The Children’s Place stores have been neglected for years, but all of that is about to change.
“I believe that the appearance and poor condition of TCP’s stores detract from the shopping experience of store customers and convey a single, unfortunate reality: our stores have become an orphan channel,” Turki AlRajhi, executive chairman of The Children’s Place, wrote in a Friday note to shareholders.
The children’s apparel retailer said that over the past several years the company has had no significant capital expenditure toward its brick-and-mortar fleet, aside from minor maintenance. Since the company acquired Gymboree in the spring of 2019 until the end of last year, the company had not opened a stand-alone store as an independent brand.
The retailer had over 920 stores at the end of 2020 and four years later had 495, an over 46% decline. Around 300 of the stores that closed were profitable at the time of closure, AlRajhi said.
Now, the company is looking to rebuild its fleet with a “spree” of new stores. The retailer is planning to open 15 locations across its Gymboree and Children’s Place brands by the end of this fiscal year. It is also exploring side-by-side stores, with the first of its kind expected to launch at Woodbury Common Premium Outlets in New York in the latter part of the year.
The retailer is also working to better distinguish its brands. In the early part of 2020, the company introduced Gymboree products in its Children’s Place stores via a shop-in-shop strategy. It didn’t work.
“The Children’s Place and Gymboree brands have different customer segments and shop-in-shops do not allow the brands to be differentiated from each other,” AlRajhi said.
Now, the retailer is focused on marking Gymboree as a “semi-luxury” brand, distancing itself from the mass market by focusing on premium quality.
The letter laying out the strategy for its future came as the company reported fourth quarter earnings. Net sales were down over 10% to $408.6 million year over year, comparable retail sales were down 15.3% and net loss narrowed to almost $8 million, down from $128.8 million in the year-ago quarter.
During the year, the company also pulled back on its free shipping offers to improve profitability. A minimum of $20 to qualify for free shipping was instituted last February, with that increasing to $40 by the end of May. Shoppers responded by increasing their units per transaction in order to qualify for free shipping, and the move resulted in a decline in small-ticket orders.
Additionally, the company recently overturned much of its leadership, with only three out of the former ten senior executives remaining at the company.
Recent hires include Philip Ende as head of real estate, Smeeta Khetarpaul as head of marketing and Kristin Clifford as head of sourcing. Last month, the company hired John Szczepanski, a former executive at Vince, as its CFO.
Last year Mithaq Capital acquired a majority stake in The Children’s Place.