Bebe Stores, Inc.
) recently reported earnings of 4 cents per share for the
fourth-quarter ended June 30, 2012, surpassing the Zacks Consensus
Estimate by a penny. However, quarterly earnings reflected a
year-over-year decline of 33.3% from 6 cents per share reported in
the prior-year quarter.
Quarter in Detail
Net sales from continuing operations for the quarter were $131.5
million, beating the Zacks Consensus Estimate of $128.0 million.
However, net sales inched down 0.6% from $132.3 million in the
prior-year quarter reflecting a decline of 2.5% in
Gross profit in dollar terms crept down 2.9% to $52.9 million
from $54.4 million in the year-ago quarter and consequently, gross
profit margin contracted 90 basis points year over year at 40.2%
from 41.1% in the year-ago quarter. The decrease in gross profit
and margin was primarily due to higher cost of goods sold as a
percentage of sales because of rise in other costs inclusive of
Lower gross profit and a decline in comparable-store-sales led
to a year-over-year fall of 31.8% in operating income to $5.4
million compared with $7.8 million in the fourth-quarter of 2011,
resulting in contraction of 180 basis points in operating margin to
Fiscal 2012 Review
Bebe reported earnings of 14 cents per share for the fiscal year
2012, which came in line with the Zacks Consensus Estimate and
surged 180% from 5 cents reported in the prior year. Net sales for
the fiscal were $530.8 million compared with $493.3 million in the
prior year, reflecting an increase of 7.6% and also beating the
Zacks Consensus Estimate of $528.0 million. Comparable-store-sales
for the fiscal showed an improvement of 5.3% compared with 0.6% in
The company markets its products under the bebe, BEBE SPORT,
bbsp, and 2b bebe brand names, targeting women belonging to the
age-group 21-34 years. During the fourth-quarter, the company
opened three 2b bebe stores and shut down two bebe stores. For the
fiscal 2012, the company opened five bebe stores, eight 2b stores
and shut 13 bebe stores (comprising one conversion of bebe to 2B
As of June 30, 2012, it operated 247 retail stores including 200
bebe stores and 47 2b bebe stores.
Other Financial Aspects
Bebe, which competes with upper segment apparel retailers, such
), has a debt-free balance sheet. The company ended the fiscal 2012
with cash and equivalents of $104.9 million compared to $95.2
million a year ago. Inventories for the fiscal were $33.3 million.
As of June 30, 2012, the company registered a 2% growth in average
inventory per square foot compared with 1% increase in fiscal
Strolling through Guidance
Bebe generated outlook for first quarter of 2013. The company
forecasts comparable-store-sales to decrease in the mid to
high-single digit, following the weak comps for the fourth quarter
2012. The company anticipates net loss to fall in the range of 1 -
4 cents for the first quarter 2013 compared with earnings of 3
cents in the prior-year quarter. Selling, general and
administrative expenses are expected to increase mainly due to
increased compensation and promotional expenses.
For the upcoming quarter, the company anticipates inventories
per square foot to fall in low to mid-teens, mainly due to expected
rise in average per unit costs, investments in wear-to-work and
rise in inventory resulting from our localization strategy.
Bebe expects to spend $27 million as capital expenditures for
the full fiscal year 2013, which will help in opening new stores,
renovations of old ones, store expansions, IT system and office
During the fiscal 2013, Bebe forecasts to open five bebe stores
and six 2b stores and expects to shut down 12 bebe stores and one
2b pop-up store. The company further anticipates that such openings
and closures will not alter the total square footage compared with
the prior-fiscal year.
Bebe's products include a wide range of separates, tops,
dresses, active wear, and accessories in career, evening, casual,
and active lifestyle categories. The company is aggressively
focusing on developing multi-channel retail format by enhancing its
Further, in a drive to expand its international business, Bebe
is aggressively increasing its sales points in different countries
and forecasts that the company's international licensees will
increase 25 points of sales in the fiscal 2013.
Following the year over year decline in the fourth-quarter
revenue and profitability, Bebe carries a Zacks #4 Rank for the
next 1-3 months implying short-term Sell rating. However, we
maintain our long-term 'Neutral' recommendation on the stock.
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