When Disney (NYSE:DIS) officially announced that it was unloading its 313-store Disney Store chain by entering into a licensing agreement with Children's Place (NASDAQ:PLCE), it was the sum of months of public anticipation.
It wasn't necessarily a secret. Days before the deal was announced, Disney sent an email to its DisneyStore.com customers to inform them that the company's own store was setting up its virtual storefront under the DisneyDirect.com domain.
Disney Direct? It was ironic. Disney was in the process of distancing itself from its 313 suburban embassies of colorful Disneyana, and its new venture was named exactly after what Disney had failed in doing in specialty retail.
Don't get me wrong. I'm with Steven Mallas on this. Disney is doing the right thing. Anyone that read "decreased losses at Disney Store" in the company's fiscal third-quarter press release had to reason that Disney collecting licensing royalties passively from Children's Place will be better than actively losing money.
I mean, I may have scratched my head at the fact that I couldn't recall ever walking into an empty Disney Store and that the whirlwind of activity failed to result in consistent profitability for the company, but the numbers don't lie. Neither does the fact that Disney's other off-site ventures -- from restaurants to high-tech video arcades to kid play havens -- have ultimately folded early.
So it was interesting to see Forbes put out its annual list of the most valuable character franchises with Mickey Mouse and his gang on top. Mickey lapped Winnie the Pooh -- another Disney property -- but it was refreshing to see Mickey and his entourage account for $5.8 billion in retail sales this year. That was a healthy jump over the $4.7 billion that Mickey generated in 2003. Disney and Pixar's (NASDAQ:PIXR) Nemo as well as the growing Disney Princesses line were also billion-dollar franchises.
While it's important to see Disney create new characters, it's good to know that the old faithful (Mickey's a few years shy of being an octogenarian) can still help Disney's consumer products division. Now it will have Children's Place's expertise in keeping kids happy at prices that make parents smile too. Disney Direct? It was more like a double reverse, but, hey, if it works, it works.
How do you think that Children's Place will fare with Disney Stores? Will it be harder because it has the licensing overhead due to Disney, or will it be able to grow the chain's operating profits in new ways? All this and more in the Disney discussion board. Only on Fool.com.
Longtime Fool contributor Rick Munarriz finds himself at a Disney Store on a seemingly monthly basis but walks out empty-handed way too often. He owns shares in Disney and Pixar.
