Item 1. Business
ITEM 1. BUSINESS.
As used in this Annual Report on Form 10-K, references to the “Company”, “The Children’s Place”, “we”, “us”, “our”, and similar terms refer to The Children's Place, Inc. and its subsidiaries. Our fiscal year ends on the Saturday on or nearest to January 31. Other terms that are commonly used in this Annual Report on Form 10-K are defined as follows:
• Fiscal 2026 — The fifty-two weeks ending January 30, 2027
• Fiscal 2025 — The fifty-two weeks ended January 31, 2026
• Fiscal 2024 — The fifty-two weeks ended February 1, 2025
• Fiscal 2023 — The fifty-three weeks ended February 3, 2024
• SEC — U.S. Securities and Exchange Commission
• U.S. GAAP — Generally Accepted Accounting Principles in the United States
• FASB — Financial Accounting Standards Board
• FASB ASC — FASB Accounting Standards Codification, which serves as the source for authoritative U.S. GAAP, except that rules and interpretive releases by the SEC are also sources of authoritative U.S. GAAP for SEC registrants
• Comparable Retail Sales — Net sales, in constant currency, from stores that have been open for at least 14 consecutive months and from our e-commerce store, excluding postage and handling fees. Store closures in the current fiscal year will be excluded from Comparable Retail Sales beginning in the fiscal quarter in which the store closes. A store that is closed for a substantial remodel, relocation, or material change in size will be excluded from Comparable Retail Sales for at least 14 months beginning in the fiscal quarter in which the closure occurred. However, stores that temporarily close will be excluded from Comparable Retail Sales until the store is re-opened for a full fiscal month
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General
The Children’s Place, Inc. and its subsidiaries (collectively, the “Company”) is one of the only pure-play children’s specialty retailers in North America with an omni-channel presence. We design, contract to manufacture, and sell fashionable, high-quality apparel, accessories and footwear predominantly at value prices, primarily under our proprietary brands: “The Children’s Place” and “Gymboree”. Our global retail and wholesale network includes two digital storefronts, 498 stores in North America, wholesale marketplaces, 223 international points of distribution in 12 countries through nine international franchise and wholesale partners, and social media channels on Instagram, Facebook, and X, formerly known as Twitter. Our physical stores offer a friendly and convenient shopping environment, segmented into departments that serve the wardrobe needs of girls and boys (sizes 4-22), toddler girls and boys (sizes 6 months-5T), and baby (sizes 0-24 months). Our digital storefronts are at www.childrensplace.com and www.gymboree.com , where our customers are able to shop online for the same merchandise available in our physical stores, as well as certain exclusive merchandise offered only on our e-commerce sites.
The Children’s Place was founded in 1969 and became publicly traded on the Nasdaq Global Select Market in 1997. During Fiscal 2024, Mithaq Capital SPC, a Cayman segregated portfolio company (“Mithaq”), acquired more than 50% of The Children’s Place, Inc.’s outstanding shares of common stock and became a controlling stockholder of the Company. During Fiscal 2025, Mithaq further increased its shareholding in the Company as a result of the completion of our rights offering, as described in “Note 10. Stockholders’ Deficit” of the Consolidated Financial Statements of this Form 10-K.
As part of the Company’s business strategy in this ever-evolving retail environment, our senior management team established several key priorities:
1. Superior Product - Product remains our number one priority. We are focused on providing the right product, in the right channels of distribution, at the right time. We offer a full line of apparel, footwear and accessories so busy moms can quickly and easily put together head-to-toe outfits. Our design, merchandising, sourcing, and planning teams strive to ensure that our product is trend-right, while at the same time balancing fashion and basics with more frequent, wear-now deliveries. We are focusing on optimizing our assortment and purchasing inventory at levels which will drive margin growth.
2. Digital Expansion - Our digital capabilities continue to expand with the development of completely redesigned responsive sites and mobile applications, providing an online shopping experience geared toward the needs of our “on-the-go” customers with expanded customer personalization, which delivers unique, relevant content designed to drive sales, loyalty and retention, and the ability to have our entire store fleet equipped with ship-from-store capabilities.
3. Omni-Channel Customer Experience - We continue to transform our omni-channel experience by making shopping even more effortless, accessible and exciting to our customers through our brick-and-mortar retail channel, our digital presence, and our wholesale channels. We continue to have a renewed focus on our store portfolio and are exploring opportunities for expanding and refurbishing our current fleet and strengthening our landlord relationships. Our wholesale business includes our relationship with Amazon, which is an important customer acquisition vehicle. We generate revenue from our franchisees from the sale of products and sales royalties.
Segment Reporting
We report segment data based on geography: The Children’s Place U.S. and The Children’s Place International. Each segment includes an e-commerce business located at www.childrensplace.com and www.gymboree.com. Included in The Children’s Place U.S. segment are our U.S. and Puerto Rico-based stores and revenue from our U.S.-based wholesale business. Included in The Children’s Place International segment are our Canadian-based stores and revenue from international franchisees. We measure our segment profitability based on operating income (loss), defined as income (loss) before interest and taxes. Net sales and direct costs are recorded by each segment. Certain inventory procurement functions such as production and design, as well as corporate overhead, including executive management, finance, real estate, human resources, legal, and information technology services, are managed by The Children’s Place U.S. segment. Expenses related to these functions, including depreciation and amortization, are allocated to The Children’s Place International segment based primarily on net sales. The assets related to these functions are not allocated. We periodically review these allocations and adjust them based upon changes in business circumstances. Net sales to external customers are derived from merchandise sales, and we have one U.S. wholesale customer that individually accounted for more than 10% of our net sales.
See “Note 16. Segment Information” of the Consolidated Financial Statements, “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations,” and “Item 8. Financial Statements and Supplementary Data” of this Form 10-K for further segment financial data.
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Key Capabilities
Merchandising Strategy
Our merchandising strategy is consumer-focused and product-driven to support the growth of the business. Our product strategy balances fashion and basics for our consumers with a good/better/best pricing approach across all channels of distribution.
High Quality and Value
Our competitive advantage in the market includes creating high quality, affordable apparel, accessories, and footwear.
Brand Image
We focus on our brand image and strengthening our customer loyalty by striving to:
• Offer high quality and age-appropriate products aligned to current consumer preferences at accessible value price points across digital and retail channels;
• Deliver coordinated assortments and outfitting solutions designed to support everyday family lifestyle needs;
• Create segmented assortments to maximize consumer preferences and expectations in all channels of distribution;
• Reinforce brand value and product positioning through consistent, data-informed marketing content across channels;
• Create consistent merchandising and visual presentation standards across digital and physical retail environments to support brand consistency and conversion;
• Leverage first-party customer data to enable targeted communications, personalization, and improve customer engagement and retention;
• Utilize our MyPLACE Loyalty Rewards program and private label credit card ecosystem to support customer frequency, retention, and lifetime value; and
• Optimize an integrated, full-funnel marketing strategy across brand, performance, customer relationship management, and retail channels designed to drive customer acquisition, engagement, and conversion while improving marketing efficiency and productivity.
Low-Cost Global Sourcing
We design, source, and contract to manufacture the substantial majority of our branded products. We believe that this is essential to assuring the consistency and quality of our merchandise, as well as our ability to deliver value to our customers. We have strong multi-year relationships with the substantial majority of our vendors. Through these relationships and our extensive knowledge of low cost sourcing on a global scale, we are able to offer our customers high-quality products at predominantly value prices. We maintain a network of sourcing offices globally in order to manage our vendors efficiently and respond to changing business needs effectively. Our sourcing offices in Hong Kong, Pakistan, Kenya, China, India, Ethiopia, and Indonesia give us access to a wide range of vendors and allow us to work to maintain or reduce our merchandise costs by capitalizing on new sourcing opportunities while maintaining our high standard for product quality. Our diversified sourcing strategy and strong vendor partnerships enable us to pivot to different sourcing locations as needed to reduce the impact of macroeconomic factors such as changes in country-specific tariffs.
Merchandising Process
The strong collaboration between our cross-functional teams in merchandising, design, sourcing, planning, and marketing have enabled us to build our brands.
Merchandising
The merchandising function outlines the product architecture, pricing strategy, category breakdown, and consumer focus that serves as a foundation for our collections. A segmented assortment strategy and relevant distribution decisions ensure success at a channel level, along with carefully crafted messaging for marketing to leverage.
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Design and Sourcing
Design builds seasonal concepts that dictate color, trend, and fashion styles based on the merchandising strategies. There is a focus on fit and fabric to ensure relevance across fashion and basics with the objective of driving customer loyalty. Best-in-class sourcing strategies deliver a cost structure that allows us to remain competitive while delivering on quality and style.
Planning and Allocation
The planning and allocation team works collaboratively with the merchandising, finance, and global sourcing teams to develop seasonal sales and margin plans to support our financial objectives and merchandising strategies. The team plans the flow of inventory to ensure we are adequately supporting store floor sets, online demand, and key selling periods.
Marketing
Brand marketing leverages the product engine to deliver a strong, cross-channel message that drives consumer traffic, conversion, and loyalty.
Production, Quality Assurance, and Responsible Sourcing
During Fiscal 2025, we engaged independent contract vendors located primarily in Asia and Africa. We continue to pursue global sourcing opportunities to support our inventory needs and seek to reduce merchandise costs. We contract for the manufacture of the substantial majority of the products we sell. We do not own or operate any manufacturing facilities.
During Fiscal 2025, we sourced all of our merchandise directly without the use of third-party commissioned buying agents for our branded product. We source from a diversified network of vendors, purchasing primarily from Bangladesh, Vietnam, Ethiopia, Indonesia, India, Kenya, Cambodia, and China. Bangladesh and Vietnam accounted for more than 15% of our sourced merchandise. Our diversified sourcing strategies include efforts to ensure that no single country represents more than 20% of our total sourcing capacity, with limited exposure to China in the mid-single digit range.
In addition to our quality assurance procedures, we conduct a responsible sourcing program that seeks to protect our Company, enhance our brands and address the well-being of the people who make our products by providing guidance in line with industry standards to our vendors in their efforts to provide safe and appropriate working conditions for their employees. These efforts are part of an ongoing process to encourage our vendors to continually assess, and where appropriate, improve factory working conditions, and well-being of their employees who make our product. Additionally, under our responsible sourcing program, we monitor changes in local laws and other conditions (e.g., worker safety, workers’ rights of association, and political and social instability) in the countries from which we source in order to identify and assess potential risks to our sourcing capabilities.
Environmental, Social & Governance
We published our latest Environment, Social & Governance (“ESG”) Report, now called our Sustainability and Social Impact Update, in October 2024, which is available at http://corporate.childrensplace.com under Investor Relations. In Fiscal 2026, we will publish our next Sustainability and Social Impact Update, which will detail our performance against previously established goals through 2025. Going forward, we intend to publish sustainability updates on a biennial basis, with the next report expected in 2028. Future reports will focus on regulatory compliance and supply chain transparency.
Our environmental strategy focuses on areas that are important to our long-term success: operational efficiency, regulatory compliance and supply chain visibility. We continue to monitor climate-related risks in alignment with regulatory requirements and industry practices. These risks include potential disruptions to our supply chain, changes in consumer preferences, and evolving legal requirements related to climate disclosure.
Our social responsibility efforts focus on responsible sourcing practices throughout our global supply chain. We collaborate with third-party vendors, factories, and other stakeholders to support workers’ health, safety and well-being. We monitor compliance by our third-party vendors and factories with our Vendor Code of Conduct, local laws and ethical business practices to help ensure fair and safe work conditions for the people who make our products.
We recognize the importance of eliminating forced labor within the supply chain, particularly given heightened global concerns regarding human rights abuses. We maintain supply chain traceability and due diligence processes designed to support compliance with the Uyghur Forced Labor Prevention Act and related import regulations.
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Human Capital Management
As of January 31, 2026, we had approximately 7,800 employees, approximately 1,430 of whom were based at our corporate offices and distribution centers. Approximately 1,070 were full-time store employees and approximately 5,300 were part-time and seasonal store employees. None of our employees are covered by a collective bargaining agreement.
The Human Capital & Compensation Committee actively oversees human capital management strategies, including our talent and succession planning initiatives designed to attract, develop, engage, reward and retain top retail, digital and business leaders, who can drive our financial performance and strategic growth initiatives and contribute to building long-term stockholder value. The Human Capital & Compensation Committee’s involvement in these strategies is systematic and ongoing, culminating in an annual review by our board of directors (“Board”).
We are investing in talent development, encouraging confident decision-making and providing clear and consistent communication to our teams. The newest additions to our senior leadership team bring extensive experience in the retail industry and in senior leadership roles.
Company Stores
As of January 31, 2026, we had a total of 498 stores in the United States, Canada, and Puerto Rico. The following table sets forth the number of stores in the United States, Canada, and Puerto Rico:
Fiscal Years Ended
Location January 31, 2026 February 1, 2025
United States 436 431
Canada 56 58
Puerto Rico 6 6
Total Stores 498 495
At The Children’s Place, our store concepts consist of multiple formats with an average of approximately 4,900 square feet, which have evolved over time in response to market trends, and are strategically placed within each market. We try to create an open and brightly lit environment for customers. Our stores typically feature white fixtures to ensure the merchandise is the focal point, using color to brand and create shop identifiers.
E-commerce Sales
Our e-commerce business is located at www.childrensplace.com and www.gymboree.com . Digital growth remains one of our top strategic priorities and we are committed to delivering a best-in-class, end-to-end user experience, from product assortment and website operation, to order fulfillment and customer service. We are further committed to delivering these experiences to our customers when, where, and how they are looking to access our brands, accounting for cross-channel behavior, growth of mobile devices, and the growing interest in our brands from international consumers. We believe that the critical investments made in areas such as e-commerce infrastructure and mobile optimization, as well as additional front-end website features, have improved our customer experience. We continue to explore opportunities to enhance our online presence by partnering with well-established online marketplaces.
Wholesale and International Franchisees
Our wholesale business includes our relationship with Amazon, which is an important customer acquisition vehicle. We generate revenue from our franchisees from the sale of products and sales royalties.
Store Operations
The Children’s Place store operations are organized by geographic region. Our U.S. and Canada regional directors oversee a number of district managers residing within each region. We have a centralized corporate store operations function which supports the operations of our stores. Our stores are staffed by store managers and full-time and part-time sales associates, with additional temporary associates hired to support seasonal needs. Our store managers spend a high percentage of their time on the store’s selling floor providing direction, motivation, and development to store associates. To maximize selling productivity, our teams emphasize greeting, replenishment, presentation standards, procedures, and controls. In order to motivate our store management, we offer a monthly incentive compensation plan that awards bonuses for achieving certain financial goals.
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Seasonality
Our business is subject to seasonal influences, with historically heavier concentrations of sales during the back-to-school and holiday seasons. Our first fiscal quarter results are dependent upon sales during the period leading up to the Easter holiday, our second and third fiscal quarter results are dependent upon back-to-school sales, and our fourth fiscal quarter results are dependent upon sales during the holiday season. The business is also subject to shifts due to unseasonable weather conditions.
The following tables show the quarterly distribution, as a percentage of the full year, of net sales, and the quarterly distribution of operating income (loss):
First Quarter Second Quarter Third Quarter Fourth Quarter
Net sales as a percentage of full year
Fiscal 2025 20.0 % 24.7 % 28.1 % 27.2 %
Fiscal 2024 19.3 % 23.1 % 28.1 % 29.5 %
First Quarter Second Quarter Third Quarter Fourth Quarter
(in thousands)
Operating income (loss)
Fiscal 2025 $ (24,117) $ 4,106 $ 3,669 $ (40,870)
Fiscal 2024 (27,998) (21,776) 29,258 6,805
For more information regarding the seasonality of our business, refer to “Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Quarterly Results and Seasonality.”
Marketing
The Children’s Place and Gymboree are established brands in the children’s apparel market, offering differentiated product assortments across value and premium lifestyle segments. We execute an integrated omni-channel marketing strategy utilizing digital, store, and customer relationship channels to drive customer acquisition, retention, and lifetime value.
We continue to evolve our brand portfolio to meet changing consumer preferences. The Children’s Place operates as a value-driven, trend-informed children’s apparel brand focused on delivering style, quality, and affordability for everyday family needs. The brand is supported by a scaled omni-channel footprint across digital commerce and retail stores. We continue to execute against core product, sourcing, and pricing strategies designed to deliver compelling value, broad assortment choice, and consistent product quality for families.
Gymboree operates as an elevated, design-led lifestyle brand supported by digital commerce at www.gymboree.com , shop-in-shop locations within select co-branded stores, and a growing standalone store presence. We continue to execute against the design, sourcing, and merchandising attributes that define Gymboree’s premium, playful positioning.
Across the portfolio, we are focused on optimizing assortment architecture, pricing strategies, and inventory productivity to support margin expansion and improve inventory turns.
We maintain a robust customer ecosystem anchored by our MyPLACE Rewards loyalty program and private label credit card. At the end of Fiscal 2025, members of the MyPLACE Rewards program and/or private label credit card customers accounted for over 80% of total U.S. retail sales. The private label credit card is issued through a third-party financial institution on a non-recourse basis and can be used at The Children’s Place and Gymboree retail stores and e-commerce sites.
To broaden payment flexibility and support customer acquisition, we also partner with third-party providers, including buy-now-pay-later platforms such as Afterpay. We continue to enhance our loyalty ecosystem to drive engagement, frequency, and personalization.
During the third quarter of Fiscal 2025, we revamped our My Place Rewards loyalty program to deliver more personalized connections, rewards, and elevated experiences to our customers. Some of the key elements of the program include (i) tiered memberships, which offer members more ways to earn, unlock, and level-up benefits, (ii) earning points, bonuses, and exclusive incentives with every purchase, (iii) members-only perks, including VIP events, early collection access, and faster order processing, (iv) family-centered benefits such as birthday discounts, and (v) enhanced convenience, such as free gift-wrapping kits and the ability to redeem points at the member’s own discretion over a 12-month period.
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We are increasing our focus on long-term brand building while maintaining a balanced, full-funnel marketing approach designed to drive both near-term demand and long-term customer growth. We are modernizing our marketing capabilities through expanded use of social media, influencer partnerships, and data-driven digital marketing channels to improve customer engagement, acquisition efficiency, marketing productivity, and brand relevance.
Distribution
In the United States, we own and operate a 700,000 square foot distribution center in Alabama, which supports our retail store operations, e-commerce, and wholesale operations both in the United States and in Canada. We use a third-party provider operating a 315,000 square foot distribution center in Indiana and a 184,000 square foot distribution center in Ontario, Canada to support our U.S. and Canadian e-commerce fulfillment operations, respectively. We utilize additional facilities in Alabama to support further warehousing needs, including offsite storage. We also use a third-party provider of warehousing and logistics services in both Malaysia and China to support our international franchise business.
Competition
The children’s apparel, footwear, and accessories retail markets are highly competitive. Our primary competitors are specialty stores, mass merchants, and off-price stores, including Carter’s, Inc., Target Corporation, Old Navy, GapKids, and babyGap (each of which is a division of The Gap, Inc.), T.J. Maxx and Marshall’s (each of which is a division of TJX Companies, Inc.), Burlington Coat Factory, Inc., Kohl’s Corporation, Walmart Stores, Inc., and other department stores. We also compete with regional retail chains, catalog companies, and e-commerce retailers. One or more of our competitors are present in substantially all of the areas in which we have stores.
Trademarks and Service Marks
“The Children’s Place”, “Gymboree”, “Sugar & Jade”, “PJ Place”, “Crazy 8”, “Place”, “Baby Place”, and certain other marks have been registered as trademarks and/or service marks with the United States Patent and Trademark Office and in Canada and other foreign countries. During the first quarter of fiscal year 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. Registration of our trademarks and the service marks may be renewed to extend the original registration period indefinitely, provided the marks are still in use. We generally intend to continue to use and protect our trademarks and service marks and maintain their registrations. We have also registered our trademarks in other countries where we source our products and where we have established and anticipate establishing franchising and/or wholesale operations.
Government Regulation
We are subject to extensive federal, state, local, provincial, and other foreign laws and regulations affecting our business, including product testing and safety, consumer protection, privacy, truth-in-advertising, accessibility, customs, wage and hour laws and regulations, and zoning and occupancy ordinances that regulate retailers generally and/or govern the promotion and sale of merchandise and the operation of retail stores and e-commerce sites. We also are subject to similar international laws and regulations affecting our business. We believe that we are in material compliance with these laws and regulations.
We are committed to product quality and safety. We focus our efforts to adhere to all applicable laws and regulations affecting our business, including the provisions of the U.S. Consumer Product Safety Improvement Act of 2008 (“CPSIA”), the Federal Hazardous Substances Act, the Flammable Fabrics Act, the Textile Fiber Product Identification Act, the Canada Consumer Product Safety Act (“CCPSA”), the Canadian Textile Labelling Act, the Canadian Care Labelling Program, and various environmental laws and regulations. Each of our product styles currently covered by the CPSIA and the CCPSA is appropriately tested to meet current standards.
Virtually all of our merchandise is manufactured by third-party factories located outside of the United States. These products are imported and are subject to U.S. and Canadian customs laws and regulations, which restrict the importation of and impose tariffs, anti-dumping and countervailing duties on, certain imported products, including textiles, apparel, footwear, and accessories. We currently are not restricted by any such anti-dumping and countervailing duties in the operation of our business.
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Internet Access to Reports
We are a public company and are subject to the disclosure requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Accordingly, we file periodic reports, proxy statements, and other information with the SEC. Such reports, proxy statements, and other information may be obtained by visiting the SEC website (http://www.sec.gov) that contains reports, proxy, and information statements and other information regarding us and other issuers that file electronically.
Our corporate website address is http://corporate.childrensplace.com. We make available, without charge, through our website, copies of our Proxy Statement, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such reports are filed with or furnished to the SEC. Our ESG Report is also available on our corporate website under the Investor Relations tab. References in this document to our websites are not and should not be considered part of this Annual Report on Form 10-K, and the information on our websites is not incorporated by reference into this Annual Report on Form 10-K.
We also make available our corporate governance materials, including our corporate governance guidelines and our code of business conduct, on our website. If we make any substantive amendments to our code of business conduct or grant any waiver, including any implicit waiver, from a provision of the code for the benefit of our President and Chief Executive Officer, we will disclose the nature of such amendment or waiver on our corporate website or in a Current Report on Form 8-K.
Controlled Company Status
In light of Mithaq’s ownership of more than 50% of the Company’s outstanding shares of common stock, The Children’s Place, Inc. is a “controlled company” within the meaning of Rule 5615(c)(1) of the Nasdaq Listing Rules, and our Board has chosen to rely on the “controlled company” exemption under the Nasdaq Listing Rules that would otherwise require the Company to have a majority independent board and fully independent Human Capital and Compensation Committee and Corporate Responsibility, Sustainability and Governance Committee. See “ Risk Factors – Risks Related to Legal and Regulatory Matters – We have exercised our option for the “controlled company” exemption under Nasdaq rules”.
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