Second quarter comparable store sales decreased
10.5%
Second quarter gross margin increased 40
bps
Second quarter loss per share was $0.65
bebe stores, inc. (NASDAQ:BEBE) today announced financial
results for the fiscal second quarter ended December 31, 2016.
Manny Mashouf, Chief Executive Officer said, “In the second
quarter of Fiscal 2017 we reacted to sales and traffic trends below
the incoming trends of the fiscal first quarter and the month of
October. While we saw improvement in the week before Thanksgiving
and the two weeks before Christmas, the results for those three
weeks were not sufficient to offset the overall negative traffic
trends in the first three weeks of November. 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. 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.”
Mr. Mashouf continued, “Similar to the last quarter we had a
very strong denim and leggings business which we will continue to
invest in. We also had improved results in knit tops, total
outerwear and evening dresses offset by weakness in day dresses,
woven tops and non-apparel. In addition, our Outlet business
generated positive comparable stores sales for the quarter. 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.
For the second quarter of fiscal 2017:
Net sales were $101.9 million, a decrease of 16.8% from $122.4
million reported for the second quarter a year ago. Comparable
store sales for the quarter ended December 31, 2016 decreased 10.5%
compared to a decrease of 2.5% in the comparable period of the
prior year.
Gross margin as a percentage of net sales increased to 34.4%
compared to 34.0% in the second quarter of fiscal 2016. The
increase in margin was primarily the effect of a reduction in
markdowns and promotions.
SG&A expenses were $41.4 million, or 40.6% of net sales,
compared to $47.1 million, or 38.5% of net sales, for the same
period in the prior year. The decrease in SG&A expenses was
attributable to reductions across most categories reflecting the
effects of savings from restructuring.
Net loss for the second quarter of fiscal 2017 was $5.2 million,
or $0.65 per share, on 8 million diluted shares outstanding,
compared to a loss of $5.5 million, or $0.68 per share, on 8
million diluted shares outstanding for the same period of the prior
year.
During the quarter ended December 31, 2016, the Company closed
one bebe store.
For the six months ended December 31, 2016
Net sales for the first six months ended December 31, 2016, were
$189.2 million, a decrease of 13.5% from $218.7 million for the
first six months ended January 2, 2016. Comparable store sales
for the first six months ended January 2, 2016 decreased
7.4%.
Net loss for the fiscal six months ended December 31, 2016, was
$13.0 million, or $1.62 per share, compared to net loss of $22.6
million, or $2.83 per share, in the same prior year period.
Balance sheet summary:
Cash and investments at December 31, 2016 were $67.1
million.
As of December 31, 2016, average finished goods inventory per
square foot decreased 18% compared to the prior year.
Capital expenditures for the six months ended December 31, 2016
were approximately $1.3 million, and depreciation expense was
approximately $8.5 million.
Fiscal 2017 guidance:
Consistent with the period beginning October 30, 2016 and ending
November 19, 2016, mall traffic was below expectations for the
first three weeks of the current fiscal quarter ending January 21,
2017. However we are seeing improvement in traffic and comparable
store sales although both measures continue to trend negative to
the prior year. While we expect to see further improvement, we
expect both will finish negative for the quarter. Contributing to
the comparable store sales decrease is a reduction in the number
and frequency of in-store and on-line promotions and markdowns
which are consistent with our strategic initiative to protect the
brand image and improve gross margin.
Finished goods inventory per square foot is anticipated to
decrease for the remained of the fiscal year compared to the prior
year as we implement the strategic plan discussed in the fiscal
2016 year ended earnings release.
Total capital expenditures for the year are anticipated to be
approximately $6 million for relocation, remodels and information
technology systems. Depreciation for the year is anticipated to be
approximately $17 million.
For fiscal year 2017, the Company does not plan to open any new
store locations and to close up to 25 bebe and outlet stores, which
will result in a decrease in total store square footage of
approximately 16% from the end of fiscal year 2016.
Forward-Looking Statements
Certain statements in this release are "forward-looking
statements" made pursuant to the safe-harbor provisions of the
Private Securities Litigation Reform Act of 1995. Such
forward-looking statements reflect the Company's current
expectations or beliefs concerning future events and are subject to
various risks and uncertainties that may cause actual results to
differ materially from those that we expected The statements in
this news release, other than the historical financial information,
contain forward-looking statements that involve risks and
uncertainties that could cause actual results to differ from
anticipated results. Wherever used, the words “expect,” “plan,”
“anticipate,” “believe” and similar expressions identify
forward-looking statements. Any such forward-looking statements are
subject to risks and uncertainties and the company's future results
of operations could differ materially from historical results or
current expectations. Some of these risks include, without
limitation, miscalculation of the demand for our products,
effective management of our growth, decline in comparable store
sales performance, 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, adverse economic conditions, and/or other
factors that may be described in the Company's annual report on
Form 10-K and/or other filings with the Securities and Exchange
Commission. Future economic and industry trends that could
potentially impact revenues and profitability are difficult to
predict. We undertake no obligation to publicly update or revise
any forward-looking statement. Financial schedules are attached to
this release. Additionally, we cannot provide any assurances as to
if, or when, Mr. Mashouf or his affiliates may choose to sell
shares of the Company’s common stock.
About bebe
Unique, sophisticated and timelessly sexy, bebe emerged as the
first contemporary fashion destination in 1976. Today bebe
continues to define next-generation chic while staying true to its
assertive, provocative origins. Inspired by Shakespeare’s immortal
words “To be, or not to be,” the brand is, at its essence, about
living, standing out and truly existing. As a global specialty
retailer that designs, develops and produces a unique line of
women’s apparel and accessories, bebe currently operates 137 retail
stores, 35 outlet stores and www.bebe.com. In addition to its store
locations in the United States, Puerto Rico and Canada, bebe also
distributes and sells bebe branded product in approximately 75
doors through its licensees in more than 21 countries.
bebe stores, inc.
SELECTED BALANCE SHEET DATA
(UNAUDITED)
(Dollars in thousands)
December 31, 2016 January 2, 2016
Assets Cash and equivalents $ 66,792 $ 43,372
Available for sale securities - 5,070 Inventories, net 23,250
28,282 Total current assets 103,619 97,444 Available for sale
securities - 5,166 Property and equipment, net 62,585 83,306 Total
assets 168,884 189,589
Liabilities and Shareholders'
Equity Total current liabilities $ 37,014 $ 40,167 Total
liabilities 53,077 60,991 Total shareholders' equity 115,808
128,598 Total liabilities and shareholders' equity 168,884 189,589
bebe stores, inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(UNAUDITED)
(Amounts in thousands except per share
data and store statistics)
For the Three Months Ended
For the Six Months Ended
December 31, January 2, December
31, January 2, 2016 %
2016 % 2016 % 2016
% Net sales $ 101,931 100.0 % $ 122,447 100.0 % $
189,169 100.0 % $ 218,730 100.0 % Cost of sales, including
production and occupancy 66,903 65.6 % 80,767
66.0 % 126,647 66.9 % 149,188
68.2 % Gross margin 35,028 34.4 % 41,680 34.0 % 62,522 33.1
% 69,542 31.8 % Selling, general and administrative expenses
41,399 40.6 % 47,116 38.5 % 77,119
40.8 % 92,006 42.1 % Operating loss
(6,371 ) -6.2 % (5,436 ) -4.4 % (14,597 ) -7.7 % (22,464 ) -10.3 %
Interest and other income, net 121 0.1 % 8
0.0 % 136 0.1 % (79 ) 0.0 % Loss
before tax provision and earnings from equity investment (6,250 )
-6.1 % (5,428 ) -4.4 % (14,461 ) -7.6 % (22,543 ) -10.3 % Income
tax provision 10 0.0 % 30 0.0 % 27 0.0 % 57 0.0 % Earnings in
equity method investment 1,029 1.0 % -
0.0 % 1,479 0.8 % - 0.0 % Net loss $
(5,231 ) -5.1 % $ (5,458 ) -4.4 % $ (13,009 ) -6.8 % $ (22,600 )
-10.3 %
Earnings per share amounts: Basic $ (0.65 ) $ (0.68 ) $ (1.62 ) $
(2.83 ) Diluted $ (0.65 ) $ (0.68 ) $ (1.62 ) $ (2.83 )
Basic weighted average shares outstanding 8,040 7,989 8,023 7,981
Diluted weighted average shares outstanding 8,040 7,989 8,023 7,981
Number of stores open at beginning of period 182 201 186 201
Number of stores opened during period - 4 - 5 Number of stores
closed during period 1 2 5 3 Number of stores open at end of period
181 203 181 203 Number of stores expanded/relocated during
period - - - - Total square footage at end of period (000's)
707 791 707 791
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version on businesswire.com: http://www.businesswire.com/news/home/20170202006215/en/
bebe stores, inc.Walter Parks, 415-715-3900President, Chief
Operating Officer and Interim Chief Financial Officer
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