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Tween Brands Reports 16% Increase in Fourth Quarter 2007 E.P.S. to $1.00 Including $0.11 Restructuring Charge
Fourth Quarter 2007 Comparable Store Sales Increase 8% Record 2007 Net Sales Surpass the $1 Billion Mark
NEW ALBANY, Ohio, Feb 20, 2008 (BUSINESS WIRE) -- Tween Brands, Inc. (NYSE: TWB), today reported earnings per diluted share of $1.00 for the thirteen weeks ended February 2, 2008 compared to the $0.86 reported for the fourteen weeks ended February 3, 2007. The $1.00 includes the recognition of a pretax restructuring charge of $4.4 million, or $0.11 per diluted share. Excluding the restructuring charge, earnings per diluted share increased 29% to $1.11. A reconciliation of earnings per diluted share on a GAAP basis to earnings per diluted share excluding the restructuring charge, a non-GAAP financial measure, is shown at the end of this release.

Net sales for the thirteen weeks of the fourth quarter of 2007 reached a record $315.8 million, a 16% increase on the $272.3 million in sales for the fourteen weeks of the fourth quarter 2006. Comparable store sales for the 2007 period increased 8% compared to the 2% increase for the 2006 quarter. By brand, Justice delivered a 29% increase in comparable store sales and Limited Too delivered a 3% increase. The company's e-commerce sales increased 125%.

Commenting on the improved fourth quarter results, Tween Brands Chairman and CEO Mike Rayden said, "In addition to great sales growth, we controlled our inventory, managed markdowns, and delivered better than expected operating income."

Total inventories at the end of 2007 were flat on a per square foot at cost basis compared to inventories at the end of 2006. In-store inventories were down 5% per square foot at cost.

Cost Savings Initiatives

During the fourth quarter 2007, Tween Brands conducted a review of certain areas of its corporate expense base, with the aim of identifying cost savings opportunities that would benefit the company in fiscal 2008 and beyond. As a result of that review, Tween Brands eliminated 22 positions, primarily in the company's corporate services areas, and undertook a number of non-personnel related expense reduction measures. The company does not anticipate any additional staff reductions as a result of the cost study's initiatives.

Tween Brands estimates the pretax savings resulting from the initiatives at $4.0 million in 2008 and $6.0 million in 2009.

Fiscal Year Results

Net sales for the fifty-two week fiscal year ended February 2, 2008 reached a record $1.0 billion, a 15% increase on the $883.7 million reported for the fifty-three week fiscal year ended February 3, 2007. The sales increase for 2007 is largely attributable to a 17% increase in the number of stores and Tween Brands' comparable store sales increase of 4%.

Comparable store sales for 2007 increased 4% compared to the 6% increase for 2006. By brand, Justice delivered a 21% increase in comparable store sales and Limited Too's comparable store sales were flat. The company's e-commerce sales increased 92% during 2007.

Earnings per diluted share for 2007 were $1.81 compared to $1.95 per diluted share for fiscal 2006. The 2007 figure includes a $0.09 per diluted share restructuring charge explained above. Compared to 2006 with its extra week, the company also had a lower gross income rate, a higher store operating general and administrative rate of sales and interest expense compared to interest income in 2007. These factors were partially offset by 12% fewer weighted average shares outstanding as a result of the company's aggressive share repurchase activity during the year.

Share Repurchase

During 2007, Tween Brands repurchased approximately 7.8 million common shares, or about 23% of the shares outstanding as of February 3, 2007. Of the 7.8 million, 5.2 million shares were repurchased as part of an accelerated share repurchase program (ASR) initiated in September 2007. The ASR was funded with a $175 million term loan, which produced a more effective capital structure and a lower weighted average cost of capital for the company.

First Quarter 2008 Outlook

Tween Brands said that it expects earnings per diluted share for the fiscal first quarter ending May 3, 2008 to be in the range of $0.35 to $0.40 per share. The company anticipates a $0.01 to $0.02 per share benefit in the quarter from the cost savings initiatives. The earnings guidance excludes any severance or recruitment charges related to the company's chief financial officer position.

"Against the backdrop of what appears to be an uncertain economy, we believe it is prudent to be cautious in our outlook for 2008. For now, we are limiting our earnings guidance to the near term," said Mr. Rayden. "We believe that, given our new store growth, significant share repurchases in 2007 and the connection to our target customer, we will see earnings growth in 2008."

Growth Plans for 2008

Tween Brands said that it is planning to open 90 to 100 Justice stores in 2008, compared to the 101 opened in 2007. In addition, the company plans to add a net 10 to 15 Limited Too stores in 2008, along with 35 remodels. Included among the new Limited Too store openings and remodels are 10 to 15 stores in a new store design format. Limited Too added a net 19 stores in 2007 and completed 33 remodels.

Total capital expenditures for 2008 are expected to be between $75.0 to $80.0 million compared to the $101.6 million invested in 2007. The 2008 budget, compared to the 2007 spending, reflects a slightly lower number of planned new store openings and remodels. Additionally, the 2007 figure included the construction of Tween Brands' home office addition, which opened in November.

SEC Regulation G
Reconciliation of fourth quarter and full-year 2007 earnings per
 diluted share on a GAAP basis to earnings per diluted share on a non-
 GAAP basis:


                                      Thirteen Weeks  Fifty-two Weeks
                                          Ended            Ended
                                     February 2, 2008 February 2, 2008

Earnings per diluted share on a GAAP
 basis                                          $1.00            $1.81
ADD: expenses associated with
 restructuring                                   0.11             0.09
                                     ---------------- ----------------

Earnings per diluted share on a non-
 GAAP basis (a)                                 $1.11            $1.90
                                     ================ ================

(a)Earnings per diluted share excluding the amounts shown above are a non-GAAP measure. The company believes this is an important measure since it represents the earnings per diluted share from ongoing operations.

Conference Call and Webcast

Tween Brands will host a conference call with security analysts beginning at 9:00 a.m. Eastern time today, February 20, 2008, to review the operating results for the fourth quarter and fiscal year ended February 2, 2008. Interested participants can call 877-407-8033 a few minutes before the 9:00 a.m. start in order to be placed in queue. The conference call ID is 270656. The live call and replay are also being webcast. Individual investors can listen to the webcast at www.earnings.com, and 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 582 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 261 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 operating results for fiscal 2008 and beyond, 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 2008 and beyond 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 February 2, 2008 and the Fourteen Weeks
                        Ended February 3, 2007
         (unaudited, in thousands, except per share amounts)

                             Thirteen Weeks Ended Fourteen Weeks Ended
                             -------------------- --------------------

                             February 2,   % of    February 3,  % of
                                 2008      Sales      2007      Sales
                             ------------ ------- ------------- ------

Net sales                       $315,821  100.0%       $272,264 100.0%
Cost of goods sold,
 including buying and
 occupancy costs                 193,432   61.2%        167,358  61.5%
                             ------------ ------- ------------- ------
Gross income                     122,389   38.8%        104,906  38.5%
Store operating, general and
 administrative expenses          79,446   25.2%         63,379  23.2%
                             ------------ ------- ------------- ------
Operating income                  42,943   13.6%         41,527  15.3%
Interest (expense)/income,
 net                              (2,503)  (0.8%)         1,454   0.5%
                             ------------ ------- ------------- ------
Earnings before income taxes      40,440   12.8%         42,981  15.8%
Provision for income taxes        15,441    4.9%         14,766   5.4%
                             ------------ ------- ------------- ------
Net Income                      $ 24,999    7.9%       $ 28,215  10.4%
                             ============ ======= ============= ======


Net income per share:

      Basic                     $   1.01               $   0.88
                             ============         =============
      Diluted                   $   1.00               $   0.86
                             ============         =============

Weighted average common
 shares:

      Basic                       24,657                 32,045
                             ============         =============
      Diluted                     25,082                 32,781
                             ============         =============

                          Tween Brands, Inc.
                Consolidated Statements of Operations
 For the Fifty-Two Weeks Ended February 2, 2008 and the Fifty-Three
                     Weeks Ended February 3, 2007
         (unaudited, in thousands, except per share amounts)


                                    Fifty-Two          Fifty-Three
                                    Weeks Ended        Weeks Ended
                                ------------------- ------------------

                                February 2,  % of   February 3,  % of
                                    2008     Sales      2007     Sales
                                ----------- ------- ----------- ------

Net sales                       $1,013,661  100.0%  $   883,683 100.0%
Cost of goods sold, including
 buying and occupancy costs        644,280   63.6%      549,715  62.2%
                                ----------- ------- ----------- ------
Gross income                       369,381   36.4%      333,968  37.8%
Store operating, general and
 administrative expenses           285,059   28.1%      238,278  27.0%
                                ----------- ------- ----------- ------
Operating income                    84,322    8.3%       95,690  10.8%
Interest (expense)/income, net      (1,665)  (0.1%)       5,138   0.6%
                                ----------- ------- ----------- ------
Earnings before income taxes        82,657    8.2%      100,828  11.4%
Provision for income taxes          30,083    3.0%       36,007   4.1%
                                ----------- ------- ----------- ------
Net Income                      $   52,574    5.2%  $    64,821   7.3%
                                =========== ======= =========== ======


Net income per share:

     Basic                      $     1.84          $      1.99
                                ===========         ===========
     Diluted                    $     1.81          $      1.95
                                ===========         ===========

Weighted average common shares:

     Basic                          28,548               32,521
                                ===========         ===========
     Diluted                        29,099               33,198
                                ===========         ===========

                          Tween Brands, Inc.
                     Consolidated Balance Sheets
             As of February 2, 2008 and February 3, 2007
           (unaudited, in thousands, except share amounts)


                                       February 2,     February 3,
                                          2008             2007
                                      ------------- ------------------
                ASSETS
  Current Assets:
      Cash and equivalents             $   46,009   $          48,394
      Investments                          70,215              99,164
      Restricted assets                     1,295               1,235
      Accounts receivable, net             12,557              13,878
      Inventories, net                    107,483              91,742
      Store supplies                       16,949              14,806
      Prepaid expenses and other
       current assets                      19,087              15,236
                                      ------------- ------------------
  Total current assets                    273,595             284,455

  Property and equipment, net             301,405             235,516
  Long-term investments                         0              17,054
  Deferred income taxes                    10,302               8,166
  Assets held in trust and other           26,335              24,486
                                      ------------- ------------------

  Total assets                         $  611,637   $         569,677
                                      ============= ==================

              LIABILITIES
  Current Liabilities:
      Accounts payable                 $   37,749   $          37,150
      Accrued expenses                     56,810              38,849
      Deferred revenue                     16,077              13,584
      Current portion long-term debt        8,750                   -
      Income taxes payable                 11,909              20,879
                                      ------------- ------------------
  Total current liabilities               131,295             110,462
                                      ------------- ------------------

  Long-term debt                          166,250                   -
  Deferred tenant allowances from
   landlords                               66,377              53,687
  Supplemental retirement and
   deferred compensation liability         21,289              20,362
  Accrued straight-line rent and
   other                                   31,427              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, 37.0
   million and 36.6 million shares
   issued, 24.7 million and 32.1
   million shares outstanding at
   February 2, 2008 and February 3,
   2007, respectively                         370                 366
  Treasury stock, at cost, 12.3
   million and 4.5 million shares at
   February 2, 2008 and February 3,
   2007, respectively                    (356,545)           (120,554)
  Paid in capital                         185,893             173,394
  Retained earnings                       368,108             318,120
  Accumulated other comprehensive
   income                                  (2,827)                  -
                                      ------------- ------------------
  Total shareholders' equity              194,999             371,326
                                      ------------- ------------------

  Total liabilities and shareholders'
   equity                              $  611,637   $         569,677
                                      ============= ==================

                          Tween Brands, Inc.
           Other Financial and Store Operating Information
                  (unaudited, dollars in thousands)

                  Thirteen/Fourteen Weeks     Fifty-Two/Fifty-Three
                            Ended                   Weeks Ended
                 -------------------------- --------------------------

                 February  February         February  February
                     2,        3,      %        2,        3,      %
                    2008      2007   Change   2008      2007    Change
                 --------- --------- ------ --------- --------- ------

Gross income     $122,389  $104,906     17% $369,381  $333,968     11%
Gross income as
 percentage of
 net sales           38.8%     38.5%            36.4%     37.8%
Depreciation     $ 10,339     8,106     28% $ 37,615    31,229     20%
Amortization of
 tenant
 allowances      $ (2,656) $ (2,394)        $ (9,670) $ (8,548)
Capital
 expenditures    $ 15,331  $ 15,916         $101,647  $ 66,012

Number of
 stores:
Beginning of
 period               834       711              722       666
  Opened               21        22              140        79
  Closed              (13)      (11)             (20)      (23)
                 --------- ---------        --------- ---------
End of period         842       722              842       722
                 ========= =========        ========= =========

Number of
 Limited Too
 stores               582       563              582       563
Number of
 Justice stores       260       159              260       159

Total gross
 square feet at
 period end
 (thousands)        3,510     3,006            3,510     3,006

Comparable store
 sales % change         8%        2%               4%        6%
  Limited Too
   stores               3%        0%               0%        4%
  Justice stores       29%       21%              21%       28%

SOURCE: Tween Brands, Inc.

Tween Brands
Robert Atkinson, 614-775-3739
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