The company's Mishmash store was floundering as it tried to reach an older-teen clientele. But Justice has been right on target, resonating with "tweens."
By ASSOCIATED PRESS
Published August 23, 2006
COLUMBUS, Ohio - Stung by slumping profits and what it called fashion missteps just a few years ago, the girls' retailer formerly known as Too Inc. has rejuvenated its bottom line by putting its focus back where it began.
Tween Brands Inc., which changed its name last month, attributes the turnaround to re-emphasizing its core customer - girls 7 to 14, often called "tweens" - especially through its 2-year-old discount chain, Justice. The brand's success has been a key factor in driving the company's sales growth and stock price, which hit record levels this spring.
The company, based in suburban New Albany, Ohio, abandoned an earlier line of stores that catered to teenagers in favor of launching Justice, a chain that targets the same age group as its flagship Limited Too stores, but with lower prices to better compete with retailers like Target and Old Navy. Tween Brands has announced plans to open hundreds of new Justice stores over the next five years.
"Justice is a winner, and it seems that while Justice wins, Limited Too can win as well," said Michael Rayden, Tween Brands' chairman, president and CEO.
Rayden said the company is considering testing the launch of a third retail concept at the end of 2008.
Both existing chains target tweens with colorful T-shirts and tank tops, trendy faded jeans and accessories such as shoes and purses. Limited Too is primarily mall-based, while most Justice stores are in strip shopping centers.
The company decided in 2003 to close its teenage chain called Mishmash because of heavy competition, at the same time fashion choices that failed with customers were hurting sales at Limited Too.
"We became distracted as a brand," spokesman Robert Atkinson said. The retailer, focused on driving customers to the Mishmash brand as they matured, tried to "age up" the look at Limited Too with an eye toward girls on the older end of its range. But that missed the brand's average customer, who's about 10, Atkinson said.
So it was out with Mishmash, in with Justice, the chain that launched in January 2004 and is named for Rayden's now 14-year-old daughter.
Justice now has 115 stores across the country. The company plans to open 65 to 70 for this year and about 100 stores annually for the next five years, Rayden said. The company eventually hopes to have 800 to 900 Justice stores across the United States and Canada.
Tween Brands reported Wednesday that it earned $6-million, or 18 cents per share, in the second quarter ended July 29, up from $4-million, or 12 cents a share, in the year-ago period. Revenues reached $185.8-million, up from $154.9-million in the year-ago period.
Justice reached out to customers at home this summer by mailing about 1-million copies of a new "catazine" - part magazine, part catalog - that's similar to those Limited Too has sent out since 1999. Rayden said in a conference call with analysts Wednesday that Justice's first catazine has had the best response rate from customers using the included coupons of any that the company has mailed.
The chain also started hosting in-store birthday parties in April, offering themes like "rock idol" and "movie star." By June, the chain was averaging 157 parties involving about 1,100 girls a week.