The Children’s Place was once the go-to place for parents to shop for their kids, but it has lost its old charm, though a regrowth strategy is now in the works.
- In the past couple of years, Children’s Place has been trying to stay afloat by cutting, raising capital and also welcoming a new CEO to turn the company around.
- The Children’s Place named Muhammad Umair as its full-time CEO in November.
- The company named Umair interim CEO in May 2024 following Jane Elfers's departure.
The Children’s Place used to be the Disneyland of the apparel world, where kids and parents equally preferred the company’s offerings and looked forward to new launches. But now, that remains just a memory.
The company's roots date back to 1969, when it began as a toy store that was selling children's clothing, apparel and accessories. In the 1980s, the company changed its strategy to focus on clothing and has stuck to it ever since.
The reality today is that the company is struggling to make a name again, a wobbly demand situation that started during the pandemic has prolonged with big-box retailers offering private label brands and the rise of Shein and Temu. The once loyal customer base of The Children’s Place has now found new homes for their kids' apparel.
With parents also navigating higher inflation over the last few years, the first thing they sought to cut was apparel, resulting in fewer trips to The Children’s Place and prompting the company to rethink its store strategy and become fully available online.
In the past couple of years, The Children’s Place has been trying to stay afloat by cutting, raising capital and also welcoming a new CEO to turn the company around.
New CEO
The Children’s Place named Muhammad Umair as its full-time CEO in November. The company named Umair interim CEO in May 2024 after the departure of Jane Elfers, who had been at the helm for 14 years. Shortly before, Saudi Arabia's wealthy AlRajhi family took a massive 54% stake in the company in the open market through its investment firm Mithaq Capital in February of 2024.
Following the stake, Umair joined the company’s board of directors in February alongside three others nominated by Mithaq Capital, which then provided over $168 million in term loans to help The Children’s Place stay afloat as it struggled to maintain cash on hand.
The Shift That Changed Everything
The Children’s Place was designed to be a mall store, and as mall traffic declined, mainly during and after the COVID-19 pandemic, the company's demand also faltered. As e-commerce boomed, the company struggled to keep up with giants such as Amazon, Shein and Temu, even after offering its products online due to changing preferences and parents trading down to private label brands or buying from retailers such as Walmart and Target as well.
Several retailers and apparel companies had to succumb to declines in mall traffic, resulting in a loss of business for them. Abercrombie & Fitch also reported that demand was thinning, but eventually turned the company around by offering better products to attract customers.
The company saw several store closures during the pandemic, with CFO John Szczepanski noting in September that, midway through the pandemic, there was a retrenchment in brick-and-mortar retail, with store closures having a material impact on sales, brand perception, and customer acquisition. “To many former customers, the perception was that The Children's Place had gone out of business,” he said.
The Turnaround
The company has kicked off a turnaround to help bring its name back and be the go-to place again. Szczepanski said that The Children’s Place is trying to bring relevance and excitement back into the portfolio.
The Children’s Place is now trying to serve a tech-savvy parental group and become more digitally appealing while also boosting in-store growth by changing the store experience, without going overboard with its store count.
What Is Retail Thinking?
Retail sentiment on The Children’s Place jumped to ‘bullish’ from ‘bearish’ territory a week ago, according to data from Stocktwits, as the company is set to report quarterly earnings after markets close on Monday. The message volume on Stocktwits was also at ‘high’ levels, while followers jumped by about 20% over the past year.
Shares of PLCE have declined by over 28% so far this year.
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