Bebe Stores Q4 comparable store sales decline 4.6 percent

Bebe Stores said that for the fourth quarter net sales were 94.9 million dollars, a decrease of 9 percent from 104.3 million dollars reported for the fourth quarter a year ago. Comparable store sales decreased 4.6 percent compared to an increase of 1.1 percent in the comparable period of the prior year. For the fiscal year ended July 2, 2016, net sales were 393.6 million dollars, a decrease of 8 percent from 428 million dollars last fiscal year. Comparable store sales decreased 4.5percent compared to an increase of 3.1 percent in the prior year.

Commenting on the company’s performance, Manny Mashouf, CEO said, “In the fourth quarter of fiscal 2016 we saw sustainable changes in our business, including the signing of the joint venture agreement with Bluestar. Also, during the quarter our comparable store sales improved each month; from negative 10percent in April and negative 6 percent in May to a positive 1.3 percent in June. These changes combined with the 25 million dollars annual reduction in SG&A give me confidence as we enter the new fiscal year.”

Detailed summary of the Q4 and FY15 results

Gross margin as a percentage of net sales decreased to 30.9 percent in the fourth quarter compared to 34.8 percent in the fourth quarter of fiscal 2015. Income from continuing operations was 25.1 million dollars or 0.31 dollar per share compared to a loss of 5.5 million dollars, or 0.07 dollar per share. During the quarter, the company closed four Bebe stores and opened one outlet store.

Loss from continuing operations for the fiscal year ended July 2, 2016, was 27.5 million dollars or 0.34 dollar per share, compared to a loss of 25.4 million dollars, or 0.32 dollar per share in the prior year. Excluding the impact of the net gain, loss from continuing operations was 59.2 million dollars or 0.74 dollar per share for fiscal 2016.

Fiscal 2017 guidance

For the fiscal year, the company expects comparable store sales to be in the negative low-single digit to positive low-single digit range. Gross margin is expected to be higher than the prior year as a result of inventory management initiatives which include a 20 percent reduction in receipts and SKU’s.

For fiscal year 2017, the company does not plan to open any new store locations and to close up to 40 Bebe and outlet stores, which will result in approximately a 20 percent decrease in total store square footage from the end of fiscal year 2016. For the year, the company anticipates, at the mid-point of the sales range provided and before one-time charges EBITDA, to be a loss of approximately 6 million dollars compared to the trailing three year average loss of 33 million dollars.

For the eight weeks ended August 27, 2016, comparable store sales decreased 3.1 percent but gross margin as a percent of sales increased 150 basis points with August increasing 550 basis points.

Images: bebe stores