Children’s Place to close mall stores; no word yet on Idaho’s

A battling retailer has taken aim at retail’s Achilles’ heel: the mall. At its first quarter earnings meeting for investors, Children’s Place announced it will close 300 stores, targeting those located at malls.

The children’s apparel and accessories retailer also markets apparel under the brands of Baby Place and Gymboree. The company is a retail apocalypse survivor with a growing e-commerce presence. It has already closed 275 stores since 2013 while opening many new stores in more strategic locations, for a net reduction in stores of 128. In the same period, it also grew its online presence.

“Over the next 20 months, we’re targeting to close an additional 300 stores, dramatically reducing our reliance on our brick-and-mortar channel,” CEO Jane Elfers said during the Q1 meeting. “We anticipate that entering 2022, following the 300 closures, our mall-based portfolio will represent less than 25% of our total revenue.”

The closures will give the store a profile of approximately 670 stores, of which 168 will be in malls. In comparison, according to the firm’s financial disclosures, it operated 1,097 stores in 2015 where 674 of those were inside malls.

The company has four locations in Idaho, three of which are inside traditional malls and one at an upscale strip mall. Those stores are at the Boise Towne Square, the Grand Teton Mall in Idaho Falls, the Magic Valley Mall in Twin Falls and the Treasure Valley Marketplace shopping center in Nampa.

All four Idaho locations survived the closures made since 2013. Because Children’s Place has not yet issued a list of proposed closures, it is not known whether the Idaho mall locations are in danger.

Children’s Place’s strategy is similar to those of other retail apocalypse survivors such as Best Buy and Sephora: cut marginal locations, relocate and repurpose brick-and-mortar stores and build a successful e-commerce platform. Whether that will work for the retailer remains to be seen. While e-commerce sales were up 300% in the first quarter, first-quarter net sales fell 38.1% to $255.2 million. Online sales were 53% of the chain’s Q1 net sales.

Because it is a retailer of children’s clothing, the make-or-break selling season for the company is back-to-school in the fall. This year, Children’s Place admitted that it can’t predict what the school year will bring because many school districts haven’t announced reopening plans. Elfers also noted that as the winter holidays approach, social distancing could still be a factor for some stores.

“We have no idea what a Black Friday might look like for some of those big Saturday weekends in December,” she said.

Children’s Place held its Q1 earnings meeting on June 11. A complete transcript of the meeting is available at the Motley Fool website.