Motley Fool  Jul 8  Comment 
Ascena Retail Group has let its brands languish, but spots of strength and hope remain.
NPR  Jun 23  Comment 
The company's popular new ad for "period starter kits" has lightened the mood on a difficult subject, but NPR's Laurel Dalrymple thinks tween angst is hard enough without petty family battles.
New York Times  Jun 6  Comment 
From tween blogger to feminist editrix to Broadway actor, Tavi Gevinson is embarking on her next project: being a grown-up.
TechCrunch  May 29  Comment 
 A group of six grade school girls in Los Fresnos, Texas took it upon themselves to solve a problem for blind kids. They built an app for them. The app, Hello Navi, first came from the imagination of a particular girl in the group, Grecia...
Wall Street Journal  Apr 1  Comment 
Tween accessories retailer Claire's said Beatrice Lafon will succeeded CEO James D. Fielding, who resigned, as the retailer also posted a lower profit for the fourth quarter.
DailyFinance  Jan 28  Comment 
BEVERLY HILLS, CA -- (Marketwired) -- 01/28/14 -- Genius Brands International, Inc. ("GBI") (OTCQB: GNUS), a global brand management company dedicated to providing entertaining and enriching 'content with a purpose' for toddlers to tweens, has...
Forbes  Nov 2  Comment 
There are few networks that have been met with as much misunderstanding as The CW has since its launch in 2006. Constantly labeled the “tween network,” the joint CBS/WB venture has always had trouble gaining traction in the realm of serious...
MedPage Today  Aug 5  Comment 
(MedPage Today) -- Smokers were more likely to have a 'tween or teen who followed in their footsteps, even if they quit before the child was born, a multigenerational study showed.
NPR  Jul 31  Comment 
An online video spot for HelloFlo breaks the familiar mold of cheesy tampon commercials in a clever way. Ad watchers say it's a reflection of the open, transparent conversations spurred by social media.
Sydney Morning Herald  Jul 4  Comment 
The tween boys and girls of Dance Academy are busy competing for positions in the Sydney Dance Company.     




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Tween Brands (NYSE: TWB) operates retail stores that sell clothing to "tweens", girls between the ages of 7 and 14. TWB's stores sell clothing, jewelry, backpacks, purses, and other accessories.[1] The Limited Too was TWB's first chain, with 586 stores open in the U.S. at the end of the first quarter of 2008, and it is aimed at an older, fashion-conscious group that will pay more for clothes than the younger girls that shop at Justice.[2] Justice was launched in 2004, operating 281 stores at the end of Q1 FY08.[3]

Tween Brands' sales have nearly doubled between the end of 2003 ($598 million) and 2007 ($1.0 billion) due to the launch and growth of the Justice brand. Same store sales grew 4% company-wide in 2007, but this was fueled by 21% growth at Justice stores while sales at The Limited Too remained flat (0% growth).[4] The company announced in August '08 that in response to slumping sales at these stores, it will discontinue the Limited Too brand, converting 560 stores to the Justice brand and closing 26 others.[5]

Despite nearly doubling its total revenue from $599 million in 2003 to $1.0 billion in 2007, Tween Brands remains a smaller player in the specialty youth apparel retail market.[6] The company must continue growing to match the performance of competitors like Abercrombie & Fitch ($3.75 billion of sales in 2007), American Eagle ($3.0 billion), and Aeropostale ($1.6 billion).[7][8][9]

Business Overview

Limited Too was launched as an in-store department of The Limited, a subsidiary of Limited Brands. Limited Too later grew into its own retail store chain, then in 1999 Tween Brands was spun-off from Limited Brands (LTD). In early calendar-year 2004 (end of FY03), Tween Brands launched Justice, ending FY04 with 35 Justice stores operating in the United States.[10] Both stores have grown significantly since launch, as TWB operated 586 Limited Too and 281 Justice stores at the end of the first quarter of FY08, as well as 26 Limited Too locations in the Middle East through a licensing agreement with Alshaya Trading Co. and 1 Limited Too Store in Sweden through a licensing agreement with Family Invest AB.[11]

Each of Tween Brands' stores target girls aged 7 to 14 with a wide range of apparel and other merchandise, including jewelry, cosmetics, footwear, electronics, music, games, toys (including fad-item Webkinz stuffed animals) and other accessories. Limited Too and Justice only sell their own respective private label apparel, but some of the accessories sold in TWB's stores are sourced from branded manufacturers. While Limited Too and Justice each cater to the tween market, Limited Too's merchandise is higher priced (Limited Too's most expensive jean is priced at $54.50 compared to Justice's most expensive pair at $36.50) and geared for a slightly older portion of the tween market than Justice's assortment.[12][13]

In 2007, Tween Brands received a total of $1.01 billion in sales between the two apparel store chains, a 14.7% increase from revenue in 2006.[14] TWB's total revenue has increased more than 12% annually since 2004, with net sales nearly doubling from $599 million in 2003 to $1.0 billion in 2007.[15] TWB earned a 36.4% gross margin and 8.3% operating margin on its $1.0 billion of revenue in 2007.[16] TWB's operating margin fell over 2 percentage points in 2007 (from 10.8% in 2006 to 8.3% in 2007), party because operating income fell due to $4.4 million of restructuring expenses related to cost saving initiatives.[17]

Tween Brands' net sales have grown more than 12% annually since 2004.
Tween Brands' net sales have grown more than 12% annually since 2004.[18]

Trends and Forces

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Channeling Growth from E-commerce Operations

In addition to store locations, TWB operates an e-commerce store for the Limited Too brand, which drove a 92% increase in direct channel (e-commerce and catalog) sales for the brand in 2007.[19] This growth continued in 2008 as e-commerce sales from Limited Too's website increased 75% in the first quarter of FY08.[20] In order to capitalize on the growing importance of e-commerce Tween Brands launched an e-commerce operation for its Justice brand in the summer of 2008 for the fall season, in hopes of mirroring the success and popularity of the Limited Too online store which experienced a 35% increase in unique user visits in 2007.[21] Similar tremendous growth in e-commerce sales can be observed at several other youth apparel retailers, such as Abercrombie & Fitch where direct-to-consumer (e-commerce and catalog) sales grew 49% in fiscal 2007 to $259 million (7% of total sales).[22]

Second Half Strength: Back-to-School and Holiday Shopping

Due to the surge of shopping in the second half of the fiscal year created by the back-to-school and holiday seasons, Tween Brands' performance in the third and fourth quarters are incredibly important to the company's success. In 2007, the second half of the year accounted for 57% of total sales and 58% of total gross profit.[23]

  • Back-to-School: Because the overwhelming majority of the customers of TWB's stores age from 7 to 14 years old are students in elementary and middle schools, both Limited Too and Justice traditionally experience a significant boost in sales during the end of summer as students shop in preparation for school. The back-to-school shopping season also boosts sales for TWB's competitors such as Abercrombie & Fitch, American Eagle Outfitters and Aeropostale. Most of the back-to-school sales are included the third fiscal quarter, for which TWB experienced same store sales growth of 4% in 2007.[24]
  • Holiday Season: The retail industry typically sees a large boost in sales leading up to the holidays in November and December. Tween Brands is no different, as the company's fourth quarter sales were nearly $100 million greater than its first quarter sales in 2007.[25] In 2007, TWB's same store sales grew 7% in the fourth quarter, reflecting a strong holiday season for Limited Too and Justice.[26] A lackluster performance during the holiday season can lead to extensive promotional selling of leftover inventory which drags down TWB's already low margins.
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Tween Brands received 57% and 58% of its annual sales and gross profit from the second half of the fiscal year in 2007.[27]

Competition

Tween Brands is the largest specialty apparel retailer focusing on the tween demographic, with $1.0 billion in 2007 sales[28]. However, it is the only major retailer that specifically and exclusively targets the "tween" market of 7 to 14 year old girls. Most of its competition comes from other youth apparel retailers who target teenagers or children with similarly fashioned apparel and merchandise. One of Tween Brands' most direct competitors are Abercrombie & Fitch Company (ANF) and American Eagle Outfitters (AEO). Tween Brands' most threatening competitor is another company that was spun-off from Limited Brands: Abercrombie & Fitch. Abercrombie is a major competitor for Tween Brands because although most of its revenue comes from its namesake and Hollister chains, ANF's children's store, abercrombie, targets a similar age group as TWB's stores. ANF received over $471 million in sales in 2007 from its 202 abercrombie stores, making the specialty children's store about half the size of Tween Brands.[29] In addition to Abercrombie & Fitch Company (ANF), American Eagle's aerie sub-brand which is sold in AEO stores and 62 standalone aerie stores targets teenage girls who fall in the older end of Tween Brand's target market. Also, American Eagle Outfitters (AEO) will launch a children's brand, 77kids, online in the second-half of fiscal 2008 and in stores in 2010, which will directly compete with Limited Too and Justice.[30] Also within the youth apparel specialty market, Tween Brands faces some competition from Aeropostale, which targets 14 to 17 year old girls and boys, placing it in the cusp of Tween Brands' target age range.

Beyond Abercrombie & Fitch Company (ANF), American Eagle Outfitters (AEO) and Aeropostale (ARO), Tween Brands competes with other retailers who offer apparel and accessories for young girls, such as Gap (GPS), through its GapKids and Old Navy stores.

Company Net Sales (mm) Gross Margin Operating Margin Sales Growth (Decline) from 2006 Same Store Sales Growth (Decline) Total Stores (End Q1 FY08) Sales per Store (thousands)
Tween Brands $1,013 36.4% 8.3% 14.7% 4% 867 $1,204
Abercrombie & Fitch $3,749 67.0% 19.7% 13.0% (-1.0%) 1,047 $3,623
American Eagle Outfitters (AEO) $3,055 46.6% 19.6% 9.3% 1.0% 1,018 $3,095
Aeropostale $1,590 34.8% 12.7% 12.6% 3.3% 848 $1,921
Gap (GPS) $15,763 36.1% 8.3% (1.0%) (4.0%) 3,177 $4,977
Note: All figures for 2007 unless otherwise noted.[31][32][33][34][35]




References

  1. Tween Brands (TWB) Annual Report 2007, Limited Too and Justice Retail Operations, pg. 24
  2. Tween Brands (TWB) Press Release, First Quarter Sales and Earnings 2008
  3. Tween Brands (TWB) Press Release, First Quarter Sales and Earnings 2008
  4. Tween Brands (TWB) Annual Report 2007, Selected Financial Data, pg. 41
  5. The Wall Street Journal, Tween Shifts to Lower Priced Strategy, 8/13/2008
  6. Tween Brands (TWB) Annual Report 2007, Selected Financial Data, pg. 41
  7. Abercrombie & Fitch 10-K 2007, pg. 25, Selected Financial Data
  8. American Eagle Outfitters (AEO) 10-K 2007, Selected Financial Data, pg. 16
  9. Aeropostale (ARO) 10-K 2007, Selected Financial Data, pg. 17
  10. Tween Brands (TWB) Annual Report 2007, Our History, pg. 23
  11. Tween Brands (TWB) Press Release, First Quarter Sales and Earnings 2008
  12. Limited Too Online Store
  13. Justice Online Store
  14. Tween Brands (TWB) Annual Report 2007, Selected Financial Data, pg. 41
  15. Tween Brands (TWB) Annual Report 2007, Selected Financial Data, pg. 41
  16. Tween Brands (TWB) Annual Report 2007, Selected Financial Data, pg. 41
  17. Tween Brands (TWB) Annual Report 2007, Financial Results, pg. 4
  18. Tween Brands (TWB) Annual Report 2007, Selected Financial Data, pg. 41
  19. Tween Brands (TWB) Annual Report 2007
  20. Tween Brands (TWB) Press Release, First Quarter Sales and Earnings 2008
  21. Tween Brands (TWB) Annual Report 2007, Growing Beyond Stores, pg. 8
  22. Abercrombie & Fitch (ANF) Press Release, Fourth Quarter and Fiscal Year 2007 Results
  23. Tween Brands (TWB) Annual Report 2007, Quarterly Financial Data, pg. 91
  24. Tween Brands (TWB) Press Release, Third Quarter Earnings 2007
  25. Tween Brands (TWB) Annual Report 2007, Quarterly Financial Data, pg. 91
  26. Tween Brands (TWB) Press Release, Fourth Quarter Earnings Release 2007
  27. Tween Brands (TWB) Annual Report 2007, Quarterly Financial Data, pg. 91
  28. Tween Brands (TWB) Annual Report 2007, Selected Financial Data, pg. 41
  29. Abercrombie & Fitch (ANF) Annual Report 2007, Financial Summary pg. 8-11
  30. American Eagle Outfitters (AEO) Press Release, First Quarter 2008
  31. Tween Brands (TWB) Annual Report 2007, Selected Financial Data, pg. 41
  32. Abercrombie & Fitch (ANF) Press Release, Fourth Quarter Earnings Release
  33. Aeropostale (ARO) Press Release, Fourth Quarter Earnings Release
  34. American Eagle Outfitters (AEO) Press Release Report, Fourth Quarter Earnings Release
  35. Gap (GPS) Press Release, Fourth Quarter Earnings Release
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