[MissDisney]

Disney Takes Control of Disney Stores

By RYAN NAKASHIMA,AP
Posted: 2008-05-01 15:01:24

LOS ANGELES (May 1) - The Walt Disney Co. said Thursday it has taken over 220 Disney Store outlets in North America from The Children's Place Retail Stores Inc. and will close about 98 stores in the U.S. and two in Canada.

The Walt Disney Co. says it has taken over management of two-thirds of the Disney Stores in the U.S. and Canada from a subsidiary of youth apparel chain Children's Place, which took over operation of the chain four years ago.

The move to reclaim most of the money-losing operation came after the Children's Place subsidiary that ran the chain filed for Chapter 11 bankruptcy protection in March.

Analysts said Disney's reclamation of just two-thirds of the stores and the elimination of license fees paid to Disney would help make the outlets profitable again.

"The Disney Stores should have more of a positive outlook than the low margins and frequent quarterly losses they used to generate," Miller Tabak & Co. analyst David Joyce said in a research note after the deal was first announced in March.

Part of the turnaround would also hinge on refocusing on high-margin products, he said, referring to "more DVDs and video games, rather than hundreds of huge plush Goofys taking up a great deal of shelf and floor space."

Specific financial terms weren't disclosed, but Secaucus, N.J.-based Children's Place said it will cost the company $50 million to exit the operations, at the bottom of its estimated range of $50 million to $100 million.

Children's Place will provide transitional support services to Disney for up to six months. After the deal closes, Children's Place said its Hoop Holdings LLC subsidiary would continue with its bankruptcy filing and submit a reorganization plan by the end of the year.

"For The Children's Place, we can once again focus exclusively on building our core namesake brand and driving the business forward," said Chuck Crovitz, interim chief executive of the children's clothing chain.

The transfer of the stores back to Disney "maximizes the return to creditors, enables a substantial portion of the chain to continue operating and is in the best interest of Hoop's suppliers, landlords, creditors and others," he said.

Children's Place took control of the stores in 2004. Crovitz said in March that the arrangement hadn't worked out.

Conflict over a refurbishment plan put the companies at odds in recent years.

Last June, Children's Place said it agreed to a new refurbishment schedule in response to Disney's assertions that it had breached its licensing agreement. It committed $175 million to remodel 234 Disney stores by 2011 and redo 165 stores by this June.

Disney has said that by taking over the stores, it could better manage merchandise from its growing portfolio of franchises, which now include High School Musical, Hannah Montana, and Pirates of the Caribbean.

Children's Place said the Disney Stores recorded an operating loss of $92.1 million for the quarter that ended Feb. 2, and $107.3 million for the year.

Disney said company veteran James Fielding would become president of Disney Stores Worldwide, overseeing North American operations and the 107 Disney Stores in Europe.

Disney shares rose 92 cents, or 2.8 percent, to $33.35 in afternoon trading on Thursday, while Children's Place shares were up $1.31, or 5.6 percent, at $24.56.

[Dana]

I hope they don't close mine...I love my Disney fix!

[MissDisney]

I was thinking the same thing... maybe it's time to go buy everything on the shelves, just in case!

[Dana]

Originally Posted by MissDisney

I was thinking the same thing... maybe it's time to go buy everything on the shelves, just in case!

I was just there...nothing I wanted to tell you the truth. I like the little PJ sets and the cute navy mickey dress, but just didn't get anything....I can get the same stuff priced better online...

[Goodegirl2007]

I will be sad if my store closes....my DS4 just loves to go in there. I like that they always have something on sale (under $5), so he can get something Disney - it makes him so happy, and keeps him from driving me nuts while I shop!!

Thanks for the post!

[cinderbella]

I agree with the article they really need to revamp!! They should include more DVDs, games etc..and downsize on ALLLLLLLLL the plush. I am glad Disney has control of it again..it was weird that it didn't in the first place.

[WDW Rules]

Funny this should come up. Just heard on our local news that one of the two stores in the Milwaukee area is closing. Thank goodness it's not the one I go to. I would't be surprised if it will close sometime down the road. It needs alot of updating.

[Monique]

I was in my local store the other day and one of the CMs was sad to report to me that the store would be closing. From what I hear two stores in the Austin area had already closed and this would be the last one to do the same. The only thing left would be The Disney Store Outlet at our outlet mall.

[jk8]

All these closings are sad!

I have to say though I would not really buy DVDs, etc there as they will cost more. I go there for the clothes, toys, and decor. I wish they would have more decor items.

[Jennatrz]

Maybe the stores that they keep open will revamp and get some of the good items back.

[Disney 4ever]

I would love to see them revamped. I used to love going in there shopping. They carried such a good variety of items. Now, it just seems so. . . boring. I do get things from time to time for the grandkids, but mostly I just go in and look around and then leave.

[mickeymotto]

Does anyone know if there is a list of the closings? I hope mine is not on it. I always goes to the Disney Store to get a little fix in between my trips....what will I do?!?!?! Go to Disney Detox?!?!?

[12Amigos]

This is too funny. DH and I were just talking about this about an hour ago. He went on a business trip to Houston and came back with a huge bag of goodies from the Disney Store (ours closed last year). He was going on and on about hoping they don't close the one in Houston because it would be worth the three hour trip to go to Dave and Busters and get a Disney fix when the next trip seems too far off. I've heard that they will be reopening a store in Baton Rouge, LA a few months ago, but now that seems like it may not happen .

[WishUponAStar]

Originally Posted by cinderbella

I agree with the article they really need to revamp!! They should include more DVDs, games etc..and downsize on ALLLLLLLLL the plush. I am glad Disney has control of it again..it was weird that it didn't in the first place.

You should see the new fancy stores, they're amazing. They actually resemble more of the feeling of a World of Disney store; very stylized, sleek, video screens playing park promos, a boutique-feeling dressing room and front end, a variety of merchandise, etc. They speak VOLUMES over what the more traditional mall Disney stores did.

I actually found out yesterday they closed one of the older Disney stores in a mall in our county. The Freehold Rareway Mall no longer has one, so I am wondering what's going to happen to the Woodbridge store.

Anyway, I think I posted a thread a couple months back with pictures of these fancy new stores.

[MissDisney]

I would love to see more items from the parks, like CDs of park music, fireworks/parades, etc. Plus park clothing and so forth.