Children’s Place has entered bankruptcy after enduring escalating losses and declining sales, as the parent company of its namesake and Gymboree brands seeks a buyer.
The company, based in New Jersey, filed for Chapter 11 protection from 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 significant presence in Mexico and the Middle East, including Israel and Saudi Arabia, through franchisees and partnerships.
“Today’s announcement is a critical step in our efforts to find the best way forward for The Children’s Place,” said Rudy Morando, co-chief restructuring officer of the company.
“We understand the importance of this situation for our employees, customers, vendors, and other partners, and we are dedicated to managing an efficient and transparent sales process.”
The company has confirmed that its stores and online platforms are still operational, and if the court grants approval, it plans to continue its ongoing inventory sales as it starts to liquidate its 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, Calif., in July 2009. (Paul Sakuma/The Associated Press)
Mithaq Capital, a family office for the affluent Al Rajhi family of Saudi Arabia, holds a 61.1 percent equity stake in the company, according to a court filing. It became the majority owner in 2024.
In the court documents, restructuring advisor Lorie Beers noted that Children’s Place has faced declining sales and profitability, competitive and promotional challenges, rising costs, and significant liquidity pressures.
Beers indicated that this situation led the company to seek proposals for selling its assets, the Children’s Place and Gymboree brands, or potentially 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, aiming to complete the court-supervised sale 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 declined by 17 percent. Inventory liquidations commenced on November 6.
Mithaq did not immediately respond to Reuters’ requests for comments on Monday.
Children’s Place shares closed at 32.2 cents on Friday, and fell 42 percent to 18.6 cents in premarket trading on Monday.