June 29 - Children's Place Retail Stores is gearing up for a much better back-to-school season as it banks on tighter inventories and new, sometimes pricer, merchandise to entice still-wary shoppers, its chief executive said on Tuesday.

Baby ballet-shoe collection

Shares of Children's Place, which sells clothes for kids, were up 1.7 percent at $45.14 in early afternoon trading.

"Last year, back to school was very difficult for us. This year, we are in a much better position ... because inventories are in a better position," said CEO Jane Elfers, adding that prices on some clothes will be up by $1-$2, due to higher costs for commodities such as cotton.

"Costs in the fall season are significantly high ... but cotton prices are ebbing down spring into summer," Elfers said, adding that the back-to-school season of 2012 should see some relief from lower cotton prices.

The back-to-school season, during which youngsters stock up on clothes, gadgets and paper supplies for the new school year, kicks off in July and runs through Labor Day in early September. It is the second-largest shopping period in the United States, after the holiday season in November and December.

Since taking the top job in January 2010, Elfers has been working to correct inventory and merchandise missteps that had often led the retailer to discount heavily at the end of each season to get rid of unsold merchandise.

This year, Elfers is expecting fewer discounts due to improvements in the company's merchandise assortment, marketing and inventory levels.

"This year, you will see more wearable and lighter fabrics. (Girls) can buy it in July and wear it in July," said Elfers.

Elfers has also reshuffled her management team, and is still looking for a new chief marketing officer.

"I've interviewed a lot of people (but) haven't found someone with the background, mix to fit into the group," said Elfers, who is also revamping the company's strategy for outlet stores and online shopping in a bid to capture more market share.

"We see about 50-65 percent of outlet merchandise being unique by 2012, up from 3 percent now," Elfers said, and added that the company sees opportunities to go beyond its usual merchandise in its online store.

Currently, e-commerce does not even account for 10 percent of Children's Place's overall sales. It mostly sells the same things as in its stores, except for some baby bedding and extended sizes.

TOUGH CHOICES

Children's Place, which competes with chains like Target Corp and Gap Inc's Old Navy, caters to households with a median annual dual income of about $70,000 -- or shoppers who are still under pressure and looking for bargains.

"(With) the pressure on fuel and food, (our core shoppers) have to make a lot of choices right now. When the real apparel inflation hits in back-to-school and holiday, she's going to have to be further pressed to make those choices," Elfers said. "The high-end consumer is not our consumer."

U.S. consumer spending failed to rise in May, breaking 10 straight months of gains, as households struggled with rising prices.

The Secaucus, New Jersey-based company , which operates almost 1,000 stores in North America, is planning to open its first international store in the second half of 2012 and has seen a lot of interest for partnership in new countries, Elfers said.

"We're looking mostly at a franchise model and long-term partners," Elfers said. The company has not yet decided where its first international store will be.

(Reporting by Nivedita Bhattacharjee and Martinne Geller, editing by Dave Zimmerman and Gerald E. McCormick)