NEW YORK, April 04, 2024 (GLOBE NEWSWIRE) — The following Litigation Report is being issued by Levi & Korsinsky, LLP:
The Children’s Place, Inc. Litigation Report
Case Introduction
Khalsa v. The Children’s Place, Inc., et al 2:24-cv-01182-EP-CLW
On February 28, 2024, investors sued The Children’s Place, Inc. (“The Children’s Place” or the “Company”) in United States District Court for the District of New Jersey.
Plaintiffs in the federal securities class action allege that they acquired The Children’s Place stock at artificially inflated prices between March 16, 2023 and February 8, 2024 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. To learn whether you may be eligible for a recovery under this class action, go to https://zlk.com/pslra-1/the-childrens-place-lawsuit-submission-form?wire=32
Summary of the Allegations
Company Background
The Company (NASDAQ:PLCE) is a self-described omni-channel children’s specialty portfolio of brands.
As such, The Children’s Place claims that it designs, contracts to manufacture, and sells “fashionable, high-quality apparel, accessories and footwear.” The Company also says that it mostly does so at value prices under its own brands. These are: “The Children’s Place”, “Gymboree”, “Sugar & Jade”, and “PJ Place.”
In all, the Company says, Its global retail and wholesale network is comprised of four digital storefronts and more than 500 stores in North America. It also includes wholesale marketplaces and distribution in 16 countries through six international franchise partners, the Company says.
Summary of Facts
The Children’s Place and two of its senior officers (the “Individual Defendants”) are now accused of deceiving investors by lying and withholding important information about the Company’s business practices and prospects during the Class Period.
In particular, they are accused of omitting truthful information about promotions and inventory values from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused The Children’s Place stock to trade at artificially inflated prices during the time in question.
The truth came out before the market opened on February 9, 2024. That’s when The Children’s Place announced its preliminary fourth quarter fiscal year 2023 financial results. In this context, the Company disclosed that “it now expected fourth quarter net sales between $454 million and $456 million, falling short of previously issued guidance.”
In the same context, the Company also revealed that “it would expect to incur an adjusted operating loss in the fourth quarter in range of (9.0%) to (8.0%) of net sales, which reflected the impact of ‘lower than expected merchandise margins resulting from more aggressive promotions in an effort to maximize sales, higher than anticipated split shipments to meet customer e-commerce demand, and increased inventory valuation adjustment.’”
A closer look…
As alleged, the Company and/or Individual Defendants repeatedly made false and misleading public statements throughout the Class Period.
In a press release issued at the beginning of the Class Period, for instance, the Company’s CEO (an Individual Defendant) stated in part: “While we still need to work through this higher cost inventory during the front half of 2023, input cost reductions in the back half of 2023, combined with our strong focus on expense and inventory management and our strategic growth initiatives, are planned to drive double-digit operating margins in the back half of 2023.”
Next, in an annual report filed with the SEC on March 28, 2023, the Company stated in relevant part: “We value inventory at the lower of cost or net realizable value, with cost determined using an average cost method. The estimated market value of inventory is determined based on an analysis of historical sales trends of our individual product categories, the impact of market trends and economic conditions, and a forecast of future demand, as well as plans to sell through inventory.”
Lastly, in a May 24, 2023, press release, The Children’s Place stated in relevant part: “As top line expectations have been reduced, the Company has further reduced its planned inventory investments and its expenses. These actions are designed to reduce risk while helping to position the Company to achieve double digit operating margin in the back half of the year.”
Actions You May Take
If you have purchased the Company’s stock during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole. To learn more about your options, go to: https://zlk.com/pslra-1/the-childrens-place-lawsuit-submission-form?wire=32
NOTE: The deadline to file for lead plaintiff in this class action is April 29, 2024. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court.
CONTACT:
Levi & Korsinsky, LLP
Joseph E. Levi, Esq.
Ed Korsinsky, Esq.
33 Whitehall Street, 17th Floor
New York, NY 10004
jlevi@levikorsinsky.com
Tel: (212) 363-7500
Fax: (212) 363-7171
www.zlk.com
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