Too, Inc.

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Too, Inc.

8323 Walton Parkway
New Albany, Ohio 43954
U.S.A.
Telephone: (614) 775-3500
Fax: (614) 775-3938
Web site: http://www.limitedtoo.com

Public Company
Incorporated: 1999
Employees: 8,800
Sales: $647.5 million (2003)
Stock Exchanges: New York
Ticker Symbol: TOO
NAIC: 315212 Women's, Girls', and Infants' Cut and Sew Apparel Contractors; 315239 Women's and Girls' Cut and Sew Other Outerwear Manufacturing; 315231 Lingerie, Loungewear, and Nightwear Manufacturing; 448130 Children's & Infants' Clothing Stores; 448120 Women's Clothing Stores

Too, Inc. is a specialty retailer that sells apparel, underwear, sleepwear, swimwear, footwear, and lifestyle and personal care products for girls 7 to 14 years of age through its two chains of branded concept stores, Limited Too and Justice.

The First Decade: From Sluggish Start to Rapid Growth

Founded in 1987, adjacent to or as a department within select The Limited stores—Leslie Wexler's successful, multiconcept chain—Limited Too initially focused on offering young girls' and infants' merchandise similar to that which The Limited offered. The concept store grew moderately until 1995, and recorded somewhat inconsistent operations and financial performance during these years. In 1996, Limited Too made several management changes, and the company began to focus on more fashion-oriented offerings.

"When I got here in 1996, we were floundering," said Michael W. Rayden, president, chairman, and chief executive officer, in a 2000 WWD article. Rayden, an industry veteran, had held the top spot at Pacific Sunwear of California before coming to Limited Too. "We were selling customers miniversions of the clothes her mother was buying. The first thing we did was focus on the merchandise in the stores. Now we live, eat and breathe that girl."

That girl was a "'tween," generally defined as a preteen aged 7 to 14. She was considered to be a sophisticated and savvy customer by merchandisers. The market segment she represented was newly lucrative and sizable. 'Tweens often made spending decisions for their parents and were up on trends. In the late 1990s, fashion magazines, such as Cosmo Girl and Seventeen, geared toward 'tweens, proliferated, and many 'tweens read them. They listened to the same music and watched the same shows as their older siblings and seemed to have an insatiable appetite for fashion, as evidenced by growing sales.

In 1997, sales of clothing for 'tween girls in the United States increased slightly less than 10 percent to $4.5 billion, according to NPD Group as cited in the Wall Street Journal in 1998. By 2001, 'tweens numbered about 27.6 million and influenced more than $150 million in annual family spending, according to a Roper Youth Report. According to Rayden, in WWD in 2000, "Girls have always been interested in fashion and have always liked to shop… . Now they are more aware of what is going on around them because of the media."

1998–2000: Expanding to Fill a Market Niche

By 1998, the 311-store Limited Too was a fast-growing division of Limited Inc., posting a 24 percent sales growth to reach revenues of $322 million. Most Limited Too stores were about 4,000 square feet and located in malls. They were brightly colored, with loud pop music and whimsically decorated with flower-shaped tables, their merchandise arranged in such a way as to encourage touching it and trying it on. Too's sales associates were a part of this distinctive atmosphere, trained to offer a high level of friendly service and to reinforce customers' fashion brand awareness by offering advice on outfits.

Striving to fill a market niche and exploit the concept of the hip, stylish, action-loving 'tween, Limited Too expanded its offerings and began developing its branded style in the late 1990s. It ran advertisements in teen magazines, presenting a lifestyle of "fun, fashion, and friends," the total "Too" experience. Wanting customers to have fun while shopping and linger in its stores, it installed instant photo sticker booths and gum ball machines.

Having successfully test-marketed makeup in its stores in 1997, Too added a "Fashion Adventure" program to educate girls about fashion and grooming, clothing design, and retail merchandising, offering those who took part in this program a discount for shopping at Limited Too. In 1998, it began to sell home design items, such as plastic inflatable furniture and furry purple cushions. Shortly thereafter, it introduced ear-piercing services to complement its Goldmark line of gold and silver jewelry, part of a joint venture with Angus & Coote Limited. In 2000, with accessories accounting for 18 percent of sales, Limited Too extended its fashion offerings to include swimwear, robes and sleepwear, and intimate apparel. Some stores featured bath and body merchandise, such as glitter lip gloss and nail polish. There were also small umbrellas, bright notebooks, shoes, rugs and lamps, and CDs. One industry analyst described Limited Too's concept as a department store for young girls with its head-to-toe offerings.

According to J.P. Morgan analysts, Limited Too's concept was successful because it had "mom appeal." In the late 1990s, the company added junior sizes up to size seven, but held to strict limits on what sort of clothes it would carry. "Our customer may aspire to the junior look, but that clothing is not always appropriate," according to Rayden in WWD in 2000. Too's design team endeavored to stay on target with the hottest fashion trends in the junior's and women's markets, but, despite some fitted clothes and a few halter tops and low-cut items, Rayden insisted, "[y]ou will not find a midriff top at our store."

In 1999, The Limited spun off Limited Too, which changed its name to Too, Inc. to create more of a separate identity for itself. It began trading shares on the New York Stock Exchange under the ticker symbol TOO. During its first year of operating independently, Too, Inc. started with about 330 stores and enjoyed profits of $23.4 million, up 60.1 percent from its 1998 profits of $14.6 million. Sales for the year 1999 were up 20 percent at $452.4 million from 1998 sales of $376.9 million. However, Too, Inc., which continued to do business as Limited Too, still shared some distribution facilities with The Limited until 2002, when Too built a new distribution center, a 510,000-square-foot facility in Etna Corporate Park in Licking County, Ohio. That same year, it moved its corporate offices to New Albany, Ohio, about 20 miles away.

By 2000, Too, Inc. had a design team of nearly 40 people and used a variety of methods, such as focus groups and sponsorship of concerts and events, to stay abreast of trends in the 'tween market. Coupon programs, a frequent buyer card, and a monthly "Wacky Wednesday" bonus promoted sales. In late 1999, Limited Too launched a catalog to pitch its products. The "catazine" was mailed directly to 1.5 million preteen girls and featured, in addition to clothing and accessories for sale, plenty of articles and fashion tips, such as advice on how to mix and match colors, fashion layouts, beauty tips, a calendar of events of teen interest, and a crossword puzzle. Limited Too's web site, which debuted also in 1999, featured pages and pages of entertaining content amid items for sale. Users could view scenes of a Limited Too fashion shoot, read the latest news on current movies and popular music; take part in e-games, quizzes, and polls; follow do-it-yourself projects; or learn news about young girls around the world.

As the company continued to grow, Limited Too began to shift toward a larger store format that it called its "Girl Power" stores. These stores that carried a larger range of accessories and generated slightly higher sales totals per year than its other stores, $1.9 million as opposed to $1.2 million. The newer stores featured lively colors and an almost theme park atmosphere, with interactive sections such as a photo sticker booth and a makeup sampling table. Rayden described these stores as a "theme park in the mall" in a 1999 Wall Street Journal article. The company also introduced its first outlet stores in the year 2000.

2001–03: The 'Tween Market Leader

By 2001, the 'tween audience had been established as "what's hot in the marketplace," according toMGMConsumer Products. "The 'tween audience is one of the hottest, hippest, untapped markets out there," MGM Senior Vice-President Travis Rutherford opined in a 2001 WWD article. However, the market targeting preteens was getting crowded due to increased vendor interest. Manufacturers had introduced 'tween apparel; department stores had updated their girls' departments with hipper lines; and branded fashion companies had introduced fashion-forward girls' and 'tween apparel.

Too, the clear market leader in the 'tween category, began to step up its marketing with in-store promotions and events. Its "Passion for Fashion" six-city tour offered free concerts, sweepstakes, and contests and featured recording artists, Olympic stars, and young actors popular with 'tweens. In an effort to branch out to target teen girls 14 to 19, Too launched a second retail chain concept, its mishmash stores in 2001. In 2002, Too, Inc. marked its 15th anniversary with a foray into movie tie-ins and licensing with Universal Pictures, partnering with Disney to debut a line of clothing based on Disney's popular Lizzie McGuire character.

Company Perspectives:

Limited Too has become the number one specialty retailer for the American 'tween girl. We have given her real fashion and cutting-edge style, in a store environment that caters to all of her senses. We mail Limited Too catazines—created specifically for her—in her name. And, Limited Too.com offers her the latest fashion on the Net. In a nutshell, we give her what she wants, when she wants it. A 360-degree brand. We've become really good at listening. Watching. Reacting. In the process, we've seen her grow up. Move on to a different stage in her life. And guess what, nobody is treating her as well as we have.

In 2003, Too, 500 stores strong and still growing, began branching out beyond mall locations and partnering with a number of consumer brands popular with the 'tween age group. Nestlé's SweeTARTS became the Limited Too's "preferred" candy and Frito Lay its "preferred" salted snack. These snack foods advertised in Limited Too's catalog and sold in their stores. The company formed a licensing agreement with Build-A-Bear Workshop whereby customers could create customized plush animals at more than 100 Limited Too stores. Limited Too also began selling stuffed bear-sized styles of its popular sportswear fashions. It partnered with Mattel's My Scene brand, a fashion-based spinoff of the Barbie brand, and began to offer licensed My Scene sportswear. A marketing partnership with LEGO Systems introduced Clikits, a new designer craft system of fashion accessories, to Limited Too stores. In the spring of 2003, Too also began test marketing Reebok shoes in 51 of its stores and introduced a new book series of fiction for young girls.

As a promotional for its "sweet 16" year, Too sponsored "What's Your Wish," a one-hour reality shoe featuring the 15 winners of its birthday wish contest who expressed wishes ranging from meeting stars to meeting ambassadors of the United Nations to being president for a day at Limited Too. The company closed its 18 underperforming mishmash stores in 2003, converting them to Justice stores, its new specialty concept-that offered sportswear and accessories to value-conscious consumers in predominantly off-the-mall locations.

"We feel we have so much growth ahead of us… . We are the dominant brand in the marketplace. This was an underserved niche that we happened to identify," Rayden had said of Too, Inc. in a 2000 WWD article. The company's plans were to continue to grow to become a 700- to 750-store chain, offering a changing assortment of apparel and merchandise displayed in a way that encouraged touching and trying on and a fun shopping experience to match the "energetic lifestyle" of 'tweens. As the self-styled one-stop shop for 'tween customers and their moms, Limited Too would continue to strive to convey the essence of its brand: creativity, fashion awareness, and excitement for girls.

Key Dates:

1987:: Limited Too is founded as a department within select Limited stores.
1999:: Too, Inc. is spun off from The Limited.
2001:: Too, Inc. launches a new concept store, mishmash.
2002:: Too, Inc. builds a new distribution center and corporate offices in Ohio.
2003:: The company replaces mishmash with its new, lower-priced concept store, Justice.

Principal Subsidiaries

American Factoring, Inc.; Limited Too Store Planning Inc.; Limited Too Purchasing, Inc.; Limited Too Catalog Production, Inc.; Limited Too Creative Design, Inc.; Limited Too Direct, LLC; Too Brands Investment, LLC; Too G.C., LLC; Too brands, Inc.; Too Retail & Sales Puerto Rico, Inc.