May 20--Tween Brands today announced that it plans to continue slashing prices in the face of the economic downturn that led to a first quarter loss.

The New Albany-based clothing retailer marketing to girls age 7 to 14 posted a loss of $1.4 million, or 6 cents per share for the first quarter. The loss was smaller than predicted by analysts polled by Thomson Reuters, who had expected a loss of 19 cents per share.

The news sent shares soaring. Tween stock stood at $4.31, up $1.18 or 37.7 percent in morning trading.

A year ago, the company posted a profit of $4.3 million, or 17 cents per share.

"As we had anticipated, the economy continued to negatively impact our sales in the first quarter of 2009," said Michael Rayden, Tween Brands chairman and CEO. "While we reported a loss for the period, our sales performance was in line with our internal forecast and our expense management exceeded our internal forecast."

Rayden said Tween plans to increase the number of days in which merchandise is on sale and to "sweeten the offers," with more 40 percent off sales instead of 30 percent off sales.

"Value and price are at the top of the customer's list," Rayden said. "We need to shore up our business on our price offering. We will do what we need to do."

Same-store sales, or sales at stores that have been open at least a year, fell 23 percent in the quarter. Revenue fell 18 percent to $205.2 million, falling short of a $221 million prediction from analysts. A year earlier, revenue was $251.7 million.

Rayden said Tween had made significant progress on the transition to converting higher-end Limited Too stores to the more budget-friendly Justice brand and closing stores in shopping centers where the chain currently has two locations as a result of the conversion.

"As our customers become accustomed to the change, we will be working to calibrate the price-value equation and our marketing efforts to drive sales activity," Rayden said.

But the conversion of the Limited Too stores to Justice wasn't behind the drop in sales, Rayden said. "I think our primary challenge is not whether we have two stores across the street from one another. Rather (it is) to get the price-value equation right."

Tween also plans to increase contact with customers via more direct mail "catazines." To offset costs from the additional mailings, the company will cut pages and condense content in the catalog-magazines.

"We hope the fourth and the first quarters were the worst quarters and we will never see those again," Rayden said.

tferan@dispatch.com

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