Disney Store closures continue
Entertainment giant to focus on licensed merchandise
August 1 2003
The Walt Disney company is to continue closing underperforming Disney Stores as it reviews the future of the retail chain.
Announcing its results for the quarter to the end of June, Disney said income from the store chain fell, against a trend in which overall company profits rose, driven by the box office success of new films [i]Finding Nemo[/i] and [i]Pirates of the Carribean[/i].
The company said that during the quarter is recorded $15m in write-downs related to the stores earmarked for closure, and warned it expects to incur additional costs related to “lease termination costs and other actions that may be taken in connection with the disposition of the stores.”
Overall consumer product revenues for the quarter rose to $497m from $457 a year ago, driven by increased royalties from licensed direct-to-retail merchandise. Disney has implemented a brand management programe to help maximise the licensing income from its ever-growing range of characters. The company also saw strong growth in international DVD sales across the quarter.
In May, Disney announced a strategic review of the Disney Store chains in the USA and Europe, likely to lead to a sale of the business. The Japanese Disney store operation was sold to Oriental Land, operator of the Tokyo Disney Resort, in 2001.
Separately. Euro Disney has warned that its will be unable to repay debts unless its both the Walt Disney, which has a 39 per cent stake in the business and it banks agree to reschedule payments. The Disneyland Paris resort has been hit by the fall in visitors to Europe related to terrorism fears.
The Walt Disney Company has already agreed to waive some royalty and management fees, and to defer payments for two years.