Cover Page
Cover Page - shares | 6 Months Ended | |
Jul. 31, 2021 | Aug. 25, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jul. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 0-23071 | |
Entity Registrant Name | CHILDRENS PLACE, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 31-1241495 | |
Entity Address, Address Line One | 500 Plaza Drive | |
Entity Address, City or Town | Secaucus | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 07094 | |
City Area Code | 201 | |
Local Phone Number | 558-2400 | |
Title of 12(b) Security | Common Stock, $0.10 par value | |
Trading Symbol | PLCE | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 14,721,208 | |
Entity Central Index Key | 0001041859 | |
Current Fiscal Year End Date | --01-29 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jul. 31, 2021 | Jan. 30, 2021 | Aug. 01, 2020 |
Current assets: | |||
Cash and cash equivalents | $ 63,982 | $ 63,548 | $ 36,119 |
Accounts receivable | 38,864 | 39,534 | 29,634 |
Inventories | 461,391 | 388,141 | 381,022 |
Prepaid expenses and other current assets | 45,011 | 55,860 | 23,085 |
Total current assets | 609,248 | 547,083 | 469,860 |
Long-term assets: | |||
Property and equipment, net | 165,558 | 181,801 | 200,963 |
Right-of-use assets | 235,208 | 283,624 | 319,796 |
Tradenames, net | 72,092 | 72,492 | 72,892 |
Deferred income taxes | 36,362 | 45,579 | 91,926 |
Other assets | 9,980 | 9,548 | 12,502 |
Total assets | 1,128,448 | 1,140,127 | 1,167,939 |
Current liabilities: | |||
Revolving loan | 199,837 | 169,778 | 250,818 |
Accounts payable | 227,579 | 252,124 | 279,014 |
Current lease liabilities | 109,991 | 174,585 | 160,932 |
Income taxes payable | 4,536 | 5,508 | 5,666 |
Accrued expenses and other current liabilities | 130,452 | 116,504 | 113,112 |
Total current liabilities | 672,395 | 718,499 | 809,542 |
Long-term liabilities: | |||
Long-term debt | 74,209 | 75,346 | 0 |
Long-term lease liabilities | 174,718 | 214,173 | 254,187 |
Other tax liabilities | 6,350 | 6,304 | 6,811 |
Income taxes payable | 14,939 | 14,939 | 17,589 |
Other long-term liabilities | 17,652 | 17,489 | 18,295 |
Total liabilities | 960,263 | 1,046,750 | 1,106,424 |
COMMITMENTS AND CONTINGENCIES | |||
STOCKHOLDERS’ EQUITY: | |||
Preferred stock, $1.00 par value, 1,000 shares authorized, 0 shares issued and outstanding | 0 | 0 | 0 |
Common stock, $0.10 par value, 100,000 shares authorized; 14,831, 14,641, and 14,637 issued; 14,772, 14,584, and 14,585 outstanding | 1,483 | 1,464 | 1,464 |
Additional paid-in capital | 164,290 | 148,519 | 138,350 |
Treasury stock, at cost (59, 57, and 52) | (3,304) | (3,164) | (3,025) |
Deferred compensation | 3,304 | 3,164 | 3,025 |
Accumulated other comprehensive loss | (13,285) | (13,816) | (14,437) |
Retained earnings (deficit) | 15,697 | (42,790) | (63,862) |
Total stockholders’ equity | 168,185 | 93,377 | 61,515 |
Total liabilities and stockholders’ equity | $ 1,128,448 | $ 1,140,127 | $ 1,167,939 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jul. 31, 2021 | Jan. 30, 2021 | Aug. 01, 2020 |
Statement of Financial Position [Abstract] | |||
Preferred stock, par value (in usd per share) | $ 1 | $ 1 | $ 1 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.10 | $ 0.10 | $ 0.10 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 14,831,000 | 14,641,000 | 14,637,000 |
Common stock, shares outstanding (in shares) | 14,772,000 | 14,584,000 | 14,585,000 |
Treasury stock (in shares) | 59,000 | 57,000 | 52,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Income Statement [Abstract] | ||||
Net sales | $ 413,855 | $ 368,923 | $ 849,336 | $ 624,130 |
Cost of sales (exclusive of depreciation and amortization) | 245,994 | 301,843 | 493,269 | 576,723 |
Gross profit | 167,861 | 67,080 | 356,067 | 47,407 |
Selling, general, and administrative expenses | 115,620 | 114,312 | 222,358 | 212,803 |
Depreciation and amortization | 14,392 | 16,708 | 29,953 | 34,596 |
Asset impairment charges | 0 | 544 | 0 | 37,635 |
Operating income (loss) | 37,849 | (64,484) | 103,756 | (237,627) |
Interest expense | (4,700) | (2,647) | (9,114) | (4,536) |
Interest income | 4 | 8 | 7 | 57 |
Income (loss) before benefit for income taxes | 33,153 | (67,123) | 94,649 | (242,106) |
Provision (benefit) for income taxes | 9,058 | (20,484) | 25,349 | (80,657) |
Net income (loss) | $ 24,095 | $ (46,639) | $ 69,300 | $ (161,449) |
Earnings (loss) per common share | ||||
Basic earnings per share (in usd per share) | $ 1.63 | $ (3.19) | $ 4.71 | $ (11.04) |
Diluted earnings per share (in usd per share) | $ 1.60 | $ (3.19) | $ 4.61 | $ (11.04) |
Weighted average common shares outstanding | ||||
Basic weighted-average common shares outstanding (in shares) | 14,780 | 14,634 | 14,725 | 14,623 |
Diluted weighted-average common shares outstanding (in shares) | 15,062 | 14,634 | 15,032 | 14,623 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Net income (loss) | $ 24,095 | $ (46,639) | $ 69,300 | $ (161,449) |
Other comprehensive income (loss): | ||||
Change in cumulative translation adjustment | (355) | 431 | 531 | (1,092) |
Change in fair value of cash flow hedges, net of income taxes | 0 | 45 | 0 | 200 |
Other comprehensive income (loss) | (355) | 476 | 531 | (892) |
Total comprehensive income (loss) | $ 23,740 | $ (46,163) | $ 69,831 | $ (162,341) |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Deferred Compensation | Retained Earnings (Deficit) | Accumulated Other Comprehensive Income (Loss) | Treasury Stock |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Beginning balance (in shares) | 14,762 | (51) | |||||
Beginning balance at Feb. 01, 2020 | $ 235,187 | $ 1,476 | $ 139,041 | $ 2,956 | $ 108,215 | $ (2,956) | $ (13,545) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Vesting of stock awards (in shares) | 167 | ||||||
Vesting of stock awards | $ 0 | 17 | (17) | ||||
Stock-based compensation | $ 4,113 | 4,113 | |||||
Purchase and retirement of shares (in shares) | (292) | ||||||
Purchase and retirement of shares | $ (15,444) | (29) | (4,787) | (10,628) | |||
Change in cumulative translation adjustment | (1,092) | (1,092) | |||||
Change in fair value of cash flow hedges, net of income taxes | 200 | ||||||
Deferral of common stock into deferred compensation plan | 0 | 69 | $ (69) | ||||
Deferral of common stock into deferred compensation plan (in shares) | (1) | ||||||
Net income (loss) | $ (161,449) | (161,449) | |||||
Ending balance (in shares) at Aug. 01, 2020 | 14,637 | (52) | |||||
Ending balance at Aug. 01, 2020 | $ 61,515 | 1,464 | 138,350 | 3,025 | (63,862) | (14,437) | $ (3,025) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Beginning balance (in shares) | 14,581 | (52) | |||||
Beginning balance at May. 02, 2020 | $ 105,035 | 1,458 | 135,328 | 3,025 | (16,838) | (3,025) | $ (14,913) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Vesting of stock awards (in shares) | 86 | ||||||
Vesting of stock awards | $ 0 | 9 | (9) | ||||
Stock-based compensation | $ 3,528 | 3,528 | |||||
Purchase and retirement of shares (in shares) | (30) | ||||||
Purchase and retirement of shares | $ (885) | (3) | (497) | (385) | |||
Change in cumulative translation adjustment | 431 | 431 | |||||
Change in fair value of cash flow hedges, net of income taxes | 45 | ||||||
Deferral of common stock into deferred compensation plan | 0 | ||||||
Net income (loss) | $ (46,639) | (46,639) | |||||
Ending balance (in shares) at Aug. 01, 2020 | 14,637 | (52) | |||||
Ending balance at Aug. 01, 2020 | $ 61,515 | $ 1,464 | 138,350 | 3,025 | (63,862) | (14,437) | $ (3,025) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Beginning balance (in shares) | 14,637 | (52) | |||||
Beginning balance (in shares) | 14,641 | (57) | |||||
Beginning balance at Jan. 30, 2021 | $ 93,377 | $ 1,464 | 148,519 | 3,165 | (42,790) | (13,816) | $ (3,165) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Vesting of stock awards (in shares) | 336 | ||||||
Vesting of stock awards | 0 | $ 34 | (34) | ||||
Stock-based compensation | 18,442 | 18,442 | |||||
Purchase and retirement of shares (in shares) | (146) | ||||||
Purchase and retirement of shares | (13,465) | $ (15) | (2,637) | (10,813) | |||
Change in cumulative translation adjustment | 531 | 531 | |||||
Deferral of common stock into deferred compensation plan | 0 | 139 | $ (139) | ||||
Deferral of common stock into deferred compensation plan (in shares) | (2) | ||||||
Net income (loss) | 69,300 | 69,300 | |||||
Ending balance (in shares) at Jul. 31, 2021 | 14,831 | (59) | |||||
Ending balance at Jul. 31, 2021 | 168,185 | $ 1,483 | 164,290 | 3,304 | 15,697 | (13,285) | $ (3,304) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Beginning balance (in shares) | 14,693 | (58) | |||||
Beginning balance at May. 01, 2021 | 145,010 | $ 1,469 | 155,908 | 3,234 | 563 | (12,930) | $ (3,234) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Vesting of stock awards (in shares) | 255 | ||||||
Vesting of stock awards | 0 | $ 26 | (26) | ||||
Stock-based compensation | 10,526 | 10,526 | |||||
Purchase and retirement of shares (in shares) | (117) | ||||||
Purchase and retirement of shares | (11,091) | $ (12) | (2,118) | (8,961) | |||
Change in cumulative translation adjustment | (355) | (355) | |||||
Deferral of common stock into deferred compensation plan | 0 | 70 | $ (70) | ||||
Deferral of common stock into deferred compensation plan (in shares) | (1) | ||||||
Net income (loss) | 24,095 | 24,095 | |||||
Ending balance (in shares) at Jul. 31, 2021 | 14,831 | (59) | |||||
Ending balance at Jul. 31, 2021 | $ 168,185 | $ 1,483 | $ 164,290 | $ 3,304 | $ 15,697 | $ (13,285) | $ (3,304) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Beginning balance (in shares) | 14,831 | (59) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 31, 2021 | Aug. 01, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 69,300 | $ (161,449) |
Reconciliation of net income (loss) to net cash used in operating activities: | ||
Non-cash portion of operating lease expense | 52,075 | 57,345 |
Depreciation and amortization | 29,953 | 34,596 |
Non-cash stock-based compensation | 18,442 | 4,113 |
Deferred income tax (benefit) | 9,390 | (79,031) |
Asset impairment charges | 0 | 37,635 |
Other non-cash changes, net | 743 | 199 |
Changes in operating assets and liabilities: | ||
Inventories | (74,406) | (53,644) |
Accounts receivable and other assets | 520 | 4,635 |
Prepaid expenses and other current assets | (847) | 4,367 |
Income taxes payable, net of prepayments | 12,056 | (6,136) |
Accounts payable and other current liabilities | (13,090) | 93,634 |
Other long-term liabilities | 139 | (395) |
Lease liabilities | (107,572) | (19,073) |
Net cash used in operating activities | (3,297) | (83,204) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (13,496) | (14,268) |
Change in deferred compensation plan | 31 | 159 |
Net cash used in investing activities | (13,465) | (14,109) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Purchase and retirement of common stock, including shares surrendered for tax withholdings and transaction costs | (13,465) | (15,444) |
Borrowings under revolving credit facility | 386,343 | 218,278 |
Repayments under revolving credit facility | (356,284) | (138,269) |
Payment of debt issuance costs | (358) | 0 |
Net cash provided by financing activities | 16,236 | 64,565 |
Effect of exchange rate changes on cash and cash equivalents | 960 | 380 |
Net increase in cash and cash equivalents | 434 | (32,368) |
Cash and cash equivalents, beginning of period | 63,548 | 68,487 |
Cash and cash equivalents, end of period | 63,982 | 36,119 |
OTHER CASH FLOW INFORMATION: | ||
Net cash paid during the period for income taxes | 3,793 | 4,406 |
Net cash paid during the period for income taxes | 4,645 | 4,023 |
Decrease in accrued capital expenditures | $ (1,145) | $ (2,060) |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jul. 31, 2021 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION Description of Business The Children’s Place, Inc. and subsidiaries (collectively, the “Company”) is the largest pure-play children’s specialty apparel retailer in North America. The Company provides apparel, footwear, accessories, and other items for children. The Company designs, contracts to manufacture, sells at retail and wholesale, and licenses to sell trend right, high-quality merchandise predominately at value prices, primarily under our proprietary “The Children’s Place”, “Place”, “Baby Place”, and “Gymboree” brand names. The Company classifies its business into two segments: The Children’s Place U.S. and The Children’s Place International. Included in The Children’s Place U.S. segment are the Company’s U.S. and Puerto Rico-based stores and revenue from its U.S.-based wholesale business. Included in The Children’s Place International segment are its Canadian-based stores, revenue from the Company’s Canadian-based wholesale business, as well as revenue from international franchisees. Each segment includes an e-commerce business located at www.childrensplace.com and www.gymboree.com . Interim Financial Statements The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the consolidated financial position of the Company as of July 31, 2021 and August 1, 2020, the results of its consolidated operations for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020, consolidated comprehensive income (loss) for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020, consolidated cash flows for the twenty-six weeks ended July 31, 2021 and August 1, 2020, and consolidated stockholders’ equity for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020. The consolidated financial position as of January 30, 2021 was derived from audited financial statements. Due to the seasonal nature of the Company’s business, the results of operations for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020 are not necessarily indicative of operating results for a full fiscal year. These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2021. In December 2019, there was an outbreak of a new strain of coronavirus (“COVID-19”) that began in Wuhan, China and has since spread to the other regions of the world. In March 2020, the World Health Organization declared COVID-19 a global pandemic, and the President of the United States declared a national emergency. Federal, state, and local governments and health officials mandated and continue to mandate various restrictions, including closures of businesses and other activities, travel restrictions, restrictions on public gatherings, stay at home orders and advisories, quarantining of people who may have been exposed to the virus, and the adoption of remote or hybrid learning models for schools. The COVID-19 pandemic has significantly negatively affected the global economy, significantly disrupted global supply chains, and created significant disruption of the financial and retail markets, including a significant disruption in consumer demand for children’s clothing and accessories. As such, the comparability of the Company’s operating results has been affected by significant adverse impacts related to the COVID-19 pandemic. Terms that are commonly used in the Company’s notes to consolidated financial statements are defined as follows: • Second Quarter 2021 — The thirteen weeks ended July 31, 2021 • Second Quarter 2020 — The thirteen weeks ended August 1, 2020 • Year-To-Date 2021 — The twenty-six weeks ended July 31, 2021 • Year-To-Date 2020 — The twenty-six weeks ended August 1, 2020 • FASB — Financial Accounting Standards Board • SEC — U.S. Securities and Exchange Commission • U.S. GAAP — Generally Accepted Accounting Principles in the United States • FASB ASC — FASB Accounting Standards Codification, which serves as the source for authoritative U.S. GAAP, except that rules and interpretive releases by the SEC are also sources of authoritative U.S. GAAP for SEC registrants Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. As of July 31, 2021 and August 1, 2020, the Company did not have any investments in unconsolidated affiliates. FASB ASC 810— Consolidation is considered when determining whether an entity is subject to consolidation. Fiscal Year The Company’s fiscal year is a 52-week or 53-week period ending on the Saturday on or nearest to January 31. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and amounts of revenues and expenses reported during the period. Actual results could differ from the assumptions used and estimates made by management, which could have a material impact on the Company’s financial position or results of operations. Significant estimates inherent in the preparation of the consolidated financial statements include: reserves for the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived assets; fair value measurements; accounting for income taxes and related uncertain tax positions; insurance reserves; intangible assets; valuation of stock-based compensation awards and related estimated forfeiture rates, among others. Reclassifications Certain reclassifications have been made to prior periods' financial statements to conform to the current period's presentation. Inventories Inventories, which consist primarily of finished goods, are stated at the lower of cost or net realizable value, with cost determined on an average cost basis. The Company capitalizes certain buying, design, and supply chain costs in inventory, and these costs are reflected within cost of sales as the inventories are sold. Inventory shrinkage is estimated in interim periods based upon the historical results of physical inventory counts in the context of current year facts and circumstances. Impairment of Long-Lived Assets The Company periodically reviews its long-lived assets when events indicate that their carrying value may not be recoverable. Such events include historical trends or projected trends of cash flow losses or a future expectation that the Company will sell or dispose of an asset significantly before the end of its previously estimated useful life. In reviewing for impairment, the Company groups its long-lived assets at the lowest possible level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company reviews all stores that have reached comparable sales status, or sooner if circumstances should dictate, on at least an annual basis. The Company believes waiting this period of time allows a store to reach a maturity level where a more comprehensive analysis of financial performance can be performed. For each store that shows indications of impairment, the Company performs a recoverability test comparing estimated undiscounted future cash flows to the carrying value of the related long-lived assets. If the undiscounted cash flows are less than the related net book value of the long-lived assets, they are written down to their fair market value. The Company primarily uses discounted future cash flows directly associated with those assets to determine fair market value of long-lived assets and right-of-use (“ROU”) assets. In evaluating future cash flows, the Company considers external and internal factors. External factors comprise the local environment in which the store resides, including mall traffic, competition, and their effect on sales trends, as well as macroeconomic factors, such as global pandemics. Internal factors include the Company’s ability to gauge the fashion taste of its customers, control variable costs such as cost of sales and payroll, and in certain cases, its ability to renegotiate lease costs. Stock-based Compensation The Company generally grants time-vesting stock awards (“Deferred Awards”) and performance-based stock awards (“Performance Awards”) to employees at management levels. The Company also grants Deferred Awards to its non-employee directors. Deferred Awards are granted in the form of restricted stock units that require each recipient to complete a service period. Deferred Awards generally vest ratably over three years, except for those granted to non-employee directors, which generally vest after one year. Performance Awards are granted in the form of restricted stock units which have performance criteria that must be achieved for the awards to vest (the “Target Shares”) in addition to a service period requirement. For Performance Awards, an employee may earn from 0% to 300% of their Target Shares based on the terms of the award and the Company’s achievement of certain performance goals established at the beginning of the applicable performance period. The Performance Awards cliff vest, if earned, after completion of the applicable performance period, which is generally three years. The fair value of Deferred Awards and Performance Awards granted is based on the closing price of our common stock on the grant date. Stock-based compensation expense is recognized ratably over the related service period, reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. Stock-based compensation expense, as it relates to Performance Awards, is also adjusted based on the probability that the performance criteria will be achieved. Deferred Compensation Plan The Company has a deferred compensation plan (the “Deferred Compensation Plan”), which is a nonqualified plan, for eligible senior level employees. Under the Deferred Compensation Plan, a participant may elect to defer up to 80% of his or her base salary and/or up to 100% of his or her bonus to be earned for the year following the year in which the deferral election is made. The Deferred Compensation Plan also permits members of the Board of Directors to elect to defer payment of all or a portion of their retainer and other fees to be earned for the year following the year in which a deferral election is made. In addition, eligible employees and directors of the Company may also elect to defer payment of any shares of Company stock that are earned with respect to stock-based awards. Directors may elect to have all or a certain portion of their fees earned for their service on the Board invested in shares of the Company’s common stock. Such elections are irrevocable. The Company is not required to contribute to the Deferred Compensation Plan, but at its sole discretion, can make additional contributions on behalf of the participants. Deferred amounts are not subject to forfeiture and are deemed invested among investment funds offered under the Deferred Compensation Plan, as directed by each participant. Payments of deferred amounts (as adjusted for earnings and losses) are payable following separation from service or at a date or dates elected by the participant at the time the deferral is elected. Payments of deferred amounts are generally made in either a lump sum or in annual installments over a period not exceeding 15 years. All deferred amounts are payable in the form in which they were made, except for Board of Directors fees invested in shares of the Company’s common stock, which will be settled in shares of Company common stock. Earlier distributions are not permitted except in the case of an unforeseen hardship. The Company has established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability. The assets of the rabbi trust are general assets of the Company and, as such, would be subject to the claims of creditors in the event of bankruptcy or insolvency. Investments of the rabbi trust consist of mutual funds and Company common stock. The Deferred Compensation Plan liability, excluding Company common stock, is included within other long-term liabilities, and changes in the balance, except those relating to payments, are recognized as compensation expense within selling, general, and administrative expenses. The value of the mutual funds is included in other assets and related earnings and losses are recognized as investment income or loss, which is included within selling, general, and administrative expenses. Company stock deferrals are included within the equity section of the Company’s consolidated balance sheet as treasury stock and as a deferred compensation liability. Deferred stock is recorded at fair market value at the time of deferral, and any subsequent changes in fair market value are not recognized. Fair Value Measurement and Financial Instruments FASB ASC 820— Fair Value Measurement provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. This topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows: • Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities • Level 2 - inputs to the valuation techniques that are other than quoted prices, but are observable for the assets or liabilities, either directly or indirectly • Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities The Company’s cash and cash equivalents, accounts receivable, assets of the Company’s Deferred Compensation Plan, accounts payable, and revolving loan are all short-term in nature. As such, their carrying amounts approximate fair value and fall within Level 1 of the fair value hierarchy. The Company stock included in the Deferred Compensation Plan is not subject to fair value measurement. The Company’s derivative assets and liabilities include foreign exchange forward contracts that are measured at fair value using observable market inputs such as forward rates, our credit risk, and our counterparties’ credit risks. Based on these inputs, our derivative assets and liabilities are classified within Level 2 of the fair value hierarchy. The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets, such as intangible assets, fixed assets, and ROU assets. The Company reviews the carrying amounts of such assets when events indicate that their carrying amounts may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to fall within Level 3 of the fair value hierarchy. Recently Issued Accounting Standards Adopted in Fiscal 2021 In December 2019, the FASB issued guidance related to the accounting for income taxes. The guidance aims to simplify the accounting for income taxes by removing certain exceptions to the general principles within the current guidance and by clarifying and amending the current guidance. The guidance is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2020. We adopted this guidance in the First Quarter 2021. This adoption did not have a material impact on our consolidated financial statements. |
REVENUES
REVENUES | 6 Months Ended |
Jul. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | REVENUES Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The following table presents our revenues disaggregated by geography: Thirteen Weeks Ended Twenty-six Weeks Ended July 31, August 1, July 31, August 1, Net sales: (in thousands) South $ 164,630 $ 146,345 $ 330,368 $ 244,281 Northeast 84,954 82,937 179,976 134,767 West 59,854 55,314 122,077 92,576 Midwest 48,088 40,270 108,892 77,503 International and other 56,329 44,057 108,023 75,003 Total net sales $ 413,855 $ 368,923 $ 849,336 $ 624,130 The Company recognizes revenue, including shipping and handling fees billed to customers, upon purchase at the Company’s retail stores or when received by the customer if the product was purchased via e-commerce, net of coupon redemptions and anticipated sales returns. The Company deferred approximately $9.5 million and $5.7 million as of July 31, 2021 and August 1, 2020, respectively, based upon estimated time of delivery, at which point control passes to the customer, and is recorded in accrued expenses and other current liabilities. Sales tax collected from customers is excluded from revenue. For the sale of goods with a right of return, the Company recognizes revenue for the consideration it expects to be entitled to and calculates an allowance for estimated sales returns based upon the Company’s sales return experience. Adjustments to the allowance for estimated sales returns in subsequent periods are generally not material based on historical data, thereby reducing the uncertainty inherent in such estimates. The allowance for estimated sales returns, which is recorded in accrued expenses and other current liabilities, was approximately $3.1 million and $1.3 million as of July 31, 2021 and August 1, 2020, respectively. The Company’s private label credit card is issued to our customers for use exclusively at The Children’s Place stores and online at www.childrensplace.com and www.gymboree.com , and credit is extended to such customers by a third-party financial institution on a non-recourse basis to the Company. The private label credit card includes multiple performance obligations for the Company, including marketing and promoting the program on behalf of the bank and the operation of the loyalty rewards program. Included in the agreement with the third-party financial institution was an upfront bonus paid to the Company. The upfront bonus is recognized as revenue and allocated between brand and reward obligations. As the license of the Company’s brand is the predominant item in the performance obligation, the amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In measuring revenue and determining the consideration the Company is entitled to as part of a contract with a customer, the Company takes into account the related elements of variable consideration, such as additional bonuses, including profit-sharing, over the life of the program. Similar to the upfront bonus, the usage-based royalties and bonuses are recognized as revenue and allocated between the brand and reward obligations. The amount allocated to the brand obligation is recognized on a straight-line basis over the initial term. The amount allocated to the reward obligation is recognized on a point-in-time basis as redemptions under the loyalty program occur. In addition, the annual profit-sharing amount is estimated and recognized quarterly within an annual period when earned. The additional bonuses are amortized over the contract term based on anticipated progress against future targets and level of risk associated with achieving the targets. The Company has a points-based customer loyalty program in which customers earn points based on purchases and other promotional activities. These points can be redeemed for coupons to discount future purchases. A contract liability is estimated based on the standalone selling price of benefits earned by customers through the program and the related redemption experience under the program. The value of each point earned is recorded as deferred revenue and is included within accrued expenses and other current liabilities. The total contract liabilities related to this program were $7.1 million and $3.3 million as of July 31, 2021 and August 1, 2020, respectively. The Company’s policy with respect to gift cards is to record revenue as and when the gift cards are redeemed for merchandise. The Company recognizes gift card breakage income in proportion to the pattern of rights exercised by the customer when the Company expects to be entitled to breakage and the Company determines that it does not have a legal obligation to remit the value of the unredeemed gift card to the relevant jurisdiction as unclaimed or abandoned property and is recorded within net sales. Prior to their redemption, gift cards are recorded as a liability, included within accrued expenses and other current liabilities. The total contract liability related to gift cards issued was $12.8 million and $13.6 million as of July 31, 2021 and August 1, 2020, respectively. The liability is estimated based on expected breakage that considers historical patterns of redemption. The following table provides the reconciliation of the contract liability related to gift cards: Contract Liability (in thousands) Balance at January 30, 2021 $ 13,634 Gift cards sold 10,344 Gift cards redeemed (9,803) Gift card breakage (1,350) Balance at July 31, 2021 12,825 |
LEASES
LEASES | 6 Months Ended |
Jul. 31, 2021 | |
Leases [Abstract] | |
LEASES | LEASES The Company has operating leases for retail stores, corporate offices, distribution facilities, and certain equipment. Our leases have remaining lease terms ranging from less than 1 year up to 9 years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the lease early. The lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. For operating leases, the ROU asset is initially and subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, less any accrued lease payments and unamortized lease incentives. For finance leases, the ROU asset is initially measured at cost and subsequently amortized using the straight-line method generally from the lease commencement date to the earlier of the end of its useful life or the end of the lease term. The discount rate is the rate implicit in the lease unless that rate cannot be readily determined. In that case, the Company is required to use its incremental borrowing rate. The discount rate for a lease is determined based on the information available at lease commencement. In general, the Company accounts for the underlying leased asset and applies a discount rate at the lease level. However, there are certain non-real estate leases for which the Company utilizes the portfolio method by aggregating similar leased assets based on the underlying lease term. The Company has made an accounting policy election by class of underlying asset to not apply the recognition requirements of FASB ASC 842— Leases (“Topic 842”) to leases with an initial term of 12 months or less. Leases with an initial lease term of 12 months or less are not recorded on the balance sheet. The Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components. The Company has elected a policy to account for lease and non-lease components as a single component for all asset classes. In certain leases, the Company has the right to exercise lease renewal options. Renewal option periods are included in the measurement of lease ROU assets and lease liabilities where the exercise is reasonably certain to occur. As of the periods presented, the Company’s finance leases were not material to the consolidated balance sheets, consolidated statements of operations, or consolidated statements of cash flows. The Company has certain lease agreements structured with both a fixed base rent and a contingent rent based on a percentage of sales over contractual levels, others with only contingent rent based on a percentage of sales, and some with a fixed base rent adjusted periodically for inflation or changes in fair market value of the underlying real estate. Contingent rent is recognized as sales occur. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company records all occupancy costs in cost of sales, except administrative office buildings, which are recorded in selling, general, and administrative expenses. In April 2020, the FASB staff released guidance regarding rent concessions related to the effects of the COVID-19 pandemic to allow for a temporary practical expedient (the “COVID-19 expedient”) to account for rent concessions as though enforceable rights and obligations for those concessions existed in the lease agreements. The election is available for concessions related to the effects of the COVID-19 pandemic that result in the total payments required by the modified contract being substantially the same as or less than total payments required by the original contract. Upon the temporary closure of the Company’s store fleet in March 2020, the Company began negotiating for concessions of certain rent payments for the time the stores were impacted. While more than 99% of our stores have reopened, these discussions and negotiations have remained ongoing and were substantially completed at the end of Second Quarter 2021. For the lease concessions that have been agreed upon and executed, the Company did not reassess each existing contract to determine whether enforceable rights and obligations for concessions existed and elected not to apply the lease modification guidance in ASC 842 to those contracts that shared similar characteristics. Rather, the Company accounts for COVID-19 lease concessions as reductions to variable lease cost. The following components of lease expense are included in the Company’s consolidated statements of operations. Thirteen Weeks Ended Twenty-six Weeks Ended July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020 (in thousands) Operating lease cost $ 24,272 $ 39,042 $ 50,030 $ 79,194 Variable lease cost (1) 10,847 8,692 14,221 19,825 Total lease cost $ 35,119 $ 47,734 $ 64,251 $ 99,019 ____________________________________________ (1) Includes short term leases with lease periods of less than 12 months as well as lease abatements accounted for as reductions to variable lease costs under the COVID-19 expedient of approximately $2.3 million and $10.3 million during the Second Quarter 2021 and Year-To-Date 2021, respectively. As of July 31, 2021, the weighted-average remaining operating lease term was 4.3 years, and the weighted-average discount rate for operating leases was 5.3%. Cash paid for amounts included in the measurement of operating lease liabilities during Year-To-Date 2021 was approximately $107.6 million. ROU assets obtained in exchange for new operating lease liabilities were approximately $6.1 million during Year-To-Date 2021. As of July 31, 2021, the maturities of lease liabilities were as follows: July 31, 2021 (in thousands) Remainder of 2021 $ 82,045 2022 72,304 2023 49,041 2024 27,693 2025 18,549 Thereafter 50,872 Total lease payments (1) $ 300,504 Less: imputed interest $ (15,795) Present value of lease liabilities $ 284,709 ____________________________________________ (1) For leases in which the Company applied the COVID-19 expedient, it did not remeasure its ROU assets and lease liabilities for rent concessions specific to Fiscal 2021 and beyond. These amounts will be recognized as variable rent costs in future periods in the amount of $27.0 million. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 6 Months Ended |
Jul. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | INTANGIBLE ASSETS On April 4, 2019, the Company acquired certain intellectual property and related assets (the “Gymboree Assets”) of Gymboree Group, Inc. and related entities, which included the worldwide rights to the names “Gymboree” and “Crazy 8” and other intellectual property, including trademarks, domain names, copyrights, and customer databases. These intangible assets, inclusive of acquisition costs, are recorded in the long-term assets section of the consolidated balance sheets. The Company’s intangible assets include both indefinite and finite assets. Intangible assets with indefinite lives consist primarily of trademarks and acquired trade names, which are tested for impairment annually or whenever circumstances indicate that a decline in value may have occurred. The Company estimates the fair value of these intangible assets based on an income approach using the relief-from-royalty method. The Company’s finite-lived intangible assets consist primarily of customer lists and other acquisition-related assets. Finite-lived intangible assets are amortized over their estimated useful economic lives and are reviewed for impairment when factors indicate that an impairment may have occurred. The Company recognizes an impairment charge when the estimated fair value of the intangible asset is less than its carrying value. The Company’s intangible assets were as follows: July 31, 2021 Useful life Gross amount Accumulated amortization Net amount (in thousands) Gymboree tradename (1) Indefinite $ 69,953 $ — $ 69,953 Crazy 8 tradename (1) 5 years 4,000 (1,861) 2,139 Customer databases (2) 3 years 3,000 (2,328) 672 Total intangibles, net $ 76,953 $ (4,189) $ 72,764 : January 30, 2021 Useful life Gross amount Accumulated amortization Net amount (in thousands) Gymboree tradename (1) Indefinite $ 69,953 $ — $ 69,953 Crazy 8 tradename (1) 5 years 4,000 (1,461) 2,539 Customer databases (2) 3 years 3,000 (1,827) 1,173 Total intangibles, net $ 76,953 $ (3,288) $ 73,665 : August 1, 2020 Useful life Gross amount Accumulated amortization Net amount (in thousands) Gymboree tradename (1) Indefinite $ 69,953 $ — $ 69,953 Crazy 8 tradename (1) 5 years 4,000 (1,061) 2,939 Customer databases (2) 3 years 3,000 (1,327) 1,673 Total intangibles, net $ 76,953 $ (2,388) $ 74,565 ____________________________________________ (1) Included within Tradenames, net in the consolidated balance sheets. (2) Included within Other assets in the consolidated balance sheets. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jul. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
STOCKHOLDERS’ EQUITY | STOCKHOLDERS’ EQUITY Share Repurchase Program In March 2018, the Board of Directors authorized a $250 million share repurchase program (the “2018 Share Repurchase Program”). As of July 31, 2021, there was approximately $79.5 million remaining on the 2018 Share Repurchase Program. Under this program, the Company may repurchase shares on the open market at current market prices at the time of purchase or in privately negotiated transactions. The timing and actual number of shares repurchased under a program will depend on a variety of factors, including price, corporate and regulatory requirements, and other market and business conditions. The Company may suspend or discontinue the program at any time and may thereafter reinstitute purchases, all without prior announcement. In March 2020, the Company suspended share repurchases, other than to satisfy withholding tax requirements of equity award recipients, due to the COVID-19 pandemic. Pursuant to the Company’s practice, including due to restrictions imposed by the Company’s insider trading policy during black-out periods, the Company withholds and repurchases shares of vesting stock awards and makes payments to taxing authorities as required by law to satisfy the withholding tax requirements of all equity award recipients. The Company’s payment of the withholding taxes in exchange for the surrendered shares constitutes a repurchase of its common stock. The Company also acquires shares of its common stock in conjunction with liabilities owed under the Company’s Deferred Compensation Plan, which are held in treasury. The following table summarizes the Company’s share repurchases: Twenty-six Weeks Ended July 31, 2021 August 1, 2020 Shares Value Shares Value (in thousands) Share repurchases related to: 2018 Share Repurchase Program 147 $ 13,465 292 $ 15,444 Shares acquired and held in treasury under Deferred Compensation Plan 1.8 $ 139 1.1 $ 69 In accordance with the FASB ASC 505— Equity , the par value of the shares retired is charged against common stock and the remaining purchase price is allocated between additional paid-in capital and retained earnings. The portion charged against additional paid-in capital is determined using a pro-rata allocation based on total shares outstanding. Related to all shares retired during Year-To-Date 2021 and Year-To-Date 2020, approximately $10.8 million and $10.6 million respectively, were charged to retained earnings. Dividends In March 2020, the Company announced it had temporarily suspended its dividend payments due to the COVID-19 pandemic. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by the Company’s Board of Directors based on a number of factors, including business and market conditions, the Company’s financial performance, and other investment priorities. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jul. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION The following table summarizes the Company’s stock-based compensation expense: Thirteen Weeks Ended Twenty-six Weeks Ended July 31, August 1, July 31, August 1, (In thousands) Deferred Awards $ 3,188 $ 3,193 $ 6,766 $ 7,507 Performance Awards 7,338 335 11,676 (3,394) Total stock-based compensation expense (1) $ 10,526 $ 3,528 $ 18,442 $ 4,113 ____________________________________________ (1) A portion of stock-based compensation is included in cost of sales. Approximately $0.8 million and $0.9 million during the Second Quarter 2021 and the Second Quarter 2020, respectively, were included in cost of sales. During Year-To-Date 2021 and Year-To-Date 2020, approximately $1.7 million an d $1.6 million, respectively, were included within cost of sales (exclusive of depreciation and amortization). All other stock-based compensation is included in selling, general, and administrative expenses. The Company recognized a tax benefit related to stock-based compensation expense of approximately $4.8 million and $1.1 million during Year-To-Date 2021 and Year-To-Date 2020, respectively. Changes in the Company’s Unvested Stock Awards During Year-To-Date 2021 Deferred Awards Number of Weighted (in thousands) Unvested Deferred Awards, beginning of period 550 $ 55.43 Granted 143 75.76 Vested (217) 86.18 Forfeited (3) 97.00 Unvested Deferred Awards, end of period 473 $ 47.12 Total unrecognized stock-based compensation expense related to unvested Deferred Awards approximated $20.4 million as of July 31, 2021, which will be recognized over a weighted average period of approximately 2.0 years. Performance Awards Number of Shares (1) Weighted (in thousands) Unvested Performance Awards, beginning of period 350 $ 74.37 Granted 144 73.73 Shares earned in excess of (below) target (22) 65.34 Vested shares, including shares earned (118) 95.61 Forfeited (1) 108.21 Unvested Performance Awards, at end of period 353 $ 67.50 ____________________________________________ (1) For those awards in which the performance period is complete, the number of unvested shares is based on actual shares that will vest upon completion of the service period. |
EARNINGS PER COMMON SHARE
EARNINGS PER COMMON SHARE | 6 Months Ended |
Jul. 31, 2021 | |
Earnings Per Share [Abstract] | |
EARNINGS PER COMMON SHARE | EARNINGS PER COMMON SHARE The following table reconciles net income (loss) and share amounts utilized to calculate basic and diluted earnings (loss) per common share: Thirteen Weeks Ended Twenty-six Weeks Ended July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020 (in thousands) Net income (loss) $ 24,095 $ (46,639) $ 69,300 $ (161,449) Basic weighted average common shares 14,780 14,634 14,725 14,623 Dilutive effect of stock awards 282 — 307 — Diluted weighted average common shares 15,062 14,634 15,032 14,623 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 6 Months Ended |
Jul. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT, NET | PROPERTY AND EQUIPMENT, NET Property and equipment, net consist of the following: July 31, 2021 January 30, 2021 August 1, 2020 (in thousands) Property and equipment: Land and land improvements $ 3,403 $ 3,403 $ 3,403 Building and improvements 36,045 36,133 35,927 Material handling equipment 61,649 58,034 56,748 Leasehold improvements 214,229 216,989 228,183 Store fixtures and equipment 224,238 226,404 235,386 Capitalized software 313,371 296,967 288,934 Construction in progress 5,339 15,211 15,620 858,274 853,141 864,201 Less accumulated depreciation and amortization (692,716) (671,340) (663,238) Property and equipment, net $ 165,558 $ 181,801 $ 200,963 At July 31, 2021, the Company reviewed its store related long-lived assets for indicators of impairment, and performed a recoverability test if indicators were identified. Based on the results of the analysis performed, the Company was not required to record an asset impairment charge for the Second Quarter 2021. During Year-To-Date 2021, the Company was not required to record an asset impairment charge. At August 1, 2020, the Company performed impairment testing on 824 stores with a total net book value of approximately $46.8 million. During the Second Quarter 2020, the Company recorded asset impairment charges of $0.5 million primarily for six stores. During Year-To-Date 2020, the Company recorded asset impairment charges of $37.6 million, inclusive of ROU assets, primarily for 418 stores. These charges were related to underperforming stores identified in our |
DEBT
DEBT | 6 Months Ended |
Jul. 31, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Revolving Credit Facilit y The Company and certain of its subsidiaries maintain an asset-based revolving credit facility (the “ABL Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”), Bank of America, N.A., HSBC Business Credit (USA) Inc., and JPMorgan Chase Bank, N.A., as lenders (collectively, the “Lenders”) and Wells Fargo, as Administrative Agent, Collateral Agent, and Swing Line Lender. The ABL Credit Facility, which expires in May 2024, consists of a $360 million asset-based revolving credit facility that was increased from $325 million as a result of finalizing an amendment with the Lenders on April 24, 2020 to secure the Company an additional $35 million available under the accordion feature for a period of one year. The ABL Credit Facility includes a $25 million Canadian sublimit and a $50 million sublimit for standby and documentary letters of credit. On October 5, 2020, the Company further amended the ABL Credit Facility to provide for certain changes that permitted the issuance of an $80 million term loan (the “Term Loan”) on that date and align certain terms of the ABL Credit Facility to those of the Term Loan. The Term Loan is discussed in more detail below. On April 23, 2021, the Company and its Lenders extended the $35 million of additional availability for an additional year until April 23, 2022. Borrowings outstanding under the ABL Credit Facility bear interest, at the Company’s option, at: (i) the prime rate, plus a margin of 1.75% to 1.88% based on the amount of the Company’s average excess availability under the facility; or (ii) the London InterBank Offered Rate, or “LIBOR”, for an interest period of one, two, three, or six months, as selected by the Company, plus a margin of: a) 2.50% to 2.75% and b) 1.00%, based on the amount of the Company’s average excess availability under the facility. The Company is charged a fee of 0.25% on the unused portion of the commitments. Letter of credit fees range from 1.25% to 1.38% for commercial letters of credit and from 2.00% to 2.25% for standby letters of credit. Letter of credit fees are determined based on the amount of the Company’s average excess availability under the facility. 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 and certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves. The outstanding obligations under the ABL Credit Facility may be accelerated upon the occurrence of certain events, including, among others, non-payment, breach of covenants, the institution of insolvency proceedings, defaults under other material indebtedness, and a change of control, subject, in the case of certain defaults, to the expiration of applicable grace periods. The Company is not subject to any early termination fees. 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. Credit extended under the ABL Credit Facility is secured by a first priority security interest in substantially all of the Company’s U.S. and Canadian assets, excluding intellectual property, software, equipment, and fixtures. In connection with the Term Loan, the Lenders under the ABL Credit Facility entered into an intercreditor agreement with the Term Loan lender and were granted a second priority security interest in the Term Loan collateral, which includes the Company’s intellectual property, certain furniture, fixtures and equipment, and pledges of subsidiary capital stock. As of July 31, 2021 the Company has capitalized an aggregate of approximately $6.3 million in deferred financing costs related to the ABL Credit Facility. The unamortized balance of deferred financing costs as of July 31, 2021 was approximately $1.2 million. Unamortized deferred financing costs are amortized over the remaining term of the ABL Credit Facility. The table below presents the components of the Company’s ABL Credit Facility: July 31, January 30, August 1, (in millions) Credit facility maximum $ 360.0 $ 360.0 $ 360.0 Borrowing base (1) 354.0 282.2 326.7 Outstanding borrowings 199.8 169.8 250.8 Letters of credit outstanding—standby 7.4 8.2 6.2 Utilization of credit facility at end of period 207.2 178.0 257.0 Availability (2) $ 146.8 $ 104.2 $ 69.7 Interest rate at end of period 3.8 % 4.2 % 4.1 % Year-To-Date 2021 Fiscal 2020 Year-To-Date 2020 Average end of day loan balance during the period $ 213.5 $ 216.2 $ 233.1 Highest end of day loan balance during the period 269.7 $ 275.6 $ 272.2 Average interest rate 3.9 % 3.8 % 3.5 % ____________________________________________ (1) Lower of the credit facility maximum or the total borrowing base collateral. (2) The sub-limit availability for letters of credit was $42.6 million at July 31, 2021, $41.8 million at January 30, 2021, and $43.8 million at August 1, 2020. Long-Term Debt Long-term debt is solely comprised of the Term Loan transaction completed during the third quarter of 2020, as discussed below. On October 5, 2020, the Company and certain of its subsidiaries entered into a loan agreement (the “Loan Agreement”) dated October 5, 2020 with SLR Credit Solutions (formerly known as Crystal Financial LLC), as Lender, Administrative Agent, and Collateral Agent, providing for an $80 million Term Loan. The net proceeds from the Term Loan, after deducting related fees and expenses, were used to repay borrowings under the Company’s ABL Credit Facility. The Term Loan: (i) matures on the earlier of October 5, 2025 or the maturity date under the ABL Credit Facility, currently in May 2024; (ii) bears interest, payable monthly, at the greater of (a) the three month LIBOR Rate published in the Wall Street Journal, and (b) 1.00%, plus 7.75% or 8.00% depending on the average excess availability of credit under the ABL Credit Facility, adjusted quarterly; and (iii) amortizes by (x) 5.00% per annum payable quarterly beginning with the fiscal quarter ending on or around July 31, 2021 through the fiscal quarter ending on or around April 30, 2022, (y) 7.50% per annum payable quarterly beginning with the fiscal quarter ending on or around July 31, 2022 through the fiscal quarter ending on or around April 30, 2023, and (z) 10.00% per annum payable quarterly thereafter. For the Second Quarter 2021 and Year-To-Date 2021, the Company recognized $1.8 million and $3.6 million, respectively, within interest expense related to the Term Loan. The Term Loan is secured by a first priority security interest in the Company’s intellectual property, certain furniture, fixtures and equipment, and pledges of subsidiary capital stock, and a second priority security interest in the collateral securing the ABL Credit Facility. The Term Loan is guaranteed, subject to certain exceptions, by each of the Company’s subsidiaries that guarantees the ABL Credit Facility. The 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 Loan Agreement, plus accrued and unpaid interest. Among other covenants, the Loan Agreement limits the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, including under the ABL Credit Facility, to make certain investments, acquisitions, dispositions or restricted payments, or to change the nature of its business. These covenants are substantially the same covenants as provided in the ABL Credit Facility. The Loan Agreement contains customary events of default, which include (subject in certain cases to customary grace and cure periods), nonpayment of principal or interest, breach of other covenants in the Loan Agreement, failure to pay certain other indebtedness, including under the ABL Credit Facility, and certain events of bankruptcy, insolvency or reorganization. The following table summarizes the current and long-term portion of the long-term debt: July 31, (in thousands) Term Loan principal $ 80,000 Less: Unamortized discount, net (964) Less: Unamortized debt issuance costs, net (1,057) Term Loan, net 77,979 Less: Current portion, net (3,770) Long-term debt, net $ 74,209 Future principal payments of long-term debt due in each of the next four years subsequent to July 31, 2021 are as follows: Period Future Principal Payments (in thousands) Remainder of 2021 $ 2,000 2022 5,500 2023 7,500 2024 65,000 2025 — Total future principal payments $ 80,000 |
LEGAL AND REGULATORY MATTERS
LEGAL AND REGULATORY MATTERS | 6 Months Ended |
Jul. 31, 2021 | |
Legal And Regulatory Matters [Abstract] | |
LEGAL AND REGULATORY MATTERS | LEGAL AND REGULATORY MATTERS The Company is a defendant in Rael v. The Children’s Place, Inc. , a purported class action, pending in the U.S. District Court, Southern District of California. In the initial complaint filed in February 2016, the plaintiff alleged that the Company falsely advertised discount prices in violation of California’s Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act. The plaintiff filed an amended complaint in April 2016, adding allegations of violations of other state consumer protection laws. In August 2016, the plaintiff filed a second amended complaint, adding an additional plaintiff and removing the other state law claims. The plaintiffs’ second amended complaint seeks to represent a class of California purchasers and seeks, among other items, injunctive relief, damages, and attorneys’ fees and costs. The Company engaged in mediation proceedings with the plaintiffs in December 2016 and April 2017. The parties reached an agreement in principle in April 2017, and signed a definitive settlement agreement in November 2017, to settle the matter on a class basis with all individuals in the U.S. who made a qualifying purchase at The Children’s Place from February 11, 2012 through January 28, 2020, the date of preliminary approval by the court of the settlement. The Company submitted its memorandum in support of final approval of the class settlement on March 2, 2021. On March 29, 2021, the court granted final approval of the class settlement and denied plaintiff’s motion for attorney’s fees, with the attorney’s fees to be decided after the class recovery amount has been determined. The settlement provides merchandise vouchers for qualified class members who submit valid claims, as well as payment of legal fees and expenses and claims administration expenses. In connection with the proposed settlement, the Company recorded a reserve for $5.0 million in its consolidated financial statements in the first quarter of 2017. The Company is also involved in various legal proceedings arising in the normal course of business. In the opinion of management, any ultimate liability arising out of these proceedings will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jul. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company computes income taxes using the liability method. This method requires recognition of deferred tax assets and liabilities, measured by enacted rates, attributable to temporary differences between the financial statement and income tax basis of assets and liabilities. The Company’s deferred tax assets and liabilities are comprised largely of differences relating to depreciation and amortization, rent expense, inventory, stock-based compensation, net operating loss carryforwards, tax credits, and various accruals and reserves. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in response to the COVID-19 pandemic. Included in the CARES Act is a provision that allows net operating losses (“NOLs”) incurred in taxable years 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to offset 100% of taxable income and generate a refund of previously paid income taxes. The Company has evaluated the impact of the CARES Act and expects the NOL carryback provision of the CARES Act to result in a material cash benefit to the Company. The Company’s effective tax rate for the Second Quarter 2021 was a tax provision of 27.3% as compared to a tax benefit of 30.5% during the Second Quarter 2020. The Company’s income tax expense for the Second Quarter 2021 was $9.1 million compared to an income tax benefit of $20.5 million in the Second Quarter 2020. The decrease in the effective tax rate for the Second Quarter 2021 compared to the Second Quarter 2020 was primarily driven by the tax benefits from the enactment of the CARES Act in the prior year. The Company’s effective tax rate for Year-To-Date 2021 was a tax provision of 26.8% as compared to a tax benefit of 33.3% for Year-To-Date 2020. The Company’s income tax expense for the Year-To-Date 2021 was $25.3 million compared to an income tax benefit of $80.7 million in Year-To-Date 2020. The decrease in the effective tax rate for Year-To-Date 2021 compared to Year-To-Date 2020 was primarily driven by the tax benefits from the enactment of the CARES Act in the prior year. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes. The total amount of unrecognized tax benefits as of July 31, 2021, January 30, 2021, and August 1, 2020 were $8.0 million, $7.9 million, and $6.8 million, respectively, and is included within non-current liabilities. The Company recognized additional interest expense related to unrecognized tax benefits of less than $0.1 million in the Second Quarter 2021 and the Second Quarter 2020. During each of Year-To-Date 2021 and Year-To-Date 2020, the Company recognized less than $0.1 million of additional interest expense. The Company is subject to tax in the United States and foreign jurisdictions, including Canada and Hong Kong. The Company, including its domestic subsidiaries, files a consolidated income tax return for federal income tax purposes. The Company is no longer subject to income tax examinations by U.S. federal, state and local, or foreign tax authorities for fiscal tax years 2014 and prior, with the exception of Hong Kong, which is open through fiscal tax year 2013 due to an ongoing tax examination. Management believes that an adequate provision has been made for any adjustments that may result from tax examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues arise as a result of a tax audit, and are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jul. 31, 2021 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION In accordance with FASB ASC 280— Segment Reporting , the Company reports 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 at www.childrensplace.com and www.gymboree.com . Included in The Children’s Place U.S. segment are the Company’s U.S. and Puerto Rico-based stores and revenue from the Company’s U.S.-based wholesale business. Included in The Children’s Place International segment are the Company’s Canadian-based stores, revenue from the Company’s Canadian-based wholesale business, and revenue from international franchisees. The Company measures its segment profitability based on operating income, defined as income 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. The Company periodically reviews these allocations and adjusts them based upon changes in business circumstances. Net sales to external customers are derived from merchandise sales, and the Company has no major customers that individually account for more than 10% of its net sales. As of July 31, 2021, The Children’s Place U.S. had 615 stores and The Children’s Place International had 93 stores. As of August 1, 2020, The Children’s Place U.S. had 711 stores and The Children’s Place International had 113 stores. The following tables provide segment level financial information: Thirteen Weeks Ended Twenty-six Weeks Ended July 31, August 1, July 31, August 1, (in thousands) Net sales (1) : ] The Children’s Place U.S. $ 372,319 $ 333,034 $ 771,978 $ 567,982 The Children’s Place International (2) 41,536 35,889 77,358 56,148 Total net sales $ 413,855 $ 368,923 $ 849,336 $ 624,130 Operating income (loss) (1) : The Children’s Place U.S. $ 34,355 $ (62,623) $ 98,267 $ (221,959) The Children’s Place International 3,494 (1,861) 5,489 (15,668) Total operating income (loss) $ 37,849 $ (64,484) $ 103,756 $ (237,627) Operating income (loss) as a percent of net sales (1) : The Children’s Place U.S. 9.2 % (18.8) % 12.7 % (39.1) % The Children’s Place International 8.4 % (5.2) % 7.1 % (27.9) % Total operating income (loss) as a percent of net sales 9.1 % (17.5) % 12.2 % (38.1) % Depreciation and amortization: The Children’s Place U.S. $ 13,303 $ 15,594 $ 27,614 $ 31,780 The Children’s Place International 1,089 1,114 2,339 2,816 Total depreciation and amortization $ 14,392 $ 16,708 $ 29,953 $ 34,596 Capital expenditures: The Children’s Place U.S. $ 6,385 $ 8,433 $ 12,872 $ 13,633 The Children’s Place International 385 102 624 635 Total capital expenditures $ 6,770 $ 8,535 $ 13,496 $ 14,268 ____________________________________________ (1) Net sales and operating income (loss) were significantly impacted by the COVID-19 pandemic in the Second Quarter 2020. (2) Net sales from The Children’s Place International are primarily derived from revenues from Canadian operations. 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. July 31, 2021 January 30, 2021 August 1, 2020 Total assets: (in thousands) The Children’s Place U.S. $ 1,036,830 $ 1,054,339 $ 1,088,348 The Children’s Place International 91,618 85,788 79,591 Total assets $ 1,128,448 $ 1,140,127 $ 1,167,939 |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 6 Months Ended |
Jul. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS The Company is exposed to gains and losses resulting from fluctuations in foreign currency exchange rates attributable to inventory purchases denominated in a foreign currency. Specifically, the Company’s Canadian subsidiary’s functional currency is the Canadian dollar, but it purchases inventory from suppliers in U.S. dollars. In order to mitigate the variability of cash flows associated with certain of these forecasted inventory purchases, the Company enters, from time to time, into foreign exchange forward contracts. These contracts typically mature within 12 months. The Company does not use forward contracts to engage in currency speculation, and it does not enter into derivative financial instruments for trading purposes. The Company accounts for all of its derivatives and hedging activity under FASB ASC 815— Derivatives and Hedging . Under the Company’s risk management policy and in accordance with guidance under the topic, in order to qualify for hedge accounting treatment, a derivative must be considered highly effective at offsetting changes in either the hedged item’s cash flows or fair value. Additionally, the hedge relationship must be documented to include the risk management objective and strategy, the hedging instrument, the hedged item, the risk exposure, and how hedge effectiveness will be assessed prospectively and retrospectively. The Company formally measures effectiveness of its hedging relationships both at the hedge inception and on an ongoing basis. The Company would discontinue hedge accounting under a foreign exchange forward contract prospectively: (i) if management determines that the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item, (ii) when the derivative expires or is terminated, (iii) if the forecasted transaction being hedged by the derivative is no longer probable of occurring, or (iv) if management determines that designation of the derivative as a hedge instrument is no longer appropriate. All derivative instruments are presented at gross fair value on the consolidated balance sheets within either prepaid expenses and other current assets or accrued expenses and other current liabilities. As of July 31, 2021, the Company did not have any open foreign exchange forward contracts. As of August 1, 2020, the Company had foreign exchange forward contracts with an aggregate notional amount of $9.5 million, and the fair value of the derivative instruments was an asset of $1.3 million. As these foreign exchange forward contracts were measured at fair value using observable market inputs such as forward rates, the Company’s credit risk, and our counterparties’ credit risks, they were classified within Level 2 of the fair value hierarchy. Cash settlements related to these forward contracts were recorded in cash flows from operating activities within the consolidated statements of cash flows. For derivative instruments that are designated and qualify as cash flow hedges, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income (“OCI”) and reclassified into earnings within cost of sales (exclusive of depreciation and amortization) in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing hedge ineffectiveness are recognized in earnings within selling, general, and administrative expenses, consistent with where the Company records realized and unrealized foreign currency gains and losses on transactions in foreign denominated currencies. There were no losses related to hedge ineffectiveness during Year-To-Date 2021 or Year-To-Date 2020. Changes in fair value associated with derivatives that were not designated and qualified as cash flow hedges were recognized in earnings within selling, general, and administrative expenses. During Year-To-Date 2021, there were no derivatives that qualified as cash flow hedges. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jul. 31, 2021 | |
Accounting Policies [Abstract] | |
Consolidation | Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany balances and transactions have been eliminated. As of July 31, 2021 and August 1, 2020, the Company did not have any investments in unconsolidated affiliates. FASB ASC 810— Consolidation is considered when determining whether an entity is subject to consolidation. |
Fiscal Year | Fiscal YearThe Company’s fiscal year is a 52-week or 53-week period ending on the Saturday on or nearest to January 31. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and amounts of revenues and expenses reported during the period. Actual results could differ from the assumptions used and estimates made by management, which could have a material impact on the Company’s financial position or results of operations. Significant estimates inherent in the preparation of the consolidated financial statements include: reserves for the realizability of inventory; reserves for litigation and other contingencies; useful lives and impairments of long-lived assets; fair value measurements; accounting for income taxes and related uncertain tax positions; insurance reserves; intangible assets; valuation of stock-based compensation awards and related estimated forfeiture rates, among others. |
Reclassifications | Reclassifications Certain reclassifications have been made to prior periods' financial statements to conform to the current period's presentation. |
Inventories | Inventories Inventories, which consist primarily of finished goods, are stated at the lower of cost or net realizable value, with cost determined on an average cost basis. The Company capitalizes certain buying, design, and supply chain costs in inventory, and these costs are reflected within cost of sales as the inventories are sold. Inventory shrinkage is estimated in interim periods based upon the historical results of physical inventory counts in the context of current year facts and circumstances. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company periodically reviews its long-lived assets when events indicate that their carrying value may not be recoverable. Such events include historical trends or projected trends of cash flow losses or a future expectation that the Company will sell or dispose of an asset significantly before the end of its previously estimated useful life. In reviewing for impairment, the Company groups its long-lived assets at the lowest possible level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The Company reviews all stores that have reached comparable sales status, or sooner if circumstances should dictate, on at least an annual basis. The Company believes waiting this period of time allows a store to reach a maturity level where a more comprehensive analysis of financial performance can be performed. For each store that shows indications of impairment, the Company performs a recoverability test comparing estimated undiscounted future cash flows to the carrying value of the related long-lived assets. If the undiscounted cash flows are less than the related net book value of the long-lived assets, they are written down to their fair market value. The Company primarily uses discounted future cash flows directly associated with those assets to determine fair market value of long-lived assets and right-of-use (“ROU”) assets. In evaluating future cash flows, the Company considers external and internal factors. External factors comprise the local environment in which the store resides, including mall traffic, competition, and their effect on sales trends, as well as macroeconomic factors, such as global pandemics. Internal factors include the Company’s ability to gauge the fashion taste of its customers, control variable costs such as cost of sales and payroll, and in certain cases, its ability to renegotiate lease costs. |
Stock-based Compensation | Stock-based Compensation The Company generally grants time-vesting stock awards (“Deferred Awards”) and performance-based stock awards (“Performance Awards”) to employees at management levels. The Company also grants Deferred Awards to its non-employee directors. Deferred Awards are granted in the form of restricted stock units that require each recipient to complete a service period. Deferred Awards generally vest ratably over three years, except for those granted to non-employee directors, which generally vest after one year. Performance Awards are granted in the form of restricted stock units which have performance criteria that must be achieved for the awards to vest (the “Target Shares”) in addition to a service period requirement. For Performance Awards, an employee may earn from 0% to 300% of their Target Shares based on the terms of the award and the Company’s achievement of certain performance goals established at the beginning of the applicable performance period. The Performance Awards cliff vest, if earned, after completion of the applicable performance period, which is generally three years. The fair value of Deferred Awards and Performance Awards granted is based on the closing price of our common stock on the grant date. Stock-based compensation expense is recognized ratably over the related service period, reduced for estimated forfeitures of those awards not expected to vest due to employee turnover. Stock-based compensation expense, as it relates to Performance Awards, is also adjusted based on the probability that the performance criteria will be achieved. |
Deferred Compensation Plan | Deferred Compensation Plan The Company has a deferred compensation plan (the “Deferred Compensation Plan”), which is a nonqualified plan, for eligible senior level employees. Under the Deferred Compensation Plan, a participant may elect to defer up to 80% of his or her base salary and/or up to 100% of his or her bonus to be earned for the year following the year in which the deferral election is made. The Deferred Compensation Plan also permits members of the Board of Directors to elect to defer payment of all or a portion of their retainer and other fees to be earned for the year following the year in which a deferral election is made. In addition, eligible employees and directors of the Company may also elect to defer payment of any shares of Company stock that are earned with respect to stock-based awards. Directors may elect to have all or a certain portion of their fees earned for their service on the Board invested in shares of the Company’s common stock. Such elections are irrevocable. The Company is not required to contribute to the Deferred Compensation Plan, but at its sole discretion, can make additional contributions on behalf of the participants. Deferred amounts are not subject to forfeiture and are deemed invested among investment funds offered under the Deferred Compensation Plan, as directed by each participant. Payments of deferred amounts (as adjusted for earnings and losses) are payable following separation from service or at a date or dates elected by the participant at the time the deferral is elected. Payments of deferred amounts are generally made in either a lump sum or in annual installments over a period not exceeding 15 years. All deferred amounts are payable in the form in which they were made, except for Board of Directors fees invested in shares of the Company’s common stock, which will be settled in shares of Company common stock. Earlier distributions are not permitted except in the case of an unforeseen hardship. The Company has established a rabbi trust that serves as an investment to shadow the Deferred Compensation Plan liability. The assets of the rabbi trust are general assets of the Company and, as such, would be subject to the claims of creditors in the event of bankruptcy or insolvency. Investments of the rabbi trust consist of mutual funds and Company common stock. The Deferred Compensation Plan liability, excluding Company common stock, is included within other long-term liabilities, and changes in the balance, except those relating to payments, are recognized as compensation expense within selling, general, and administrative expenses. The value of the mutual funds is included in other assets and related earnings and losses are recognized as investment income or loss, which is included within selling, general, and administrative expenses. Company stock deferrals are included within the equity section of the Company’s consolidated balance sheet as treasury stock and as a deferred compensation liability. Deferred stock is recorded at fair market value at the time of deferral, and any subsequent changes in fair market value are not recognized. |
Fair Value Measurement and Financial Instruments | Fair Value Measurement and Financial Instruments FASB ASC 820— Fair Value Measurement provides a single definition of fair value, together with a framework for measuring it, and requires additional disclosure about the use of fair value to measure assets and liabilities. This topic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows: • Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities • Level 2 - inputs to the valuation techniques that are other than quoted prices, but are observable for the assets or liabilities, either directly or indirectly • Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities The Company’s cash and cash equivalents, accounts receivable, assets of the Company’s Deferred Compensation Plan, accounts payable, and revolving loan are all short-term in nature. As such, their carrying amounts approximate fair value and fall within Level 1 of the fair value hierarchy. The Company stock included in the Deferred Compensation Plan is not subject to fair value measurement. The Company’s derivative assets and liabilities include foreign exchange forward contracts that are measured at fair value using observable market inputs such as forward rates, our credit risk, and our counterparties’ credit risks. Based on these inputs, our derivative assets and liabilities are classified within Level 2 of the fair value hierarchy. The Company’s assets measured at fair value on a nonrecurring basis include long-lived assets, such as intangible assets, fixed assets, and ROU assets. The Company reviews the carrying amounts of such assets when events indicate that their carrying amounts may not be recoverable. Any resulting asset impairment would require that the asset be recorded at its fair value. The resulting fair value measurements of the assets are considered to fall within Level 3 of the fair value hierarchy. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Adopted in Fiscal 2021 In December 2019, the FASB issued guidance related to the accounting for income taxes. The guidance aims to simplify the accounting for income taxes by removing certain exceptions to the general principles within the current guidance and by clarifying and amending the current guidance. The guidance is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2020. We adopted this guidance in the First Quarter 2021. This adoption did not have a material impact on our consolidated financial statements. |
REVENUES (Tables)
REVENUES (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table presents our revenues disaggregated by geography: Thirteen Weeks Ended Twenty-six Weeks Ended July 31, August 1, July 31, August 1, Net sales: (in thousands) South $ 164,630 $ 146,345 $ 330,368 $ 244,281 Northeast 84,954 82,937 179,976 134,767 West 59,854 55,314 122,077 92,576 Midwest 48,088 40,270 108,892 77,503 International and other 56,329 44,057 108,023 75,003 Total net sales $ 413,855 $ 368,923 $ 849,336 $ 624,130 |
Reconciliation of Contract Liability Related to Gift Cards | The following table provides the reconciliation of the contract liability related to gift cards: Contract Liability (in thousands) Balance at January 30, 2021 $ 13,634 Gift cards sold 10,344 Gift cards redeemed (9,803) Gift card breakage (1,350) Balance at July 31, 2021 12,825 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Leases [Abstract] | |
Lease, Cost | The following components of lease expense are included in the Company’s consolidated statements of operations. Thirteen Weeks Ended Twenty-six Weeks Ended July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020 (in thousands) Operating lease cost $ 24,272 $ 39,042 $ 50,030 $ 79,194 Variable lease cost (1) 10,847 8,692 14,221 19,825 Total lease cost $ 35,119 $ 47,734 $ 64,251 $ 99,019 ____________________________________________ (1) |
Lessee, Operating Lease, Liability, Maturity | As of July 31, 2021, the maturities of lease liabilities were as follows: July 31, 2021 (in thousands) Remainder of 2021 $ 82,045 2022 72,304 2023 49,041 2024 27,693 2025 18,549 Thereafter 50,872 Total lease payments (1) $ 300,504 Less: imputed interest $ (15,795) Present value of lease liabilities $ 284,709 ____________________________________________ (1) For leases in which the Company applied the COVID-19 expedient, it did not remeasure its ROU assets and lease liabilities for rent concessions specific to Fiscal 2021 and beyond. These amounts will be recognized as variable rent costs in future periods in the amount of $27.0 million. |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets and Goodwill | The Company’s intangible assets were as follows: July 31, 2021 Useful life Gross amount Accumulated amortization Net amount (in thousands) Gymboree tradename (1) Indefinite $ 69,953 $ — $ 69,953 Crazy 8 tradename (1) 5 years 4,000 (1,861) 2,139 Customer databases (2) 3 years 3,000 (2,328) 672 Total intangibles, net $ 76,953 $ (4,189) $ 72,764 : January 30, 2021 Useful life Gross amount Accumulated amortization Net amount (in thousands) Gymboree tradename (1) Indefinite $ 69,953 $ — $ 69,953 Crazy 8 tradename (1) 5 years 4,000 (1,461) 2,539 Customer databases (2) 3 years 3,000 (1,827) 1,173 Total intangibles, net $ 76,953 $ (3,288) $ 73,665 : August 1, 2020 Useful life Gross amount Accumulated amortization Net amount (in thousands) Gymboree tradename (1) Indefinite $ 69,953 $ — $ 69,953 Crazy 8 tradename (1) 5 years 4,000 (1,061) 2,939 Customer databases (2) 3 years 3,000 (1,327) 1,673 Total intangibles, net $ 76,953 $ (2,388) $ 74,565 ____________________________________________ (1) Included within Tradenames, net in the consolidated balance sheets. (2) Included within Other assets in the consolidated balance sheets. |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Shares Repurchases | The following table summarizes the Company’s share repurchases: Twenty-six Weeks Ended July 31, 2021 August 1, 2020 Shares Value Shares Value (in thousands) Share repurchases related to: 2018 Share Repurchase Program 147 $ 13,465 292 $ 15,444 Shares acquired and held in treasury under Deferred Compensation Plan 1.8 $ 139 1.1 $ 69 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Company’s Stock-Based Compensation Expense | The following table summarizes the Company’s stock-based compensation expense: Thirteen Weeks Ended Twenty-six Weeks Ended July 31, August 1, July 31, August 1, (In thousands) Deferred Awards $ 3,188 $ 3,193 $ 6,766 $ 7,507 Performance Awards 7,338 335 11,676 (3,394) Total stock-based compensation expense (1) $ 10,526 $ 3,528 $ 18,442 $ 4,113 ____________________________________________ (1) A portion of stock-based compensation is included in cost of sales. Approximately $0.8 million and $0.9 million during the Second Quarter 2021 and the Second Quarter 2020, respectively, were included in cost of sales. During Year-To-Date 2021 and Year-To-Date 2020, approximately $1.7 million an |
Schedule of Unvested Deferred Award Roll Forward | Deferred Awards Number of Weighted (in thousands) Unvested Deferred Awards, beginning of period 550 $ 55.43 Granted 143 75.76 Vested (217) 86.18 Forfeited (3) 97.00 Unvested Deferred Awards, end of period 473 $ 47.12 |
Schedule of Unvested Performance Award Roll Forward | Performance Awards Number of Shares (1) Weighted (in thousands) Unvested Performance Awards, beginning of period 350 $ 74.37 Granted 144 73.73 Shares earned in excess of (below) target (22) 65.34 Vested shares, including shares earned (118) 95.61 Forfeited (1) 108.21 Unvested Performance Awards, at end of period 353 $ 67.50 ____________________________________________ |
EARNINGS PER COMMON SHARE (Tabl
EARNINGS PER COMMON SHARE (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Basic and Diluted Earnings (Loss) Per Common Share | The following table reconciles net income (loss) and share amounts utilized to calculate basic and diluted earnings (loss) per common share: Thirteen Weeks Ended Twenty-six Weeks Ended July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020 (in thousands) Net income (loss) $ 24,095 $ (46,639) $ 69,300 $ (161,449) Basic weighted average common shares 14,780 14,634 14,725 14,623 Dilutive effect of stock awards 282 — 307 — Diluted weighted average common shares 15,062 14,634 15,032 14,623 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property, Plant and Equipment | Property and equipment, net consist of the following: July 31, 2021 January 30, 2021 August 1, 2020 (in thousands) Property and equipment: Land and land improvements $ 3,403 $ 3,403 $ 3,403 Building and improvements 36,045 36,133 35,927 Material handling equipment 61,649 58,034 56,748 Leasehold improvements 214,229 216,989 228,183 Store fixtures and equipment 224,238 226,404 235,386 Capitalized software 313,371 296,967 288,934 Construction in progress 5,339 15,211 15,620 858,274 853,141 864,201 Less accumulated depreciation and amortization (692,716) (671,340) (663,238) Property and equipment, net $ 165,558 $ 181,801 $ 200,963 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Line of Credit Facilities | The table below presents the components of the Company’s ABL Credit Facility: July 31, January 30, August 1, (in millions) Credit facility maximum $ 360.0 $ 360.0 $ 360.0 Borrowing base (1) 354.0 282.2 326.7 Outstanding borrowings 199.8 169.8 250.8 Letters of credit outstanding—standby 7.4 8.2 6.2 Utilization of credit facility at end of period 207.2 178.0 257.0 Availability (2) $ 146.8 $ 104.2 $ 69.7 Interest rate at end of period 3.8 % 4.2 % 4.1 % Year-To-Date 2021 Fiscal 2020 Year-To-Date 2020 Average end of day loan balance during the period $ 213.5 $ 216.2 $ 233.1 Highest end of day loan balance during the period 269.7 $ 275.6 $ 272.2 Average interest rate 3.9 % 3.8 % 3.5 % ____________________________________________ (1) Lower of the credit facility maximum or the total borrowing base collateral. (2) The sub-limit availability for letters of credit was $42.6 million at July 31, 2021, $41.8 million at January 30, 2021, and $43.8 million at August 1, 2020. |
Schedule of Long-term Debt Instruments | The following table summarizes the current and long-term portion of the long-term debt: July 31, (in thousands) Term Loan principal $ 80,000 Less: Unamortized discount, net (964) Less: Unamortized debt issuance costs, net (1,057) Term Loan, net 77,979 Less: Current portion, net (3,770) Long-term debt, net $ 74,209 |
Schedule of Maturities of Long-term Debt | Future principal payments of long-term debt due in each of the next four years subsequent to July 31, 2021 are as follows: Period Future Principal Payments (in thousands) Remainder of 2021 $ 2,000 2022 5,500 2023 7,500 2024 65,000 2025 — Total future principal payments $ 80,000 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jul. 31, 2021 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting | The following tables provide segment level financial information: Thirteen Weeks Ended Twenty-six Weeks Ended July 31, August 1, July 31, August 1, (in thousands) Net sales (1) : ] The Children’s Place U.S. $ 372,319 $ 333,034 $ 771,978 $ 567,982 The Children’s Place International (2) 41,536 35,889 77,358 56,148 Total net sales $ 413,855 $ 368,923 $ 849,336 $ 624,130 Operating income (loss) (1) : The Children’s Place U.S. $ 34,355 $ (62,623) $ 98,267 $ (221,959) The Children’s Place International 3,494 (1,861) 5,489 (15,668) Total operating income (loss) $ 37,849 $ (64,484) $ 103,756 $ (237,627) Operating income (loss) as a percent of net sales (1) : The Children’s Place U.S. 9.2 % (18.8) % 12.7 % (39.1) % The Children’s Place International 8.4 % (5.2) % 7.1 % (27.9) % Total operating income (loss) as a percent of net sales 9.1 % (17.5) % 12.2 % (38.1) % Depreciation and amortization: The Children’s Place U.S. $ 13,303 $ 15,594 $ 27,614 $ 31,780 The Children’s Place International 1,089 1,114 2,339 2,816 Total depreciation and amortization $ 14,392 $ 16,708 $ 29,953 $ 34,596 Capital expenditures: The Children’s Place U.S. $ 6,385 $ 8,433 $ 12,872 $ 13,633 The Children’s Place International 385 102 624 635 Total capital expenditures $ 6,770 $ 8,535 $ 13,496 $ 14,268 ____________________________________________ (1) Net sales and operating income (loss) were significantly impacted by the COVID-19 pandemic in the Second Quarter 2020. (2) Net sales from The Children’s Place International are primarily derived from revenues from Canadian operations. 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. July 31, 2021 January 30, 2021 August 1, 2020 Total assets: (in thousands) The Children’s Place U.S. $ 1,036,830 $ 1,054,339 $ 1,088,348 The Children’s Place International 91,618 85,788 79,591 Total assets $ 1,128,448 $ 1,140,127 $ 1,167,939 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) | 6 Months Ended |
Jul. 31, 2021segment | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of reportable segments | 2 |
Deferred compensation arrangements maximum percentage of base salary | 80.00% |
Deferred compensation arrangements maximum percentage of bonus | 100.00% |
Deferred Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 3 years |
Deferred Awards | Non-employee Directors | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 1 year |
Performance Awards | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Award vesting period | 3 years |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Performance award vesting rights, percentage | 0.00% |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Performance award vesting rights, percentage | 300.00% |
REVENUES - Disaggregation by Ge
REVENUES - Disaggregation by Geography (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 413,855 | $ 368,923 | $ 849,336 | $ 624,130 |
South | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 164,630 | 146,345 | 330,368 | 244,281 |
Northeast | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 84,954 | 82,937 | 179,976 | 134,767 |
West | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 59,854 | 55,314 | 122,077 | 92,576 |
Midwest | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | 48,088 | 40,270 | 108,892 | 77,503 |
International and other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 56,329 | $ 44,057 | $ 108,023 | $ 75,003 |
REVENUES - Narrative (Details)
REVENUES - Narrative (Details) - USD ($) $ in Thousands | Jul. 31, 2021 | Jan. 30, 2021 | Aug. 01, 2020 |
Disaggregation of Revenue [Line Items] | |||
Deferred revenue, current | $ 9,500 | $ 5,700 | |
Deferred revenue | 3,100 | 1,300 | |
Contract liability | 7,100 | 3,300 | |
Gift Cards | |||
Disaggregation of Revenue [Line Items] | |||
Contract liability | $ 12,825 | $ 13,634 | $ 13,600 |
REVENUES - Gift Card Liability
REVENUES - Gift Card Liability Balance (Details) $ in Thousands | 6 Months Ended |
Jul. 31, 2021USD ($) | |
Contract Liability | |
Gift card liability, ending balance | $ 7,100 |
Gift Cards | |
Contract Liability | |
Gift card liability, beginning balance | 13,634 |
Gift cards sold | 10,344 |
Gift cards redeemed | (9,803) |
Gift card breakage | (1,350) |
Gift card liability, ending balance | $ 12,825 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 31, 2021 | Aug. 01, 2020 | |
Lessee, Lease, Description [Line Items] | ||
Option to extend lease | 5 years | |
Stores reopened percentage | 99.00% | |
Operating lease, weighted average remaining lease term | 4 years 3 months 18 days | |
Operating lease, weighted average discount rate | 5.30% | |
Operating lease, payments | $ 107,572 | $ 19,073 |
Right-of-use asset obtained in exchange for operating lease liability | $ 6,100 | |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, operating lease, remaining lease term | 1 year | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, operating lease, remaining lease term | 9 years |
LEASES - Lease Cost (Details)
LEASES - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Leases [Abstract] | ||||
Operating lease cost | $ 24,272 | $ 39,042 | $ 50,030 | $ 79,194 |
Variable lease cost | 10,847 | 8,692 | 14,221 | 19,825 |
Total lease cost | 35,119 | $ 47,734 | 64,251 | $ 99,019 |
Reduction of lease cost, lease abatement | $ 2,300 | $ 10,300 |
LEASES - Lease Liability Maturi
LEASES - Lease Liability Maturity (Details) $ in Thousands | 6 Months Ended |
Jul. 31, 2021USD ($) | |
Leases [Abstract] | |
Remainder of 2021 | $ 82,045 |
2022 | 72,304 |
2023 | 49,041 |
2024 | 27,693 |
2025 | 18,549 |
Thereafter | 50,872 |
Total lease payments | 300,504 |
Less: imputed interest | (15,795) |
Present value of lease liabilities | 284,709 |
Operating lease liability, decrease for rent concessions | $ 27,000 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended | |
Jul. 31, 2021 | Aug. 01, 2020 | Jan. 30, 2021 | |
Finite-Lived Intangible Assets [Line Items] | |||
Accumulated amortization | $ (4,189) | $ (2,388) | $ (3,288) |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Total intangibles, net, Gross amount | 76,953 | 76,953 | 76,953 |
Total intangibles, net, Accumulated amortization | (4,189) | (2,388) | (3,288) |
Total intangibles, net, Net amount | 72,764 | 74,565 | 73,665 |
Crazy 8 tradename | |||
Indefinite-lived Intangible Assets [Line Items] | |||
Indefinite-lived intangible assets | $ 69,953 | $ 69,953 | $ 69,953 |
Crazy 8 tradename | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 5 years | 5 years | 5 years |
Gross amount | $ 4,000 | $ 4,000 | $ 4,000 |
Accumulated amortization | (1,861) | (1,061) | (1,461) |
Net amount | 2,139 | 2,939 | 2,539 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Total intangibles, net, Accumulated amortization | $ (1,861) | $ (1,061) | $ (1,461) |
Customer databases | |||
Finite-Lived Intangible Assets [Line Items] | |||
Useful life | 3 years | 3 years | 3 years |
Gross amount | $ 3,000 | $ 3,000 | $ 3,000 |
Accumulated amortization | (2,328) | (1,327) | (1,827) |
Net amount | 672 | 1,673 | 1,173 |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | |||
Total intangibles, net, Accumulated amortization | $ (2,328) | $ (1,327) | $ (1,827) |
STOCKHOLDERS' EQUITY - Narrativ
STOCKHOLDERS' EQUITY - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | Mar. 31, 2018 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchased and retired during period, value | $ 11,091,000 | $ 885,000 | $ 13,465,000 | $ 15,444,000 | |
Retained Earnings (Deficit) | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchased and retired during period, value | 8,961,000 | $ 385,000 | 10,813,000 | $ 10,628,000 | |
2018 Share Repurchase Program | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Stock repurchase program, authorized amount | $ 250,000,000 | ||||
Stock repurchase program, remaining authorized repurchase amount | $ 79,500,000 | $ 79,500,000 |
STOCKHOLDERS' EQUITY - (Share R
STOCKHOLDERS' EQUITY - (Share Repurchases) (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 31, 2021 | Aug. 01, 2020 | |
Stockholders' Equity Note [Abstract] | ||
2018 Share Repurchase Program (in shares) | 147,000 | 292,000 |
2018 Share Repurchase Program | $ 13,465 | $ 15,444 |
Shares acquired and held in treasury under Deferred Compensation Plan (in shares) | 1,800,000 | 1,100 |
Shares acquired and held in treasury under Deferred Compensation Plan | $ 139 | $ 69 |
STOCK-BASED COMPENSATION - Sche
STOCK-BASED COMPENSATION - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 10,526 | $ 3,528 | $ 18,442 | $ 4,113 |
Cost of Sales | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 800 | 900 | 1,700 | 1,600 |
Deferred Awards | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 3,188 | 3,193 | 6,766 | 7,507 |
Performance Awards | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 7,338 | $ 335 | $ 11,676 | $ (3,394) |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 31, 2021 | Aug. 01, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense, tax benefit | $ 4.8 | $ 1.1 |
Deferred Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unvested deferred awards | $ 20.4 | |
weighted average recognized period | 2 years | |
Performance Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unvested deferred awards | $ 14.7 | |
weighted average recognized period | 2 years 3 months 18 days | |
Target shares earned percentage | 100.00% |
STOCK-BASED COMPENSATION - Unve
STOCK-BASED COMPENSATION - Unvested Awards Roll Forward (Details) shares in Thousands | 6 Months Ended |
Jul. 31, 2021$ / sharesshares | |
Deferred Awards | |
Number of Shares | |
Unvested awards, beginning of period (in shares) | shares | 550 |
Granted (in shares) | shares | 143 |
Vested (in shares) | shares | (217) |
Forfeited (in shares) | shares | (3) |
Unvested awards, end of period (in shares) | shares | 473 |
Weighted Average Grant Date Fair Value | |
Unvested awards, beginning of period (in usd per share) | $ / shares | $ 55.43 |
Granted (in usd per share) | $ / shares | 75.76 |
Vested (in usd per share) | $ / shares | 86.18 |
Forfeited (in usd per share) | $ / shares | 97 |
Unvested awards, end of period (in usd per share) | $ / shares | $ 47.12 |
Performance Awards | |
Number of Shares | |
Unvested awards, beginning of period (in shares) | shares | 350 |
Granted (in shares) | shares | 144 |
Shares earned in excess of (below) target (in shares) | shares | (22) |
Vested (in shares) | shares | (118) |
Forfeited (in shares) | shares | (1) |
Unvested awards, end of period (in shares) | shares | 353 |
Weighted Average Grant Date Fair Value | |
Unvested awards, beginning of period (in usd per share) | $ / shares | $ 74.37 |
Granted (in usd per share) | $ / shares | 73.73 |
Shares earned in excess of (below) target (in usd per share) | $ / shares | 65.34 |
Vested (in usd per share) | $ / shares | 95.61 |
Forfeited (in usd per share) | $ / shares | 108.21 |
Unvested awards, end of period (in usd per share) | $ / shares | $ 67.50 |
EARNINGS PER COMMON SHARE (Deta
EARNINGS PER COMMON SHARE (Details) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ 24,095 | $ (46,639) | $ 69,300 | $ (161,449) |
Basic weighted average common shares (in shares) | 14,780 | 14,634 | 14,725 | 14,623 |
Dilutive effect of stock awards (in shares) | 282 | 0 | 307 | 0 |
Diluted weighted average common shares (in shares) | 15,062 | 14,634 | 15,032 | 14,623 |
PROPERTY AND EQUIPMENT, NET - S
PROPERTY AND EQUIPMENT, NET - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Jul. 31, 2021 | Jan. 30, 2021 | Aug. 01, 2020 |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 858,274 | $ 853,141 | $ 864,201 |
Less accumulated depreciation and amortization | (692,716) | (671,340) | (663,238) |
Property and equipment, net | 165,558 | 181,801 | 200,963 |
Land and land improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 3,403 | 3,403 | 3,403 |
Building and improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 36,045 | 36,133 | 35,927 |
Material handling equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 61,649 | 58,034 | 56,748 |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 214,229 | 216,989 | 228,183 |
Store fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 224,238 | 226,404 | 235,386 |
Capitalized software | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 313,371 | 296,967 | 288,934 |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 5,339 | $ 15,211 | $ 15,620 |
PROPERTY AND EQUIPMENT, NET - N
PROPERTY AND EQUIPMENT, NET - Narrative (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 31, 2021USD ($) | Aug. 01, 2020USD ($)store | Jul. 31, 2021USD ($) | Aug. 01, 2020USD ($)store | |
Property, Plant and Equipment [Abstract] | ||||
Number of stores tested for impairment | store | 824 | 824 | ||
Net book value | $ | $ 46,800 | $ 46,800 | ||
Asset impairment charges | $ | $ 0 | $ 544 | $ 0 | $ 37,635 |
Number of impaired stores | store | 6 | 418 |
DEBT - Narrative (Details)
DEBT - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jul. 31, 2021 | Jul. 31, 2021 | Apr. 23, 2021 | Jan. 30, 2021 | Oct. 05, 2020 | Aug. 01, 2020 | Apr. 24, 2020 | |
ABL Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Additional availability | $ 199,800,000 | $ 199,800,000 | $ 169,800,000 | $ 250,800,000 | |||
Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Unamortized balance of deferred financing costs | 1,057,000 | 1,057,000 | |||||
Long-term debt | 77,979,000 | 77,979,000 | |||||
Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Interest expense | 1,800,000 | $ 3,600,000 | |||||
Term Loan | Debt Instrument, Redemption, Period One | |||||||
Line of Credit Facility [Line Items] | |||||||
Redemption price percentage | 5.00% | ||||||
Term Loan | Debt Instrument, Redemption, Period Two | |||||||
Line of Credit Facility [Line Items] | |||||||
Redemption price percentage | 7.50% | ||||||
Term Loan | Debt Instrument, Redemption, Period Three | |||||||
Line of Credit Facility [Line Items] | |||||||
Redemption price percentage | 10.00% | ||||||
Term Loan | Loan Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Long-term debt | $ 80,000,000 | ||||||
Revolving credit facility | ABL Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility maximum | 360,000,000 | $ 360,000,000 | $ 360,000,000 | $ 360,000,000 | |||
Unused line fee percentage | 0.25% | ||||||
Deferred financing costs | 6,300,000 | $ 6,300,000 | |||||
Unamortized balance of deferred financing costs | 1,200,000 | $ 1,200,000 | |||||
Revolving credit facility | ABL Credit Facility | London Interbank Offered Rate (LIBOR) | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 1.00% | ||||||
Revolving credit facility | ABL Credit Facility | Minimum | Prime Rate | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 1.75% | ||||||
Revolving credit facility | ABL Credit Facility | Minimum | London Interbank Offered Rate (LIBOR) | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 2.50% | ||||||
Revolving credit facility | ABL Credit Facility | Maximum | Prime Rate | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 1.88% | ||||||
Revolving credit facility | ABL Credit Facility | Maximum | London Interbank Offered Rate (LIBOR) | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 2.75% | ||||||
Revolving credit facility | Line of Credit | ABL Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility maximum | 360,000,000 | $ 360,000,000 | $ 325,000,000 | ||||
Revolving credit facility | Line of Credit | Term Loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility maximum | 80,000,000 | $ 80,000,000 | |||||
Additional availability | $ 35,000,000 | ||||||
Revolving credit facility | Term Loan | ABL Credit Facility | London Interbank Offered Rate (LIBOR) | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 1.00% | ||||||
Revolving credit facility | Term Loan | ABL Credit Facility | Minimum | London Interbank Offered Rate (LIBOR) | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 7.75% | ||||||
Revolving credit facility | Term Loan | ABL Credit Facility | Maximum | London Interbank Offered Rate (LIBOR) | |||||||
Line of Credit Facility [Line Items] | |||||||
Basis spread on variable rate | 8.00% | ||||||
Revolving Credit Facility Accordion | Line of Credit | ABL Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility maximum | 35,000,000 | $ 35,000,000 | |||||
Debt term | 1 year | ||||||
Canadian Credit Facility | Line of Credit | ABL Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility maximum | 25,000,000 | $ 25,000,000 | |||||
Standby and Documentary Letters of Credit | Line of Credit | ABL Credit Facility | |||||||
Line of Credit Facility [Line Items] | |||||||
Credit facility maximum | $ 50,000,000 | $ 50,000,000 | |||||
Commercial Letter Of Credit | ABL Credit Facility | Minimum | |||||||
Line of Credit Facility [Line Items] | |||||||
Unused line fee percentage | 1.25% | ||||||
Commercial Letter Of Credit | ABL Credit Facility | Maximum | |||||||
Line of Credit Facility [Line Items] | |||||||
Unused line fee percentage | 1.38% | ||||||
Standby | ABL Credit Facility | Minimum | |||||||
Line of Credit Facility [Line Items] | |||||||
Unused line fee percentage | 2.00% | ||||||
Standby | ABL Credit Facility | Maximum | |||||||
Line of Credit Facility [Line Items] | |||||||
Unused line fee percentage | 2.25% |
DEBT - Components (Details)
DEBT - Components (Details) - ABL Credit Facility - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended | |
Jul. 31, 2021 | Aug. 01, 2020 | Jan. 30, 2021 | |
Line of Credit Facility [Line Items] | |||
Borrowing base | $ 354 | $ 326.7 | $ 282.2 |
Outstanding borrowings | 199.8 | 250.8 | 169.8 |
Utilization of credit facility at end of period | 207.2 | 257 | 178 |
Availability | $ 146.8 | $ 69.7 | $ 104.2 |
Interest rate at end of period | 3.80% | 4.10% | 4.20% |
Average end of day loan balance during the period | $ 213.5 | $ 233.1 | $ 216.2 |
Highest end of day loan balance during the period | $ 269.7 | $ 272.2 | $ 275.6 |
Average interest rate | 3.90% | 3.50% | 3.80% |
Revolving credit facility | |||
Line of Credit Facility [Line Items] | |||
Credit facility maximum | $ 360 | $ 360 | $ 360 |
Standby | |||
Line of Credit Facility [Line Items] | |||
Letters of credit outstanding—standby | 7.4 | 6.2 | 8.2 |
Sublimit Letter Of Credit | |||
Line of Credit Facility [Line Items] | |||
Availability | $ 42.6 | $ 43.8 | $ 41.8 |
DEBT - Long-term Debt (Details)
DEBT - Long-term Debt (Details) $ in Thousands | Jul. 31, 2021USD ($) |
Line of Credit Facility [Line Items] | |
Less: Current portion, net | $ (3,770) |
Long-term debt, net | 74,209 |
Term Loan | |
Line of Credit Facility [Line Items] | |
Term Loan principal | 80,000 |
Less: Unamortized discount, net | (964) |
Less: Unamortized debt issuance costs, net | (1,057) |
Term Loan, net | $ 77,979 |
DEBT - Maturity (Details)
DEBT - Maturity (Details) - USD ($) $ in Thousands | Jul. 31, 2021 | Jan. 30, 2021 | Aug. 01, 2020 |
Debt Instrument [Line Items] | |||
Total future principal payments | $ 74,209 | $ 75,346 | $ 0 |
Term Loan | |||
Debt Instrument [Line Items] | |||
Remainder of 2021 | 2,000 | ||
2022 | 5,500 | ||
2023 | 7,500 | ||
2024 | 65,000 | ||
2025 | 0 | ||
Total future principal payments | $ 80,000 |
LEGAL AND REGULATORY MATTERS (D
LEGAL AND REGULATORY MATTERS (Details) $ in Millions | Apr. 29, 2017USD ($) |
Legal And Regulatory Matters [Abstract] | |
Loss contingency, estimate of possible loss | $ 5 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | Jan. 30, 2021 | |
Income Tax Disclosure [Abstract] | |||||
Effective income tax rate reconciliation, percent | 27.30% | 30.50% | 26.80% | 33.30% | |
Income tax expense (benefit) | $ 9,058 | $ (20,484) | $ 25,349 | $ (80,657) | |
Unrecognized tax benefits | 8,000 | 6,800 | 8,000 | 6,800 | $ 7,900 |
Unrecognized tax benefits, interest on income taxes expense | $ 100 | $ 100 | $ 100 | $ 100 |
SEGMENT INFORMATION - Narrative
SEGMENT INFORMATION - Narrative (Details) - store | Jul. 31, 2021 | Aug. 01, 2020 |
The Children’s Place U.S. | ||
Segment Reporting Information [Line Items] | ||
Number of stores | 615 | 711 |
The Children’s Place International | ||
Segment Reporting Information [Line Items] | ||
Number of stores | 93 | 113 |
SEGMENT INFORMATION - Segment R
SEGMENT INFORMATION - Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 31, 2021 | Aug. 01, 2020 | Jul. 31, 2021 | Aug. 01, 2020 | Jan. 30, 2021 | |
Segment Reporting Information [Line Items] | |||||
Net sales | $ 413,855 | $ 368,923 | $ 849,336 | $ 624,130 | |
Operating income (loss) | $ 37,849 | $ (64,484) | $ 103,756 | $ (237,627) | |
Operating income (loss) as a percent of net sales | 9.10% | (17.50%) | 12.20% | (38.10%) | |
Depreciation and amortization: | $ 14,392 | $ 16,708 | $ 29,953 | $ 34,596 | |
Capital expenditures: | 6,770 | 8,535 | 13,496 | 14,268 | |
Total assets: | |||||
Total assets | 1,128,448 | 1,167,939 | 1,128,448 | 1,167,939 | $ 1,140,127 |
Operating Segments | The Children’s Place U.S. | U.S. | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 372,319 | 333,034 | 771,978 | 567,982 | |
Operating income (loss) | $ 34,355 | $ (62,623) | $ 98,267 | $ (221,959) | |
Operating income (loss) as a percent of net sales | 9.20% | (18.80%) | 12.70% | (39.10%) | |
Depreciation and amortization: | $ 13,303 | $ 15,594 | $ 27,614 | $ 31,780 | |
Capital expenditures: | 6,385 | 8,433 | 12,872 | 13,633 | |
Total assets: | |||||
Total assets | 1,036,830 | 1,088,348 | 1,036,830 | 1,088,348 | 1,054,339 |
Operating Segments | The Children’s Place International | International | |||||
Segment Reporting Information [Line Items] | |||||
Net sales | 41,536 | 35,889 | 77,358 | 56,148 | |
Operating income (loss) | $ 3,494 | $ (1,861) | $ 5,489 | $ (15,668) | |
Operating income (loss) as a percent of net sales | 8.40% | (5.20%) | 7.10% | (27.90%) | |
Depreciation and amortization: | $ 1,089 | $ 1,114 | $ 2,339 | $ 2,816 | |
Capital expenditures: | 385 | 102 | 624 | 635 | |
Total assets: | |||||
Total assets | $ 91,618 | $ 79,591 | $ 91,618 | $ 79,591 | $ 85,788 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - Foreign Exchange Forward Contract $ in Millions | Aug. 01, 2020USD ($) |
Derivative [Line Items] | |
Aggregate notional amount | $ 9.5 |
Derivative instrument was an asset | $ 1.3 |