SorcererMickey
October 21st, 2004, 01:45
Disney to sell mall-based stores to Children's Place
Posted 10/20/2004 2:50 PM
From wire reports
LOS ANGELES — Walt Disney Co. (DIS) on Wednesday agreed to sell its money-losing Disney store chain to Children's Place Retail Stores (PLCE) in a deal analysts described as positive for Children's Place.
"It looks like a home run," Margaret Whitfield, said retail analyst at Ryan Beck. "It sounds like they have numerous opportunities to improve the business."
Children's Place shares jumped on the news.
The Children's Place, based in Secaucus N.J., will continue to operate the stores under the Disney name with a 15-year licensing agreement and three, 10-year renewal options.
It will not make an upfront payment to Disney. Instead, it will provide a "working capital adjustment payment," valued by one analyst at $50 million to $100 million.
The payment will be based on the value of inventory at the stores at the time the deal closes. The cost of the licensing deal was not disclosed.
Whitfield said Children's Place should be able to improve and potentially add to the stores' apparel lines, which are about 60% of the Disney store business, and continue to drive sales of items like dolls, stuffed animals and other toys, she said.
"With store closings at KB, as well as potential closings at Toys R Us, this will be a destination for parents, as well as kids," Whitfield added.
Disney has been trying to unload its stores as part of a larger effort to dispose of non-core assets such as sports teams. The once-profitable retail chain hit a high of 700 stores in 2000. Since then, Disney has been trimming the number of stores — 313 mall-based retail stores remain — but losing money on the operation.
Children's Place has agreed to invest up to $100 million in the remaining stores, with half of that coming at closing. It intends to fund the deal from cash on hand and short-term borrowing. It does not expect to seek long-term borrowing or issue stock as a result of the deal.
Disney will continue to operate the stores inside its theme parks, as well as the flagship Fifth Avenue store in New York. The stores will be run by Disney's theme park division instead of its consumer products arm.
Disney is continuing to seek a buyer for its European stores.
Disney will continue to sell some toys and items on its Web site and through its mail order catalog, operating as a competitor to the retail stores on items such as plush toys. Other merchandise, such as snow globes, will be sold exclusively by Disney.
Posted 10/20/2004 2:50 PM
From wire reports
LOS ANGELES — Walt Disney Co. (DIS) on Wednesday agreed to sell its money-losing Disney store chain to Children's Place Retail Stores (PLCE) in a deal analysts described as positive for Children's Place.
"It looks like a home run," Margaret Whitfield, said retail analyst at Ryan Beck. "It sounds like they have numerous opportunities to improve the business."
Children's Place shares jumped on the news.
The Children's Place, based in Secaucus N.J., will continue to operate the stores under the Disney name with a 15-year licensing agreement and three, 10-year renewal options.
It will not make an upfront payment to Disney. Instead, it will provide a "working capital adjustment payment," valued by one analyst at $50 million to $100 million.
The payment will be based on the value of inventory at the stores at the time the deal closes. The cost of the licensing deal was not disclosed.
Whitfield said Children's Place should be able to improve and potentially add to the stores' apparel lines, which are about 60% of the Disney store business, and continue to drive sales of items like dolls, stuffed animals and other toys, she said.
"With store closings at KB, as well as potential closings at Toys R Us, this will be a destination for parents, as well as kids," Whitfield added.
Disney has been trying to unload its stores as part of a larger effort to dispose of non-core assets such as sports teams. The once-profitable retail chain hit a high of 700 stores in 2000. Since then, Disney has been trimming the number of stores — 313 mall-based retail stores remain — but losing money on the operation.
Children's Place has agreed to invest up to $100 million in the remaining stores, with half of that coming at closing. It intends to fund the deal from cash on hand and short-term borrowing. It does not expect to seek long-term borrowing or issue stock as a result of the deal.
Disney will continue to operate the stores inside its theme parks, as well as the flagship Fifth Avenue store in New York. The stores will be run by Disney's theme park division instead of its consumer products arm.
Disney is continuing to seek a buyer for its European stores.
Disney will continue to sell some toys and items on its Web site and through its mail order catalog, operating as a competitor to the retail stores on items such as plush toys. Other merchandise, such as snow globes, will be sold exclusively by Disney.