GlobeNewswire Inc | Mar 9, 2021 07:00AM EST

March 09, 2021

Reports Q4 GAAP Earnings per Diluted Share of $0.53 versus $1.61 in Q4 2019

Reports Q4 Adjusted Earnings per Diluted Share of $1.01 versus $1.85 in Q4 2019

SECAUCUS, N.J., March 09, 2021 (GLOBE NEWSWIRE) -- The Childrens Place, Inc. (Nasdaq: PLCE), the largest pure-play childrens specialty apparel retailer in North America, today announced financial results for the fourth quarter and fiscal year ended January 30, 2021.

Jane Elfers, President and Chief Executive Officer announced, Fourth quarter results exceeded our expectations across all key metrics with sales significantly exceeding our expectations in both our digital and stores channels. Consolidated digital sales increased 38% for the fourth quarter, representing46% of total sales. For full year 2020, digital sales increased 37%, and we ended the year with an industry-leading digital penetration of 53% of total sales. For fiscal 2020, we added 1.9 million new digital customers, converted over 1 million of our store-only customers to omni-channel customers, and increased our mobile app downloads by approximately 60%. With no significant COVID-19 temporary U.S. store closures during the quarter, U.S. store sales were better than expected at 81% of last years levels with traffic down approximately 35%. However, due to the significant impact of government mandated COVID-19 closures in Canada, impacting approximately two thirds of our Canadian stores for approximately half of the fourth quarter,Canada store sales performed at 52% of last years levels, with traffic down 62%.

Ms. Elfers continued, With respect to our fleet optimization initiative, we closed 60 stores during thequarter bringing our total stores closures to 178 for 2020. We plan to close a total of approximately 122 stores in 2021, with 25 planned closures in the first quarter, and 97 closures planned by the end of fiscal 2021, bringing our total closures for the two year period to our previously announced target of 300 closures.

Ms. Elfers concluded, Our entire organization committed to delivering the best possible results for our customers and our shareholders this past year and I want to thank each of our associates for their resilience during this very difficult period. We operated at a high level throughout the pandemic and due to our consistent and focused execution of our long-term strategic plan, we believe we have multiple opportunities ahead of us for accelerated operating margin expansion. While we are hopeful that the pandemic will subside in 2021, we will continue to address the many pandemic-related challenges we face between now and then, and,at the same time, continue to focus on realizing the significant opportunity that exists for our brands.

Fourth Quarter 2020 ResultsNet sales decreased 7.8% to $472.9 million in the three months ended January 30, 2021 compared to $513.0 million in the three months ended February 1, 2020, primarily driven by the impact of permanent and temporary store closures and the negative impact of reduced operating hours in our mall stores, as mandated by the mall owners. Comparable retail sales for the quarter increased 1%.

Gross profit was $139.8 million in the three months ended January 30, 2021, compared to $166.4 million in the three months ended February 1, 2020. Adjusted gross profit was $143.9 million in the three months ended January 30, 2021, compared to $166.9 million in the comparable period last year, and deleveraged 210 basis points to 30.4% of net sales. The decrease was primarily a result of increased penetration of our e-commerce business and its higher fulfillment costs, inclusive of incremental freight surcharges and additional costs resulting from capacity constraints from our major carriers, a $13.6 million donation of seasonal holiday product as a result of historically low demand in dress-up product, and the deleverage of fixed expenses resulting from the decline in net sales, partially offset by lower occupancy expenses due to rent abatements of $12.9 million and lease negotiations, and higher merchandise margins in both our stores and digital channels.

Selling, general, and administrative expenses were $108.8 million in the three months ended January 30, 2021, compared to $113.2 million in the three months ended February 1, 2020. Adjusted SG&A was $102.7 million in the three months ended January 30, 2021, compared to $113.0 million in the comparable period last year, and leveraged 30 basis points to 21.7% of net sales, primarily as a result of a reduction in store expenses resulting from our permanent store closures, as well as a reduction in overall operating expenses associated with strategic actions taken in response to the COVID-19 pandemic, partially offset by higher incentive compensation accruals.

Operating income was $14.4 million in the three months ended January 30, 2021, compared to $29.5 million in the three months ended February 1, 2020. Adjusted operating income was $26.0 million in the three months ended January 30, 2021, compared to $35.4 million in the comparable period last year, and deleveraged 140 basis points to 5.5% of net sales.

Interest expense was $4.1 million in the three months ended January 30, 2021, compared to $1.8 million in the three months ended February 1, 2020. The increase in interest expense was driven by a higher debt balance and the higher interest rate associated with the term loan.

Net income was $7.8 million, or $0.53 per diluted share, in the three months ended January 30, 2021, compared to net income of $24.2 million, or $1.61 per diluted share, in the three months ended February 1, 2020. Adjusted net income was $14.9 million, or $1.01 per diluted share, compared to adjusted net income of $28.0 million, or $1.85 per diluted share, in the comparable period last year.

Fiscal 2020 ResultsNet sales decreased 18.6% to $1.523 billion in the twelve months ended January 30, 2021 compared to $1.871 billion in the twelve months ended February 1, 2020, primarily as a result of the disruption caused by the COVID-19 pandemic, resulting in a significant acceleration of permanent store closures, extensive temporary store closures, and a significant decrease in back-to-school demand due to schools adopting remote and hybrid learning models, partially offset by increased e-commerce sales.

Gross profit was $333.3 million in the twelve months ended January 30, 2021, compared to $655.3 million in the twelve months ended February 1, 2020. Adjusted gross profit was $408.8 million in the twelve months ended January 30, 2021, compared to $655.3 million in the comparable period last year, and deleveraged 820 basis points to 26.8% of net sales, primarily as a result of increased penetration of our e-commerce business and its higher fulfillment costs, a decrease in merchandise margin resulting from strategic actions taken in the first half of fiscal 2020 in response to the pandemic-driven temporary closure of our entire store fleet, and the deleverage of fixed expenses resulting from the decline in net sales.

Selling, general, and administrative expenses were $428.2 million in the twelve months ended January 30, 2021, compared to $478.1 million in the twelve months ended February 1, 2020. Adjusted SG&A was $402.1 million in the twelve months ended January 30, 2021, compared to $472.3 million in the comparable period last year, and deleveraged 120 basis points to 26.4% of net sales, primarily as a result of the deleverage of fixed expenses resulting from the decline in net sales and higher incentive compensation accruals, partially offset by a reduction in store expenses resulting from our permanent store closures, as well as a reduction in overall operating expenses associated with strategic actions taken in response to the COVID-19 pandemic.

Operating loss was ($199.9) million in the twelve months ended January 30, 2021, compared to operating income of $96.4 million in the twelve months ended February 1, 2020. Adjusted operating loss was ($56.7) million in the twelve months ended January 30, 2021, compared to adjusted operating income of $111.3 million in the comparable period last year, and deleveraged 970 basis points to (3.7%) of net sales.

Interest expense was $11.8 million in the twelve months ended January 30, 2021, compared to $7.9 million in the twelve months ended February 1, 2020. The increase in interest expense was driven by a higher debt balance and the higher interest rate associated with the term loan.

Net loss was ($140.4) million, or ($9.59) per diluted share, in the twelve months ended January 30, 2021, compared to net income of $73.3 million, or $4.68 per diluted share, in the twelve months ended January 30, 2021. Adjusted net loss was ($53.4) million, or ($3.65) per diluted share, compared to adjusted net income of $83.8 million, or $5.36 per diluted share, in the comparable period last year.

Non-GAAP ReconciliationThe Companys results are reported in this press release on a GAAP and as adjusted, non-GAAP basis. Adjusted net income (loss), adjusted net income (loss) per diluted share, adjusted gross profit, adjusted selling, general, and administrative expenses, and adjusted operating income (loss) are non-GAAP measures, and are not intended to replace GAAP financial information, and may be different from non-GAAP measures reported by other companies. The Company believes the income and expense items excluded as non-GAAP adjustments are not reflective of the performance of its core business, and that providing this supplemental disclosure to investors will facilitate comparisons of the past and present performance of its core business.

In the fourth quarter, the Company modified its reporting practices regarding the use of non-GAAP measures. As a result, the Company no longer excludes the following items from its non-GAAP measures: (1) occupancy charges for rent at our stores when they were temporarily closed of approximately $49.0 million; and (2) payroll and benefits for certain store employees during the period our stores were temporarily closed, net of a payroll tax credit benefit resulting from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, of approximately $4.2 million. Included with the Reconciliation of Non-GAAP Financial Information to GAAP tables at the end of this press release are tables setting forth reconciliations reflecting the above modifications for prior fiscal quarters in fiscal 2020.

For the three months ended January 30, 2021, the Companys adjusted results exclude net expenses of approximately $11.6 million, primarily related to the impact of the COVID-19 pandemic, including incremental COVID-19 operating expenses, including incentive pay and personal protective equipment for our associates. The total impact on income taxes for the above items was approximately $4.4 million, including a provision of approximately $1.4 million, primarily resulting from the changes in operating loss carryback rules as a result of the CARES Act.

For the twelve months ended January 30, 2021, the Company recorded an inventory provision of approximately $63.2 million and approximately $38.5 million of impairment charges, including the right-of-use assets recorded in connection with the adoption of the new lease accounting standard. The inventory provision relates to the adverse business disruption resulting from the COVID-19 pandemic, including the store closures. The impairment charges were primarily a result of decreased net revenue and cash flow projections resulting from the COVID-19 pandemic disruption.

In addition to the inventory provision and impairment charges, the Companys adjusted results for the twelve months ended January 30, 2021 exclude net expenses of approximately $41.5 million, primarily related to the impact of the COVID-19 pandemic, including incremental COVID-19 operating expenses, including incentive pay and personal protective equipment for our associates.

The total impact on income taxes for the above items for the year ended January 30, 2021 was approximately $56.2 million, including a benefit of approximately $18.3 million, primarily resulting from the changes in operating loss carryback rules as a result of the CARES Act.

Store UpdateAs of January 30, 2021, the Company had 680 of 749 stores open to the public in the U.S., Canada, and Puerto Rico, with all but one store of the temporarily closed stores located in Canada.

Consistent with the Companys store fleet optimization initiative, the Company permanently closed 60 stores in the three months ended January 30, 2021, bringing our store closures for fiscal 2020 to 178 stores. The Company is planning to close a total of 122 stores in fiscal 2021, with approximately 25 stores closing in the first quarter, and approximately 97 closures planned by the end of fiscal 2021, bringing our total closures for the two year period to our previously announced target of 300 closures.

The Company ended the quarter with 749 stores and square footage of 3.6 million, a decrease of 16.3% compared to the prior year. The Company permanently closed 178 stores in fiscal 2020, and since the Companys fleet optimization initiative was announced in 2013, it has permanently closed 449 stores.

Balance Sheet and Cash FlowAs of January 30, 2021, the Company had approximately $64 million of cash and cash equivalents and $170 million outstanding on its revolving credit facility. Additionally, the Company generated approximately $15 million in operating cash flow in the three months ended January 30, 2021.

OutlookAs a result of the continued uncertainty created by the COVID-19 pandemic, the Company is not providing EPS guidance.

Conference Call InformationThe Childrens Place will host a conference callonTuesday, March 9, 2021at 8:00 a.m. Eastern Timeto discuss its fourth quarter and full year fiscal 2020 results.

The call will be broadcast live at http://investor.childrensplace.com. An audio archive will be available on the Companys website approximately one hour after the conclusion of the call. A conference call transcript will also be posted on our website.

About The Childrens PlaceThe Childrens Place is the largest pure-play childrens specialty apparel retailer in North America. The Company designs, contracts to manufacture, sells at retail and wholesale, and licenses to sell fashionable, high-quality merchandise predominantly at value prices, primarily under the proprietary The Childrens Place, Place, Baby Place, and Gymboree brand names. As of January 30, 2021, the Company had 749 stores in the United States, Canada, and Puerto Rico, online stores atwww.childrensplace.comand www.gymboree.com,and the Companys eight international franchise partners had 230 international points of distribution in 19 countries.

Forward Looking StatementsThis press release, contains or may contain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to statements relating to the Companys strategic initiatives and adjusted net income per diluted share. Forward-looking statements typically are identified by use of terms such as may, will, should, plan, project, expect, anticipate, estimate and similar words, although some forward-looking statements are expressed differently. These forward-looking statements are based upon the Companys current expectations and assumptions and are subject to various risks and uncertainties that could cause actual results and performance to differ materially. Some of these risks and uncertainties are described in the Companys filings with the Securities and Exchange Commission, including in the Risk Factors section of its annual report on Form 10-K for the fiscal year ended February 1, 2020 and supplemented by the Risk Factors sections of its quarterly reports on Form 10-Q for the fiscal quarter ended May 2, 2020 and the fiscal quarter ended August 1, 2020. Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unsuccessful in gauging fashion trends and changing consumer preferences, the risks resulting from the highly competitive nature of the Companys business and its dependence on consumer spending patterns, which may be affected by changes in economic conditions, the risks related to the COVID-19 pandemic, including the impact of the COVID-19 pandemic on our business or the economy in general (including decreased customer traffic, schools adopting remote and hybrid learning models, closures of businesses and other activities causing decreased demand for our products and negative impacts on our customers spending patterns due to decreased income or actual or perceived wealth, and the impact of the CARES Act and other legislation related to the COVID-19 pandemic, and any changes to the CARES Act or such other legislation), the risk that the Companys strategic initiatives to increase sales and margin are delayed or do not result in anticipated improvements, the risk of delays, interruptions and disruptions in the Companys global supply chain, including resulting from COVID-19 or other disease outbreaks, or foreign sources of supply in less developed countries or more politically unstable countries, the risk that the cost of raw materials or energy prices will increase beyond current expectations or that the Company is unable to offset cost increases through value engineering or price increases, various types of litigation, including class action litigations brought under consumer protection, employment, and privacy and information security laws and regulations, the imposition of regulations affecting the importation of foreign-produced merchandise, including duties and tariffs, and the uncertainty of weather patterns. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. The Company undertakes no obligation to release publicly any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Contact: Investor Relations(201) 558-2400 ext. 14500

(Tables follow)

THE CHILDREN?S PLACE, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts)(Unaudited) Fourth Quarter Ended Year-To-Date Ended January 30, February 1, January 30, February 1, 2021 2020 2021 2020 Net sales $ 472,897 $ 513,020 $ 1,522,598 $ 1,870,667 Cost of sales 333,118 346,660 1,189,347 1,215,362 Gross profit 139,779 166,360 333,251 655,305 Selling, generaland administrative 108,792 113,183 428,234 478,120 expensesAsset impairment 598 4,731 38,527 6,039 chargesDepreciation and 16,000 18,911 66,405 74,788 amortizationOperating income 14,389 29,535 (199,915 ) 96,358 (loss)Interest expense, (4,101 ) (1,797 ) (11,843 ) (7,941 )netIncome (loss) 10,288 27,738 (211,758 ) 88,417 before taxesProvision (benefit) 2,524 3,497 (71,393 ) 15,117 for income taxesNet income (loss) $ 7,764 $ 24,241 $ (140,365 ) $ 73,300 Earnings (loss) per common shareBasic $ 0.53 $ 1.61 $ (9.59 ) $ 4.71 Diluted $ 0.53 $ 1.61 $ (9.59 ) $ 4.68 Weighted averagecommon shares outstandingBasic 14,642 15,027 14,631 15,547 Diluted 14,769 15,101 14,631 15,653

THE CHILDREN?S PLACE, INC.RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP(In thousands, except per share amounts)(Unaudited) Fourth Quarter Ended Year-To-Date Ended January 30, February 1, January 30, February 1, 2021 2020 2021 2020 Net income (loss) $ 7,764 $ 24,241 $ (140,365 ) $ 73,300 Non-GAAP adjustments:Incremental COVID-19 4,865 - 22,495 - operating expensesRestructuring costs 3,172 690 10,509 2,808 Fleet optimization 2,129 1,104 3,400 2,297 Accelerated 809 478 2,980 3,145 depreciationAsset impairment 599 4,731 38,528 6,039 chargesInventory provision - - 63,247 - Accounts receivables - - 1,081 - Gymboree integration - 1,076 640 2,144 costsForeign exchange - (2,200 ) - (2,200 ) penaltiesLegal reserve - - 302 - Distributionfacility start-up - - - 721 costsAggregate impact of 11,574 5,879 143,182 14,954 Non-GAAP adjustmentsIncome tax effect^ (3,027 ) (2,140 ) (37,880 ) (4,545 ) (1)Prior year uncertain - - - 135 tax positions^(2)Impact of CARES Act (1,381 ) - (18,309 ) - Net impact of 7,166 3,739 86,993 10,544 Non-GAAP adjustments Adjusted net income $ 14,930 $ 27,980 $ (53,372 ) $ 83,844 (loss) GAAP net income(loss) per common $ 0.53 $ 1.61 $ (9.59 ) $ 4.68 share Adjusted net income(loss) per common $ 1.01 $ 1.85 $ (3.65 ) $ 5.36 share (1) The tax effects of the non-GAAP items arecalculated based on the statutory rate of the jurisdiction in which the discrete item resides. (2) Prior year tax related to uncertain tax positions. Fourth Quarter Ended Year-To-Date Ended January 30, February 1, January 30, February 1, 2021 2020 2021 2020 Operating income $ 14,389 $ 29,535 $ (199,915 ) $ 96,358 (loss) Non-GAAP adjustments:Incremental COVID-19 4,865 - 22,495 - operating expensesRestructuring costs 3,172 690 10,509 2,808 Fleet optimization 2,129 1,104 3,400 2,297 Accelerated 809 478 2,980 3,145 depreciationAsset impairment 599 4,731 38,528 6,039 chargesInventory provision - - 63,247 - Accounts receivables - - 1,081 - Gymboree integration - 1,076 640 2,144 costsForeign exchange - (2,200 ) - (2,200 ) penaltiesLegal reserve - - 302 - Distributionfacility start-up - - - 721 costsAggregate impact of 11,574 5,879 143,182 14,954 Non-GAAP adjustments Adjusted operating $ 25,963 $ 35,414 $ (56,733 ) $ 111,312 income (loss)

THE CHILDREN?S PLACE, INC.RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP(In thousands, except per share amounts)(Unaudited) Fourth Quarter Ended Year-To-Date Ended January 30, February 1, January 30, February 1, 2021 2020 2021 2020 Gross profit $ 139,779 $ 166,360 $ 333,251 $ 655,305 Non-GAAP adjustments: Incremental COVID-19 3,428 - 11,632 - operating expensesFleet optimization 643 512 643 (38 )Inventory provision - - 63,247 - Aggregate impact of 4,071 512 75,522 (38 )Non-GAAP adjustments Adjusted Gross profit $ 143,850 $ 166,872 $ 408,773 $ 655,267 Fourth Quarter Ended Year-To-Date Ended January 30, February 1, January 30, February 1, 2021 2020 2021 2020 Selling, general and $ 108,792 $ 113,183 $ 428,234 $ 478,120 administrative expenses Non-GAAP adjustments: Restructuring costs (3,172 ) (690 ) (10,509 ) (2,808 )Fleet optimization (1,486 ) (592 ) (2,757 ) (2,335 )Incremental COVID-19 (1,437 ) - (10,863 ) - operating expensesAccounts receivables - - (1,081 ) - Gymboree integration - (1,076 ) (640 ) (2,144 )costsForeign exchange - 2,200 - 2,200 penaltiesLegal reserve - - (302 ) - Distribution facility - - - (721 )start-up costsAggregate impact of (6,095 ) (158 ) (26,152 ) (5,808 )Non-GAAP adjustments Adjusted Selling,general and $ 102,697 $ 113,025 $ 402,082 $ 472,312 administrative expenses

January 30, February 1, 2021 2020*Assets: Cash and cash equivalents $ 63,548 $ 68,487Accounts receivable 39,534 32,812Inventories 388,141 327,165Other current assets 55,860 21,416Total current assets 547,083 449,880 Property and equipment, net 181,801 236,898Right-of-use assets 280,209 393,820Tradenames, net 72,492 73,291Other assets, net 55,127 27,508Total assets $ 1,136,712 $ 1,181,397 Liabilities and Stockholders' Equity: Revolving loan $ 169,778 $ 170,808Accounts payable 239,173 213,115Current lease liabilities 183,194 121,868Accrued expenses and other current liabilities 122,012 89,216Total current liabilities 714,157 595,007 Long-term lease liabilities 215,100 311,908Term Loan 75,346 -Other liabilities 38,732 39,295Total liabilities 1,043,335 946,210 Stockholders' equity 93,377 235,187 Total liabilities and stockholders' equity $ 1,136,712 $ 1,181,397 * Derived from the audited consolidated financial statements included in theCompany's Annual Report on Form 10-Kfor the fiscal year ended February 1, 2020.

52 Weeks 52 Weeks Ended Ended January 30, February 1, 2021 2020 Net income (loss) $ (140,365 ) $ 73,300 Non-cash adjustments 200,554 251,645 Working capital (95,906 ) (147,043 ) Net cash provided by (used in) operating (35,717 ) 177,902 activities Net cash used in investing activities (30,374 ) (134,350 ) Net cash provided by (used in) financing 60,929 (44,374 ) activities Effect of exchange rate changes on cash 223 173 Net decrease in cash and cash (4,939 ) (649 ) equivalents Cash and cash equivalents, beginning of 68,487 69,136 period Cash and cash equivalents, end of period $ 63,548 $ 68,487

THE CHILDREN?S PLACE, INC.RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP(In thousands, except per share amounts)(Unaudited) First Second Third Fourth Year-To-Date Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended May 2, August 1, October January January 30, 31, 30, 2020 2020 2020 2021 2021 Net income $ (114,810 ) $ (46,639 ) $ 13,320 $ 7,764 $ (140,365 )(loss) Non-GAAP adjustments:IncrementalCOVID-19 2,374 9,840 5,416 4,865 22,495 operatingexpensesRestructuring 3,391 3,030 916 3,172 10,509 costsFleet - 650 621 2,129 3,400 optimizationAccelerated 141 1,203 827 809 2,980 depreciationAssetimpairment 37,091 544 294 599 38,528 chargesInventory 63,247 - - - 63,247 provisionAccounts 1,043 38 - - 1,081 receivablesGymboreeintegration 640 - - - 640 costsLegal reserve 302 - - - 302 Aggregateimpact of 108,229 15,305 8,074 11,574 143,182 Non-GAAPadjustmentsIncome tax (28,663 ) (4,054 ) (2,136 ) (3,027 ) (37,880 )effectImpact of (13,477 ) (3,901 ) 450 (1,381 ) (18,309 )CARES ActNet impact ofNon-GAAP 66,089 7,350 6,388 7,166 86,993 adjustments Adjusted net $ (48,721 ) $ (39,289 ) $ 19,708 $ 14,930 $ (53,372 )income (loss) GAAP netincome (loss) $ (7.86 ) $ (3.19 ) $ 0.91 $ 0.53 $ (9.59 )per commonshare Adjusted netincome (loss) $ (3.33 ) $ (2.68 ) $ 1.35 $ 1.01 $ (3.65 )per commonshare Itemspreviouslyexcluded from adjusted netincome(loss):Occupancy 23,126 23,932 1,915 - 48,973 chargesStore payrolland benefits,net of CARES 4,242 - - - 4,242 Act retentioncreditIncome tax (7,250 ) (6,341 ) (508 ) - (14,099 )effectNet impact ofNon-GAAPadjustments 86,207 24,941 7,795 7,166 126,109 previouslydisclosed Adjusted netincome (loss) $ (28,603 ) $ (21,698 ) $ 21,115 $ 14,930 $ (14,256 )previouslydisclosed Adjusted netincome (loss)per common $ (1.96 ) $ (1.48 ) $ 1.44 $ 1.01 $ (0.99 )sharepreviouslydisclosed First Second Third Fourth Year-To-Date Quarter Quarter Quarter Quarter Ended Ended Ended Ended Ended May 2, August 1, October January January 30, 31, 30, 2020 2020 2020 2021 2021 Operating $ (173,143 ) $ (64,484 ) $ 23,323 $ 14,389 $ (199,915 )income (loss) Non-GAAP adjustments:IncrementalCOVID-19 2,374 9,840 5,416 4,865 22,495 operatingexpensesRestructuring 3,391 3,030 916 3,172 10,509 costsFleet - 650 621 2,129 3,400 optimizationAccelerated 141 1,203 827 809 2,980 depreciationAssetimpairment 37,091 544 294 599 38,528 chargesInventory 63,247 - - - 63,247 provisionAccounts 1,043 38 - - 1,081 receivablesGymboreeintegration 640 - - - 640 costsLegal reserve 302 - - - 302 Aggregateimpact of 108,229 15,305 8,074 11,574 143,182 Non-GAAPadjustments Adjustedoperating $ (64,914 ) $ (49,179 ) $ 31,397 $ 25,963 $ (56,733 )income (loss) Itemspreviouslyexcluded fromadjusted operatingincome(loss):Occupancy 23,126 23,932 1,915 - 48,973 chargesStore payrolland benefits,net of CARES 4,242 - - - 4,242 Act retentioncreditAggregateimpact ofNon-GAAP 135,597 39,237 9,989 11,574 196,397 adjustmentspreviouslydisclosed Adjustedoperatingincome (loss) $ (37,546 ) $ (25,247 ) $ 33,312 $ 25,963 $ (3,518 )previouslydisclosed

THE CHILDREN?S PLACE, INC.RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP(In thousands, except per share amounts)(Unaudited) First Second Third Quarter Fourth Year-To-Date Quarter Quarter Quarter Ended Ended Ended Ended Ended May 2, August 1, October 31, January 30, January 30, 2020 2020 2020 2021 2021 Gross profit $ (19,673 ) $ 67,080 $ 146,065 $ 139,779 $ 333,251 (loss) Non-GAAP adjustments:IncrementalCOVID-19 1,690 2,745 3,769 3,428 11,632 operatingexpensesFleet - - - 643 643 optimizationInventory 63,247 - - - 63,247 provisionAggregateimpact of 64,937 2,745 3,769 4,071 75,522 Non-GAAPadjustments Adjusted Gross $ 45,264 $ 69,825 $ 149,834 $ 143,850 $ 408,773 profit Itemspreviouslyexcluded from adjusted Grossprofit:Occupancy 23,126 23,932 1,915 - 48,973 chargesAggregateimpact ofNon-GAAP 88,063 26,677 5,684 4,071 124,495 adjustmentspreviouslydisclosed Adjusted Grossprofit $ 68,390 $ 93,757 $ 151,749 $ 143,850 $ 457,746 previouslydisclosed First Second Third Quarter Fourth Year-To-Date Quarter Quarter Quarter Ended Ended Ended Ended Ended May 2, August 1, October 31, January 30, January 30, 2020 2020 2020 2021 2021 Selling,general, and $ 98,491 $ 114,312 $ 106,639 $ 108,792 $ 428,234 administrativeexpenses Non-GAAP adjustments:Restructuring (3,391 ) (3,030 ) (916 ) (3,172 ) (10,509 )costsFleet - (650 ) (621 ) (1,486 ) (2,757 )optimizationIncrementalCOVID-19 (684 ) (7,095 ) (1,647 ) (1,437 ) (10,863 )operatingexpensesAccounts (1,043 ) (38 ) - - (1,081 )receivablesGymboreeintegration (640 ) - - - (640 )costsLegal reserve (302 ) - - - (302 )Aggregateimpact of (6,060 ) (10,813 ) (3,184 ) (6,095 ) (26,152 )Non-GAAPadjustments AdjustedSelling,general, and $ 92,431 $ 103,499 $ 103,455 $ 102,697 $ 402,082 administrativeexpenses Itemspreviouslyexcluded fromadjusted Selling,general, andadministrativeexpense:Store payrolland benefits,net of CARES (4,242 ) - - - (4,242 )Act retentioncreditAggregateimpact ofNon-GAAP (10,302 ) (10,813 ) (3,184 ) (6,095 ) (30,394 )adjustmentspreviouslydisclosed AdjustedSelling,general andadministrative $ 88,189 $ 103,499 $ 103,455 $ 102,697 $ 397,840 expensespreviouslydisclosed