A kids' clothing chain with roughly five hundred stores now has about a month to find a buyer. You're listening to Fashion Business Daily. Today: The Children's Place in Chapter 11, a CEO buying his licensing company back from private equity, and Morgan Stanley taking a little air out of the French luxury stocks. First stop, a bankruptcy court in New Jersey.
Daphne Howland, writing in Retail Dive:
The goal is to sell itself by the end of the year, with bids due Dec. 9, according to court documents. Nine proposals have been received but they are “not currently actionable.” The company plans to enter into a new term loan facility provided by existing secured lenders.
The filing landed on Sunday, November 8, in the US Bankruptcy Court for the District of New Jersey. The Secaucus-based company, which also runs Gymboree, listed about 742 million dollars in assets against about 881 million in debts. Stores and websites stay open for now, but Retail Dive says store-closing sales started last week, and the company has said some closures will be necessary without naming locations. Nine proposals, none actionable. Retail Dive breaks them down: six for the going concern or the intellectual property, three to liquidate substantially all the assets. So a third of the interested parties want to sell off the inventory, not run the chain. And the numbers explain why. ROI-NJ reports net sales for the fiscal year to August 2026 fell 15.9 percent to 1.13 billion dollars, and the operating loss widened to 57 million from 14 million. Saudi firm Mithaq Capital became majority owner in 2024 and put in about 208 million dollars. That bought time, not a turnaround. Then on November 1, the interim CEO and the chief strategy officer stepped down, and the CFO, John Szczepanski, became acting president. For me this is a product story. GlobalData's Neil Saunders says Target, Walmart, Amazon and the off-pricers improved the quality and design of their kids' clothes and sell them for less. If the big-box toddler hoodie is better and cheaper, why drive to the mall? And the people paying for it are on the shop floor. A notice filed with New Jersey regulators covers 732 positions in the state by February 2, 2027, right through the holidays. On buyers, keep the labels straight. Debtwire reported last month that J.C. Penney owner Catalyst Brands was among potential bidders, interested in the IP and about 200 stores. That's a report. Catalyst didn't comment. The next marker is a stalking horse bid, due in about a week, which sets the floor everyone else has to beat.
Lisa Lockwood, with an exclusive interview in WWD:
They were supportive, but they’re private equity. Private equity is an investment, and after a point in time, it’s time. What’s next? So with me being an entrepreneur in this business, I wanted my company back
That's Jason Rabin, CEO of Centric Brands. The management buyout closed on Friday, November 6. Rabin is now majority owner, with Axar Capital Management, M-Cor Capital, MSP Sports Capital and group president Jarrod Kahn. Blackstone, Ares and HPS, who have backed the company since 2018, are exiting. WWD's piece doesn't put a price on the deal. Most shoppers have never heard of Centric, and they've almost certainly worn something it made. More than a hundred licensed and owned brands: Calvin Klein, Tommy Hilfiger, Ugg, Under Armour, Off-White, plus Coach and Michael Kors under license. It sells everywhere from Walmart to Neiman Marcus. When one operator makes product for that many competing labels, the brand difference has to live in the design brief. I'd want to know who's protecting that. On scale, WWD puts revenue above three billion dollars. It's a private company, so that's not an audited, reported figure we can check. Rabin says nothing changes strategically. Same staff, about 2,600 people across 26 offices, and no IPO, which he says is not in the cards today. The growth plan is international. There are offices in Milan, Amsterdam and London, and in Asia, where most of its sixteen-plus offices handle sourcing, it wants to build wholesale and distribution. One detail caught my ear. Asked about the Saks Global bankruptcy, Rabin said straight out that Centric was impacted. Off-White is one of its top department-store brands, so when luxury wholesale wobbles, a licensing giant feels it too. And the deal pipeline is the other half of his pitch. Rabin points out that brand owners like Authentic don't make product, so every brand they buy is a potential manufacturing contract for someone like Centric. He also says he'd rather own a brand outright if it can work across men's, women's, kids and accessories. So this is a bet that licensing demand keeps growing, now with the founder holding the equity.
Sebastien Foll, reporting for MarketScreener:
Its concerns focus particularly on weak demand in China, which accounts for 25% of total sales, as well as deteriorating activity in France and South Korea, which represent 7.5% and 6% of the market, respectively.
That's Morgan Stanley, on Monday, cutting its price targets on the big luxury names because it sees a tougher year-end than expected. These are analyst targets, not company guidance. LVMH goes to 415 euros from 420, Hermès to 1,375 from 1,400, Kering to 200 from 220, all still equal-weight. Richemont stays overweight and remains the broker's top pick, though its target drops to 206 Swiss francs from 220. And on the day, Kering went up. Seven-tenths of a percent, while LVMH slid 2.1 percent to 400 euros and Hermès lost 1.3. When the house whose target took the biggest cut is the only gainer, the market has already priced in a lot of bad news. Look at the upside numbers, though. Morgan Stanley's new target sits only about two percent above LVMH's price and one percent above Hermès's. That's a broker telling you it sees almost nowhere for these stocks to go. The South Korea part has backing from the ground. Edaily reported Tuesday that Lotte, Shinsegae and Hyundai all grew department-store operating profit in the third quarter, with a lot of it driven by foreign shoppers. But luxury sales growth at the three slowed from around 40 percent in the second quarter to the mid-twenties in the third. In October it was fifteen percent at Lotte and about ten at Shinsegae. That's the honest read. Korea's stores are still growing, just much more slowly, and a market that drove luxury growth this year is cooling into the holidays. Morgan Stanley is flagging that before the year-end numbers arrive. I'll take its view as a forecast until fourth-quarter sales confirm it.
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That's the Tuesday briefing. We'll be watching for that Children's Place stalking horse bid. Fashion Business Daily is made by Lantern Podcasts, and we're back tomorrow.