Disney Stores Not So Magical For Childrens Place

[tjcjr]

The following is an excerpt from a statement issued by the Childrens Place regarding the Disney Stores in it's recently published financial results:

The Company also provided an update regarding its License Agreement with The Walt Disney Company under which the Company operates the Disney Store chain in the United States and Canada.
As previously announced, on June 8, 2007, the Company and Disney executed a letter agreement which modified certain provisions of the parties' long-term license agreement, to address claims by Disney that the Company had committed numerous material breaches of the license agreement. The June letter agreement provided that Disney would treat the Company's breaches as having been cured so long as the Company complied with the terms of the June letter agreement. The June letter agreement imposed specific obligations on the Company with respect to the remodeling and refreshing of numerous stores in the Disney Store chain between fiscal 2007 and fiscal 2011 and, for the stores to be remodeled in fiscal 2007 and fiscal 2008, set forth a detailed timetable for submission of plans and completion dates.
To date the Company has been unable to meet several of the deadlines set forth in the June letter agreement. In every instance except for this most recent one, Disney has provided the Company with written confirmation that it does not consider these missed deadlines to constitute breaches of the June letter agreement. While the Company expects that the amendment to the license agreement described below will defer the one remaining deadline that was missed, unless and until this amendment agreement is signed, the Company will be in breach of the June letter agreement, entitling Disney to exercise its remedies under the June letter agreement and the license agreement, including possible termination of the license agreement. In addition, this breach constitutes a cross-default under the secured credit facility for the Disney Store chain, entitling the lenders to exercise their contractual remedies. Neither Disney nor the lenders have notified the Company that they have, or intend to, exercise their rights mentioned above, but there can be no assurance that they will not exercise their rights in the future.
In addition, the Company has identified various upcoming deadlines during the third and fourth quarters of fiscal 2007 that it will likely miss. The Company and Disney have been engaged in recent discussions regarding potential changes to the requirements of the June letter agreement that would postpone the due dates of certain of the Company's remodel obligations until later in fiscal 2007, fiscal 2008 and fiscal 2009. In consideration for these changes, the parties have also been discussing changes to the original license agreement to allow Disney to relocate its flagship store in Manhattan.
In addition, the parties have been discussing modifications so that Disney's ability to grant direct licenses to other specialty retailers for the sale of Disney merchandise will apply only to specialty retailers primarily focused on the sale of children's merchandise. It is expected that these various changes would be incorporated in an amendment to the license agreement.
There can be no assurance that the Company's discussions with Disney will result in any agreement or that the dates for the Company's remodel obligations will be deferred. Whether or not these dates are deferred, the Company's ability to meet its obligations under the June letter agreement will depend on numerous factors, some of which are beyond the Company's control, and there can be no assurance that it will be able to fully comply. If the Company fails to comply with these obligations, it will be in breach of the June letter agreement, entitling Disney to exercise its remedies under the June letter agreement and the license agreement.

See the complete article here: http://money.cnn.com/news/newsfeeds/...ire/125495.htm

[tjcjr]

Some related info from Forbes:

The Children's Place Retail Stores Inc. said Thursday it missed several deadlines to remodel and refresh numerous stores in the Disney Store chain and expects to miss more deadlines. Shares tumbled in premarket trading.
Under a long-term license agreement with Walt Disney Co., Children's Place operates the Disney Store retail chain in the U.S. and Canada. On June 8, Children's Place agreed to an amended license deal that included a timetable to renovate and upgrade hundreds of Disney stores.
The discussions began after Disney said Children's Place failed to comply with some terms for the agreement, including obligations for renovation and maintenance.

Read their complete artice here: http://www.forbes.com/feeds/ap/2007/...ap4047791.html

[DisneyMickey]

The way to fix the stores is really very simple, yet these companies do the complete opposite of what the public actually wants. I don't understand why either company can't come up with a new prototype for the stores that make them actually look good instead of Disney "cheap" and "kiddy." Disney's prototypes in 2001 were ok, but Children's Place were worse. Why can't they come up with something classy and refined? The merchandise is terribly cheap and way overpriced. Children's Place or Disney isn't making matters any better. All the Disney Stores currently open (sans Japan) are a mumbled mess. Some are still modeled from the original format, some are the new Disney type of 2001, some are still highly themed ones, and others are the ugly, hospital-looking Children's Place remodel. They need something that remodels ALL stores and gives them some sophistication.

They have the whole thing in a mangled mess. There is DisneyShopping.com which has all things Disney, but it is not DisneyStore. They have DisneyStore.com, but it only sells things in the Disney Stores. They have DisneyOutlet.com which is discounted DisneyShopping. Then Children's Place has Disney Store Outlets in actual retail store forms. There are Disney Stores that, like I said, are a mess merchandise and design-wise. Not only that, but there is World of Disney stores, character outlets stores, the Disney Vault 28 prototype, and other lines circulating through the veins of Walt Mart, Target, and other big-store chains that are a downright disgrace to Disney's name (in my opinion).

They should clean up the mess by fusing the whole Disney Store/Shopping mess into one operation. This two company thing is not working very well. And Disney's whole merchandise vein is set up very badly in the first place with lines like DisneyHome, DisneyBaby, DisneyStore, Disney Consumer Products, DisneyShopping etc. etc. It all needs to be re-thought and re-worked into something cohesive.

[Meettherobinson]

I must say that I just quit my position at The Disney Store. I only worked there for approx. 2 months. The staff was horrible to work for. Even though I worked there part time, it was hell. My trainor always told me when I entered my shift on stage... hey don't take offense if I snap at you, its because I'm having a bad day. I'm not kidding ever time I worked. I adore Walts vision of giving that charm to each guest, so I tried my very best. But these castmembers either looked or acted like they slept for 2 hours. But the stores themselves do need up lifting and change. The carpet stinks and is very badly stained. The registers still were from the original opening store date. The fixtures were either chipped or discolored. Its very sad, and I hope WDC can put a little fire on their behind and make them updated everything.

[tjcjr]

More bad news for The Childrens Place:

A multibillion-dollar hedge fund that has been hit by the market's recent turmoil decided to reduce its stake in Secaucus-based retailer The Children's Place Retail Stores Inc., which has seen its own share of tumult in recent months.
New York-based hedge fund D.E. Shaw Group reported in a statement filed with the Securities and Exchange Commission on Monday that it had reduced its stake in The Children's Place to 4.1 percent, or about 1.9 million shares, down from a 9.7 percent stake, or 2.8 million shares, as of July 30.
A D.E. Shaw spokeswoman declined to comment on the filing. But it represents a reversal for the hedge fund, which previously had indicated an interest in possibly acquiring the retailer. The fund has invested in a number of retailers, including toy company icon FAO Schwarz, and novelty chain Spencer Gifts.
Retail analyst Howard Davidowitz said the about-face probably was prompted by a combination of two factors: the market turmoil that has caused Shaw and other hedge funds to suffer losses, and "the disappointment and additional risk associated with The Children's Place."
Children's Place, which operates 876 namesake children's clothing stores and 328 Disney retail stores, has seen its stock price tumble to its lowest point in five years in the face of lackluster sales, an investigation into backdated stock options that is requiring the company to restate earnings, and an ongoing dispute with The Disney Co. over the terms of its licensing agreement.
"There's a lot of issues with Children's Place, and there's a lot of issues within the hedge-fund industry, so I'd have to say this is frankly not too surprising," said Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm based in New York.
The Children's Place stock closed at $27.96, down 34 cents, or 1.2 percent, for the day. It was trading at more than $70 a share a year ago.

Source: http://www.northjersey.com/page.php?...dnFlZUVFeXkyMg==