Children's retailer Tween Brands has lowered earnings forecasts for the company's fourth quarter despite posting a 13% sales increase.

Net sales increased to US$260.9m in the company's third quarter, ended 3 November, thanks mainly to an 123-store increase in its roster of outlets, with comparable store sales up only 4%.

Tween's Justice brand led the way with a 17% sales increase, with Limited Too edging up only 1%. Both had enjoyed a buoyant August, the company said, but Limited Too in particular was affected by a downturn in September and October.

Net income was US$13m, down on the previous year's figure of US$19m.

Tween Brands is now forecasting fourth-quarter earnings per share of US$0.98-1.08, 4-5% down on its previous guidance figure of US$1.03-1.13.

The company said it based this on a low single-digit increase in comparable store sales, with the holiday period set to be slower than previously expected.

"While our early November sales are encouraging, we believe it is prudent to moderate our earnings expectations for the holiday period, based on what appears to be a challenging retail environment," said Tween Brands CEO Mike Rayden.

"The competition for customer attention is already resulting in an increased level of promotion, exerting more pressure on operating margins."