Children's Place Q2 2024 10-Q Filed

TL;DR

Children's Place Q2 10-Q is in. Financials and biz updates out.

AI Summary

Children's Place, Inc. filed its 10-Q for the period ending August 3, 2024. The filing details financial performance and operational updates for the second quarter of fiscal year 2024. Key financial figures and business segment information are presented, reflecting the company's ongoing strategies in the retail family clothing sector.

Why It Matters

This filing provides investors with the latest financial results and operational details for Children's Place, offering insights into the company's performance in the competitive retail landscape.

Risk Assessment

Risk Level: medium — The company operates in the highly competitive and seasonal retail sector, which is subject to changing consumer preferences and economic conditions.

Key Numbers

• 2024-08-03 — End of Fiscal Period (This date marks the conclusion of the reporting period for the 10-Q filing.)
• 2024-09-11 — Filing Date (The date the 10-Q was officially submitted to the SEC.)

Key Players & Entities

• Children's Place, Inc. (company) — Filer of the 10-Q
• 20240803 (date) — End of the reporting period
• 20240911 (date) — Filing date
• 500 Plaza Drive, Secaucus, NJ 07094 (location) — Company's business and mailing address

FAQ

Key Financial Figures

• $0.10 — ange on which registered Common Stock, $0.10 par value PLCE Nasdaq Global Select Mar

Filing Documents

• plce-20240803.htm (10-Q) — 1420KB
• exhibit103q22024.htm (EX-10.3) — 98KB
• exhibit104q22024.htm (EX-10.4) — 29KB
• exhibit105q22024.htm (EX-10.5) — 24KB
• exhibit3112024q2.htm (EX-31.1) — 11KB
• exhibit3122024q2.htm (EX-31.2) — 11KB
• exhibit322024q2.htm (EX-32) — 9KB
• image_1.jpg (GRAPHIC) — 0KB
• logo.jpg (GRAPHIC) — 10KB
• 0001628280-24-040127.txt ( ) — 6988KB
• plce-20240803.xsd (EX-101.SCH) — 41KB
• plce-20240803_cal.xml (EX-101.CAL) — 66KB
• plce-20240803_def.xml (EX-101.DEF) — 218KB
• plce-20240803_lab.xml (EX-101.LAB) — 545KB
• plce-20240803_pre.xml (EX-101.PRE) — 386KB
• plce-20240803_htm.xml (XML) — 965KB

— FINANCIAL INFORMATION

PART I — FINANCIAL INFORMATION PAGE Item 1. F inancial S tatements . Consolidated Balance Sheets as of August 3, 2024, February 3, 2024 and July 29, 2023 1 Consolidated Statements of Operations for the thirteen weeks and twenty-six weeks ended August 3, 2024 and July 29, 2023 2 Consolidated Statements of Comprehensive Loss for the thirteen weeks and twenty-six weeks ended August 3, 2024 and July 29, 2023 3 Consolidated Statements of Changes in Stockholders ' (Deficit) Equity for the thirteen weeks and twenty-six weeks ended August 3, 2024 and July 29, 2023 4 Consolidated Statements of Cash Flows for the twenty-six weeks ended August 3, 2024 and July 29, 2023 6 Notes to C onsolidated F inancial S tatements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations . 25 Item 3.

Quantitative and Qualitative Disclosures A bout Market Risk

Quantitative and Qualitative Disclosures A bout Market Risk . 37 Item 4.

Controls and Procedures

Controls and Procedures . 38

— OTHER INFORMATION

PART II — OTHER INFORMATION Item 1. Legal Proceedings . 39 Item 1A. Risk Factors . 39 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds . 39 Item 5. Other Information . 39 Item 6. Exhibits . 40 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS. THE CHILDREN'S PLACE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) August 3, 2024 February 3, 2024 July 29, 2023 (in thousands, except par value) ASSETS Current assets: Cash and cash equivalents $ 9,573 $ 13,639 $ 18,846 Accounts receivable 61,926 33,219 33,073 Inventories 520,593 362,099 536,980 Prepaid expenses and other current assets 35,251 43,169 65,108 Total current assets 627,343 452,126 654,007 Long-term assets: Property and equipment, net 111,296 124,750 141,244 Right-of-use assets 163,539 175,351 112,325 Tradenames, net 13,000 41,123 70,491 Deferred income taxes — — 35,798 Other assets 6,236 6,958 9,220 Total assets $ 921,414 $ 800,308 $ 1,023,085 LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY Current liabilities: Revolving loan $ 316,655 $ 226,715 $ 347,546 Accounts payable 215,793 225,549 262,369 Current portion of operating lease liabilities 67,610 69,235 65,266 Income taxes payable 3,384 5,297 2,938 Accrued expenses and other current liabilities 95,074 89,608 122,032 Total current liabilities 698,516 616,404 800,151 Long-term liabilities: Long-term debt — 49,818 49,785 Related party long-term debt 165,354 — — Long-term portion of operating lease liabilities 110,596 118,073 63,714 Income taxes payable — 9,486 9,610 Other tax liabilities 5,073 4,664 2,905 Other long-term liabilities 10,747 10,882 10,990 Total liabilities 990,286 809,327 937,155 Commitments and contingencies (see Note 8) Stockholders' (deficit) equity: Preferred stock, $ 1.00 par value, 1,000 shares authorized, 0 shares issued and outstanding — — — Common stock, $ 0.10 par value, 100,000 shares authorized; 12,779 , 12,585 , and 12,544 issued; 12,718 , 12,529 , and 12,473 outstanding 1,278 1,259 1,254 Additional paid-in capital 151,859 141,083 145,117 Treasury stock, at cost ( 61 , 56 , and 71 shares) ( 2,975 ) ( 2,909 ) ( 3,884 ) Deferred compensation 2,975 2,909 3,884 Accumulated other co

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION Description of Business 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 five international franchise partners. The Company designs, contracts to manufacture, and sells fashionable, high-quality apparel, accessories and footwear predominantly at value prices, primarily under the Company's proprietary brands: "The Children's Place", "Gymboree", "Sugar & Jade", and "PJ Place". The Company classifies its business into two segments: The Children's Place U.S. and The Children's Place International. Included in The Children's Place U.S. 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. 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: Second Quarter 2024 — The thirteen weeks ended August 3, 2024 Second Quarter 2023 — The thirteen weeks ended July 29, 2023 First Quarter 2024 — The thirteen weeks ended May 4, 2024 Year-To-Date 2024 — The twenty-six weeks ended August 3, 2024 Year-To-Date 2023 — The twenty-six weeks ended July 29, 2023 Fiscal 2024 — The fifty-two weeks ending February 1, 2025 Fiscal 2023 — The fifty-three weeks ended February 3, 2024 Fiscal 2022 — The fifty-tw

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) In the opinion of management, the accompanying unaudited consolidated financial statements contain all normal recurring adjustments necessary for a fair statement of the consolidated financial position of the Company as of August 3, 2024 and July 29, 2023, the results of its consolidated operations, consolidated comprehensive loss, and consolidated changes in stockholders' (deficit) equity for the thirteen weeks and twenty-six weeks ended August 3, 2024 and July 29, 2023, and consolidated cash flows for the twenty-six weeks ended August 3, 2024 and July 29, 2023. The consolidated balance sheet as of February 3, 2024 was derived from audited financial statements. Due to the seasonal nature of the Company's business, the results of operations for the thirteen weeks and twenty-six weeks ended August 3, 2024 and July 29, 2023 are not necessarily indicative of operating results for a full fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended February 3, 2024. Certain prior period financial statement disclosures have been conformed to the current period presentation. Liquidity The Company incurred net losses in the Second Quarter 2024, Fiscal 2023 and Fiscal 2022. As of August 3, 2024, the Company had an Accumulated deficit of $ 204.8 million and a working capital deficit of $ 71.2 million, which included borrowings of $ 316.7 million under its asset-based revolving credit facility (the "ABL Credit Facility"), which will mature in November 2026, pursuant to its credit agreement, dated as of May 9, 2019, (as amended from time to time, the "Credit Agreement"), by and among the Company, certain of its subsidiaries and the lenders party thereto. As of August 3, 2024, the Company had availability under its ABL Credit Facility of $ 67.3 million. The Company

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) In December 2023, the FASB issued Accounting Standards Update No. 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," ("ASU 2023-09"). The amendments in ASU 2023-09 are designed to enhance the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements. 2. REVENUES 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 Twenty-six Weeks Ended August 3, 2024 July 29, 2023 August 3, 2024 July 29, 2023 (in thousands) Net sales: South $ 125,639 $ 127,708 $ 228,895 $ 247,626 Northeast 50,453 59,935 104,680 124,468 West 38,837 46,750 72,753 89,352 Midwest 27,953 34,093 60,491 72,902 International and other (1) 76,773 77,113 120,714 132,891 Total net sales $ 319,655 $ 345,599 $ 587,533 $ 667,239 ____________________________________________ (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 $ 12.6 million, $ 3.1 million,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Unaudited) The Company's private label credit card is issued to customers for use exclusively at The Children's Place stores and online at www.childrensplace.com and www.gymboree.com , and credit is extended to such customers by a third-party financial institution on a non-recourse basis to the Company. The private label credit card includes multiple performance obligations for the Company, including marketing and promoting the program on behalf of the bank and the operation of the loyalty rewards program. Included in the agreement with the third-party financial institution was an upfront bonus paid to the Company and an additional bonus to extend the term of the agreement. These bonuses are recognized as revenue and allocated between brand and reward obligations. As the license of the Company's brand is the predominant item in the performance obligation, the amount allocated to the brand obligation is recognized on a straight-line basis over the term of the agreement. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. 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 reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In addition, the annual profit-sharing amount is recognized quarterly within an annual period when it can be estimated reli

View Full Filing

View this 10-Q filing on SEC EDGAR