Out Fox The $treet

Tween Brands is up 30% today on news of the all stock deal with Dress Barn (DBRN). Its interesting that DBRN is up 10%+ on the news. Its very uncommon for an acquirer to increase on news of a purchase. Our take is that the market sees this as a steal by DBRN considering they were able to buy a premium brand for about 85% lower then its peak valuation. My only concern is that TWB has some stuff hiding in the closet for their BOD to agree to such a minimal price of $137M when they still have sales in the $1B range. Being that its an all stock deal they do still get the opportunity to participate in any further market rallies and to any rebound in the Justice line, though on a very diluted basis. In general your getting mostly an investment in DBRN going forward. Highlights of the deal: Stock-for-stock merger expected to be neutral to earnings in the first full year of combined operations and accretive thereafter Dress Barn, Inc. to add 908 Justice ...

Just as was reported on the 15th [ Stat of the Day: Consumer Confidence Soars ], the markets are again soaring because of good consumer news. This time its from the Conference Board which typically has more influence then the Michigan Survey on the 15th. Still the market should've expected a huge jump. The Index soared beyond estimates of 42.3 by a wide margin to nearly 55. What were those analysts thinking? As the Michigan Survey showed, future expectations are soaring. Expectations were at 72 while the Present Situation came in at 29. So basically the Consumer Confidence number is going to continue to soar. Michigan expectations were at levels not seen since October 2007 and while not noted in this report I'd expect them to come close to that time frame. Its definitely higher then the number a year ago. Retailers such as SHLD and TWB are soaring on this news while DKS is doing pretty good. Both SHLD and TWB are worth considerably more if the consumer returns. The Conference ...

The owner of the Justice and Limited Too brands that focuses on the tween girls category (7-14 year olds) has been crushed by the markets and the weak economy. Oddly though, Tween Brands (TWB) has been crushed much more by the markets then the likes of Childrens Place (PLCE), Gymboree (GYMB), and Pacsun (PSUN). Was it because of the the move to transition all of the Limited Too stores to the much better performing Justice brand? If so, the market was placing a huge execution discount on the stock. All 4 stocks recently reported Q1 numbers through the end of April and clearly TWB and PSUN had the worst numbers and they consequently have the lowest market caps. Both GYMB and PLCE reported pretty decent numbers and hence they have the highest market caps. But thats where the market quits making sense. PSUN has a market cap nearly triple that of TWB - $275M vs $100M - even though TWB posted better results actually recording an operating profits versus the $8M loss at PSUN. With comparable ...

Maybe this Tween just isn't that good in school or maybe the market knows something that we don't. Tween Brands ( TWB ) has greatly underperformed the market in this huge rally. Both pre-tween retailers GYMB and PLCE have both rebounded strongly over their 200ema and even hated retailers like SHLD, JCP, and M are all above those marks as well. Then why is TWB now even below the 20/50ema's? On a valuation basis, this stock provides a compelling story. Even on a business plan basis, this stock seems much more attractive then the other mentioned stores. Just using the most common comparisons of GYMB and PLCE, the movement away from the mall seems to give them a leg up. Maybe the market seess execution risk in moving from the Limited Too mall brand to just a Justice only brand. The Q4 margins were probably a good reason to pause, but most of that issue was related to the sell out of the Liimited Too clothing line. TWB has been a very well run company for a while now so it seems...