Financial Data and Key Metrics Changes - Net sales for Q3 decreased by $28.9 million or 5.7% to $480.2 million, exceeding the high end of guidance, driven by strong e-commerce performance [12][87] - Gross profit margin for Q3 decreased to 33.7% from 34.8% in the prior year, impacted by higher distribution and fulfillment expenses [35] - Adjusted net income was $40.6 million or $3.22 per diluted share compared to $43.8 million or $3.33 per diluted share in the prior year [37] Business Line Data and Key Metrics Changes - E-commerce sales represented 57% of retail sales in Q3, up from 50% last year and 37% in 2019, driven by a double-digit increase in e-commerce traffic [7][87] - The wholesale business, particularly through Amazon, had a strong performance, contributing to the overall sales despite a decrease in net retail sales [11][92] - Adjusted SG&A expense was $102.9 million for Q3, down from $105.4 million in the comparable period last year, reflecting reductions in store expenses and payroll [36] Market Data and Key Metrics Changes - U.S. net retail sales decreased by $37 million or 8.9% to $380.3 million, while Canadian net retail sales decreased by $10.2 million or 22.1% to $35.8 million [93] - Comparable store traffic was down approximately 7%, with a nearly 30% decline compared to 2019 [93] - The average unit retail (AUR) decreased by approximately 5% for the quarter, attributed to consumer pressures and a highly promotional environment [93] Company Strategy and Development Direction - The company is focusing on digital transformation and fleet optimization, aiming to operate with fewer resources while enhancing online service [3] - Strategic marketing initiatives have been launched to capture market share, including partnerships with celebrities for seasonal campaigns [9][90] - The company plans to enter 2024 with a rightsized fleet of approximately 530 stores after closing 86 stores in 2023 [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about top-line momentum continuing into Q4, with consolidated retail sales running up low single digits quarter-to-date compared to last year [30] - The company anticipates that fulfillment and distribution cost pressures will continue in Q4 but expects some alleviation in contractual savings [85] - Management believes that the macro environment will improve, leading to a return to normal purchasing patterns for customers [24] Other Important Information - The company ended Q3 with cash and short-term investments of $14 million and $359 million in borrowings on its revolving credit facility [15] - Interest expense for Q3 was $7.9 million, up from $3.8 million in the prior year, due to higher average borrowings and interest rates [14] - The company expects net sales for the full fiscal year 2023 to be in the range of $1.605 billion to $1.61 billion [18] Q&A Session Summary Question: Can you help unpack the increased expenses? - Management acknowledged operational challenges affecting margins but highlighted strong merchandise margins despite the macro environment [21][44] Question: What is the total impact of these factors on gross profit? - Management indicated that many of the increased costs are addressable and expect improvements by the next peak season [46][48] Question: Can you elaborate on free cash flow outlook and debt pay down plans? - Management confirmed a strategy to reduce debt levels significantly, expecting a decline of around $100 million or more [52] Question: How is the shopper's behavior changing? - Management noted that customers are purchasing less per transaction but maintaining high average units sold online [53][65] Question: What are the margin opportunities for 2024? - Management expressed confidence in improved margins due to reduced fulfillment challenges and a strong top line [73][74]

INVESTMENT HIGHLIGHTS Strong Portfolio of Brands Serving Newborn to Tween 591 Stores in the U.S. and Canada Accelerated Amazon Opportunity | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |---------------------|---------|-------|-------|---------|-------|---------|-------|-------|-------------------------|-------|-----------------------| | | | | % of | | % of | | % of | | 23 vs. 22 \nInc/(Dec) | | 23 vs. 19 \nInc/(Dec) | | | Q3 2023 | | Sales | Q3 2022 | Sales | Q3 2019 | Sales | % ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 29, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number 0-23071 THE CHILDREN'S PLACE, INC. (Exact name of registrant as specified in its charter) ...

The Children's Place, Inc. (NASDAQ:PLCE) Q2 2023 Results Conference Call August 17, 2023 8:00 AM ET Company Participants Jane Elfers - President, CEO Maegan Markee - Brand President Sheamus Toal - COO, CFO Josh Truppo - VP, Financial Planning and Analysis Conference Call Participants Jim Chartier - Monness, Crespi and Hardt Jeff Lick - B. Riley Financial Dana Telsey - Telsey Group Jay Sole - UBS Operator Good morning, and welcome to The Children's Place Second Quarter 2023 Earnings Conference Call. On the ...

THE CHILDREN'S PLACE BT Sugar &jade GYMBORee COMPANY OVERVIEW SECOND QUARTER FISCAL 2023 RESULTS INTENV YOHY INVESTMENT HIGHLIGHTS | --- | --- | --- | --- | --- | |-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------|-------|-------| | | | | | | | | • Omni-channel children's specialty portfolio of brands with an | | | | | | industry-leading digital-f ...

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements.](index=3&type=section&id=Item%201.%20Financial%20Statements.) The financial statements for the thirteen weeks ended April 29, 2023, reveal a significant decline in performance, shifting from net income to a substantial net loss due to reduced sales, lower margins, and increased expenses [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands) | Metric | April 29, 2023 | January 28, 2023 | April 30, 2022 | | :-------------------------------- | :------------- | :--------------- | :------------- | | Cash and cash equivalents | $18,242 | $16,689 | $58,494 | | Inventories | $504,194 | $447,795 | $549,167 | | Total current assets | $606,599 | $561,943 | $687,463 | | Total assets | $1,014,870 | $986,281 | $1,145,026 | | Revolving loan | $300,835 | $286,990 | $249,544 | | Total current liabilities | $719,287 | $648,385 | $717,671 | | Total liabilities | $889,049 | $827,803 | $931,342 | | Total stockholders' equity | $125,821 | $158,478 | $213,684 | - Cash and cash equivalents decreased significantly from **$58.494 million** in April 2022 to **$18.242 million** in April 2023, indicating reduced liquidity[10](index=10&type=chunk) - Inventories decreased from **$549.167 million** in April 2022 to **$504.194 million** in April 2023, potentially reflecting efforts to manage stock levels[10](index=10&type=chunk) - Total stockholders' equity declined from **$213.684 million** in April 2022 to **$125.821 million** in April 2023, reflecting the net loss and share repurchases[10](index=10&type=chunk) [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (Thirteen Weeks Ended, in thousands, except EPS) | Metric | April 29, 2023 | April 30, 2022 | Change (YoY) | | :-------------------------------------- | :------------- | :------------- | :----------- | | Net sales | $321,640 | $362,350 | -11.2% | | Gross profit | $96,462 | $141,905 | -32.0% | | Gross profit margin | 30.0% | 39.2% | -9.2 pp | | Selling, general, and administrative expenses | $112,931 | $109,036 | +3.6% | | Operating income (loss) | $(30,067) | $19,254 | N/A (loss) | | Net income (loss) | $(28,834) | $19,831 | N/A (loss) | | Basic EPS | $(2.33) | $1.46 | N/A (loss) | | Diluted EPS | $(2.33) | $1.43 | N/A (loss) | - Net sales decreased by **11.2%** year-over-year, from **$362.350 million** to **$321.640 million**[12](index=12&type=chunk) - The company reported an operating loss of **$30.067 million** and a net loss of **$28.834 million** in Q1 2023, a significant reversal from operating income of **$19.254 million** and net income of **$19.831 million** in Q1 2022[12](index=12&type=chunk) - Diluted EPS shifted from a positive **$1.43** in Q1 2022 to a negative **$(2.33)** in Q1 2023[12](index=12&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Consolidated Statements of Comprehensive Income (Loss) Highlights (Thirteen Weeks Ended, in thousands) | Metric | April 29, 2023 | April 30, 2022 | | :-------------------------------- | :------------- | :------------- | | Net income (loss) | $(28,834) | $19,831 | | Foreign currency translation adjustment | $(818) | $(482) | | Total comprehensive income (loss) | $(29,652) | $19,349 | - Total comprehensive income shifted from a gain of **$19.349 million** in Q1 2022 to a loss of **$29.652 million** in Q1 2023, primarily driven by the net loss[15](index=15&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Changes in Stockholders' Equity (Thirteen Weeks Ended, in thousands) | Metric | April 29, 2023 | April 30, 2022 | | :-------------------------------- | :------------- | :------------- | | Balance, beginning of period | $158,478 | $225,472 | | Net income (loss) | $(28,834) | $19,831 | | Purchase and retirement of common stock | $(6,088) | $(38,699) | | Balance, end of period | $125,821 | $213,684 | - Stockholders' equity decreased from **$158.478 million** at January 28, 2023, to **$125.821 million** at April 29, 2023, primarily due to the net loss and share repurchases[19](index=19&type=chunk) - Common stock repurchases amounted to **$6.088 million** in Q1 2023, significantly lower than **$38.699 million** in Q1 2022[19](index=19&type=chunk)[21](index=21&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Highlights (Thirteen Weeks Ended, in thousands) | Metric | April 29, 2023 | April 30, 2022 | | :-------------------------------- | :------------- | :------------- | | Net cash provided by (used in) operating activities | $5,134 | $(18,837) | | Net cash used in investing activities | $(11,037) | $(10,983) | | Net cash provided by financing activities | $7,757 | $33,856 | | Net increase in cash and cash equivalents | $1,553 | $3,707 | | Cash and cash equivalents, end of period | $18,242 | $58,494 | - Operating activities generated **$5.134 million** in cash in Q1 2023, a positive shift from **$18.837 million** cash used in Q1 2022, primarily due to lower inventory balance[24](index=24&type=chunk) - Cash provided by financing activities decreased significantly from **$33.856 million** in Q1 2022 to **$7.757 million** in Q1 2023, mainly due to lower net borrowings and reduced share repurchases[24](index=24&type=chunk) - Ending cash and cash equivalents decreased to **$18.242 million** in Q1 2023 from **$58.494 million** in Q1 2022[24](index=24&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [1. BASIS OF PRESENTATION](index=9&type=section&id=1.%20BASIS%20OF%20PRESENTATION) - The Children's Place, Inc. is the largest pure-play children's specialty apparel retailer in North America, operating under proprietary brands like 'The Children's Place', 'Place', 'Baby Place', 'Gymboree', 'Sugar & Jade', and 'PJ Place'[25](index=25&type=chunk) - The company operates in two segments: The Children's Place U.S. (U.S. and Puerto Rico stores, U.S. wholesale) and The Children's Place International (Canadian stores, Canadian wholesale, international franchisees), both including e-commerce[26](index=26&type=chunk) - Interim financial statements are unaudited and prepared in accordance with U.S. GAAP and SEC regulations, with certain information condensed or omitted compared to annual statements[27](index=27&type=chunk) - Management notes that due to the seasonal nature of the business, Q1 results are not necessarily indicative of a full fiscal year's operating results[29](index=29&type=chunk) [2. REVENUES](index=10&type=section&id=2.%20REVENUES) Net Sales Disaggregated by Geography (Thirteen Weeks Ended, in thousands) | Geography | April 29, 2023 | April 30, 2022 | | :---------- | :------------- | :------------- | | South | $119,918 | $136,372 | | Northeast | $64,532 | $75,396 | | West | $42,603 | $50,132 | | Midwest | $38,809 | $43,613 | | International and other | $55,778 | $56,837 | | Total net sales | $321,640 | $362,350 | - Revenue is recognized upon purchase at retail stores or customer receipt for e-commerce, net of coupons and estimated returns[36](index=36&type=chunk) - The company operates a private label credit card program and a points-based customer loyalty program, with associated revenues and liabilities recognized based on specific criteria[40](index=40&type=chunk)[42](index=42&type=chunk) - Gift card liability decreased from **$13.3 million** in April 2022 to **$10.5 million** in April 2023, with **$2.0 million** recognized as net sales in Q1 2023 from prior balances[43](index=43&type=chunk) [3. INTANGIBLE ASSETS](index=12&type=section&id=3.%20INTANGIBLE%20ASSETS) Intangible Assets (in thousands) | Intangible Asset | Useful Life | Net Amount (April 29, 2023) | Net Amount (January 28, 2023) | Net Amount (April 30, 2022) | | :----------------- | :---------- | :-------------------------- | :---------------------------- | :-------------------------- | | Gymboree tradename | Indefinite | $69,953 | $69,953 | $69,953 | | Crazy 8 tradename | 5 years | $738 | $938 | $1,539 | | Customer databases | 3 years | — | — | — | | Total intangible assets | | $70,691 | $70,891 | $71,492 | - The Gymboree tradename, with an indefinite useful life, remains the largest intangible asset at **$69.953 million**[46](index=46&type=chunk) - The net amount of Crazy 8 tradename decreased due to amortization[46](index=46&type=chunk) [4. PROPERTY AND EQUIPMENT, NET](index=13&type=section&id=4.%20PROPERTY%20AND%20EQUIPMENT,%20NET) Property and Equipment, Net (in thousands) | Category | April 29, 2023 | January 28, 2023 | April 30, 2022 | | :-------------------------- | :------------- | :--------------- | :------------- | | Total gross property and equipment | $858,260 | $878,004 | $854,226 | | Less accumulated depreciation and amortization | $(711,945) | $(728,130) | $(697,193) | | Property and equipment, net | $146,315 | $149,874 | $157,033 | - Net property and equipment decreased to **$146.315 million** as of April 29, 2023, from **$157.033 million** as of April 30, 2022[50](index=50&type=chunk) - The company recorded **$1.8 million** in asset impairment charges in Q1 2023, including right-of-use (ROU) assets, related to underperforming stores[50](index=50&type=chunk) [5. LEASES](index=13&type=section&id=5.%20LEASES) Operating Lease Costs (Thirteen Weeks Ended, in thousands) | Lease Cost Type | April 29, 2023 | April 30, 2022 | | :---------------- | :------------- | :------------- | | Fixed operating lease cost | $20,906 | $22,970 | | Variable operating lease cost | $14,697 | $15,118 | | Total operating lease cost | $35,603 | $38,088 | - Total operating lease costs decreased to **$35.603 million** in Q1 2023 from **$38.088 million** in Q1 2022[52](index=52&type=chunk) - The weighted-average remaining operating lease term was **3.6 years**, and the weighted-average discount rate was **5.1%** as of April 29, 2023[52](index=52&type=chunk) - Cash paid for operating lease liabilities was **$20.9 million** in Q1 2023, and ROU assets obtained for new operating lease liabilities were **$10.6 million**[52](index=52&type=chunk) [6. DEBT](index=14&type=section&id=6.%20DEBT) - The company maintains a **$350.0 million** asset-based revolving credit facility (ABL Credit Facility) and a **$50.0 million** term loan (Term Loan), both maturing in November 2026[56](index=56&type=chunk) ABL Credit Facility Components (in millions) | Metric | April 29, 2023 | January 28, 2023 | April 30, 2022 | | :-------------------------------- | :------------- | :--------------- | :------------- | | Maximum borrowing availability | $350.0 | $350.0 | $350.0 | | Outstanding borrowings | $300.8 | $287.0 | $249.5 | | Availability | $41.8 | $55.6 | $93.1 | | Interest rate at end of period | 6.5% | 5.9% | 2.0% | - Interest expense related to the ABL Credit Facility increased to **$4.7 million** in Q1 2023 from **$1.6 million** in Q1 2022, driven by higher borrowings and interest rates[57](index=57&type=chunk) - Interest expense related to the Term Loan increased to **$0.9 million** in Q1 2023 from **$0.4 million** in Q1 2022[61](index=61&type=chunk) - On June 5, 2023, the ABL Credit Facility was increased to **$445.0 million**, LIBOR was replaced by SOFR, and pricing grids were updated, increasing liquidity by approximately **$85 million**[64](index=64&type=chunk) [7. COMMITMENTS AND CONTINGENCIES](index=16&type=section&id=7.%20COMMITMENTS%20AND%20CONTINGENCIES) - The company is a defendant in a class action lawsuit (Rael v. The Children's Place, Inc.) regarding alleged false advertising, which was granted final settlement approval in March 2021[65](index=65&type=chunk)[66](index=66&type=chunk) - The settlement provides merchandise vouchers for qualified class members and covers legal/administration expenses; a **$5.0 million** reserve was recorded in Q1 2017[66](index=66&type=chunk) - Management believes that any ultimate liability from this and other legal proceedings will not materially adversely affect the company's financial position, results of operations, or cash flows[67](index=67&type=chunk) [8. STOCKHOLDERS' EQUITY](index=16&type=section&id=8.%20STOCKHOLDERS'%20EQUITY) - A **$250.0 million** share repurchase program was authorized in November 2021, with **$158.3 million** remaining availability as of April 29, 2023[68](index=68&type=chunk) Share Repurchases (Thirteen Weeks Ended, in thousands) | Category | April 29, 2023 (Shares) | April 29, 2023 (Amount) | April 30, 2022 (Shares) | April 30, 2022 (Amount) | | :-------------------------- | :---------------------- | :---------------------- | :---------------------- | :---------------------- | | Share repurchase program | 155 | $6,088 | 665 | $38,699 | | Shares acquired and held in treasury | 1 | $74 | 1 | $69 | - Share repurchases in Q1 2023 totaled **$6.088 million**, significantly less than **$38.699 million** in Q1 2022[71](index=71&type=chunk) - Future dividend declarations are subject to Board approval based on business conditions, financial performance, and investment priorities[72](index=72&type=chunk) [9. STOCK-BASED COMPENSATION](index=17&type=section&id=9.%20STOCK-BASED%20COMPENSATION) Stock-Based Compensation Expense (Thirteen Weeks Ended, in thousands) | Award Type | April 29, 2023 | April 30, 2022 | | :----------- | :------------- | :------------- | | Deferred Awards | $2,500 | $3,425 | | Performance Awards | $583 | $4,137 | | Total stock-based compensation expense | $3,083 | $7,562 | - Total stock-based compensation expense decreased to **$3.083 million** in Q1 2023 from **$7.562 million** in Q1 2022[73](index=73&type=chunk) [10. EARNINGS (LOSS) PER COMMON SHARE](index=18&type=section&id=10.%20EARNINGS%20(LOSS)%20PER%20COMMON%20SHARE) Earnings (Loss) Per Common Share Reconciliation (Thirteen Weeks Ended, in thousands) | Metric | April 29, 2023 | April 30, 2022 | | :-------------------------------- | :------------- | :------------- | | Net income (loss) | $(28,834) | $19,831 | | Basic weighted average common shares outstanding | 12,374 | 13,621 | | Diluted weighted average common shares outstanding | 12,374 | 13,841 | | Basic EPS | $(2.33) | $1.46 | | Diluted EPS | $(2.33) | $1.43 | - The company reported a diluted loss per share of **$(2.33)** in Q1 2023, compared to diluted earnings per share of **$1.43** in Q1 2022[76](index=76&type=chunk) - Anti-dilutive shares excluded from diluted EPS calculation were **228 thousand** in Q1 2023, compared to none in Q1 2022, reflecting the net loss[76](index=76&type=chunk) [11. INCOME TAXES](index=18&type=section&id=11.%20INCOME%20TAXES) - The effective income tax rate was a benefit of **19.8%** (**$7.1 million**) in Q1 2023, compared to **13.0%** (**$2.3 million**) in Q1 2022[78](index=78&type=chunk) - The increase in the effective tax rate was primarily due to the release of a nonrecurring reserve for unrecognized tax benefits in Q1 2022 and the pretax loss in Q1 2023[78](index=78&type=chunk) - Unrecognized tax benefits totaled **$3.8 million** as of April 29, 2023, an increase from **$2.3 million** in April 2022[80](index=80&type=chunk) [12. SEGMENT INFORMATION](index=19&type=section&id=12.%20SEGMENT%20INFORMATION) - The company reports segment data based on geography: The Children's Place U.S. and The Children's Place International, both including e-commerce[84](index=84&type=chunk) Segment Net Sales and Operating Income (Loss) (Thirteen Weeks Ended, in thousands) | Segment | Net Sales (April 29, 2023) | Net Sales (April 30, 2022) | Operating Income (Loss) (April 29, 2023) | Operating Income (Loss) (April 30, 2022) | | :-------------------------- | :------------------------- | :------------------------- | :--------------------------------------- | :--------------------------------------- | | The Children's Place U.S. | $293,486 | $327,961 | $(28,027) | $16,869 | | The Children's Place International | $28,154 | $34,389 | $(2,040) | $2,385 | | Total | $321,640 | $362,350 | $(30,067) | $19,254 | - Both U.S. and International segments experienced declines in net sales and shifted from operating income to operating losses in Q1 2023[85](index=85&type=chunk) - The Children's Place U.S. had **528 stores** and International had **71 stores** as of April 29, 2023, a decrease from **583** and **82 stores** respectively in April 2022[84](index=84&type=chunk) [13. SUBSEQUENT EVENTS](index=20&type=section&id=13.%20SUBSEQUENT%20EVENTS) - On May 26, 2023, the company issued a voluntary termination notice for its corporate office building lease, accelerating the termination to June 1, 2024, and paying a **$4 million** fee, expected to reduce ROU assets and operating lease liabilities by approximately **$17 million**[86](index=86&type=chunk)[99](index=99&type=chunk) - On June 5, 2023, the ABL Credit Facility was increased to **$445.0 million**, LIBOR was replaced by SOFR, and pricing grids were updated, enhancing liquidity by approximately **$85 million**[87](index=87&type=chunk)[100](index=100&type=chunk)[135](index=135&type=chunk) - Under the amended ABL Credit Facility, interest rates are now based on the SOFR rate plus a margin of **2.00%** or **2.25%**, or the prime rate plus **1.25%** or **1.50%**[88](index=88&type=chunk)[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management's discussion highlights a challenging Q1 2023 with decreased net sales and an operating loss, driven by macroeconomic pressures, while the company implements strategic initiatives and liquidity enhancements [OVERVIEW](index=22&type=section&id=OVERVIEW) - The company is the largest pure-play children's specialty apparel retailer in North America, operating **599 stores** and **212 international points of distribution** as of April 29, 2023[95](index=95&type=chunk) - Recent macroeconomic conditions, including increased costs for goods, labor, transportation, and fuel, coupled with inflationary pressures, have adversely affected consumer discretionary apparel purchases, leading to a decrease in Q1 2023 net sales[98](index=98&type=chunk) - Net sales decreased by **$40.8 million** (**11.2%**) to **$321.6 million** in Q1 2023, with comparable retail sales down **8.2%**[101](index=101&type=chunk) - Gross profit decreased by **$45.4 million** to **$96.5 million** (**30.0%** of net sales) in Q1 2023, a **920 basis point** decrease in gross margin due to higher input costs and deleverage of fixed expenses[102](index=102&type=chunk) - The company reported an operating loss of **$30.1 million** and a net loss of **$28.8 million** (or **$(2.33)** per diluted share) in Q1 2023, a significant decline from Q1 2022[103](index=103&type=chunk) - Strategic initiatives include digital transformation, alternative distribution channels, and fleet optimization, with **600 stores** closed since 2013 and a target of **80-100 additional closures** in Fiscal 2023[104](index=104&type=chunk)[106](index=106&type=chunk) [SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES](index=24&type=section&id=SIGNIFICANT%20ACCOUNTING%20POLICIES%20AND%20CRITICAL%20ACCOUNTING%20ESTIMATES) - No significant changes in accounting policies from the most recent Annual Report on Form 10-K[110](index=110&type=chunk) - Critical accounting estimates include impairment of long-lived assets, indefinite-lived intangible assets, income taxes, stock-based compensation, and inventory valuation, with no material changes from the prior annual report[112](index=112&type=chunk) - No pending accounting standards updates are expected to have a material impact on the consolidated financial statements[113](index=113&type=chunk) [RESULTS OF OPERATIONS](index=24&type=section&id=RESULTS%20OF%20OPERATIONS) Selected Statements of Operations Data as Percentage of Net Sales | Metric | April 29, 2023 | April 30, 2022 | | :-------------------------------------- | :------------- | :------------- | | Net sales | 100.0% | 100.0% | | Cost of sales (exclusive of depreciation and amortization) | 70.0% | 60.8% | | Gross profit | 30.0% | 39.2% | | Selling, general, and administrative expenses | 35.1% | 30.1% | | Operating income (loss) | (9.3)% | 5.3% | | Net income (loss) | (9.0)% | 5.5% | - Net sales decreased by **11.2%** to **$321.6 million** in Q1 2023, driven by macroeconomic conditions and pressure on consumers[118](index=118&type=chunk) - Gross profit margin decreased by **920 basis points** to **30.0%** due to higher input costs (cotton, supply chain) and deleverage from lower sales[122](index=122&type=chunk) - SG&A expenses increased by **$3.9 million** to **$112.9 million**, deleveraging **500 basis points** to **35.1%** of net sales, partly due to incremental operating expenses (**$2.4 million** contract termination, **$1.1 million** fleet optimization, **$0.3 million** restructuring)[124](index=124&type=chunk) - Operating income shifted to a loss of **$30.1 million** in Q1 2023, a **$49.4 million** decrease from Q1 2022, with operating loss deleveraging **1,460 basis points** to **(9.3)%** of net sales[127](index=127&type=chunk) - Net interest expense increased to **$5.9 million** from **$1.7 million**, driven by higher borrowings and increased average interest rates[128](index=128&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=26&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - Working capital deficit increased by **$82.5 million** to **$112.7 million** at April 29, 2023, compared to **$30.2 million** at April 30, 2022, reflecting decreased inventory and cash, and increased ABL borrowings[133](index=133&type=chunk) - As of April 29, 2023, the company had **$300.8 million** outstanding under its **$350.0 million** ABL Credit Facility, with total liquidity of **$25.0 million** (including **$6.8 million** ABL availability and **$18.2 million** cash on hand)[134](index=134&type=chunk) - The Fifth Amendment to the Credit Agreement on June 5, 2023, increased the ABL Credit Facility to **$445.0 million**, boosting liquidity by approximately **$85 million**[135](index=135&type=chunk)[149](index=149&type=chunk) - Cash provided by operating activities was **$5.1 million** in Q1 2023, a positive change from **$18.8 million** cash used in Q1 2022, primarily due to a lower inventory balance[154](index=154&type=chunk) - Cash provided by financing activities decreased to **$7.8 million** in Q1 2023 from **$33.9 million** in Q1 2022, due to lower net borrowings and reduced common stock repurchases[156](index=156&type=chunk) - Anticipated capital expenditures for Fiscal 2023 are **$20 million** to **$25 million**, primarily for distribution center expansion, digital initiatives, and fulfillment capabilities[157](index=157&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk.](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) The company faces market risks from interest rate fluctuations on floating-rate debt and foreign currency movements, particularly impacting Canadian dollar assets and liabilities, alongside geopolitical risks from international sourcing - The company's financial position is subject to market risk from interest rate movements on borrowings and currency rate movements on non-U.S. dollar denominated assets, liabilities, income, and expenses[158](index=158&type=chunk) - As of April 29, 2023, the company had **$300.8 million** in borrowings under its ABL Credit Facility and **$50.0 million** outstanding on its Term Loan, both bearing floating interest rates[160](index=160&type=chunk)[161](index=161&type=chunk) - The ABL Credit Facility and Term Loan interest rate benchmark transitioned from LIBOR to SOFR on June 5, 2023, with updated pricing grids[162](index=162&type=chunk) - Net assets in Canada and Hong Kong amounted to **$22.5 million** as of April 29, 2023, making them susceptible to foreign currency exchange rate fluctuations[163](index=163&type=chunk) - A **10%** change in Canadian and Hong Kong foreign currency exchange rates would increase or decrease the corresponding net investment by **$2.3 million**[163](index=163&type=chunk) - The company imports most merchandise from countries like Bangladesh, Ethiopia, Cambodia, Vietnam, India, Indonesia, and China, exposing it to political, trade, financial, and labor risks in these regions[166](index=166&type=chunk) [Item 4. Controls and Procedures.](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded that disclosure controls and procedures were effective as of April 29, 2023, with no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed is recorded, processed, summarized, and reported timely[167](index=167&type=chunk) - The Chief Executive Officer and President and Chief Financial Officer concluded that disclosure controls and procedures were effective at the reasonable assurance level as of April 29, 2023[168](index=168&type=chunk) - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[169](index=169&type=chunk) [PART II — OTHER INFORMATION](index=31&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings.](index=31&type=section&id=Item%201.%20Legal%20Proceedings.) The company's legal proceedings are consistent with those disclosed in the notes to the consolidated financial statements and the prior annual report, with no new material developments - Legal proceedings are discussed in Note 7 to the consolidated financial statements and Part I, Item 3 of the Annual Report on Form 10-K[171](index=171&type=chunk) [Item 1A. Risk Factors.](index=31&type=section&id=Item%201A.%20Risk%20Factors.) There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to the risk factors disclosed in Item 1A of Part I in the Annual Report on Form 10-K for the year ended January 28, 2023[172](index=172&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) The company continued its **$250.0 million** share repurchase program, with **$158.3 million** remaining, primarily for tax withholdings on equity awards in Q1 2023 - A **$250.0 million** share repurchase program was authorized in November 2021, with **$158.3 million** remaining availability as of April 29, 2023[173](index=173&type=chunk) - The company repurchases shares of vesting stock awards to satisfy tax withholding requirements and acquires shares for its deferred compensation plan[174](index=174&type=chunk) Share Repurchase Activity (First Quarter 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value (in thousands) of Shares that May Yet Be Purchased Under the Plans or Programs | | :---------------- | :----------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :-------------------------------------------------------------------------------------------------- | | 1/29/23-2/25/23 | 1,550 | $47.98 | — | $164,352 | | 2/26/23-4/1/23 | 149,647 | $39.28 | 149,647 | $158,474 | | 4/2/23-4/29/23 | 5,418 | $38.25 | 5,418 | $158,267 | | Total | 156,615 | $39.33 | 155,065 | $158,267 | [Item 6. Exhibits.](index=32&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including the Fifth Amendment to the Credit Agreement, CEO and CFO certifications, and various Inline XBRL taxonomy documents - Key exhibits include the Joinder and Fifth Amendment to the Amended and Restated Credit Agreement (dated June 5, 2023), and certifications from the Principal Executive Officer and Principal Financial Officer[177](index=177&type=chunk) - The report also includes various Inline XBRL (eXtensible Business Reporting Language) taxonomy extension documents for data formatting[177](index=177&type=chunk) [SIGNATURES](index=33&type=section&id=SIGNATURES) - The report was signed on June 7, 2023, by Jane T. Elfers, Chief Executive Officer and President, and Sheamus Toal, Chief Financial Officer[180](index=180&type=chunk)

The Children's Place, Inc. (NASDAQ:PLCE) Q1 2023 Earnings Conference Call May 24, 2023 8:00 AM ET Company Participants Jane Elfers - President and Chief Executive Officer Maegan Markee - Senior Vice President, Digital Marketing Sheamus Toal - Chief Financial Officer Conference Call Participants Jim Chartier - Monness, Crespi, Hardt Jeff Lick - B. Riley Financial Jay Sole - UBS Operator Good morning and welcome to The Children's Place First Quarter 2023 Earnings Conference Call. On the call today are Jane El ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fifty-two weeks ended January 28, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number 0-23071 THE CHILDREN'S PLACE, INC. (Exact name of registrant as specified in its charter) | ...

The Children’s Place, Inc. (NASDAQ:PLCE) Q4 2022 Earnings Conference Call March 16, 2023 8:00 AM ET Company Participants Jane Elfers - President and Chief Executive Officer Sheamus Toal - Chief Financial Officer Maegan Markee - Senior Vice President, Digital Marketing Josh Truppo - Vice President, Financial Planning and Analysis Conference Call Participants Jay Sole - UBS James Chartier - Monness, Crespi, Hardt & Co. Dana Telsey - Telsey Advisory Group Marni Shapiro - The Retail Tracker Operator Good morn ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 29, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file number 0-23071 THE CHILDREN'S PLACE, INC. (Exact name of registrant as specified in its chart ...