The same-store sales figures illustrate the divergent trends; Justice saw a stellar 22% improvement in comparable sales, while Limited Too reported a 7% fall. This resulted in an overall comp drop of 1%, as Tween operates twice as many Limited Too stores as it does for the much more popular Justice franchise. Management attributed the challenging Limited Too results to a miss in color selections in the sportswear segment, as well as increased cost-consciousness from moms facing rapidly rising gas prices.
In stark contrast, existing Justice stores performed exceptionally well, given that they were up against tough comps. Tween didn't cite any smoking-gun reason as to why it can't translate Justice's success to the more mature Limited Too store base, but its location in strip malls has to help; families can drop in on the way to Kohl's
Justice also carries more basic items as compared to Limited Too, which is a big benefit given the current tough retailing environment as shoppers trade down to more affordable alternatives. It's little surprise, then, that Tween is leaning on Justice for new store growth; for the quarter, it opened 21 Justice stores and netted only four new Limited Too stores.
First-quarter results were better than analysts were expecting, and management now expects second-quarter earnings to reach positive territory – previously, it was calling for a slight loss. Clearly, things are looking up for Tween Brands, but Limited Too is still holding Justice back and torpedoing overall financial results.
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