Saddled with debt and unable to grow sales in a weak consumer environment, The Children’s Place has filed for Chapter 11 and is looking for a buyer to rescue the 60-year-old business.

The US-based retailer primarily sells children’s apparel and accessories under its proprietary brands The Children’s Place and Gymboree.

The collapse comes despite an infusion of funds from Saudi investment firm Mithaq Capital, which took a 54 per cent majority stake in the company two years ago, and recent attempts to boost sales through bricks-and-mortar expansion, with 19 stores opening in just the second quarter of the year. 

But while tough economic conditions were a factor, industry experts say the retailer made some critical mistakes that made its situation worse. 

“While the market for childrenswear has not been particularly healthy, Children’s Place put itself into a position where it was unable to succeed,” said Neil Saunders, managing director at GlobalData. 

“The primary cause of the problems came from huge levels of debt – some of which was acquired during the pandemic.” 

Rather than paying down this debt with the healthy profits from the 2021 boom, Saunders noted that the business chose to buy back shares and take on even more debt. 

“That proved to be a huge mistake, especially as the fortunes of the company changed in 2022 and beyond,” he said.

At the same time, consumers facing a cost-of-living crisis started seeking out lower-priced kidswear, and non-specialist players like Target, Walmart, Amazon and off-price brands took market share from The Children’s Place.

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