Feb. 26--Tween Brands eliminated 85 positions at its New Albany headquarters Monday and reported a surprise fourth-quarter loss yesterday, sending share prices down 39 percent.

The downsizing involves leaving 36 positions vacant and laying off 49 employees. The positions spanned the organization, said Michael Keane, Tween senior vice president of human resources.

The move is on top of a decision made in August to cut 150 positions as the company converted Limited Too stores into its lower-price Justice concept.

The latest downsizing is expected to save about $7 million, excluding the anticipated severance expenses of $1.4 million, said Chairman and Chief Executive Michael Rayden in a statement.

Morningstar analyst Michelle Chang said in a note that the cost-cutting initiatives might not be enough.

"We don't believe the savings from these moves will completely offset weakness in the store base," she wrote.

The company reported a loss of $13.9 million, or 56 cents a share, for the quarter that ended Jan. 31, compared with a profit of $25 million, or $1 per share, for the same period last year.

The quarterly numbers reflect a one-time $7.5 million restructuring charge associated with the shift to the Justice brand. Still, excluding the charge, the fourth-quarter loss was $9.1 million, or 37 cents per share.

Analysts polled by Thomson Reuters predicted earnings of 44 cents per share, excluding one-time items.

The surprise loss sent Tween shares down $1.07, or 39 percent, to a new 52-week low of $1.67 per share.

"The fourth quarter and full year of 2008 were the most difficult in our company's history as our customer base faced formidable financial pressures," Rayden said in the statement.

Sales in the fourth quarter declined 16 percent to $265.9 million from $316.1 million. Same-store sales at Limited Too stores declined 27 percent from last year.

Tween was aggressive in promotions at Limited Too stores to clear out fall merchandise, Keane said.

"(The) goal was to get through the Limited Too merchandise so we're ready to start the spring season with new strategy of Justice only, and we were very successful at that front," Keane said.

Chang noted, "Although this strategy took its toll on profitability, it did work in clearing out merchandise, with inventory per square foot down 24 percent."

The company also announced that it had worked out a new credit arrangement with its lenders. The "easing" requirements will allow the company the "flexibility to navigate the difficult economic environment," Rayden said.

"That gives us a two-year runway to weather the storm without any worries of running out of cash," Keane said.

Information from the Associated Press was included in this story.

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