Ever agonized on what to buy girls in that tough seven-to-14-year-old 'tween phase? That's what Too Inc.
According to the news report, the company is launching a new off-mall concept called Justice, to the cheers of analysts. Apparently, this kind of Justice is served by offering merchandise similar to Too's, at prices 20% to 25% lower than those featured in the regular Too stores.
The move is seen as a way to grab some market share from less expensive venues like Kohl's
Several weeks ago, Too reported a 30% decline in fourth-quarter earnings, with a 6% dip in same-store sales. However, it also gave a positive outlook for 2004, predicting a 45% to 54% increase in earnings.
The stock's now trading at 21 times forward earnings, and just shy of its 52-week high. If Justice can work up enough cool points to tempt kids, it could be a great boost to Too's earnings and revenue growth. However, if value-conscious parents insist on clothing their kids in Kohl's, Target, and Wal-Mart
After all, the 'tween age is definitely one where kids need clothes, but it's also a phase with little autonomy. In the case of Justice, parental guidance could make a difference between hot... and not.
Shopping for growth and value in unexpected places? Try out The Motley Fool's Hidden Gems newsletter.
Alyce Lomax does not own shares of any of the companies mentioned.