Tween Brands Is Getting Spanked

Why can't we simply design clothing, produce clothing, market clothing, and distribute clothing? It appears that in today's world, if your fashion business becomes large and successful you have more to worry about than late deliveries, loose threads, or buyer charge backs. As a prime example, take a look at what happened this week to Tween Brands. Today I have read that a shareholder class action was filed against Tween Brands, Inc. A law firm had issued notice that a class action lawsuit was filed on behalf of all purchasers of securities (company stock) of Tween Brands, Inc. from May 23, 2007 through August 21, 2007. The Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that consumer demand had materially declined for the Company's products; (2) that the Company was facing significantly increased expenses in the form of higher rent and marketing costs; as well as a few other issues. I understand that publicly traded companies have to play by different rules, but why would they have to report such trivial information in their filings. What garment company in their right mind would tell anyone "that consumer demand had declined for the company's product". Is that a good way to build confidence with your clients? Is that a good way to keep your employees inspired to work hard and feel they are on a winning team? I do not understand why they are required to state such things in their filings. Also, why does the management of a clothing company have to point out time after time that the company is facing higher rent and higher marketing costs. Aren't we all grown ups?? Don't we all already understand that rent typically does not go down... If you own a fashion boutique, has your landlord recently stopped by your shop and told you they want to do you a favor and "lower" your rent. The reality is that if you live any where outside of a cave, you may naturally understand expenses typically "go up". Why does it have to be spelled out to investors... Anyway, in my opinion, it is a shame that successful clothing retailers need to have financial wizards and lawyers working as hard or harder then their buyers and merchandisers. Doesn't this take the fun out of the business. More importantly, doesn't this "distract" upper management from running a clothing business. The bottom line is that CEO's of "publicly traded" clothing companies have to be accountants and lawyers and not garmentos... By the way their stock (symbol TWB) closed on Aug. 7th, 2007 at $39.08 per share. One month later I have just looked a few moments ago Sept. 7th and the stock is trading at $28.90. I am a garmento and not very good at math, but I think that is a drop of around 26% in one month (you can do your own calculations). Actually, if you go back to July, and re-calculate the percentage drop from a point in July until now, the story looks even worse. Wow that hurts... My opinion, Tween Brands is a good company. They are just taking a beating at that moment. I wish them future success... By the way, if you are not familiar with Tween Brands, here is a summary. Tween Brands, Inc. (NYSE:TWB), formerly known as Too, Inc., aims to be a world-class brand for the ‘tween (ages 7 to 14) girl. At Limited Too, the company sells apparel, swimwear, sleepwear, underwear, footwear, lifestyle and personal care products for active, fashion-aware ‘tween girls. Limited Too currently operates more than 560 stores in 46 states and Puerto Rico and has a select number of international franchised stores. Limited Too publishes a catalog coinciding with key ‘tween shopping times throughout the year, and conducts e-commerce on its Web site, www.limitedtoo.com. Written: 9/7/07 - sorry this post was so long... Do you think Tween Brands has a good future ahead?

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  • "I understand that publicly traded companies have to play by different rules, why would they have to report such trivial information in their filings. What garment company in their right mind would tell anyone "that consumer demand had declined for the company's product". Is that a good way to build confidence with your clients? Is that a good way to keep your employees inspired to work hard and feel they are on a winning team? I do not understand why they are required to state such things in their filings. "

    They are required to state such things in their filings because the shareholders are OWNERS of the company and have a RIGHT to know EXACTLY what is happening to the company that they own. And since it is a publicly traded company, it has to report things openly so that shareholders and potential buyers know what they're getting into. Of course, they'd prefer not to disclose such information, but the shareholders ARE the owners! Things need to be spelled out to investors because it's the INVESTORS" money that is being used and it's THEIR money that is at stake. Investors are owners. If you had invested your money, you'd want to know what was going on, wouldn't you???

    Maybe all this does take the "fun" out of the business, but when you are using other people's money (that's what getting investors means), then you'd darn well better be paying attention to such things and not only having fun.
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