Disney deals to buy back most retail stores

Katherine Leonard arranges stuffed animals at the Disney Store in Glendale, Calif., one of a chain of mall stores used to showcase the brand in an ill-fated licensing deal.

Associated Press (2001)

Katherine Leonard arranges stuffed animals at the Disney Store in Glendale, Calif., one of a chain of mall stores used to showcase the brand in an ill-fated licensing deal.

Walt Disney Co. is close to taking back two-thirds of the struggling Disney Stores chain by May 1, but the rest of the 335-store chain faces closure as part of a Chapter 11 bankruptcy filing.

The bankruptcy reorganization is the vehicle chosen by the Children's Place Retail Stores Inc. to unravel its ill-fated four-year licensing deal running a chain of mall stores Disney created in the 1990s to showcase its growing array of branded goods.

There are four Disney Stores in Tampa Bay malls after a fifth at University Mall in Tampa closed a few months ago. Disney is still negotiating which stores and how many it's taking back.

The divorce was triggered by Disney's concerns that $200-million in pledged remodelings of the flashy cartoon-themed stores was overdue. Sales were flat in 2007 as the Disney Store chain lost $107-million.

Children's Place, a Secaucus, N.J., chain of 906 kids apparel stores, is not part of the New Jersey bankruptcy case filed late Wednesday by a wholly owned subsidiary that operates the Disney stores.

The subsidiary, Hoop Holdings LLC, secured debtor-in-possession financing to keep operating in the interim and is in the "advanced stages" of clinching a deal for the sale to Disney. Children's Place committed up to $100-million to Hoop Holdings.

"Once Disney takes control of about two-thirds of the stores, the other stores will be wound down as part of the Chapter 11 proceeding," said Chuck Crovitz, interim chief executive of Children's Place, which is shedding $640-million of its $2.1-billion in annual sales.

At its peak, there were more than 700 Disney Stores. They served as showrooms to push the studio's licensed product stable beyond kitschy trinkets, T-shirts, plush characters and toys to more stylish lifestyle goods.

Eventually, demand for licensed Hollywood studio goods peaked. The rival Warner Bros. Studio Stores closed. Disney downsized and rethought the Disney Stores.

Disney product lines grew big enough that larger retailers sell the stuff too. Indeed, sales of the 10 biggest Disney product franchises hit $11.2-billion in 2007, up from $6.5-billion in 2004.

Today, toys and plush characters get plenty of shelf space in Disney Stores. But most of the merchandise is apparel, bedding and accessories designed for kids and preteens: Hannah Montana, High School Musical, Cars and the Disney Princess and Fairies lines.

Mark Albright can be reached at albright@sptimes.com or

(727) 893-8252.

Disney deals to buy back most retail stores 03/27/08 [Last modified: Thursday, March 27, 2008 9:23pm]

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