Children's Place's stock tumbles after longtime CEO agrees to leave

MW Children's Place's stock tumbles after longtime CEO agrees to leave

By Tomi Kilgore

Retailer's change in leadership comes three months after Saudi Arabia's Mithaq Capital takes controlling stake

Shares of Children's Place Inc. took a dive Tuesday after the retailer of children's apparel said longtime Chief Executive Jane Elfers has left the company under a "mutual agreement."

Muhammad Umair, who has a finance background and was appointed to the company's board of directors three months ago, was named interim CEO.

The stock $(PLCE)$ tumbled 18.8% in afternoon trading. On Monday, it had closed at a two-month high of $13.82, following a 105.7% spike higher off a 26-year closing low of $6.72 on May 1.

That rally was helped along by fourth-quarter results released on May 6, when the company reported a surprise increase in same-store sales to snap a seven-quarter streak of declines.

Elfers's departure comes after the announcement on Feb. 15 that Saudi-based Mithaq Capital had acquired 54% of Children's Place's shares outstanding. The company said that "unsolicited" acquisition of shares by Mithaq constituted a "change of control."

And with that change and Elfers's mutually agreed-upon departure, the company said it had entered into a separation agreement that included a $3.75 million severance payment to Elfers.

Interim CEO Umair was one of four people Mithaq had nominated who Children's Place appointed to its board of directors. With his appointment as interim CEO, Umair will receive an annual base salary of $650,000 and will be eligible for incentive compensation.

Before his appointment as interim CEO, Umair was a senior adviser at trade-finance fund Origin Funding Partners. Before joining Origin, Umair had been an investment adviser at AMD Holding in Saudi Arabia since 2016.

Children's Place's stock has now plunged 51.7% year to date, while the SPDR S&P Retail exchange-traded fund XRT has gained 4% and the S&P 500 SPX has climbed 11.4%.

-Tomi Kilgore

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May 21, 2024 15:26 ET (19:26 GMT)

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