Bebe posts sales slump due to low traffic, to close 25 stores

By

Obi Anyanwu

Published
Feb 5, 2017

Traffic trends hindered Bebe Stores in its second quarter. The company saw improvement in the week before Thanksgiving and the two weeks before Christmas, according to CEO Manny Mashouf, but this could not offset the negative traffic trends that preceded the holiday season.

 
“We ended the quarter with our inventory and SG&A below the prior year and increased our gross margin 40 bps as a result of fewer markdowns,” said Mashouf. “As a result of the reductions in SG&A, inventory and capital expenditures we generated cash for the six months ended December 31, 2016 for the first time since the fall of 2012.”

For fiscal year 2017, Bebe plans to close up to 25 Bebe and outlet stores, which will result in a decrease in total square footage of 16% compared to last year. 

Mashouf added that the company will continue to invest in its strong denim and leggings business, and it achieved improved results in knitwear, outerwear and evening dresses.
 
Gross margin increased to 34.4% on net sales of $101.9 million, a 16% decrease from last year. Net loss was reduced to $5.2 million, or $0.65 per share, from $5.5 million, or $0.68 per share.
 
For the six months ended December 31, 2016, net sales decreased 13.5% to $218.7 million, and net loss decreased to $13.0 million from $22.6 million.
 
Mashouf added, “As we discussed in our last release we are working to take advantage of the casual trend taking place and believe we can continue to grow our bottoms business while working to improve departments within our tops business. 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.”