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CP

Childrens Place, Inc. (PLCE)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 2026 net sales fell 9.6% to $242.1M; GAAP diluted EPS was $(1.57) and adjusted diluted EPS was $(1.52), reflecting lower traffic, conversion, and the lap of shipping-threshold changes; gross margin contracted 540 bps YoY to 29.2% on mix and markdowns .
  • Versus Wall Street consensus (S&P Global), revenue missed by ~$18.5M, with consensus at ~$260.6M*; EPS consensus was unavailable for Q1 2026*; prior-year Q1 had a small EPS miss relative to consensus (-$1.18 actual vs -$1.1508 estimate)* .
  • Liquidity stood at $84.4M (cash $5.7M; $38.7M revolver availability; $40M Mithaq commitment), with revolver balance at $258.6M; operating cash outflow was $43.0M in the quarter .
  • Narrative catalysts: management emphasized tariff uncertainty, sourcing diversification (no country >20% of supply; limited China exposure mid-single digits), and a focus on inventory turns, SG&A discipline, and an upcoming loyalty program; back-to-school expected to benefit from improved assortments .

What Went Well and What Went Wrong

What Went Well

  • SG&A disciplined: adjusted SG&A of $86.5M was the lowest first-quarter level in 15+ years, even as marketing mix was rebalanced .
  • Inventory positioning improved entering back-to-school; wholesale contribution helped offset retail weakness; management reiterated sourcing diversification and tariff mitigation plans (no country >20% of sourcing; China mid-single digits) .
  • Subsequent quarter momentum: July was the first month in 18 months with positive YoY comp in owned DTC, citing assortments/licensing; back-to-school trend improving (context for trajectory) .

What Went Wrong

  • Top line pressure: Q1 net sales down 9.6% YoY to $242.1M, with comparable retail sales down 13.6%, driven by e-commerce softness from higher shipping thresholds and lower traffic/conversion, and reduced brick-and-mortar sales on lower store count and traffic .
  • Margin compression: gross margin down 540 bps to 29.2% on a higher penetration of wholesale (channel mix) and greater markdown mix; only partially offset by stricter shipping minimums .
  • Cash flow and leverage: operating cash outflow of $42.958M; revolver borrowings rose to $258.623M; net interest expense climbed to $8.6M partly due to deferred financing cost write-offs tied to rights offering term-loan paydown .

Financial Results

MetricQ1 2025 (prior year)Q4 2024 (prior quarter)Q1 2026 (current)
Net Sales ($USD Millions)$267.878 $408.562 $242.125
Gross Profit ($USD Millions)$92.741 $116.585 $70.783
Gross Margin %34.6% 28.5% 29.2%
SG&A ($USD Millions)$109.094 $100.574 $86.670
Adjusted SG&A ($USD Millions)$88.648 $99.505 $86.532
Operating Income/(Loss) ($USD Millions)$(27.988) $6.805 $(24.117)
Adjusted Operating Income/(Loss) ($USD Millions)$(5.080) $8.306 $(23.979)
Net Income/(Loss) ($USD Millions)$(37.795) $(7.990) $(34.023)
Diluted EPS ($USD)$(2.98) $(0.62) $(1.57)
Adjusted Diluted EPS ($USD)$(1.18) $0.43 $(1.52)
Comparable Retail Sales (%)—(15.3%) (13.6%)
Inventories ($USD Millions)$425.156 $399.602 $422.204
Cash And Equivalents ($USD Millions)$12.960 $5.347 $5.694
Total Liquidity ($USD Millions)—$85.5 $84.4
Revolving Loan Outstanding ($USD Millions)$226.100 $245.659 $258.623
Net Cash Used in Operating Activities ($USD Millions)$(110.756) —$(42.958)

Estimates vs Actuals (S&P Global)

MetricQ1 2025Q1 2026
Revenue Consensus Mean ($USD)$302.77M*$260.62M*
Actual Revenue ($USD)$267.88M $242.13M
Primary EPS Consensus Mean ($USD)$(1.1508)*N/A*
Actual Primary EPS ($USD)$(1.18) $(1.57)

Values retrieved from S&P Global.*

KPIs and Operational Metrics

KPIQ1 2025Q4 2024Q1 2026
Comparable Retail Sales YoY—(15.3%) (13.6%)
Store Count (end of period)518 (prior-year end) 495 495
Liquidity Detail—$85.5M liquidity $84.4M liquidity; Cash $5.7M; Revolver availability $38.7M; $40M Mithaq commitment
Net Interest Expense ($USD Millions)$7.7 $8.5 $8.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Tariff & duty expense (incremental)FY 2025N/A~$20–$25M New
Cost savings (gross benefits)FY 2025–FY 2027N/A>$40M over 3 years New
One-time transformation costsFY 2025–FY 2026N/A~$5–$10M New
Corporate payroll run-rateFY 2026 target>$120M peak (FY 2023) < $80M run-rate Lowered
Loyalty program launchQ3 FY 2025N/ALaunch in Q3 FY 2025 New
Store openingsH2 FY 2025N/ATargeted openings in back-half 2025 New
SEDC expansion completionEarly 2026N/ACompletion early 2026 New
Revenue/EPS guidanceQ1 FY 2026None providedNone providedMaintained (no disclosure)
DividendsOngoingNone disclosedNone disclosedMaintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q4 2024)Previous Mentions (Q-1: Q2 2025)Current Period (Q1 2026)Trend
Tariffs/macroTariffs a headwind; plan to partially offset; focus on value proposition Projecting ~$20–$25M tariff/duty headwind; ~80% mitigation plan Tariff uncertainty persists; diversified sourcing and limited China exposure Continued caution; stronger mitigation narrative
Supply chain & sourcingInput cost improvements (cotton, freight); SG&A rationalization Vendor partnerships; inbound ocean rate improvements Sourcing diversification; balanced merchandise mix Structural optimization underway
Omni-channel & store strategyPlan to refresh fleet; reopen/opportunistic expansion; concept redesign Emphasis on store openings; store-led back-to-school momentum Balanced inventory entering back-to-school; focus on inventory turns Stores regaining focus; alignment with assortments
Product/brand & licensingNewness in designs; Sugar & Jade expansion; Gymboree repositioning Licensing expansion; fashion-forward assortments resonating New product offerings incl. licensing partnerships and collaborations Increasing fashion/licensing mix
Marketing & loyaltyEfficient marketing; loyalty overhaul; unified data plan New loyalty program launching Q3; brand-building spend Innovative marketing to acquire customers; loyalty program revamp From cost cuts to targeted reinvestment
Technology/AIAI tool for real estate site selection ——Early AI adoption; targeted use case
Regulatory/legalValuation allowance adjustments; no new legal specifics Legal settlement accrual adjustments (non-GAAP) Continued valuation allowance adjustments Ongoing tax allowance management

Management Commentary

  • “The first quarter was a challenging time for our business and customers… results remain under pressure due to the current macroeconomic environment… lapping of our shipping threshold increase added an anticipated challenge to top-line sales… entering the back-to-school selling season with a more balanced inventory position.” — Muhammad Umair, President & Interim CEO .
  • “We expect to see continued top-line sales pressures but remain committed to our long-term goal of delivering profitable top-line sales… revitalized loyalty program, store openings in the back-half of 2025, new licensing partnerships and collaborations, along with innovative marketing initiatives to acquire new customers.” .
  • “We will be implementing an in-depth long-range plan… to yield over $40 million of gross benefits over the next three years… expected to incur one-time costs of approximately $5–$10 million… corporate payroll planned to be below an $80 million run rate in fiscal year 2026.” — John Szczepanski, CFO .

Q&A Highlights

  • No Q1 2026 earnings call transcript was available in the document catalog; we searched for “earnings-call-transcript” and found none for PLCE in 2025–2026, so no Q&A detail is accessible [ListDocuments search returned 0].

Estimates Context

  • Q1 2026 revenue missed consensus by ~$18.5M* ($260.62M* vs actual $242.13M), reflecting traffic/conversion weakness and the lap of stricter shipping thresholds .
  • EPS consensus for Q1 2026 was unavailable*; Q1 2025 showed a small EPS miss (-$1.18 actual vs -$1.1508 estimate)* and revenue miss ($267.88M actual vs $302.77M estimate), suggesting consensus has been high relative to realized demand.
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Trajectory: Despite a weak Q1, subsequent commentary points to improving back-to-school trends and store-led demand stabilization; watch Q2 2026 momentum and comp trajectory for validation .
  • Mix matters: Margin pressure stemmed from channel mix (higher wholesale) and markdowns; success of fashion-forward/licensing initiatives could aid product margins and traffic recovery .
  • Balance sheet and cash: Operating cash outflow and higher revolver borrowings highlight the need for inventory turns and working capital discipline; monitor liquidity (revolver availability, Mithaq commitment) and interest expense .
  • Cost program: The >$40M three-year savings plan and payroll run-rate target (<$80M FY2026) are key to SG&A leverage amid top-line pressure; expect transformation one-time costs in FY25–26 .
  • Tariff overhang: $20–$25M FY2025 tariff/duty headwind with ~80% mitigation planned; sourcing diversification (limited China exposure) helps, but tariff policy volatility remains a risk to margins .
  • Near-term trading: Into prints, skew attention to comp cadence, gross margin mix, and inventory levels; any confirmation of back-to-school strength and improved product mix could drive positive revisions and sentiment .
  • Medium-term thesis: Execution on loyalty, store refresh/openings, and fashion/licensing newness could rebuild brand relevance and omni-channel economics; capex/SEDC expansion (early 2026) has potential to lower fulfillment costs and support margin expansion .