UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of report (Date of earliest event reported): June 7, 2007
THE
CHILDREN’S PLACE RETAIL STORES, INC.
(Exact
name of registrant as specified in charter)
|
Delaware
|
0-23071
|
31-1241495
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
915
Secaucus Road, Secaucus, New Jersey, 07094
(Address
of Principal Executive Offices) (Zip Code)
(201)
558-2400
(Registrant’s
telephone number, including area code)
Not
applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement
The
Children's Place Retail Stores, Inc. (the "Company"), its subsidiaries Hoop
Retail Stores, LLC and Hoop Canada, Inc. (collectively, "Hoop") and TDS
Franchising LLC ("TDSF"), a subsidiary of The Walt Disney Company, entered
into
a letter agreement (the "June Letter Agreement") on June 7, 2007 (dated as
of
June 6, 2007), addressing issues that had been raised by TDSF, as previously
disclosed by the Company, relating to the compliance by Hoop with certain
provisions of the Disney Store License and Conduct of Business Agreement dated
November 21, 2004 (the "License Agreement"), under which Hoop holds a long-term
license to operate the Disney Store retail chain in North America. The June
Letter Agreement culminates the discussions that have taken place between TDSF,
the Company and Hoop over the last few months regarding these issues. The June
Letter Agreement sets forth TDSF's position that Hoop has committed 120 uncured
material breaches of the License Agreement, primarily relating to Hoop's
obligations with respect to store remodeling and store maintenance. TDSF has
asserted that the existence of these breaches would permit TDSF to exercise
its
rights and remedies under the License Agreement, which could include termination
of the License Agreement.
The
June
Letter Agreement modifies certain provisions of the License Agreement and
creates certain additional obligations on the part of the Company and Hoop,
as
follows:
1.
Hoop
has agreed to develop a new store prototype for Disney Stores and for Disney
Store outlets and to obtain TDSF's approval of these new store prototypes during
June 2007. Thereafter, Hoop will convert nine existing Disney Stores identified
in the June Letter Agreement to the new store prototype by specified dates
during the third and fourth quarters of fiscal 2007, based upon a detailed
timeline for each of these stores. In addition, by the end of fiscal 2008,
Hoop
will convert at least 67 additional existing Disney Stores identified in the
June Letter Agreement to the new store prototype and will open at least 18
new
Disney Stores using the new prototype. Hoop will convert to the new prototype
at
least 53 additional existing stores by the end of fiscal 2009, at least 70
additional existing stores by the end of fiscal 2010, and at least 35 additional
existing stores by the end of fiscal 2011. In addition to the 18 new stores
to
be opened by the end of fiscal 2008 using the new store prototype, Hoop has
the
right to open up to a specified number of additional new stores using the new
store prototype during each fiscal year.
2.
Hoop
has also agreed to conduct a review of all existing Disney Stores bearing the
"Mickey" store design (excluding those "Mickey" stores that are to be converted
to the new store prototype), as well as all existing Disney Stores bearing
the
"Castle" design that were constructed after November 2004, and to deliver to
TDSF, by June 30, 2007, a written report on this review, along with an enhanced
maintenance and remodel plan for these stores and a detailed timeline for
implementation of this plan. Once this enhanced maintenance and remodel plan
is
approved by TDSF, Hoop will implement this plan at 25 existing store locations
by December 31, 2007 and at all remaining stores bearing these store designs
(approximately fifteen additional store locations) by March 31, 2008.
3.
Similarly, Hoop has agreed to conduct a review of all existing Disney Stores
bearing the "pink and green" store design, as well as all existing Disney Stores
bearing the "Castle" design that were constructed prior to November 2004, and
to
deliver to TDSF, during July and August 2007, an enhanced maintenance and
remodel plan for these stores and a detailed timeline for implementation of
this
plan. Once this enhanced maintenance and remodel plan is approved by TDSF,
Hoop
will implement this plan at one-half of these store locations by March 31,
2008
and at the remaining stores bearing these store designs by June 30,
2008.
4.
Hoop
has also agreed to prepare a refresh and enhancement plan for the Disney Store
flagship location on Michigan Avenue in Chicago and to expend at least $200,000
on this store by August 31, 2007.
5.
As
required by the June Letter Agreement, the Company's Board of Directors has
approved the June Letter Agreement and the expenditures of $175 million over
the
period between June 6, 2007 and January 31, 2012 to implement the renovation
and
maintenance plans called for by the June Letter Agreement.
6.
The
maintenance and store renovation requirements of the June Letter Agreement
will
supersede the store renovation provisions in Section 9.3.5(b)(i) and (ii) of
the
original License Agreement through January 31, 2012, so long as the June Letter
Agreement remains in effect and is not terminated by TDSF in accordance with
its
terms. Following January 31, 2012 (or a termination of the June Letter
Agreement), the store renovation provisions in Section 9.3.5(b)(i) and (ii)
of
the original License Agreement will become effective again.
7.
Hoop
has also agreed that, with respect to those Disney Stores that were identified
as "Non-Core Stores" for purposes of the original License Agreement, for which
Hoop was entitled to an extended royalty abatement under the License Agreement,
to the extent that the lease for any such store was or is renewed but the store
is not remodeled within a specified time period after such lease renewal, Hoop
will no longer be entitled to the royalty abatement for these
stores.
8.
The
parties have also agreed to amend the License Agreement in order to reduce
certain of the restrictions on TDSF's ability to grant direct merchandising
licenses to other specialty retail store chains.
9.
Hoop
has agreed to conduct consumer research regarding the need for a differentiated
merchandising plan for Disney Store outlets and, if requested by TDSF based
on
such research, to develop and implement such a plan during fiscal
2008.
10.
Finally, TDSF and Hoop have agreed to certain modifications of the provisions
of
the License Agreement establishing standards for Disney Store merchandise based
upon Disney merchandise available through other retailers and to modify the
provisions that would apply to a potential wind-down of the Disney Store
business following any termination of the License Agreement.
The
June
Letter Agreement provides that, if the Company and Hoop fully comply with its
terms, TDSF will forebear from exercising any rights or remedies that TDSF
would
have based on the existing breaches of the License Agreement that are identified
in the June Letter Agreement. However, TDSF will have the right to terminate
this forbearance and the June Letter Agreement if the Company and/or Hoop
violate any of the provisions of the June Letter Agreement on one or more
occasions, in which event TDSF would be free to exercise any or all of its
rights and remedies under the existing License Agreement, which include possible
termination of the License Agreement. In addition, if the Company and/or Hoop
violate any of the provisions of the June Letter Agreement on three or more
occasions (assuming the June Letter Agreement has not previously been terminated
by TDSF), Hoop will be required to make an immediate payment of $18.0 million
to
TDSF.
In
the
event that the Company and/or Hoop violate any of the provisions of the June
Letter Agreement on five or more occasions, the Company and Hoop have agreed
that TDSF will have the right to terminate the License Agreement, without any
right on the part of Hoop or the Company to defend, counterclaim, protest or
cure.
The
June
Letter Agreement provides that if the Company and Hoop fully comply with the
terms of the June Letter Agreement, Hoop will be deemed to have cured all the
existing breaches of the License Agreement that were identified in the June
Letter Agreement. Disney would continue to retain all its other rights and
remedies under the License Agreement with respect to any other breaches that
may
occur.
Item
8.01 Other Events
On
June 7, 2007, the Company issued a press release containing its sales results
for the four-week period ended June 2, 2007.
A
copy of the Company’s press release is included as Exhibit 99.1
hereto.
Item
9.01 Financial Statements and Exhibits
| (a) |
Financial
Statements of Business Acquired: Not
applicable
|
| (b) |
Pro
Forma Financial Information: Not
applicable
|
| (c) |
Exhibits:
|
| 99.1 |
Press
Release dated June 7, 2007.
|
[SIGNATURE
BLOCK FOLLOWS]
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| THE CHILDREN’S PLACE RETAIL STORES, INC. | ||
| |
|
|
| By: | /s/ Susan Riley | |
|
Name:
Susan Riley
Title:
Executive Vice President, Finance and
Administration
|
||
Dated:
June 7, 2007
FOR
IMMEDIATE RELEASE
THE
CHILDREN’S PLACE RETAIL STORES, INC. REPORTS CONSOLIDATED MAY SALES UP 13%;
CONSOLIDATED COMPARABLE STORE SALES UP 4%
Secaucus,
New Jersey - June 7, 2007 - The Children’s Place Retail Stores, Inc. (Nasdaq:
PLCE)
today
announced sales of $127.6 million for the four-week period ended June 2,
2007, a
13% increase compared to sales of $112.7 million for the four-week period
ended
May 27, 2006. Consolidated comparable store sales increased 4% compared to
last
year’s 16% increase. During May 2007, the Company opened eight Children’s Place
stores.
Total
Sales (millions):
|
May
2007
|
May
2006
|
%
Increase
|
Year-to-Date
2007
|
Year-to-Date
2006
|
%
Increase
|
|
|
The
Children’s Place brand
|
$
91.9
|
$
79.6
|
16%
|
$
448.0
|
$
401.6
|
12%
|
|
Disney
Store
|
$
35.8
|
$
33.1
|
8%
|
$
158.7
|
$
137.6
|
15%
|
|
Total
Company
|
$127.7
|
$
112.7
|
13%
|
$
606.7
|
$
539.2
|
13%
|
Comparable
Store Sales Increase:
|
May
2007
|
May
2006
|
Year-to-Date
2007
|
Year-to-Date
2006
|
|
|
The
Children’s Place brand
|
6%
|
15%
|
3%
|
11%
|
|
Disney
Store
|
1%
|
20%
|
6%
|
17%
|
|
Total
Company
|
4%
|
16%
|
4%
|
13%
|
As
previously announced, due to the extra week in fiscal 2006, the Company’s fiscal
2007 comparable store sales have shifted by one week as compared to the
corresponding period of fiscal 2006. References made today and going forward
regarding last year’s comparable store sales results, in view of the shift, will
be on the “adjusted” basis. For a breakdown of the Company’s fiscal 2006
comparable store sales on an “as reported” and “as adjusted” basis, please refer
to the Company’s March 8, 2007, press release.
-
more -
PLCE:
May 2007 Sales Release
Page
2
In
conjunction with today’s May sales release, you are invited to listen to the
Company’s pre-recorded monthly sales call, which will be available beginning at
7:30 a.m. Eastern Time today through Thursday, June 14, 2007. To access the
call, please dial (402) 220-1182 or you may listen through the Investor
Relations section of the Company’s website, www.childrensplace.com.
The
Children’s Place Retail Stores, Inc. is a leading specialty retailer of
children’s merchandise. The Company designs, contracts to manufacture and sells
high-quality, value-priced merchandise under the proprietary “The Children’s
Place” and licensed “Disney Store” brand names. As of June 2, 2007, the Company
owned and operated 876 The Children’s Place stores and 328 Disney Stores in
North America and The Children’s Place online store at www.childrensplace.com.
This
press release and above referenced call may contain certain forward-looking
statements regarding future circumstances. These forward-looking statements
are
based upon the Company’s current expectations and assumptions and are subject to
various risks and uncertainties that could cause actual results to differ
materially from those contemplated in such forward-looking statements including,
in particular, the risks and uncertainties described in the Company’s filings
with the Securities and Exchange Commission, as well as the risks and
uncertainties relating to the Company's stock option grants and procedures
and
the recently completed investigation by the special committee of the Company’s
Board of Directors, the previously announced pending restatement of the
Company’s historical financial statements, the delays in filing the Company’s
periodic reports with the Securities and Exchange Commission, the outcome
of the
informal investigation of the Company being conducted by the Securities and
Exchange Commission, potential other governmental proceedings, the shareholder
litigation commenced against the Company and certain of its officers and
directors,
and the potential impact of each
of these matters on the Company, as well as matters relating to the Company’s
discussions with The Walt Disney Company. Actual
results, events, and performance may differ. Readers or listeners (on the
call)
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company undertakes no obligation
to
release publicly any revisions to these forward-looking statements that may
be
made to reflect events or circumstances after the date hereof or to reflect
the
occurrence of unanticipated events. The inclusion of any statement in this
release does not constitute an admission by the Company or any other person
that
the events or circumstances described in such statement are
material.
| CONTACT: |
The
Children’s Place Retail Stores, Inc.
Heather
Anthony, Senior Director, Investor Relations, (201) 558-2865
Susan
LaBar, Manager, Investor Relations, (201)
453-6955
|
###