Nat Worden
Disney (DIS Quote - Cramer on DIS - Stock Picks) announced Tuesday that it signed a direct-to-retail deal with Payless ShoeSource to sell a new line of children's footwear branded with characters from the media empire's popular animated films.
By working directly with the discount retail chain, Disney is cutting out licensees, which have typically served as the go-between for the media conglomerate and retail outlets in its consumer products business. "It looks like they'll come in at a price point here that is just above private-label merchandise, so Disney is broadening its horizons beyond just being a premium-priced merchandiser," says David Joyce, analyst with Miller Tabak. Payless, which operates 4,600 stores, has sold Disney merchandise in the past, but Tuesday's announcement means the two parties will be working together more closely. Also, Disney will have more control over the merchandise, which will feature characters including Disney Princesses, Winnie the Pooh and the Power Rangers. "Payless is ideal for our first direct-to-retail footwear collaboration because the company is well-aligned with Disney's goal to create quality, on-trend products for kids and families," said Andy Mooney, chairman of Disney Consumer Products. "Being closely involved with the shoe-design process is a significant step for us, and we plan to have a truly integrated relationship with Payless, the nation's leading footwear retailer, from creative to point of sale." Mooney has spearheaded an effort to bypass licensees in Disney's merchandising business. Its consumer products unit is Disney's smallest business, comprising only 8% of its total revenue. "Disney is always about increasing profit margins," says Richard Greenfield, analyst with Pali Research. "Anytime a layer of bureaucracy or middle man can be eliminated, it will do it."
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