"Limited to Justice" sounds like a TV cop show, but it describes a big play in the competitive tween apparel market -- clothes for elementary and middle-school girls sizes 7-14.
Tween Brands said last week it will convert all of its 560 Limited Too mall stores into Justice stores. Justice -- which focuses more on "value-oriented" basics priced about 25 percent less than Limited Too -- will operate more than 900 stores nationwide.
While Limited Too's numbers have fallen recently, Justice has comped higher in the last 14 quarters, according to Media Post. While the merchandise is similar, a pair of jeans at Justice costs $19.90 on back-to-school, while the special price at Limited Too is $29.90.
Girls' Circo jeans at Target cost $9.99.
On Tween's May earnings call, CEO Mike Rayden argued with Citigroup retail analyst Kimberly Greenberger's assertion that Limited Too's flat sales revenues were being spread over too many stores.
"I don't just cannibalize and compete against myself. I compete against Old Navy, Kohl's, Penney's, Target, and Wal-Mart. That's where the share of market is, but I think right now the name of this game is growing my top line and my share of market," Rayden said. "The stores are profitable and I like having a 13 percent sales increase when the tween apparel market in the first quarter is down 10 percent. Those competitors are not winning in this space."
Instead, a quarter later, Limited Too will disappear almost completely, although the brand will appear in Justice stores. "Our customers are looking for the next great thing and their parents want more value for their dollar," Rayden said in an earnings press release. Tween Brands --which spun off from Limited Brands in 1999 -- swung to a $6.7 million loss in the second quarter ended August 2.
With a 13-year-old girl in the house, this is a category I know all too well. It's interesting to compare Tween Brands' earnings call-speak (from the May call) with my field observations. Limited Too's merchandise was overpriced, it relied too much on "save $25 on $50" discount coupons from its "catazine," and its sales strategies failed to map the reality of overstretched parents who already have to say "no" to their kids more than they would like. It's easier to avoid stores that practice obnoxious overselling, and that's just what happened to Limited Too.
Earnings call-speak: "We failed to deliver the right colors within Limited Too's sportswear assortment. That failure was exacerbated by the fact that we missed on color. It goes across multiple categories within our casual as well as active assortments."
Field report: Too much pink and blue and cutesy pastel plaid, too many items that don't survive the wash.
Earnings call-speak: "Lifestyles and licensed accessories and apparel had increases. ... Lifestyles is the biggest it's ever been. We did almost 15 percent of our business in that category, it's not purely Webkinz but we've never done anywhere near that kind of percentage in a first quarter versus about 5 or 6 percent last year. The margin on that is outstanding."
Field report: The rear third of Limited Too, near the cash wrap, is devoted to "lifestyles and licensed accessories" -- candy, cosmetics, accessories, toys, and media, featuring Hannah Montana, High School Musical, Neopets, and Webkins, among others. Salespeople push this stuff hard, and while girls love it, the upselling and cheesiness are major Mom turnoffs.
Earnings call-speak: "It impairs our outfitting strategy whereby we guide tweens and their Moms in putting color coordinated tops and bottoms together."
Field report: The two clearance-rack tops selected by your child appear in the dressing room matched with full-price jeans ($39.50), hoodies ($29.50), shoes ($44.50), and a necklace, all of which she wants. This ticks Mom right off.
Earnings call-speak: On Webkins: "It is really a very reasonable way financially for Mom to satisfy the Mom's greatest need which is the happiness of her daughter."
Field report: $16.50 for a Beanie Baby with a web code? Maybe once.
The takeaway: Mom has the credit card. Mom has the car keys. Cater to the pre-teen and ignore the mother at your peril.