The Children’s Place Inc. is cutting jobs and getting rid of some real estate costs as it looks to go digital-first to deal with a customer spending downturn.
The children’s wear chain will end its Secaucus, N.J. headquarters lease in May next year instead of 2029. It’s also laying off 181 employees, or 17 percent of its workforce, according to a Securities and Exchange Commission document filed Wednesday. Most work in corporate HQ.
The owner of Baby Place, Gymboree, Sugar & Jade and PJ Place is planning to close up to 100 more doors this year after steadily thinning its store base over the past several quarters. It’s already adopting the digital-centric lingo, describing itself as the “largest pure-play children’s specialty apparel retailer in North America” despite still operating physical stores. It used that language earlier this month when it announced its revolving credit facility expanded from $350 million to $445 million.
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The Children’s Place expects to take a $13 million to $15 million hit in its second quarter ending July 29, 2023. Savings related to the cuts were included in its first-quarter earnings report.
B. Riley Securities retail analyst Jeff Lick estimates that the retailer’s moves will cut $12 million to $18 million in annual expenses.
The first quarter ended April 29 reflected an 11.2 percent decline in net sales to $321.6 million, while comparable retail sales fell 8.2 percent. Gross profit fell by $45.4 million to $96.5 million, or 30 percent of net sales. Higher costs, including cotton and transportation expenses, affected the quarter. The Children’s Place ended the three-month period with a net loss of $28.8 million, against $19.8 million in net income in the comparable quarter.
The retailer also ended the quarter with 599 doors, 9 percent less than a year ago. It closed 13 doors in the quarter, and has eliminated 600 locations since 2013. Another 80 to 100 doors are set to close this year.
The Children’s Place expect first-quarter trends to continue in the second quarter, projecting a 10 percent net sales decline to $340 million to $345 million and an adjusted net loss per share in the range of $2.15 to $2.20. For the full year, net sales are seen falling in the high-single digit percentage range to between $1.58 billion to $1.59 billion, with adjusted net earnings per diluted share between $1.00 to $1.50.
Last week the retailer launched its 2023 Back-to-School campaign in partnership with the Jonas Brothers. The campaign also includes a contest where parents with children in grades K-8, who are enrolled in a non-tuition based school for the 2023-2024 school year, can nominate their child’s school for a chance to win a $100,000 prize.
