Tween Brands Shifting to Low-Price Strategy

Chicago In a move to drive growth and profitability, Tween Brands Inc. said Tuesday it will convert approximately 560 Limited Too stores to its lower-priced Justice brand and close 26 others. Both brands are targeted at 7-14 year-old girls, with Justice priced an average of 20% to 25% less than the more fashion-forward Limited Too.

Once the change over is complete, the company will no longer operate any Limited Too stores. It will, however, continue to sell Limited Too product in Justice stores.

The move will give the Justice chain, which currently has 310 locations, about 900 stores.

“Limited Too was the brand that introduced great fashion to tween girls, but our customers are looking for the next great thing and their parents want more value for their dollar," Tween Brands chairman and CEO Mike Rayden said in a statement.

The desire for cheaper apparel was dragging down the company's performance, as same-store sales fell 11% at the Limited Too during the second quarter. Same-store sales rose 3% at Justice.

The company said the deal will save up to $25 million after taxes.

It will record an $18 million charge in the second half related to severance, store closings and other charges related to the transition.

Meanwhile, the company said on Tuesday that its poor springtime inventory choices and a sluggish economy kept shoppers away from its Limited Too stores.

For the quarter ending Aug. 2, the company lost $6.7 million compared with a profit of $2.1 million during the same period last year. Revenue rose 4%, climbing to $223.1 million.