Disney wishes upon a store, eyes return to retail counter

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Now that it has so many lucrative new franchises to sell, Disney wants its stores back.

The company said Thursday that it has been negotiating for months to take back control of the U.S. Disney Store chain that it licensed more than three years ago to Children's Place.

Children's Place said Thursday that the Disney Stores racked up an operating loss of $107.3 million for the year, but Disney said it can run them profitably just as it does in Europe, where the media conglomerate owns 120 Disney Stores.

"Given the right size of the portfolio, it will be the same here," said Gary Foster, senior vp at Disney Consumer Products.

That "right size" is from 200-225 stores that range in size from 3,000-5,000 square feet each. Children's Place runs 335 Disney Stores and will shoulder the cost for shutting down more than 100 of them before Disney reclaims control of the chain.

Disney won't disclose any financial or timing metrics of the deal still being hammered out, but insiders say executives are anxious to close the deal quickly so that Disney can gear up in plenty of time for Christmas.

When Disney ceded control of its U.S.-based Disney Stores, Michael Eisner was the company's CEO, Pixar had not yet been acquired and now-CEO Bob Iger hadn't implemented his plan to focus more heavily on the Disney brand.

Since then, "Hannah Montana," "High School Musical," "Pirates of the Caribbean," "Cars" and others have become reliable franchises ripe for merchandising.

"We have so much more to work with now," Foster said.

Foster won't speculate on how the stores might change once Disney takes them over again, but he did note that lately they have perhaps skewed too heavily in favor of apparel given that the specialty of Children's Place is children's clothing.

Besides the 335 Disney Stores, the retail company runs 906 Children's Place stores.

Disney had been criticized for the way it expanded the Disney Store concept so quickly years ago and in doing so diluted the brand, eventually leading to its decision to license the stores to Children's Place. Foster said Thursday that, at the time, Disney was more interested in spending its capital on theme parks than it was on retail outlets.

There also are 40 Disney Stores in Japan that will continue to be operated by Oriental Land Co., operator of Tokyo Disney Resort.
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