Key Takeaways
- • The Children's Place Inc. has drawn a total of $40 million from Mithaq Capital, its largest shareholder and a Saudi family office, via Shariah-compliant unsecured term loans, including $25 million borrowed last month after $15 million in July, according to the company's regulatory filings and reporting.
- • The retailer is working with Berkeley Research Group on operational assistance amid declining sales, according to people familiar with the situation.
- • Revenue for the three months ended Aug. 1 fell 18.9% year over year to $241.8 million, with comparable retail sales down 16.7%, per regulatory filings.
- • Interim CEO Asif Seemab, a Mithaq executive serving on the board, replaced the chief executive in July, and shares traded near $2, down from above $9 in November.
Summary
The Children's Place Inc. is working with Berkeley Research Group for operational assistance as sales continue to decline, according to people familiar with the situation, and has tapped a $40 million facility from Mithaq Capital, a Saudi family office that is the retailer's largest shareholder. The specialty retailer disclosed last month that it borrowed another $25 million from Mithaq to shore up cash reserves, following a $15 million draw in July. The family office has been providing incremental cash injections in the form of Shariah-compliant unsecured term loans, which are structured to adhere to Islamic finance principles, including the prohibition on conventional interest. Mithaq acquired 54% of the chain's outstanding shares in 2024, when the company was edging toward a restructuring.
The New Jersey-based company, which also owns the Gymboree brand, has been affected by lower foot traffic and inflationary pressure. It recorded revenue of $241.8 million in the three months ended Aug. 1, 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 locations during the pandemic. The company lists more than 500 stores in North America and has international distribution points in 13 countries. In April it said it was returning to Saudi Arabia, with plans to open a flagship store in Riyadh this year.
The company replaced its chief executive in July with interim leader Asif Seemab, a Mithaq executive who sits on the board. Shares traded around $2 on Monday, a steady decline from above $9 in November. Representatives for Berkeley Research Group declined to comment, and messages to The Children's Place and Mithaq were not returned.
The New Jersey-based company, which also owns the Gymboree brand, has been affected by lower foot traffic and inflationary pressure. It recorded revenue of $241.8 million in the three months ended Aug. 1, 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 locations during the pandemic. The company lists more than 500 stores in North America and has international distribution points in 13 countries. In April it said it was returning to Saudi Arabia, with plans to open a flagship store in Riyadh this year.
The company replaced its chief executive in July with interim leader Asif Seemab, a Mithaq executive who sits on the board. Shares traded around $2 on Monday, a steady decline from above $9 in November. Representatives for Berkeley Research Group declined to comment, and messages to The Children's Place and Mithaq were not returned.
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