Shareholders File Suit Against Children's Place Over Disney Store Agreement

[disneytim]

Shareholders of The Children's Place Retail Stores, Inc. on Tuesday filed a class action suit against the retailer, claiming that it "failed to disclose and misrepresented" details of its licensing agreement with Disney over the operation of 331 Disney Stores. The shareholders are represented by the law firm of Schiffrin Barroway Topaz & Kessler, LLP.

At the heart of the suit is shareholder dissatisfaction with The Children's Place's inability to meet obligations to Disney to maintain store standards. In June, The Children's Place announced they would remodel or "refresh" the majority of its Disney Stores at a cost of $175 million to comply with contractual requirements. In August, however, they announced they'd be unable to meet many of the deadlines established in the June agreement, thus leaving the door open for Disney to grant sales rights to other retailers or to cancel the licensing agreement outright.

This week, The Children's Place announced that overall September 2007 same store sales decreased 4% from the same period last year. Sales from The Disney Store alone decreased 6%.

Shares of The Children's Place have dropped nearly 40 points since the beginning of the year. As of this post, it's priced at $22.65/share.

Source: CNNMoney/PR Newswire

[BigPigletFan]

FYI - Even though there apparently was no wrong doing, the President of HOOP resigned from the company last month.

[disneytim]

The drama continues. The former chief executive of The Children's Place fires back. This from The New York Times:

Ousted Chief of Retailer Strikes Back at Directors
By MICHAEL BARBARO
Published: October 12, 2007

When the board of Children’s Place ousted its chief executive, Ezra Dabah, several weeks ago over supposed violations of the company’s code of conduct, the clothing retailer assumed he would leave quietly. He isn’t.

Mr. Dabah fired off a testy letter last night to the acting chairwoman of Children’s Place, charging that his resignation was “solely attributable to a power play by certain members of the board” and upbraiding the company for making remarks “that have disparaged my good name and reputation.”

The two-page letter, by turns angry and boastful, suggests that a nasty behind-the-scenes battle played out at the company over Mr. Dabah’s conduct, resulting in a split board vote on whether he should remain in the job.

Hinting at a conspiracy, Mr. Dabah writes of “personal motives of certain directors” and their “misleading” statements.

The letter is likely to create an awkward situation for the management of Children’s Place, which operates the Disney Store chain. Mr. Dabah, 54, is still a board member and the company’s largest single shareholder.

He resigned on Sept. 26 after an internal inquiry found he did not comply with company rules governing the disclosure of stockholdings and trading.

Full Story: Ousted Chief of Retailer Strikes Back at Directors

Mr. Dabah's Letter to the Board

[BigPigletFan]

Aww... Ezra. Gotta love him.

[Cmash95]

sounds like the company got in over it's head and now needs to save face.

[Jerren]

Originally Posted by disneytim

This week, The Children's Place announced that overall September 2007 same store sales decreased 4% from the same period last year. Sales from The Disney Store alone decreased 6%.

Gee I figured it would be a lot more than 6%, the quality has gone downhill, they no longer have stores in many of the malls around here and they no longer sell the Artwork and Adult clothing they once did. Finally they closed the store in the nicer malls here and kept the ones in the less savory ones... probably due to cost cutting but still they look as run down as the mall itself and thats not good. Its sad because we did do a lot of shopping there especially during the holidays... not anymore.

[sediment]

Plenty of us saw this coming. Well, not the shareholder lawsuit but the inevitability of TCP not being able to meet the demands of Disney (and make a profit from it). (The) Disney Store was already in ruins from catering to a specific target group instead of all fans of Disney.