1041859--12/5/2007--CHILDRENS_PLACE_RETAIL_STORES

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A material breach of the License Agreement and certain other events could result in termination of the License Agreement. A breach of the Refurbishment Amendment could adversely affect us and jeopardize our ability to continue operating the Disney Store business. A change in control of the Company resulting from an acquisition proposal or attempt may permit Disney to terminate the License Agreement, compelling the Company to promptly sell or wind down the Disney Store business, and may cause an event of default under one or more of the Company s debt instruments. If the License Agreement for the Disney Store were to be terminated, we could be required to sell the Disney Store to Disney or to a buyer selected by Disney and/or to wind down the remaining Disney Store business in an orderly manner within six months. Under these circumstances our subsidiaries that operate the Disney Store business would have significant financial and other obligations to Disney, lenders, landlords, vendors and other third parties and might not be able to avoid bankruptcy proceedings. Our agreements with Disney may require us to make additional investments in the Disney Store business, which could require us to seek external sources of funds or to reduce the amount of capital expenditures we make in The Children s Place business. If we are unable to reposition Disney Store, our results of operations and cash flows will be adversely impacted. Our segregation of working capital and credit facilities could lead to a liquidity need in one business despite adequate liquidity on a consolidated basis. Restrictions on our Disney Store business to issue dividends to The Children s Place Retail Stores, Inc. could lead to our inability to re-allocate capital on a consolidated basis Because we are not current in our filings with the SEC, our common stock may be delisted from the Nasdaq Global Select Market, in which event we may suffer adverse business consequences. Our failure to be current in our filings with the SEC poses other significant risks to our business, each of which could materially and adversely affect our financial condition and results of operations. Because the trading price of our common stock has significantly declined over the last year, it is possible that one or more parties may consider seeking to acquire the Company. There is no assurance that any proposal to acquire the Company will be made or that a sale of the Company will occur, nor has our Board determined that a sale of the Company is advisable. In the event that a sale of the Company were to occur, it is likely that following such sale our public stockholders would no longer have the benefits of ownership of our common stock. We have identified material weaknesses in our internal control over financial reporting as of February 3, 2007 that, if not remedied effectively, could result in a reasonable possibility that a material misstatement of the Company s annual or interim financial statements will not be prevented or detected on a timely basis in future periods. We have experienced deterioration in our sales and profitability. If we are unable to anticipate and respond to merchandise trends, we may continue to suffer adverse business consequences, including loss of revenue. Changes in comparable store sales results from period to period could have a material adverse effect on the market price of our common stock. The recent resignation of Ezra Dabah as our CEO, or the future loss of one or more of our other key personnel could have a material adverse effect on our business. If we are unable to maintain profitable growth, our future operating results and cash flows will be adversely impacted. The success of our Disney Store business largely depends on The Walt Disney Company character franchise and brand; and any events that negatively impact the consumers perception of Disney could hurt our future operating results and cash flows. Our future operating results and cash flows could be adversely affected by pending litigation commenced by our shareholders. An unfavorable result from the informal investigation of the SEC and the U.S. Attorney for the District of New Jersey into our historic stock option granting practices could lead to regulatory or criminal fines and penalties, adverse publicity, and other negative consequences. Because we use foreign manufacturers, an unaffiliated manufacturer s failure to comply with acceptable labor practices could have an adverse effect on our business. Since a portion of our available cash is located in foreign jurisdictions, if we need such cash to fund domestic needs we may not be able to do so on favorable terms. Because we operate in foreign countries, some of our revenues are subject to foreign economic risks. Because we operate in foreign countries, some of our product costs and other expenses are subject to foreign currency fluctuations. Disruptions in receiving and distribution could have a material adverse effect on our business. We face significant competition in the retail industry, which could impact our ability to compete successfully against existing or future competition. We depend on our relationships with unaffiliated manufacturers and independent agents. A material disruption in our information technology systems could adversely affect our business or results of operations and cash flows. Our ability to discourage, delay or prevent a takeover attempt could reduce the market value of our common stock. We are sensitive to economic, regional and other business conditions, which could adversely affect our future operating results and cash flows. Recalls and post-manufacture repairs of our products and/or product liability claims against our products could harm our reputation, increase costs or reduce sales. A privacy breach could adversely affect our business. Our profitability could be adversely affected if we are unable to successfully negotiate favorable lease terms. Because of conditions impacting our quarterly results of operations, including seasonality and other factors, our quarterly results fluctuate. Certain stockholders have significant influence over determining the outcome of matters submitted to a stockholder vote. The volatility of our stock price could adversely affect the market price of our common stock. Legislative actions and new accounting pronouncements could result in us having to increase our administrative expenses to remain compliant. Any terrorist act that impacts consumer shopping could have a material adverse effect on our business.

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1041859--12/5/2007--CHILDRENS_PLACE_RETAIL_STORES_INC