ( 8,611 ) ( 59,411 ) ( 49,574 )
Total liabilities and stockholders’ deficit $ 762,509 $ 747,552 $ 888,793
See accompanying notes to these consolidated financial statements.
1
Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Thirteen Weeks Ended Thirty-nine Weeks Ended
November 1,
2025 November 2,
2024 November 1,
2025 November 2,
2024
(in thousands, except loss per common share)
Net sales $ 339,466 $ 390,173 $ 879,597 $ 977,706
Cost of sales (exclusive of depreciation and amortization) 227,162 251,832 595,238 634,830
Gross profit 112,304 138,341 284,359 342,876
Selling, general, and administrative expenses 101,301 99,817 277,567 304,976
Depreciation and amortization 7,334 9,266 23,134 30,406
Asset impairment charges — — — 28,000
Operating income (loss) 3,669 29,258 ( 16,342 ) ( 20,506 )
Related party interest expense ( 1,869 ) ( 2,078 ) ( 5,609 ) ( 4,554 )
Other interest expense ( 6,259 ) ( 8,014 ) ( 19,126 ) ( 22,515 )
Interest income 7 14 34 39
Income (loss) before provision (benefit) for income taxes ( 4,452 ) 19,180 ( 41,043 ) ( 47,536 )
Provision (benefit) for income taxes ( 132 ) ( 900 ) 2,665 2,293
Net income (loss) $ ( 4,320 ) $ 20,080 $ ( 43,708 ) $ ( 49,829 )
Earnings (loss) per common share
Basic $ ( 0.19 ) $ 1.57 $ ( 1.99 ) $ ( 3.91 )
Diluted $ ( 0.19 ) $ 1.57 $ ( 1.99 ) $ ( 3.91 )
Weighted average common shares outstanding
Basic 22,170 12,801 21,980 12,753
Diluted 22,170 12,822 21,980 12,753
See accompanying notes to these consolidated financial statements.
2
Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Thirteen Weeks Ended Thirty-nine Weeks Ended
November 1,
2025 November 2,
2024 November 1,
2025 November 2,
2024
(in thousands)
Net income (loss) $ ( 4,320 ) $ 20,080 $ ( 43,708 ) $ ( 49,829 )
Other comprehensive income (loss):
Foreign currency translation adjustment 310 ( 282 ) 2,382 ( 1,021 )
Total comprehensive income (loss) $ ( 4,010 ) $ 19,798 $ ( 41,326 ) $ ( 50,850 )
See accompanying notes to these consolidated financial statements.
3
Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Unaudited)
Thirteen Weeks Ended November 1, 2025
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, August 2, 2025 22,171 $ 2,217 $ 242,407 $ 90 $ ( 232,072 ) $ ( 17,419 ) ( 3 ) $ ( 90 ) $ ( 4,867 )
Stock-based compensation expense — — 266 — — — — — 266
Other comprehensive income — — — — — 310 — — 310
Net loss — — — — ( 4,320 ) — — — ( 4,320 )
Balance, November 1, 2025 22,171 $ 2,217 $ 242,673 $ 90 $ ( 236,392 ) $ ( 17,109 ) ( 3 ) $ ( 90 ) $ ( 8,611 )
Thirty-nine Weeks Ended November 1, 2025
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 1, 2025 12,785 $ 1,279 $ 151,485 $ 90 $ ( 192,684 ) $ ( 19,491 ) ( 3 ) $ ( 90 ) $ ( 59,411 )
Vesting of stock awards 226 22 ( 22 ) — — — — — —
Stock-based compensation expense — — 2,943 — — — — — 2,943
Purchase and retirement of common stock ( 71 ) ( 7 ) ( 415 ) — — — — — ( 422 )
Rights offering stock issuance 9,231 923 89,077 — — — — — 90,000
Stock issuance costs — — ( 395 ) — — — — — ( 395 )
Other comprehensive income — — — — — 2,382 — — 2,382
Net loss — — — — ( 43,708 ) — — — ( 43,708 )
Balance, November 1, 2025 22,171 $ 2,217 $ 242,673 $ 90 $ ( 236,392 ) $ ( 17,109 ) ( 3 ) $ ( 90 ) $ ( 8,611 )
See accompanying notes to these consolidated financial statements.
4
Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(Unaudited)
Thirteen Weeks Ended November 2, 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, August 3, 2024 12,779 $ 1,278 $ 151,859 $ 2,975 $ ( 204,774 ) $ ( 17,235 ) ( 61 ) $ ( 2,975 ) $ ( 68,872 )
Vesting of stock awards — — — — — — — — —
Stock-based compensation expense — — 21 — — — — — 21
Stock issuance costs — — ( 521 ) — — — — — ( 521 )
Other comprehensive loss — — — — — ( 282 ) — — ( 282 )
Deferral of common stock into deferred compensation plan — — — ( 2,865 ) — — 58 2,865 —
Net income — — — — 20,080 — — — 20,080
Balance, November 2, 2024 12,779 $ 1,278 $ 151,359 $ 110 $ ( 184,694 ) $ ( 17,517 ) ( 3 ) $ ( 110 ) $ ( 49,574 )
Thirty-nine Weeks Ended November 2, 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 — — 11,382 — — — — — 11,382
Purchase and retirement of common stock ( 71 ) ( 7 ) ( 559 ) — — — — — ( 566 )
Stock issuance costs — — ( 521 ) — — — — — ( 521 )
Other comprehensive loss — — — — — ( 1,021 ) — — ( 1,021 )
Distribution of common stock from deferred compensation plan, net of deferrals — — — ( 2,799 ) — — 53 2,799 —
Net loss — — — — ( 49,829 ) — — — ( 49,829 )
Balance, November 2, 2024 12,779 $ 1,278 $ 151,359 $ 110 $ ( 184,694 ) $ ( 17,517 ) ( 3 ) $ ( 110 ) $ ( 49,574 )
See accompanying notes to these consolidated financial statements.
5
Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Thirty-nine Weeks Ended
November 1,
2025 November 2,
2024
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ ( 43,708 ) $ ( 49,829 )
Reconciliation of net loss to net cash used in operating activities:
Non-cash portion of operating lease expense 53,882 58,738
Depreciation and amortization 23,134 30,406
Non-cash stock-based compensation expense 2,943 11,382
Asset impairment charges — 28,000
Other non-cash charges, net 3,353 1,922
Loss on extinguishment of debt 1,039 —
Changes in operating assets and liabilities:
Inventories 10,029 ( 130,436 )
Accounts receivable and other assets ( 2,137 ) ( 29,856 )
Prepaid expenses and other current assets ( 14,633 ) ( 14,086 )
Income taxes payable, net of prepayments ( 12,991 ) 2,841
Accounts payable and other current liabilities ( 32,775 ) ( 90,857 )
Lease liabilities ( 53,671 ) ( 56,513 )
Other long-term liabilities ( 1,659 ) ( 628 )
Net cash used in operating activities ( 67,194 ) ( 238,916 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ( 14,489 ) ( 15,924 )
Net cash used in investing activities ( 14,489 ) ( 15,924 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facility 554,055 1,032,881
Repayments under revolving credit facility ( 502,500 ) ( 897,221 )
Proceeds from rights offering
90,000 —
Purchase and retirement of common stock, including shares surrendered for tax withholdings and transaction costs ( 422 ) ( 566 )
Proceeds from issuance of related party term loans — 168,600
Repayment of related party term loan ( 60,187 ) —
Repayment of term loan — ( 50,000 )
Payment of debt issuance costs — ( 5,133 )
Payment of stock issuance costs ( 395 ) ( 521 )
Net cash provided by financing activities 80,551 248,040
Effect of exchange rate changes on cash and cash equivalents 3,038 ( 1,090 )
Net increase (decrease) in cash and cash equivalents 1,906 ( 7,890 )
Cash and cash equivalents, beginning of period 5,347 13,639
Cash and cash equivalents, end of period $ 7,253 $ 5,749
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Net cash paid (received) for income taxes $ 15,719 $ ( 688 )
Cash paid for interest 22,473 20,428
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Purchases of property and equipment not yet paid 6,599 2,176
See accompanying notes to these consolidated financial statements.
6
Table of Contents
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
Description of Business
The Children’s Place, Inc. and its subsidiaries (collectively, the “Company”) is one of the only pure-play children’s specialty retailer in North America with an omni-channel portfolio of brands and an industry-leading digital-first model. The Company designs, contracts to manufacture, and sells fashionable, high-quality apparel, accessories and footwear predominantly at value prices, primarily under the Company’s proprietary brands “The Children’s Place”, “Gymboree”, “Sugar & Jade”, and “PJ Place”. Its global retail and wholesale network includes two digital storefronts, 499 stores in North America, wholesale marketplaces, 227 international points of distribution in 12 countries through nine international franchise and wholesale partners and social media channels on Instagram, Facebook, X, formerly known as Twitter, YouTube and Pinterest. The Company’s digital storefronts are at www.childrensplace.com and www.gymboree.com , where its customers are able to shop online for the same merchandise available in its physical stores, as well as certain exclusive merchandise offered only on its e-commerce sites.
The Company classifies its business into two segments: The Children’s Place U.S. and The Children’s Place International. Included in The Children’s Place U.S. segment are the Company’s U.S. and Puerto Rico-based stores and net sales from its U.S.-based wholesale business. Included in The Children’s Place International segment are its Canadian-based stores and net sales from international franchisees. Each segment includes an e-commerce business located at www.childrensplace.com and www.gymboree.com .
Terms that are commonly used in the notes to the Company’s consolidated financial statements are defined as follows:
• Third Quarter 2025 — The thirteen weeks ended November 1, 2025
• Third Quarter 2024 — The thirteen weeks ended November 2, 2024
• Year-To-Date 2025 — The thirty-nine weeks ended November 1, 2025
• Year-To-Date 2024 — The thirty-nine weeks ended November 2, 2024
• Fiscal 2025 — The fifty-two weeks ending January 31, 2026
• Fiscal 2024 — The fifty-two weeks ended February 1, 2025
• SEC — U.S. Securities and Exchange Commission
• U.S. GAAP — Generally Accepted Accounting Principles in the United States
• FASB — Financial Accounting Standards Board
• FASB ASC — FASB Accounting Standards Codification, which serves as the source for authoritative U.S. GAAP, except that rules and interpretive releases by the SEC are also sources of authoritative U.S. GAAP for SEC registrants
Basis of Presentation
The unaudited consolidated financial statements and accompanying notes to the consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and the rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. As of November 1, 2025, February 1, 2025 and November 2, 2024, the Company did not have any investments in unconsolidated affiliates. FASB ASC 810 — Consolidation is considered when determining whether an entity is subject to consolidation.
7
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
In the opinion of management, the accompanying unaudited consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the consolidated balance sheets of the Company as of November 1, 2025 and November 2, 2024, the results of its consolidated operations, consolidated comprehensive income (loss), and consolidated changes in stockholders’ deficit for the thirteen and thirty-nine weeks ended November 1, 2025 and November 2, 2024, and consolidated cash flows for the thirty-nine weeks ended November 1, 2025 and November 2, 2024. The consolidated balance sheet as of February 1, 2025 was derived from audited financial statements. Due to the seasonal nature of the Company’s business, the results of operations for the thirteen and thirty-nine weeks ended November 1, 2025 and November 2, 2024 are not necessarily indicative of operating results for a full fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2025.
Fiscal Year
The Company’s fiscal year is a fifty-two week or fifty-three week period ending on the Saturday on or nearest to January 31.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and amounts of revenues and expenses reported during the period. Actual results could differ from the assumptions used and estimates made by management, which could have a material impact on the Company’s financial position or results of operations. Critical accounting estimates inherent in the preparation of the consolidated financial statements include impairment of long-lived assets, impairment of indefinite-lived intangible assets, income taxes, stock-based compensation, and inventory valuation.
Recent Accounting Standards Updates
Accounting Pronouncement Recently Adopted
In November 2023, the FASB issued Accounting Standards Update No. 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures,” (“ASU 2023-07”). The amendments in ASU 2023-07 are designed to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses during interim and annual periods. The Company adopted ASU 2023-07 on a retrospective basis and is effective for the Company’s Annual Report on Form 10-K for Fiscal 2024, and subsequent interim periods. The adoption of ASU 2023-07 expanded our disclosures but did not have a material impact on our consolidated financial statements.
Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued Accounting Standards Update No. 2023-09 “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” (“ASU 2023-09”). The amendments in ASU 2023-09 are designed to enhance the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The adoption of ASU 2023-09 will expand the Company’s disclosures, but is not expected to have a material impact on its consolidated financial statements.
In November 2024, the FASB issued Accounting Standards Update No. 2024-03 “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40),” (“ASU 2024-03”). The amendments in ASU 2024-03 are designed to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods with fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements.
8
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
In September 2025, the FASB issued Accounting Standards Update No. 2025-06, “Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40),” (“ASU 2025-06”). The amendments in ASU 2025-06 remove all references to prescriptive and sequential software development stages, and require entities to start capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the function intended. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, and may be adopted on a prospective, modified, or retrospective transition approach. Early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements.
2. REVENUES
The following table presents the Company’s net sales disaggregated by geography:
Thirteen Weeks Ended Thirty-nine Weeks Ended
November 1,
2025 November 2,
2024 November 1,
2025 November 2,
2024
(in thousands)
South $ 116,046 $ 127,050 $ 318,085 $ 355,945
Northeast 76,112 78,891 169,121 183,571
West 40,632 42,310 103,327 115,063
Midwest 38,912 42,510 90,738 103,001
International and other (1)
67,764 99,412 198,326 220,126
Total net sales $ 339,466 $ 390,173 $ 879,597 $ 977,706
____________________________________________
(1) Includes retail and e-commerce sales in Canada and Puerto Rico, wholesale and franchisee sales, and certain amounts earned under the Company’s private label credit card program.
Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
The Company recognizes revenue, including shipping and handling fees billed to customers, as applicable, upon purchase at the Company’s retail stores or when received by the customer if the product was purchased via e-commerce, net of coupon redemptions and anticipated sales returns. The Company deferred sales of $ 11.0 million, $ 3.2 million, and $ 9.3 million within Accrued expenses and other current liabilities as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively, based upon estimated time of delivery, at which point control passes to the customer. Sales tax collected from customers is excluded from revenue.
For its wholesale business, the Company recognizes revenue, when title of the goods passes to the customer, net of commissions, discounts, operational chargebacks, and cooperative advertising. The allowance for wholesale revenue included within Accounts receivable was $ 7.4 million, $ 8.7 million, and $ 14.1 million as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively.
For the sale of goods to retail customers with a right of return, the Company recognizes revenue for the consideration it expects to be entitled to and calculates an allowance for estimated sales returns based upon the Company’s sales return experience. Adjustments to the allowance for estimated sales returns in subsequent periods have not been material based on historical data, thereby reducing the uncertainty inherent in such estimates. The allowance for estimated sales returns, which is recorded in Accrued expenses and other current liabilities, was $ 1.7 million, $ 1.0 million, and $ 1.9 million as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively.
9
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The Company’s private label credit card is issued to customers for use exclusively at The Children’s Place and Gymboree stores in the U.S. and online at www.childrensplace.com and www.gymboree.com, and credit is extended to such customers by a third-party financial institution on a non-recourse basis to the Company. The private label credit card includes multiple performance obligations for the Company, including marketing and promoting the program on behalf of the bank and the operation of the loyalty rewards program. Included in the agreement with the third-party financial institution was an upfront bonus paid to the Company and an additional bonus to extend the term of the agreement. These bonuses are recognized as revenue and allocated between brand and reward obligations. As the license of the Company’s brand is the predominant item in the performance obligation, the amount allocated to the brand obligation is recognized on a straight-line basis over the term of the agreement. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur.
In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration, such as additional bonuses, including profit-sharing, over the life of the private label credit card program. Similar to the upfront bonus, the usage-based royalties and bonuses are recognized as revenue and allocated between the brand and reward obligations. The amount allocated to the brand obligation is recognized on a straight-line basis over the remaining term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In addition, the annual profit-sharing amount is recognized quarterly within an annual period when it can be estimated reliably. The additional bonuses are amortized over the contract term based on anticipated progress against future targets and level of risk associated with achieving the targets.
The Company has a points-based customer loyalty program in which customers earn points based on purchases and other promotional activities. These points can be redeemed for coupons to discount future purchases. The redemption cycle for coupons is 45 days. On September 23, 2025, the Company launched a new loyalty program in which customers can now redeem their coupons over a 12 month period. A contract liability is estimated based on the standalone selling price of benefits earned by customers through the program and the related redemption experience under the program. The value of each point earned is recorded as deferred revenue and is included within Accrued expenses and other current liabilities. The total contract liabilities related to this program were $ 8.1 million, $ 3.7 million, and $ 3.8 million as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively. During Year-To-Date 2025 and Year-To-Date 2024, the Company recognized Net sales of $ 3.7 million and $ 1.7 million related to the points-based customer loyalty program balance that existed at February 1, 2025 and February 3, 2024, respectively.
The Company’s policy with respect to gift cards is to record revenue as and when the gift cards are redeemed for merchandise. The Company recognizes gift card breakage income in proportion to the pattern of rights exercised by the customer when the Company expects to be entitled to breakage and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property. Gift card breakage is recorded within Net sales. Prior to their redemption, gift cards are recorded as a liability within Accrued expenses and other current liabilities. The liability is estimated based on expected breakage that considers historical patterns of redemption. The gift card liability balance as of November 1, 2025, February 1, 2025, and November 2, 2024 was $ 2.7 million, $ 4.8 million, and $ 4.5 million, respectively. During the Third Quarter 2025 and the Third Quarter 2024, the Company recognized Net sales of $ 1.7 million and $ 1.9 million related to the gift card liability balance that existed at February 1, 2025 and February 3, 2024, respectively. During Year-To-Date 2025 and Year-To-Date 2024, the Company recognized Net sales of $ 4.1 million and $ 4.7 million related to the gift card liability balance that existed at February 1, 2025 and February 3, 2024, respectively.
The Company has an international program of territorial agreements with franchisees. The Company generates revenues from the franchisees from the sale of product and, in certain cases, sales royalties. The Company recognizes revenue on the sale of product to franchisees when the franchisee takes ownership of the product. The Company records net sales for royalties when the applicable franchisee sells the product to its customers. Under certain agreements, the Company receives a fee from each franchisee for exclusive territorial rights and based on the opening of new stores. The Company records these territorial fees as deferred revenue and amortizes the fee into Net sales over the life of the territorial agreement.
10
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
3. INTANGIBLE ASSETS
On April 4, 2019, the Company acquired certain intellectual property and related assets of Gymboree Group, Inc. and related entities, which included the worldwide rights to the Gymboree tradename. The Gymboree tradename is recorded in the long-term assets section of the consolidated balance sheets.
The Company’s intangible assets were as follows:
November 1, 2025
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 1, 2025
Useful Life Gross Amount Accumulated Amortization Net Amount
(in thousands)
Gymboree tradename
Indefinite $ 13,000 $ — $ 13,000
Crazy 8 tradename
5 years 4,000 ( 4,000 ) —
Total intangible assets $ 17,000 $ ( 4,000 ) $ 13,000
November 2, 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
The Company did not identify any indicators of impairment in the Third Quarter 2025 and Year-To-Date 2025. The Company recorded an impairment charge on the Gymboree tradename of $ 28.0 million during the Company’s second fiscal quarter of 2024, which reduced the carrying value to its fair value of $ 13.0 million.
4. PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following:
November 1,
2025 February 1,
2025 November 2,
2024
(in thousands)
Land and land improvements $ 3,403 $ 3,403 $ 3,403
Building and improvements 36,209 36,527 36,418
Material handling equipment 84,761 88,092 89,427
Leasehold improvements 166,636 159,992 164,335
Store fixtures and equipment 151,498 151,810 168,414
Capitalized software 232,069 228,227 336,320
Construction in progress 8,155 1,647 3,956
682,731 669,698 802,273
Less: accumulated depreciation and amortization ( 590,501 ) ( 572,211 ) ( 696,787 )
Property and equipment, net $ 92,230 $ 97,487 $ 105,486
11
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The Company reviewed its store related long-lived assets for indicators of impairment, and performed a recoverability test if indicators were identified. Based on the results of the analyses performed, the Company did not record asset impairment charges in the Third Quarter 2025 and Year-To-Date 2025, and in the Third Quarter 2024 and Year-To-Date 2024.
5. LEASES
The Company has operating leases for retail stores, corporate offices, distribution facilities, and certain equipment. The Company’s leases have remaining lease terms ranging from less than one year up to twelve years , some of which include options to extend the leases for up to five years , and some of which include options to terminate the lease early. The Company records all occupancy costs in Cost of sales, except costs for administrative office buildings, which are recorded in Selling, general, and administrative expenses. As of the periods presented, the Company’s finance leases were not material to the Consolidated Balance Sheets, Consolidated Statements of Operations, or Consolidated Statements of Cash Flows.
The following components of operating lease expense were recognized in the Company’s Consolidated Statements of Operations:
Thirteen Weeks Ended Thirty-nine Weeks Ended
November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024
(in thousands)
Fixed operating lease cost $ 21,774 $ 22,684 $ 64,316 $ 68,326
Variable operating lease cost
5,099 5,281 15,180 19,224
Total operating lease cost $ 26,873 $ 27,965 $ 79,496 $ 87,550
The following table provides the weighted-average remaining lease term of the Company’s operating leases, the weighted-average discount rate used to calculate the Company’s operating liabilities, cash paid for amounts included in the measurement of the Company’s operating lease liabilities, and right-of-use (“ROU”) assets obtained in exchange for the Company’s new operating lease liabilities:
Thirty-nine Weeks Ended
November 1, 2025 November 2, 2024
Weighted-average remaining lease term (years) 4.8 4.4
Weighted average discount rate (%) 8.7 % 8.0 %
Cash paid for amounts included in the measurement of operating lease liabilities ($, in millions) 54.1 59.8
ROU assets obtained in exchange for new operating lease liabilities ($, in millions) 54.4 51.1
The maturities of operating lease liabilities were as follows:
November 1, 2025
(in thousands)
Remainder of 2025
$ 22,134
2026 61,485
2027 36,704
2028 26,798
2029 20,353
Thereafter 49,982
Total operating lease payments
217,456
Less: imputed interest ( 44,349 )
Present value of operating lease liabilities $ 173,107
12
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. DEBT
ABL Credit Facility
The Company and certain subsidiaries maintain the $ 433.0 million asset-based revolving credit facility (the “ABL Credit Facility”) under its Amended and Restated Credit Agreement dated May 9, 2019 (as amended from time to time, the “Credit Agreement”), with Wells Fargo Bank, National Association (“Wells Fargo”), Bank of America, N.A., JPMorgan Chase Bank, N.A., Truist Bank, HSBC Bank (USA), N.A., and PNC Bank, National Association, as the lenders party thereto and Wells Fargo, as Administrative Agent, Collateral Agent, and Swing Line Lender. The ABL Credit Facility will mature in November 2026.
As of April 18, 2024, which is the effective date of the seventh amendment to the Credit Agreement (the “Seventh Amendment”), the ABL Credit Facility includes a $ 25.0 million Canadian sublimit and a $ 25.0 million sublimit for standby and documentary letters of credit.
From and after February 4, 2025 and on the first day of each fiscal quarter thereafter, based on the amount of the Company’s average daily excess availability under the facility, borrowings outstanding under the ABL Credit Facility bear interest, at the Company’s option, at:
(i) the prime rate per annum, plus a margin of 1.750 % or 2.000 %; or
(ii) the Secured Overnight Financing Rate (“SOFR”) per annum, plus 0.100 %, plus a margin of 2.750 % or 3.000 %.
As of April 18, 2024, based on the size of the unused portion of the commitments, the Company is charged a fee ranging from 0.250 % to 0.375 %.
As of February 4, 2025, letter of credit fees range from 1.000 % to 1.125 % for commercial letters of credit and range from 1.500 % to 1.750 % for standby letters of credit. These fees are determined based on the amount of the Company’s average daily excess availability under the facility. The amount available for loans and letters of credit under the ABL Credit Facility is determined by a borrowing base consisting of certain credit card receivables, certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves and an availability block.
For the Third Quarter 2025 and Year-To-Date 2025, the Company recognized $ 5.5 million and $ 15.7 million, respectively, in interest expense related to the ABL Credit Facility. For the Third Quarter 2024 and Year-To-Date 2024, the Company recognized $ 7.1 million and $ 19.1 million, respectively, in interest expense related to the ABL Credit Facility.
As of April 18, 2024, credit extended under the ABL Credit Facility was secured by a first priority security interest in substantially all of the Company’s U.S. and Canadian assets, including the Company’s intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock.
The outstanding obligations under the ABL Credit Facility may be accelerated upon the occurrence of certain customary events of default, as described below. The Company is not subject to any early termination fees.
The ABL Credit Facility contains covenants, which include conditions on stock buybacks and the payment of cash dividends or similar payments. These covenants also limit the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, or dispositions or to change the nature of its business. Pursuant to the Seventh Amendment, the requisite payment condition thresholds for some of these covenants have been heightened, resulting in certain actions such as the repurchase of shares and payment of cash dividends becoming more difficult to perform. Additionally, if the Company is unable to maintain a certain amount of excess availability for borrowings (the “excess availability threshold”), the Company may be subject to cash dominion.
The ABL Credit Facility contains customary events of default, which include (subject in certain cases to customary grace and cure periods) nonpayment of principal or interest, breach of covenants, failure to pay certain other indebtedness, and certain events of bankruptcy, insolvency or reorganization, such as a change of control.
As of November 1, 2025, February 1, 2025, and November 2, 2024, unamortized deferred financing costs amounted to $ 2.2 million, $ 3.8 million, and $ 4.3 million, related to the Company’s ABL Credit Facility.
13
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The tables below present the components of the Company’s ABL Credit Facility:
November 1,
2025 February 1,
2025 November 2,
2024
(in millions)
Total borrowing base availability
$ 361.5 $ 301.9 $ 422.9
Credit facility availability (1)
433.0 433.0 433.0
Maximum borrowing availability (2)
361.5 301.9 422.9
Outstanding borrowings 297.2 245.7 362.4
Letters of credit outstanding—standby 18.2 16.0 12.2
Utilization of credit facility at end of period 315.4 261.7 374.6
Availability (3)
$ 46.1 $ 40.2 $ 48.3
Interest rate at end of period 7.3 % 7.6 % 8.1 %
Average end-of-day loan balance during the period $ 269.1 $ 284.5 $ 280.9
Highest end-of-day loan balance during the period $ 302.7 $ 366.9 $ 366.9
Average interest rate 7.7 % 8.7 % 9.0 %
____________________________________________
(1) Pursuant to the Company’s recent refinancing transactions, as of December 16, 2025, the credit facility availability will be subject to a new excess availability requirement.
(2) The lower of the credit facility availability and the total borrowing base availability. Pursuant to the Company’s recent refinancing transactions, as of December 16, 2025, the maximum borrowing availability of the Company is the lower of the credit facility availability, net of the new excess availability requirement, and the total borrowing base availability.
(3) The sublimit availability for letters of credit was $ 6.8 million as of November 1, 2025, $ 9.0 million at February 1, 2025, and $ 12.8 million as of November 2, 2024.
On December 16, 2025, the Company completed the refinancing of its ABL Credit Facility with Wells Fargo by entering into an eighth amendment to its Credit Agreement (the “Eighth Amendment”). Among other things, the Eighth Amendment (i) reduced the ABL Credit Facility to $ 350.0 million and Wells Fargo became the sole lender party thereto, (ii) increased the sublimit for standby and documentary letters of credit to $ 30.0 million, (iii) lowered the interest rates, (iv) reconfigured the collateral package for the ABL Credit Facility, and (v) implemented a new minimum excess availability covenant that limits the maximum amount of borrowings that the Company may make under the ABL Credit Facility. At the same time, the Company and certain of its subsidiaries entered into a term loan agreement (the “SLR Loan Agreement”) with SLR Credit Solutions (“SLR”) for $ 100.0 million (the “SLR Term Loan”) and used the net proceeds to partially pay down its borrowings under the ABL Credit Facility. Refer to “Note 14. Subsequent Events” for further information.
Mithaq Term Loans
Mithaq Capital SPC, a Cayman segregated portfolio company (“Mithaq”), is a controlling stockholder of the Company. The Company and certain subsidiaries maintain an interest-free, unsecured and subordinated promissory note with Mithaq for a $ 78.6 million term loan (the “Initial Mithaq Term Loan”), dated February 29, 2024, by and among the Company, certain of its subsidiaries, and Mithaq. During the first quarter of Fiscal 2025, $ 60.2 million under the Initial Mithaq Term Loan was repaid pursuant to the completion of the Company’s rights offering on February 6, 2025 (“Rights Offering”), leaving $ 18.4 million outstanding under the Initial Mithaq Term Loan as of November 1, 2025. For more information about the Rights Offering, refer to “Note 8. Stockholders’ Deficit” below.
The Initial Mithaq Term Loan matures on February 15, 2027 and is guaranteed by each of the Company’s subsidiaries that guarantee the Company’s ABL Credit Facility.
14
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The Company and certain subsidiaries also maintain an unsecured and subordinated promissory note with Mithaq for a $ 90.0 million term loan (the “New Mithaq Term Loan”; and together with the Initial Mithaq Term Loan, collectively, the “Mithaq Term Loans”), dated April 16, 2024, by and among the Company, certain of its subsidiaries, and Mithaq.
The New Mithaq Term Loan matures on April 16, 2027, and requires monthly payments equivalent to interest charged at the SOFR plus 4.000 % per annum, with the first year’s monthly payments to Mithaq deferred until April 30, 2025. On April 28, 2025, the Company and Mithaq entered into Amendment No. 1 to the New Mithaq Term Loan promissory note, which subjected these deferred monthly payments due as of April 30, 2025 to a payment plan, payable in installments prior to the end of Fiscal 2025. The amendment was evaluated under FASB ASC 470 — Debt , and accounted for as a debt modification. The New Mithaq Term Loan is guaranteed by each of the Company’s subsidiaries that guarantee the Company’s ABL Credit Facility. For the Third Quarter 2025 and Year-To-Date 2025, the Company recognized $ 1.9 million and $ 5.6 million, respectively, in interest-equivalent expense related to the New Mithaq Term Loan. For the Third Quarter 2024 and Year-To-Date 2024, the Company recognized $ 2.1 million and $ 4.6 million, respectively, in interest-equivalent expense related to the New Mithaq Term Loan.
Pursuant to the Company’s recent refinancing transactions, the Mithaq Term Loans were amended to extend both of their maturity dates to April 16, 2031. The New Mithaq Term Loan was also amended to allow the Company to defer its monthly payments upon written notice to Mithaq, and as an amendment consent fee, its principal amount was increased by $ 2.7 million to $ 92.7 million.
During the Third Quarter 2025 and Year-To-Date 2025, the Company paid $ 3.3 million and $ 6.6 million, respectively, in interest-equivalent charges to Mithaq. These payments were made in the form of Murabaha transactions to be compliant with Shariah law. The purchase and sale of commodities as a result of these transactions have been accounted for in accordance with FASB ASC 610 — Other income , and presented on a net basis within Related party interest expense. As of November 1, 2025, February 1, 2025, and November 2, 2024, interest-equivalent expense payable to Mithaq was $ 5.5 million, $ 6.5 million, and $ 4.6 million, respectively, which is recorded within Accrued expenses and other current liabilities.
The Mithaq Term Loans are subject to an amended and restated subordination agreement (as amended from time to time, the “Mithaq Subordination Agreement”), dated as of April 16, 2024, by and among the Company and certain subsidiaries, Wells Fargo and Mithaq, pursuant to which the Mithaq Term Loans are subordinated in payment priority to the obligations of the Company and its subsidiaries under the Credit Agreement. Pursuant to the Company’s recent refinancing transactions, the Mithaq Term Loans are also subordinated in payment priority to the obligations of the Company and its subsidiaries under the SLR Term Loan. Subject to such subordination terms, the Mithaq Term Loans are prepayable at any time and from time to time without penalty and do not require any mandatory prepayments.
The Mithaq Term Loans contain customary affirmative and negative covenants substantially similar to a subset of the covenants set forth in the Credit Agreement, including limits on the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, dispositions or restricted payments, or to change the nature of its business. The Mithaq Term Loans, however, do not provide for any closing, prepayment or exit fees, or other fees typical for transactions of this nature, do not impose additional reserves on borrowings under the Credit Agreement, and do not contain certain other restrictive covenants.
The Mithaq Term Loans contain certain customary events of default, which include (subject in certain cases to customary grace periods), nonpayment of principal, breach of other covenants of the Mithaq Term Loans, inaccuracy in representations or warranties, acceleration of certain other indebtedness (including under the Credit Agreement), certain events of bankruptcy, insolvency or reorganization, such as a change of control, and invalidity of any part of the Mithaq Term Loans.
As of November 1, 2025, February 1, 2025, and November 2, 2024, unamortized deferred financing costs amounted to $ 1.0 million, $ 2.6 million, and $ 2.9 million, respectively, related to the Mithaq Term Loans.
15
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Maturities of the Company’s principal debt payments on the Mithaq Term Loans as of November 1, 2025 are as follows:
November 1, 2025
(in thousands)
Remainder of 2025 $ —
2026 —
2027 108,400
Thereafter (1)
—
Total related party debt
$ 108,400
____________________________________________
(1) Pursuant to the Company’s recent refinancing transactions, the Mithaq Term Loans were amended to extend both of their maturity dates to April 16, 2031.
Mithaq Commitment Letter
On May 2, 2024, the Company entered into a commitment letter (the “Commitment Letter”) with Mithaq for a senior unsecured $ 40.0 million credit facility (the “Mithaq Credit Facility”). Under the Mithaq Credit Facility, the Company had the ability to request for advances at any time prior to July 1, 2025. On September 10, 2024, the Company and Mithaq entered into an Amendment No. 1 to the Commitment Letter, that extended the deadline for requesting advances until July 1, 2026. On September 4, 2025, the Company and Mithaq entered into an Amendment No. 2 to the Commitment Letter, that further extended the deadline for requesting advances until July 1, 2027.
If any debt is incurred under the Mithaq Credit Facility, it shall require monthly payments equivalent to interest charged at the SOFR plus 5.000 % per annum. Such debt shall be unsecured and shall be guaranteed by each of the Company’s subsidiaries that guarantee the Company’s ABL Credit Facility. Similar to the Mithaq Term Loans, such debt shall also be subject to the Mithaq Subordination Agreement, contain customary affirmative and negative covenants substantially similar to a subset of the covenants set forth in the Credit Agreement, and contain certain customary events of default. Additionally, such debt shall require no mandatory prepayments and shall mature no earlier than July 1, 2027. As of November 1, 2025, no debt had been incurred under the Mithaq Credit Facility.
Pursuant to the Company’s recent refinancing transactions, the Mithaq Credit Facility was further amended to extend the deadline for requesting advances until December 16, 2030, and the rate for any monthly payments for borrowings equivalent to interest charged was increased to the SOFR plus 9.000 % per annum.
7. COMMITMENTS AND CONTINGENCIES
The Company is a defendant in Gabriela Gonzalez v. The Children’s Place, Inc. , a purported class action, pending in the U.S. District Court, Central District of California. The plaintiff alleged that the Company had falsely advertised discounts that do not exist, in violation of California’s Unfair Competition Laws, False Advertising Law and the California Consumer Legal Remedies Act. The Company filed a motion to compel arbitration, which the plaintiff did not oppose, and the court granted the motion on August 17, 2022—staying the case pending the outcome of the arbitration. The demand for arbitration was filed on October 4, 2022, in connection with the individual claim of the plaintiff. A mass arbitration firm associated with plaintiff’s counsel then conducted an advertising campaign for claimants to conduct a mass arbitration. In part, to avoid the mass arbitration, the parties stipulated to return the original plaintiff’s claim to court to proceed as a class action. Accordingly, the arbitration would not be proceeding and the Company’s response to the original plaintiff’s complaint in court was filed on July 20, 2023. On August 16, 2023, however, the Company began to receive notices regarding an initial tranche of approximately 1,300 individual demands that were filed with Judicial Arbitration and Mediation Services, Inc. (“JAMS”) as part of a related mass arbitration claim. The parties participated in mediation proceedings on November 15, 2023 and February 9, 2024. The parties agreed to further discuss settlement options in May 2024, which occurred without resolution. In late May 2024, due to the judge’s retirement, the Gonzalez action was transferred and reassigned to a different judge. Deadlines were therefore reset, including the Company’s motion to dismiss. On June 10, 2024, JAMS advised that it would be pausing its administration of the claims until the parties resolve their dispute over which set of arbitration terms apply to the case. The Company’s motion to dismiss was denied in November 2024. The Company subsequently filed a Motion for Reconsideration in December 2024, which was denied by the court in October 2025. Class certification discovery is ongoing, with class certification proceedings expected to take place in fiscal 2026. Any liability arising out of these proceedings is not expected to have a material adverse effect on the Company's financial position, results of operations, or cash flows.
16
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The Company is also involved in various legal proceedings arising in the normal course of business. In the opinion of management, any ultimate liability arising out of these proceedings is not expected to have a material adverse effect on the Company’s financial position, results of operations, or cash flows.
8. STOCKHOLDERS’ DEFICIT
Rights Offering
On February 6, 2025, the Company completed a Rights Offering pursuant to which the Company distributed to the holders of record of the Company’s Common stock as of the close of business on December 13, 2024, the record date for the Rights Offering, non-transferable subscription rights to purchase, in the aggregate, up to 9.2 million shares of Common stock. Each subscription right entitled its holder to purchase 0.7220 shares of Common stock at a subscription price of $ 9.75 per whole share of Common stock. Additionally, rights holders who fully exercised their basic subscription rights were entitled to subscribe for additional shares of Common stock that remained unsubscribed as a result of any unexercised basic subscription rights. The subscription price was payable by rights holders (i) in cash, (ii) by delivery in lieu of cash of an equivalent amount of any indebtedness for borrowed money (principal and/or accrued and unpaid interest) owed by the Company to such rights holder, or (iii) by delivery of a combination of cash and such indebtedness. Upon the completion of the Rights Offering, the Company issued 9.2 million shares of Common stock for a total purchase price of $ 90.0 million.
Mithaq purchased 6.7 million shares of Common stock pursuant to the Rights Offering and currently owns and controls the voting power of 62 % of the Company’s outstanding shares of Common stock. It paid (i) $ 5.1 million of the subscription price for such shares in cash and (ii) the remaining $ 60.2 million of the subscription price for such shares by delivery of indebtedness for borrowed money owed by the Company to Mithaq pursuant to the Initial Mithaq Term Loan. The Company received approximately $ 29.8 million in gross cash proceeds from the Rights Offering on February 6, 2025. Substantially all of the gross cash proceeds from the Rights Offering were used towards prepaying the Company’s ABL Credit Facility.
Share Repurchase Program
In November 2021, the Company’s Board of Directors authorized a $ 250.0 million share repurchase program (the “Share Repurchase Program”). Under this program, the Company may repurchase shares on the open market at current market prices at the time of purchase or in privately negotiated transactions. The timing and actual number of shares repurchased under the program will depend on a variety of factors, including price, corporate and regulatory requirements, and other market and business conditions. The Company may suspend or discontinue the program at any time and may thereafter reinstitute purchases, all without prior announcement. Currently, pursuant to the terms of the Company’s Credit Agreement, the repurchase of any shares would require fulfilling the heightened payment conditions under the Credit Agreement, except that repurchases of shares as described below, pursuant to the Company’s practice as a result of its insider trading policy, are expressly permitted. As of November 1, 2025, there was $ 156.1 million remaining availability under the Share Repurchase Program.
Pursuant to the Company’s practice, including due to restrictions imposed by the Company’s insider trading policy during black-out periods, the Company withholds and repurchases shares of vesting stock awards and makes payments to taxing authorities as required by law to satisfy the withholding tax requirements of all equity award recipients. The Company’s payment of the withholding taxes in exchange for the surrendered shares constitutes a repurchase of its common stock. The Company also acquires shares of its common stock in conjunction with liabilities owed under the Company’s deferred compensation plan, which are held in treasury.
The following table summarizes the Company’s share repurchases:
Thirty-nine Weeks Ended
November 1, 2025 November 2, 2024
Shares Amount Shares Amount
(in thousands)
Share repurchases related to:
Share repurchase program
71 $ 422 65 $ 566
Shares acquired and held in treasury — $ — 5 $ 66
17
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
In accordance with the FASB ASC 505 — Equity , the par value of the shares retired is charged against Common stock and the remaining purchase price is allocated between Additional paid-in capital and Accumulated deficit. The portion charged against Additional paid-in capital is determined using a pro-rata allocation based on total shares outstanding.
Dividends
Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the Company’s Board of Directors based on a number of factors, including business and market conditions, the Company’s financial performance, and other investment priorities. Currently, pursuant to the terms of the Company’s Credit Agreement, the Company has no current plans to pay regular cash dividends in Fiscal 2025.
9. STOCK-BASED COMPENSATION
The Company generally grants time-vesting stock awards (“Deferred Awards”) and performance-based stock awards (“Performance Awards”) to employees at senior management levels. The Company also grants Deferred Awards to its non-employee independent directors.
The following table summarizes the Company’s stock-based compensation expense:
Thirteen Weeks Ended Thirty-nine Weeks Ended
November 1,
2025 November 2,
2024 November 1,
2025 November 2,
2024
(in thousands)
Deferred Awards $ 279 $ 282 $ 1,985 $ 2,110
Performance Awards
( 13 ) ( 261 ) 958 9,272
Total stock-based compensation expense (1)
$ 266 $ 21 $ 2,943 $ 11,382
___________________________________________
(1) Stock-based compensation expense recorded within Cost of sales (exclusive of depreciation and amortization) was immaterial in all periods presented. All other stock-based compensation expense is included in Selling, general, and administrative expenses.
During Fiscal 2024, there was a change of control of the Company, which triggered a conversion of all then-outstanding Performance Awards into service-based Performance Awards in accordance with their terms. As a result, the fiscal year 2023, fiscal year 2022, and fiscal year 2021 Performance Awards will all vest or have vested, as applicable, at their target shares on their respective vesting dates without regard to the achievement of any of the performance metrics associated with those awards, provided that the recipient be employed at the Company on each such vesting date. The incremental expense recorded for Performance Awards during Year-To-Date 2024 due to the change of control was $ 9.9 million.
10. EARNINGS (LOSS) PER COMMON SHARE
On February 6, 2025, the Company completed its Rights Offering. As the exercise price of the subscription right was less than the fair value of the Common stock, the subscription right contained a bonus element. In connection with this transaction, and in accordance with FASB ASC 260 — Earnings Per Share , the Company’s weighted average common shares outstanding and basic and diluted loss per share were retroactively adjusted for all prior periods presented by a factor of 1.002 .
18
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The following table reconciles net income (loss) and common share amounts utilized to calculate basic and diluted earnings (loss) per common share:
Thirteen Weeks Ended Thirty-nine Weeks Ended
November 1,
2025 November 2,
2024 November 1,
2025 November 2,
2024
(in thousands)
Net income (loss) $ ( 4,320 ) $ 20,080 $ ( 43,708 ) $ ( 49,829 )
Basic weighted average common shares outstanding 22,170 12,801 21,980 12,753
Dilutive effect of stock awards — 21 — —
Diluted weighted average common shares outstanding 22,170 12,822 21,980 12,753
Anti-dilutive shares excluded from diluted earnings (loss) per common share calculation 202 — 116 44
11. FAIR VALUE MEASUREMENT
The Company’s cash and cash equivalents and investments in the rabbi trust are short-term in nature. As such, their carrying amounts approximate fair value. These assets and liabilities fall within Level 1 of the fair value hierarchy. The Company stock included in the deferred compensation plan is not subject to fair value measurement.
The fair value of the Initial Mithaq Term Loan with a carrying value (gross of debt issuance costs) of $ 18.4 million as of November 1, 2025, was approximately $ 15.6 million. The fair value of the New Mithaq Term Loan with a carrying value (gross of debt issuance costs) of $ 90.0 million as of November 1, 2025, was approximately $ 83.9 million. The fair value of debt was estimated using a market approach, which considers the Company’s credit risk and market related conditions, and is therefore within Level 2 of the fair value hierarchy.
The Company’s non-financial assets measured at fair value on a nonrecurring basis include long-lived assets, such as intangible assets, fixed assets, and ROU assets. The Company reviews the carrying amounts of such assets when events indicate that their carrying amounts may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to fall within Level 3 of the fair value hierarchy.
Impairment of Long-Lived Assets
The fair value of the Company’s long-lived assets is primarily calculated using a discounted cash-flow model directly associated with those assets, which consist principally of property and equipment and ROU assets. These assets are tested for impairment when events indicate that their carrying value may not be recoverable.
The Company performed periodic quantitative impairment assessments of its long-lived assets and did no t record an impairment charge in the Third Quarter 2025 and Year-To-Date 2025, and in the Third Quarter 2024 and Year-To-Date 2024.
Impairment of Indefinite-Lived Intangible Assets
The Company estimates the fair value of its indefinite-lived Gymboree tradename based on an income approach using the relief-from-royalty method. Estimating fair value using this method requires management to estimate future revenues, royalty rates, discount rates, long-term growth rates, and other factors in order to project future cash flows.
The Company performs a periodic impairment assessment of the Gymboree tradename, in accordance with FASB ASC 350 — Intangibles — Goodwill and Other . Based on this assessment, the Company did not identify any indicators of impairment in the Third Quarter 2025 and Year-To-Date 2025. During the Company’s second fiscal quarter of 2024, the Company recorded an impairment charge of $ 28.0 million, primarily due to reductions in Gymboree sales forecasts, which reduced the carrying value of its fair value to $ 13.0 million.
19
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
12. INCOME TAXES
The Company utilizes the asset and liability method of accounting for income taxes as set forth in FASB ASC 740 — Income Taxes . This method requires recognition of deferred tax assets and liabilities, measured by currently enacted rates, attributable to temporary differences between the financial statement and income tax basis of assets and liabilities. The Company’s deferred tax assets and liabilities are comprised largely of differences relating to depreciation and amortization, rent expense, inventory, stock-based compensation, net operating loss carryforwards, tax credits, and various accruals and reserves.
The Company’s benefit for income taxes was $( 0.1 ) million during the Third Quarter 2025, compared to $( 0.9 ) million during the Third Quarter 2024. The Company’s effective tax rate was 3.0 % in the Third Quarter 2025, compared to ( 4.7 )% in the Third Quarter 2024. The change in the effective tax rate is primarily due to shifts in earnings mix and pretax loss during the Third Quarter 2025 compared to pretax income during the Third Quarter 2024. The Company continues to adjust its valuation allowance based upon its ongoing operating results.
The Company’s provision for income taxes was $ 2.7 million during Year-To-Date 2025, compared to $ 2.3 million during Year-To-Date 2024. The Company’s effective tax rate was ( 6.5 )% in Year-To-Date 2025, compared to ( 4.8 )% in Year-To-Date 2024. The change in the effective tax rate is primarily due to the absence of the impairment charge related to the Gymboree tradename and a higher Year-To-Date 2024 pretax loss. The Company continues to adjust its valuation allowance based upon its ongoing operating results.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic. The CARES Act allows net operating losses (“NOLs”) incurred in taxable years 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to offset 100 % of taxable income and to generate a refund of previously paid income taxes. Pursuant to the CARES Act, the Company carried back the taxable year 2020 tax loss of $ 150.0 million to prior years. As of November 1, 2025, the remaining income tax receivable of $ 19.1 million is included within Prepaid expenses and other current assets on the Consolidated Balance Sheets.
The Company accrues interest and penalties related to unrecognized tax benefits as part of its provision for income taxes. The total amount of unrecognized tax benefits was $ 6.8 million, $ 6.5 million, and $ 6.9 million as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively, and is included within long-term liabilities. Additional interest expense recognized in the Third Quarter 2025 and Third Quarter 2024, and during Year-To-Date 2025 and Year-To-Date 2024, related to unrecognized tax benefits was not significant.
The Company is subject to tax in the United States and foreign jurisdictions, including Canada and Hong Kong. The Company files a consolidated U.S. income tax return for federal income tax purposes. The Company is no longer subject to income tax examinations by U.S. federal, state and local or foreign tax authorities for tax years 2015 and prior.
The Internal Revenue Service is currently conducting an examination of the Company’s tax return for fiscal year 2020 in conjunction with its review of the CARES Act NOL carryback to earlier fiscal years. The Company believes that its reserves for uncertain tax positions are adequate to cover existing risks or exposures. Management believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues arise as a result of a tax audit, and are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.
On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the United States. The legislation contains certain provisions related to the full expensing of U.S. research and development costs and other depreciable property. The legislation also includes changes to the determination of the amount of U.S. interest expense that is deductible for U.S. tax purposes. While these changes are generally favorable to the Company’s cash tax position, the legislation does not have a material impact on its estimated annual effective tax rate and financial statements as of the Third Quarter 2025. The Company is evaluating the effects of the legislation that will begin to apply in fiscal year 2026.
20
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
13. SEGMENT INFORMATION
The Company’s reportable segments are based on the financial information the chief operating decision maker (“CODM”) uses to allocate resources and assess performance of its business. The Company’s President and Chief Executive Officer is the CODM. The Company’s CODM evaluates the performance of each segment and measures its segment profitability based on operating income (loss), defined as income (loss) before interest and taxes. Operating income (loss) is used as a key metric during the annual budget process, and on a quarterly basis to monitor actual performance against the annual budget and forecasts.
The Company reports segment data based on geography: The Children’s Place U.S. and The Children’s Place International. Each segment includes an e-commerce business located at www.childrensplace.com and www.gymboree.com . Included in The Children’s Place U.S. segment are the Company’s U.S. and Puerto Rico-based stores and net sales from the Company’s U.S.-based wholesale business. Included in The Children’s Place International segment are the Company’s Canadian-based stores and net sales from international franchisees. Net sales and direct costs are recorded by each segment. Certain inventory procurement functions, such as production and design, as well as corporate overhead, including executive management, finance, real estate, human resources, legal, and information technology services, are managed by The Children’s Place U.S. segment. Expenses related to these functions, including depreciation and amortization, are allocated to The Children’s Place International segment based primarily on net sales. The assets related to these functions are not allocated. The Company periodically reviews these allocations and adjusts them based upon changes in business circumstances.
Major Customers
Net sales to external customers are derived from merchandise sales, and the Company has one U.S. wholesale customer that individually accounted for more than 10% of its net sales during Year-To-Date 2025, with net sales amounting to $ 30.7 million for the Third Quarter 2025 and $ 105.3 million for Year-To-Date 2025, and $ 57.3 million and $ 118.3 million for the Third Quarter 2024 and Year-To-Date 2024, respectively. The customer also accounts for a majority of the Company’s accounts receivable, amounting to $ 26.0 million, $ 31.6 million, and $ 45.1 million as of November 1, 2025, February 1, 2025, and November 2, 2024.
Store Count by Segment
As of November 1, 2025, The Children’s Place U.S. had 442 stores and The Children’s Place International had 57 stores. As of November 2, 2024, The Children’s Place U.S. had 449 stores and The Children’s Place International had 61 stores.
The tables below present certain segment information for our reportable segments for the periods indicated:
Thirteen Weeks Ended November 1, 2025
The Children’s Place U.S. The Children’s Place International (1)
Total
(in thousands)
Net sales $ 307,399 $ 32,067 $ 339,466
Cost of sales (2)
199,128 28,034 227,162
Selling, general, and administrative expenses (3)
99,286 9,349 108,635
Segment operating income (loss) $ 8,985 $ ( 5,316 ) $ 3,669
Segment operating income (loss) as a percentage of net sales 2.9 % ( 16.6 )% 1.1 %
Thirty-nine Weeks Ended November 1, 2025
The Children’s Place U.S. The Children’s Place International (1)
Total
(in thousands)
Net sales $ 802,353 $ 77,244 $ 879,597
Cost of sales (2)
531,728 63,510 595,238
Selling, general, and administrative expenses (3)
275,071 25,630 300,701
Segment operating loss $ ( 4,446 ) $ ( 11,896 ) $ ( 16,342 )
Segment operating loss as a percentage of net sales ( 0.6 )% ( 15.4 )% ( 1.9 )%
21
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Thirteen Weeks Ended November 2, 2024
The Children’s Place U.S. The Children’s Place International (1)
Total
(in thousands)
Net sales $ 356,163 $ 34,010 $ 390,173
Cost of sales (2)
228,680 23,152 251,832
Selling, general, and administrative expenses (3)
99,363 9,720 109,083
Segment operating income $ 28,120 $ 1,138 $ 29,258
Segment operating income as a percentage of net sales 7.9 % 3.3 % 7.5 %
Thirty-nine Weeks Ended November 2, 2024
The Children’s Place U.S. The Children’s Place International (1)
Total
(in thousands)
Net sales $ 894,744 $ 82,962 $ 977,706
Cost of sales (2)
574,757 60,073 634,830
Selling, general, and administrative expenses (3)
307,518 27,864 335,382
Other segment expenses (4)
28,000 — 28,000
Segment operating loss $ ( 15,531 ) $ ( 4,975 ) $ ( 20,506 )
Segment operating income loss as a percentage of net sales ( 1.7 )% ( 6.0 )% ( 2.1 )%
___________________________________________
(1) The Company’s foreign subsidiaries, primarily in Canada, have operating results based in foreign currencies and are thus subject to the fluctuations of the corresponding translation rates into U.S. dollars.
(2) Cost of sales includes the cost of inventory sold, certain buying, design, and distribution expenses, shipping and handling costs on merchandise sold directly to customers, and all occupancy costs, except for administrative office buildings.
(3) Selling, general, and administrative expenses include store expenses, marketing, corporate payroll, including long-term incentive compensation, information technology, other administrative expenses, and depreciation and amortization.
(4) Other segment expenses include asset impairment charges.
The table below presents a reconciliation of reportable segment operating income (loss) to Income (loss) before provision (benefit) for income taxes:
Thirteen Weeks Ended Thirty-nine Weeks Ended
November 1,
2025 November 2,
2024 November 1,
2025 November 2,
2024
(in thousands)
Total segment operating income (loss) $ 3,669 $ 29,258 $ ( 16,342 ) $ ( 20,506 )
Related party interest expense ( 1,869 ) ( 2,078 ) ( 5,609 ) ( 4,554 )
Other interest expense ( 6,259 ) ( 8,014 ) ( 19,126 ) ( 22,515 )
Interest income 7 14 34 39
Income (loss) before provision (benefit) for income taxes $ ( 4,452 ) $ 19,180 $ ( 41,043 ) $ ( 47,536 )
22
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Additional Segment Data
Thirteen Weeks Ended Thirty-nine Weeks Ended
November 1,
2025 November 2,
2024 November 1,
2025 November 2,
2024
(in thousands)
Depreciation and amortization:
The Children’s Place U.S. $ 6,870 $ 8,613 $ 21,551 $ 27,102
The Children’s Place International 464 653 1,583 3,304
Total depreciation and amortization $ 7,334 $ 9,266 $ 23,134 $ 30,406
Capital expenditures:
The Children’s Place U.S. $ 9,461 $ 2,949 $ 13,868 $ 15,347
The Children’s Place International 185 497 621 577
Total capital expenditures $ 9,646 $ 3,446 $ 14,489 $ 15,924
November 1,
2025 February 1,
2025 November 2,
2024
(in thousands)
Total assets:
The Children’s Place U.S. $ 721,886 $ 711,564 $ 845,962
The Children’s Place International 40,623 35,988 42,831
Total assets $ 762,509 $ 747,552 $ 888,793
Long-lived assets:
United States $ 258,858 $ 267,751 $ 276,508
Canada 10,825 9,801 9,157
Asia 2,632 1,996 437
Total long-lived assets (1)
$ 272,315 $ 279,548 $ 286,102
___________________________________________
(1) The Company’s long-lived assets are comprised of net Property and equipment, ROU assets, Tradenames, and Other assets, and are recorded in the long-term assets section of the consolidated balance sheets.
14. SUBSEQUENT EVENTS
On December 16, 2025, the Company completed the refinancing of its ABL Credit Facility with Wells Fargo by entering into an Eighth Amendment to its Credit Agreement. Among other things, the Eighth Amendment (i) reduced the ABL Credit Facility to $ 350.0 million and Wells Fargo became the sole lender party thereto, (ii) increased the sublimit for standby and documentary letters of credit to $ 30.0 million, (iii) lowered the interest rates, (iv) reconfigured the collateral package for the ABL Credit Facility, and (v) implemented a new minimum excess availability covenant that limits the maximum amount of borrowings that the Company may make under the ABL Credit Facility.
Also on December 16, 2025, the Company and certain of its subsidiaries entered into the SLR Loan Agreement with SLR for a $ 100.0 million SLR Term Loan. The SLR Term Loan (i) matures on the earlier of December 16, 2030, or the maturity date under the ABL Credit Facility, (ii) bears interest, payable monthly, (a) until June 16, 2026, at the SOFR per annum plus 5.250 % for any portion that is a SOFR loan, or at the base rate per annum plus 4.250 % for any portion that is a base rate loan; or (b) from and after June 17, 2026, at the SOFR per annum plus 5.250 % or 6.250 % for any portion that is a SOFR loan, or at the base rate per annum plus 4.250 % or 5.250 % for any portion that is a base rate loan, based on the Company’s consolidated fixed charge coverage ratio for the trailing twelve-month period as of the most recent fiscal quarter just ended.
The SLR Term Loan is secured by a first priority security interest in the Company’s intellectual property, real estate, certain furniture, fixtures and equipment, and pledges of subsidiary capital stock, and a second priority security interest in the collateral securing the ABL Credit Facility. The SLR Term Loan is guaranteed by each of the Company’s subsidiaries that guarantee the Company’s ABL Credit Facility.
23
THE CHILDREN’S PLACE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The SLR Term Loan is, in whole or in part, pre-payable any time and from time to time, subject to certain prepayment premiums specified in the SLR Loan Agreement, plus accrued and unpaid interest.
The SLR Term Loan contains customary affirmative and negative covenants substantially similar to a subset of the covenants set forth in the Credit Agreement, including limits on the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, dispositions or restricted payments, or to change the nature of its business. The SLR Term Loan also imposes a more restrictive excess availability requirement that further limits the Company’s maximum borrowing availability under the ABL Credit Facility.
The SLR Term Loan contains certain customary events of default, which include (subject in certain cases to customary grace periods), nonpayment of principal, breach of other covenants of the SLR Term Loan, inaccuracy in representations or warranties, acceleration of certain other indebtedness (including under the Credit Agreement), certain events of bankruptcy, insolvency or reorganization, such as a change of control, and invalidity of any part of the SLR Term Loan.
The Company used the net proceeds from the SLR Term Loan to partially pay down its borrowings under the ABL Credit Facility.
Pursuant to the refinancing transactions described above, the Mithaq Term Loans were amended to extend both of their maturity dates to April 16, 2031. The New Mithaq Term Loan was also amended to allow the Company to defer its monthly payments upon written notice to Mithaq, and as an amendment consent fee, its principal amount was increased by $ 2.7 million to $ 92.7 million. Separately, the Mithaq Credit Facility was further amended to (i) extend the Company’s deadline for requesting advances until December 16, 2030, and (ii) increase the rate for any monthly payments for borrowings equivalent to interest charged to the SOFR plus 9.000 % per annum.
24