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Sat, May 24, 2003 - Page 12 News List

Walt Disney will sell retail chains

AP , LOS ANGELES

The Walt Disney Co is considering selling its chain of retail stores in North America and Europe, the company said Thursday.

To prepare for the potential sale, the executive running the stores has resigned, Disney said.

Other executives will lose their jobs over the next few weeks as Disney's Consumer Products division looks to control costs, the company said.

Disney has been closing the most unprofitable stores over the last few years and has experimented with several redesigns to try and turn the ailing retail chain around. The chain has gone from 522 stores in North America to 387 and further closings are expected, the company said.

There are 548 stores worldwide, including 47 in Japan, six in Hong Kong, and stores in London, Paris and other major European cities.

Disney said it is considering selling the stores to a retail specialist who would run them and pay Disney a royalty.

The company has yet to hire an investment bank to solicit bids, according to Gary Foster, a spokesman for Disney Consumer Products.

Last year, the company sold its Disney Stores in Japan to Oriental Land Co, the same company that runs Tokyo Disneyland. The sale resulted in a net pre-tax gain of US$34 million.

Disney launched its retail stores in 1987 to sell dolls, videos, mugs, and other items based on characters such as Mickey Mouse and Winnie the Pooh.

They are based mostly in local shopping malls.

Profits from the stores have been steadily declining and Disney has been experimenting with new layouts, new product mixes and other strategies to reinvigorate the chain. Ultimately, the company concluded it did not have the capital and expertise to succeed.

"We really do believe there is a combination of stores that would be a profitable business for another company," Foster said.

For the first six months of its fiscal year, ending March 31, operating income at Disney's Consumer Products division, which includes licensing revenue, publishing and video games as well as the stores, fell 7 percent.

In 2001, Disney hired Peter Whitford, who previously ran Limited Inc's Structure division, to run the ailing chain.

Under his leadership, Disney continued closing less profitable locations as leases came due and considered splitting the chain in two, with one store selling dolls, toys and its popular line of "Princess" products and the other stores featuring bed sheets, furniture, apparel and similar products.

Disney said Thursday that Whitford had resigned.

Andy Mooney, chairman of Disney Consumer Products, will run the retail stores on an interim basis.

Disney is also facing difficult economic challenges at its theme parks and its ABC Television network, a reality that shrinks the pool of capital available to invest in the Disney Stores, Foster said.

Disney has also been aggressively pursuing a new strategy of developing products specifically for major retailers such as Kmart and Wal-Mart.

It also revamped its licensing strategy, introducing Disney juices and other drinks with The Coca-Cola Co and Disney breakfast cereals with Kellogg Co.

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