In support of the Company’s ongoing structural transformation from a legacy store operating model to a digital-first retailer, during the second quarter of Fiscal 2023, the Company voluntarily entered into an early termination of its corporate office lease and implemented a workforce reduction.

The Company proactively accelerated the termination of its corporate office lease to capitalize on the prevailing tenant-favorable market conditions and subsequently executed an amendment to its corporate office lease in January 2024 with its current landlord on more favorable terms. The amended lease will expire in May 2037, with a termination right after the seventh year, and two five-year renewal options at fair market value.

The Company also implemented a plan that encompassed multiple headcount reductions, which accounted for approximately 20% of its salaried workforce, the substantial majority of whom were located at the Company’s corporate offices in Secaucus, New Jersey, with the balance at other domestic and international locations. The associated workforce reduction was substantially completed as of the end of the First Quarter 2024.

In addition, the lease for the Company’s distribution center in Toronto, Canada (“TODC”) expired in April 2024. The Company has moved these operations to the United States to its current distribution center in Alabama as of the end of the First Quarter 2024.

As a result of these strategic actions associated with the voluntary early termination of its corporate office lease, the move from the TODC, and workforce reductions, the Company incurred non-operating charges of $2.3 million in restructuring costs during the First Quarter 2024 on a pretax basis, summarized in the following table:


	Thirteen Weeks Ended
	May 4, 2024		April 29, 2023
	(in thousands)

Lease termination costs (1)	$	460	$	—
TODC costs (2)	1,848		—

Total restructuring costs (3)	$	2,308	$	—

(1)Includes non-cash charges related to accelerated depreciation on certain assets in the corporate office over the reduced term, amounting to $0.5 million for the First Quarter 2024.

(2)Includes non-cash charges related to accelerated depreciation on TODC assets, amounting to $1.1 million for the First Quarter 2024.

(3)Restructuring costs are recorded within Selling, general and administrative expenses, except accelerated depreciation charges noted above, which are recorded within Depreciation and amortization. TODC costs are recorded within The Children's Place International segment and lease termination costs are recorded within The Children’s Place U.S. segment.

The following table summarizes the restructuring costs that have been partially settled with cash payments and the remaining related liability as of May 4, 2024. The remaining related liability is expected to be settled with cash payments in the future and these costs are included in Accrued expenses and other current liabilities on the Consolidated Balance Sheets:



	Employee-Related Costs		TODC Costs		Total
	(in thousands)
Balance at February 3, 2024	$	1,666	$	—	$	1,666
Provision	—		751		751
Cash payments	(1,114)		(247)		(1,361)
Balance at May 4, 2024	$	552	$	504	$	1,056



	Employee-Related Costs		Lease Termination Costs		Professional Fees		Total
	(in thousands)
Balance at April 29, 2023	$	—	$	—	$	—	$	—
Provision	5,433		4,040		186		9,659
Cash Payments	(2,602)		(4,040)		—		(6,642)
Balance at July 29, 2023	2,831		—		186		3,017
Provision	674		—		82		756
Cash Payments	(2,652)		—		(268)		(2,920)
Balance at October 28, 2023	853		—		—		853
Provision	1,275		—		—		1,275
Cash Payments	(462)		—		—		(462)
Balance at February 3, 2024	$	1,666	$	—	$	—	$	1,666