Childrens Place, Inc.
For the period ended Jan 31, 2026. Filed Apr 10, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Apr 10, 2026
PLCE$0.32-4.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-02-01; filed 2025-04-17.
0001628280-25-018195
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2026-01-31; filed 2026-04-10.
0001628280-26-024672
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 141 previous paragraphs and 147 current paragraphs.
56 unchanged; 52 reworded; 33 added; 31 removed; 2 previous and 6 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
During Fiscal 2025, we commenced our transformation initiative to right-size our organization and operations. We opened our new office in Lahore, Pakistan to accelerate cross-functional efficiencies. We expect these benefits to ramp up in Fiscal 2026 to drive significant improvement in our operating results. We have already implemented actions related to home office headcount reductions, supply chain optimization, and third-party non-merchandise spend, which is expected to generate approximately $30 million in gross annualized benefits, with further gross benefits of approximately $15 million expected to be actioned and realized in Fiscal 2026, bringing total gross benefits to approximately $45 million, partially offset by approximately $10 million to $15 million in one-time and recurring operating costs.
Current report
On February 5, 2026, we entered into a Receivables Purchase Agreement (the “RPA”) with TRMEF Basis II LLC (“TRMEF”) to sell our CARES Act income tax receivable of $19.1 million plus accrued interest of $3.7 million at a purchase rate of 88.5%, for a total purchase price of $20.1 million. We received net cash proceeds of $15.9 million, after insurance and legal fees amounting to $0.7 million. The remaining proceeds of $3.5 million are expected to be received in two tranches as follows: (i) upon confirmation by the IRS of submission by the IRS of the Revenue Agent Report to the Joint Committee on Taxation, TRMEF shall pay $2.5 million less the amount of any downward adjustments in respect of the tax refund claim set forth in such Revenue Agent Report, and (ii) on the date on which TRMEF receives payment in full in cash of the refund claim, TRMEF shall pay $1.0 million less 10% of accrued interest as of the effective date of the RPA. We used the net proceeds from the sale of our income tax receivable to partially pay down our borrowings under our asset-based revolving credit facility (the “ABL Credit Facility”).
Current report
During Fiscal 2025, the U.S. government imposed tariffs on certain goods imported from other countries into the United States. While we developed plans to mitigate most of the effects of these tariffs through a range of strategic initiatives, including pricing strategies, the establishment of stronger vendor partnerships, and improvements in inbound ocean rates, these tariffs still resulted in an adverse impact on our margins. In February 2026, the U.S. Supreme Court ruled that certain tariffs under the International Emergency Economic Powers Act (“IEEPA”) were invalid, and in March 2026, the U.S. Court of International Trade ruled that the U.S. Customs and Border Protection (“CBP”) must refund duties imposed under IEEPA. On March 31, 2026, we entered into a Claim Sale and Purchase Agreement with Alnus Investors, LLC (“Alnus”) to sell our claims for refunds of tariffs originally invoked under IEEPA and were previously paid to the CBP. Alnus purchased an aggregate amount of $38.2 million of these refund claims at a purchase rate of 67.2%, for a total purchase price of $25.7 million. We used the net proceeds from the sale of these refund claims to partially pay down our borrowings under our ABL Credit Facility.
Current report
Net sales decreased $177.4 million, or 12.8%, to $1.209 billion during Fiscal 2025 from $1.386 billion during Fiscal 2024, primarily driven by a decrease in e-commerce sales due to lower traffic and conversion. We also experienced a decrease in brick-and-mortar revenue from lower sales volume due to lower traffic, particularly in the first half of the fiscal year. Our stores and e-commerce sales were both impaired by the current macroeconomic environment, including the impact of tariffs, which has negatively affected our consumer. We also experienced a decrease in wholesale revenue due to the planned reduction in shipments to Amazon during the year to rebalance their inventory levels. Comparable retail sales decreased 8.4% for Fiscal 2025.
Current report
Gross profit decreased $97.9 million, or 21.3%, to $361.6 million during Fiscal 2025 from $459.5 million during Fiscal 2024. Gross margin decreased 320 basis points to 29.9% of Net sales during Fiscal 2025, compared to 33.1% of Net sales during Fiscal 2024. The decrease in gross margin was caused primarily by an increase in inventory reserves (200 bps), the impact of higher tariffs on our product (140 bps), and a higher penetration of markdown sales and dilutions (70 bps), partially offset by favorable product costs (100 bps) as we shifted strategies to respond to the impact of higher tariff costs.
Current report
Related party interest expensewas $7.6 million during Fiscal 2025, compared to $6.5 million during Fiscal 2024. The increase was due to a full year of interest-equivalent charges compared to a partial year in the prior period.
Current report
The Children’s Place U.S. Net sales decreased $163.0 million, or 12.9%, to $1.103 billion during Fiscal 2025, compared to $1.266 billion during Fiscal 2024, driven by a decrease in e-commerce sales due to lower traffic and conversion. We also experienced a decrease in brick-and-mortar revenue from lower sales volume due to lower traffic, particularly in the first half of the fiscal year. Our stores and e-commerce sales were both impaired by the current macroeconomic environment, including the impact of tariffs, which has negatively affected our consumer. We also experienced a decrease in wholesale revenue due to the planned reduction in shipments to Amazon during the year to rebalance their inventory levels.
Current report
The Children’s Place U.S. Operating loss was $(41.5) million during Fiscal 2025, compared to $(3.7) million during Fiscal 2024, primarily due to lower net sales and gross margin.
Current report
The Children’s Place International Operating loss was $(15.7) million during Fiscal 2025, compared to $(10.0) million during Fiscal 2024, primarily due to lower net sales and gross margin.
Current report
On December 16, 2025, we entered into a term loan agreement (the “SLR Loan Agreement”) with SLR Credit Solutions (“SLR”) for a $100.0 million term loan (the “SLR Term Loan”). We used the net proceeds to partially pay down our borrowings under the ABL Credit Facility. The principal amount outstanding as of January 31, 2026 was $100.0 million.
Current report
Our working capital improved by $60.2 million to a surplus of $10.1 million at January 31, 2026, compared to a deficit of $50.1 million at February 1, 2025, primarily due to the SLR Term Loan net proceeds that were used to partially pay down the outstanding borrowings under our ABL Credit Facility and a decrease in our accounts payable balances due to lower inventory purchases, partially offset by a decrease in inventory due to improved inventory management as we continue to align our inventory levels with our growth and product strategy, and better balance the mix of fashion and basic product.
Current report
Accounts receivable were $26.0 million at January 31, 2026, compared to $42.7 million at February 1, 2025. The decrease of $16.7 million, or 39.2%, was primarily driven by a reduction in our wholesale receivables.
Current report
Accounts payable were $108.5 million at January 31, 2026, compared to $126.7 million at February 1, 2025. The decrease of $18.2 million, or 14.4%, was primarily the result of a reduction in inventory purchases during Fiscal 2025.
Current report
ABL Credit Facility
Current report
The Company and certain subsidiaries maintain the $350.0 million ABL Credit Facility under its Amended and Restated Credit Agreement dated May 9, 2019 (as amended from time to time, the “Credit Agreement”), with Wells Fargo Bank, National Association (“Wells Fargo”), as the sole lender party thereto, and as Administrative Agent, Collateral Agent, and Swing Line Lender. The ABL Credit Facility will mature on the earlier of December 16, 2030, or the maturity date under our term loan agreement with SLR as further described below.
Current report
Previously, from February 4, 2025 to December 15, 2025, on the first day of each fiscal quarter within that period, based on the amount of our average daily excess availability under the facility, borrowings outstanding under the ABL Credit Facility bore interest, at our option, at:
Current report
From December 16, 2025 to January 31, 2026, based on the amount of our average daily excess availability under the facility, borrowings outstanding under the ABL Credit Facility bore interest, at our option, at:
Current report
(i)the prime rate per annum, plus a margin of 1.250%; or
Current report
(i)the prime rate per annum, plus a margin of 1.000%, 1.250% or 1.500%; or
Current report
We recorded a loss on extinguishment of debt of $1.2 million during Fiscal 2025 when we entered into the Eighth Amendment, which is recorded within Other interest expense.
Current report
(1)Prior to the Eighth Amendment, the lower of the credit facility size and the borrowing base, without factoring in any excess availability requirement. Pursuant to the Eighth Amendment, as of December 16, 2025, our maximum borrowing availability is the lower of the credit facility size and the borrowing base, net of the new excess availability requirement.
Current report
SLR Term Loan
Current report
On December 16, 2025, the Company and certain of its subsidiaries entered into the SLR Loan Agreement with SLR and other affiliated SLR entities as the lenders party thereto, and SLR as Administrative Agent, and Collateral Agent, providing for a $100.0 million SLR Term Loan. We used the net proceeds from the SLR Term Loan to partially pay down our borrowings under the ABL Credit Facility.
Current report
The SLR Term Loan (i) matures on the earlier of December 16, 2030, or the maturity date under the ABL Credit Facility, (ii) bears interest, payable monthly, (a) until June 16, 2026, at the SOFR per annum plus 5.250% for any portion that is a SOFR loan, or at the base rate per annum plus 4.250% for any portion that is a base rate loan; or (b) from and after June 17, 2026, at the SOFR per annum plus 5.250% or 6.250% for any portion that is a SOFR loan, or at the base rate per annum plus 4.250% or 5.250% for any portion that is a base rate loan, based on our consolidated fixed charge coverage ratio for the trailing twelve-month period as of the most recent fiscal quarter just ended.
Current report
The SLR Term Loan is, in whole or in part, pre-payable any time and from time to time, subject to certain prepayment premiums specified in the SLR Loan Agreement, plus accrued and unpaid interest.
Current report
The SLR Term Loan contains customary affirmative and negative covenants substantially similar to a subset of the covenants set forth in the Credit Agreement, including limits on the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, dispositions or restricted payments, or to change the nature of its business.
Current report
For Fiscal 2025, we recognized $1.2 million in interest expense related to the SLR Term Loan. As of January 31, 2026, the interest rate was 8.9%.
Current report
Mithaq Capital SPC, a Cayman segregated portfolio company (“Mithaq”), is a controlling stockholder of the Company. The Company and certain subsidiaries maintain an interest-free, unsecured and subordinated promissory note with Mithaq (the “Initial Mithaq Term Loan”), dated February 29, 2024, by and among the Company, certain of its subsidiaries, and Mithaq. During the first quarter of Fiscal 2025, $60.2 million under the Initial Mithaq Term Loans was repaid pursuant to the completion of our Rights Offering, leaving $18.4 million outstanding under the Initial Mithaq Term Loan as of January 31, 2026. We recorded a loss on extinguishment of debt of $1.0 million during Fiscal 2025, due to the partial prepayment of the Initial Mithaq Term Loan, which is recorded within Other interest expense. For more information about the Rights Offering, refer to “Note 10. Stockholders’ Deficit” of the Consolidated Financial Statements in this Form 10-K for more information.
Current report
The Company and certain subsidiaries also maintain an unsecured and subordinated promissory note with Mithaq for a $90.0 million term loan (the “New Mithaq Term Loan”; and together with the Initial Mithaq Term Loan, collectively, the “Mithaq Term Loans”), dated April 16, 2024, by and among the Company, certain of its subsidiaries, and Mithaq.
Current report
Pursuant to our refinancing transactions on December 16, 2025, the New Mithaq Term Loan was further amended to allow us to defer our monthly payments upon written notice to Mithaq, and as an amendment consent fee, its principal amount was increased by $2.7 million to $92.7 million, leaving an aggregate of $111.1 million outstanding under the Mithaq Term Loans. These amendments were evaluated under FASB ASC 470 — Debt, and accounted for as debt modifications. The $2.7 million increase in principal amount and the related deferred financing costs are accounted for as noncash financing activities within our Consolidated Statements of Cash Flows.
Current report
For Fiscal 2025 and Fiscal 2024, we recognized $7.4 million and $6.5 million, respectively, in interest-equivalent expense related to the New Mithaq Term Loan. As of January 31, 2026, the interest-equivalent rate was 7.8%.
Current report
For Fiscal 2025, we paid $8.3 million in interest-equivalent charges to Mithaq. These payments were made in the form of Murabaha transactions to be compliant with Shariah law. The purchase and sale of commodities as a result of these transactions have been accounted for in accordance with FASB ASC 610 —Other income, and presented on a net basis within Related party interest expense. As of January 31, 2026 and February 1, 2025, interest-equivalent expense payable to Mithaq was $5.6 million and $6.5 million, respectively, which is recorded within Accrued expenses and other current liabilities.
Current report
As of January 31, 2026 and February 1, 2025, unamortized deferred financing costs amounted to $3.6 million and $2.6 million, respectively, related to the Mithaq Term Loans.
Removed paragraphs (31)
Previous report
In February and March 2025, the U.S. government announced the intention to impose tariffs on certain goods imported from Canada, Mexico and China. On April 2, 2025, it was further announced that tariffs would be applied to all countries importing goods to the United States. We continue to monitor the impact of any of these tariffs that become effective, as well as potential retaliatory tariffs imposed by other countries. These tariffs could have a material adverse impact on the global retail industry, supply chains worldwide, and other political and macroeconomic conditions, which could increase our product input costs in Fiscal 2025 and beyond, and also affect customer sentiment in deciding whether to purchase U.S. goods as opposed to other alternatives.
Previous report
On February 6, 2025, we completed a rights offering (“Rights Offering”) pursuant to which we distributed to the holders of record of our Common stock as of the close of business on December 13, 2024, the record date for the Rights Offering, non-transferable subscription rights to purchase, in the aggregate, up to 9.2 million shares of Common stock. Each subscription right entitled its holder to purchase 0.7220 shares of Common stock at a subscription price of $9.75 per whole share of Common stock. Additionally, rights holders who fully exercised their basic subscription rights were entitled to subscribe for additional shares of Common stock that remained unsubscribed as a result of any unexercised basic subscription rights. The subscription price was payable by rights holders (i) in cash, (ii) by delivery in lieu of cash of an equivalent amount of any indebtedness for borrowed money (principal and/or accrued and unpaid interest) owed by us to such rights holder, or (iii) by delivery of a combination of cash and such indebtedness. Upon the completion of the Rights Offering, we issued 9.2 million shares of Common stock for a total purchase price of $90.0 million.
Previous report
Mithaq Capital SPC, a Cayman segregated portfolio company (“Mithaq”), which is a controlling stockholder of the Company, purchased 6.7 million of shares of Common stock pursuant to the Rights Offering and as of February 6, 2025, it owns and controls the voting power of 62.2% of our outstanding shares of Common stock. Mithaq paid (i) $5.1 million of the subscription price for such shares in cash and (ii) the remaining $60.2 million of the subscription price for such shares by delivery of indebtedness for borrowed money owed by us to Mithaq pursuant to that certain interest-free unsecured promissory note for a $78.6 million term loan (the “Initial Mithaq Term Loan”), dated February 29, 2024, by and among us, certain subsidiaries of the Company, and Mithaq. Accordingly, the aggregate outstanding indebtedness owed by us to Mithaq pursuant to both of our term loans from Mithaq, collectively, has been reduced to $108.4 million as of February 6, 2025. We received approximately $29.8 million in gross cash proceeds from the Rights Offering on February 6, 2025. Substantially all of the gross cash proceeds from the Rights Offering were used towards prepaying our asset-based revolving credit facility (the “ABL Credit Facility”) under our Amended and Restated Credit Agreement dated May 9, 2019 (as amended from time to time, the “Credit Agreement”), with Wells Fargo, National Association (“Wells Fargo”), Bank of America, N.A., HSBC Bank (USA), N.A., JPMorgan Chase Bank, N.A., Truist Bank and PNC Bank, National Association, as lenders (collectively, the “Credit Agreement Lenders”), and Wells Fargo, as Administrative Agent, Collateral Agent and Swing Line Lender.
Previous report
On March 17, 2025, we announced that John Szczepanksi has been appointed Chief Financial Officer, effective March 31, 2025.
Previous report
Pillar Two Model Rules
Previous report
The Organization for Economic Cooperation and Development (“OECD”) has introduced a global minimum corporate tax rate of 15% under its Pillar Two initiative (“Pillar Two”), effective for tax years beginning in January 2024. Although the U.S. and Hong Kong had not yet adopted the Pillar Two rules in 2024, other regions where we conduct business, primarily Canada, have begun to enact such legislation. The implementation of the Pillar Two rules in each jurisdiction in which it operates is not expected to have a material impact on our effective tax rate. We are closely monitoring legislative developments globally to evaluate potential impacts on our financial statements as more regions implement the Pillar Two rules.
Previous report
Operating Highlights
Previous report
Net sales decreased $216.2 million, or 13.5%, to $1.386 billion during Fiscal 2024 from $1.603 billion during Fiscal 2023, primarily due to anticipated declines in e-commerce demand due to the rationalization of promotions, reductions in inflated and unprofitable marketing spend, and the strategic decision to change “free shipping” offers, as we proactively sacrificed unprofitable sales in an effort to improve profitability. The Company also experienced a decrease in brick-and-mortar revenue due to a lower store count and lower sales volume. This was partially offset by an increase in wholesale revenue, as we continue to strengthen relationships with our partners. During Fiscal 2024, we closed 29 stores and opened one Gymboree stand-alone store in Paramus, New Jersey. Comparable retail sales decreased 13.4% for Fiscal 2024, largely due to the planned decrease in e-commerce revenue.
Previous report
Gross profit increased $14.2 million, or 3.2%, to $459.5 million during Fiscal 2024 from $445.3 million during Fiscal 2023. Gross margin increased 530 basis points to 33.1% during Fiscal 2024, compared to 27.8% during Fiscal 2023. The increase in gross margin was primarily due to reductions in product input costs, including cotton and supply chain costs, which negatively impacted margins in the prior year. These improvements in input costs were combined with the success of our strategies to rationalize profit-draining promotions and limit unprofitable shipping offers, in addition to optimized shipping carrier rates, which resulted in a significant reduction in freight costs.
Previous report
Operating loss was $(13.7) million during Fiscal 2024 compared to $(83.8) million during Fiscal 2023. Operating margin leveraged 420 basis points to (1.0)% of net sales.
Previous report
Net sales decreased $216.2 million, or 13.5%, to $1.386 billion during Fiscal 2024 from $1.603 billion during Fiscal 2023, primarily due to anticipated declines in e-commerce demand due to the rationalization of promotions, reductions in inflated and unprofitable marketing spend, and the strategic decision to change “free shipping” offers, as we proactively sacrificed unprofitable sales in an effort to improve profitability. We also experienced a decrease in brick-and-mortar revenue due to a lower store count and lower sales volume. This was partially offset by an increase in wholesale revenue, as we continue to strengthen relationships with our partners. Comparable retail sales decreased 13.4% for Fiscal 2024, largely due to the planned decrease in e-commerce revenue.
Previous report
Gross profit increased $14.2 million, or 3.2%, to $459.5 million during Fiscal 2024 from $445.3 million during Fiscal 2023. Gross margin increased 530 basis points to 33.1% of net sales during Fiscal 2024, compared to 27.8% during Fiscal 2023. The increase in gross margin was primarily due to reductions in product input costs, including cotton and supply chain costs, which negatively impacted margins in the prior year. These improvements in input costs were combined with the success of our strategies to rationalize profit-draining promotions and limit unprofitable shipping offers, in addition to optimized shipping carrier rates, which resulted in a significant reduction in freight costs.
Previous report
Related party interest expensewas $6.5 million during Fiscal 2024, due to interest-equivalent charges from loans entered into with Mithaq during Fiscal 2024. There was no related party interest expense during Fiscal 2023.
Previous report
The Children’s Place U.S. Net sales decreased $190.9 million, or 13.1%, to $1.266 billion during Fiscal 2024, compared to $1.457 billion during Fiscal 2023, primarily due to anticipated declines in e-commerce demand due to the rationalization of promotions, reductions in inflated and unprofitable marketing spend, and the strategic decision to change “free shipping” offers, as we proactively sacrificed unprofitable sales in an effort to improve profitability. We also experienced a decrease in brick-and-mortar revenue due to a lower store count and lower sales volume. This was partially offset by an increase in wholesale revenue, as we continue to strengthen relationships with our partners.
Previous report
The Children’s Place U.S. Operating loss was $(3.7) million during Fiscal 2024, compared to $(86.5) million during Fiscal 2023. The Children’s Place U.S. operating margin improved during Fiscal 2024 primarily due to the success of our strategies to rationalize profit-draining promotions and limit unprofitable shipping offers, in addition to optimized shipping carrier rates, which resulted in a significant reduction in freight costs. We were also able to significantly reduce marketing expenses, as we eliminated inflated and unprofitable marketing costs and to a lesser extent, by reductions in store payroll and corporate payroll.
Previous report
The Children’s Place International Operating loss was $(10.0) million during Fiscal 2024, compared to Operating income of $2.7 million during Fiscal 2023. The Children’s Place International operating margin was negatively impacted during Fiscal 2024 due to shifts in our supply chain which resulted in increased freight, duty and commission costs to transfer inventory from the U.S. into Canada, partially offset by occupancy cost savings achieved due to the closure of our distribution center in Toronto, Canada.
Previous report
In connection with the completion of our Rights Offering on February 6, 2025, our diluted weighted average common shares outstanding and diluted earnings (loss) per common share were retroactively adjusted for all periods presented by a factor of 1.002. Refer to “Note 18. Subsequent Events” of the Consolidated Financial Statements of this Form 10-K for more information.
Previous report
Our working capital deficit decreased $114.2 million to $50.1 million at February 1, 2025, compared to $164.3 million at February 3, 2024, primarily reflecting a decrease in our accounts payable balances as we paid down past due vendors, partially offset by an increase in our inventory and accounts receivable balances.
Previous report
Accounts receivable were $42.7 million at February 1, 2025, compared to $33.2 million at February 3, 2024. The increase of $9.5 million, or 28.5%, was primarily driven by the timing of wholesale customer shipments and associated payments.
Previous report
Accounts payable were $126.7 million at February 1, 2025, compared to $225.5 million at February 3, 2024. The decrease of $98.8 million, or 43.8%, was primarily the result of paying down past due vendors that existed at the end of Fiscal 2023.
Previous report
ABL Credit Facility and 2021 Term Loan
Previous report
We and certain of our subsidiaries maintain the $433.0 million ABL Credit Facility and, before it was fully repaid, maintained the 2021 Term Loan under our Credit Agreement. The ABL Credit Facility will mature and, before it was fully repaid, the 2021 Term Loan would have matured, in November 2026.
Previous report
Under the ABL Credit Facility, borrowings outstanding bear interest, at the Company’s option, at:
Previous report
(1)In Fiscal 2023, the total borrowing base availability and credit facility availability were both calculated net of the excess availability threshold under the Credit Agreement, as prior to the Seventh Amendment, crossing that threshold would have resulted in cash dominion, which would have triggered a fixed charge coverage ratio covenant test and would likely have led to a default under the Credit Agreement. As of the Seventh Amendment, the fixed charge coverage ratio covenant has been removed from the Credit Agreement, and entering into cash dominion by crossing the excess availability threshold no longer poses the same risk of default under the Credit Agreement.
Previous report
(2)The lower of the credit facility availability and the total borrowing base availability.
Previous report
The 2021 Term Loan bore interest, payable monthly, at (i) the SOFR per annum plus 2.750% for any portion that was a SOFR loan, or (ii) the base rate per annum plus 2.000% for any portion that was a base rate loan. The 2021 Term Loan was pre-payable at any time without penalty, and did not require amortization. For Fiscal 2024, Fiscal 2023, and Fiscal 2022, we recognized $1.1 million, $4.0 million, and $2.3 million respectively, in interest expense related to the 2021 Term Loan.
Previous report
As of April 18, 2024, the 2021 Term Loan was fully repaid.
Previous report
Mithaq is a controlling stockholder of the Company. We and certain of our subsidiaries maintain the Initial Mithaq Term Loan, consisting of (i) a first tranche in an aggregate principal amount of $30.0 million (the “First Tranche”) and (ii) a second tranche in an aggregate principal amount of $48.6 million (the “Second Tranche”). We received the First Tranche on February 29, 2024 and the Second Tranche on March 8, 2024.
Previous report
We and certain of our subsidiaries also maintain the New Mithaq Term Loan.
Previous report
As of February 6, 2025, $60.2 million under the Initial Mithaq Term Loan was repaid pursuant to the completion of the Rights Offering, leaving an aggregate of $108.4 million outstanding under the Mithaq Term Loans, payable in fiscal year 2027. Refer to “Note 18. Subsequent Events” of the Consolidated Financial Statements for additional detail.
Previous report
Unfavorable changes in certain of our key assumptions may affect future testing results. For example, keeping all other assumptions constant, a 100-basis point increase in the discount rate or a 10% decrease in forecasted revenue would result in further impairment charges of approximately $1.0 million.
Reworded paragraphs (52)
Previous wording
The following discussion should be read in conjunction with our audited financial statements and notes thereto included in Part IV, Item 15. Exhibits and Financial Statement Schedules. This Annual Report on Form 10-K contains or may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the Company’s strategic initiatives and results of operations, including adjusted net income (loss) per diluted share. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “project,” “expect,” “anticipate,” “estimate,” “believe,” and similar words, although some forward-looking statements are expressed differently. These forward-looking statements are based upon the Company’s current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results and performance to differ materially. Some of these risks and uncertainties are described in the Company’s filings with the Securities and Exchange Commission, including in Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K for the fiscal year ended February 1, 2025. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unable to achieve operating results at levels sufficient to fund and/or finance the Company’s current level of operations and repayment of indebtedness, the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Company’s business and its dependence on consumer spending patterns, which may be affected by changes in economic conditions (including inflation), the risk that changes in the Company’s plans and strategies with respect to pricing, capital allocation, capital structure, investor communications and/or operations may have a negative effect on the Company’s business, the risk that the Company’s strategic initiatives to increase sales and margin, improve operational efficiencies, enhance operating controls, decentralize operational authority and reshape the Company’s culture are delayed or do not result in anticipated improvements, the risk of delays, interruptions, disruptions and higher costs in the Company’s global supply chain, including resulting from disease outbreaks, foreign sources of supply in less developed countries, more politically unstable countries, or countries where vendors fail to comply with industry standards or ethical business practices, including the use of forced, indentured or child labor, the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, various types of litigation, including cl…
Excerpt shortened here; the source contains the full paragraph.
Current wording
The following discussion should be read in conjunction with our audited financial statements and notes thereto included in Part IV, Item 15. Exhibits and Financial Statement Schedules. This Annual Report on Form 10-K contains or may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the Company’s strategic initiatives and results of operations, including adjusted net income (loss) per diluted share. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “project,” “expect,” “anticipate,” “estimate,” “believe,” and similar words, although some forward-looking statements are expressed differently. These forward-looking statements are based upon the Company’s current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results and performance to differ materially. Some of these risks and uncertainties are described in the Company’s filings with the Securities and Exchange Commission, including in Part I, Item 1A. Risk Factors of this Annual Report on Form 10-K for the fiscal year ended January 31, 2026. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unable to achieve operating results at levels sufficient to fund and/or finance the Company’s current level of operations and repayment of indebtedness, the risk that changes in trade policy and tariff regimes, including newly imposed U.S. tariffs and any responsive non-U.S. tariffs, may impact the Company’s international manufacturing and operations or customers’ discretionary spending habits, the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Company’s business and its dependence on consumer spending patterns, which may be affected by changes in economic conditions (including inflation), the risk that changes in the Company’s plans and strategies with respect to pricing, capital allocation, capital structure, investor communications and/or operations may have a negative effect on the Company’s business, the risk that the Company’s strategic initiatives to increase sales and margin, improve operational efficiencies, enhance operating controls, decentralize operational authority and reshape the Company’s culture are delayed or do not result in anticipated improvements, the risk of delays, interruptions, disruptions and higher costs in the Company’s global supply chain, including resulting from disease outbreaks, foreign sources of supply in less developed countries, more politically unstable countries, or countries where vendors fail to comply with industry standards or ethical business practices, including the use of forced, indentured or child lab…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
We are the largest pure-play children’s specialty retailer in North America with an omni-channel portfolio of brands. We design, contract to manufacture, and sell fashionable, high quality apparel, accessories and footwear predominantly at value prices, primarily under our proprietary brands: “The Children’s Place”, “Gymboree”, “Sugar & Jade”, and “PJ Place”. Our global retail and wholesale network includes two digital storefronts, 495 stores in North America, wholesale marketplaces, 190 international points of distribution in 13 countries through our six franchise partners, and social media channels on Instagram, Facebook, X, formerly known as Twitter, YouTube and Pinterest. Our digital storefronts are atwww.childrensplace.comand www.gymboree.com, where our customers are able to shop online for the same merchandise available in our physical stores, but also certain exclusive merchandise only available at our e-commerce sites.
Current wording
We are one of the only pure-play children’s specialty retailers in North America with an omni-channel presence. We design, contract to manufacture, and sell fashionable, high quality apparel, accessories and footwear predominantly at value prices, primarily under our proprietary brands: “The Children’s Place” and “Gymboree”. Our global retail and wholesale network includes two digital storefronts, 498 stores in North America, wholesale marketplaces, 223 international points of distribution in 12 countries through our nine international franchise and wholesale partners, and social media channels on Instagram, Facebook, and X, formerly known as Twitter. Our digital storefronts are atwww.childrensplace.com andwww.gymboree.com, where our customers are able to shop online for the same merchandise available in our physical stores, as well as certain exclusive merchandise offered only on our e-commerce sites.
Previous wording
In accordance with FASB ASC 280—Segment Reporting, we report segment data based on geography: The Children’s Place U.S. and The Children’s Place International. Each segment includes an e-commerce business located atwww.childrensplace.comand www.gymboree.com. Included in The Children’s Place U.S. segment are our U.S. and Puerto Rico-based stores and revenue from our U.S.-based wholesale business. Included in The Children’s Place International segment are our Canadian-based stores and revenue from international franchisees. We measure our segment profitability based on operating income (loss), defined as income (loss) before interest and taxes. Net sales and direct costs are recorded by each segment. Certain inventory procurement functions such as production and design, as well as corporate overhead, including executive management, finance, real estate, human resources, legal, and information technology services, are managed by The Children’s Place U.S. segment. Expenses related to these functions, including depreciation and amortization, are allocated to The Children’s Place International segment based primarily on net sales. The assets related to these functions are not allocated. We periodically review these allocations and adjust them based upon changes in business circumstances. Net sales to external customers are derived from merchandise sales, and we have one U.S. wholesale customer that individually accounted for more than 10% of our net sales during Fiscal 2024. Refer to “Note 17. Segment Information” of the Consolidated Financial Statements of this Form 10-K for more information.
Current wording
In accordance with FASB ASC 280 —Segment Reporting, we report segment data based on geography: The Children’s Place U.S. and The Children’s Place International. Each segment includes an e-commerce business located atwww.childrensplace.comand www.gymboree.com. Included in The Children’s Place U.S. segment are our U.S. and Puerto Rico-based stores and revenue from our U.S.-based wholesale business. Included in The Children’s Place International segment are our Canadian-based stores and revenue from international franchisees. We measure our segment profitability based on operating income (loss), defined as income (loss) before interest and taxes. Net sales and direct costs are recorded by each segment. Certain inventory procurement functions such as production and design, as well as corporate overhead, including executive management, finance, real estate, human resources, legal, and information technology services, are managed by The Children’s Place U.S. segment. Expenses related to these functions, including depreciation and amortization, are allocated to The Children’s Place International segment based primarily on net sales. The assets related to these functions are not allocated. We periodically review these allocations and adjust them based upon changes in business circumstances. Net sales to external customers are derived from merchandise sales, and we have one U.S. wholesale customer that individually accounted for more than 10% of our net sales during Fiscal 2025 and Fiscal 2024. Refer to “Note 16. Segment Information” of the Consolidated Financial Statements in this Form 10-K for more information.
Previous wording
Macroeconomic conditions, including inflationary pressures, higher interest rates, and other domestic and geopolitical factors, continued to adversely affect our core customer in Fiscal 2024. While some of these inflationary pressures, including freight input costs and product input costs, had improved in Fiscal 2024, we may continue to experience inflationary pressures on our product input costs and distribution costs. In Fiscal 2024, these pressures contributed to a decrease in consumer discretionary apparel purchases. We expect these macroeconomic conditions, including but not limited to increased product input costs, transportation costs, distribution costs, and geopolitical conditions like changes in foreign policies of the United States, and other inflationary pressures, to continue to have an impact during Fiscal 2025.
Current wording
Macroeconomic conditions, including inflationary pressures, interest rates, tariffs, and other domestic and geopolitical factors, continued to adversely affect our core customer. During Fiscal 2025, these pressures contributed to a decrease in consumer discretionary apparel purchases. We expect these macroeconomic conditions, including but not limited to increased product input costs, transportation costs, distribution costs, and geopolitical conditions like changes in foreign policies of the United States, and other inflationary pressures, to continue to have an adverse impact during Fiscal 2026.
Previous wording
We believe that our e-commerce and brick-and-mortar retail store operations are highly interdependent, with both sharing common customers purchasing from a common pool of product inventory. Accordingly, we believe that consolidated omni-channel reporting presents the most meaningful and appropriate measure of our performance, including net sales.
Current wording
We believe that our e-commerce and brick-and-mortar retail store operations are highly interdependent, with both sharing common customers purchasing from a common pool of product inventory. Accordingly, we believe that consolidated omni-channel reporting presents the most meaningful and appropriate measure of our performance. We primarily evaluate the results of our operations as a percentage of Net sales rather than in terms of absolute dollar increases or decreases by analyzing the year over year change in our business expressed as a percentage of Net sales (i.e., “basis points”). To the extent that our sales have increased at a faster rate than our costs (i.e., “leverage”), the more efficiently we have utilized the investments we have made in our business. Conversely, if our sales decrease or if our costs grow at a faster pace than our sales (i.e., “deleverage”), we have utilized the investments we have made in our business less efficiently.
Previous wording
Gross profit is calculated as consolidated net sales less cost of goods sold. Gross margin is calculated as gross profit divided by consolidated net sales. Gross profit as a percentage of net sales is dependent upon a variety of factors, including changes in the relative sales mix among distribution channels, changes in the mix of products sold, the timing and level of promotional activities, changes in foreign currency exchange rates, and fluctuations in input costs. These factors, among others, may cause gross profit as a percentage of net sales to fluctuate from period to period.
Current wording
Gross profit is calculated as consolidated Net sales less Cost of goods sold (exclusive of depreciation and amortization). Gross margin is calculated as gross profit divided by consolidated net sales. Gross profit as a percentage of net sales is dependent upon a variety of factors, including changes in the relative sales mix among distribution channels, changes in the mix of products sold, the timing and level of promotional activities, changes in foreign currency exchange rates, and fluctuations in input costs. These factors, among others, may cause gross profit as a percentage of net sales to fluctuate from period to period.
Previous wording
Selling, general, and administrative expenses were $405.6 million during Fiscal 2024, compared to $447.3 million during Fiscal 2023. The decrease in SG&A was due to significant reductions in marketing expenses of $31.0 million, as we eliminated inflated and unprofitable marketing costs and to a lesser extent, due to reductions in store payroll and corporate payroll. We were successful in reducing SG&A expenses by $41.7 million despite an increase in incentive compensation and equity compensation of $21.0 million. Fiscal 2024 results included incremental operating expenses of $35.3 million, including restructuring costs of $11.7 million, primarily due to changes in our senior leadership team, non-cash equity compensation charges of $9.9 million and other fees of $3.8 million associated with the change of control, financing-related charges of $7.0 million, lender required consulting fees of $2.4 million, fleet optimization costs of $1.4 million, costs associated with the closure of our Canada distribution center of $0.8 million, and other professional and consulting fees of $0.6 million, partially offset by the reversal of a legal settlement accrual of $2.3 million. Fiscal 2023 results included incremental operating expenses of $14.9 million, including restructuring costs of $10.5 million, fleet optimization costs of $3.1 million, a reserve of $3.0 million for a customer lawsuit, contract termination costs of $3.0 million, professional and consulting fees of $1.8 million, partially offset by a settlement payment received of $6.5 million. Excluding the impact of these charges, Adjusted SG&A expenses were $370.3 million during Fiscal 2024, compared to $432.5 million during Fiscal 2023, and leveraged 30 basis points to 26.7% of net sales. This represents the lowest level of Adjusted selling, general, and administrative expenses in over 15 years for a full fiscal year.
Current wording
Selling, general, and administrative expenses were $383.7 million during Fiscal 2025, compared to $405.6 million during Fiscal 2024 and deleveraged 240 basis points to 31.7% of Net sales. The decrease was due to a reduction in one-time costs incurred during Fiscal 2024, as described below, partially offset by an increase in marketing expenses. Fiscal 2025 results included incremental operating expenses of $2.6 million, including restructuring costs of $2.7 million, partially offset by the reversal of a legal settlement accrual. Fiscal 2024 results included incremental operating expenses of $35.3 million, including restructuring costs of $11.7 million, primarily due to changes in our senior leadership team, non-cash equity compensation charges of $9.9 million and other fees of $3.8 million associated with the change of control, financing-related charges of $7.0 million, lender required consulting fees of $2.4 million, fleet optimization costs of $1.4 million, costs associated with the closure of our Canada distribution center of $0.8 million, and other professional and consulting fees of $0.6 million, partially offset by the reversal of a legal settlement accrual of $2.3 million. Excluding the impact of these charges, Adjusted SG&A expenses were $381.1 million during Fiscal 2025, compared to $370.3 million during Fiscal 2024, and deleveraged 480 basis points to 31.5% of Net sales.
Previous wording
Depreciation and amortization was $39.6 million during Fiscal 2024, compared to $47.2 million during Fiscal 2023. This decrease was primarily driven by reduced depreciation of capitalized software and the permanent closure of 29 stores during Fiscal 2024.
Current wording
Depreciation and amortization was $33.1 million during Fiscal 2025, compared to $39.6 million during Fiscal 2024. This decrease was primarily driven by reduced depreciation of capitalized software.
Previous wording
Asset impairment charges were $28.0 million during Fiscal 2024 due to the reduction in fair value of the Gymboree tradename, which was primarily due to reductions in Gymboree sales forecasts. Asset impairment charges were $34.5 million during Fiscal 2023 for long-lived assets, inclusive of ROU assets. These charges were due to the reduction in fair value of the Gymboree tradename attributable to an increase in the discount rate used to value the tradename and reductions in Gymboree sales forecasts. The remaining impairment charges were related to underperforming stores identified in our ongoing store portfolio evaluation primarily as a result of decreased net sales and cash flow projections.
Current wording
Asset impairment charges were $2.0 million during Fiscal 2025. Asset impairment charges were $28.0 million during Fiscal 2024, primarily due to the reduction in fair value of the Gymboree tradename.
Previous wording
Operating loss was $(13.7) million during Fiscal 2024, compared to $(83.8) million during Fiscal 2023. The Fiscal 2024 results were impacted by incremental operating expense of $66.4 million, including SG&A expenses of $35.3 million, as described above, asset impairment charges of $28.0 million on the Gymboree tradename, accelerated depreciation of $2.2 million, and additional change in control charges impacting gross margin of $0.9 million. The Fiscal 2023 results were impacted by incremental operating expenses of $51.3 million, including SG&A expenses of $14.9 million, as described above, asset impairment charges of $34.5 million, and accelerated depreciation of $2.0 million. Excluding the impact of these incremental charges, Adjusted operating income was $52.7 million during Fiscal 2024, compared to an Adjusted operating loss of $(32.5) million and leveraged 580 basis points to 3.8% of net sales.
Current wording
Operating loss was $(57.2) million during Fiscal 2025, compared to $(13.7) million during Fiscal 2024. The Fiscal 2025 results were impacted by incremental operating expense of $4.6 million, including SG&A expenses of $2.6 million, as described above, and asset impairment charges of $2.0 million. The Fiscal 2024 results were impacted by incremental operating expenses of $66.4 million, including SG&A expenses of $35.3 million, as described above, asset impairment charges of $28.0 million on the Gymboree tradename, accelerated depreciation of $2.2 million, and additional change in control charges impacting gross margin of $0.9 million. Excluding the impact of these incremental charges, Adjusted operating loss was $(52.6) million during Fiscal 2025, compared to an Adjusted operating income of $52.7 million during Fiscal 2024.
Previous wording
Other interest expense, net was $29.3 million during Fiscal 2024, compared to $30.0 million during Fiscal 2023. The decrease was primarily due to the paydown of the $50.0 million term loan (the “2021 Term Loan”) under our Credit Agreement, partially offset by higher average interest rates associated with our ABL Credit Facility.
Current wording
Other interest expense, net was $25.5 million during Fiscal 2025, compared to $29.3 million during Fiscal 2024. The decrease was primarily driven by lower average borrowings and interest rates on our ABL Credit Facility, partially offset by the write-off of deferred financing costs associated with the refinancing of our ABL Credit Facility and the partial paydown of our first term loan entered into with our majority shareholder, Mithaq Capital SPC (“Mithaq”), as a result of our rights offering completed on February 6, 2025 (“Rights Offering”).
Previous wording
Provision for income taxes was $8.4 million during Fiscal 2024, compared to $40.7 million during Fiscal 2023. Our effective tax rate was a provision of (16.9)% and (35.8)% during Fiscal 2024 and Fiscal 2023, respectively. The change in our effective tax rate and income tax provision for Fiscal 2024 compared to Fiscal 2023 was primarily driven by the establishment of a valuation allowance against our net deferred tax assets in Fiscal 2023 and a shift in the jurisdictional earnings mix in Fiscal 2024. We continue to adjust the valuation allowance based on ongoing operating results.
Current wording
Provision (benefit) for income taxes was a benefit of $(2.0) million during Fiscal 2025, compared to a provision of $8.4 million during Fiscal 2024. Our effective tax rate was a benefit of 2.2% and a provision of (16.9)% during Fiscal 2025 and Fiscal 2024, respectively. The change in the provision (benefit) for income taxes and in the effective tax rate is primarily due to shifts in earnings mix and a higher pretax loss for Fiscal 2025, in addition to the impact of favorable provision to return adjustments and a reduction in reserves for unrecognized income tax benefits. We continue to adjust the valuation allowance based upon ongoing operating results.
Previous wording
Net loss was $(57.8) million, or $(4.53) per diluted share, during Fiscal 2024, compared to $(154.5) million, or $(12.34) per diluted share, during Fiscal 2023, due to the factors described above. Adjusted net income was $5.5 million, or $0.43 per diluted share during Fiscal 2024, compared to Adjusted net loss of $(103.3) million, or $(8.25) per diluted share, during Fiscal 2023 due to factors described above, in addition to the impact of income taxes of $3.1 million on the non-GAAP charges.
Current wording
Net loss was $(88.3) million, or $(4.01) per diluted share, during Fiscal 2025, compared to $(57.8) million, or $(4.53) per diluted share, during Fiscal 2024, due to the factors described above. Adjusted net loss was $(81.4) million, or $(3.70) per diluted share during Fiscal 2025, compared to Adjusted net income of $5.5 million, or $0.43 per diluted share, during Fiscal 2024 due to factors described above.
Previous wording
(1)The Company’s foreign subsidiaries, primarily in Canada, have operating results based in foreign currencies and are thus subject to the fluctuations of the corresponding translation rates into U.S dollars.
Current wording
(1)Our foreign subsidiaries, primarily in Canada, have operating results based in foreign currencies and are thus subject to the fluctuations of the corresponding translation rates into U.S dollars.
Previous wording
The Children’s Place International Net sales decreased $25.4 million, or 17.5%, to $119.8 million during Fiscal 2024, compared to $145.2 million during Fiscal 2023, primarily due to anticipated declines in e-commerce demand due to the rationalization of promotions, reductions in inflated and unprofitable marketing spend, and the strategic decision to change “free shipping” offers, as we proactively sacrificed unprofitable sales in an effort to improve profitability. We also experienced a decrease in brick-and-mortar revenue due to a lower store count and lower sales volume.
Current wording
The Children’s Place International Net sales decreased $(14.4) million, or 12.0%, to $105.4 million during Fiscal 2025, compared to $119.8 million during Fiscal 2024, driven by a decrease in e-commerce sales due to lower traffic and conversion. We also experienced a decrease in brick-and-mortar revenue from lower sales volume due to lower traffic, particularly in the first half of the fiscal year.
Previous wording
We have presented certain measures on a non-GAAP basis. Adjusted net loss, adjusted net loss per diluted share, adjusted selling, general, and administrative expenses, and adjusted operating income (loss) are non-GAAP measures. These measures are not intended to replace GAAP financial information, and may be different from non-GAAP measures reported by other companies. The most comparable GAAP measures are net loss, net loss per diluted share, selling, general, and administrative expenses, and operating income (loss), respectively. We believe the income and expense items excluded as non-GAAP adjustments are not reflective of the performance of our core business, and that providing this supplemental disclosure to investors will facilitate comparisons of the past and present performance of our core business.
Current wording
We have presented certain measures on a non-GAAP basis. Adjusted net income (loss), adjusted net income (loss) per diluted share, adjusted gross profit, adjusted selling, general, and administrative expenses, and adjusted operating income (loss) are non-GAAP measures. These measures are not intended to replace GAAP financial information, and may be different from non-GAAP measures reported by other companies. The most comparable GAAP measures are net income (loss), net income (loss) per diluted share, gross profit, selling, general, and administrative expenses, and operating income (loss), respectively. We believe the income and expense items excluded as non-GAAP adjustments are not reflective of the performance of our core business, and that providing this supplemental disclosure to investors will facilitate comparisons of the past and present performance of our core business.
Previous wording
Our working capital needs typically follow a seasonal pattern, peaking during the third fiscal quarter based on seasonal inventory purchases. Our primary uses of cash are for working capital requirements, which consist primarily of inventory purchases, rent and marketing expenses; the payment of interest expense on our ABL Credit Facility, and the financing of capital projects.
Current wording
Our working capital needs typically follow a seasonal pattern, peaking during the third fiscal quarter based on seasonal inventory purchases. Our primary uses of cash are for working capital requirements, which consist primarily of inventory purchases, rent and marketing expenses, the payment of interest expense on our ABL Credit Facility and term loans, and the financing of capital projects.
Previous wording
During Fiscal 2024, we entered into an interest-free, unsecured and subordinated promissory note with Mithaq for a $78.6 million Initial Mithaq Term Loan and an unsecured and subordinated $90.0 million term loan (the “New Mithaq Term Loan”; and together with the Initial Mithaq Term Loan, collectively, the “Mithaq Term Loans”). As of February 6, 2025, $60.2 million under the Initial Mithaq Term Loan was repaid pursuant to the completion of the Rights Offering, leaving an aggregate of $108.4 million outstanding under the Mithaq Term Loans.
Current wording
During Fiscal 2024, we entered into an interest-free, unsecured and subordinated promissory note with Mithaq for a $78.6 million Initial Mithaq Term Loan and a separate unsecured and subordinated promissory note for a $90.0 million term loan (the “New Mithaq Term Loan”; and together with the Initial Mithaq Term Loan, collectively, the “Mithaq Term Loans”). As of February 6, 2025, $60.2 million under the Initial Mithaq Term Loan was repaid pursuant to the completion of our Rights Offering, leaving $18.4 million outstanding under the Initial Mithaq Term Loan. Pursuant to our refinancing transactions on December 16, 2025, the New Mithaq Term Loan was amended to allow us to defer our monthly payments upon written notice to Mithaq, and as an amendment consent fee, its principal amount was increased by $2.7 million to $92.7 million, leaving an aggregate of $111.1 million outstanding under the Mithaq Term Loans as of January 31, 2026.
Previous wording
As of February 1, 2025, we had $245.7 million of outstanding borrowings under our $433.0 million ABL Credit Facility and no borrowings under our $40.0 million senior unsecured credit facility with Mithaq (the “Mithaq Credit Facility”).
Current wording
As of January 31, 2026, we had $131.1 million of outstanding borrowings under our $350.0 million ABL Credit Facility and no borrowings under our $40.0 million senior unsecured credit facility with Mithaq (the “Mithaq Credit Facility”).
Previous wording
As of February 1, 2025, we had total liquidity of $85.5 million, including $40.2 million of availability under our ABL Credit Facility, $40.0 million of availability under our Mithaq Credit Facility and $5.3 million of cash on hand. At February 1, 2025, we had $16.0 million of outstanding letters of credit with an additional $9.0 million available for issuing letters of credit under our ABL Credit Facility.
Current wording
As of January 31, 2026, we had total liquidity of $89.9 million, including $44.4 million of availability under our ABL Credit Facility, $40.0 million of availability under our Mithaq Credit Facility, and $5.5 million of cash on hand. At January 31, 2026, we had $23.7 million of outstanding letters of credit with an additional $6.3 million available for issuing letters of credit under our ABL Credit Facility.
Previous wording
In November 2021, the board of directors (the “Board of Directors”) authorized a $250.0 million share repurchase program (the “Share Repurchase Program”). Currently, given the terms of our Credit Agreement, as amended by the seventh amendment to the Credit Agreement (the “Seventh Amendment”), dated as of April 18, 2024, the repurchase of any shares would require fulfilling the heightened payment conditions under our Credit Agreement, except that repurchases of shares as described above in “Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities”, pursuant to our practice as a result of our insider trading policy, are expressly permitted. During Fiscal 2024, we repurchased approximately 0.1 million shares of our common stock for $0.7 million, consisting of shares surrendered to cover tax withholdings associated with the vesting of equity awards. During Fiscal 2023, we repurchased approximately 0.2 million shares for $7.1 million, consisting of shares surrendered to cover tax withholding associated with the vesting of equity awards. As of February 1, 2025, there was $156.5 million remaining availability under the Share Repurchase Program.
Current wording
In November 2021, our board of directors (the “Board”) authorized a $250.0 million share repurchase program (the “Share Repurchase Program”). Currently, given the terms of our credit agreement with Wells Fargo as its administrative agent and our term loan agreement with SLR, the repurchase of any shares would require fulfilling stringent payment conditions under those agreements, except that repurchases of shares as described in “Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities”, pursuant to our practice as a result of our insider trading policy, are expressly permitted. During Fiscal 2025, we repurchased approximately 0.1 million shares of our common stock for $0.4 million, consisting of shares surrendered to cover tax withholdings associated with the vesting of equity awards. During Fiscal 2024, we repurchased approximately 0.1 million shares for $0.7 million, consisting of shares surrendered to cover tax withholdings associated with the vesting of equity awards. As of January 31, 2026, there was $156.1 million remaining availability under the Share Repurchase Program.
Previous wording
Cash used in operating activities was $117.6 million during Fiscal 2024, compared to $92.8 million of cash provided by operating activities during Fiscal 2023. Cash used in operating activities during Fiscal 2024 was primarily the result of a decrease in accounts payable as we paid down past due vendors and an increase in inventory. Cash provided by operating activities of $92.8 million during Fiscal 2023 was primarily the result of a lower inventory balance, reflecting lower average unit costs, and improved inventory management, as well as an increase in accounts payable and other planned changes in working capital.
Current wording
Cash provided by operating activities was $8.1 million during Fiscal 2025, compared to $117.6 million of cash used in operating activities during Fiscal 2024, representing a net increase of $125.7 million. Cash provided by operating activities during Fiscal 2025 was primarily the result of decreases in inventory and accounts receivable, partially offset by larger net losses. Cash used in operating activities during Fiscal 2024 was primarily the result of a decrease in accounts payable as we paid down past vendors and an increase in inventory.
Previous wording
Cash used in investing activities was $15.8 million during Fiscal 2024, compared to $27.8 million during Fiscal 2023. The decrease was driven by lower capital expenditures incurred during the year.
Current wording
Cash used in investing activities was $17.4 million during Fiscal 2025, compared to $15.8 million during Fiscal 2024, driven by higher capital expenditures.
Previous wording
Cash provided by financing activities was $128.4 million during Fiscal 2024, compared to cash used in financing activities of $68.3 million during Fiscal 2023. The increase primarily resulted from proceeds from higher net borrowings under our ABL Credit Facility and the Mithaq Term Loans, partially offset by the repayment of the 2021 Term Loan.
Current wording
Cash provided by financing activities was $7.0 million during Fiscal 2025, compared to $128.4 million during Fiscal 2024. The decrease primarily resulted from proceeds received from the Mithaq Term Loans during Fiscal 2024 and lower net borrowings on our ABL Credit Facility, partially offset by the net cash proceeds received from the SLR Term Loan and the Rights Offering completed during Fiscal 2025.
Previous wording
Our ability to continue to meet our capital requirements in Fiscal 2025 depends on our cash on hand, our ability to generate cash flows from operations, and available borrowings under our ABL Credit Facility and Mithaq Credit Facility. Cash flows generated from operations depends on our ability to achieve our financial plans. We believe that our cash on hand, cash generated from operations, and funds available to us through our ABL Credit Facility and Mithaq Credit Facility will be sufficient to fund our capital and other cash requirements for the foreseeable future.
Current wording
Our ability to continue to meet our capital requirements in Fiscal 2026 depends on our cash on hand, our ability to generate cash flows from operations, and available borrowings under our ABL Credit Facility and Mithaq Credit Facility. Cash flows generated from operations depend on our ability to achieve our financial plans. We believe that our cash on hand, cash generated from operations, and funds available to us through our ABL Credit Facility and Mithaq Credit Facility will be sufficient to fund our capital and other cash requirements for the foreseeable future.
Previous wording
Certain components of our Consolidated Balance Sheets as of February 1, 2025 and February 3, 2024 were as follows:
Current wording
Certain components of our Consolidated Balance Sheets were as follows:
Previous wording
Inventories were $399.6 million at February 1, 2025, compared to $362.1 million at February 3, 2024. The increase of $37.5 million, or 10.4%, was primarily the result of a higher number of units on hand.
Current wording
Inventories were $325.1 million at January 31, 2026, compared to $399.6 million at February 1, 2025. The decrease of $74.5 million, or 18.6%, was primarily the result of a lower number of units on hand due to better inventory management.
Previous wording
As of April 18, 2024, which is the effective date of the Seventh Amendment, the ABL Credit Facility includes a $25.0 million Canadian sublimit and a $25.0 million sublimit for standby and documentary letters of credit.
Current wording
Previously, from April 18, 2024 to December 15, 2025, the ABL Credit Facility included a $25.0 million Canadian sublimit and a $25.0 million sublimit for standby and documentary letters of credit. As of December 16, 2025, which is the effective date of the eighth amendment to the Credit Agreement (the “Eighth Amendment”), the ABL Credit Facility includes a $25.0 million Canadian sublimit and a $30.0 million sublimit for standby and documentary letters of credit.
Previous wording
(ii)the Secured Overnight Financing Rate (“SOFR”) per annum, plus 0.100%, plus a margin of 3.000%.
Current wording
(ii)the Secured Overnight Financing Rate (“SOFR”) per annum, plus 0.100%, plus a margin of 2.750% or 3.000%.
Previous wording
(ii)the SOFR per annum, plus 0.100%, plus a margin of 2.750% or 3.000%.
Current wording
(ii)the SOFR per annum, plus a margin of 2.250%.
Previous wording
From and after February 4, 2025 and on the first day of each fiscal quarter thereafter, based on the amount of our average daily excess availability under the facility, borrowings outstanding under the ABL Credit Facility will bear interest, at the Company’s option, at:
Current wording
From and after February 1, 2026, and on the first day of each fiscal quarter thereafter, based on the amount of our average daily excess availability under the facility, borrowings outstanding under the ABL Credit Facility bear interest, at our option at:
Previous wording
(i)the prime rate per annum, plus a margin of 2.000%; or
Current wording
(ii)the SOFR per annum, plus a margin of 2.000%, 2.250% or 2.500%.
Previous wording
Prior to April 18, 2024, we were charged a fee of 0.200% on the unused portion of the commitments. As of April 18, 2024, based on the size of the unused portion of the commitments, we are charged a fee ranging from 0.250% to 0.375%. Letter of credit fees are at 1.125% for commercial letters of credit and 1.750% for standby letters of credit. The amount available for loans and letters of credit under the ABL Credit Facility is determined by a borrowing base consisting of certain credit card receivables, certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves and an availability block.
Current wording
As of April 18, 2024, based on the size of the unused portion of the commitments, we are charged a fee ranging from 0.250% to 0.375%.
Previous wording
Letter of credit fees will range from 1.000% to 1.125% for commercial letters of credit and will range from 1.500% to 1.750% for standby letters of credit. Letter of credit fees will be determined based on the amount of our average daily excess availability under the facility.
Current wording
From December 16, 2025 to January 31, 2026, letter of credit fees were 0.625% for commercial letters of credit and were 1.250% for standby letters of credit. As of February 1, 2026, letter of credit fees range from 0.500% to 0.750% for commercial letters of credit and range from 1.000% to 1.500% for standby letters of credit. These fees are determined based on the amount of our average daily excess availability under the facility.
Previous wording
For Fiscal 2024, Fiscal 2023, and Fiscal 2022, we recognized $25.0 million, $24.2 million, and $10.2 million, respectively, in interest expense related to the ABL Credit Facility.
Current wording
For Fiscal 2025, Fiscal 2024, and Fiscal 2023,we recognized $19.1 million, $25.0 million, and $24.2 million, respectively, in interest expense related to the ABL Credit Facility.
Previous wording
Prior to April 18, 2024, when the 2021 Term Loan was fully repaid, credit extended under the ABL Credit Facility was secured by a first priority security interest in substantially all of our U.S. and Canadian assets other than intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock, and a second priority security interest in our intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock. As of April 18, 2024, the ABL Credit Facility is secured on a first priority basis by all of the foregoing collateral.
Current wording
Previously, from April 18, 2024 to December 15, 2025, credit extended under the ABL Credit Facility was secured by a first priority security interest in substantially all of our U.S. and Canadian assets, including our intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock. As of December 16, 2025, credit extended under the ABL Credit Facility is secured by a first priority security interest in substantially all of our U.S. and Canadian assets, other than intellectual property, real estate, certain furniture, fixtures and equipment, and pledges of subsidiary capital stock, and a second priority security interest in our intellectual property, real estate, certain furniture, fixtures and equipment, and pledges of subsidiary capital stock.
Previous wording
The ABL Credit Facility contains covenants, which include conditions on stock buybacks and the payment of cash dividends or similar payments. These covenants also limit our ability and our subsidiaries’ ability to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, or dispositions or to change the nature of our business. Pursuant to the Seventh Amendment, the requisite payment condition thresholds for some of these covenants have been heightened, resulting in certain actions such as the repurchase of shares and payment of cash dividends becoming more difficult to perform. Additionally, if we are unable to maintain a certain amount of excess availability for borrowings (the “excess availability threshold”), we may be subject to cash dominion.
Current wording
The ABL Credit Facility contains covenants, which include conditions on stock buybacks and the payment of cash dividends or similar payments. These covenants also limit the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, or dispositions or to change the nature of its business. Pursuant to a prior amendment, the requisite payment condition thresholds for some of these covenants were heightened, resulting in certain actions such as the repurchase of shares and payment of cash dividends becoming more difficult to perform. Additionally, if we are unable to maintain a certain amount of excess availability for borrowings, we may be subject to cash dominion, and pursuant to the Eighth Amendment, we are required to maintain excess availability of at least $35.0 million, subject to increase based on our borrowing base (the “excess availability requirement”). We were in compliance with this excess availability requirement as of January 31, 2026.
Previous wording
As of February 1, 2025 and February 3, 2024, unamortized deferred financing costs amounted to $3.8 million and $2.2 million, respectively, related to our ABL Credit Facility.
Current wording
As of January 31, 2026 and February 1, 2025, unamortized deferred financing costs amounted to $5.6 million and $3.8 million related to our ABL Credit Facility.
Previous wording
The tables below present the components of our ABL Credit Facility as of the end of Fiscal 2024 and Fiscal 2023:
Current wording
The table below presents the components of our ABL Credit Facility as of the end of Fiscal 2025 and Fiscal 2024:
Previous wording
(3)The sub-limit availability for letters of credit was $9.0 million at February 1, 2025 and $42.6 million at February 3, 2024.
Current wording
(2)The sub-limit availability for letters of credit was $6.3 million at January 31, 2026 and $9.0 million at February 1, 2025.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Previously, from February 4, 2025 to December 15, 2025, letter of credit fees ranged from 1.000% to 1.125% for commercial letters of credit and ranged from 1.500% to 1.750% for standby letters of credit.
Current report — wording carried from elsewhere
Prior to December 16, 2025, the amount available for loans and letters of credit under the ABL Credit Facility was determined by a borrowing base consisting of certain credit card receivables, certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves. As of December 16, 2025, the fair market value of certain real estate is no longer included in this borrowing base.
Current report — wording carried from elsewhere
The SLR Term Loan is secured by a first priority security interest in our intellectual property, real estate, certain furniture, fixtures and equipment, and pledges of subsidiary capital stock, and a second priority security interest in the collateral secured by a first priority security interest under the ABL Credit Facility. The SLR Term Loan is guaranteed by each of our subsidiaries that guarantees our ABL Credit Facility.
Current report — wording carried from elsewhere
The SLR Term Loan contains certain customary events of default, which include (subject in certain cases to customary grace periods), nonpayment of principal, breach of other covenants of the SLR Term Loan, inaccuracy in representations or warranties, acceleration of certain other indebtedness (including under the Credit Agreement), certain events of bankruptcy, insolvency or reorganization, such as a change of control, and invalidity of any part of the SLR Term Loan. Additionally, the SLR Term Loan contains the same excess availability requirement as the ABL Credit Facility. We were in compliance with this excess availability requirement as of January 31, 2026.
Current report — wording carried from elsewhere
Pursuant to our refinancing transactions in December 2025, the Mithaq Term Loans are also subordinated in payment priority to the obligations of the Company and its subsidiaries under the SLR Term Loan. Subject to such subordination terms, the Mithaq Term Loans are prepayable at any time and from time to time without penalty and do not require any mandatory prepayments.
Current report — wording carried from elsewhere
In Fiscal 2025, the stock awards granted to employees at senior management levels were Deferred Awards that vest in three equal tranches in fiscal year 2027, fiscal year 2028 and fiscal year 2029.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Net loss was $(57.8) million, or $(4.53) per diluted share, during Fiscal 2024 compared to $(154.5) million, or $(12.34) per diluted share, during Fiscal 2023, due to the factors discussed above.
Previous report — wording carried elsewhere
The following table sets forth, for the periods indicated, selected data from our Consolidated Statements of Operations expressed as a percentage of Net sales. We primarily evaluate the results of our operations as a percentage of Net sales rather than in terms of absolute dollar increases or decreases by analyzing the year over year change in our business expressed as a percentage of Net sales (i.e., “basis points”).