Blog: Children's Place going places?
Leonie Barrie | 12 October 2007
The Children's Place isn’t commenting on claims that it’s up for sale, but its recent run of bad luck might not mean these rumours are too far off the mark.
An ongoing dispute with The Walt Disney Company with whom it has an agreement to operate 328 Disney Stores, the resignation of CEO Ezra Dabah for violating the company's code of conduct on securities trades, and failing to file any quarterly reports since June 2006, are just some of the problems it has recently been up against.
And just when things looked like they couldn’t get any worse, this week its auditor, Deloitte & Touche, decided not to stand for re-election and the retailer was forced to slash its full year earnings forecast.
Prospective suitors are thought to include private equity and apparel firms, but they will need to be convinced there are opportunities to improve the company's performance – and that the information included in the company’s audits is sound.
Some analysts see the Disney Store business as the biggest hurdle to any sale though. Margins are low and a newly agreed $175m store remodeling schedule over the next four years will be a heavy financial drain. But exiting the agreement will be a costly option too.
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