Children’s Place has initiated bankruptcy proceedings following significant losses and declining sales, as it seeks a buyer for its namesake and Gymboree children’s apparel brands.
The company, headquartered in New Jersey, submitted a Chapter 11 bankruptcy filing late Sunday in Newark court to protect itself from creditors.
Established in 1969, Children’s Place operates over 500 stores across the United States and Canada, and has a notable presence in Mexico and the Middle East through franchises and partnerships, including in Israel and Saudi Arabia.
“Today’s announcement signifies a crucial step in our efforts to determine the best path forward for The Children’s Place,” stated Rudy Morando, the company’s co-chief restructuring officer.
“We understand the importance of this situation for our employees, customers, vendors, and partners, and we are dedicated to ensuring a smooth and transparent sales process.”
The company confirmed that its stores and online platforms will remain operational, and if approved by the court, it plans to continue its ongoing inventory sales while starting the liquidation process.
As of August 1, Children’s Place reported assets amounting to $742.3 million US ($1.05 billion Cdn) and liabilities totaling $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, holds a 61.1 percent equity share in the company, as stated in a court document. It became the majority owner in 2024.
In a court submission, restructuring advisor Lorie Beers indicated that Children’s Place has faced declining sales and profitability, along with competitive pressures, rising costs, and significant liquidity challenges.
Beers noted that these issues led the company to seek proposals for selling its assets, as well as the Children’s Place and Gymboree brands, or possibly liquidating. She mentioned that Children’s Place has received nine proposals to acquire some or nearly all of its assets.
The company is requesting that interested parties 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 US for the three-month period ending August 1. Net sales decreased by 19 percent compared to the previous year, while sales at stores open for at least one year dropped by 17 percent. Inventory liquidations commenced on November 6.
Mithaq has not provided immediate comments to Reuters regarding the situation as of Monday.
Children’s Place shares ended trading on Friday at 32.2 cents. They fell by 42 percent to 18.6 cents in premarket trading on Monday.