Children's Place Delays SEC Filing, Inks Disney Deal
Children's Place Retail Stores said Friday it secured a licensing agreement with Walt Disney that had been in jeopardy.
The company also said it would not file its annual report with the U.S. Securities and Exchange Commission today, confirming a statement made last week.
Children's Place said new terms modify a licensing agreement reached with Disney in June for Children's Place to develop a new prototype for the Disney stores that included remodelings and refurbishments.
Children's Place, which runs the Disney Store chain and its namesake clothing chain, has agreed to remodel 236 existing Disney stores by Jan. 31, 2012, two more than previously agreed, but pushed back its 2007 and 2008 deadlines to finish the remodelings.
The company will also refurbish 165 stores by June 30, 2008, the same as previously agreed, but will complete 18 fewer stores in fiscal 2007 than planned.
Children's Place said it will also allow Disney to relocate its Manhattan flagship store and agreed to relax restrictions on Disney's ability to license with other partners, especially those that offer products targeted at adults.
Children's Place said last week it was unable to meet the deadlines set in the agreement because of circumstances beyond its control, such as a mall being renovated or another tenant not moving.
The missed deadlines were breaches of the agreement and entitled Disney to possible termination of the store licensing deal, which contributed nearly one-third of Children Place's revenue in its last quarter.
Children's Place said it does not expect the agreement modifications to affect its fiscal 2007 earnings guidance. The company previously said it expects earnings per share of $2.25 to $2.40 for the full year, in range with analysts' expectation of $2.35 per share, according to Reuters Estimates.
Last week Children's Place said its internal policies and procedures were violated by two employees -- one, who was not a "named executive officer" of the company and one who was.
It did not identify either.
The company said it is still reviewing the matter and will delay filing its delinquent financial statements until it decides what action to take. The company said it will ask the Nasdaq board for more time to file its reports.