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| Tween Brands Reports Third Quarter Sales and Earnings |
NEW ALBANY, Ohio--(BUSINESS WIRE)--Nov. 19, 2007--Tween Brands, Inc. (NYSE: TWB), today reported its operating results for the third quarter that began August 5, 2007 and ended November 3, 2007. As compared to the results for the third quarter 2006 that began July 30, 2006 and ended October 28, 2006:
-- Net sales increased 13% to $260.9 million from $230.5 million,
attributable to an increase of 123 stores and a 4% comparable
store sales increase;
-- Comparable store sales increased 4%, composed of a 17%
increase for Justice and a 1% increase for Limited Too.
Comparable store sales for the quarter were driven by a strong
August in both brands, primarily attributable to the shift in
back to school dates, followed by negative comparable store
sales at Limited Too in September and October;
-- As expected, gross income as a rate of sales declined 410
basis points primarily due to Limited Too's recognition of a
higher proportion of planned seasonal markdowns and higher
buying and occupancy costs;
-- Store operating, general and administrative expenses as a rate
of sales increased 60 basis points principally related to
Limited Too's higher store and direct-to-customer expenses;
-- Net income for the 2007 quarter was $13.0 million, or $0.46
per diluted share, within the range of the company's previous
guidance. Tween Brands reported net income of $19.0 million,
or $0.58 per diluted share for the 2006 period; and
-- Total inventories at the end of the 2007 quarter were down 3%
per square foot at cost compared to inventories at the end of
the 2006 period, while in-store inventories were down 8% per
square foot at cost, favorable to the company's previous
guidance. The difference is attributable to increases in
non-store inventories primarily from directly sourced
inventory in-transit and Limited Too e-commerce inventory.
Share Repurchase
During the third quarter, Tween Brands repurchased $175 million of its common shares. Of this amount, approximately $143.3 million was reacquired under a previously disclosed accelerated share repurchase program. An additional $31.7 million was reacquired under the same authorization approved by the Board of Directors in September 2007. The company still has $148.3 million remaining under a separate authorization approved by the Board in May 2007. Since the original share repurchase was authorized by the Board of Directors in November 2004, the company has reacquired more than $355 million of its common shares. Fourth Quarter Outlook Tween Brands said that it now expects earnings per diluted share for the fourth quarter ending February 2, 2008 to be in the range of $0.98 to $1.08, 4% to 5% below its previous guidance of $1.03 to $1.13. The company reported fourth quarter 2006 earnings per share of $0.86 per diluted share. The company said that its more conservative outlook for the fourth quarter reflects its latest expectations for a slower holiday season than had been previously anticipated. The company added that its range of earnings projected for the fourth quarter assumes a low single digit percentage increase in comparable store sales, a lower gross income rate, higher store operating, general and administrative expenses as a rate of sales and a higher effective income tax rate compared to fourth quarter 2006. "While our early November sales are encouraging, we believe it is prudent to moderate our earnings expectations for the holiday season based on what appears to be a challenging retail environment," said Tween Brands CEO Mike Rayden. "The competition for customer attention is already resulting in an increased level of promotion, exerting more pressure on operating margins." Tween Brands Store Growth Justice opened 33 stores during the third quarter 2007, ending the period at 246 stores, an increase of 105 stores on the 141 open at end of third quarter 2006. Justice expects to open 15 stores during the fourth quarter, for a total of 102 new openings during 2007. Limited Too opened 18 new, closed 3 and remodeled 6 existing stores, ending the period at 588 stores. Conference Call and Webcast Tween Brands will host a conference call with security analysts beginning at 9:00 a.m. Eastern time today, November 19, 2007, to review the operating results for the third quarter ended November 3, 2007. Interested participants can call 888/224-1005 a few minutes before the 9:00 a.m. start in order to be placed in queue. The conference call passcode is 7470143. This call is also being webcast by Thomson and is being distributed over their investor distribution network. Individual investors can listen to the webcast at www.earnings.com. Institutional investors can access the webcast at www.streetevents.com. The webcast will also be available at Tween Brands' corporate Web site, www.tweenbrands.com. About Tween Brands, Inc. Tween Brands, Inc. is a leading specialty retailer for tweens (ages 7 to 14). At Limited Too, the company sells sportswear, related accessories and key lifestyle items for active, fashion-aware tween girls. Limited Too currently operates 593 stores across the United States, and has 25 international franchised stores. Limited Too publishes a catazine coinciding with key tween shopping times throughout the year and conducts e-commerce on its Web site, www.limitedtoo.com. Justice is the company's newer specialty retail concept for tween girls, offering moderately-priced sportswear, accessories and lifestyle items in predominantly off-the-mall store sites. Justice also publishes a catazine for its tween customers and currently operates 254 stores across the United States, the locations of which can be found on their Web site, www.justicejustforgirls.com. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 This press release contains various "forward-looking statements" specifically related to the company's financial performance and store growth for fiscal 2007, within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Such statements can be identified by the use of the forward-looking words "anticipate," "estimate," "project," "target," "predict," "believe," "intend," "plan," "expect," "hope," "risk," "could," "pro forma," "potential," "prospects, " "outlook," or similar words. These statements discuss future expectations, contain projections regarding future developments, operations or financial conditions, or state other forward-looking information. These forward-looking statements involve various important risks, uncertainties and other factors that could cause our actual results for 2007 to differ materially from those expressed. The following factors, among others, could affect our future financial performance and cause actual future results to differ materially from those expressed or implied in any forward-looking statements included in this press release: changes in consumer spending patterns, consumer preferences and overall economic conditions; decline in the demand for our merchandise; the impact of competition and pricing; the effectiveness of our brand awareness and marketing programs; a significant change in the regulatory environment applicable to our business; risks associated with our sourcing and logistics functions; the impact of modifying and implementing new information technology systems; changes in existing or potential trade restrictions, duties, tariffs or quotas; currency and exchange risks; availability of suitable store locations at appropriate terms; ability to develop new merchandise; ability to hire and train associates; the potential impact of health concerns relating to severe infectious diseases, particularly on manufacturing operations of our vendors in Asia and elsewhere; acts of terrorism in the U.S. or worldwide; and other risks that may be described in other reports and filings we make with the Securities and Exchange Commission. Future economic and industry trends that could potentially impact revenue and profitability are difficult to predict. Therefore, there can be no assurance that the forward-looking statements included here will prove to be accurate. The inclusion of forward-looking statements should not be regarded a representation by us, or any other person, that our objectives will be achieved. The forward-looking statements made herein are based on information presently available to us, as the management of the company. We assume no obligation to publicly update or revise our forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. Company home page: www.tweenbrands.com
Tween Brands, Inc.
Consolidated Statements of Operations
For the Thirteen Weeks Ended November 3, 2007 and October 28, 2006
(unaudited, in thousands, except per share amounts)
Thirteen Weeks Ended Thirteen Weeks Ended
-------------------- --------------------
November 3, % of October 28, % of
2007 Sales 2006 Sales
----------- -------- ------------- ------
Net sales $ 260,910 100.0% $230,481 100.0%
Cost of goods sold,
including buying and
occupancy costs 166,984 64.0% 137,986 59.9%
----------- -------- ------------- ------
Gross income 93,926 36.0% 92,495 40.1%
Store operating, general and
administrative expenses 72,699 27.9% 62,999 27.3%
----------- -------- ------------- ------
Operating income 21,227 8.1% 29,496 12.8%
Interest (expense)/income,
net (803) (0.3%) 1,085 0.5%
----------- -------- ------------- ------
Earnings before income taxes 20,424 7.8% 30,581 13.3%
Provision for income taxes 7,422 2.8% 11,577 5.1%
----------- -------- ------------- ------
Net Income $ 13,002 5.0% $ 19,004 8.2%
=========== ======== ============= ======
Net income per share:
Basic $ 0.47 $ 0.59
=========== =============
Diluted $ 0.46 $ 0.58
=========== =============
Weighted average common
shares:
Basic 27,586 32,188
=========== =============
Diluted 28,249 32,883
=========== =============
Tween Brands, Inc.
Consolidated Statements of Operations
For the Thirty-Nine Weeks Ended November 3, 2007 and October 28, 2006
(unaudited, in thousands, except per share amounts)
Thirty-Nine Weeks Ended Thirty-Nine Weeks Ended
----------------------- -----------------------
November 3, % of October 28, % of
2007 Sales 2006 Sales
-------------- -------- ---------------- ------
Net sales $ 697,841 100.0% $ 611,418 100.0%
Cost of goods sold,
including buying and
occupancy costs 450,849 64.6% 382,355 62.5%
-------------- -------- ---------------- ------
Gross income 246,992 35.4% 229,063 37.5%
Store operating,
general and
administrative
expenses 205,613 29.5% 174,900 28.6%
-------------- -------- ---------------- ------
Operating income 41,379 5.9% 54,163 8.9%
Interest income, net 838 0.1% 3,683 0.6%
-------------- -------- ---------------- ------
Earnings before
income taxes 42,217 6.0% 57,846 9.5%
Provision for income
taxes 14,642 2.0% 21,241 3.5%
-------------- -------- ---------------- ------
Net Income $ 27,575 4.0% $ 36,605 6.0%
============== ======== ================ ======
Net income per share:
Basic $ 0.92 $ 1.12
============== ================
Diluted $ 0.91 $ 1.10
============== ================
Weighted average
common shares:
Basic 29,845 32,679
============== ================
Diluted 30,438 33,338
============== ================
Tween Brands, Inc.
Consolidated Balance Sheets
As of November 3, 2007 and February 3, 2007
(unaudited, in thousands, except share amounts)
November 3, February 3,
2007 2007
------------ -------------
ASSETS
Current Assets:
Cash and equivalents $ 42,669 $ 48,394
Investments 11,750 99,164
Restricted assets 1,268 1,235
Accounts receivable, net 21,889 13,878
Inventories, net 130,237 91,742
Store supplies 15,322 14,806
Prepaid expenses and other current
assets 15,562 15,236
------------ -------------
Total current assets 238,697 284,455
Property and equipment, net 295,337 235,516
Long-term investments 2,465 17,054
Deferred income taxes 10,330 8,166
Assets held in trust and other 26,600 24,486
------------ -------------
Total assets $ 573,429 $ 569,677
============ =============
LIABILITIES
Current Liabilities:
Accounts payable $ 47,977 $ 37,150
Accrued expenses 50,150 38,849
Deferred revenue 11,715 13,584
Income taxes payable 480 20,879
------------ -------------
Total current liabilities 110,322 110,462
------------ -------------
Long term debt 175,000 -
Deferred tenant allowances from landlords 66,101 53,687
Supplemental retirement and deferred
compensation liability 22,895 20,362
Accrued straight-line rent and other 26,877 13,840
Commitments and contingencies
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 50 million
shares authorized
Common stock, $.01 par value, 100 million
shares authorized, 36.9 million and 36.6
million shares issued, 24.7 million and
32.1 million shares outstanding at
November 3, 2007 and February 3, 2007,
respectively 369 366
Treasury stock, at cost, 12.3 million and
4.5 million shares at November 3, 2007 and
February 3, 2007, respectively (356,437) (120,554)
Paid in capital 185,192 173,394
Retained earnings 343,110 318,120
------------ -------------
Total shareholders' equity 172,234 371,326
------------ -------------
Total liabilities and shareholders' equity $ 573,429 $ 569,677
============ =============
Tween Brands, Inc.
Other Financial and Store Operating Information
(unaudited, dollars in thousands)
Thirteen Weeks Ended Thirty-Nine Weeks Ended
------------------------ --------------------------
November October November October
3, 28, % 3, 28, %
2007 2006 Change 2007 2006 Change
-------- -------- ------ --------- --------- ------
Gross income $93,926 $92,495 2% $246,992 $229,063 8%
Gross income as
percentage of net
sales 36.0% 40.1% 35.4% 37.5%
Depreciation $10,062 7,927 27% $27,276 23,123 18%
Amortization of
tenant allowances $(2,449) $(2,150) $(7,014) $(6,154)
Capital
expenditures $31,360 24,779 $86,316 50,096
Number of stores:
Beginning of
period 786 681 722 666
Opened 51 30 119 57
Closed (3) - (7) (12)
-------- -------- --------- ---------
End of period 834 711 834 711
======== ======== ========= =========
Number of Limited
Too stores 588 570 588 570
Number of Justice
stores 246 141 246 141
Total gross square
feet at period
end (thousands) 3,467 2,963 3,467 2,963
Comparable store
sales % change 4% 4% 2% 8%
Limited Too
stores 1% 1% -1% 6%
Justice stores 17% 35% 17% 33%
CONTACT: Tween Brands Robert Atkinson, 614-775-3739 SOURCE: Tween Brands, Inc. |
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