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Saddled with delinquent filings and an impending $24 million restatement, the retailer hires a new finance chief.
Sarah Johnson, CFO.com | US
November 21, 2007
Troubled retailer Children's Place has hired a new finance executive to update its books.
The company has appointed former American Standard Cos. executive Richard Paradise as its new senior vice president of finance, promising him the CFO post when its delinquent financial reports are filed with the Securities and Exchange Commission. At his previous employer, Paradise was CFO of its bath and kitchen division, which was recently sold to Bain Capital Partners.
Paradise will report to Susan Riley, who a year ago was also hired as a senior vice president on a CFO track. She replaced Hiten Patel, who left to pursue other interests.
Children's Place has hit a rocky stretch during Riley's tenure. Since she joined the company in March 2006, Children's Place has dismissed its chief executive officer, its auditor quit, and it has had to continually explain why its regulatory filings for the second half of 2006 and this year are late. The reasons given include misdated stock-option grants, misconduct by two executives, and problems over its license agreement with The Walt Disney Co. A Children's Place spokeswoman did not return CFO.com's request for comment for this article.
The company's recent spate of problems started six months after Riley was hired, when Children's Place announced it had uncovered "unintentional" errors in the granting and recording of stock options, adding it to the growing list of companies associated with the backdating scandal and under investigation by the SEC.
The company changed the name of Riley's post, removing CFO from the title, around the same time it announced it would have to restate as much as $24 million for fiscal years 2003 through 2005 and the first fiscal quarter of 2006 to compensate for the incorrect measurement dates for previously issued stock-option grants. Riley was put in the new position of executive vice president of finance and administration, which she still holds. She is responsible for supervising the finance, treasury, accounting, legal, and human-resource functions.
Soon after, Ezra Dabah resigned as chief executive after being accused by the board of not complying with the company's internal policies related to securities trades. He was replaced on an interim basis by director Chuck Crovitz. In addition, Children's Place took away its chief creative officer's title after finding irregularities in its expense-reimbursement practices.
Adding another blow to the retailer's financial outlook, Deloitte & Touche announced last month that it would no longer serve as the company's auditor. Children's Place has said BDO Seidman would finish up the auditing work for fiscal year 2007. With the news about Deloitte, the retailer also said it will reclassify two previously disclosed matters as showing a material weakness in its internal controls over financial reporting. The company has not explained why Deloitte's departure prompted the reclassifications.
Children's Place missed another Nasdaq extension to file its late financial reports last week. Nasdaq has warned the company that it may be delisted.