HOLLYWOOD — The Mouse is exiting the mall.
The Walt Disney Co. on Wednesday executed a long-awaited deal to sell its Disney Store chain in the North America to kidtailer the Children’s Place.
Financial details weren’t disclosed, but Children’s Place said it plans to invest up to $100 million to remodel and operate the stores. Credit Suisse First Boston estimated that the Mouse House will be earning mid-single-digital royalties on sales as part of the agreement.
After booming during the ’90s and expanding rapidly, the Disney Store chain ran into trouble and had to shutter some locations and shift strategies. Competitor Warner Bros. had a similar experience, eventually closing all of its branded stores.
Although Disney doesn’t specifically break out performance of its stores, company said last quarter that the chain continued to lose money but was improving due to cost-cutting measures.
Children’s Place plans to improve Disney Stores’ performance by integrating its own infrastructure to lower operating costs while maintaining a focus on Disney brands. “By combining the Disney brand with our retail expertise, we believe we can increase sales, produce significant margin expansion and leverage operating expenses,” said CEO Ezra Dabah.
Mouse House began looking to sell the Disney Store last year and first signed a nonbinding agreement with Children’s Place in spring.
While it allows Children’s Place to take over its retail operations, Disney will continue to operate its own catalog and maintain an online retail presence. Conglom also has more than 100 Disney Stores overseas that are not part of the deal. Most are in Europe, and the company said it’s exploring options to sell those as well.
Disney shares closed down slightly at $24.74 on Wednesday.
