The Children’s Place (PLCE) Q2 2027 earnings summary

Executive summary

• Net sales for Q2 2026 decreased 18.9% year-over-year to $241.8 million, with comparable retail sales down 16.7% due to lower traffic, clearance-heavy mix, and planned wholesale reductions.

• Gross profit fell to $83.3 million, but gross margin improved to 34.4% due to $39 million in tariff refunds; excluding refunds, gross margin declined significantly.

• Operating loss was $13.0 million versus income of $4.1 million last year, driven by lower sales and higher SG&A as a percentage of sales; adjusted operating loss was $10.9 million.

• Net loss widened to $31.0 million ($1.39 per share) from $5.4 million ($0.24 per share) in Q2 2025; adjusted net loss was $18.2 million ($0.82 per share).

• Opened 19 new stores, the highest quarterly addition since 2013, and focused on boosting fleet profitability.

Financial highlights

• Year-to-date net sales declined 15.4% to $457.0 million; comparable retail sales down 12.9%.

• Year-to-date gross margin decreased 200 bps to 29.9%; adjusted gross margin was 30.9%.

• Year-to-date operating loss was $55.2 million, compared to $20.0 million last year.

• Year-to-date net loss was $84.1 million ($3.79 per share), versus $39.4 million ($1.80 per share) in 2025.

• Cash used in operations improved to $32.3 million YTD from $73.4 million last year, aided by better working capital management.

Outlook and guidance

• Macroeconomic pressures, including inflation, higher gas prices, and tariffs, are expected to continue impacting results for the remainder of fiscal 2026.

• Management expects to meet working capital and capital expenditure needs for at least the next twelve months through cash, operations, and available credit.

• Negative sales and margin trends began to reverse at the start of Q3 as wholesale partners rebuild inventory ahead of the holiday season.

• AI-enabled creative optimization and brand media initiatives are expected to further improve conversion and engagement for the holiday season.

• Continued focus on cost reduction, liquidity improvement, and transformation plan execution.