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Tween Brands (NYSE:TWB) operates two specialty retail businesses targeting trendy 7- to 14-year-old girls. Limited Too offers apparel, footwear, swimwear, and numerous lifestyle and personal-care products, whereas Justice focuses on moderately priced sportswear and accessories. The company currently operates 570 Limited Too stores and 141 Justice stores across the United States.

The "tween" girls retail apparel and accessories industry is highly fragmented, with competition from department stores, discount stores, and independent retailers. However, the large number of stores gives Tween Brands a competitive edge in terms of geographic scope. The recent performance of the company has been exciting, with double-digit revenue growth. Justice brand, which now contributes about 17% to the top line, is a primary growth driver, with a striking 35% increase in same-store sales.

To keep growth momentum alive, the company has allocated most of its capital expenditure to the Justice brand for the next year. After posting a third consecutive year of ample free cash flow, the company plans to open 100 more Justice Stores in 2007 while maintaining its debt-free trend. The expansion will result in approximately 16% square footage growth. Furthermore, the company is upbeat on the gift offerings that include toys and teeny collectibles and expects this segment to drive future profitability. In order to increase its edge over competitors even more, Tween Brands exclusively offers toys by the leading toy company Mattel Brand (NYSE:MAT).

Additionally, advertising revenues in the in-house Catazines are growing, and larger gains are predicted in future. On the operational front, direct sourcing will continue to improve margins. With management anticipating a 13% growth in diluted earnings per share during 2007, Tween is expected to follow a bullish trend.

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