Bebe Reports Weak 1Q Comps - Analyst Blog
October 04 2012 - 1:05PM
Zacks
Recently, Bebe Stores
Inc. (BEBE) 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 1st 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 period.
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 its stores.
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 offline sales.
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 as Nordstrom Inc.
(JWN) and Guess’ Inc. (GES). 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.
BEBE STORES INC (BEBE): Free Stock Analysis Report
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NORDSTROM INC (JWN): Free Stock Analysis Report
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