NEW YORK — The Children’s Place Retail Stores Inc. signed a deal for an undisclosed amount to acquire and run all of The Walt Disney Co.’s 313 North American retail stores.
Wall Street applauded the deal, sending shares of The Children’s Place up 18.71 percent to close at $29.63 in trading on the Nasdaq, Wednesday.
The acquisition includes a $100 million investment for remodeling and operation costs, $50 million of which will be funded when the deal closes in November, the children’s retailer said.
Seth Udasin, finance director for The Children’s Place, said in a conference call that he expects the acquisition to boost earnings by 30 cents a share for fiscal year 2005.
The deal allows The Children’s Place to expand its market position while Disney gets to unload what it feels is a lagging business. The Children’s Place currently runs 725 stores across the U.S.
Ezra Dabah, chairman and chief executive officer of The Children’s Place, said the acquisition is in line with the company’s goal to be “the leading retail player in the newborn-to-age-10 category.”
“This deal makes sense,” said Dabah. “With Disney’s name brand coupled with our merchandising and marketing expertise, we are confident this is the right deal.”
Remodeling the Disney stores is planned, and the retailer said it will transform the shops into more of an “emporium” style.
Dabah said the company will be able to take advantage of existing infrastructure at The Children’s Place with the Disney store to improve operating costs. The Walt Disney Co. will continue paying leases on the stores and will begin receiving royalties from the The Children’s Place in late 2006.
In a separate announcement, Mario Ciampi was named president of Disney Store North America. Ciampi currently serves as senior vice president of store development for The Children’s Place. He is charged with enhancing the in-store shopping experience while also positioning goods at lower price points, but not lower quality.