As reported by GlobeSt.com last week regarding the company's dismal second quarter results, CP has defaulted on agreements and deadlines to remodel Disney stores, reportedly for about $175 million. The company officials said it would not be able to hit targets of remodeling nine stores by the end of the year, and 67 more stores by January 2009. In total, CP had promised it would remodel 234 stores by 2011. The company officials blamed circumstances beyond their control, such as store landlord permission disputes, for the missed deadlines.

Now, the new agreement allows CP to only have to remodel seven stores by the end of the year and 49 more by January 2009, but adds two more stores that the company must refurbish by 2011. Also, Disney also won concessions such as the relocation of its flagship store in Manhattan, and giving the Orlando-based company the ability to sell its merchandise to stores that cater to adults, though CP will still have the exclusive children-only store sales. The company owns and operates 883 CP stores and 328 Disney stores in North America.

Two CP executives share at least part or all of the blame for the delay in filing its Annual Report on Form 10-K for the fiscal year ended Feb. 3, and its quarterly reports on Form 10-Q for second and third quarters of fiscal 2006 and first quarter of fiscal 2007. According to a CP statement issued Friday, "the Board of Directors is still reviewing the circumstances surrounding certain violations of the company's policies and procedures by two executives of the company and is considering the appropriate actions to take regarding these matters. Although the company does not currently expect these violations to result in a material change to the company's previously reported results of operations, the Board must determine the actions to take on these matters" before filing the reports.