The Children’s Place Reports Second Quarter 2026 Results
Weak traffic, heavy markdowns and higher financing costs drove larger losses despite tariff refunds and reduced inventory levels.
Rhea-AI Summary
The Children’s Place (PLCE) reported second quarter 2026 net sales of $241.8 million, down 18.9% year over year, and a net loss of $31.0 million.
The sales decline was driven by a 15.0% drop in direct-to-consumer revenue and a 16.7% decrease in comparable retail sales, alongside planned wholesale shipment reductions. Gross profit fell to $83.3 million from $101.3 million, though reported gross margin rose 40 bps to 34.4% due mainly to $39 million of tariff refunds recorded as a reduction of cost of sales. Excluding these refunds, gross margin decreased 1,550 bps, pressured by heavier markdowns, higher tariffs, increased occupancy from new stores, and higher inventory reserves. SG&A expenses were $90.1 million and deleveraged to 37.2% of sales. Operating results swung to a loss of $13.0 million, while year-to-date net loss widened to $84.1 million on a 15.4% decline in net sales. Inventory decreased 23.2% to $340.2 million, and total liquidity was $79.7 million.
Positive
- Tariff refunds of $39 million recognized, boosting reported gross margin
- Reported Q2 gross margin up 40 bps to 34.4%
- Inventory reduced by $102.5 million, down 23.2% year over year
- Operating cash use improved to $(32.3) million vs. $(73.4) million year-to-date
- Liquidity of $79.7 million, including $47.5 million revolver availability and $25.0 million commitment
- Store base expanded to 514 locations, up from 494 year over year
Negative
- Q2 net sales down 18.9% to $241.8 million
- Q2 comparable retail sales in DTC down 16.7%
- Gross margin excluding tariff refunds down 1,550 bps year over year
- Q2 operating result swung to a $(13.0) million loss from $4.1 million income
- Q2 net loss widened to $(31.0) million from $(5.4) million
- Year-to-date net loss increased to $(84.1) million from $(39.4) million
- Year-to-date net sales down 15.4% to $457.0 million
- SG&A deleveraged to 37.2% of Q2 sales and 39.1% year-to-date
- Net interest expense rose to $18.3 million in Q2 and $27.9 million year-to-date
- Higher markdowns, tariffs, occupancy, and inventory reserves pressured underlying profitability
News Explained
Liquidity was $79.7 million, but cash was $7.2 million and the revolver had $160.1 million outstanding at August 1, 2026.
The Children’s Place reported results for the quarter ended
The quarter’s reported
Details
Market reaction after 2Q26 earnings report: PLCE -8.31%
Following this news, PLCE has declined 8.31%, reflecting a notable negative market reaction. Our momentum scanner has triggered 2 alerts so far, indicating moderate trading interest and price volatility. The stock is currently trading at $2.26.
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Key Figures
- Net sales
- $241.8 million
- Q2 2026; down 18.9% year over year
- Gross margin
- 34.4%
- Q2 2026; increased 40 basis points including tariff refunds
- Underlying gross margin change
- Decreased 1,550 bps
- Q2 2026 excluding $39 million of tariff refunds
- Operating loss
- $(13.0) million
- Q2 2026 versus $4.1 million of operating income in Q2 2025
- Net loss
- $(31.0) million; $(1.39) per diluted share
- Q2 2026 versus $(5.4) million and $(0.24) per diluted share in Q2 2025
- Total liquidity
- $79.7 million
- As of August 1, 2026
- Inventory
- $340.2 million
- As of August 1, 2026; down 23.2% year over year
- New stores
- 19 stores
- Opened during Q2 2026
Previous Earnings Reports
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Sales and gross margin declined, while reported 24-hour price reaction was positive
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Sales fell and losses widened amid ecommerce, tariff, and inventory pressures
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Sales and net loss worsened despite reported inventory improvement and positive price reaction
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Sales, comparable retail sales, and gross margin declined with a wider operating challenge
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Key Terms
direct-to-consumer technical
basis points financial
non-gaap financial
revolving credit facility financial
omni-channel technical
AI-generated analysis. How Rhea-AI works. Not financial advice.
Opened 19 new stores during the quarter
Significant decrease in inventory balance compared to the prior year
SECAUCUS, N.J., Sept. 14, 2026 (GLOBE NEWSWIRE) -- The Children’s Place, Inc. (Nasdaq: PLCE), one of the only pure-play children’s specialty retailers in North America with an omni-channel presence, today announced financial results for the Company’s second fiscal quarter ended August 1, 2026.
Muhammad Asif Seemab, President and Interim Chief Executive Officer said, “During the quarter, we continued to contend with stabilizing our customer file, driving traffic to our stores and websites, and lower conversion, combined with a very clearance-heavy mix. The transition of our e-commerce operations to Salesforce has also taken longer than anticipated, which has contributed in part to the sales decline. Further, last year’s strong back-to-school demand was uniquely elevated by customer demand ahead of anticipated tariff price increases, which skewed those financial results compared to this year’s. Despite the near-term headwinds, we continue to invest in the long-term strength of the business focused on our strategic priorities: improving our customer experience, strengthening and elevating the brand, delivering on financial targets and enhancing organization leadership.”
Mr. Seemab continued, “During the quarter, we opened 19 new stores, which is the most in any quarter since 2013, and we remained focused on boosting the profitability of our fleet. We implemented new turnaround capabilities into the market for the first time during this back-to-school season, focused on enhancing our understanding of the effectiveness of our brand media. We have integrated AI to enhance the user-friendliness of our website and coordinated national brand events that generated more customer engagement. Early results from these new initiatives are encouraging: brand media generated a measured return of over 7-times, while AI-enabled creative optimization is already increasing e-commerce conversion and will be scaled further for the upcoming holiday season. Our traffic trends have improved in August relative to July, and we plan to build on these capabilities and continue the momentum into the holiday season. We are also advancing our international growth strategy by hiring Alexandra Derner as Chief Growth Officer, with a mandate to increase the global reach of the brand, including our planned entry into Mexico.”
Mr. Seemab concluded, “When I took on this role two months ago, I had a clear mandate to strengthen the Company’s financial position and liquidity. While we continue to execute our transformation plan and remain focused on cost reduction in all aspects of the business to optimize efficiencies, we are also evaluating our operating model to function in a profitable manner and improve our immediate liquidity position. I am excited about the opportunities ahead as we continue to execute on our long-term transformation plans.”
Second Quarter 2026 Results
Net sales decreased
Gross profit decreased
Selling, general, and administrative expenses increased
Operating income (loss) was a loss of
Net interest expense was
Provision (benefit) for income taxes was a benefit of
Net loss was
Fiscal Year-To-Date 2026 Results
Net sales decreased
Gross profit decreased
Selling, general, and administrative expenses increased
Operating loss was
Net interest expense was
Provision for income taxes was
Net loss was
Store Update
The Company opened 19 and closed 2 stores in the three months ended August 1, 2026, and ended the quarter with 514 stores, compared to 494 stores as of August 2, 2025.
Balance Sheet and Cash Flow
As of August 1, 2026, the Company had
Inventories were
Non-GAAP Reconciliation
The Company’s 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.
Please refer to the “Reconciliation of Non-GAAP Financial Information to GAAP” later in this press release, which sets forth the non-GAAP operating adjustments for the 13-week and 26-week periods ended August 1, 2026 and August 2, 2025.
About The Children’s Place
The Children’s Place is one of the only pure-play children’s specialty retailers in North America with an omni-channel presence. Its global retail and wholesale network includes two digital storefronts, 514 stores in North America, wholesale marketplaces and distribution in 13 countries through ten international franchise and wholesale partners. The Children’s Place designs, contracts to manufacture, and sells fashionable, high-quality, head-to-toe outfits predominantly at value prices, primarily under its proprietary brands: “The Children’s Place” and “Gymboree”. For more information, visit: www.childrensplace.com and www.gymboree.com.
Forward-Looking Statements
This 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 Company’s strategic initiatives and results of operations, including adjusted net income (loss) per diluted share. Forward-looking statements typically are identified by use of terms such as “may,” “will,” “should,” “plan,” “project,” “expect,” “anticipate,” “estimate,” “believe” and similar words, although some forward-looking statements are expressed differently.
These forward-looking statements are based upon the Company’s 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 Company’s filings with the Securities and Exchange Commission, including in the “Part I, Item1A. Risk Factors” section of its annual report on Form 10-K for the fiscal year ended January 31, 2026.
Included among the risks and uncertainties that could cause actual results and performance to differ materially are the risk that the Company will be unable to achieve operating results at levels sufficient to fund and/or finance the Company’s current level of operations and repayment of indebtedness, the risk that changes in trade policy and tariff regimes, including newly imposed U.S. tariffs and any responsive non-U.S. tariffs, may impact the Company’s international manufacturing and operations or customers’ discretionary spending habits, 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 Company’s business and its dependence on consumer spending patterns, which may be affected by changes in economic conditions (including inflation), the risk that changes in the Company’s plans and strategies with respect to pricing, capital allocation, capital structure, investor communications and/or operations may have a negative effect on the Company’s business, the risk that the Company’s strategic initiatives to increase sales and margin, improve operational efficiencies, enhance operating controls, decentralize operational authority and reshape the Company’s culture are delayed or do not result in anticipated improvements, the risk of delays, interruptions, disruptions and higher costs in the Company’s global supply chain, including resulting from disease outbreaks, foreign sources of supply in less developed countries, more politically unstable countries, or countries where vendors fail to comply with industry standards or ethical business practices, including the use of forced, indentured or child labor, 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 litigation brought under securities, consumer protection, employment, and privacy and information security laws and regulations, risks related to the existence of a controlling stockholder, and the uncertainty of weather patterns, as well as other risks discussed in the Company’s filings with the SEC from time to time.
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
| THE CHILDREN’S PLACE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) | |||||||||||||||
| Second Quarter Ended | Year-to-Date Ended | ||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||
| Net sales | $ | 241,800 | $ | 298,006 | $ | 457,025 | $ | 540,131 | |||||||
| Cost of sales (exclusive of depreciation and amortization) | 158,522 | 196,734 | 320,397 | 368,076 | |||||||||||
| Gross profit | 83,278 | 101,272 | 136,628 | 172,055 | |||||||||||
| Selling, general and administrative expenses | 90,061 | 89,596 | 178,925 | 176,266 | |||||||||||
| Depreciation and amortization | 6,254 | 7,570 | 12,920 | 15,800 | |||||||||||
| Operating income (loss) | (13,037 | ) | 4,106 | (55,217 | ) | (20,011 | ) | ||||||||
| Related party interest expense | (2,099 | ) | (1,868 | ) | (4,041 | ) | (3,740 | ) | |||||||
| Other interest expense, net | (16,153 | ) | (6,150 | ) | (23,900 | ) | (12,840 | ) | |||||||
| Loss before provision (benefit) for income taxes | (31,289 | ) | (3,912 | ) | (83,158 | ) | (36,591 | ) | |||||||
| Provision (benefit) for income taxes | (338 | ) | 1,453 | 984 | 2,797 | ||||||||||
| Net loss | $ | (30,951 | ) | $ | (5,365 | ) | $ | (84,142 | ) | $ | (39,388 | ) | |||
| Loss per common share | |||||||||||||||
| Basic | $ | (1.39 | ) | $ | (0.24 | ) | $ | (3.79 | ) | $ | (1.80 | ) | |||
| Diluted | $ | (1.39 | ) | $ | (0.24 | ) | $ | (3.79 | ) | $ | (1.80 | ) | |||
| Weighted average common shares outstanding | |||||||||||||||
| Basic | 22,237 | 22,142 | 22,223 | 21,885 | |||||||||||
| Diluted | 22,237 | 22,142 | 22,223 | 21,885 | |||||||||||
| THE CHILDREN’S PLACE, INC. RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP (In thousands, except per share amounts) (Unaudited) | |||||||||||||||
| Second Quarter Ended | Year-to-Date Ended | ||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||
| Net loss | $ | (30,951 | ) | $ | (5,365 | ) | $ | (84,142 | ) | $ | (39,388 | ) | |||
| Non-GAAP adjustments: | |||||||||||||||
| Exit from third-party distribution facility | 390 | — | 5,010 | — | |||||||||||
| Financing charges on monetization of tariff refund claims | 9,865 | — | 11,929 | — | |||||||||||
| Restructuring costs | 1,713 | 1,211 | 3,151 | 2,145 | |||||||||||
| Financing charges on monetization of income tax receivable | 762 | — | 1,490 | — | |||||||||||
| Loss on extinguishment of debt | — | — | — | 1,039 | |||||||||||
| Legal settlement accrual / reversal | — | 750 | — | (46 | ) | ||||||||||
| Aggregate impact of non-GAAP adjustments | 12,730 | 1,961 | 21,580 | 3,138 | |||||||||||
| Income tax effect(1) | — | — | — | — | |||||||||||
| Net impact of non-GAAP adjustments | 12,730 | 1,961 | 21,580 | 3,138 | |||||||||||
| Adjusted net loss | $ | (18,221 | ) | $ | (3,404 | ) | $ | (62,562 | ) | $ | (36,250 | ) | |||
| GAAP net loss per common share | $ | (1.39 | ) | $ | (0.24 | ) | $ | (3.79 | ) | $ | (1.80 | ) | |||
| Adjusted net loss per common share | $ | (0.82 | ) | $ | (0.15 | ) | $ | (2.82 | ) | $ | (1.66 | ) | |||
| % of Net Sales (GAAP) | (12.8 | )% | (1.8 | )% | (18.4 | )% | (7.3 | )% | |||||||
| % of Net Sales (As adjusted) | (7.5 | )% | (1.1 | )% | (13.7 | )% | (6.7 | )% | |||||||
(1) The tax effects of the non-GAAP items are calculated based on the statutory rate of the jurisdiction in which the discrete item resides, adjusted for the impact of any valuation allowance.
| THE CHILDREN’S PLACE, INC. RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP (In thousands) (Unaudited) | |||||||||||||||
| Second Quarter Ended | Year-to-Date Ended | ||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||
| Operating income (loss) | $ | (13,037 | ) | $ | 4,106 | $ | (55,217 | ) | $ | (20,011 | ) | ||||
| Non-GAAP adjustments: | |||||||||||||||
| Exit from third-party distribution facility | 390 | — | 5,010 | — | |||||||||||
| Restructuring costs | 1,713 | 1,211 | 3,151 | 2,145 | |||||||||||
| Reversal of legal settlement accrual | — | 750 | — | (46 | ) | ||||||||||
| Aggregate impact of non-GAAP adjustments | 2,103 | 1,961 | 8,161 | 2,099 | |||||||||||
| Adjusted operating income (loss) | $ | (10,934 | ) | $ | 6,067 | $ | (47,056 | ) | $ | (17,912 | ) | ||||
| % of Net Sales (GAAP) | (5.4 | )% | 1.4 | % | (12.1 | )% | (3.7 | )% | |||||||
| % of Net Sales (As adjusted) | (4.5 | )% | 2.0 | % | (10.3 | )% | (3.3 | )% | |||||||
| THE CHILDREN’S PLACE, INC. RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION TO GAAP (In thousands) (Unaudited) | |||||||||||||||
| Second Quarter Ended | Year-to-Date Ended | ||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||
| Gross profit | $ | 83,278 | $ | 101,272 | $ | 136,628 | $ | 172,055 | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Exit from third-party distribution facility | 390 | — | 4,681 | — | |||||||||||
| Aggregate impact of non-GAAP adjustments | 390 | — | 4,681 | — | |||||||||||
| Adjusted gross profit | $ | 83,668 | $ | 101,272 | $ | 141,309 | $ | 172,055 | |||||||
| % of Net Sales (GAAP) | 34.4 | % | 34.0 | % | 29.9 | % | 31.9 | % | |||||||
| % of Net Sales (As adjusted) | 34.6 | % | 34.0 | % | 30.9 | % | 31.9 | % | |||||||
| Second Quarter Ended | Year-to-Date Ended | ||||||||||||||
| August 1, 2026 | August 2, 2025 | August 1, 2026 | August 2, 2025 | ||||||||||||
| Selling, general and administrative expenses | $ | 90,061 | $ | 89,596 | $ | 178,925 | $ | 176,266 | |||||||
| Non-GAAP adjustments: | |||||||||||||||
| Restructuring costs | 1,713 | 1,211 | 3,151 | 2,145 | |||||||||||
| Legal settlement accrual | — | 750 | — | (46 | ) | ||||||||||
| Aggregate impact of non-GAAP adjustments | 1,713 | 1,961 | 3,151 | 2,099 | |||||||||||
| Adjusted selling, general and administrative expenses | $ | 88,348 | $ | 87,635 | $ | 175,774 | $ | 174,167 | |||||||
| % of Net Sales (GAAP) | 37.2 | % | 30.1 | % | 39.1 | % | 32.6 | % | |||||||
| % of Net Sales (As adjusted) | 36.5 | % | 29.4 | % | 38.5 | % | 32.2 | % | |||||||
| THE CHILDREN’S PLACE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) | |||||||||||
| August 1, 2026 | January 31, 2026* | August 2, 2025 | |||||||||
| Assets: | |||||||||||
| Cash and cash equivalents | $ | 7,176 | $ | 5,489 | $ | 7,798 | |||||
| Accounts receivable | 44,616 | 25,967 | 54,365 | ||||||||
| Inventories | 340,213 | 325,100 | 442,705 | ||||||||
| Prepaid expenses and other current assets | 34,090 | 41,441 | 38,987 | ||||||||
| Total current assets | 426,095 | 397,997 | 543,855 | ||||||||
| Property and equipment, net | 84,924 | 81,658 | 89,445 | ||||||||
| Right-of-use assets | 207,793 | 164,495 | 151,145 | ||||||||
| Tradenames, net | 13,000 | 13,000 | 13,000 | ||||||||
| Other assets | 10,495 | 13,149 | 7,652 | ||||||||
| Total assets | $ | 742,307 | $ | 670,299 | $ | 805,097 | |||||
| Liabilities and Stockholders’ Deficit: | |||||||||||
| Revolving loan | $ | 160,080 | $ | 131,078 | $ | 294,417 | |||||
| Accounts payable | 146,201 | 108,481 | 132,436 | ||||||||
| Current portion of operating lease liabilities | 62,772 | 57,236 | 60,546 | ||||||||
| Income tax payable | 1,646 | 2,945 | 2,043 | ||||||||
| Short-term debt | 17,833 | — | — | ||||||||
| Accrued expenses and other current liabilities | 91,261 | 88,149 | 94,454 | ||||||||
| Total current liabilities | 479,793 | 387,889 | 583,896 | ||||||||
| Long-term debt | 97,718 | 97,588 | — | ||||||||
| Related party long-term debt | 122,895 | 107,554 | 107,193 | ||||||||
| Long-term portion of operating lease liabilities | 161,249 | 120,410 | 103,982 | ||||||||
| Other tax liabilities | 3,626 | 3,520 | 5,523 | ||||||||
| Other long-term liabilities | 15,998 | 7,521 | 9,370 | ||||||||
| Total liabilities | 881,279 | 724,482 | 809,964 | ||||||||
| Stockholders’ deficit | (138,972 | ) | (54,183 | ) | (4,867 | ) | |||||
| Total liabilities and stockholders’ deficit | $ | 742,307 | $ | 670,299 | $ | 805,097 | |||||
* Derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026.
| THE CHILDREN’S PLACE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) | |||||||
| Year-to-Date Ended | |||||||
| August 1, 2026 | August 2, 2025 | ||||||
| Net loss | $ | (84,142 | ) | $ | (39,388 | ) | |
| Non-cash adjustments | 60,310 | 57,734 | |||||
| Working capital | (8,467 | ) | (91,782 | ) | |||
| Net cash used in operating activities | (32,299 | ) | (73,436 | ) | |||
| Net cash used in investing activities | (13,698 | ) | (4,843 | ) | |||
| Net cash provided by financing activities | 48,382 | 77,754 | |||||
| Effect of exchange rate changes on cash and cash equivalents | (698 | ) | 2,976 | ||||
| Net increase in cash and cash equivalents | 1,687 | 2,451 | |||||
| Cash and cash equivalents, beginning of period | 5,489 | 5,347 | |||||
| Cash and cash equivalents, end of period | $ | 7,176 | $ | 7,798 | |||
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What were the main drivers of the decline in The Children’s Place’s Q2 2026 sales?
The company reported that Q2 2026 net sales fell 18.9% primarily due to lower traffic in its direct-to-consumer business, which led to a 15.0% decline in DTC sales and a 16.7% decrease in comparable retail sales. Results were also affected by a planned reduction in wholesale shipments to better align customer inventory levels and liquidate aged fashion inventory.
How did tariff refunds affect The Children’s Place’s Q2 2026 gross margin?
The company recognized $39 million of tariff refunds in the quarter, recorded as a reduction of cost of sales. Including these refunds, reported gross margin increased 40 bps to 34.4%. Excluding them, gross margin decreased 1,550 bps, mainly due to higher markdown penetration, increased tariffs, higher store occupancy from new openings, and increased inventory reserves, partially offset by favorable product mix and costs.
What is The Children’s Place’s current store footprint and recent opening activity?
During the three months ended August 1, 2026, the company opened 19 stores and closed 2, ending the quarter with 514 stores. This compares with 494 stores as of August 2, 2025. Year-to-date, it has opened 20 new stores, contributing to higher store-related expenses and occupancy costs.
What was The Children’s Place’s liquidity and debt position at the end of Q2 2026?
As of August 1, 2026, the company had $7.2 million in cash and cash equivalents, $47.5 million of availability under its revolving credit facility, and $25.0 million of additional availability under an unsecured commitment letter from Mithaq, for total liquidity of $79.7 million. It had $160.1 million outstanding on its revolving credit facility.
How have inventories and working capital trends changed year over year?
Inventories decreased to $340.2 million as of August 1, 2026, from $442.7 million a year earlier, a reduction of $102.5 million or 23.2%. The company attributed this to improved inventory management, aligning inventory with anticipated demand and selling through excess inventory. Operating cash flows used were $(32.3) million year-to-date, an improvement from $(73.4) million in the prior-year period.