Tween Brands (TWB)

[MikeDDKing]

Updated TWB Q1 CC summary

1. They spent significant time consolidating their marketing databases and experimenting with marketing techniques in the new economic environment. Direct mail circulation was down from circulation of 21.5M in Q1'08 to 13.1M in Q1'09. This resulted in lower sales. They will be significantly increasing marketing in Q2.

2. The drop in revenue in Q1'09 vs. Q1'08 isn't as significant as it seems because Q1'08 was a really good quarter due to Webkinz. The revenue drop caused by Webkinz will be less of an issue as they move through 2009.

3. In Q1'08 they had a program called Fun Card/Bonus card which generated $16K in revenue per store. In 2009 that program is happening in Q2. That means that Q2 should have a boost of roughly $14.5M in revenue assuming the promotion has the same revenue effect in 2009.

4. Units per transaction are up!

5. Comparable store sales are expected to improve as we go through the year.

6. They said that April was the best month of the season and they were gaining traction in May as well. This seems to point to an improving trend.

7. They have realized roughly $14M of the $39.5-42.5M in cost savings that they expected. The remaining cost savings will be realized mostly in Q2'09 and Q3'09.

8. They don't have a problem with cannibalization of revenue due to the cutover of Limited Too to Justice.

9. They have negotiated rent on something like 65 stores of the 240 stores that are coming up for renewal in 2009 and 2010. The rent has dropped by 30-some odd percent on average.

10. Inventory was cut by 22.5%. This has allowed them to minimize the markdown that they have had to do.

11. Increased direct sourcing of product is giving them a better cost for their merchandise.

12. At quarter end they had $84M in cash plus $50M in a revolving line of credit for a total liquidity position of $134M.

13. They have roughly an 8% market share of the tween market.

Here is a transcript of the conference call:
http://seekingalpha.com/article/138782-tween-brands-f1q09-qtr-end-05-02-09-earnings-call-transcript?source=yahoo