Despite posting a smaller-than-expected third-quarter loss, preteen apparel retailer Tween Brands Inc. withdrew its guidance for the second half of 2008 due to a difficult macroeconomic environment.
This story first appeared in the December 2, 2008 issue of WWD. Subscribe Today.
The New Albany, Ohio-based firm had a net loss of $831,000, or 3 cents a share, for the quarter ended Nov. 1, compared with net income of $13 million, or 46 cents, for the prior-year period.
Excluding an $11.5 million pretax restructuring charge covering the conversion of its business to the Justice nameplate, Tween earned $6.4 million, or 26 cents a share, beating analysts’ estimate of 16 cents a share, according to Yahoo Finance.
Net sales slid 2.5 percent, to $254.3 million, from $260.9 million in the 2007 period. Comparable-store sales fell 11 percent overall, with Limited Too off 13 percent and Justice down 4 percent. The decline at Justice was the first in its history.
Tween, which announced in August that it was converting 560 Limited Too stores to the more value-oriented Justice nameplate by May, said the shift situates the company to “proceed from a position of strength when the storm clears.”
Gross margin fell to 33.7 percent from 36 percent due to higher markdowns, a rise in total buying and occupancy costs and a 3 percent decline in net sales.
“We believe the incredibly challenging conditions we are experiencing today are likely to persist for some time and will have a sustained impact on consumers’ desire and need for value,” chief executive officer Michael Rayden said, adding that the company’s “visibility” going into the holidays is “opaque at best.” Consequently, it withdrew its previous second-half guidance for earnings per share of 35 cents to 65 cents, including charges. Capital expenditures, expected to finish this year at between $65 million and $70 million, will be reduced to a range of $10 million to $15 million.