TDS to close 100 stores, sell the rest

[maleficent1959]

Sorry to post bad news this morning. This article at CBS Marketwatch confirms that Disney has decided to close 100 more stores and will sell the rest. No word on which stores will close or who potential buyers may be.

Disney: Who wants to be a retailer?
By Russ Britt, CBS.MarketWatch.com
Last Update: 6:01 PM ET May 22, 2003

BURBANK, Calif. (CBS.MW) -- Walt Disney Co. said Thursday that it plans to put its troubled chain of retail stores up for sale, as the entertainment giant looks to license its valuable brand name rather than remain a shopkeeper.

Disney (DIS: news, chart, profile) will seek a buyer for its 548 Disney Stores worldwide, the company announced after the closing bell. The announcement had been expected since last week, after Chief Financial Officer Thomas Staggs reportedly told an analyst that a sale was possible.

On Thursday, Disney solidified that stance, saying its goal is to sell the operations outright. Peter Whitford, president of the Disney Store chain, has resigned and will be replaced temporarily by Andy Mooney, chairman of the company's consumer products division.

In a conference call with reporters, Mooney said it has proven too difficult for the Disney Stores to compete for company capital with a number of diverse entities such as movie studios, theme parks and the ABC Television Network. Retail outlets are not a "core competency" for Disney, Mooney said.

He added that Disney would consider closing the stores if it could not find a buyer.

"That would be one of the options," Mooney said. "We have absolutely not made the decision to close the stores."

Mooney said there is no time frame for finding a buyer, adding the company feels confident it can find interested parties.

Weak performance at Disney Stores has dragged down the company's consumer products division.

Mooney said the stores stopped being profitable after Disney initiated a plan to boost the store count in North America from 300 to 800 stores. Disney has reduced that store count in recent years, and the North America number now stands at 387.

More stores will be closed as Disney plans to at least reduce the number of stores 300 again, and perhaps lower if necessary to prepare the division for sale.

The group's sales have dropped 35.5 percent since1997, from $3.8 billion to $2.4 billion in 2002. Operating income has plunged even more in that time, $893 million to $394 million, a drop of 55.9 percent.

Operating income would get a boost if the outlets were sold, although revenue also would drop, Mooney added. But the company's consumer products division would not be folded back into another part of Disney should the stores be sold, Mooney said, because its sales still are a small part of the business.

In 2001, Disney sold its stores in Japan to the Oriental Land Co., which owns and operates Tokyo Disneyland and Tokyo DisneySea under a license agreement.

Mooney said the company believes a specialty retailer would be an ideal purchaser, or a financial buyer that would create its own retail operation.

Ahead of the announcement, shares of Disney, a component of the Dow Jones Industrial Average, rose 24 cents, or 1.3 percent, to close at $18.12.

Russ Britt is the Los Angeles Bureau Chief for CBS.MarketWatch.com.

 

[FergieTCat]

That's too bad.

I still think their mistake was discontinuing adult clothing. TDS is more like a toy store nowadays.

 

[Grog]

I hate to see them go but it's at the point right now where I only go into TDS about once a year, and then only to see if they have come to their senses. I would love to see someone else buy them and hopefully start selling adult clothing and collectibles again. If this happens I just hope that my local store survives the purge

 

[Towncrier]

I guess I had better spend that Disney Store credit that I've been carrrying around in my wallet before it's worthless.

 

[MerryPoppins]

I hate to see them go. On the other hand, I've been unhappy with what they have in our store lately. Maybe another owner could do better? I wonder if this means that they won't do the catalog sales either? I'll miss that.

 

[Bunchkin]

This is so sad!!

We still go there about once or twice a month. And seem to only buy things on sale or clearance. Most of their things are over priced and there are way too many toys. And DH & I really miss the adult clothing too!!! They should have never gotten rid of the the adult clothes and the baby clothes too!! I used to buy so many baby outfits from there when DD was a baby 5 1/2 years ago.

Remember when they used to have Lion King clothing there about 5-6 years ago?? I have the greatest Lion King pull over fleece from TDS I bought back then. Everyone asks me where I bought it from and no one ever believes it's from TDS, they always thinks it's from the park. No one ever remembers TDS having Lion King clothing.....let alone ADULT Lion King clothing.

 

[TiggerPiglet]

Honestly I'm not surprised. You can buy Disney clothes at K-Mart for half the price. I think I might have bought something in the Disney store maybe once because it was an unbelievable sale, otherwise I just window shop. I think most people buy Disney merchandise when they're actually in DisneyWorld or Disneyland. It's just too expensive to go into a Disney store on a regular basis.

 

[Cinders]

Ebay will become non-park-goers way to buy merchandise that isnt offered online at the Disney Store now.

 

[s&k'smom]

Now that I think of it there was no adult clothes when I was there at the end of March. I actually got some good deals but they were all for my kids. I was disapointed to because there were no pins there. I do much better on line when I go to the clearance section. Plus you guys are right it's very expensive and I usually do really well with the clearance catalog that comes after Christmas.