TWEEN BRANDS, INC. (TOO) SPO
|Company Name||TWEEN BRANDS, INC.|
|Company Address||8323 WALTON PARKWAY
NEW ALBANY, OH 43054
|CEO||Michael W. Rayden|
|Employees (as of 2/2/2002)||8400|
|State of Inc||DE|
|Fiscal Year End||2/3|
|Exchange||New York Stock Exchange|
|Shares Over Alloted||0|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||6/17/2002|
We estimate that the net proceeds to us from this offering of 2,400,000 shares of our common stock at a public offering price of $32.50 per share to be approximately $73.4 million ($84.5 million if the underwriters exercise their over-allotment option in full) after deducting the underwriting discount and other estimated expenses of this offering. We intend to use the net proceeds of this offering to repay the $50 million term loan under our $100 million credit facility. The remainder of the net proceeds from this offering will be used for general corporate purposes. We entered into the credit facility in August 1999 in connection with our spin-off from The Limited to finance a $50 million dividend to The Limited, as well as to repay a portion of working capital advances made by The Limited prior to the spin-off. The credit facility matures on August 13, 2004 and had an interest rate of 3.74% as of May 20, 2002.
The sale of apparel and personal care products through retail stores and direct-to-consumer channels is a highly competitive business with numerous competitors, including individual and chain fashion specialty stores, department stores, discount retailers and direct marketers. Depth of selection, colors and styles of merchandise, merchandise procurement and pricing, ability to anticipate fashion trends and customer preferences, inventory control, reputation, quality of merchandise, store design and location, advertising and customer services are all important factors in competing successfully in the retail industry. We believe that our focused and differentiated brand provides us an ability to compete successfully in our industry.
We are a leading specialty retailer of branded apparel and lifestyle products for 'tween girls, ages 7 to 14, and recently introduced a new retail concept for teen girls ages 14 to 19. As of February 2, 2002, we operated 459 Limited Too stores, targeting the 'tween segment, and seven mishmash
stores, targeting the teen girl segment. We design, source and market our products under our proprietary brands, Limited Too and mishmash, for sale exclusively in our stores. Our sales strategy is to integrate our retail, direct mail and website channels to provide marketing vehicles and sources for the latest fashion and trends. Both store concepts are located primarily in high-traffic mall locations. Our store design, merchandise assortments and marketing initiatives are intended to create lifestyle brands that capture the latest trends for our fashion-aware customers. With Limited Too, we have created destination retail stores that showcase our brands and the scope of our product offerings, encouraging customers to spend time experimenting with and trying on products before making purchases. We believe our target customers want a broad assortment of merchandise for their wardrobes, including apparel for school, leisure and special occasions, as well as non-apparel merchandise, such as footwear, candy, jewelry, cosmetics and lifestyle products. We have historically relied on colorful in-store graphics and window displays to convey our fun and "cool" image. We intend to leverage these successful marketing efforts to continue to promote brand awareness on a national level, including engaging in cross-promotions with major media companies such as Disney and Universal Studios and consumer product companies. In 1996, our management team recognized that our core customer had her own emerging sense of style and revised our strategy to focus on girls 7 to 14 years of age as our target customer group. Since then, we have implemented an aggressive store opening campaign to capitalize on our business strengths and have grown our Limited Too store base from 308 stores at the end of fiscal 1996 to 459 stores in 46 states at the end of fiscal 2001. Our net sales have increased at a compound annual growth rate in excess of 18%, from $256.7 million in fiscal 1996 to $602.7 million in fiscal 2001. Over the same period, our operating income rate has increased from (3.5%) to 11.0%. We intend to continue our expansion program and plan to open approximately 50 to 55 new Limited Too stores in fiscal 2002 and remodel about 10 stores to enhance their sales and profitability. We expect to open these stores in our existing markets as well as in markets in which we do not currently have a presence. Additionally, we intend to continue to develop our mishmash concept. Based on positive customer response to our first seven mishmash stores, we plan to open at least four more mishmash stores in fiscal 2002 and 30 to 50 stores during fiscal 2003.
|Company Counsel||Porter, Wright, Morris & Arthur LLP and O'Melveny & Myers LLP|
|Lead Underwriter||Bear, Stearns and Co. Inc|
|Lead Underwriter||J.P. Morgan Securities Inc.|
|Underwriter Counsel||Davis Polk & Wardwell|