What changed in this filing

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Item 1. Financial Statements

2024-09-11 compared with 2024-06-13 · 219 added, 157 removed, 595 unchanged (39% of the section changed)

4 unchanged sentences

2024 February 3,

2024 April 29,

2024 July 29,

(in thousands, except par value)

22 unchanged sentences

Long-term debt — 49,818 49,785

Related party long-term debt 165,354 — —

Long-term portion of operating lease liabilities 110,596 118,073 63,714

22 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Thirteen Weeks Ended

2024 April 29,

Thirteen Weeks Ended Twenty-six Weeks Ended

2024 July 29,

2023 August 3,

2024 July 29,

(in thousands, except loss per common share)

Net sales $ 319,655 $ 345,599 $ 587,533 $ 667,239

Cost of sales (exclusive of depreciation and amortization) 175,137 225,178

Cost of sales 207,861 257,840 382,998 483,019

Gross profit 111,794 87,759 204,535 184,220

3 unchanged sentences

Operating loss ( 21,776 ) ( 36,941 ) ( 49,764 ) ( 67,008 )

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

Related party interest expense ( 2,087 ) — ( 2,476 ) —

Other interest expense ( 7,158 ) ( 7,658 ) ( 14,501 ) ( 13,594 )

Interest income 14 17 25 51

12 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Thirteen Weeks Ended

2024 April 29,

Thirteen Weeks Ended Twenty-six Weeks Ended

2024 July 29,

2023 August 3,

2024 July 29,

(in thousands)

7 unchanged sentences

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, February 3, 2024 12,585 $ 1,259 $ 141,083 $ 2,909 $ ( 134,865 ) $ ( 16,496 ) ( 56 ) $ ( 2,909 ) $ ( 9,019 )

Thirteen Weeks Ended August 3, 2024

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

Vesting of stock awards 61 6 ( 6 ) —

Stock-based compensation expense 12,610 12,610

Stock-based compensation benefit ( 1,248 ) ( 1,248 )

Purchase and retirement of common stock ( 21 ) ( 2 ) ( 245 ) ( 247 )

2 unchanged sentences

Net loss ( 32,114 ) ( 32,114 )

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

Balance, August 3, 2024 12,779 $ 1,278 $ 151,859 $ 2,975 $ ( 204,774 ) $ ( 17,235 ) ( 61 ) $ ( 2,975 ) $ ( 68,872 )

Twenty-six Weeks Ended August 3, 2024

Additional Other Total

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

(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 )

5 unchanged sentences

Net loss ( 69,909 ) ( 69,909 )

Balance, August 3, 2024 12,779 $ 1,278 $ 151,859 $ 2,975 $ ( 204,774 ) $ ( 17,235 ) ( 61 ) $ ( 2,975 ) $ ( 68,872 )

See accompanying notes to these consolidated financial statements.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY

Thirteen Weeks Ended July 29, 2023

Additional Other Total

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

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

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

Vesting of stock awards 119 12 ( 12 ) —

Stock-based compensation benefit ( 4,762 ) ( 4,762 )

Purchase and retirement of common stock ( 48 ) ( 5 ) ( 955 ) 85 ( 875 )

Other comprehensive income 1,101 1,101

Deferral of common stock into deferred compensation plan 74 ( 3 ) ( 74 ) —

Net loss ( 35,355 ) ( 35,355 )

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

Twenty-six Weeks Ended July 29, 2023

Additional Other Total

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 455 46 ( 46 ) —

Stock-based compensation benefit ( 1,679 ) ( 1,679 )

Purchase and retirement of common stock ( 203 ) ( 21 ) ( 4,114 ) ( 2,829 ) ( 6,964 )

Other comprehensive income 283 283

Deferral of common stock into deferred compensation plan 148 ( 4 ) ( 148 ) —

Net loss ( 64,188 ) ( 64,188 )

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

See accompanying notes to these consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Thirteen Weeks Ended

2024 April 29,

Twenty-six Weeks Ended

2024 July 29,

(in thousands)

1 unchanged sentence

Net loss $ ( 69,909 ) $ ( 64,188 )

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

Reconciliation of net loss to net cash used in operating activities:

Non-cash portion of operating lease expense 39,184 37,757

Depreciation and amortization 21,140 23,801

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

Non-cash stock-based compensation expense (benefit), net 11,361 ( 1,679 )

Asset impairment charges 28,000 2,532

9 unchanged sentences

Other long-term liabilities ( 137 ) ( 2,237 )

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

Net cash used in operating activities ( 194,687 ) ( 32,705 )

CASH FLOWS FROM INVESTING ACTIVITIES:

6 unchanged sentences

Purchase and retirement of common stock, including shares surrendered for tax withholdings and transaction costs ( 566 ) ( 6,964 )

Proceeds from issuance of term loans 168,600 —

Proceeds from issuance of related party term loans

Repayment of term loan ( 50,000 ) —

17 unchanged sentences

The Children’s Place, Inc.

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.

and its subsidiaries (collectively, the “Company”) operate an omni-channel children’s specialty portfolio of brands.

Its global retail and wholesale network includes two digital storefronts, more than 500 stores in North America, wholesale marketplaces and distribution in 15 countries through five international franchise partners.

The 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:

10 unchanged sentences

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

• Second Quarter 2024 — The thirteen weeks ended August 3, 2024

• Second Quarter 2023 — The thirteen weeks ended July 29, 2023

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

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

• Year-To-Date 2024 — The twenty-six weeks ended August 3, 2024

• Year-To-Date 2023 — The twenty-six weeks ended July 29, 2023

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

14 unchanged sentences

Intercompany balances and transactions have been eliminated.

As of May 4, 2024, February 3, 2024 and April 29, 2023, the Company did not have any investments in unconsolidated affiliates.

As of August 3, 2024, February 3, 2024 and July 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)

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.

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 August 3, 2024 and July 29, 2023, the results of its consolidated operations, consolidated comprehensive loss, and consolidated changes in stockholders’ (deficit) equity for the thirteen weeks and twenty-six weeks ended August 3, 2024 and July 29, 2023, and consolidated cash flows for the twenty-six weeks ended August 3, 2024 and July 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 and twenty-six weeks ended August 3, 2024 and July 29, 2023 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 Second Quarter 2024, Fiscal 2023 and Fiscal 2022.

As of August 3, 2024, the Company had an Accumulated deficit of $ 204.8 million and a working capital deficit of $ 71.2 million, which included borrowings of $ 316.7 million under its asset-based revolving credit facility (the “ABL Credit Facility”), which will mature in 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.

As of August 3, 2024, the Company had availability under its ABL Credit Facility of $ 67.3 million.

The Company also has access to a senior unsecured credit facility of up to $ 40.0 million (the “Mithaq Credit Facility”), pursuant to a commitment letter, dated as of May 2, 2024, entered into between the Company and its majority shareholder, Mithaq Capital SPC, a Cayman segregated portfolio company (“Mithaq”).

The Mithaq Credit Facility will be available to draw on at any time prior to July 1, 2026 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 plans to address its ongoing liquidity needs with additional financing as necessary, including but not limited to a future rights offering that the Company is currently contemplating.

For more information about the ABL Credit Facility and the Mithaq Credit Facility, see “Note 7.

Debt” of the consolidated financial statements.

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.

11 unchanged sentences

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)

In December 2023, the FASB issued Accounting Standards Update No.

4 unchanged sentences

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

2024 April 29,

Thirteen Weeks Ended Twenty-six Weeks Ended

2024 July 29,

2023 August 3,

2024 July 29,

(in thousands)

9 unchanged sentences

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 $ 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.

The Company deferred sales of $ 12.6 million, $ 3.1 million, and $ 11.7 million within Accrued expenses and other current liabilities as of August 3, 2024, February 3, 2024, and July 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 $ 7.0 million, $ 9.0 million, and $ 5.5 million as of May 4, 2024, February 3, 2024, and April 29, 2023, respectively.

The allowance for wholesale revenue included within Accounts receivable was $ 8.0 million, $ 9.0 million, and $ 7.4 million as of August 3, 2024, February 3, 2024, and July 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 $ 1.3 million, $ 1.7 million, and $ 1.8 million as of May 4, 2024, February 3, 2024, and April 29, 2023, respectively.

The allowance for estimated sales returns, which is recorded in Accrued expenses and other current liabilities, was $ 2.1 million, $ 1.7 million, and $ 2.5 million as of August 3, 2024, February 3, 2024, and July 29, 2023, respectively.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

4 unchanged sentences

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.

8 unchanged sentences

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 $ 2.3 million, $ 1.7 million, and $ 3.8 million as of May 4, 2024, February 3, 2024, and April 29, 2023, respectively.

The total contract liabilities related to this program were $ 3.6 million, $ 1.7 million, and $ 5.6 million as of August 3, 2024, February 3, 2024, and July 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.

3 unchanged sentences

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

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 gift card liability balance as of August 3, 2024, February 3, 2024, and July 29, 2023 was $ 6.4 million, $ 6.8 million, and $ 10.2 million, respectively.

During Year-To-Date 2024, the Company recognized Net sales of $ 2.7 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.

4 unchanged sentences

The Company records these territorial fees as deferred revenue and amortizes the fee into Net sales over the life of the territorial agreement.

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 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.

1 unchanged sentence

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,

RESTRUCTURING

As a result of the strategic actions associated with the voluntary early termination and subsequent renewal of the Company’s corporate office lease, the move of its distribution center operations from Toronto, Canada (“TODC”) to Alabama in the United States, and workforce reductions, the Company incurred $ 0.2 million and $ 2.5 million in restructuring costs during the Second Quarter 2024 and Year-To-Date 2024, respectively, on a pretax basis, summarized in the following table:

Thirteen Weeks Ended Twenty-six Weeks Ended

2024 July 29,

2023 August 3,

2024 July 29,

(in thousands)

Employee-related costs

$ — $ 5,433 $ — $ 5,433

Lease termination costs (1)

241 4,947 701 4,947

TODC costs (2)

Professional fees — 186 — 186

Total restructuring costs (3)

$ 241 $ 10,566 $ 2,549 $ 10,566

(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.

_______________________________________

(1) Includes non-cash charges related to accelerated depreciation on certain assets in the corporate office over the reduced term, amounting to $ 0.2 million and $ 0.7 million for the Second Quarter 2024 and Year-To-Date 2024, respectively.

(2) Includes non-cash charges related to accelerated depreciation on TODC assets, amounting to $ 1.1 million during Year-To-Date 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:

TODC costs are recorded within The Children’s Place International segment.

The remaining restructuring costs 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 August 3, 2024.

The remaining related liability is expected to be settled with cash payments during the remainder of Fiscal 2024 and these costs are included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets:

Employee-Related Costs TODC Costs Total

4 unchanged sentences

Balance at May 4, 2024 552 504 1,056

Cash Payments ( 304 ) ( 185 ) ( 489 )

Balance at August 3, 2024 $ 248 $ 319 $ 567

Employee-Related Costs Lease Termination Costs Professional Fees Total

18 unchanged sentences

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 performed a quantitative impairment assessment of the Gymboree tradename as of June 30, 2024, and recorded additional asset impairment charges of $ 28.0 million in the Second Quarter 2024, which reduced the carrying value to its fair value of $ 13.0 million as of August 3, 2024.

The Company’s intangible assets were as follows:

August 3, 2024

Useful Life Gross Amount Accumulated Amortization Net Amount

2 unchanged sentences

Indefinite $ 13,000 $ — $ 13,000

Crazy 8 tradename (1)

5 years 4,000 ( 4,000 ) —

Total intangible assets $ 13,000 $ — $ 13,000

7 unchanged sentences

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

April 29, 2023

July 29, 2023

Useful Life Gross Amount Accumulated Amortization Net Amount

5 unchanged sentences

Total intangible assets $ 73,953 $ ( 3,462 ) $ 70,491

____________________________________________

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

THE CHILDREN’S PLACE, INC.

4 unchanged sentences

2024 February 3,

2024 April 29,

2024 July 29,

(in thousands)

8 unchanged sentences

799,742 804,131 862,193

Less accumulated depreciation and amortization ( 680,509 ) ( 679,381 ) ( 711,945 )

accumulated depreciation and amortization ( 688,446 ) ( 679,381 ) ( 720,949 )

Property and equipment, net $ 111,296 $ 124,750 $ 141,244

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.

At August 3, 2024 and July 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 did no t record asset impairment charges in the Second Quarter 2024 and Year-To-Date 2024.

The Company recorded asset impairment charges in the Second Quarter 2023 and Year-To-Date 2023 of $ 0.8 million and $ 2.5 million, respectively, inclusive of right of use (“ROU”) assets.

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 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’s leases have remaining lease terms ranging from less than one year up to thirteen 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

2024 April 29,

Thirteen Weeks Ended Twenty-six Weeks Ended

2024 July 29,

2023 August 3,

2024 July 29,

(in thousands)

1 unchanged sentence

Variable operating lease cost (1)

6,098 14,388 13,944 29,085

Total operating lease cost $ 29,237 $ 35,869 $ 59,585 $ 71,472

1 unchanged sentence

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

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.

As of August 3, 2024, the weighted-average remaining operating lease term was 4.3 years, and the weighted-average discount rate for operating leases was 7.8 %.

Cash paid for amounts included in the measurement of operating lease liabilities during Year-To-Date 2024 was $ 39.8 million.

ROU assets obtained in exchange for new operating lease liabilities were $ 34.8 million during Year-To-Date 2024.

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

As of August 3, 2024, the maturities of operating lease liabilities were as follows:

(in thousands)

7 unchanged sentences

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.

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.

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

1 unchanged sentence

(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 %.

Prior to April 18, 2024, the Company was charged a fee of 0.200 % on the unused portion of the commitments.

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 %.

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

8 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

For the Second Quarter 2024 and Year-To-Date 2024, the Company recognized $ 6.3 million and $ 12.0 million, respectively, in interest expense related to the ABL Credit Facility.

For the Second Quarter 2023 and Year-To-Date 2023, the Company recognized $ 6.1 million and $ 10.8 million, respectively, in interest expense related to the ABL Credit Facility.

Prior to April 18, 2024, 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.

As of April 18, 2024, 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 of default, as described below.

The Company is not subject to any early termination fees.

11 unchanged sentences

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.

As of April 18, 2024, the ABL Credit Facility was reduced from $ 445.0 million to $ 433.0 million, and until the Company achieved certain excess availability thresholds, the Seventh Amendment preserved the temporary enhanced reporting requirements under the Waiver Agreement and continued to impose cash dominion.

As of August 29, 2024, the Company is no longer under cash dominion and it has reverted to the standard reporting requirements under the Credit Agreement.

THE CHILDREN’S PLACE, INC.

3 unchanged sentences

2024 February 3,

2024 April 29,

2024 July 29,

(in millions)

17 unchanged sentences

____________________________________________

(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.

(1) In the Second Quarter 2024, given that the Company was under cash dominion, the excess availability threshold was not applicable to the total borrowing base availability.

As of August 29, 2024, the Company is no longer under cash dominion.

In Fiscal 2023, the total borrowing base availability was calculated net of the excess availability threshold, as prior to the Seventh Amendment, crossing that threshold would have resulted in cash dominion, which would have triggered a fixed charge coverage ratio covenant test and would likely have led to a default under the Credit Agreement.

As of the Seventh Amendment, the fixed charge coverage ratio covenant has been removed from the Credit Agreement.

(2) In the Second Quarter 2024, given that the Company was under cash dominion, the excess availability threshold was not applicable to the determination of the credit facility availability.

As of August 29, 2024, the Company is no longer under cash dominion.

In Fiscal 2023, the credit facility availability was calculated net of the excess availability threshold, as prior to the Seventh Amendment, crossing that threshold would have resulted in cash dominion, which would have triggered a fixed charge coverage ratio covenant test and would likely have led to a default under the Credit Agreement.

As of the Seventh Amendment, the fixed charge coverage ratio covenant has been removed from the Credit Agreement.

(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.

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

The Company recognized $ 1.1 million in interest expense related to the 2021 Term Loan during Year-To-Date 2024.

For the Second Quarter 2023 and Year-To-Date 2023, the Company recognized $ 1.0 million and $ 1.9 million, respectively, in interest expense related to the 2021 Term Loan.

As of April 18, 2024, the 2021 Term Loan was fully repaid.

As of August 3, 2024, unamortized deferred financing costs amounted to $ 2.4 million related to the Company’s ABL Credit Facility.

Mithaq Term Loans

6 unchanged sentences

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”;

The Company and certain of its subsidiaries also maintain an 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”).

1 unchanged sentence

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.

For the Second Quarter 2024 and Year-To-Date 2024, the Company recognized $ 2.1 million and $ 2.5 million, respectively, 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.

3 unchanged sentences

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:

As of August 3, 2024 unamortized deferred financing costs amounted to $ 3.2 million related to the Mithaq Term Loans.

Maturities of the Company’s principal debt payments as of August 3, 2024 are as follows:

August 3, 2024

(in thousands)

Remainder of 2024

Total related party debt

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.

On May 2, 2024, the Company entered into a commitment letter (“the Commitment Letter”) with Mithaq for a $ 40.0 million 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.

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.

2 unchanged sentences

Additionally, such debt shall require no mandatory prepayments and shall mature no earlier than July 1, 2026 .

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

As of August 3, 2024, no debt had been incurred under the Mithaq Credit Facility.

THE CHILDREN’S PLACE, INC.

23 unchanged sentences

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.

Following the court’s recent decision(s), the Company released $ 2.3 million from its previously established reserve during the First Quarter 2024.

Similar to the Rael case above, the Company is also a defendant in Gabriela Gonzalez v.

9 unchanged sentences

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.

(“JAMS”) as part of a related mass arbitration claim.

The parties participated in mediation proceedings on November 15, 2023 and February 9, 2024.

1 unchanged sentence

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.

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.

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

3 unchanged sentences

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 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.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company is also involved in various legal proceedings arising in the normal course of business.

STOCKHOLDERS’ (DEFICIT) EQUITY

5 unchanged sentences

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.

As of August 3, 2024, there was $ 156.7 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.

2 unchanged sentences

The following table summarizes the Company’s share repurchases:

Thirteen Weeks Ended

May 4, 2024 April 29, 2023

Twenty-six Weeks Ended

August 3, 2024 July 29, 2023

Shares Amount Shares Amount

6 unchanged sentences

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 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.

6 unchanged sentences

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

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

Thirteen Weeks Ended

2024 April 29,

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

Thirteen Weeks Ended Twenty-six Weeks Ended

2024 July 29,

2023 August 3,

2024 July 29,

(in thousands)

1 unchanged sentence

Performance Awards

Total stock-based compensation expense (1)

( 659 ) ( 6,452 ) 9,532 ( 5,869 )

Total stock-based compensation expense (benefit) (1)

$ ( 1,248 ) $ ( 4,762 ) $ 11,361 $ ( 1,679 )

(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.

___________________________________________

(1) Stock-based compensation expense (benefit) recorded within Cost of sales amounted to $ 0.1 million and $( 0.5 ) million in the Second Quarter 2024 and Second Quarter 2023, respectively, and $ 1.1 million and $( 0.1 ) million in Year-To-Date 2024 and Year-To-Date 2023, respectively.

All other stock-based compensation expense (benefit) 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.

The fiscal year 2021 Performance Awards vested during the First Quarter 2024.

The incremental expense recorded for Performance Awards during Year-To-Date 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,

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

Thirteen Weeks Ended Twenty-six Weeks Ended

2024 July 29,

2023 August 3,

2024 July 29,

(in thousands)

12 unchanged sentences

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 the Company’s Initial Mithaq Term Loan with a carrying value (gross of debt issuance costs) of $ 78.6 million at August 3, 2024, was approximately $ 55.1 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 August 3, 2024, was approximately $ 78.8 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.

6 unchanged sentences

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.

The Company performed periodic quantitative impairment assessments of its long-lived assets and did no t record an impairment charge in the Second Quarter 2024 and Year-To-Date 2024.

The Company recorded asset impairment charges in the Second Quarter 2023 and Year-To-Date 2023 of $ 0.8 million and $ 2.5 million, respectively, inclusive of ROU assets.

Impairment of Indefinite-Lived Intangible Assets

1 unchanged sentence

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.

The Company performed a quantitative impairment assessment of the Gymboree tradename as of June 30, 2024, in accordance with FASB ASC 350— Intangibles – Goodwill and Other .

Based on this assessment, the Company recorded an impairment charge of $ 28.0 million in the Second Quarter 2024, primarily due to reductions in Gymboree sales forecasts and a reduction in the royalty rate u sed to value the tradename, which reduced the carrying value to its fair value of $ 13.0 million as of August 3, 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.

For example, keeping all other assumptions constant, a 100-basis point increase in the discount rate or a 10% decrease in forecasted revenue would result in further impairment charges of approximately $ 1.0 million.

The Company computes income taxes using the asset and 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 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.

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 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 Company’s effective income tax rate for the Second Quarter 2024 was a provision of ( 3.6 )%, or $ 1.1 million, compared to a benefit of 20.7 %, or $( 9.2 ) million, during the Second Quarter 2023.

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

The Company’s effective income tax rate for Year-To-Date 2024 was a provision of ( 4.8 )%, or $ 3.2 million, compared to a benefit of 20.3 %, or $( 16.4 ) million, for Year-To-Date 2023.

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

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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

As of August 3, 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 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 $ 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 total amount of unrecognized tax benefits was $ 7.8 million, $ 7.0 million, and $ 4.3 million as of August 3, 2024, February 3, 2024, and July 29, 2023, respectively, and is included within long-term liabilities.

Additional interest expense recognized in the Second Quarter 2024 and Second 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.

30 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 no customer that individually accounted for more than 10% of its net sales.

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

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 $ 44.5 million and $ 61.0 million for the Second Quarter 2024 and Year-To-Date 2024, respectively, and accounts for a majority of the Company’s accounts receivable.

As of August 3, 2024, The Children’s Place U.S.

had 452 stores and The Children’s Place International had 63 stores.

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

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

had 525 stores and The Children’s Place International had 71 stores.

3 unchanged sentences

The following table provides segment level financial information:

Thirteen Weeks Ended

2024 April 29,

Thirteen Weeks Ended Twenty-six Weeks Ended

2024 July 29,

2023 August 3,

2024 July 29,

(in thousands)

28 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