BRISBANE, CALIF. – July 6, 2010 – bebe stores, inc. (Nasdaq: BEBE) today announced that it will discontinue operations of its PH8 division, allowing the company to focus its efforts on improving bebe sales and profitability as well as continuing to develop its 2b bebe concept, possibly in the place of current PH8 stores.

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The company estimates the total pre-tax cost associated with closing or converting its 48 PH8 stores will be approximately $17 million and believes all 48 stores will all be closed or converted during fiscal year 2011.

bebe stores, inc. designs, develops and produces a distinctive line of contemporary women’s apparel and accessories, which it markets under the bebe, BEBE SPORT, bbsp, 2b bebe and PH8 brand names, all sold in their 297 stores, around the United States, U.S. Virgin Islands, Puerto Rico and Canada as well online.

bebe stores, inc.'s Board of Directors also declared a one-time cash dividend of $1.00 per share. The dividend is payable on July 30, 2010 to shareholders of record at the close of business on July 21, 2010. No additional dividend will be payable this quarter.

The Board decided this was an appropriate time to make such payment to its shareholders especially given the full payment the company received related to the auction rate securities it previously held at UBS, meaning total cash and investments cmbined reached $350 million.

This payout is announced despite statements released in May this year regarding net sales down by 10.4%; from $127.7 million reported for the third quarter 2009 they lowered, for the third quarter of fiscal 2010 to $114.4 million.

The company had thought these results could be due to issues such as miscalculation of the demand for products, ongoing competitive pressures in the apparel industry, changes in the level of consumer spending or preferences in apparel, loss of key personnel, difficulties in manufacturing, disruption of supply or adverse economic conditions.