Disney to Sell Mall-Based Stores to Children’s Place

LOS ANGELES – The Walt Disney Co. will sell its chain of 313 mall-based retail stores to New Jersey-based The Children’s Place while continuing to sells dolls, toys, and other Disney-branded products through its own catalog and Web site, it was announced yesterday.The Children’s Place Retail Stores Inc said the deal to buy Disney’s North American stores is expected to close next month.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 the inventory at the stores when the deal closes. The cost of the licensing deal was not disclosed.Disney has been trying to unload its stores as part of a larger effort to dispose of noncore 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, while 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 located 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.Children’s Place will sell items online from its retail stores, using the Web site www.disneystore.com.Disney switched its Internet retail operation to www.disneydirect.com.Disney will continue to sell similar 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. The company will sell other merchandise, such as snow globes, exclusively.Disney’s consumer products division has been operating at a profit recently as it began to license products to large retailers such as Wal-Mart Stores Inc while creating specialty lines of merchandise.Disney has also entered the consumer electronics business, selling Disney-themed computers, telephones and DVD players.The deal was announced before the start of market trading on Wednesday. Shares of Children’s Place were up nearly 19 percent, or $4.67, to $29.63 in afternoon trading on the Nasdaq Stock Market. Disney shares were down 15 cents, at $24.74, on the New York Stock Exchange.

Disney to Sell Mall-Based Stores to Children’s Place

Disney to Sell Mall-Based Stores to Children’s Place

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