Disney buying back Disney Store retail outlets

[Manedwolf]

Disney buys back North American Disney Store chain
Thu May 1, 2008 10:43am EDT

NEW YORK (Reuters) - Walt Disney Co (DIS.N: Quote, Profile, Research) has repurchased its North American Disney Store chain from Children's Place Retail Stores Inc (PLCE.O: Quote, Profile, Research), the companies said on Thursday.

Disney said it bought back 220 locations in the United States and Canada. Terms were not disclosed. The final number of acquired stores will depend on the outcome of negotiations with landlords, it said.

Disney also obtained the right to close about 100 stores.

Children's Place said in March it was exiting the Disney Store business, and Disney confirmed it was in talks to take back stores.

Children's Place, whose eponymous chain sells clothes for children, said it would provide transitional support to Disney for up to six months and expects to incur exit costs of $50 million -- at the low end of its anticipated range of $50 million to $100 million.

Most of these cash costs were taken in the first quarter, the company said.

Disney sold a struggling chain of 313 stores to Children's Place in 2004. At the time, Children's Place was seeking to expand in the market for merchandise for newborns to age 10, and Disney was shifting its consumer goods strategy from running its own stores to designing and then licensing products to other retailers.

I remember when I was little, when they first opened, they were like mini slices of the theme parks. All kinds of animatronics along the upper walls on ledges, a huge screen, cheerful music from the parks, and actually cheerful employees that were like the park "cast members", along with the "Disney Deco" decor. They even sold original animation cels, museum matted, framed and all in a gallery corner. It felt like you'd just walked in from Main Street USA or one of the EPCOT plazas.

Then, I guess it was after the sale, they just turned into bland, dour retail outlets, no decor, bleak fluorescent lighting, just some racks of cheap Mickey shirts from China and typical bored retail workers.

That didn't attract customers anymore? What a surprise!

[mtnbkr]

Were all Disney Stores owned externally or just some of them?  I ask because your description of the "old way" is what I see in Disney Stores around here (including the all too chipper employees).  I haven't seen any examples of the 2nd description.  Having a young daughter means I spend more time in Disney stores than I'd prefer...

Chris

[Stetson]

The revenue to Disney went down, a lot, when they transferred the ownership.

It did not meet any of the projected revenue goals.

Due to who I work for and what I do, I deal with quite a few of the Disney finance personnel and they told us about this a few months ago.  They want to bring the stores back up to DCP(Disney Consumer Products) standards.

[AJ Dual]

Mrs. Dual works for The Children's Place. All employee raises have been suspended for this year so far...

TCP got threatened with all sorts of stuff by Disney last year for not meeting the stringent terms of the contract of maintaining the "Disney Experience". TCP agreed to sink millions of dollars into The Disney Stores in remodels and upkeep etc. and it sounds like TCPpromised to do it with no way of actually financing it, or, the credit/mortgage crunch made the finance they expected to use impossible to obtain.

Best guess is TCP is giving the Disney Stores back at a huge loss, perhaps for nothing, and are just writing it all off... Those probably are the "Undisclosed Terms" the article mentions, because it's cheaper than getting sued, or having Disney exercise all the penalty options in the original sale contract, or the renegotiated contract that TCP signed onto when Disney forced them into a corner over this last year.

IMO, TCP upper managment were morons for getting into bed with Disney in the first place. Disney's well known for being exceptionally demanding when it comes to the upkeep of their brand. And IMO that vastly outweighed whatever retail expertise TCP thought they were bringing to the table. I saw some of the sanitized outlines of the original deal with Disney that TCP gave to their managers and associates, and they were jaw-dropping.

Oh, IIRC, all the Disney stores were owned by TCP, other than a few extra-large showcase stores with extra attractions in them that Disney operated, Manhattan/Times Square, and possibly one on Chicago's miracle mile.

[Bogie]

Plus, if the Disney Stores are operated even at break even rates, they provide a tremendous advertising boost to the parent company. They do not HAVE to be profitable to make the overall company money.
 
Some operations which early spun off entities while telling them "we must all make our separate profits, or be shut down" are starting to realize that about some of their public-viewable operations.