08/05/2004 - Updated 10:38 AM ET
UPDATE 2-Children's Place may buy Disney chain, sales rise
(Recasts, updates with detail, background)
NEW YORK (Reuters) - Children's Place Retail Stores Inc. said Thursday it has signed a nonbinding letter of intent to buy Walt Disney Co.'s money-losing Disney Store chain in North America, which has been on the block for more than a year.
The fast-growing mall-based children's clothing retailer said talks with Disney on the possible acquisition -- first made public in June -- continue.
The Disney Store's retail operations in the United States and Canada have consistently weighed on Disney's earnings. The European Disney Store chain, which is profitable, is also up for sale.
Disney's stores sell clothing, toys and other merchandise featuring Walt Disney characters and draw legions of visitors each year. But most of the North American Disney Stores are in malls, which have suffered from a plunge in shopper traffic.
Disney has shifted its strategy away from peddling consumer goods at its own stores toward licensing products for sale by other major retailers.
The discussions between Disney and Children's Place involve the operation of the retail chain under a long-term licensing agreement, Children's Place said in a statement.
The Disney Stores on Fifth Avenue in midtown Manhattan, at the Disney theme parks, and on the Disney studio lot in Burbank, California, are not part of the auction.
Secaucus, New Jersey-based Children's Place, which focuses on young children and sells its own branded clothing line out of its 715 stores, said its July same-store sales rose 14 percent compared with a 7 percent increase in the year-earlier period, thanks to a sales promotion during the month.
But while the sale brought customers into Children's Place stores and cleaned out inventories, it had no effect on the company's gross margin. Children's Place said it still expected to report a second-quarter loss of about 38 cents a share to 40 cents a share, which compares with analysts' average estimate of a 39 cent a share loss, according to Reuters Estimates.
Total sales for the four-week period ending July 31 rose 21 percent from a year earlier to $60.4 million.
© Reuters 2004. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
Copyright © 1998-2004 MarketWatch.com Inc.
UPDATE 2-Children's Place may buy Disney chain, sales rise
(Recasts, updates with detail, background)
NEW YORK (Reuters) - Children's Place Retail Stores Inc. said Thursday it has signed a nonbinding letter of intent to buy Walt Disney Co.'s money-losing Disney Store chain in North America, which has been on the block for more than a year.
The fast-growing mall-based children's clothing retailer said talks with Disney on the possible acquisition -- first made public in June -- continue.
The Disney Store's retail operations in the United States and Canada have consistently weighed on Disney's earnings. The European Disney Store chain, which is profitable, is also up for sale.
Disney's stores sell clothing, toys and other merchandise featuring Walt Disney characters and draw legions of visitors each year. But most of the North American Disney Stores are in malls, which have suffered from a plunge in shopper traffic.
Disney has shifted its strategy away from peddling consumer goods at its own stores toward licensing products for sale by other major retailers.
The discussions between Disney and Children's Place involve the operation of the retail chain under a long-term licensing agreement, Children's Place said in a statement.
The Disney Stores on Fifth Avenue in midtown Manhattan, at the Disney theme parks, and on the Disney studio lot in Burbank, California, are not part of the auction.
Secaucus, New Jersey-based Children's Place, which focuses on young children and sells its own branded clothing line out of its 715 stores, said its July same-store sales rose 14 percent compared with a 7 percent increase in the year-earlier period, thanks to a sales promotion during the month.
But while the sale brought customers into Children's Place stores and cleaned out inventories, it had no effect on the company's gross margin. Children's Place said it still expected to report a second-quarter loss of about 38 cents a share to 40 cents a share, which compares with analysts' average estimate of a 39 cent a share loss, according to Reuters Estimates.
Total sales for the four-week period ending July 31 rose 21 percent from a year earlier to $60.4 million.
© Reuters 2004. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
Copyright © 1998-2004 MarketWatch.com Inc.