Bebe Stores Inc
) reported weak same store sales and overall retail sales results
for the first quarter of fiscal 2013 ended September 29, 2012. The
company will announce further details with the first-quarter
earnings release on 1
November, which will include wholesale as well as other sales.
The company stated that total retail sales of $105.1 million for
the reported quarter declined 9.4% from $116.0 million in the
prior-year quarter. Comps declined 8.7% year over year for the
quarter compared with an increase of 7.0% in the year-ago
The decline in retail sales and comps were primarily due to
lower traffic at the company's stores. We believe the company's
fusty discounting tactics remained ineffective to lure customers at
As of September 29, 2012, the company registered a 12.5% growth
in average inventory per square foot compared with 1% increase in
the year-ago quarter. The year-over-year increase was mainly due to
rise in average per unit costs and investments in wear-to-work.
In an effort to fight the situation of falling retail sales,
Bebe is focusing on the development of a multi-channel retail
format by enhancing its e-commerce capabilities. Moreover, the
company believes that its new distribution facility in Benicia,
California, has the capability of serving both, its online and
Further, in order to expand its international business, Bebe is
aggressively increasing its sales points in different countries. At
the end of fiscal 2012, the company had 110 sales points in 19
countries, with plans to add 25 more sales points in fiscal 2013.
We believe these expansion strategies will help drive sales.
Bebe competes with other upper segment apparel retailers, such
). Currently, the company has a Zacks #4 Rank, which translates to
a short-term Sell rating. However, we are maintaining a long-term
'Neutral' recommendation on the stock.
Bebe Stores is engaged in the design, development and production
of women's apparel and accessories. The company's products include
a wide range of separates, tops, dresses, active wear and
accessories in career, evening, casual and active lifestyle
categories. The company markets its products under the bebe, BEBE
SPORT, bbsp and 2b bebe brand names targeting 21 to 34-year-old
women. As of September 29, 2012, it operated 250 retail stores
including 198 bebe stores and 52 2b bebe stores.
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