No Mickey Mouse Operations : Retailing: Disney, Warner Bros. and Sesame Street are doing well with specialty shops that sell their casts of characters on all manner of merchandise.

Despite the country’s retail slump, Mickey Mouse is selling quite well. So well, in fact, that Big Bird and Bugs Bunny are in hot pursuit.

In the spring of 1987, the Walt Disney Co. launched the Disney Store in Glendale, selling toys, clothes and books based on Disney’s animated characters. Since then, the Burbank-based company has opened 170 more Disney Stores, mostly in U.S. shopping malls.

The chain’s rapid expansion, now focused on Europe and Japan, has been prompted by impressive sales. For its fiscal year ended Sept. 30, 1991, when 123 outlets were in operation, the Disney Stores added $246 million to Disney’s $6.2 billion in total revenue. Analysts estimate that these stores averaged sales of more than $600 per square foot--more than double the norm for a mall retailer.

These results haven’t gone unnoticed. Two years ago, Sesame Street Retail Stores Corp., through a licensing arrangement with the Children’s Television Workshop, introduced its first store in Costa Mesa with products related to the popular children’s television show. There are now 16 Sesame Street stores, 12 of them in California.

And since last fall, Warner Bros. in Burbank has opened a dozen of its Warner Bros. Studio Stores, which carry videos of about 200 Warner Bros. film titles, along with items that range from a $2 Batman key chain to a $16,000 animation cel. Like Disney and Sesame Street, Warner’s parent, Time Warner Inc. of New York, plans an aggressive expansion of the Warner Bros. stores.

But all three of these entertainment-themed merchandisers face a variety of risks. Though analysts say they have weathered the recession well, some consumers complain they can’t afford to shop at these pricey stores.

Disney, Sesame Street and Warner also compete against one another, even though each claims to have its own niche. Warner says 75% of its customers are adults; Disney says its stores appeal to both young and old, and Sesame Street sees itself as unique, arguing that it mainly carries educational products for children up to 7 years old.

At Disney Stores, life-size figures of Goofy, Donald Duck and other cast members abound amid a mountain of Dalmatian dolls (tied to the video release of “101 Dalmatians”). In the rear, a gigantic television screen plays Disney videos. Every product in the stores is tied to a Disney movie, Disney TV show or Disney animated character.

Virtually every product at the Warner stores carries the brand name, but as with Disney, many of Warner’s items are also available at other retailers.

“We don’t go hot and cold with the movies,” said Gene Platin, president of Sesame Street Retail Stores Corp., a private company based in Hayward. Platin says Sesame Street stocks about 2,500 items, from 49-cent Sesame Street figures to a $400 train set. About 30% of the store’s goods are not related to Sesame Street and are available at other toy and general stores.

Perhaps a bigger challenge, though, is that in a way, each chain is also competing against itself. Disney, Sesame Street and Warner all receive fees from other retailers who sell their goods through licenses. But with these three companies selling their wares directly, analysts wonder whether department stores will continue to carry those licensed items.

“You can’t have it both ways,” said Jack Trout, a marketing consultant with Trout & Ries in Greenwich, Conn. These other retailers “will undercut” the specialty stores, Trout said, “then the next thing they’ll do is drop the merchandise.”

So far, that hasn’t happened, said Peter Starrett, president of Warner Bros. Worldwide Retail. “We believe our stores will complement” sales of licensed products, he said.

However, Mike Maul, a regional director for Suncoast Motion Picture Co., which has 220 stores nationwide that sell videos, posters and other items from Disney, Warner and Sesame Street, among other companies, acknowledged: “They probably impact our contemporary business to a degree.”

Therefore, Suncoast competes with them. A video of Disney’s classic “Fantasia,” for example, sells for $19.99 at the Disney Store in the Northridge Fashion Center. At Suncoast’s store in the same mall, the tape retails for $2 less.

Disney, Sesame Street and Warner Bros., of course, have good reason to sell their goods directly: greater profit margins.

“If someone spends $30 for a Mickey Mouse doll at a general retailer, Disney might get 10%,” said Paul Marsh, an analyst with County NatWest in New York. But if it’s sold at their own store, “they get $30, less the cost to make it,” Marsh said.

But in operating their own stores, they also face heavy costs, such as labor and rent. The typical Sesame Street store is 3,000 square feet, Disney’s average 3,500 square feet and Warner’s are 7,000 square feet. All of them are lavishly designed.

Sesame Street stores, for example, re-create familiar scenes from the TV show: A six-foot cutout of Big Bird stands at the entrance, where customers can walk through the doors of 123 Sesame Street or Mr. Hooper’s storefront.

One of Warner’s latest stores opened in May in the lavish Caesars Forum at Caesars Palace in Las Vegas. The shop occupies 8,200 square feet, while Forum rent averages $60 per square foot per year, compared with $20 to $40 per square foot for a typical mall in California, said Randy Brant, vice president of Melvin, Simon & Associates, a shopping center developer in Los Angeles.

Warner’s Starrett declined to give sales figures for that store or any others. However, he said that Warner’s stores typically do 50% more business per square foot than the average for that shopping center. Platin, of Sesame Street Retail Stores, said the shops averages sales of $360 to $390 per square foot.

The Disney Store, in particular, has “weathered the recession far better than most of the other retailers,” said Jeff Lodgson, an analyst with Seidler Amdec, a Los Angeles brokerage.

Why? “Because we’ve become a brand-merchandise kind of consumer,” Lodgson said. “People place a high value on Disney characters.” Indeed, in the San Francisco-based Landor Associates’ survey measuring awareness and esteem of 6,000 brands, Disney came in No. 3 in the United States, behind Coca-Cola and Campbell Soup. Sesame Street was No. 62, and Warner Bros. was ranked No. 108.

“We are going to continue to aggressively open Disney Stores around the world,” said Paul Pressler, who on Monday became executive vice president and general manager of the Disney Stores. (Pressler succeeded Steve Burke, who has been promoted to executive vice president of Euro Disney, whose Parisian park had disappointing attendance its first summer of operation.)

Sales figures for these specialty stores are high, analysts note, partly because the prices of products sold in them are expensive. Consumers agree.

“To me, a T-shirt shouldn’t cost $30, even if it has a logo on it,” said Farley Dahl, a 31-year-old nuclear engineer who last week visited the Disney and Sesame Street stores in the Northridge mall with his children, Lisa, 4, and Cameron, 2.

Still, Dahl and other consumers said they and their children like these specialty stores because they are well stocked and new. Analysts say that for Disney and Warner, in particular, the challenge will be to consistently introduce a supply of new items in the same way they release new movies.

“Right now, it’s a novelty,” said Trout, the consultant. But with so many more stores expected to open, “you’ve got the question of long-term saturation,” he said.

Debbie Bohnett, Disney Stores’ director of marketing and promotions, agreed that was a concern. But she said Disney doesn’t plan to overbuild. And “we intend to keep the merchandise fresh,” she said.

Warner’s Starrett concurred: “There is always a risk in not keeping products fresh.”