monkeyboy
<font color=purple>Strangely fascinated by zombies
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LOS ANGELES (Hollywood Reporter) - The Children's Place Retail Stores on Thursday became the first potential buyer to disclose that it is in discussions with the Walt Disney Co. about buying its Disney Stores business in the United States and Canada. The revelation came a year after Disney confirmed that the stores were on the block.
In a release discussing its sales for May, Children's Place said the combination of its stores and Disney's would "bring together the Children's Place's retail expertise with the unique Disney brand and creative engine."
Children's Place sells its own proprietary clothing for children ages newborn to 10 at more than 700 Children's Place stores in the United States and Canada as well as on its Web site. The retailer has expanded rapidly over the past several years and reported a 9% increase in comparable-store sales for May.
A Disney spokeswoman declined comment on the situation but confirmed that the number of Disney Stores in North America now stands at 323. After originally opening in 1987 and expanding rapidly in the 1990s, Disney's domestic stores stood at 522 at their peak. Disney does not break out Disney Stores results, but analysts have estimated that it is losing as much as $50 million a year.
Ryan Beck & Co. retail analyst Margaret Whitfield said she is "intrigued" by the possible combination. "Fifty percent of Disney Stores' sales at this time are in apparel," she said. "Children's Place has excellent sourcing capability."
Although Children's Place is exclusively in the apparel business except for a small amount of gift items, Whitfield said management sees a potential opportunity in the recent shakeout in toy retailing.
"KB Toys are the only toy stores in many malls now, and with them closing (following KB's bankruptcy filing), management sees an opportunity," Whitfield said. Disney's stores are primarily mall-based as are those of Children's Place.
Disney's flagship Fifth Avenue store in Manhattan would not be part of the deal as Disney plans to keep that as part of its own handful of stores that are based at its parks and on its Burbank lot. Disney has been separately seeking a buyer for its European stores after having sold its Japanese chain in 2001.
While several analysts were upbeat on the possible combination, at least one knowledgeable observer cautioned that he will remain skeptical of a deal because of the restrictions that are sure to be placed on any potential buyer. Disney is notoriously controlling when it comes to its brands, and Disney Stores spokesman Gary Foster has been quoted as saying that any transaction would be "complicated" because of "licensing agreements and brand issues."
"They will put some real handcuffs on whoever they make a deal with," said the industry insider, who requested anonymity. "All the approvals could be a deal killer."
The source said that whether a deal happens could come down to "how desperate Disney is to get the stores off their balance sheet." He said Disney will likely sell the chain "for a song" and take a write-down in order to keep a marketing vehicle and "save face" rather than having to close its stores as Warner Bros. did in 2001 after becoming part of the merged AOL Time Warner.
In a release discussing its sales for May, Children's Place said the combination of its stores and Disney's would "bring together the Children's Place's retail expertise with the unique Disney brand and creative engine."
Children's Place sells its own proprietary clothing for children ages newborn to 10 at more than 700 Children's Place stores in the United States and Canada as well as on its Web site. The retailer has expanded rapidly over the past several years and reported a 9% increase in comparable-store sales for May.
A Disney spokeswoman declined comment on the situation but confirmed that the number of Disney Stores in North America now stands at 323. After originally opening in 1987 and expanding rapidly in the 1990s, Disney's domestic stores stood at 522 at their peak. Disney does not break out Disney Stores results, but analysts have estimated that it is losing as much as $50 million a year.
Ryan Beck & Co. retail analyst Margaret Whitfield said she is "intrigued" by the possible combination. "Fifty percent of Disney Stores' sales at this time are in apparel," she said. "Children's Place has excellent sourcing capability."
Although Children's Place is exclusively in the apparel business except for a small amount of gift items, Whitfield said management sees a potential opportunity in the recent shakeout in toy retailing.
"KB Toys are the only toy stores in many malls now, and with them closing (following KB's bankruptcy filing), management sees an opportunity," Whitfield said. Disney's stores are primarily mall-based as are those of Children's Place.
Disney's flagship Fifth Avenue store in Manhattan would not be part of the deal as Disney plans to keep that as part of its own handful of stores that are based at its parks and on its Burbank lot. Disney has been separately seeking a buyer for its European stores after having sold its Japanese chain in 2001.
While several analysts were upbeat on the possible combination, at least one knowledgeable observer cautioned that he will remain skeptical of a deal because of the restrictions that are sure to be placed on any potential buyer. Disney is notoriously controlling when it comes to its brands, and Disney Stores spokesman Gary Foster has been quoted as saying that any transaction would be "complicated" because of "licensing agreements and brand issues."
"They will put some real handcuffs on whoever they make a deal with," said the industry insider, who requested anonymity. "All the approvals could be a deal killer."
The source said that whether a deal happens could come down to "how desperate Disney is to get the stores off their balance sheet." He said Disney will likely sell the chain "for a song" and take a write-down in order to keep a marketing vehicle and "save face" rather than having to close its stores as Warner Bros. did in 2001 after becoming part of the merged AOL Time Warner.
