NATION The Children's Place will buy Disney's chain of retail stores

The stores will continue to use the Disney name under a new owner.
LOS ANGELES (AP) -- The Walt Disney Co. will sell its chain of 313 mall-based retail stores to The Children's Place while continuing to sells dolls, toys and other Disney-branded products through its own catalog and Web site, it was announced Wednesday.
The Children's Place Retail Stores said the deal to buy Disney's North American stores was expected to close next month.
The Children's Place, based in Secaucus N.J., will continue to operate the stores under the Disney name with a 15-year licensing agreement and three, 10-year renewal options.
It will not make an upfront payment to Disney. Instead, it will provide a "working capital adjustment payment," valued by one analyst at $50 million to $100 million.
The payment will be based on the value of inventory at the stores at the time the deal closes. The cost of the licensing deal was not disclosed.
The royalty will not begin until two years from the closing date to give Children's Place time to remodel and operate the stores.
Disposing of assets
Disney has been trying to unload its stores as part of a larger effort to dispose of noncore assets such as sports teams. The once-profitable retail chain hit a high of 700 stores in 2000. Since then, Disney has been trimming the number of stores, while losing money on the operation.
Children's Place has agreed to invest up to $100 million in the remaining stores, with half of that coming at closing. It intends to fund the deal from cash on hand and short-term borrowing. It does not expect to seek long-term borrowing or issue stock as a result of the deal.
Disney will continue to operate the stores inside its theme parks, as well as the flagship Fifth Avenue store in New York. The stores will be run by Disney's theme park division instead of its consumer products arm.
Disney is continuing to seek a buyer for its European stores.
Children's Place will sell items online from its retail stores, using the Web site www.disneystore.com.
Last week, Disney switched its Internet retail operation to www.disneydirect.com.
Disney will continue to sell similar toys and items on its Web site and through its mail order catalog, operating as a competitor to the retail stores on items such as plush toys. The company will sell other merchandise, such as snow globes, exclusively.
Disney's consumer products division has been operating at a profit recently as it began to license products to large retailers such as Wal-Mart while creating specialty lines of merchandise.