Everyone has been arguing about whether retail is going to have a tough holiday season this year, but does that apply to Too
Too -- a company long ago spun off from Limited
It's good to know that Justice -- which I wrote about way back in March 2004, when the concept was in its infancy -- is helping Too improve its fortunes. Too also said that improving margins helped it achieve this impressive quarter, with little reliance on markdowns.
Going forward, Too said that the fourth quarter is looking good so far. The company increased its forecast to a range of $0.80 to $0.82 per share. That of course includes the important holiday season, in which tweens usually get what they want.
I've written about Too in the past, exploring the notion that its tween niche audience may be both underserved by other retailers and more insulated from the macroeconomic concerns that might impact other retailers.
On the other hand, there are plenty of cautions for investors. The high end of Too's target demographic includes teenagers, a market that many retailers try to lure. Among teen-targeting stores, Too's formidable rivals include Motley Fool Stock Advisor pick Gap
While Too certainly appears to have very good prospects going forward, its healthy earnings announcement has driven the stock to a new 52-week high; it's currently trading at a forward P/E near 20. Investors eyeing Too should consider the price, and the risks to future growth, before plunking their money down here.
Further fashionable Foolishness:
- Not too long ago, Too upped its forecast, so Wednesday's news is not too surprising.
- Revisit last quarter at Too.
- Fool contributor Jeremy MacNealy recently looked at Too and tweens.
Gap is a Motley Fool Stock Advisor pick. To find out what other companies David and Tom Gardner have recommended to investors since the service's inaugural issue in April 2002, click here for a 30-day free trial.
Alyce Lomax does not own shares of any of the companies mentioned.