New York City Children's Place on Thursday said it is in advanced talks with The Walt Disney Co. for Disney to regain ownership of two-thirds of Disney Stores in North America.
Disney confirmed it was talking about potentially buying back a portion of the Disney Store chain, which Children's Place has operated under a license.
"Given the challenging macro-economic environment, we believe the steps we are taking today, while difficult, will put The Children's Place in position to realize its full potential," Chuck Crovitz, interim CEO of The Children's Place Retail Stores Inc., said in the earnings release.
Children's Place also on Thursday posted a net loss for the fourth quarter, compared with a year-ago net gain, hurt mostly by one-time charges regarding its exit of the Disney Store North America chain.
The company reported a quarterly net loss of $58.5 million compared with a net profit of $44.7 million a year earlier. Excluding items such as asset impairment charges, the company earned $20.5 million.
The company said it recognized a pretax asset impairment charge of $80.3 million in the fourth quarter of fiscal 2007, related to exiting the Disney store. The company said it plans to cut 80 positions from its shared services work force.
Children's Place said consolidated comparable sales for all its stores in the fourth quarter rose 3%, while the Disney Stores comparable sales fell 4%.
Apart from the charges, Children's Place said a tough economic environment and high inventory hurt earnings.
"By any measure, fiscal 2007 was a very tough year for our company. For the majority of the year, our merchandise assortments ... did not resonate with the consumer and our inventory levels were too high, particularly given the challenging economic environment," Crovitz said.