Bebe to transfer intellectual property to joint venture as part of restructuring plan

By

Obi Anyanwu

Published
May 17, 2017

Bebe on Wednesday reported a decrease in net sales from $79.9 million to $65.7 million in the quarter ended on April 1, as well as loss per share of $6.41. The decrease in sales follows a significant restructuring period for the retailer that began in February.

 
Part of the restructuring is the transfer of Bebe intellectual property. In a 10-Q form filed to the US Securities and Exchange Commission, the California-based retailer said it would transfer the bebe.com domain name, and all Bebe social media and international wholesale agreements to a joint venture, which will license the transferred properties to third parties.
 
The new restructuring details follow store closures and mass layoffs from Bebe. In March, the retailer announced that it would shutter its stores to focus on e-commerce. The retailer avoided filing for bankruptcy by forming deals with landlords to exit the leases of up to 180 stores.

And with store closures comes job cuts. Bebe announced in April that it would cut 700 employees, 400 of which are retail jobs.
 
Bebe expects to pay approximately $7 million to $10 million for severance, accrued vacation and stay-on bonuses, and the retailer plans to sell real estate assets to fund the severance payments, as well as lease termination payments and future operations.
 
The retailer in the quarter ended on April 1 reported $9.2 million in expenses for termination payments related to settlements. The funds from real estate assets are expected to cover the costs associated with restructuring.
 
Bebe has reported sales decreases for consecutive quarters and was believed to file for bankruptcy alongside several retailers that filed Chapter 11 bankruptcies at the end of 2016 or the beginning of 2017.