Children’s Place has announced its bankruptcy filing following significant financial losses and declining sales, as the owner of the Children’s Place and Gymboree clothing brands seeks a buyer.
The New Jersey-based retailer submitted a Chapter 11 bankruptcy petition to creditors late Sunday in Newark’s bankruptcy court.
Established in 1969, Children’s Place operates over 500 locations across the United States and Canada, and has a strong presence in Mexico and the Middle East through franchise agreements, with significant operations in Israel and Saudi Arabia.
“This announcement signifies a crucial step in our quest to determine the most beneficial path 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.”
According to the firm, its stores and online platforms remain operational, and pending court approval, it plans to continue its ongoing inventory sales as it begins the liquidation process.
As of August 1, Children’s Place reported assets totaling $742.3 million USD ($1.05 billion CAD) against liabilities of $881.3 million USD ($1.2 billion CAD).
Shoppers enter The Children’s Place at a mall in San Jose, California, in July 2009. (Paul Sakuma/The Associated Press)
Mithaq Capital, which is the family office for Saudi Arabia’s affluent Al Rajhi family, owns a 61.1 percent equity share in the company, according to court documents. The firm became the majority owner in 2024.
In a court submission, restructuring consultant Lorie Beers indicated that Children’s Place has faced a downturn in sales and profitability, increased competitive pressures, rising costs, and serious liquidity challenges.
This situation has led the company to seek offers for its assets, the Children’s Place and Gymboree brands, or even consider liquidation. Beers noted that Children’s Place has received nine proposals to acquire some or nearly all of its assets.
The company has set a deadline for interested buyers to submit bids by December 9, aiming to finalize the court-supervised sale process by the end of December.
For the three-month period ending August 1, Children’s Place reported a loss of $31 million USD, with net sales dropping 19 percent compared to the previous year, and a 17 percent decline in sales at stores operating for at least one year. Inventory liquidations commenced on November 6.
Mithaq has not yet responded to requests for comments from Reuters on Monday.
Children’s Place shares concluded trading on Friday at 32.2 cents. On Monday, they experienced a 42 percent drop in premarket trading, falling to 18.6 cents.