Children's Place Shares Pop 16% After Chair Outlines Suite of Changes

Dow Jones05-25

By Ben Glickman

Shares of The Children's Place rose Friday after the company's new chair outlined a slate of changes to be made to the company's business, including automating more distribution and scrapping earnings calls and guidance.

The stock was up 16% to $13.60 in afternoon trading. Shares are still down about 42% this year.

Saudi investment firm Mithaq Capital took a controlling stake in the Secaucus, N.J., children's retailer earlier this year, with Turki Saleh AlRajhi taking over as chair.

AlRajhi said in a letter to shareholders Friday that the board plans to enact a minimum order size for free shipping, meant to prevent losses or slim margins on low-value orders. He also said the company planned to expand and automate its distribution center, a push to increase efficiency and save costs.

AlRajhi said the board would prioritize minimizing debt whenever possible and would look to keep a certain amount of liquidity on the balance sheet. He said the company plans to raise equity capital through a rights offering, which will depend on market conditions.

The company plans to stop giving earnings guidance and will no longer host quarterly earnings calls, a push by management to ignore short-term fluctuations, according to AlRajhi.

Children's Place will also look for operating efficiencies, including related to "the growth of human capital at headquarters."

"Since the majority of total revenue is e-commerce, the quantum of human capital should be adjusted accordingly," AlRajhi said.

AlRajhi also said he would forgo any form of compensation as chair.

Write to Ben Glickman at ben.glickman@wsj.com

(END) Dow Jones Newswires

May 24, 2024 15:30 ET (19:30 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.

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