If you're an investor who tracks retail stocks, you probably hear a whole lot about teen retailers. Too
Too, once owned by mall-based retailer The Limited
At any rate, Too said that its back-to-school selling season seems to be going swimmingly so far. It cited higher sales and an improved merchandising margin for the increased earnings. Of course, today's numbers were no surprise -- Too let the cat out of the bag in early August that it would "at least" double its earnings on a year-over-year basis.
Teen-oriented stores generally get most of investors' attention -- think about the debates folks might have about stocks such as Abercrombie & Fitch
However, the 7-to-14-year-old girls to whom Too caters are another market with serious money. They're also protected to a certain degree from some of the vagaries affecting older shoppers. For example, in Too's conference call, management said that it has been able to raise prices on several key items with little price resistance from its customers. The call also emphasized the importance of denim in its back-to-school offerings.
Too's concentration on a tween audience -- and the profit potential thereof -- apparently hasn't been lost on investors. The stock currently trades at 17 times forward earnings; when compared to rivals, it begins to look a bit pricey, even for a premium brand. But it's hard to argue with recent results. Indeed, Too seems to be working magic with the younger set.
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Alyce Lomax does not own shares of any of the companies mentioned.