What changed in this filing

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Item 1. Financial Statements

2024-06-13 compared with 2023-12-04 · 339 added, 264 removed, 413 unchanged (59% of the section changed)

3 unchanged sentences

CONSOLIDATED BALANCE SHEETS

2023 January 28,

2023 October 29,

2024 February 3,

2024 April 29,

(in thousands, except par value)

12 unchanged sentences

Total assets $ 848,335 $ 800,308 $ 1,014,870

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

Current liabilities:

13 unchanged sentences

Commitments and contingencies (see Note 8)

Stockholders’ equity:

Stockholders’ (deficit) equity:

Preferred stock, $ 1.00 par value, 1,000 shares authorized, 0 shares issued and outstanding

8 unchanged sentences

Accumulated other comprehensive loss ( 16,822 ) ( 16,496 ) ( 17,065 )

Retained earnings (deficit) ( 6,015 ) 22,540 79,375

Total stockholders’ equity 118,071 158,478 212,176

Total liabilities and stockholders’ equity $ 973,381 $ 986,281 $ 1,084,617

Accumulated deficit ( 172,660 ) ( 134,865 ) ( 9,207 )

Total stockholders’ (deficit) equity ( 34,850 ) ( 9,019 ) 125,821

Total liabilities and stockholders’ (deficit) equity $ 848,335 $ 800,308 $ 1,014,870

See accompanying notes to these consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Thirteen Weeks Ended Thirty-nine Weeks Ended

2023 October 29,

2022 October 28,

2023 October 29,

(in thousands, except earnings (loss) per common share)

Thirteen Weeks Ended

2024 April 29,

(in thousands, except loss per common share)

Net sales $ 267,878 $ 321,640

4 unchanged sentences

Asset impairment charges — 1,750

Operating income (loss) 44,967 57,837 ( 22,042 ) 63,261

Operating loss ( 27,988 ) ( 30,067 )

Interest expense ( 7,731 ) ( 5,937 )

Interest income 10 34

Income (loss) before provision (benefit) for income taxes 37,028 54,051 ( 43,523 ) 55,181

Loss before provision (benefit) for income taxes ( 35,709 ) ( 35,970 )

Provision (benefit) for income taxes 2,086 ( 7,136 )

Net income (loss) $ 38,482 $ 42,855 $ ( 25,705 ) $ 49,387

Earnings (loss) per common share

Net loss $ ( 37,795 ) $ ( 28,834 )

Loss per common share

Basic $ ( 2.99 ) $ ( 2.33 )

6 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Thirteen Weeks Ended Thirty-nine Weeks Ended

2023 October 29,

2022 October 28,

2023 October 29,

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Thirteen Weeks Ended

2024 April 29,

(in thousands)

Net income (loss) $ 38,482 $ 42,855 $ ( 25,705 ) $ 49,387

Net loss $ ( 37,795 ) $ ( 28,834 )

Other comprehensive loss:

Foreign currency translation adjustment ( 326 ) ( 818 )

Total comprehensive income (loss) $ 36,947 $ 40,458 $ ( 26,957 ) $ 46,562

Total comprehensive loss $ ( 38,121 ) $ ( 29,652 )

See accompanying notes to these consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Thirteen Weeks Ended October 28, 2023

Additional Retained Other Total

Common Stock Paid-In Deferred Earnings Comprehensive Treasury Stock Stockholders’

(in thousands) Shares Amount Capital Compensation (Deficit) Loss Shares Amount Equity

Balance, July 29, 2023 12,544 $ 1,254 $ 145,117 $ 3,884 $ ( 44,477 ) $ ( 15,964 ) ( 71 ) $ ( 3,884 ) $ 85,930

Vesting of stock awards 7 1 ( 1 ) —

Stock-based compensation benefit ( 4,746 ) ( 4,746 )

Purchase and retirement of common stock ( 2 ) — ( 40 ) ( 20 ) ( 60 )

Other comprehensive loss ( 1,535 ) ( 1,535 )

Deferral of common stock into deferred compensation plan 48 ( 2 ) ( 48 ) —

Net income 38,482 38,482

Balance, October 28, 2023 12,549 $ 1,255 $ 140,330 $ 3,932 $ ( 6,015 ) $ ( 17,499 ) ( 73 ) $ ( 3,932 ) $ 118,071

Thirty-nine Weeks Ended October 28, 2023

Additional Retained Other Total

Common Stock Paid-In Deferred Earnings Comprehensive Treasury Stock Stockholders’

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY

Thirteen Weeks Ended May 4, 2024

Accumulated Total

Additional Other Stockholders’

Common Stock Paid-In Deferred Accumulated Comprehensive Treasury Stock (Deficit)

(in thousands) Shares Amount Capital Compensation Deficit Loss Shares Amount Equity

Balance, January 28, 2023

12,292 $ 1,229 $ 150,956 $ 3,736 $ 22,540 $ ( 16,247 ) ( 67 ) $ ( 3,736 ) $ 158,478

Vesting of stock awards 462 47 ( 47 ) —

Stock-based compensation benefit ( 6,424 ) ( 6,424 )

Purchase and retirement of common stock ( 205 ) ( 21 ) ( 4,155 ) ( 2,850 ) ( 7,026 )

Other comprehensive loss ( 1,252 ) ( 1,252 )

Deferral of common stock into deferred compensation plan 196 ( 6 ) ( 196 ) —

Net loss ( 25,705 ) ( 25,705 )

Balance, October 28, 2023

12,549 $ 1,255 $ 140,330 $ 3,932 $ ( 6,015 ) $ ( 17,499 ) ( 73 ) $ ( 3,932 ) $ 118,071

See accompanying notes to these consolidated financial statements.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Thirteen Weeks Ended October 29, 2022

Additional Other Total

Common Stock Paid-In Deferred Retained Comprehensive Treasury Stock Stockholders’

(in thousands) Shares Amount Capital Compensation Earnings Loss Shares Amount Equity

Balance, July 30, 2022 13,087 $ 1,309 $ 151,954 $ 3,587 $ 45,532 $ ( 14,614 ) ( 64 ) $ ( 3,587 ) $ 184,181

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 204 20 ( 20 ) —

3 unchanged sentences

Deferral of common stock into deferred compensation plan 48 ( 4 ) ( 48 ) —

Net income 42,855 42,855

Balance, October 29, 2022 12,662 $ 1,266 $ 148,546 $ 3,661 $ 79,375 $ ( 17,011 ) ( 65 ) $ ( 3,661 ) $ 212,176

Thirty-nine Weeks Ended October 29, 2022

Net loss ( 37,795 ) ( 37,795 )

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

Thirteen Weeks Ended April 29, 2023

Additional Other Total

Common Stock Paid-In Deferred Retained Comprehensive Treasury Stock Stockholders’

(in thousands) Shares Amount Capital Compensation Earnings Loss Shares Amount Equity

Common Stock Paid-In Deferred Accumulated Comprehensive Treasury Stock Stockholders’

(in thousands) Shares Amount Capital Compensation Deficit Loss Shares Amount Equity

Balance, January 28, 2023

12,292 $ 1,229 $ 150,956 $ 3,736 $ 22,540 $ ( 16,247 ) ( 67 ) $ ( 3,736 ) $ 158,478

Vesting of stock awards 336 34 ( 34 ) —

3 unchanged sentences

Deferral of common stock into deferred compensation plan 74 ( 1 ) ( 74 ) —

Net income 49,387 49,387

Balance, October 29, 2022 12,662 $ 1,266 $ 148,546 $ 3,661 $ 79,375 $ ( 17,011 ) ( 65 ) $ ( 3,661 ) $ 212,176

Net loss ( 28,834 ) ( 28,834 )

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

See accompanying notes to these consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Thirty-nine Weeks Ended

2023 October 29,

Thirteen Weeks Ended

2024 April 29,

(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ ( 25,705 ) $ 49,387

Reconciliation of net income (loss) to net cash used in operating activities:

Net loss $ ( 37,795 ) $ ( 28,834 )

Reconciliation of net loss to net cash (used in) provided by operating activities:

Non-cash portion of operating lease expense 19,212 18,441

Depreciation and amortization 11,635 11,848

Non-cash stock-based compensation expense (benefit), net ( 6,424 ) 19,055

Non-cash stock-based compensation expense 12,610 3,083

Asset impairment charges — 1,750

9 unchanged sentences

Other long-term liabilities ( 321 ) ( 1,237 )

Net cash used in operating activities ( 42,632 ) ( 16,965 )

Net cash (used in) provided by operating activities ( 110,756 ) 5,134

CASH FLOWS FROM INVESTING ACTIVITIES:

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Purchase and retirement of common stock, including shares surrendered for tax withholdings and transaction costs ( 320 ) ( 6,088 )

Proceeds from issuance of term loans 168,600 —

Repayment of term loan ( 50,000 ) —

Payment of debt issuance costs ( 2,777 ) —

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents ( 118 ) ( 301 )

Net decrease in cash and cash equivalents ( 3,167 ) ( 35,543 )

Net (decrease) increase in cash and cash equivalents ( 679 ) 1,553

Cash and cash equivalents, beginning of period 13,639 16,689

1 unchanged sentence

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Net cash paid (received) for income taxes $ 6,008 $ ( 15,680 )

Net cash (received) paid for income taxes $ ( 3,715 ) $ 2,293

Cash paid for interest 7,591 5,784

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The Children’s Place, Inc.

and subsidiaries (collectively, the “Company”) is an omni-channel children’s specialty portfolio of brands with an industry-leading digital-first operating model.

Its global retail and wholesale network includes four digital storefronts, more than 500 stores in North America, wholesale marketplaces and distribution in 16 countries through six international franchise partners.

and its subsidiaries (collectively, the “Company”) operate an omni-channel children’s specialty portfolio of brands with an industry-leading digital-first operating model.

Its global retail and wholesale network includes two digital storefronts, more than 500 stores in North America, wholesale marketplaces and distribution in 16 countries through six international franchise partners.

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:

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Included in The Children’s Place International segment are its Canadian-based stores, revenue from the Company’s Canadian-based wholesale business, as well as revenue from international franchisees.

Each segment includes an e-commerce business located at www.childrensplace.com, www.gymboree.com, www.sugarandjade.com, and www.pjplace.com .

Each segment includes an e-commerce business located at www.childrensplace.com and www.gymboree.com.

The Company also has social media channels on Instagram, Facebook, X, formerly known as Twitter, YouTube and Pinterest.

Terms that are commonly used in the notes to the Company’s consolidated financial statements are defined as follows:

• Third Quarter 2023 — The thirteen weeks ended October 28, 2023

• Third Quarter 2022 — The thirteen weeks ended October 29, 2022

• Year-To-Date 2023 — The thirty-nine weeks ended October 28, 2023

• Year-To-Date 2022 — The thirty-nine weeks ended October 29, 2022

• Fiscal 2023 – The fifty-three weeks ending February 3, 2024

• First Quarter 2024 — The thirteen weeks ended May 4, 2024

• First Quarter 2023 — The thirteen weeks ended April 29, 2023

• Fiscal 2024 — The fifty-two weeks ending February 1, 2025

• Fiscal 2023 — The fifty-three weeks ended February 3, 2024

• Fiscal 2022 — The fifty-two weeks ended January 28, 2023

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Intercompany balances and transactions have been eliminated.

As of October 28, 2023, January 28, 2023 and October 29, 2022, the Company did not have any investments in unconsolidated affiliates.

As of May 4, 2024, February 3, 2024 and April 29, 2023, 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.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the consolidated financial position of the Company as of May 4, 2024 and April 29, 2023, the results of its consolidated operations, consolidated comprehensive loss, consolidated changes in stockholders’ (deficit) equity, and consolidated cash flows for the thirteen weeks ended May 4, 2024 and April 29, 2023.

The consolidated balance sheet as of February 3, 2024 was derived from audited financial statements.

Due to the seasonal nature of the Company’s business, the results of operations for the thirteen weeks ended May 4, 2024 and April 29, 2023 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 3, 2024.

Certain prior period financial statement disclosures have been conformed to the current period presentation.

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In the opinion of management, the accompanying unaudited consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the consolidated financial position of the Company as of October 28, 2023 and October 29, 2022, the results of its consolidated operations, consolidated comprehensive income (loss), and consolidated changes in stockholders’ equity for the thirteen and thirty-nine weeks ended October 28, 2023 and October 29, 2022, and consolidated cash flows for the thirty-nine weeks ended October 28, 2023 and October 29, 2022.

The consolidated balance sheet as of January 28, 2023 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 October 28, 2023 and October 29, 2022 are not necessarily indicative of operating results for a full fiscal year.

Certain prior period financial statement disclosures have been conformed to the current period presentation.

The Company incurred net losses in the First Quarter 2024, Fiscal 2023 and Fiscal 2022.

As of May 4, 2024, the Company had an Accumulated deficit of $ 172.7 million and a working capital deficit of $ 63.6 million, which included borrowings of $ 226.1 million under its asset-based revolving credit facility (the “ABL Credit Facility”) that do not mature until November 2026, pursuant to its credit agreement, dated as of May 9, 2019, (as amended from time to time, the “Credit Agreement”), by and among the Company, certain of its subsidiaries and the lenders party thereto.

The Company had availability under its ABL Credit Facility of $ 47.7 million.

These conditions resulted in the Company seeking additional liquidity to fund its ongoing operations.

On May 2, 2024, the Company and its majority shareholder, Mithaq Capital SPC, a Cayman segregated portfolio company (“Mithaq”), entered into a commitment letter pursuant to which Mithaq agreed to provide the Company with a Shariah-compliant senior unsecured credit facility of up to $ 40.0 million (the “Mithaq Credit Facility”) in accordance with the terms described in “Note 7.

Debt” of the consolidated financial statements.

The Mithaq Credit Facility will be available to draw on at any time prior to July 1, 2025 to augment the Company’s liquidity position, if needed.

The Company plans to address its ongoing liquidity needs with additional financing as necessary.

The Company has determined that its existing cash on hand, expected cash generated from operations, and availability under its ABL Credit Facility and the Mithaq Credit Facility, will be sufficient to fund its capital and other cash requirements for at least the next twelve months from the date that the Company’s consolidated financial statements for the First Quarter 2024 were issued.

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.

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Recent Accounting Standards Updates

There are no pending accounting standards updates that are currently expected to have a material impact on the Company’s consolidated financial statements.

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 annuals periods.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of this update on its consolidated financial statements.

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 Company is currently evaluating the impact of this update on its consolidated financial statements.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 following table presents the Company’s revenues disaggregated by geography:

Thirteen Weeks Ended Thirty-nine Weeks Ended

2023 October 29,

2022 October 28,

2023 October 29,

Thirteen Weeks Ended

2024 April 29,

(in thousands)

8 unchanged sentences

(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.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company recognizes revenue, including shipping and handling fees billed to customers, 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 $ 7.6 million, $ 2.9 million, and $ 8.9 million within Accrued expenses and other current liabilities as of October 28, 2023, January 28, 2023, and October 29, 2022, respectively, based upon estimated time of delivery, at which point control passes to the customer.

The Company deferred sales of $ 5.3 million, $ 3.1 million, and $ 5.9 million within Accrued expenses and other current liabilities as of May 4, 2024, February 3, 2024, and April 29, 2023, 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, including shipping and handling fees billed to customers, 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 $ 8.6 million, $ 5.0 million, and $ 4.9 million as of October 28, 2023, January 28, 2023, and October 29, 2022, respectively.

The allowance for wholesale revenue included within Accounts receivable was $ 7.0 million, $ 9.0 million, and $ 5.5 million as of May 4, 2024, February 3, 2024, and April 29, 2023, 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 $ 2.5 million, $ 1.0 million, and $ 2.2 million as of October 28, 2023, January 28, 2023, and October 29, 2022, respectively.

The Company’s private label credit card is issued to customers for use exclusively at The Children’s Place stores and online at www.childrensplace.com, www.gymboree.com , www.sugarandjade.com, and www.pjplace.com, and credit is extended to such customers by a third-party financial institution on a non-recourse basis to the Company.

The allowance for estimated sales returns, which is recorded in Accrued expenses and other current liabilities, was $ 1.3 million, $ 1.7 million, and $ 1.8 million as of May 4, 2024, February 3, 2024, and April 29, 2023, respectively.

The Company’s private label credit card is issued to customers for use exclusively at The Children’s Place stores 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.

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The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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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 $ 2.0 million, $ 2.6 million, and $ 2.0 million as of October 28, 2023, January 28, 2023, and October 29, 2022, respectively.

The total contract liabilities related to this program were $ 2.3 million, $ 1.7 million, and $ 3.8 million as of May 4, 2024, February 3, 2024, and April 29, 2023, respectively.

The Company’s policy with respect to gift cards is to record revenue as and when the gift cards are redeemed for merchandise.

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The liability is estimated based on expected breakage that considers historical patterns of redemption.

The gift card liability balance as of October 28, 2023, January 28, 2023, and October 29, 2022 was $ 6.3 million, $ 11.1 million, and $ 11.2 million, respectively.

During Year-To-Date 2023, the Company recognized Net sales of $ 8.4 million related to the gift card liability balance that existed at January 28, 2023.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The gift card liability balance as of May 4, 2024, February 3, 2024, and April 29, 2023 was $ 6.4 million, $ 6.8 million, and $ 10.5 million, respectively.

During the First Quarter 2024, the Company recognized Net sales of $ 1.7 million related to the gift card liability balance that existed at February 3, 2024.

The Company has an international program of territorial agreements with franchisees.

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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 their customers.

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.

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RESTRUCTURING

In support of the Company’s ongoing structural transformation from a legacy store operating model to a digital-first retailer, during the second quarter of 2023, the Company voluntarily entered into an early termination of its corporate office lease and implemented a workforce reduction.

On May 26, 2023, the Company proactively accelerated the termination of its corporate office lease to capitalize on the prevailing tenant-favorable market conditions.

That lease will now expire in May 2024, and the Company is continuing to explore various options for a new lease, including negotiations with the current landlord.

During the second quarter of 2023, the Company implemented a plan that encompassed two headcount reductions, which accounted for over 20 % of its salaried workforce, the substantial majority of whom were located at the Company’s corporate offices in Secaucus, New Jersey, with the balance at other domestic and international locations.

The voluntary lease termination, combined with the workforce reduction, will enable the Company to reduce its current space configuration and capitalize on lower prevailing market rates than would have been applicable under its existing lease, which included escalations in occupancy costs, and did not expire until 2029.

The actions associated with the workforce reduction were substantially completed by the end of the Third Quarter 2023.

In addition, the lease for the Company’s distribution center in Toronto, Canada (“TODC”) expires in April 2024.

The Company expects to move these operations to the United States to its current distribution center in Alabama, which will result in a further headcount reduction at the TODC.

The transition out of the TODC is expected to be substantially completed by the end of the first quarter of 2024.

As a result of these strategic actions associated with the voluntary early termination of its corporate office lease, the move from the TODC, and workforce reductions, the Company incurred non-operating charges of $ 1.2 million and $ 11.8 million in restructuring costs during the Third Quarter 2023 and Year-To-Date 2023, respectively on a pretax basis, summarized in the following table:

Thirteen Weeks Ended Thirty-nine Weeks Ended

2023 October 29,

2022 October 28,

2023 October 29,

In support of the Company’s ongoing structural transformation from a legacy store operating model to a digital-first retailer, during the second quarter of Fiscal 2023, the Company voluntarily entered into an early termination of its corporate office lease and implemented a workforce reduction.

The Company proactively accelerated the termination of its corporate office lease to capitalize on the prevailing tenant-favorable market conditions and subsequently executed an amendment to its corporate office lease in January 2024 with its current landlord on more favorable terms.

The amended lease will expire in May 2037, with a termination right after the seventh year, and two five-year renewal options at fair market value.

The Company also implemented a plan that encompassed multiple headcount reductions, which accounted for approximately 20 % of its salaried workforce, the substantial majority of whom were located at the Company’s corporate offices in Secaucus, New Jersey, with the balance at other domestic and international locations.

The associated workforce reduction was substantially completed as of the end of the First Quarter 2024.

In addition, the lease for the Company’s distribution center in Toronto, Canada (“TODC”) expired in April 2024.

The Company has moved these operations to the United States to its current distribution center in Alabama as of the end of the First Quarter 2024.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As a result of these strategic actions associated with the voluntary early termination of its corporate office lease, the move from the TODC, and workforce reductions, the Company incurred non-operating charges of $ 2.3 million in restructuring costs during the First Quarter 2024 on a pretax basis, summarized in the following table:

Thirteen Weeks Ended

2024 April 29,

(in thousands)

Employee-related costs

$ 674 $ — $ 6,107 $ —

Lease termination costs (1)

454 — 5,401 —

Professional fees 82 — 268 —

TODC costs (2)

Total restructuring costs (3)

___________________________________________

(1) Includes non-cash charges related to accelerated depreciation on certain assets in the corporate office over the reduced term, amounting to $ 0.5 million and $ 1.4 million for the Third Quarter 2023 and Year-To-Date 2023, respectively.

The Company expects to record additional accelerated depreciation charges of approximately $ 1.0 million until the expiration of its corporate office lease.

(2) Restructuring costs are recorded within Selling, general and administrative expenses, except accelerated depreciation charges noted above, which are recorded within Depreciation and amortization, and are primarily recorded within The Children’s Place U.S.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the restructuring costs that have been partially settled with cash payments and the remaining related liability as of October 28, 2023.

(1) Includes non-cash charges related to accelerated depreciation on certain assets in the corporate office over the reduced term, amounting to $ 0.5 million for the First Quarter 2024.

(2) Includes non-cash charges related to accelerated depreciation on TODC assets, amounting to $ 1.1 million for the First Quarter 2024.

(3) Restructuring costs are recorded within Selling, general and administrative expenses, except accelerated depreciation charges noted above, which are recorded within Depreciation and amortization.

TODC costs are recorded within The Children's Place International segment and lease termination costs are recorded within The Children’s Place U.S.

The following table summarizes the restructuring costs that have been partially settled with cash payments and the remaining related liability as of May 4, 2024.

The remaining related liability is expected to be settled with cash payments in the future and these costs are included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets:

Employee-Related Costs TODC Costs Total

(in thousands)

Balance at February 3, 2024 $ 1,666 $ — $ 1,666

Provision — 751 751

Cash payments ( 1,114 ) ( 247 ) ( 1,361 )

Balance at May 4, 2024 $ 552 $ 504 $ 1,056

Employee-Related Costs Lease Termination Costs Professional Fees Total

4 unchanged sentences

Balance at July 29, 2023 2,831 — 186 3,017

Provision 674 — 82 756

Cash Payments ( 2,652 ) — ( 268 ) ( 2,920 )

( 2,652 ) — ( 268 ) ( 2,920 )

Balance at October 28, 2023 853 — — 853

Provision 1,275 — — 1,275

Cash Payments ( 462 ) — — ( 462 )

Balance at February 3, 2024 $ 1,666 $ — $ — $ 1,666

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 names “Gymboree” and “Crazy 8” and other intellectual property, including trademarks, domain names, copyrights, and customer databases.

These intangible assets, inclusive of acquisition costs, are recorded in the long-term assets section of the Consolidated Balance Sheets.

The Company recorded an impairment charge on the Gymboree tradename of $ 29.0 million in Fiscal 2023, which reduced the carrying value to its fair value of $ 41.0 million.

There were no impairment charges recorded in the First Quarter 2024.

The Company’s intangible assets were as follows:

October 28, 2023

Useful Life Gross Amount Accumulated Amortization Net Amount

5 unchanged sentences

Total intangible assets $ 45,000 $ ( 4,000 ) $ 41,000

January 28, 2023

February 3, 2024

Useful Life Gross Amount Accumulated Amortization Net Amount

4 unchanged sentences

5 years 4,000 ( 3,877 ) 123

Customer databases (2)

3 years 3,000 ( 3,000 ) —

Total intangible assets $ 45,000 $ ( 3,877 ) $ 41,123

October 29, 2022

April 29, 2023

Useful Life Gross Amount Accumulated Amortization Net Amount

4 unchanged sentences

5 years 4,000 ( 3,262 ) 738

Customer databases (2)

3 years 3,000 ( 3,000 ) —

Total intangible assets $ 73,953 $ ( 3,262 ) $ 70,691

1 unchanged sentence

(1) Included within Tradenames, net on the Consolidated Balance Sheets.

(2) Included within Other assets on the Consolidated Balance Sheets.

THE CHILDREN’S PLACE, INC.

3 unchanged sentences

Property and equipment consisted of the following:

2023 January 28,

2023 October 29,

2024 February 3,

2024 April 29,

(in thousands)

10 unchanged sentences

Property and equipment, net $ 116,779 $ 124,750 $ 146,315

At October 28, 2023 and October 29, 2022, 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 recorded asset impairment charges in the Third Quarter 2023 and Year-To-Date 2023 of $ 0.6 million and $ 3.1 million, respectively, inclusive of right-of-use (“ROU”) assets.

No impairment charge was recorded in the Third Quarter 2022.

The Company recorded asset impairment charges during Year-To-Date 2022 of $ 1.4 million, inclusive of ROU assets.

At May 4, 2024 and April 29, 2023, 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 recorded asset impairment charges in the First Quarter 2023 of $ 1.8 million, inclusive of right-of-use (“ROU”) assets.

The Company did no t record asset impairment charges in the First Quarter 2024.

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 nine 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’s leases have remaining lease terms ranging from less than one year up to 13 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.

1 unchanged sentence

The following components of operating lease expense were recognized in the Company’s Consolidated Statements of Operations:

Thirteen Weeks Ended Thirty-nine Weeks Ended

2023 October 29,

2022 October 28,

2023 October 29,

Thirteen Weeks Ended

2024 April 29,

(in thousands)

1 unchanged sentence

Variable operating lease cost (1)

11,030 12,477 40,115 40,168

Total operating lease cost $ 30,348 $ 35,603

1 unchanged sentence

(1) Includes short term leases with lease periods of less than 12 months.

As of October 28, 2023, the weighted-average remaining operating lease term was 3.1 years, and the weighted-average discount rate for operating leases was 5.3 %.

Cash paid for amounts included in the measurement of operating lease liabilities during Year-To-Date 2023 was $ 64.7 million.

ROU assets obtained in exchange for new operating lease liabilities were $ 51.5 million during Year-To-Date 2023.

As of May 4, 2024, the weighted-average remaining operating lease term was 4.4 years, and the weighted-average discount rate for operating leases was 7.6 %.

Cash paid for amounts included in the measurement of operating lease liabilities during the First Quarter 2024 was $ 19.7 million.

ROU assets obtained in exchange for new operating lease liabilities were $ 22.1 million during the First Quarter 2024.

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of October 28, 2023, the maturities of operating lease liabilities were as follows:

As of May 4, 2024, the maturities of operating lease liabilities were as follows:

(in thousands)

4 unchanged sentences

Present value of operating lease liabilities $ 189,031

On November 16, 2021, the Company completed the refinancing of its previous $ 360.0 million asset-based revolving credit facility and previous $ 80.0 million term loan with a new lending group led by an affiliate of Wells Fargo Bank, National Association (“Wells Fargo”) by entering into a fourth amendment to its credit agreement, dated as of May 9, 2019, with the lenders party thereto (as amended from time to time, the “Credit Agreement”).

The refinanced debt consisted of a $ 350.0 million asset-based revolving credit facility (the “ABL Credit Facility”) and a $ 50.0 million term loan (the “Term Loan”).

On June 5, 2023, the Company entered into a fifth amendment to its Credit Agreement, pursuant to which, among other things, (i) PNC Bank, National Association (“PNC Bank”) was added as a new lender, (ii) the ABL Credit Facility was increased to $ 445.0 million, (iii) the London InterBank Offered Rate (“LIBOR”) was replaced by the Secured Overnight Financing Rate (“SOFR”) as the interest rate benchmark, and (iv) the pricing grid for applicable margins on borrowings was updated.

All other material terms and conditions of the Credit Agreement remained unchanged.

As previously disclosed in the Company’s Form 8-K dated October 30, 2023, the Company became aware of an inadvertent calculation error contained in the June, July and August 2023 borrowing base certificates provided to the lenders under its Credit Agreement, all of which have since been remedied.

While the lenders determined the calculation error resulted in certain technical defaults under the Credit Agreement (including the Company not being in compliance with certain debt covenants), the Company and the lenders entered into a Waiver and Amendment Agreement (the “Waiver Agreement”) on October 24, 2023, pursuant to which the lenders waived all of the defaults and the Company agreed to certain temporary enhanced reporting requirements and temporary restrictions on certain payments.

These enhanced reporting requirements and restrictions will cease once the Company achieves certain excess availability thresholds.

At no time prior to or following entering into the Waiver Agreement was the Company prevented from borrowing under the Credit Agreement in the ordinary course.

ABL Credit Facility and 2021 Term Loan

The Company and certain of its subsidiaries maintain the $ 445.0 million ABL Credit Facility and the $ 50.0 million Term Loan with Wells Fargo, Truist Bank, Bank of America, N.A., HSBC Business Credit (USA) Inc., JPMorgan Chase Bank, N.A., and PNC Bank as lenders (collectively, the “Lenders”) and Wells Fargo, as Administrative Agent, Collateral Agent, Swing Line Lender and Term Agent.

Both the ABL Credit Facility and the Term Loan mature in November 2026.

The ABL Credit Facility includes a $ 25.0 million Canadian sublimit and a $ 50.0 million sublimit for standby and documentary letters of credit.

Under the ABL Credit Facility, based on the amount of the Company’s average daily excess availability under the facility, borrowings outstanding bear interest, at the Company’s option, at:

The Company and certain of its subsidiaries maintain the $ 433.0 million ABL Credit Facility and, before it was fully repaid, maintained a $ 50.0 million term loan (the “2021 Term Loan”) under its Credit Agreement with Wells Fargo Bank, National Association (“Wells Fargo”), Truist Bank, Bank of America, N.A., HSBC Business Credit (USA) Inc., JPMorgan Chase Bank, N.A., and PNC Bank, National Association, as the lenders party thereto (collectively, the “Credit Agreement Lenders”) and Wells Fargo, as Administrative Agent, Collateral Agent, Swing Line Lender and, before the 2021 Term Loan was fully repaid, Term Agent.

The ABL Credit Facility will mature and, before it was fully repaid, the 2021 Term Loan would have matured, in November 2026.

As of 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.

Under the ABL Credit Facility, borrowings outstanding bear interest, at the Company’s option, at:

(i) the prime rate per annum, plus a margin of 2.000 %;

(ii) the Secured Overnight Financing Rate (“SOFR”) per annum, plus 0.100 %, plus a margin of 3.000 %.

Prior to the effective date of the Seventh Amendment, the Company was charged a fee of 0.200 % on the unused portion of the commitments.

As of the effective date of the Seventh Amendment, based on the size of the unused portion of the commitments, the Company is charged a fee ranging from 0.250 % to 0.375 %.

Letter of credit fees are at 1.125 % for commercial letters of credit and 1.750 % for standby letters of credit.

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.

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 will bear interest, at the Company’s option, at:

(i) the prime rate per annum, plus a margin of 1.750 % or 2.000 %;

(ii) the SOFR per annum, plus 0.100 %, plus a margin of 2.750 % or 3.000 %.

Letter of credit fees will range from 1.000 % to 1.125 % for commercial letters of credit and will range from 1.500 % to 1.750 % for standby letters of credit.

Letter of credit fees will be determined based on the amount of the Company’s average daily excess availability under the facility.

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(ii) the SOFR per annum, plus a margin of 2.000 % or 2.250 %.

The Company is charged a fee of 0.200 % on the unused portion of the commitments.

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.

Letter of credit fees are determined based on the amount of the Company’s average daily excess availability under the facility.

Once the Company achieves a consolidated EBITDA of at least $ 200.0 million across four consecutive fiscal quarters, and based on the amount of the Company’s average daily excess availability under the facility, borrowings outstanding under the ABL Credit Facility would bear interest, at the Company’s option, at:

(i) the prime rate per annum, plus a margin of 0.625 % or 0.875 %;

(ii) the SOFR per annum, plus a margin of 1.375 % or 1.625 %.

Letter of credit fees would range from 0.688 % to 0.813 % for commercial letters of credit and would range from 0.875 % to 1.125 % for standby letters of credit.

Letter of credit fees are determined based on the amount of the Company’s average daily excess availability under the facility.

For the Third Quarter 2023 and Year-To-Date 2023, the Company recognized $ 7.2 million and $ 18.0 million, respectively, in interest expense related to the ABL Credit Facility.

For the Third Quarter 2022 and Year-To-Date 2022, the Company recognized $ 3.0 million and $ 6.9 million, respectively, in interest expense related to the ABL Credit Facility.

The outstanding obligations under the ABL Credit Facility may be accelerated upon the occurrence of certain events, including, among others, non-payment, breach of covenants, the institution of insolvency proceedings, defaults under other material indebtedness, and a change of control, subject, in the case of certain defaults, to the expiration of applicable grace periods.

For the First Quarter 2024 and First Quarter 2023, the Company recognized $ 5.7 million and $ 4.7 million, respectively, in interest expense related to the ABL Credit Facility.

Prior to the effective date of the Seventh Amendment, when the 2021 Term Loan was fully repaid, 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 other than intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock, and a second priority security interest in the Company’s intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock.

As of the effective date of the Seventh Amendment, the ABL Credit Facility is secured on a first priority basis by all of the foregoing collateral.

The outstanding obligations under the ABL Credit Facility may be accelerated upon the occurrence of certain customary events, including, among others, non-payment, breach of covenants, the institution of insolvency proceedings, defaults under other material indebtedness, and a change of control, subject, in the case of certain defaults, to the expiration of applicable grace periods.

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, and a fixed-charge coverage ratio covenant, which only becomes effective in the event that borrowings and other uses of credit exceed the maximum borrowing availability (as reflected in the table below), based on the Company’s ability to maintain a certain amount of excess availability for borrowings (the “excess availability threshold”).

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.

Credit extended under the ABL Credit Facility is secured by a first priority security interest in substantially all of the Company’s U.S.

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.

In October 2023, the Company became aware of inadvertent calculation errors contained in the June, July and August 2023 borrowing base certificates provided to the Credit Agreement Lenders, all of which have since been remedied.

As the Credit Agreement Lenders determined that the calculation errors resulted in certain technical defaults under the Credit Agreement (including the Company not being in compliance with certain debt covenants), the Company and the Credit Agreement Lenders entered into a Waiver and Amendment Agreement (the “Waiver Agreement”) on October 24, 2023, pursuant to which the Credit Agreement Lenders waived all of the defaults and the Company agreed to certain temporary enhanced reporting requirements and temporary restrictions on certain payments.

These enhanced reporting requirements and restrictions will cease once the Company achieves certain excess availability thresholds.

At no time prior to or following entering into the Waiver Agreement was the Company prevented from borrowing under the Credit Agreement in the ordinary course in accordance with its terms.

During the First Quarter 2024, Mithaq became the controlling shareholder of the Company and this change of control triggered an event of default under the Credit Agreement, thus subjecting the Company to cash dominion by the Credit Agreement Lenders.

Subsequently, the Credit Agreement Lenders agreed to forbear from enforcing certain other rights and remedies during a limited forbearance period.

On April 16, 2024, the Company and certain of its subsidiaries entered into the Seventh Amendment with the Credit Agreement Lenders that, among other things, provided a permanent waiver of the change of control event of default.

As of the effective date of the Seventh Amendment, the ABL Credit Facility was reduced from $ 445.0 million to $ 433.0 million, and until the Company achieves certain excess availability thresholds, the Seventh Amendment preserves the temporary enhanced reporting requirements under the Waiver Agreement and continues to impose cash dominion.

THE CHILDREN’S PLACE, INC.

2 unchanged sentences

The table below presents the components of the Company’s ABL Credit Facility:

2023 January 28,

2023 October 29,

2024 February 3,

2024 April 29,

(in millions)

Total borrowing base availability, net of the excess availability threshold, as applicable $ 394.7 $ 363.8 $ 463.9

Credit facility maximum, net of the excess availability threshold, as applicable 400.5 315.0 350.0

Total borrowing base availability (1)

$ 286.0 $ 258.4 $ 408.9

Credit facility availability (2)

433.0 400.5 315.0

Maximum borrowing availability (3)

12 unchanged sentences

____________________________________________

(1) Lower of the credit facility maximum and the total borrowing base availability, both net of the excess availability threshold.

(2) The sub-limit availability for letters of credit was $ 42.6 million at October 28, 2023, January 28, 2023, and October 29, 2022.

The Term Loan bears interest, payable monthly, at (a) the SOFR per annum plus 2.750 % for any portion that is a SOFR loan, or (b) the base rate per annum plus 2.000 % for any portion that is a base rate loan.

The Term Loan is pre-payable at any time without penalty, and does not require amortization.

For the Third Quarter 2023 and Year-To-Date 2023, the Company recognized $ 0.4 million, and $ 2.4 million, respectively, in interest expense related to the Term Loan.

For the Third Quarter 2022 and Year-To-Date 2022, the Company recognized $ 0.6 million, and $ 1.5 million, respectively, in interest expense related to the Term Loan.

The Term Loan is secured by a first priority security interest in the Company’s intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock, and a second priority security interest in the collateral securing the ABL Credit Facility on a first-priority basis.

The Term Loan is guaranteed by each of the Company’s subsidiaries that guarantees the ABL Credit Facility and contains substantially the same covenants as provided in the ABL Credit Facility.

Both the ABL Credit Facility and the Term Loan contain 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.

As of October 28, 2023, unamortized deferred financing costs amounted to $ 2.4 million, of which $ 2.2 million related to our ABL Credit Facility.

(1) In the First Quarter 2024, given that the Company was under cash dominion, the total borrowing base availability was only net of the availability block under the Credit Agreement as of the effective date of the Seventh Amendment, and the excess availability threshold was not applicable.

For the second quarter of Fiscal 2024, if applicable, the total borrowing base availability will need to be net of the excess availability threshold for 60 consecutive days after June 30, 2024 in order to exit cash dominion.

In Fiscal 2023, the total borrowing base availability was net of the excess availability threshold under the Credit Agreement prior to the effective date of the Seventh Amendment.

(2) In the First Quarter 2024, given that the Company was under cash dominion, the excess availability threshold under the Credit Agreement as of the effective date of the Seventh Amendment was not applicable to the determination of the credit facility availability.

For the second quarter of Fiscal 2024, if applicable, the credit facility availability will need to be net of the excess availability threshold for 60 consecutive days after June 30, 2024 in order to exit cash dominion.

In Fiscal 2023, the credit facility availability was net of the excess availability threshold under the Credit Agreement prior to the effective date of the Seventh Amendment.

(3) The lower of the credit facility availability and the total borrowing base availability.

(4) The sub-limit availability for letters of credit was $ 12.8 million at May 4, 2024, and $ 42.6 million at February 3, 2024 and April 29, 2023.

The 2021 Term Loan bore interest, payable monthly, at (a) the SOFR per annum plus 2.750 % for any portion that was a SOFR loan, or (b) the base rate per annum plus 2.000 % for any portion that was a base rate loan.

The 2021 Term Loan was pre-payable at any time without penalty, and did not require amortization.

For the First Quarter 2024 and First Quarter 2023, the Company recognized $ 1.1 million and $ 0.9 million, respectively, in interest expense related to the 2021 Term Loan.

As of the effective date of the Seventh Amendment, the 2021 Term Loan was fully repaid.

As of May 4, 2024, unamortized deferred financing costs amounted to $ 2.9 million related to the Company’s ABL Credit Facility.

Mithaq Term Loans

The Company and certain of its subsidiaries maintain an interest-free, unsecured and subordinated promissory note with Mithaq for a $ 78.6 million term loan (the “Initial Mithaq Term Loan”), consisting of (a) a first tranche in an aggregate principal amount of $ 30.0 million (the “First Tranche”) and (b) a second tranche in an aggregate principal amount of $ 48.6 million (the “Second Tranche”).

The Company received the First Tranche on February 29, 2024 and the Second Tranche on March 8, 2024.

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Initial Mithaq Term Loan matures on February 15, 2027.

The Initial Mithaq Term Loan is guaranteed by each of the Company’s subsidiaries that guarantee the Company’s ABL Credit Facility.

The Company and certain of its subsidiaries also maintain a Shariah-compliant unsecured and subordinated $ 90.0 million term loan with Mithaq (the “New Mithaq Term Loan”;

and together with the Initial Mithaq Term Loan, collectively, the “Mithaq Term Loans”).

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 such monthly payments to Mithaq deferred until April 30, 2025.

The New Mithaq Term Loan is guaranteed by each of the Company’s subsidiaries that guarantee the Company’s ABL Credit Facility.

For the First Quarter 2024, the Company recognized $ 0.4 million in deferred interest-equivalent expense related to the New Mithaq Term Loan.

The Mithaq Term Loans are subject to an amended and restated subordination agreement (as amended from time to time, the “Subordination Agreement”), dated as of April 16, 2024, by and among the Company and certain of its 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.

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 May 4, 2024 unamortized deferred financing costs amounted to $ 2.0 million related to the Mithaq Term Loans.

Maturities of the Company’s principal debt payments as of May 4, 2024 are as follows:

(in thousands)

Remainder of 2024

Mithaq Commitment Letter

On May 2, 2024, the Company entered into a commitment letter with Mithaq for a Shariah-compliant $ 40.0 million Mithaq Credit Facility.

Under the Mithaq Credit Facility, the Company may request for advances at any time prior to July 1, 2025.

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 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, 2025.

As of May 4, 2024, no debt had been incurred under the Mithaq Credit Facility.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

COMMITMENTS AND CONTINGENCIES

13 unchanged sentences

The settlement provides merchandise vouchers for qualified class members who submit valid claims, as well as payment of legal fees and expenses and claims administration expenses.

Vouchers were distributed to class members on November 15, 2021 and they will be eligible for redemption in multiple rounds through November 2023.

Vouchers were distributed to class members on November 15, 2021 and they were eligible for redemption in multiple rounds through November 2023.

On February 23, 2024, a hearing on motion for preliminary injunction and permanent injunction and to enforce judgement and settlement agreement was held.

Pending receipt of the court’s ruling, upon the court’s order, the plaintiff filed a renewed motion for attorneys’ fees, costs and incentive awards on March 4, 2024, to which the Company filed a statement of non-opposition on April 1, 2024.

Because the plaintiff was seeking less than the maximum amount agreed to in the settlement, the Company requested that such difference in amount be distributed as vouchers to authorized class members, pursuant to the settlement agreement.

The hearing for the motion for attorneys’ fees, costs, and incentive awards resulted in the court granting the plaintiff’s counsel approximately $ 0.3 million in fees, costs and incentive awards.

The balance of funds initially reserved for the plaintiff counsel’s fees and costs will now be issued as a single, final round of merchandise vouchers for qualified class members.

In connection with the settlement, the Company recorded a reserve for $ 5.0 million in its consolidated financial statements in the first quarter of 2017.

Following the court’s recent decision(s), the Company released $ 2.3 million from its previously established reserve.

Similar to the Rael case above, the Company is also 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.

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, due to the judge’s retirement, the Gonzalez action was transferred and reassigned to a different judge.

Deadlines will therefore be reset, including the Company’s motion to dismiss.

As of February 2024, the Company is also a defendant in Randeep Singh Khalsa v.

The Children’s Place, Inc.

, a purported class action, pending in the United States District Court of New Jersey.

The complaint purports to assert claims under the federal securities laws, alleging that between March 16, 2023, and February 8, 2024, the Company made materially false and/or misleading statements, and failed to disclose material adverse facts to its investors, which the complaint alleges led to a drop in the price of the Company’s common stock.

The Company intends to defend this case vigorously and it is currently too early to assess the possible outcome of this case.

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 will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

STOCKHOLDERS’ EQUITY

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.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

STOCKHOLDERS’ (DEFICIT) EQUITY

Share Repurchase Program

In November 2021, the Board of Directors authorized a $ 250.0 million share repurchase program (the “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.

1 unchanged sentence

The Company may suspend or discontinue the program at any time and may thereafter reinstitute purchases, all without prior announcement.

Currently, pursuant to the Waiver Agreement described above, the Company is temporarily restricted from repurchasing any shares.

As of October 28, 2023, there was $ 157.3 million remaining availability under the Share Repurchase Program.

Currently, given the terms of the Company’s Credit Agreement as amended by its Seventh Amendment described above, the Company is not expecting to repurchase any shares in Fiscal 2024, except as described below, pursuant to our practice as a result of our insider trading policy.

As of May 4, 2024, there was $ 156.9 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.

1 unchanged sentence

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 CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the Company’s share repurchases:

Thirty-nine Weeks Ended

October 28, 2023 October 29, 2022

Thirteen Weeks Ended

May 4, 2024 April 29, 2023

Shares Amount Shares Amount

4 unchanged sentences

Shares acquired and held in treasury 4 $ 48 1 $ 74

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 Retained earnings (deficit).

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.

For all shares retired in Year-To-Date 2023 and Year-To-Date 2022, $ 2.9 million and $ 47.9 million was charged to Retained earnings (deficit), respectively.

For all shares retired in the First Quarter 2023, $ 2.9 million was charged to Accumulated deficit.

There were no amounts charged to Accumulated deficit in the First Quarter 2024.

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 Waiver Agreement described above, the Company is temporarily restricted from issuing any cash dividends.

Currently, given the terms of the Credit Agreement as amended by the Seventh Amendment as described above, the Company is not expecting to pay any cash dividends in Fiscal 2024.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

STOCK-BASED COMPENSATION

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The Company also grants Deferred Awards to its non-employee directors.

The following table summarizes the Company’s stock-based compensation expense (benefit):

Thirteen Weeks Ended Thirty-nine Weeks Ended

2023 October 29,

2022 October 28,

2023 October 29,

The following table summarizes the Company’s stock-based compensation expense:

Thirteen Weeks Ended

2024 April 29,

(in thousands)

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Performance Awards

( 5,939 ) 3,336 ( 11,807 ) 11,574

Total stock-based compensation expense (benefit) (2)

Total stock-based compensation expense (1)

$ 12,610 $ 3,083

___________________________________________

(1) Included within the Performance Awards benefit for the Third Quarter 2023 was a combination of ongoing expense associated with existing grants and $ 6.2 million of credits resulting from a change in estimate based on revised expectations of the attainment levels for performance metrics of certain awards.

Included within the Performance Awards benefit for Year-To-Date 2023 was a combination of ongoing expense associated with existing grants and $ 12.9 million of credits resulting from (a) a change in estimate based on revised expectations of the attainment levels for performance metrics of certain awards, and (b) the reversal of unvested expense related to forfeited awards for employees no longer with the Company.

(2) Stock-based compensation expense (benefit) recorded within Cost of sales (exclusive of depreciation and amortization) amounted to $ 0.1 million and $ 0.3 million in the Third Quarter 2023 and Third Quarter 2022, respectively, and $ 1.2 million in Year-To-Date 2022.

The stock-based compensation expense (benefit) recorded within Cost of sales (exclusive of depreciation and amortization) in Year-To-Date 2023 nets to zero .

All other stock-based compensation expense (benefit) is included in Selling, general, and administrative expenses.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

EARNINGS (LOSS) PER COMMON SHARE

The following table reconciles net income (loss) and share amounts utilized to calculate basic and diluted earnings (loss) per common share:

Thirteen Weeks Ended Thirty-nine Weeks Ended

2023 October 29,

2022 October 28,

2023 October 29,

(1) Stock-based compensation expense recorded within Cost of sales (exclusive of depreciation and amortization) amounted to $ 1.0 million and $ 0.4 million in the First Quarter 2024 and First Quarter 2023, respectively.

All other stock-based compensation expense is included in Selling, general, and administrative expenses.

During the First Quarter 2024, there was a change of control of the Company, which triggered a conversion of all Performance Awards into service-based Performance Awards in accordance with their terms.

As a result, the Fiscal 2023, Fiscal 2022, and fiscal year 2021 Performance Awards will all vest at their target shares on their respective vesting dates without regard to the achievement of any of the performance metrics associated with those awards.

The incremental expense recorded for Performance Awards in the First Quarter 2024 due to the change of control was $ 9.9 million.

LOSS PER COMMON SHARE

The following table reconciles net loss and share amounts utilized to calculate basic and diluted loss per common share:

Thirteen Weeks Ended

2024 April 29,

(in thousands)

Net income (loss) $ 38,482 $ 42,855 $ ( 25,705 ) $ 49,387

Net loss $ ( 37,795 ) $ ( 28,834 )

Basic weighted average common shares outstanding 12,643 12,374

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Diluted weighted average common shares outstanding 12,643 12,374

Anti-dilutive shares excluded from diluted earnings (loss) per common share calculation — — 124 —

The Company computes income taxes using the liability method.

This method requires recognition of deferred tax assets and liabilities, measured by 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 provision for income taxes during interim reporting periods has historically been calculated by applying an estimate of the annual effective tax rate for the full fiscal year to pretax income (loss) excluding unusual or infrequently occurring discrete items for the reporting period.

For the Third Quarter 2023, and in accordance with ASC 740-270-30-18 “Income Taxes - Interim Reporting - Initial Measurement,” and paragraph 82 of FASB interpretation No.

18, “Accounting for Income Taxes in Interim Periods” (“FIN 18”), the Company computed its provision for income taxes based on the actual effective tax rate for the year-to-date period by applying the discrete method.

The Company determined that the historical method would not provide a reliable estimate for the Third Quarter 2023 because small changes in estimated ordinary income for Fiscal 2023 would result in a significant change in the estimated annual effective tax rate.

We believe that, at this time, the use of this discrete method represents the best estimate of our annual effective tax rate.

The Company’s effective income tax rate for the Third Quarter 2023 was a benefit of ( 3.9 )%, or $ 1.5 million, compared to a provision of 20.7 %, or $ 11.2 million, during the Third Quarter 2022.

The change in the effective income tax rate and income tax provision (benefit) for the Third Quarter 2023 compared to the Third Quarter 2022 was primarily driven by the utilization of the discrete tax provision methodology discussed above in the Third Quarter 2023, and the impact of certain non-deductible executive compensation.

The Company’s effective income tax rate for Year-To-Date 2023 was a benefit of ( 40.9 )%, or $ 17.8 million, compared to a provision of 10.5 %, or $ 5.8 million, for Year-To-Date 2022.

The change in the effective income tax rate for Year-To-Date 2023 compared to Year-To-Date 2022 was primarily driven by the Year-To-Date 2023 pretax loss as compared to pretax income for Year-To-Date 2022, jurisdictional earnings mix, the impact of certain non-deductible executive compensation, and the release of a reserve in the first quarter of Fiscal 2022 of $ 6.4 million for unrecognized tax benefits as a result of a settlement with a taxing authority which was nonrecurring, in addition to the utilization of the discrete tax provision methodology.

Anti-dilutive shares excluded from diluted loss per common share calculation 78 228

FAIR VALUE MEASUREMENT

The Company’s cash and cash equivalents, accounts receivable, investments in the rabbi trust, accounts payable, and revolving loan are all short-term in nature.

As such, their carrying amounts approximate fair value.

The Company's deferred compensation plan 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 CHILDREN’S PLACE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair value of the Company’s Initial Mithaq Term Loan with a carrying value (gross of debt issuance costs) of $ 78.6 million at May 4, 2024, was approximately $ 53.2 million.

The fair value of the Company’s New Mithaq Term Loan with a carrying value (gross of debt issuance costs) of $ 90.0 million at May 4, 2024, was approximately $ 77.8 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 recorded impairment charges in the First Quarter 2023 of $ 1.8 million, inclusive of ROU assets.

The Company did no t record asset impairment charges in the First Quarter 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 quantitative impairment assessment of the Gymboree tradename, in accordance with FASB ASC 350— Intangibles – Goodwill and Other .

Based on this assessment, the Company recorded an impairment charge on the Gymboree tradename of $ 29.0 million in Fiscal 2023, which reduced the carrying value to its fair value of $ 41.0 million.

There were no impairment charges recorded in the First Quarter 2024.

Unfavorable changes in certain of the Company’s key assumptions may affect future testing results.

For example, keeping all other assumptions constant, a 100-basis point increase in the discount rate would result in further impairment charges of approximately $ 3.0 million or a 10% decrease in forecasted revenue would result in further impairment charges of approximately $ 4.0 million.

The Company computes income taxes using the liability method.

The Company’s effective income tax rate for the First Quarter 2024 was a provision of ( 5.8 )%, or $ 2.1 million, compared to a benefit of 19.8 %, or $( 7.1 ) million, during the First Quarter 2023.

The change in the effective income tax rate and income tax provision (benefit) for the First Quarter 2024 compared to the First Quarter 2023 was primarily driven by the establishment of a valuation allowance against the Company’s net deferred tax assets in Fiscal 2023.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic.

1 unchanged sentence

Pursuant to the CARES Act, the Company carried back the taxable year 2020 tax loss of $ 150.0 million to prior years.

During the first quarter of Fiscal 2022, the Company received $ 22.0 million of this income tax refund and the remaining balance of $ 19.1 million as of October 28, 2023 is included within Prepaid expenses and other current assets on the Consolidated Balance Sheets.

As of May 4, 2024, the remaining income tax receivable of $ 19.1 million is included within Prepaid expenses and other current assets on the Consolidated Balance Sheets.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company accrues interest and penalties related to unrecognized tax benefits as part of the provision for income taxes.

The total amount of unrecognized tax benefits was $ 4.8 million, $ 3.6 million, and $ 2.3 million as of October 28, 2023, January 28, 2023, and October 29, 2022, respectively, and is included within long-term liabilities.

Interest expense recognized in Year-To-Date 2023 and Year-To-Date 2022 related to unrecognized tax benefits was not significant.

The total amount of unrecognized tax benefits was $ 7.4 million, $ 7.0 million, and $ 3.8 million as of May 4, 2024, February 3, 2024, and April 29, 2023, respectively, and is included within long-term liabilities.

Additional interest expense recognized in the First Quarter 2024 and First Quarter 2023 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.

3 unchanged sentences

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.

1 unchanged sentence

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.

During the First Quarter 2024, Mithaq became the controlling shareholder of the Company.

This change of control constituted an “ownership change” under the Internal Revenue Code Section 382, subjecting the Company to an annual limitation on its ability to utilize its existing NOLs and tax credits as of the ownership change date to offset future taxable income.

The application of such limitation may cause U.S.

federal income taxes to be paid by the Company earlier than they otherwise would be paid if such limitation was not in effect, which would adversely affect the Company’s operating results and cash flows if it has taxable income in the future.

In addition to the aforementioned federal income tax implications pursuant to Section 382 of the Code, most U.S.

states follow the general provision of Section 382 of the Code, either explicitly or implicitly resulting in separate state NOL limitations.

This could cause state income taxes to be paid earlier than otherwise would be paid if such limitation was not in effect and could cause such NOLs to expire unused.

SEGMENT INFORMATION

2 unchanged sentences

and The Children’s Place International.

Each segment includes an e-commerce business located at www.childrensplace.com, www.gymboree.com, www.sugarandjade.com, and www.pjplace.com.

Each segment includes an e-commerce business located at www.childrensplace.com and www.gymboree.com.

Included in The Children’s Place U.S.

8 unchanged sentences

The Company periodically reviews these allocations and adjusts them based upon changes in business circumstances.

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, amounting to $ 54.5 million and $ 116.0 million for the Third Quarter 2023 and Year-To-Date 2023, respectively, and accounts for a majority of the Company’s accounts receivable.

As of October 28, 2023, The Children’s Place U.S.

Net sales to external customers are derived from merchandise sales, and the Company has no customer that individually accounted for more than 10% of its net sales.

As of May 4, 2024, The Children’s Place U.S.

had 455 stores and The Children’s Place International had 63 stores.

As of October 29, 2022, The Children’s Place U.S.

As of April 29, 2023, The Children’s Place U.S.

had 528 stores and The Children’s Place International had 71 stores.

3 unchanged sentences

The following table provides segment level financial information:

Thirteen Weeks Ended Thirty-nine Weeks Ended

2023 October 29,

2022 October 28,

2023 October 29,

Thirteen Weeks Ended

2024 April 29,

(in thousands)

4 unchanged sentences

Total net sales $ 267,878 $ 321,640

Operating income (loss):

Operating loss:

The Children’s Place U.S.

1 unchanged sentence

The Children’s Place International ( 4,009 ) ( 2,040 )

Total operating income (loss) $ 44,967 $ 57,837 $ ( 22,042 ) $ 63,261

Operating income (loss) as a percentage of net sales:

Total operating loss $ ( 27,988 ) $ ( 30,067 )

Operating loss as a percentage of net sales:

The Children’s Place U.S.

1 unchanged sentence

The Children’s Place International ( 18.5 %) ( 7.2 %)

Total operating income (loss) as a percentage of net sales 9.4 % 11.4 % ( 1.9 %) 5.1 %

Total operating loss as a percentage of net sales ( 10.4 %) ( 9.3 %)

Depreciation and amortization:

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements