Key Takeaways
- • The Children's Place has engaged Berkeley Research Group for operational assistance amid declining sales, according to people familiar with the situation, and has drawn a $40 million facility from Saudi family office Mithaq Capital.
- • Mithaq Capital, the retailer's largest shareholder with 54% of outstanding shares acquired in 2024, has provided Shariah-compliant unsecured term loans, including $15 million drawn in July and $25 million borrowed last month.
- • Revenue fell 18.9% year over year to $241.8 million in the three months ended Aug. 1, and comparable retail sales dropped 16.7%, according to regulatory filings.
- • In July, the company replaced its CEO with interim leader Asif Seemab, a Mithaq executive serving on the board, while shares trade around $2, down from above $9 in November.
Summary
The Children's Place Inc. is working with Berkeley Research Group for operational assistance as sales decline, according to people familiar with the situation, and has tapped a $40 million facility from Mithaq Capital, a Saudi family office that is also its largest shareholder. A spokesperson for Berkeley Research Group declined to comment, and representatives for The Children's Place and Mithaq did not respond to requests for comment.
Mithaq has been providing incremental cash through Shariah-compliant unsecured term loans, which are structured to adhere to Islamic finance principles, including the prohibition on conventional interest. The company disclosed last month that it had borrowed another $25 million to shore up cash reserves, following a $15 million draw in July. Mithaq acquired 54% of the chain's outstanding shares in 2024, when the company was edging toward a restructuring.
The New Jersey-based retailer, which also owns the Gymboree brand, has faced lower foot traffic and inflationary pressure. Revenue for the three months ended Aug. 1 was $241.8 million, down 18.9% from a year earlier, with comparable retail sales falling 16.7%, according to regulatory filings. The company attributed part of the decline to a slower-than-expected transition of its e-commerce business to Salesforce and is liquidating older inventory through clearance sales.
Despite the weak results, The Children's Place opened 19 new stores in the quarter, the most in any quarter since 2013, after closing hundreds of shops during the pandemic. The company lists more than 500 stores in North America and has international distribution points in 13 countries. It said in April it was returning to Saudi Arabia, with plans to open a flagship store in Riyadh this year.
In July, the company replaced chief executive officer with interim leader Asif Seemab, a Mithaq executive on the board. Shares traded around $2 on Monday, a steady decline from above $9 in November.
Mithaq has been providing incremental cash through Shariah-compliant unsecured term loans, which are structured to adhere to Islamic finance principles, including the prohibition on conventional interest. The company disclosed last month that it had borrowed another $25 million to shore up cash reserves, following a $15 million draw in July. Mithaq acquired 54% of the chain's outstanding shares in 2024, when the company was edging toward a restructuring.
The New Jersey-based retailer, which also owns the Gymboree brand, has faced lower foot traffic and inflationary pressure. Revenue for the three months ended Aug. 1 was $241.8 million, down 18.9% from a year earlier, with comparable retail sales falling 16.7%, according to regulatory filings. The company attributed part of the decline to a slower-than-expected transition of its e-commerce business to Salesforce and is liquidating older inventory through clearance sales.
Despite the weak results, The Children's Place opened 19 new stores in the quarter, the most in any quarter since 2013, after closing hundreds of shops during the pandemic. The company lists more than 500 stores in North America and has international distribution points in 13 countries. It said in April it was returning to Saudi Arabia, with plans to open a flagship store in Riyadh this year.
In July, the company replaced chief executive officer with interim leader Asif Seemab, a Mithaq executive on the board. Shares traded around $2 on Monday, a steady decline from above $9 in November.
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