Children's Place (Nasdaq: PLCE ) has plenty of good buzz for its insourced Disney (NYSE: DIS ) stores. Buzz Lightyear, to be specific.
The children's clothing retailer saw sales rise by 11% in its eponymous chain of stores, and by 18% in the Disney shop-o-ramas. Overall, that's a 12% year-over-year revenue boost; the Disney Store concept remains the smaller contributor to overall results, despite its speedy growth.
Mickeyville is improving in other ways, too. Two years ago, that segment contributed a modest $8.5 million of full-year operating profits to company coffers. Last year, it was $10 million -- despite a $14 million loss from that segment in the first quarter.
This time, the Disney Store's operational losses in this seasonally weak quarter stopped at $4.5 million, boding well for the full-year outlook. The Children's Place stores remain the company's peanut butter and jelly, bringing in $53.6 million in operating profits versus $48 million last year. Still, the Disney contribution doesn't look too goofy anymore. It's falling with style.
That's why it's important to work out a new deal with the House of Mouse. Disney says that Children's Place hasn't kept up with the remodeling and renovation agreements stipulated in the two companies' contract, and it's threatening to cancel the whole deal. The latest word is that a new contract is in the works, and while there are no guarantees, a quick and positive resolution is in sight.
It would be a shame to abandon this developing store concept just when it starts to gain traction, and I'm stumped as to who else could handle it better than Children's Place. Target (NYSE: TGT ) and Wal-Mart (NYSE: WMT ) don't live at the mall, Gymboree (Nasdaq: GYMB ) has its hands full with internal growth projects already, and Gap (NYSE: GPS ) is looking to simplify, rather than diversify, its offerings.
As of now, it seems like The Children's Place and Disney are nearing a final agreement for the various modifications necessary. Most likely, the company will have to follow a strict schedule on updating and renovating existing Disney Stores. While the negotiation is not yet final, the company already has plans to integrate Disney's new lineup of theatrical releases into its upcoming merchandise. Hopefully, that'll ensure that Children's Place's revenue stays healthy to infinity and ... well, you get the picture.
You've got a Fool in me:
The Walt Disney Company and Gap are two Motley Fool Stock Advisor recommendations. Gap also joins the rootin'-tootin' roundup gang at Motley Fool Inside Value, right next to Wal-Mart.
Fool contributor Anders Bylund is a Disney and Gymboree shareholder, but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like. Foolish disclosure is so glad you're not a dinosaur!