Children’s Place has initiated bankruptcy proceedings following significant losses and declining sales, as the parent company of its namesake and Gymboree children’s clothing lines searches for a buyer.
The New Jersey-based firm filed for Chapter 11 bankruptcy protection 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, including Israel and Saudi Arabia, through franchises and partnerships.
“This announcement represents a pivotal moment in our efforts to find the best pathway forward for The Children’s Place,” stated Rudy Morando, the company’s co-chief restructuring officer.
“We acknowledge 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 if the court grants approval, it plans to carry on with 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 of $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 for Saudi Arabia’s affluent Al Rajhi family, owns a 61.1 percent equity share in the company as noted in a court document. It became the majority stakeholder in 2024.
In a court submission, restructuring advisor Lorie Beers indicated that Children’s Place has faced falling sales and profitability, competitive pressures, rising expenses, and serious liquidity challenges.
Beers mentioned that these issues led the company to seek proposals to sell its assets, divest the Children’s Place and Gymboree brands, or consider liquidation. She reported that Children’s Place has received nine bids to purchase some or all of its assets.
The company has requested that any interested parties submit bids for its assets by December 9, with the expectation of 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. Net sales dropped 19 percent compared to the previous year, and sales at stores open for at least one year decreased by 17 percent. Inventory liquidations commenced on November 6.
Mithaq did not provide an immediate response to Reuters’ inquiries on Monday.
Children’s Place shares closed at 32.2 cents on Friday but fell 42 percent to 18.6 cents during premarket trading on Monday.