bebe stores inc.
) is slated to report its fourth-quarter fiscal 2014 results on Sep
4, 2014. In the last quarter, it posted a negative surprise of
30.0%. Let's see how things are shaping up for this
Factors Influencing the Upcoming Quarter
This women's clothing and accessories designer has been posting
disappointing results for the past seven quarters. Of late, the
company has been reporting loss due to weak top-line performance
and higher operating expenses.
Moreover, the company recently announced strategic plans that
focus on exiting the loss making 2b business and cutting jobs
across some departments. The company intends to fully exit from its
2b business by the end of fourth-quarter fiscal 2014 which will
include closure of 16 mall-based and e-commerce services. The
company anticipates recording a charge of nearly $5-$6 million in
relation to asset write-offs, inventory liquidation, lease
termination and employee lay off costs in fiscal 2014. Moreover,
bebe expects to book a pre-tax loss of $5-$6 million associated
with the 2b business in fiscal 2014.
In connection with the job cuts, the company anticipates
recording a pre-tax severance cost of approximately $3 million in
fiscal 2014. However, this will benefit BEBE by saving costs of
about $4 million in fiscal 2015.
Further, the company had lowered its comparable-store sales
(comps) guidance for the fourth quarter of fiscal 2014 to a
negative low-single-digit range as against the earlier forecast of
flat. Despite this, BEBE has reiterated its bottom-line outlook of
loss in the range of mid-teens. Thus, we remain apprehensive about
the company's performance in the upcoming quarter.
Our proven model does not conclusively show that bebe stores is
likely to beat earnings this quarter. This is because a stock needs
to have both a positive
(Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3
for this to happen. This is not the case here as you will see
bebe stores currently has an Earnings ESP of +5.00%. This is
because the Most Accurate estimate stands at a loss of 19 cents per
share, while the Zacks Consensus Estimate is pegged at a loss of 20
bebe stores' Zacks Rank #5 (Strong Sell) when combined with a
positive ESP of 5.00% makes surprise prediction difficult. We
caution against stocks with a Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post an
Limoneira Company (
) has an Earnings ESP of +12.50% and a Zacks Rank #2 (Buy).
Zumiez Inc. (
) with an Earnings ESP of +4.55% and a Zacks Rank #2.
Calavo Growers Inc. (
) has an Earnings ESP of +8.70% and a Zacks Rank #3 (Hold).
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