Ushering in good news for Disney fans across China,
The Walt Disney Company
) announced its plans to open the largest Disney store in the
world in Shanghai. Scheduled to open in early 2015, this 53,000
square feet store will be located in Lujiazui district - the
financial center of Shanghai.
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Walt Disney, China signed an agreement with Mr. Li Jinzhao,
General Manager Shanghai Lujiazui Finance and Trade Zone
Development Co., Ltd to bring its first flagship store on the
Chinese Mainland. The store will integrate the retail concept
with fun and novelty to create the ultimate entertainment
Disney unveiled its first Disney Store in Glendale Calif in 1987
and now boasts 340 locations worldwide. Disney's latest store
will possess state-of-the art store retail space (nearly 10,800
square feet) and an outdoor plaza area. The store will feature an
assorted range of Disney products both by domestic as well as
The outdoor plaza area will have a Disney themed landscape along
with the capacity to host outdoor events. The location of the
store has been strategically chosen as it is a well-known
shopping/ tourist destination in Shanghai and Disney is expected
to benefit from such an ambience.
Apart from Disney, leading retailer,
Wal-Mart Stores, Inc
), is geared to expand into the promising market of China. It
plans to open more than 100 facilities in the country between
2014 and 2016, which will create approximately 19,000 retail
jobs. Earlier this year, as part of its global expansion plans,
The Gap, Inc.
) announced its intention to expand in the Chinese market.
Gap has also decided to open company-operated Old Navy and Banana
Republic stores in China as it currently operates stores under
its namesake brands only. During fiscal 2012, the company opened
33 stores in China and intends to add approximately 35 new stores
in fiscal 2013. With this addition, it will have nearly 85 stores
in China at fiscal 2013 end.
Thus, the question arises, why are retailers flocking to China?
China, the world's largest economy after the United States, grew
7.7% (on track with the Chinese government's target of 7.5% for
2013) for the first nine months of 2013. Though this is a
comparatively dismal performance, given its double digit growth
in the recent past, however it shows improvement compared to
other giant economies viz U.S (GDP rate for first and second
quarter 2013 is 1.1% and 2.5%, and we are awaiting third quarter
Further, with the Chinese government looking to stabilize and
streamline its economy to focus more on consumption, it seems
retailers will reap bounty. Moreover, with a tepid domestic
retail backdrop, the Chinese economy provides a lucrative
opportunity for American retailers to drive the top line.
Currently, Disney carries a Zacks Rank #3 (Hold).
Liberty Media Corporation
), another stock in media conglomerate sector can be recommended
for investment as it carries a Zacks Rank #1(Strong Buy).