Children’s Place has initiated bankruptcy proceedings as it grapples with escalating losses and declining sales, with its parent company, which oversees both the Children’s Place and Gymboree clothing lines, in search of a buyer.
Based in New Jersey, the company sought Chapter 11 protection from its creditors on Sunday, filing in the Newark bankruptcy court.
Established in 1969, Children’s Place operates over 500 retail locations across the United States and Canada, and has significant operations through franchise agreements in Mexico and the Middle East, including Israel and Saudi Arabia.
“Today’s announcement signifies a crucial step in our mission to find the optimal path forward for The Children’s Place,” stated Rudy Morando, co-chief restructuring officer of the company.
“We understand the importance of this situation for our employees, customers, vendors, and other stakeholders, and we are dedicated to ensuring a smooth and transparent sales process.”
The company confirmed that its stores and online platforms remain operational, and pending court approval, it plans to continue its ongoing inventory sales while starting to liquidate stock.
As of August 1, Children’s Place reported assets totaling $742.3 million US ($1.05 billion Cdn) against liabilities amounting to $881.3 million ($1.2 billion Cdn).
Shoppers enter The Children’s Place at a mall in San Jose, California, in July 2009. (Paul Sakuma/The Associated Press)
Mithaq Capital, a family office representing Saudi Arabia’s affluent Al Rajhi family, possesses a 61.1 percent equity stake in the company, as noted in a court filing. It became the majority owner in 2024.
A restructuring advisor, Lorie Beers, indicated in a court filing that Children’s Place has faced decreasing sales and profits, competitive and promotional challenges, rising expenses, and serious liquidity issues.
She mentioned that these challenges led the company to seek proposals to sell its assets, divest the Children’s Place and Gymboree brands, or potentially undergo liquidation. Beers noted that Children’s Place has received nine offers to acquire either some or nearly all of its assets.
The company is requesting that any interested buyers submit offers for its assets by December 9 and anticipates concluding the court-supervised sale process by the end of December.
Children’s Place reported a loss of $31 million US for the three months ending August 1, with net sales dropping 19 percent compared to the previous year, and sales from stores open for at least one year decreasing by 17 percent. Inventory liquidation commenced on November 6.
Mithaq did not respond to Reuters’ requests for comments on Monday.
Children’s Place shares closed at 32.2 cents on Friday, and in premarket trading on Monday, they fell by 42 percent to 18.6 cents.