• by Sarah Mahoney  @mahoney_sarah, March 16, 2009

Amid all the gloom in the retail industry, Aeropostale is going gangbusters, and says it will expand its successful teen formula to the tween market this summer. Called P.S. by Aeropostale, the stores will sell casual clothing and accessories for both girls and boys--which it says will be a key market difference--ages 7 to 12.

"The innovative store format will be a fun, playful and inviting shopping experience for both the child and parent," Chairman and CEO Julian Geiger said in a conference call, announcing the chain's record fourth-quarter results. "We believe that both the merchandise assortment and the store environment will be loved by kids and endorsed by moms."

Geiger says that the company is committed to the concept, and that it will spend $55 million in the coming fiscal year to open 10 of the new stores, as well as 40 new Aeropostale units.

"We do not consider this a test," he says. "We have watched with amazement for years [the way] moms would come to Aeropostale with an older and a younger sibling, with the younger sibling desperately trying to fit into the merchandise that was obviously too big for them. We are expanding and extending all of the things we've done well for the high school student to the elementary school student. We are enormously focused on this."

Meanwhile, the company posted banner results, at a time when most earnings reports are peppered with bad news. Net income for the company rose 5% for the period to $68.2 million, on a sales increase of 17% to $690 million. Same-store sales for the period rose 6%, and sales in its commerce business increased 88% to $41.4 million.

The launch of P.S. by Aeropostale comes a month after the announcement that it was pulling the plug on its Jimmy'z concept, aimed at a slightly older shopper than the core Aeropostale customer, who is 14 to 17. It will close all 11 of those stores.

While marketers have been bullish on the burgeoning strength of the tween market for years, it's not an easy segment to please. Tween Brands, for example, in the midst of converting its Limited Too stores to its Justice brand, has seen its market value plunge so deeply that it has received a warning from the New York Stock Exchange. It recently posted a fourth-quarter loss of $13.9 million compared to earnings of $25.0 million for the same period last year, and called the quarter "the most difficult in our history." And Saks discontinued its Club Libby Lu specialty store business late last year.

Other retailers targeting younger kids include J. Crew, with its Crewcuts, and Gap Kids. And both American Eagle Outfitters and Abercrombie & Fitch--two teen retailers that have been struggling-- are also experimenting with younger kids: AE has 77kids, an online-only offering, while A&F has abercrombie.

"It may be a scary time in the industry, but there is an unmet need, and an opportunity at the mass level," says Wynne Tyree, president of Smarty Pants, a consulting firm that has worked with such companies as Kohl's and American Eagle. "Many people find it difficult to find boys' clothes, so that's a really good positioning, And many parents find that much of the girls' clothes is overly girly. With the right merchandise, and the right store environment, this may stick."