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Children’s Place Acquires Gymboree, Crazy 8 Intellectual Property, Assets For $76 Million in Cash

8:53 AM, Mar 4, 2019 — Children’s Place (PLCE) said it bought intellectual property and related assets of Gymboree and Crazy 8 for $76 million in cash including the companies’ names, trademarks, domain names and customer databases.

The acquisition will be funded by cash on hand and debt from the company’s revolving credit facility, Children’s Place said in a statement on Monday. It will be accretive to adjusted earning starting in fiscal 2020 following low-teens percentage dilution in 2019 as the company makes incremental investments in Gymboree.

The deal is subject to approval of the US Bankruptcy Court for the Eastern District of Virginia at a hearing scheduled for Monday, along with other standard closing conditions, Children’s Place said.

“Gymboree’s recent bankruptcy announcement and our agreement to acquire the Gymboree Assets significantly strengthens our long-term position,” Children’s Place Chief Executive Jane Elfers said. “Control of the Gymboree brand and IP will now allow us to meaningfully expand our previously targeted market share opportunity. The acquisition will be an attractive vehicle to expand our business across price and channel. It will provide us with a path to revitalize the Gymboree brand across various channels, including e-commerce, TCP stores, wholesale, and international.”

Elfers said Children’s Place will fill a void left when Gymboree declared bankruptcy and the acquisition is a chance for the company to bring digitally savvy customers into its “omni-channel ecosystem” while maximizing value for shareholders.

Gymboree Group filed for bankruptcy on Jan. 16 while its Canadian subsidiary, Gymboree Inc., said at the time it would seek protection in Canada.

In a separate statement, Children’s Place said fourth-quarter adjusted earnings came in at $1.10 a share, down from $2.52 during the same timeframe a year earlier, missing consensus compiled by Capital IQ for $2.10 a share. Revenue was reported at $530.6 million, down from $570 million during the same quarter the previous year and short of Street projections of $553.1 million.

The company said it expects first-quarter adjusted net loss from $0.70 to $0.40 a share versus expectations for earnings of $1.53. Revenue is seen from $385 million to $395 million, well short of forecasts for $449.3 million. For the full-year 2019, Children’s Place said it expects earnings from $5.25 to $5.75 a share, below consensus for $7.32, and revenue from $1.89 billion and $1.92 billion, missing expectations for $1.96 billion.

Shares plunged 14% in pre-bell trading.

Companies: Children’s Place, Inc. (The)
Price: 81.00 Price Change: -13.60 Percent Change: -14.38

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