PLCE
🔄 Transitioning from 75% physical store sales to 75% online, but struggling with high SG&A costs despite the shift, hindering profitability.
💰 Received significant investment from a Saudi group (acquiring 53%), providing low-cost loans to fund restructuring and operational improvements.
📈 Presents a turnaround opportunity based on potential cost-cutting (e.g., ~20% workforce reduction) and margin expansion towards industry averages (~7.5%+).
@Academiadeinversion:
“The Children’s Place is like a Zara Kids, specializing in retail for children aged 12 months to 12 years. Historically successful, it’s gone through turbulence, causing a stock price drop, presenting what I see as an impressive risk/reward. It’s currently my largest position. The thesis is simple: the company shifted from 75% in-store sales to 75% online, but SG&A expenses haven’t decreased accordingly, which doesn’t make sense. Online operations should mean fewer store staff, even with more warehouse personnel. This poor transition nearly bankrupted the company. It should have margins around 10% (industry average ~7.5%) on $1.8B in sales, but it’s barely breaking even due to mismanagement. Recently, a Saudi group bought 53% and provided low-interest loans (first at 0%) to fund restructuring. The catalyst is straightforward: cutting ~20% of the workforce, similar to Musk at Twitter, because many roles are redundant post-online shift. They also face expiring leases; the average lease term is short, meaning the online share could reach 90% in a couple of years, enabling further cost savings. It should achieve at least the industry margin of 7.5%. Customer reviews are strong (e.g., 4.9 on US Apple Store). While there’s high short interest, the main thesis is the operational turnaround driven by the new majority owner, who has experience and vast resources.”
Watch the exact part of the video where @Academiadeinversion talks about The Children’s Place, Inc. here:
Watch the video on YouTube
Read more articles analyzing The Children’s Place, Inc. (PLCE) at the provided link. PLCE stock.
