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Q & A MICHAEL EISNER

Disney Co.'s Chairman Hopes Mall Will Be a Magic Kingdom for Store

November 23, 1987

Disney land has moved to Costa Mesa. But the city of Anaheim couldn't care less.

That's because the House of Mouse--better known as the Walt Disney Co.--officially opened its third Disney Store on Saturday at South Coast Plaza. And if the 35,000-square-foot, all-Disney outlet is as successful as its predecessors in Glendale and San Francisco, the company could very well have its hands on the mouse that roars.

For years, Disney has sold trinkets, T-shirts and other apparel decorated with mouse ears and other cartoon characters in its theme parks. But it was not until the arrival of company Chairman Michael Eisner that the concept of a Disney Store actually got off the drawing board and into the malls.

Eisner, 45, was president of Paramount Pictures before signing on with Disney three years ago. Since then, he and President Frank Wells have been credited with turning the Burbank-based company from a dismal earnings performer into one of the stars of the entertainment industry, with profits that jumped 80% to $445 million in fiscal 1987.

FOR THE RECORD - CORRECTION
Los Angeles Times Thursday November 26, 1987 Orange County Edition Business Part 4 Page 5 Column 1 Financial Desk 1 inches; 30 words Type of Material: Correction
The photographer who took the picture of Walt Disney Co. Chairman Michael Eisner published in Monday's business section of The Times was incorrectly identified. The photographer was John Galuzzi for the Disney Co.

The Disney stores are just one of the ways that Eisner is trying to exploit the company's potential. With 8,000 items to satisfy hungry Disneyphiles, he reasoned, what better way to show off the products and put them within consumers' easy reach?

The first Disney Store opened March 28 at the Glendale Galleria. Store No. 2 opened July 31 at Pier 39 in San Francisco. Since then, both have been successful beyond even Eisner's initial expectations.

In a recent conversation with Times Staff Writer Mary Ann Galante, Eisner discussed the company's retail operations, why it chose Orange County for its third store and how it plans to make the magic work here.

Q: Why is the Disney Co. getting into the retail business?

A: It's a natural extension of our company and our company's product. We have about 8,000 products that we license. They generally appear in our parks in California, Florida and Tokyo. We maintain approval and control over every single one of those 8,000 products.

We thought that we should make them available to more places in the country and under a banner that was controlled as well as the products are controlled.

Q: The Disney Co. has long-term intentions of opening shops in malls in major cities across the country. How big is the potential market?

A: On one hand, we are going to expand rapidly. Hopefully, within three years we will be a national specialty chain. On the other, we are going to do it in a cautious way so that we are not overcommitted if we see that the environment and the mood for specialty retail slows down.

Q: How soon will the company expand its stores outside of California?

A: I think we'll be out of California with the next store. We will probably go to the East Coast, concentrate on both coasts first, and then go to the middle.

Q: How many Disney stores do you foresee in, say, three to five years?

A: It could be anywhere from 100 to 300 or 400! If we went as far as 300 or 400 we would probably tax our operations here, but I would say 100 to 200. We are walking before we run. We opened two stores; they're smashing. We're opening the third store in the most successful shopping center in Southern California, and we anticipate it will be a smash.

We have spent the most money per square foot on the Orange County store. We have to make the store particularly good because of its proximity to Disneyland and the knowledge that people there have of Disneyland. If that store isn't as successful as we hope, we will move on.

We are scouring the country for locations. But when we go into a location, we not only want to get into a quality regional mall but we want to be the quality location in a quality regional mall. And that's not easy.

Q: How successful do you see the Orange County location being?

A: Let me put it this way. The other stores are the "Star Wars" or the ET or the "Raiders of the Lost Ark" of the retails. They are successful beyond any of the estimates that we had projected.

I don't want to give sales per square foot, but as far as I know, it's higher than anybody else in malls that we're in. We have a lot of people calling us up not believing figures, asking us to confirm them.

Q: Is it over, say, $130 per square foot?

A: It's over that by leaps and bounds. We're more like 5 or 6 times that.

We've only been open for seven months in Glendale and three months in San Francisco. You have to see how these stores do over the long run. They've had initially a very wide receptivity.

You know, we have training for people in our stores the way we train people in our parks. Our people who work in the stores are cast members. And people who come to our stores to buy are guests. A sales person is trained to act the part, and we have our backstage areas and our on-stage areas. We treat the stores exactly the way we treat the rest of our company--which is from a theatrical point of view.

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