Bebe stores reports 10.5 percent fall in Q2 comparable sales

Bebe Stores’ net sales for the fiscal second quarter ended December 31, 2016 were 101.9 million dollars, a decrease of 16.8 percent from 122.4 million dollars reported for the second quarter a year ago. Comparable store sales decreased 10.5 percent compared to a decrease of 2.5 percent in the comparable period of the prior year.

Commenting on the development, Manny Mashouf, Chief Executive Officer said, “Similar to the last quarter we had a very strong denim and leggings business which we will continue to invest in. We also had improved results in knit tops, total outerwear and evening dresses offset by weakness in day dresses, woven tops and non-apparel. In addition, our outlet business generated positive comparable stores sales for the quarter. Consistent with the prior quarter we continue to find it challenging to offset the extremely high levels of markdowns and promotions realized in the prior year.”

Second quarter financial highlights

Gross margin as a percentage of net sales increased to 34.4 percent compared to 34 percent in the second quarter of fiscal 2016. The increase in margin, the company said, was primarily the effect of a reduction in markdowns and promotions.

Net loss for the quarter was 5.2 million dollars or 0.65 dollar per share, on 8 million diluted shares outstanding, compared to a loss of 5.5 million dollars or 0.68 dollar per share, on 8 million diluted shares outstanding for the same period of the prior year. The company closed one Bebe store during the quarter.

Six months net sales declined 13.5 percent

Net sales were 189.2 million dollars, a decrease of 13.5 percent from 218.7 million dollars for the first six months ended January 2, 2016. Comparable store sales decreased 7.4 percent.

Net loss for the period was 13 million dollars, or 1.62 dollars per share, compared to net loss of 22.6 million dollars, or 2.83 dollars per share, in the same prior year period.

Foresees fall in comparable sales for fiscal 2017

Bebe Stores said, consistent with the period beginning October 30, 2016 and ending November 19, 2016, mall traffic was below expectations for the first three weeks of the current fiscal quarter ending January 21, 2017. However it foresees improvement in traffic and comparable store sales although both measures continue to trend negative to the prior year.

The company added that contributing to the comparable store sales decrease is a reduction in the number and frequency of in-store and on-line promotions and markdowns which are consistent with the company’s strategic initiative to protect the brand image and improve gross margin.

For fiscal year 2017, the company does not plan to open any new store locations and to close up to 25 Bebe and outlet stores, which will result in a decrease in total store square footage of approximately 16 percent from the end of fiscal year 2016.

Picture:Bebe Stores