Children’s Place has declared bankruptcy following a series of increasing losses and declining sales, as the parent company of both its own brand and Gymboree seeks a buyer.
The New Jersey-based corporation submitted a Chapter 11 bankruptcy petition late Sunday at the Newark court to gain protection from creditors.
Established in 1969, Children’s Place operates over 500 locations across the United States and Canada, and through franchisees and partnerships, maintains a significant presence in Mexico and the Middle East, including Israel and Saudi Arabia.
“This announcement represents a crucial step in our quest to identify the best path forward for The Children’s Place,” remarked Rudy Morando, the company’s co-chief restructuring officer.
“We understand the importance of this development for our employees, customers, vendors, and other partners, and we are dedicated to ensuring an efficient and transparent sales process.”
The company confirmed that its retail outlets and online shopping platforms will remain operational, and upon court approval, it plans to proceed with ongoing inventory sales as it embarks on liquidation of its stock.
As of August 1, Children’s Place reported assets totaling $742.3 million US ($1.05 billion CAD) against liabilities of $881.3 million ($1.2 billion CAD).
Shoppers enter The Children’s Place at a mall in San Jose, Calif., in July 2009. (Paul Sakuma/The Associated Press)
Mithaq Capital, a family office associated with Saudi Arabia’s affluent Al Rajhi family, has a 61.1 percent equity stake in the company, as noted in a court filing. They became the majority owner in 2024.
According to restructuring consultant Lorie Beers, Children’s Place has faced a drop in sales and profit margins, along with competitive and promotional pressures, rising costs, and significant liquidity challenges.
Beers indicated that these factors led the company to seek proposals for selling its assets, the Children’s Place and Gymboree brands, or possibly liquidating entirely. She mentioned that Children’s Place has received nine offers to acquire some or nearly all of its assets.
The company is inviting any interested parties to submit bids for its assets by December 9, with an expectation to conclude the court-supervised sales process by the end of December.
Children’s Place suffered a loss of $31 million US during the three-month period ending August 1. Net sales dropped by 19 percent compared to the previous year, and sales at stores open for at least one year fell by 17 percent. Inventory liquidations commenced on November 6.
Mithaq did not respond to requests for comment from Reuters on Monday.
As of Friday, shares of Children’s Place closed at 32.2 cents, falling 42 percent to 18.6 cents in premarket trading on Monday.