Poor earnings performance, inconsistent execution and pressures from the parent company finally boiled over last month at Child World.

CNC Holdings said it retained three agents to help it find a buyer for part or all of its 82 percent equity in the 175-unit toy chain.

The recent announcement followed a March 29 statement by CNC Holdings that the company was considering disposing of all or part of its interest in Child World. At that time, CNC Holdings said it had been approached by and had discussions with "potential acquirers of Child World."

Donaldson, Lufkin & Jenrette Securities Corp., S.G. Warburg & Co., and The Argosy Group have been retained by CNC Holdings "to explore its financial and strategic alternatives including the possible sale of the company," according to a May 21 statement by Child World. CNC Holdings further stated that it is "considering the disposition of all or part of CNC Holding's interest in Child World or a merger or other transaction involving Child World."

CNC Holdings gave no specific reasons for unloading its interest in Child World but the toy chain's worsening financial position is probably a a strong factor.

For the fiscal year ended Feb. 3, Child World reported a net income of $5.8 million, or 51 cents per share, on sales of nearly $830.3 million. A year ago, Child World earned almost $12.6 million on sales of $807 million.

Comparable store sales declined 8.6 percent for the year.

In the crucial fourth quarter of last year, sales totaled $404.6 million, down nearly 1 percent from $408.4 million in the final quarter of 1988. Income in the quarter fell 13.2 percent to $20.2 million. Comparable store sales during the final quarter of 1989 dipped 4.0 percent.

According to Tracy Burmeister, treasurer of Child World and an officer with CNC Holdings, Cleveland, CNC has no specific timetable set for the disposition of Child World. He declined to provide specific reasons for trying to sell the toy chain and would not comment on interested buyers.

In the meantime, Child World will continue operating with its existing management team, Burmeister said.

The three agents retained by CNC Holdings are currently reviewing alternatives for Child World, said Burmeister. The next step will be to issue a confidential offering memorandum indicating potential interest in the troubled toy chain, he said. CNC Holdings holds 82 percent of Child World stock.

Child World is the second-largest toy retailer in the United States behind Toys "R" Us. However, the chain is a distant second.

Compared with Child World's earnings decline, Toys "R" Us posted a healthy earnings gain. TRU's earnings rose 19.7 percent to $321 million on sales of $4.78 billion last year, also a gain of 19.7 percent.

According to retail analysts who follow the toy industry, Child World is suffering from a lack of consistency in a number of areas including technology. But the critical reason for the chain's problems, said Jack Siebald, vice president of Salomon Brothers, is that Child World "has not been executing according to a central mission."

TRU's mission, said Siebald is straightforward: to deliver the broadest range of toys to the public at the lowest possible price. Siebald said Child World's attention has not been concentrated on that alone.

Siebald said he recently concluded a market share study of the top three toy retailers and found that TRU had a 19.8 percent market share on toys, up from 5.9 percent in 1980.

Child World holds 4.3 percent of all U.S. toy sales, up from 2.8 percent in 1984. However, market share growth has been flat since 1987. At that time, Child World's market share for toys was 4.2 percent, said Siebald.

Despite its troubles, Child World is trying to move forward.

Last Christmas, it opened a new prototype in Framingham, Mass., and announced plans to remodel at least nine more stores this year based on this new prototype plus approximately four others based on the chain's smaller, 20,000-square-foot version, said Burmeister.

In addition to the remodeling plans, Child World plans to open about 10 new stores this year; install scanning in all stores; test shelf-pricing; and expand juvenile apparel among many other changes, including improved marketing and merchandising programs.