Even the most successful retail formulas have their limits. That's why two thriving chains — Talbots and Chico's — are spinning off new store concepts this year.

Chico's, which targets female baby boomers aged 35 to 55, will reach 385 stores by the end of this year and plans to open 70 to 75 stores annually until it reaches 650 stores nationwide. “As Chico's gets closer to that magic number, Wall Street kind of wants to know where they're headed,” says Margaret Whitfield, an analyst with Brean Murray in New York.

Where the Ft. Myers, Fla.-based retailer is headed is down — to a younger customer base. Though details are sketchy, Chico's CIO Charles Kleman told Women's Wear Daily that the concept fits in “somewhere between Abercrombie & Fitch and Chico's, leaning more towards AnnTaylor Loft.” Lucky Star is the working name for the concept and goods for this younger demographic are being tested at undisclosed stores. Chico's research indicates that members of this demographic group, who have considerably less income than current Chico's customers, don't have the dollars for the clothes they desire. These are customers who emulate high-fashion styles with apparel from lower-price-point stores ranging from Arden B and Banana Republic to Gap and Target.

Says Whitfield, “In some ways the new concept sounds more challenging given the supply of stores serving this younger customer.” Analyst Richard Baum of Credit Suisse First Boston, concurs: “From a demographic standpoint, this is a more crowded market for the 20- to 35-year-old customer. Chico's has a lot of expertise in women's apparel and is very creative, and it runs very efficient stores. It remains to be seen how well that will translate to another demographic.”

Talbots' new men's concept has inspired no such doubts for these two analysts. The Hingham, Mass.-based women's apparel chain has 797 stores, which include the traditional women's stores, freestanding petite and plus-size shops, as well as accessories stores. Fifty-seven of the chain's stores fall under the Talbots Kids umbrella, a brand extension that grew steadily in 2001 only to see flat comp sales in 2002. Now, the retailer hopes its success in the women's segment will carry through to its men's stores, which are scheduled to debut in the fall.

The Talbots name could be a mixed blessing, says Baum. “Some of the guys I work with wouldn't be seen walking in a Talbots,” he says. “But their significant others would welcome an alternative to a department store.” Also, Baum observes: “Say ‘Talbots’ and you have some image of what the quality, price point and service level is going to be like. Their aim is to replicate those three qualities in the men's area.”

Talbots contends that 60% of its new customer base for menswear will come from its existing female clientele. “This is quite a natural extension for Talbots,” says Baum, “because something like 80% of all men's apparel is purchased by women anyway.”

He points to the paucity of specialty store alternatives for men aged 40 to 60, their target customers. “Brooks Brothers is the only big competitor,” he says, though the new Talbots mens concept will feature only sportswear. While the real estate strategy has not been announced, “Knowing Talbots, they will probably test a number of venues, including directly adjacent to or nearby a Talbots misses store,” says Baum.

Will the new concepts from Chico's and Talbots grow legs and contribute meaningful growth? Neither of these new concepts is likely to have significant earnings impact any time soon, say Baum and Whitfield. “It takes a huge amount of revenue to move the dial in a large company,” says Baum, “but for a little company like Chico's the impact is greater.”

But the potential for misfire also exists. Gymboree, for example, did poorly when it tried for the tween market a few years back with Zutopia. Eddie Bauer's kid stores, AKA Eddie Bauer, also fared poorly.

Talbots and Chico's, says Baum, are not making a dangerous leap from their basic businesses, where they have proven adept. “You want to build on your core competency,” he says. “You want to build on your skills as much as possible. The farther afield you go, the more questionable the concept.”