The Children’s Place (PLCE) investor relations material

Executive summary

• Net sales declined 11.1% year-over-year to $215.2 million, driven by lower direct-to-consumer traffic and planned reductions in wholesale shipments.

• Net loss widened to $53.2 million ($2.40 per diluted share) from $34.0 million ($1.57 per diluted share) in the prior year quarter; adjusted net loss was $44.3 million ($2.00 per diluted share).

• Gross margin contracted 440 basis points to 24.8%, impacted by higher tariff costs, distribution exit charges, and increased markdowns; adjusted gross margin was 26.8%.

• Strategic transformation initiatives and four new long-term priorities focus on customer experience, brand elevation, financial discipline, and organizational leadership.

• Leadership team expanded with significant retail expertise to support transformation.

Financial highlights

• Operating loss widened to $(42.2) million from $(24.1) million; adjusted operating loss was $(36.1) million.

• Selling, general, and administrative expenses increased to $88.9 million, or 41.3% of net sales.

• Cash used in operating activities was $53.8 million, up from $43.0 million in the prior year.

• Inventory decreased 22.7% year-over-year to $326.4 million, reflecting improved management.

• Liquidity at quarter-end was $82.8 million, including $4.8 million in cash and $38.0 million in revolver availability.

Outlook and guidance

• Macroeconomic pressures, including inflation and higher input costs, are expected to continue impacting results for the remainder of fiscal 2026.

• Recovery of unlawful IEEPA tariffs and cost reduction initiatives, with $45 million in annualized benefits achieved toward a $60 million target by fiscal 2027, are expected to partially offset margin pressures.

• Exiting the third-party distribution facility is expected to yield $10 million in annualized savings.

• Liquidity is expected to cover capital and working capital needs for at least the next twelve months.