What changed in this filing

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Item 1. Financial Statements

2025-06-11 compared with 2024-12-06 · 272 added, 363 removed, 445 unchanged (59% of the section changed)

4 unchanged sentences

2025 February 1,

2024 October 28,

(in thousands, except par value)

9 unchanged sentences

Tradenames, net 13,000 13,000 41,000

Deferred income taxes — — 35,237

Other assets 7,891 7,466 6,957

Total assets $ 779,602 $ 747,552 $ 848,335

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

6 unchanged sentences

Long-term liabilities:

Long-term debt — 49,818 49,801

Related party long-term debt 107,010 165,974 166,635

5 unchanged sentences

Commitments and contingencies (see Note 7)

Stockholders’ (deficit) equity:

Stockholders’ equity (deficit):

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

9 unchanged sentences

Accumulated deficit ( 226,707 ) ( 192,684 ) ( 172,660 )

Total stockholders’ (deficit) equity ( 49,574 ) ( 9,019 ) 118,071

Total liabilities and stockholders’ (deficit) equity $ 888,793 $ 800,308 $ 973,381

Total stockholders’ equity (deficit) 1,415 ( 59,411 ) ( 34,850 )

Total liabilities and stockholders’ equity (deficit) $ 779,602 $ 747,552 $ 848,335

See accompanying notes to these consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

Thirteen Weeks Ended Thirty-nine Weeks Ended

2024 October 28,

2023 November 2,

2024 October 28,

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

Thirteen Weeks Ended

(in thousands, except loss per common share)

Net sales $ 242,125 $ 267,878

Cost of sales 251,832 318,182 634,830 801,111

Cost of sales (exclusive of depreciation and amortization) 171,342 175,137

Gross profit 70,783 92,741

1 unchanged sentence

Depreciation and amortization 8,230 11,635

Asset impairment charges — 583 28,000 3,115

Operating income (loss) 29,258 44,967 ( 20,506 ) ( 22,042 )

Operating loss ( 24,117 ) ( 27,988 )

Related party interest expense ( 1,871 ) ( 389 )

1 unchanged sentence

Interest income 10 10

Income (loss) before provision (benefit) for income taxes 19,180 37,028 ( 47,536 ) ( 43,523 )

Provision (benefit) for income taxes ( 900 ) ( 1,454 ) 2,293 ( 17,818 )

Net income (loss) $ 20,080 $ 38,482 $ ( 49,829 ) $ ( 25,705 )

Earnings (loss) per common share

Loss before provision for income taxes ( 32,679 ) ( 35,709 )

Provision for income taxes 1,344 2,086

Net loss $ ( 34,023 ) $ ( 37,795 )

Loss per common share

Basic $ ( 1.57 ) $ ( 2.98 )

6 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Thirteen Weeks Ended Thirty-nine Weeks Ended

2024 October 28,

2023 November 2,

2024 October 28,

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Thirteen Weeks Ended

(in thousands)

Net income (loss) $ 20,080 $ 38,482 $ ( 49,829 ) $ ( 25,705 )

Other comprehensive loss:

Net loss $ ( 34,023 ) $ ( 37,795 )

Other comprehensive income (loss):

Foreign currency translation adjustment 3,582 ( 326 )

Total comprehensive income (loss) $ 19,798 $ 36,947 $ ( 50,850 ) $ ( 26,957 )

Total comprehensive loss $ ( 30,441 ) $ ( 38,121 )

See accompanying notes to these consolidated financial statements.

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY

Thirteen Weeks Ended November 2, 2024

Additional Other Total

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

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

Thirteen Weeks Ended May 3, 2025

Accumulated Total

Additional Other Stockholders’

Common Stock Paid-In Deferred Accumulated Comprehensive Treasury Stock Equity

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

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

Balance, February 1, 2025 12,785 $ 1,279 $ 151,485 $ 90 $ ( 192,684 ) $ ( 19,491 ) ( 3 ) $ ( 90 ) $ ( 59,411 )

Vesting of stock awards 64 6 ( 6 ) — — — — — —

Stock-based compensation expense — — 1,746 — — — — — 1,746

Purchase and retirement of common stock ( 15 ) ( 1 ) ( 83 ) — — — — — ( 84 )

Rights offering stock issuance 9,231 923 89,077 — — — — — 90,000

Stock issuance costs — — ( 395 ) — — — — — ( 395 )

Other comprehensive loss — — — — — ( 282 ) — — ( 282 )

Distribution of common stock from deferred compensation plan — — — ( 2,865 ) — — 58 2,865 —

Net income — — — — 20,080 — — — 20,080

Balance, November 2, 2024 12,779 $ 1,278 $ 151,359 $ 110 $ ( 184,694 ) $ ( 17,517 ) ( 3 ) $ ( 110 ) $ ( 49,574 )

Thirty-nine Weeks Ended November 2, 2024

Other comprehensive income — — — — — 3,582 — — 3,582

Net loss — — — — ( 34,023 ) — — — ( 34,023 )

Balance, May 3, 2025 22,065 $ 2,207 $ 241,824 $ 90 $ ( 226,707 ) $ ( 15,909 ) ( 3 ) $ ( 90 ) $ 1,415

Thirteen Weeks Ended May 4, 2024

Additional Other Total

2 unchanged sentences

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

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

Vesting of stock awards 204 20 ( 20 ) — — — — — —

1 unchanged sentence

Purchase and retirement of common stock ( 50 ) ( 5 ) ( 315 ) — — — — — ( 320 )

Stock issuance costs — — ( 521 ) — — — — — ( 521 )

Other comprehensive loss — — — — — ( 326 ) — — ( 326 )

Distribution of common stock from deferred compensation plan, net of deferrals — — — ( 2,799 ) — — 53 2,799 —

Net loss — — — — ( 49,829 ) — — — ( 49,829 )

Balance, November 2, 2024 12,779 $ 1,278 $ 151,359 $ 110 $ ( 184,694 ) $ ( 17,517 ) ( 3 ) $ ( 110 ) $ ( 49,574 )

See accompanying notes to these consolidated financial statements.

THE CHILDREN’S PLACE, INC.

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’

(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 ) —

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

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

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

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

See accompanying notes to these consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Thirty-nine Weeks Ended

2024 October 28,

Thirteen Weeks Ended

(in thousands)

4 unchanged sentences

Depreciation and amortization 8,230 11,635

Non-cash stock-based compensation expense (benefit), net 11,382 ( 6,424 )

Asset impairment charges 28,000 3,115

Deferred income tax provision — 1,266

Non-cash stock-based compensation expense 1,746 12,610

Other non-cash charges, net 638 361

Loss on extinguishment of debt 1,039 —

Changes in operating assets and liabilities:

9 unchanged sentences

Capital expenditures ( 3,413 ) ( 4,694 )

Change in deferred compensation plan — ( 173 )

Net cash used in investing activities ( 3,413 ) ( 4,694 )

2 unchanged sentences

Repayments under revolving credit facility ( 155,850 ) ( 248,649 )

Proceeds from rights offering

Purchase and retirement of common stock, including shares surrendered for tax withholdings and transaction costs ( 84 ) ( 320 )

Proceeds from issuance of related party term loans — 168,600

Repayment of related party term loan ( 60,187 ) —

Repayment of term loan — ( 50,000 )

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents 4,420 ( 118 )

Net decrease in cash and cash equivalents ( 7,890 ) ( 3,167 )

Net increase (decrease) in cash and cash equivalents 347 ( 679 )

Cash and cash equivalents, beginning of period 5,347 13,639

1 unchanged sentence

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Net cash (received) paid for income taxes $ ( 688 ) $ 6,008

Net cash paid (received) for income taxes $ 667 $ ( 3,715 )

Cash paid for interest 5,142 7,591

8 unchanged sentences

The Children’s Place, Inc.

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 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:

“The Children’s Place”, “Gymboree”, “Sugar & Jade”, and “PJ Place”.

and its subsidiaries (collectively, the “Company”) is the largest pure-play children’s specialty retailer in North America with an omni-channel portfolio of brands and an industry-leading digital-first model.

The Company designs, contracts to manufacture, and sells fashionable, high-quality apparel, accessories and footwear predominantly at value prices, primarily under the Company’s proprietary brands “The Children’s Place”, “Gymboree”, “Sugar & Jade”, and “PJ Place”.

Its global retail and wholesale network includes two digital storefronts, 495 stores in North America, wholesale marketplaces, 228 international points of distribution in 12 countries through seven international franchise partners and social media channels on Instagram, Facebook, X, formerly known as Twitter, YouTube and Pinterest.

The Company’s digital storefronts are at www.childrensplace.com and www.gymboree.com , where its customers are able to shop online for the same merchandise available in its physical stores, but also certain exclusive merchandise only available at its e-commerce sites.

The Company classifies its business into two segments:

3 unchanged sentences

segment are the Company’s U.S.

and Puerto Rico-based stores and revenue from its U.S.-based wholesale business.

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.

and Puerto Rico-based stores and net sales from its U.S.-based wholesale business.

Included in The Children’s Place International segment are its Canadian-based stores and net sales from international franchisees.

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

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 2024 — The thirteen weeks ended November 2, 2024

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

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

• First Quarter 2025 — The thirteen weeks ended May 3, 2025

• Year-To-Date 2024 — The thirty-nine weeks ended November 2, 2024

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

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

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

• Fiscal 2025 — The fifty-two weeks ending January 31, 2026

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

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

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

Securities and Exchange Commission

5 unchanged sentences

Basis of Presentation

The unaudited consolidated financial statements and accompanying notes to consolidated financial statements are prepared in accordance with U.S.

The unaudited consolidated financial statements and accompanying notes to the consolidated financial statements are prepared in accordance with U.S.

GAAP for interim financial information and the rules and regulations of the SEC.

3 unchanged sentences

Intercompany balances and transactions have been eliminated.

As of November 2, 2024, February 3, 2024 and October 28, 2023, the Company did not have any investments in unconsolidated affiliates.

As of May 3, 2025, February 1, 2025 and May 4, 2024, the Company did not have any investments in unconsolidated affiliates.

FASB ASC 810— Consolidation is considered when determining whether an entity is subject to consolidation.

In the opinion of management, the accompanying unaudited consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the consolidated balance sheets of the Company as of May 3, 2025 and May 4, 2024, the results of its consolidated operations, consolidated comprehensive loss, and consolidated changes in stockholders’ equity (deficit) for the thirteen weeks ended May 3, 2025 and May 4, 2024, and consolidated cash flows for the thirteen weeks ended May 3, 2025 and May 4, 2024.

The consolidated balance sheet as of February 1, 2025 was derived from audited financial statements.

Due to the seasonal nature of the Company’s business, the results of operations for the thirteen weeks ended May 3, 2025 and May 4, 2024 are not necessarily indicative of operating results for a full fiscal year.

These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2025.

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 November 2, 2024 and October 28, 2023, the results of its consolidated operations, consolidated comprehensive income (loss), and consolidated changes in stockholders’ (deficit) equity for the thirteen weeks and thirty-nine weeks ended November 2, 2024 and October 28, 2023, and consolidated cash flows for the thirty-nine weeks ended November 2, 2024 and October 28, 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 thirty-nine weeks ended November 2, 2024 and October 28, 2023 are not necessarily indicative of operating results for a full fiscal year.

The Company incurred net losses during Year-To-Date 2024, and in Fiscal 2023 and Fiscal 2022.

As of November 2, 2024, the Company had an Accumulated deficit of $ 184.7 million and a working capital deficit of $ 46.3 million, which included borrowings of $ 362.4 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 November 2, 2024, the Company had availability under its ABL Credit Facility of $ 48.3 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”), as amended on September 10, 2024.

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, including but not limited to the rights offering that the Company is currently contemplating, and for which a preliminary prospectus has been filed with the SEC on Form S-1 on October 15, 2024.

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 Third Quarter 2024 were issued.

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.

5 unchanged sentences

Recent Accounting Standards Updates

Accounting Pronouncement Recently Adopted

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

1 unchanged sentence

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 expects the adoption of ASU 2023-07 to expand its disclosures, but does not expect it to have a material impact on its consolidated financial statements.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company adopted ASU 2023-07 on a retrospective basis and is effective for the Company’s Annual Report on Form 10-K for Fiscal 2024, and subsequent interim periods.

The adoption of ASU 2023-07 expanded our disclosures but did not have a material impact on our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

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

3 unchanged sentences

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The adoption of ASU 2023-09 will expand our disclosures, but we do not expect it to have a material impact on our consolidated financial statements.

In November 2024, the FASB issued Accounting Standards Update No.

2024-03 “Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40),” (“ASU 2024-03”).

The amendments in ASU 2024-03 are designed to improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods with fiscal years beginning after December 15, 2027, with early adoption permitted.

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

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

2024 October 28,

2023 November 2,

2024 October 28,

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents the Company’s net sales disaggregated by geography:

Thirteen Weeks Ended

(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 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 $ 9.3 million, $ 3.1 million, and $ 7.6 million within Accrued expenses and other current liabilities as of November 2, 2024, February 3, 2024, and October 28, 2023, respectively, based upon estimated time of delivery, at which point control passes to the customer.

The Company recognizes revenue, including shipping and handling fees billed to customers, as applicable, upon purchase at the Company’s retail stores or when received by the customer if the product was purchased via e-commerce, net of coupon redemptions and anticipated sales returns.

The Company deferred sales of $ 7.6 million, $ 3.2 million, and $ 5.3 million within Accrued expenses and other current liabilities as of May 3, 2025, February 1, 2025, and May 4, 2024, respectively, based upon estimated time of delivery, at which point control passes to the customer.

Sales tax collected from customers is excluded from revenue.

For its wholesale business, the Company recognizes revenue, 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 $ 14.1 million, $ 9.0 million, and $ 8.6 million as of November 2, 2024, February 3, 2024, and October 28, 2023, respectively.

For its wholesale business, the Company recognizes revenue, when title of the goods passes to the customer, net of commissions, discounts, operational chargebacks, and cooperative advertising.

The allowance for wholesale revenue included within Accounts receivable was $ 8.0 million, $ 8.7 million, and $ 7.0 million as of May 3, 2025, February 1, 2025, and May 4, 2024, respectively.

For the sale of goods to retail customers with a right of return, the Company recognizes revenue for the consideration it expects to be entitled to and calculates an allowance for estimated sales returns based upon the Company’s sales return experience.

Adjustments to the allowance for estimated sales returns in subsequent periods have not been material based on historical data, thereby reducing the uncertainty inherent in such estimates.

The allowance for estimated sales returns, which is recorded in Accrued expenses and other current liabilities, was $ 1.9 million, $ 1.7 million, and $ 2.5 million as of November 2, 2024, February 3, 2024, and October 28, 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.

The allowance for estimated sales returns, which is recorded in Accrued expenses and other current liabilities, was $ 1.2 million, $ 1.0 million, and $ 1.3 million as of May 3, 2025, February 1, 2025, and May 4, 2024, respectively.

The Company’s private label credit card is issued to customers for use exclusively at The Children’s Place and Gymboree stores in the U.S.

and online at www.childrensplace.com and www.gymboree.com, and credit is extended to such customers by a third-party financial institution on a non-recourse basis to the Company.

The private label credit card includes multiple performance obligations for the Company, including marketing and promoting the program on behalf of the bank and the operation of the loyalty rewards program.

3 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.

Similar to the upfront bonus, the usage-based royalties and bonuses are recognized as revenue and allocated between the brand and reward obligations.

The amount allocated to the brand obligation is recognized on a straight-line basis over the initial term.

The amount allocated to the brand obligation is recognized on a straight-line basis over the remaining term.

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

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These points can be redeemed for coupons to discount future purchases.

The redemption cycle for coupons is 45 days.

A contract liability is estimated based on the standalone selling price of benefits earned by customers through the program and the related redemption experience under the program.

The value of each point earned is recorded as deferred revenue and is included within Accrued expenses and other current liabilities.

The total contract liabilities related to this program were $ 3.8 million, $ 1.7 million, and $ 2.0 million as of November 2, 2024, February 3, 2024, and October 28, 2023, respectively.

The total contract liabilities related to this program were $ 5.4 million, $ 3.7 million, and $ 2.3 million as of May 3, 2025, February 1, 2025, and May 4, 2024, respectively.

During the First Quarter 2025 and the First Quarter 2024, the Company recognized Net sales of $ 3.7 million and $ 1.7 million related to the points-based customer loyalty program balance that existed at February 1, 2025 and February 3, 2024, respectively.

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

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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 November 2, 2024, February 3, 2024, and October 28, 2023 was $ 4.5 million, $ 6.8 million, and $ 6.3 million, respectively.

During Year-To-Date 2024, the Company recognized Net sales of $ 4.7 million related to the gift card liability balance that existed at February 3, 2024.

The gift card liability balance as of May 3, 2025, February 1, 2025, and May 4, 2024 was $ 4.4 million, $ 4.8 million, and $ 6.4 million, respectively.

During the First Quarter 2025 and the First Quarter 2024, the Company recognized Net sales of $ 1.4 million and $ 1.7 million related to the gift card liability balance that existed at February 1, 2025 and February 3, 2024, respectively.

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

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

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 $ 2.5 million in restructuring costs during Year-To-Date 2024, and $ 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:

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Thirteen Weeks Ended Thirty-nine Weeks Ended

2024 October 28,

2023 November 2,

2024 October 28,

(in thousands)

Employee-related costs

$ — $ 674 $ — $ 6,107

Lease termination costs (1)

— 454 701 5,401

TODC costs (2)

Professional fees — 82 — 268

Total restructuring costs (3)

$ — $ 1,210 $ 2,549 $ 11,776

_______________________________________

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

(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.

The remaining restructuring costs are primarily recorded within The Children’s Place U.S.

The following table summarizes the restructuring costs that have been settled with cash payments.

There is no remaining liability as of November 2, 2024.

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

Cash Payments ( 304 ) ( 185 ) ( 489 )

Balance at August 3, 2024 248 319 567

Provision ( 248 ) ( 319 ) ( 567 )

Balance at November 2, 2024 $ — $ — $ —

Employee-Related Costs Lease Termination Costs Professional Fees Total

(in thousands)

Balance at April 29, 2023 $ — $ — $ — $ —

Provision 5,433 4,040 186 9,659

Cash Payments ( 2,602 ) ( 4,040 ) — ( 6,642 )

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

Provision 674 — 82 756

Cash Payments ( 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

INTANGIBLE ASSETS

On April 4, 2019, the Company acquired certain intellectual property and related assets of Gymboree Group, Inc.

and related entities, which included the worldwide rights to the Gymboree tradename.

The Gymboree tradename is recorded in the long-term assets section of the consolidated balance sheets.

THE CHILDREN’S PLACE, INC.

1 unchanged sentence

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.

The Company recorded a further impairment charge on the Gymboree tradename of $ 28.0 million in the Second Quarter 2024, which reduced the carrying value to its fair value of $ 13.0 million.

The Company did not record an impairment charge in the Third Quarter 2024.

The Company’s intangible assets were as follows:

November 2, 2024

Useful Life Gross Amount Accumulated Amortization Net Amount

11 unchanged sentences

Total intangible assets $ 17,000 $ ( 4,000 ) $ 13,000

October 28, 2023

Useful Life Gross Amount Accumulated Amortization Net Amount

5 unchanged sentences

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

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company recorded an impairment charge on the Gymboree tradename of $ 28.0 million in Fiscal 2024, which reduced the carrying value to its fair value of $ 13.0 million.

The Company did not identify any indicators of impairment in the First Quarter 2025 and First Quarter 2024.

PROPERTY AND EQUIPMENT, NET

1 unchanged sentence

2025 February 1,

2024 October 28,

(in thousands)

Property and equipment:

Land and land improvements $ 3,404 $ 3,403 $ 3,403

8 unchanged sentences

Property and equipment, net $ 92,094 $ 97,487 $ 116,779

At November 2, 2024 and October 28, 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 Third Quarter 2024 and Year-To-Date 2024.

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.

The Company reviewed its store related long-lived assets for indicators of impairment, and performed a recoverability test if indicators were identified.

Based on the results of the analyses performed, the Company did not record asset impairment charges in the First Quarter 2025 and First Quarter 2024.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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’s leases have remaining lease terms ranging from less than one year up to twelve years , some of which include options to extend the leases for up to five years , and some of which include options to terminate the lease early.

The Company records all occupancy costs in Cost of sales, except costs for administrative office buildings, which are recorded in Selling, general, and administrative expenses.

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

2024 October 28,

2023 November 2,

2024 October 28,

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

(in thousands)

1 unchanged sentence

Variable operating lease cost

5,281 11,030 19,224 40,115

Total operating lease cost $ 26,958 $ 30,348

____________________________________________

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

As of November 2, 2024, the weighted-average remaining operating lease term was 4.4 years, and the weighted-average discount rate for operating leases was 8.0 %.

Cash paid for amounts included in the measurement of operating lease liabilities during Year-To-Date 2024 was $ 59.8 million.

ROU assets obtained in exchange for new operating lease liabilities were $ 51.1 million during Year-To-Date 2024.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of November 2, 2024, the maturities of operating lease liabilities were as follows:

The following table provides the weighted-average remaining lease term of the Company’s operating leases, the weighted-average discount rate used to calculate the Company’s operating liabilities, cash paid for amounts included in the measurement of the Company’s operating lease liabilities, and right-of-use (“ROU”) assets obtained in exchange for the Company’s new operating lease liabilities:

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

Weighted-average remaining lease term (years) 4.4 4.4

Weighted average discount rate (%) 8.6 % 7.6 %

Cash paid for amounts included in the measurement of operating lease liabilities ($, in millions) 17.4 19.7

ROU assets obtained in exchange for new operating lease liabilities ($, in millions) 23.1 22.1

As of May 3, 2025, the maturities of operating lease liabilities were as follows:

(in thousands)

4 unchanged sentences

Present value of operating lease liabilities $ 179,189

ABL Credit Facility and 2021 Term Loan

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.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

ABL Credit Facility

The Company and certain subsidiaries maintain the $ 433.0 million asset-based revolving credit facility (the “ABL Credit Facility”) under its Amended and Restated Credit Agreement dated May 9, 2019 (as amended from time to time, the “Credit Agreement”), with Wells Fargo Bank, National Association (“Wells Fargo”), Bank of America, N.A., JPMorgan Chase Bank, N.A., Truist Bank, HSBC Bank (USA), N.A., and PNC Bank, National Association, as the lenders party thereto and Wells Fargo, as Administrative Agent, Collateral Agent, and Swing Line Lender.

The ABL Credit Facility will mature in November 2026.

As of April 18, 2024, which is the effective date of the seventh amendment to the Credit Agreement (the “Seventh Amendment”), the ABL Credit Facility includes a $ 25.0 million Canadian sublimit and a $ 25.0 million sublimit for standby and documentary letters of credit.

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

Under the ABL Credit Facility, prior to February 4, 2025, borrowings outstanding bore 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 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.

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Third Quarter 2024 and Year-To-Date 2024, the Company recognized $ 7.1 million and $ 19.1 million, respectively, in interest expense related to the ABL Credit Facility.

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.

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 April 18, 2024, the ABL Credit Facility is secured on a first priority basis by all of the foregoing collateral.

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 %.

Prior to February 4, 2025, letter of credit fees were at 1.125 % for commercial letters of credit and 1.750 % for standby letters of credit.

As of February 4, 2025, letter of credit fees range from 1.000 % to 1.125 % for commercial letters of credit and range from 1.500 % to 1.750 % for standby letters of credit.

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

For the First Quarter 2025 and First Quarter 2024, the Company recognized $ 4.8 million and $ 5.7 million, respectively, in interest expense related to the ABL Credit Facility.

As of April 18, 2024, credit extended under the ABL Credit Facility is secured by a first priority security interest in substantially all of the Company’s U.S.

and Canadian assets, including the Company’s intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock.

The outstanding obligations under the ABL Credit Facility may be accelerated upon the occurrence of certain customary events of default, as described below.

5 unchanged sentences

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.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of May 3, 2025, February 1, 2025, and May 4, 2024, unamortized deferred financing costs amounted to $ 3.3 million, $ 3.8 million, and $ 2.9 million, related to the Company’s ABL Credit Facility.

The tables below present the components of the Company’s ABL Credit Facility:

2025 February 1,

2024 October 28,

(in millions)

11 unchanged sentences

Interest rate at end of period 7.7 % 7.6 % 9.9 %

____________________________________________

(1) In Fiscal 2023, the total borrowing base availability and credit facility availability were both 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, and entering into cash dominion by crossing the excess availability threshold no longer poses the same risk of default under the Credit Agreement.

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

(3) The sub-limit availability for letters of credit was $ 12.8 million at November 2, 2024, and $ 42.6 million at February 3, 2024 and October 28, 2023.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year-To-Date 2024 Fiscal 2023 Year-To-Date 2023

(in millions)

Average end-of-day loan balance during the period $ 247.2 $ 284.5 $ 228.2

1 unchanged sentence

Average interest rate 7.7 % 8.7 % 9.6 %

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.

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

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 2021 Term Loan.

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

As of November 2, 2024, unamortized deferred financing costs amounted to $ 4.3 million related to the Company’s ABL Credit Facility.

____________________________________________

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

(2) The sub-limit availability for letters of credit was $ 6.8 million as of May 3, 2025, $ 9.0 million at February 1, 2025, and $ 12.8 million as of May 4, 2024.

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 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 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”).

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.

Mithaq Capital SPC, a Cayman segregated portfolio company (“Mithaq”), is a controlling stockholder of the Company.

The Company and certain subsidiaries maintain an interest-free, unsecured and subordinated promissory note with Mithaq for a $ 78.6 million term loan (the “Initial Mithaq Term Loan”), dated February 29, 2024, by and among the Company, certain of its subsidiaries, and Mithaq.

During the First Quarter 2025, $ 60.2 million under the Initial Mithaq Term Loan was repaid pursuant to the completion of the Company’s rights offering on February 6, 2025 (“Rights Offering”), leaving $ 18.4 million outstanding under the Initial Mithaq Term Loan as of May 3, 2025.

The Company recorded a loss on extinguishment of debt of $ 1.0 million during the First Quarter 2025, due to this partial prepayment of the Initial Mithaq Term Loan, which is recorded within Other interest expense.

For more information about the Rights Offering, see “Note 8.

Stockholders’ Equity (Deficit)” below.

The Initial Mithaq Term Loan matures on February 15, 2027 and is guaranteed by each of the Company’s subsidiaries that guarantee the Company’s ABL Credit Facility.

The Company and certain subsidiaries also maintain an unsecured and subordinated promissory note with Mithaq for a $ 90.0 million term loan (the “New Mithaq Term Loan”;

and together with the Initial Mithaq Term Loan, collectively, the “Mithaq Term Loans”), dated April 16, 2024, by and among the Company, certain of its subsidiaries, and Mithaq.

The New Mithaq Term Loan matures on April 16, 2027, and requires monthly payments equivalent to interest charged at the SOFR plus 4.000 % per annum, with the first year’s monthly payments to Mithaq deferred until April 30, 2025.

On April 28, 2025, the Company and Mithaq entered into Amendment No.

1 to the New Mithaq Term Loan promissory note, which subjected these deferred monthly payments due as of April 30, 2025 to a payment plan, payable in installments prior to the end of Fiscal 2025.

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

For the Third Quarter 2024 and Year-To-Date 2024, the Company recognized $ 2.1 million and $ 4.6 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.

For the First Quarter 2025 and First Quarter 2024, the Company recognized $ 1.9 million and $ 0.4 million, respectively, in interest-equivalent expense related to the New Mithaq Term Loan.

As of May 3, 2025 and May 4, 2024, interest-equivalent expense payable to Mithaq was $ 8.4 million and $ 0.4 million, respectively, which is recorded within Accrued expenses and other current liabilities.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 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.

2 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 November 2, 2024 unamortized deferred financing costs amounted to $ 2.9 million related to the Mithaq Term Loans.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Maturities of the Company’s principal debt payments on the Mithaq Term Loans as of November 2, 2024 are as follows:

November 2, 2024

As of May 3, 2025, February 1, 2025, and May 4, 2024, unamortized deferred financing costs amounted to $ 1.4 million, $ 2.6 million, and $ 2.0 million, respectively, related to the Mithaq Term Loans.

Maturities of the Company’s principal debt payments on the Mithaq Term Loans as of May 3, 2025 are as follows:

(in thousands)

2 unchanged sentences

Mithaq Commitment Letter

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

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

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

5 unchanged sentences

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

As of November 2, 2024, no debt had been incurred under the Mithaq Credit Facility.

As of May 3, 2025, no debt had been incurred under the Mithaq Credit Facility.

COMMITMENTS AND CONTINGENCIES

21 unchanged sentences

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.

The balance of funds initially reserved for the plaintiff counsel’s fees and costs have been issued as a single, final round of merchandise vouchers for qualified class members, which expired in March 2025.

Following the expiration of the vouchers in March, the Company has fully satisfied its obligations under the settlement agreement and considers this matter closed.

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 during the First Quarter 2024.

Following the court’s decision(s), the Company released $ 0.8 million and $ 2.3 million during the First Quarter 2025 and First Quarter 2024, respectively, from its previously established reserve, which is recorded within Selling, general and administrative expenses.

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

16 unchanged sentences

The Company’s motion to dismiss was denied in November 2024.

As of February 2024, the Company was 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 purported 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 alleged led to a drop in the price of the Company’s common stock.

As of November 20, 2024, this case has been dismissed in its entirety, with prejudice.

Any liability arising out of these proceedings is not expected to have a material adverse effect on the Company's financial position, results of operations, or cash flows.

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

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

STOCKHOLDERS’ (DEFICIT) EQUITY

STOCKHOLDERS’ EQUITY (DEFICIT)

Rights Offering

On February 6, 2025, the Company completed a Rights Offering pursuant to which the Company distributed to the holders of record of the Company’s Common stock as of the close of business on December 13, 2024, the record date for the Rights Offering, non-transferable subscription rights to purchase, in the aggregate, up to 9.2 million shares of Common stock.

Each subscription right entitled its holder to purchase 0.7220 shares of Common stock at a subscription price of $ 9.75 per whole share of Common stock.

Additionally, rights holders who fully exercised their basic subscription rights were entitled to subscribe for additional shares of Common stock that remained unsubscribed as a result of any unexercised basic subscription rights.

The subscription price was payable by rights holders (i) in cash, (ii) by delivery in lieu of cash of an equivalent amount of any indebtedness for borrowed money (principal and/or accrued and unpaid interest) owed by the Company to such rights holder, or (iii) by delivery of a combination of cash and such indebtedness.

Upon the completion of the Rights Offering, the Company issued 9.2 million shares of Common stock for a total purchase price of $ 90.0 million.

Mithaq purchased 6.7 million shares of Common stock pursuant to the Rights Offering and currently owns and controls the voting power of 62 % of the Company’s outstanding shares of Common stock.

It paid (i) $ 5.1 million of the subscription price for such shares in cash and (ii) the remaining $ 60.2 million of the subscription price for such shares by delivery of indebtedness for borrowed money owed by the Company to Mithaq pursuant to the Initial Mithaq Term Loan.

The Company received approximately $ 29.8 million in gross cash proceeds from the Rights Offering on February 6, 2025.

Substantially all of the gross cash proceeds from the Rights Offering were used towards prepaying the Company’s ABL Credit Facility.

Share Repurchase Program

3 unchanged sentences

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

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 November 2, 2024, there was $ 156.7 million remaining availability under the Share Repurchase Program.

Currently, pursuant to the terms of the Company’s Credit Agreement as amended by its Seventh Amendment described above, the repurchase of any shares would require fulfilling the heightened payment conditions under the Credit Agreement, except that repurchases of shares as described below, pursuant to the Company’s practice as a result of its insider trading policy, are expressly permitted.

As of May 3, 2025, there was $ 156.5 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:

Thirty-nine Weeks Ended

November 2, 2024 October 28, 2023

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

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.

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, 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.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the Board of Directors based on a number of factors, including business and market conditions, the Company’s financial performance, and other investment priorities.

Currently, pursuant to the terms of the Company’s Credit Agreement as amended by its Seventh Amendment as described above, the Company has no current plans to pay regular cash dividends in Fiscal 2025.

STOCK-BASED COMPENSATION

The Company generally grants time-vesting stock awards (“Deferred Awards”) and performance-based stock awards (“Performance Awards”) to employees at management levels.

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

2024 October 28,

2023 November 2,

2024 October 28,

The Company generally grants time-vesting stock awards (“Deferred Awards”) and performance-based stock awards (“Performance Awards”) to employees at senior management levels.

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

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

Thirteen Weeks Ended

(in thousands)

1 unchanged sentence

Performance Awards

( 261 ) ( 5,939 ) 9,272 ( 11,807 )

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

Total stock-based compensation expense (1)

$ 1,746 $ 12,610

___________________________________________

(1) Stock-based compensation expense (benefit) recorded within Cost of sales amounted to a benefit of $( 0.3 ) million and an expense of $ 0.1 million in the Third Quarter 2024 and Third Quarter 2023, respectively, and an expense of $ 0.9 million in Year-To-Date 2024.

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 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.

EARNINGS (LOSS) PER COMMON SHARE

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

Thirteen Weeks Ended Thirty-nine Weeks Ended

2024 October 28,

2023 November 2,

2024 October 28,

(1) Stock-based compensation expense recorded within Cost of sales (exclusive of depreciation and amortization) amounted to $ 0.3 million and $ 1.0 million in the First Quarter 2025 and First Quarter 2024, 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 then-outstanding Performance Awards into service-based Performance Awards in accordance with their terms.

As a result, the Fiscal 2023, fiscal year 2022, and fiscal year 2021 Performance Awards will all vest or have vested, as applicable, at their target shares on their respective vesting dates without regard to the achievement of any of the performance metrics associated with those awards, provided that the recipient be employed at the Company on each such vesting date.

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

LOSS PER COMMON SHARE

During the First Quarter 2025, the Company completed its Rights Offering.

As the exercise price of the subscription right was less than the fair value of the Common stock, the subscription right contained a bonus element.

In connection with this transaction, and in accordance with FASB ASC 260— Earnings Per Share , the Company’s weighted average common shares outstanding and basic and diluted loss per share were retroactively adjusted for all periods presented by a factor of 1.002 .

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

Thirteen Weeks Ended

(in thousands)

Net income (loss) $ 20,080 $ 38,482 $ ( 49,829 ) $ ( 25,705 )

Net loss $ ( 34,023 ) $ ( 37,795 )

Basic weighted average common shares outstanding 21,629 12,665

Dilutive effect of stock awards 21 71 — —

Diluted weighted average common shares outstanding 21,629 12,665

Anti-dilutive shares excluded from diluted earnings (loss) per common share calculation — — 44 124

Anti-dilutive shares excluded from diluted loss per common share calculation 93 78

THE CHILDREN’S PLACE, INC.

2 unchanged sentences

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.

The Company’s cash and cash equivalents and investments in the rabbi trust are short-term in nature.

As such, their carrying amounts approximate fair value.

The Company’s deferred compensation plan assets and liabilities fall within Level 1 of the fair value hierarchy.

These assets and liabilities fall within Level 1 of the fair value hierarchy.

The Company stock included in the deferred compensation plan is not subject to fair value measurement.

The fair value of the Company’s Initial Mithaq Term Loan with a carrying value (gross of debt issuance costs) of $ 78.6 million at November 2, 2024, was approximately $ 57.6 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 November 2, 2024, was approximately $ 79.8 million.

The fair value of the Initial Mithaq Term Loan with a carrying value (gross of debt issuance costs) of $ 18.4 million as of May 3, 2025, was approximately $ 14.6 million.

The fair value of the New Mithaq Term Loan with a carrying value (gross of debt issuance costs) of $ 90.0 million as of May 3, 2025, was approximately $ 81.8 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.

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These assets are tested for impairment when events indicate that their carrying value may not be recoverable.

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

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 ROU assets.

The Company performed periodic quantitative impairment assessments of its long-lived assets and did no t record an impairment charge in the First Quarter 2025 and First Quarter 2024.

Impairment of Indefinite-Lived Intangible Assets

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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 an annual impairment assessment of the Gymboree tradename at the end of December or whenever circumstances indicate that a decline in value may have occurred, in accordance with FASB ASC 350— Intangibles – Goodwill and Other .

Based on this assessment, the Company recorded an impairment charge of $ 29.0 million in Fiscal 2023, and a further impairment charge of $ 28.0 million in the Second Quarter 2024, which reduced the carrying value to its fair value of $ 13.0 million.

There were no impairment charges recorded in the Third 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 or a 10% decrease in forecasted revenue would result in further impairment charges of approximately $ 1.0 million.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 performs a periodic impairment assessment of the Gymboree tradename, in accordance with FASB ASC 350 — Intangibles – Goodwill and Other .

Based on this assessment, the Company did not identify any indicators of impairment in the First Quarter 2025 and First Quarter 2024.

The Company utilizes the asset and liability method of accounting for income taxes as set forth in FASB ASC 740— Income Taxes .

This method requires recognition of deferred tax assets and liabilities, measured by currently enacted rates, attributable to temporary differences between the financial statement and income tax basis of assets and liabilities.

The Company’s deferred tax assets and liabilities are comprised largely of differences relating to depreciation and amortization, rent expense, inventory, stock-based compensation, net operating loss carryforwards, tax credits, and various accruals and reserves.

The Company’s provision (benefit) for income taxes in the Third Quarter 2024 has been calculated by applying an estimate of the annual effective tax rate for Fiscal 2024 to pre-tax income (loss), excluding unusual or infrequently occurring discrete items in the reporting period.

This is the method that has historically been followed in interim reporting periods with the exception of the Third Quarter 2023, where the Company computed its provision (benefit) for income taxes based on the actual effective tax rate for Year-To-Date 2023 by applying the discrete method as allowed by Accounting Standards Codification (“ASC”) 740-270-30-18, “Income Taxes-Interim Reporting-Initial Measurement”.

The Company’s effective income tax rate for the Third Quarter 2024 was a benefit of ( 4.7 )%, or $( 0.9 ) million, compared to ( 3.9 )%, or $( 1.5 ) million, during the Third Quarter 2023.

The change in the effective income tax rate and income tax provision (benefit) for the Third Quarter 2024 compared to the Third Quarter 2023 was primarily driven by the establishment of a valuation allowance against the Company’s net deferred tax assets in Fiscal 2023, partially offset by a favorable shift in the jurisdictional earnings mix in Fiscal 2024.

Furthermore, the Company’s provision (benefit) for income taxes in the Third Quarter 2024 has been calculated by applying an estimate of the annual effective tax rate.

In the Third Quarter 2023, the Company computed its provision (benefit) for income taxes based on the actual effective tax rate for Year-To-Date 2023 by applying the discrete method.

The Company’s effective income tax rate for Year-To-Date 2024 was a provision of ( 4.8 )%, or $ 2.3 million, compared to a benefit of 40.9 %, or $( 17.8 ) 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 Company’s provision for income taxes was $ 1.3 million during the First Quarter 2025, compared to $ 2.1 million during the First Quarter 2024.

The Company’s effective tax rate was a provision of ( 4.1 )% and ( 5.8 )% in the First Quarter 2025 and First Quarter 2024, respectively.

The Company continues to adjust its valuation allowance based upon its ongoing operating results.

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

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.

As of November 2, 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 its provision (benefit) for income taxes.

The total amount of unrecognized tax benefits was $ 6.9 million, $ 7.0 million, and $ 4.8 million as of November 2, 2024, February 3, 2024, and October 28, 2023, respectively, and is included within long-term liabilities.

Additional interest expense recognized in the Third Quarter 2024 and Third Quarter 2023 related to unrecognized tax benefits was not significant.

As of May 3, 2025, the remaining income tax receivable of $ 19.1 million is included within Prepaid expenses and other current assets on the Consolidated Balance Sheets.

THE 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 its provision for income taxes.

The total amount of unrecognized tax benefits was $ 6.6 million, $ 6.5 million, and $ 7.4 million as of May 3, 2025, February 1, 2025, and May 4, 2024, respectively, and is included within long-term liabilities.

Additional interest expense recognized in the First Quarter 2025 and First Quarter 2024 related to unrecognized tax benefits was not significant.

The Company is subject to tax in the United States and foreign jurisdictions, including Canada and Hong Kong.

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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.

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

SEGMENT INFORMATION

In accordance with FASB ASC 280— Segment Reporting , the Company reports segment data based on geography:

The Company’s reportable segments are based on the financial information the chief operating decision maker (“CODM”) uses to allocate resources and assess performance of its business.

The Company’s President and Interim Chief Executive Officer is the CODM.

The Company’s CODM evaluates the performance of each segment and measures its segment profitability based on operating income (loss), defined as income (loss) before interest and taxes.

Operating income (loss) is used as a key metric during the annual budget process, and on a quarterly basis to monitor actual performance against the annual budget and forecasts.

The Company reports segment data based on geography:

The Children’s Place U.S.

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segment are the Company’s U.S.

and Puerto Rico-based stores and revenue from the Company’s U.S.-based wholesale business.

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

The Company measures its segment profitability based on operating income, defined as income before interest and taxes.

and Puerto Rico-based stores and net sales from the Company’s U.S.-based wholesale business.

Included in The Children’s Place International segment are the Company’s Canadian-based stores and net sales from international franchisees.

Net sales and direct costs are recorded by each segment.

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

Major Customers

Net sales to external customers are derived from merchandise sales, and the Company has one U.S.

wholesale customer that individually accounted for more than 10% of its net sales, amounting to $ 57.3 million and $ 118.3 million for the Third Quarter 2024 and Year-To-Date 2024, respectively, and accounts for a majority of the Company’s accounts receivable, amounting to $ 45.1 million as of November 2, 2024.

As of November 2, 2024, The Children’s Place U.S.

wholesale customer that individually accounted for more than 10% of its net sales, amounting to $ 32.2 million for the First Quarter 2025, and accounts for a majority of the Company’s accounts receivable, amounting to $ 25.2 million as of May 3, 2025.

Store Count by Segment

As of May 3, 2025, The Children’s Place U.S.

had 437 stores and The Children’s Place International had 58 stores.

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

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

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

The following table provides segment level financial information:

Thirteen Weeks Ended Thirty-nine Weeks Ended

2024 October 28,

2023 November 2,

2024 October 28,

(in thousands)

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The tables below present certain segment information for our reportable segments for the periods indicated:

Thirteen Weeks Ended May 3, 2025

The Children’s Place U.S.

$ 356,163 $ 441,865 $ 894,744 $ 1,048,568

The Children’s Place International (1)

(in thousands)

Net sales $ 221,767 $ 20,358 $ 242,125

Cost of sales (2)

153,986 17,356 171,342

Total net sales $ 390,173 $ 480,234 $ 977,706 $ 1,147,474

Operating income (loss):

The Children’s Place U.S.

Selling, general, and administrative expenses (3)

87,496 7,404 94,900

Segment operating loss $ ( 19,715 ) $ ( 4,402 ) $ ( 24,117 )

Segment operating loss as a percentage of net sales ( 8.9 )% ( 21.6 )% ( 10.0 )%

Thirteen Weeks Ended May 4, 2024

The Children’s Place U.S.

The Children’s Place International (1)

(in thousands)

Net sales $ 246,188 $ 21,690 $ 267,878

Cost of sales (2)

159,162 15,975 175,137

Total operating income (loss) $ 29,258 $ 44,967 $ ( 20,506 ) $ ( 22,042 )

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

The Children’s Place U.S.

Selling, general, and administrative expenses (3)

111,005 9,724 120,729

The Children’s Place International (1)

Segment operating loss $ ( 23,979 ) $ ( 4,009 ) $ ( 27,988 )

Segment operating income (loss) as a percentage of net sales ( 9.7 )% ( 18.5 )% ( 10.4 )%

___________________________________________

Total operating income (loss) as a percentage of net sales 7.5 % 9.4 % ( 2.1 %) ( 1.9 )%

(1) The Company’s foreign subsidiaries, primarily in Canada, have operating results based in foreign currencies and are thus subject to the fluctuations of the corresponding translation rates into U.S.

(2) Cost of sales includes the cost of inventory sold, certain buying, design, and distribution expenses, shipping and handling costs on merchandise sold directly to customers, and all occupancy costs, except for administrative office buildings.

(3) Selling, general, and administrative expenses include store expenses, marketing, corporate payroll, including long-term incentive compensation, information technology, other administrative expenses, and depreciation and amortization.

The table below presents a reconciliation of reportable segment operating loss to Loss before provision for income taxes:

Thirteen Weeks Ended

(in thousands)

Total segment operating loss $ ( 24,117 ) $ ( 27,988 )

Related party interest expense ( 1,871 ) ( 389 )

Other interest expense ( 6,701 ) ( 7,342 )

Interest income 10 10

Loss before provision for income taxes $ ( 32,679 ) $ ( 35,709 )

THE CHILDREN’S PLACE, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Additional Segment Data

Thirteen Weeks Ended

(in thousands)

Depreciation and amortization:

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Total capital expenditures $ 3,413 $ 4,694

2025 February 1,

(in thousands)

Total assets:

The Children’s Place U.S.

$ 739,736 $ 711,564 $ 807,625

The Children’s Place International 39,866 35,988 40,710

Total assets $ 779,602 $ 747,552 $ 848,335

Long-lived assets:

United States $ 264,293 $ 267,751 $ 326,152

Canada 12,739 9,801 11,999

Asia 1,961 1,996 572

Total long-lived assets (1)

$ 278,993 $ 279,548 $ 338,723

___________________________________________

(1) The Company’s long-lived assets are comprised of net Property and equipment, ROU assets, Tradenames, and Other assets, and are recorded in the long-term assets section of the consolidated balance sheets.

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