One reason the Children's Place is going bankrupt? Not enough children.

By Bill Peters

'For brands that are stuck in the middle, like Children's Place, it becomes harder to stand out,' analyst says

Children's Place filed for Chapter 11 bankruptcy protection on Sunday.

People might be having fewer children, but that isn't the only thing to blame for Children's Place filing for bankruptcy.

Falling birth rates, cautious consumers, competition and $881 million in debt drove the children's apparel retailer to file for Chapter 11 protection on Sunday. The New Jersey-based chain (PLCE) and shopping-mall fixture cut costs and shook up leadership over the past few years, but annual sales have fallen every year since 2022.

"The children's wear market is tough because there's a declining birth rate," said Neil Saunders, a retail analyst at GlobalData. "It's also tough because parents are under pressure and they're looking to save money, so they've trimmed back on volumes or they're looking for cheaper products.

"That said," he added, "other players in the market face those headwinds as well."

Saunders said that Children's Place - seen as a spot for fashionable but affordable selections - hadn't done enough to keep up with retail rivals like Target (TGT), whose Cat & Jack children's clothing line has become a nearly $3 billion brand. Walmart (WMT) and Amazon.com (AMZN), which can undercut seemingly anyone on price, also pushed further into the space.

When inflation started squeezing shoppers after 2022, Children's Place didn't focus enough on lower prices for struggling consumers, Saunders noted. As busier parents took to online shopping for their children, he said the company raised its threshold for free deliveries, driving shoppers toward its larger retail rivals. Amid changes at retail stores and malls - where it had a lot of stores - analysts said Children's Place didn't change enough.

The U.S. fertility rate fell 1% in 2025 and has fallen 23% since 2007, according to the Centers for Disease Control and Prevention. However, other companies have noted that despite that drop, consumers are spending more per baby. How much of that is due to inflation is unclear.

Emarketer expects U.S. kidswear retail sales this year to rise 4.5% to $69.28 billion. Suzy Davidkhanian, an analyst at Emarketer, said a chain like Children's Place tended to serve special occasions, like gift giving, so a trip there didn't feel as natural or intuitive as, say, a trip to Walmart or Target to restock supplies.

"Those are destination places," she said of the big-box stores. "People go there to buy lots of things, and then also add children's wear to their basket, versus go[ing] there to buy only children's wear."

Children's Place on Sunday said it had voluntarily filed Chapter 11 relief and planned to sell "substantially all" of its assets. Its stores and e-commerce sites are still open and running. As of its second quarter, which ended on Aug. 1, it had 514 stores. According to court documents, it had total assets of roughly $742 million.

The company said it was in discussions with other parties over possible transactions to "continue its business enterprise as a going concern and preserve the value of its brands." Children's Place is asking those parties to submit bids by Dec. 9.

Children's Place's stock tumbled 41.8% on Monday, and is down more than 95% so far this year. Shares were down 4.7% on Tuesday. The stock, worth under 18 cent a share, is trading at a fraction of its early-2018 highs of around $160.

Children's Place started as a toy store in 1969 and also sold children's clothing at that time, CFO John Szczepanski explained at a conference in September of last year. By the 1980s, he noted, it shifted entirely to apparel. In 2007, sales topped $2 billion, according to FactSet data.

As birthrates fell from 2007 levels, the company in the 2010s began focusing more on offerings geared toward "big kids," and predicted bigger discounting in the baby segment. While sales got a boost during the pandemic e-commerce boom, GlobalData's Saunders said the company also took on more debt and used its profits and debts to buy back stock, giving the business little room to make other maneuvers. The company also closed 300 stores in 2020 and 2021.

"To many former customers, the perception was that Children's Place had gone out of business," Szczepanski said at the conference last year.

As the business teetered, it got a lifeline in early 2024. Mithaq Capital - an investment firm for the Al Rajhi family in Saudia Arabia - took a majority stake in the chain. But tariffs and higher gas prices strained the business and its consumers. Last week, days before the Chapter 11 announcement, the company disclosed that its interim CEO had resigned, among other departures. The moves put Szczepanski in the role of principal executive officer.

Davidkhanian said that as Children's Place fields offers for leftover assets, its intellectual property might not be strong enough to attract someone willing to keep the brand name alive.

"For brands that are stuck in the middle, like Children's Place, it becomes harder to stand out," she said.

-Bill Peters

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11-10-26 1756ET