Teen Stores Post Record Sales, Rosy Predictions

by Sarah Mahoney, Nov 16, 2006, 5:00 AM

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Teen retailers: Record numbers, rosy predictions The grown-ups in their lives may be worried about the Fed, inflation, and when the housing market might rebound. But American kids have been on a shopping spree, and some teen retailers expect their cash registers will keep jingling straight through the holidays. And it's the newer retail brands that are showing the most spark.

That's good news, because along with the tempered retail forecasts, analysts have been predicting teen sales would cool off. Piper Jaffray's biannual "Taking Stock With Teens' National Study of Teen Shopping Behavior and Brand Preferences" survey found that parents said they expected to spend 12 percent less, year-over-year, on clothing purchases for their teens, following a year of 30 percent-plus increases.

Tween Brands, which includes the 'tween chains Limited Too and Justice, said yesterday that earnings rose 21 percent in the third quarter, and that sales increased 13 percent to $230.5 million. While Limited Too stores posted just a 1 percent gain in comparable stores sales, the real growth was at Justice, with same-store sales increasing 35 percent. And, given its fourth-quarter marketing plan and holiday merchandise, Tween said it believes it will increase earnings at least 19 percent in the fourth quarter.

At Abercrombie & Fitch, net sales for the quarter increased 22 percent to $863.4 million. Overall, same-store sales increased 5 percent, but while Abercrombie & Fitch stores showed just 1 percent gain, comparable store sales at its Hollister Co. grew 8 percent. (Hollister took the No. 1 spot as teens' favorite place to shop in the Piper Jaffray survey.) Net income for the quarter hit a record $102 million. The company also said it plans to open its first European location in London in the first quarter of fiscal 2007.

American Eagle Outfitters also posted record profits--with earnings for the quarter increasing 40 percent to $100.9 million, and sales climbing 20 percent to $696.3 million, exceeding company expectations. After launching aerie, its first sub-brand, the company said it is evaluating three stand-alone aerie stores. And while Martin + Osa is still new, the company said "management is confident that the brand concept, targeting 25 to 40 year olds, presents a meaningful growth opportunity. The company will have five stores open in time for the holidays and plans to open 15 stores next year."

A&F and American Eagle are No. 3 and 4, respectively, in the Piper Jaffray survey of teens' preferred retail brands.

One exception, though, is Hot Topic, which has been struggling. While it met expectations with a 19 percent increase in earnings, sales gained just 2 percent to $198.3 million. And same-store sales fell 6.8 percent. The company also announced that it named Chris Daniel as president of its Torrid chain, a plus-size store targeting young women.

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