Acquisition Will Strengthen The Children's Place Leading Position
in the Newborn to Age 10 Category
SECAUCUS, N.J.--(BUSINESS WIRE)--Nov. 23, 2004-- The Children's Place Retail Stores, Inc. (Nasdaq: PLCE) today
announced that it has successfully completed its previously announced
acquisition of the Disney Store retail chain in North America, which
currently includes 313 stores.
"This acquisition marks a significant milestone in the growth of
The Children's Place," said Ezra Dabah, Chairman and Chief Executive
Officer of The Children's Place. "We believe that the Disney brand
together with our retail expertise will be a powerful and profitable
The Children's Place Retail Stores, Inc. will operate The Disney
Store North America as a wholly owned subsidiary and has the exclusive
right to operate the Disney Stores in the United States and Canada
under a long-term license and conduct of business agreement. The new
subsidiary will be responsible for the store lease obligations. The
Children's Place acquired the equity of the Disney Store North America
from Disney in exchange for a working capital payment to Disney of
approximately $101 million, which takes into account the current level
of inventory for the upcoming Holiday season as well as a reduction in
accounts payable prior to the acquisition. The Children's Place funded
the transaction with cash on hand and short-term borrowings.
The Disney Store North America will continue to design, source and
sell merchandise featuring "Disney-branded" characters, past, present
and future, and, following a two-year abatement, will begin to pay
royalties to Disney on its physical retail store sales. Beginning in
October 2005, the Disney Store North America will operate an Internet
store featuring a select assortment of merchandise offered in the
physical retail locations. The Walt Disney Company will continue to
operate the Disney Catalog and will maintain a Disney online retail
presence. The Children's Place has committed to invest up to $100
million into the remodeling and operations of the Disney Store North
America. Of this amount, an initial $50 million was funded at closing.
"The Children's Place management team has a proven track record of
growing a unique and compelling retail concept," said Peter E. Murphy,
Senior Executive Vice President and Chief Strategic Officer of The
Walt Disney Company. "We believe their commitment to quality, the
Disney brand, and entertainment retailing will maximize the Disney
Store opportunity. We look forward to a long and rewarding
relationship with The Children's Place."
The Children's Place continues to anticipate fiscal 2004 earnings
per share growth of approximately 60% over fiscal 2003. This earnings
growth does not include the slight accretion anticipated from the
Disney Store North America subsidiary. In addition, The Children's
Place continues to anticipate fiscal 2005 earnings of approximately
$1.90 per share, which includes approximately $0.30 per share from the
Disney Store subsidiary.
As previously announced, partly in connection with the
acquisition, The Children's Place completed the expansion of its
credit facility. In addition, the Company stated that it has
established a separate $100 million working capital facility for the
new subsidiary. The agent for both facilities is Wells Fargo Retail
Finance, the Company's working capital lender.
The Children's Place Retail Stores, Inc. is a leading specialty
retailer of high quality, value-priced apparel and accessories for
children, newborn to age ten. The Company designs, contracts to
manufacture and sells its products under the "The Children's Place"
brand name. As of October 30, 2004, the Company operated 734 stores,
including 678 stores in the United States, 54 stores in Canada and two
stores in Puerto Rico. The Company also sells its merchandise through
its virtual store located at www.childrensplace.com.
This press release may contain certain forward-looking statements
regarding future circumstances. These forward-looking statements are
based upon current expectations and assumptions and are subject to
various risks and uncertainties that could cause actual results to
differ materially from those contemplated in such forward-looking
statements including, in particular, the risks and uncertainties
described in the filings of The Children's Place and The Walt Disney
Company with the Securities and Exchange Commission. Actual results,
events, and performance may differ. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only
as of the date hereof. We undertake no obligation to release publicly
any revisions to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events. The inclusion of any statement
in this release does not constitute an admission by The Children's
Place or The Walt Disney Company or any other person that the events
or circumstances described in such statement are material.
CONTACT: The Children's Place
Seth Udasin, 201-558-2409
Heather Anthony, 201-558-2865
Torie Pennington, 212-850-5629
SOURCE: The Children's Place Retail Stores, Inc.