Children’s Place has initiated bankruptcy proceedings following significant financial losses and declining sales, as the parent company of its namesake brand and Gymboree seeks a prospective buyer.
The company, headquartered in New Jersey, sought Chapter 11 protection from its creditors late Sunday in the Newark bankruptcy court.
Established in 1969, Children’s Place operates over 500 stores across the United States and Canada, and has a substantial presence in Mexico and the Middle East through franchisees and partners, including locations in Israel and Saudi Arabia.
“This announcement represents a crucial step in our endeavor to identify the most suitable path forward for The Children’s Place,” remarked Rudy Morando, the company’s co-chief restructuring officer.
“We understand the importance of this situation for our employees, customers, vendors, and other collaborators, and we are dedicated to ensuring a smooth and transparent sales process.”
The retailer indicated that its stores and online platforms remain operational, and if approved by the court, it plans to continue its current inventory sales while starting to liquidate its stock.
As of August 1, Children’s Place reported having assets totaling $742.3 million USD ($1.05 billion CAD) against liabilities amounting to $881.3 million USD ($1.2 billion CAD).
Customers 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 for Saudi Arabia’s affluent Al Rajhi family, holds a 61.1% equity stake in the company, as stated in a court document. It became the majority owner in 2024.
In a filing to the court, restructuring consultant Lorie Beers noted that Children’s Place has been facing decreasing sales and profitability, competitive pressures, rising costs, and significant liquidity challenges.
According to Beers, these issues have led the company to seek proposals for selling its assets, the Children’s Place and Gymboree brands, or possibly liquidating entirely. Children’s Place has received nine offers to acquire some or nearly all of its assets.
The company is urging any interested parties to submit bids for its assets by December 9, with an expectation to finalize the court-supervised sale process by the end of December.
Children’s Place reported a loss of $31 million USD for the three months ending August 1. Its net sales dropped by 19% compared to the previous year, while sales from stores that had been open for at least one year fell by 17%. Inventory liquidations commenced on November 6.
Mithaq has not yet responded to inquiries from Reuters on Monday.
Children’s Place shares closed at 32.2 cents on Friday, and fell 42% to 18.6 cents in premarket trading on Monday.