The Children’s Place Files for Chapter 11 After Burning Through Its Saudi Parent’s ‘Child Support’

“Ah sh*t, here we go again…” - CJ Gymboree

Yet another tenant of the mall wing wedged between the boarded-up GameStop and the Auntie Anne’s that got shut down by the health department is officially cooked. On Sunday, The Children’s Place got its Chapter 11 on and put substantially all of its assets up for sale. Now it has until Dec. 9 to find its own sugar daddy with low standards, and it wants a deal done by year-end.

Yes, that includes Gymboree, which TCP bought for $76M back in 2019 after Gymboree’s second bankruptcy in two years. For those keeping score at home (read: no one), that’s three Chapter 11s since 2017.

For now, all 514 North American stores and both websites are staying open, and the inventory sales keep rolling (pending court approval). By Monday, the sites were already advertising a “total inventory blowout” (new parents just flinched).

TCP listed about $742M in assets against roughly $881M in debts, so it’s ~$139M in the hole. Net sales fell nearly 19% last quarter, and the stock is trading around 18 cents. Per Bloomberg, existing shareholders are expected to get wiped out, which, yikes.

Which brings us to the Bank of Mom and Dad (read: Mithaq Capital). Friendly reminder, the Saudi family investment firm grabbed a majority stake in 2024, back when TCP was already in a death spiral, and the stock more than doubled on the news. Since then, Mithaq has handed over more than $200M in loans to keep the lights on. At some point, you gotta kick the deadbeat kid out.

Spoiler: it didn’t help. In the last earnings release, Mithaq’s guy in the corner office, Muhammad Asif Seemab, blamed a tough comparison to last year’s back-to-school rush, which was “uniquely elevated… ahead of anticipated tariff price increases.” He also said the company saw “lower conversion, combined with a very clearance-heavy mix.” In other words, nobody wants this sh*t unless it’s 70% off.

Of course, the grown-ups were the first ones to bail on the sinking ship. Days before the filing, Seemab and Muhammad Umair (TCP’s strategy chief, and the guy who had the CEO job before him) “stepped down” from their exec roles, though both are keeping their board seats. CFO John Szczepanski is now the fall guy acting president and principal executive officer. Per Rudy Morando, one of the two guys hired to run the estate sale (read: co-chief restructuring officer), TCP will “remain focused on serving the families who have trusted The Children’s Place for generations.” Which, sure. It’s just that this generation of parents can grab the next size up at Walmart, Target, or Amazon without a trip to the mall, and TCP has been getting what the kids are calling “mogged” by all three for years.

Meaning, if Grandma stuck a Children’s Place gift card in your kid’s birthday card this year, spend it now… before it’s worth about as much as the stock. See you in 2029, Gymboree…

Until next time, friends!

At the time of publishing, Stocks.News holds positions in Amazon as mentioned in the article.