1041859--4/2/2008--CHILDRENS_PLACE_RETAIL_STORES

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We depend on generating sufficient cash flow and having access to additional liquidity sources to fund our ongoing operations, the Disney Store business exit costs, capital expenditures, and debt repayment. In fiscal 2007, we experienced deterioration in our profitability. If we are unable to anticipate and respond to merchandise trends, we may continue to suffer adverse business consequences. Hoop may not be able to obtain confirmation of the plan of liquidation. If the bankruptcy court were to enforce the termination provisions of the License Agreement for the Disney Store, we could be required to sell the Disney Store business to Disney or to a buyer selected by Disney or to rapidly wind down the remaining Disney Store business. 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. The creditors of Hoop could attempt to make claims against the Company, such as claims under piercing the corporate veil, alter ego, control person or related theories. If successful, these claims would have a material adverse effect on our financial condition and liquidity. A prolonged continuation of the Hoop wind-down may harm our businesses. Because we have not held our fiscal 2006 shareholders' meeting, our common stock may be delisted from the Nasdaq Global Select Market, in which event we may suffer adverse business consequences. Our failure to timely file required filings with the SEC restricts our ability to file short-form registration statements, 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 seek 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. Although remediated as of February 2, 2008, the material weaknesses in our internal control over financial reporting that we identified as of February 3, 2007 could have resulted in a reasonable possibility that a material misstatement of the Company's annual or interim financial statements would not be prevented or detected on a timely basis in future periods. Changes in comparable store sales results from period to period could have a material adverse effect on the market price of our common stock. Our success depends upon the continuing service and capabilities of our management team. The failure to retain management could have a material adverse effect on our business. If we are unable to open and operate new stores successfully, our future operating results will be adversely impacted. Our future operating results and cash flows could be adversely affected by pending litigation. 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 certain stores outside the United States and purchase most of our products overseas, some of our revenues, product costs and other expenses are subject to foreign economic risks. 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 acceptable lease terms. Because of conditions impacting our quarterly results of operations, including seasonality and other factors, our quarterly results fluctuate. 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--4/2/2008--CHILDRENS_PLACE_RETAIL_STORES_INC