The net sales declined by 11.1 per cent year on year (YoY) to $215.2 million in the three months ended May 2, 2026, from $242.1 million a year earlier. The decline was driven primarily by a 10.2 per cent drop in direct-to-consumer (DTC) sales due to lower traffic as the company works to stabilise its customer base. Comparable retail sales in the owned and operated DTC business fell 8.3 per cent during the quarter.
The Children’s Place has reported net sales of $215.2 million in Q1 FY26, down 11.1 per cent YoY, as weaker consumer spending and lower traffic weighed on performance.
Net loss widened to $53.2 million from $34 million a year earlier, while gross margin fell to 24.8 per cent due to tariffs and distribution costs.
The company is pursuing transformation initiatives to support recovery.
“Today, we reported our first quarter results, which provide assurance that our strategies are beginning to take shape as we observed a reduction in the rate of sales declines versus the prior quarter and the same quarter last year, combined with material progress on our transformation efforts in a challenging retail environment,” said Muhammad Umair, president and CEO at The Children’s Place.
Gross margin contracts amid cost pressures
The gross profit fell to $53.4 million from $70.8 million in the prior-year period, while gross margin contracted by 440 basis points to 24.8 per cent. The decline was mainly attributed to higher tariff-related product costs, increased distribution expenses linked to the exit from a third-party distribution facility and a higher proportion of markdown sales.
The adjusted gross margin decreased by 240 basis points to 26.8 per cent, The Children’s Place said in a press release.
“We recognise that our value customer has been impacted by higher gas and grocery prices. As a result, we are committed to clear messaging regarding the strength of our price/value offerings,” added Umair.
Selling, general and administrative (SG&A) expenses rose 2.5 per cent to $88.9 million, reflecting higher store-related costs as the retailer expanded its store network. Operating loss widened to $42.2 million from $24.1 million a year earlier, while adjusted operating loss increased to $36.1 million from $24 million.
Net loss widened to $53.2 million, or $2.4 per diluted share. Adjusted net loss stood at $44.3 million, or $2 per diluted share.
“While keeping our prices stable has narrowed our profit margins, further compounded by product cost headwinds from higher tariffs, we have filed for tariff refund claims amounting to approximately $40 million, which we expect to partially offset margin dilution during this fiscal year, and of which $5.5 million has already been received to date,” he said.
Company targets $60 million in annualised savings by FY27
The company unveiled four strategic priorities to support its long-term transformation: Improving customer experience across channels, strengthening and elevating the brand, delivering on financial targets and enhancing organisational leadership.
“We believe these strategic priorities are critical to move our brand forward, providing a strong foundation for us to refocus on our customer, enhance our brand, and increase our profitability. Execution is now of utmost importance, and we will provide updates on a regular basis as to how we are tracking against these priorities,” Umair said.
The company also continued its cost-reduction programme, achieving $45 million in gross annualised benefits towards its target of $60 million by fiscal 2027. During the quarter, it exited a third-party distribution facility, a move expected to generate approximately $10 million in annualised savings.
It continues to focus on cost reduction and driving operational efficiencies and has actioned $45 million in gross annualised benefits towards its goal of $60 million by fiscal 2027.
The Children’s Place opened one store and closed two during the quarter, ending the period with 497 stores, compared to 495 stores a year earlier.
Fibre2Fashion News Desk (SG)
