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Revenue slips at Bebe Stores, which flirts with sale

By FashionUnited

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Fashion

Revenue for the fiscal second quarter slipped at Bebe Stores Inc. by 4.1 percent, getting the industry talking about the fashion retailer allegedly looking for private investors. The womenswear chain reported revenue for the quarter of 135.5 million dollars, ahead of the consensus estimate of 121.29

million dollars.

Steve Birkhold, Chief Executive Officer, commented: "We are encouraged by the sequential improvement we experienced in the second quarter, especially during Black Friday weekend and the month of December.
December continued the sequential improvement with positive comparable store sales, as we saw a favourable response to the new merchandise and an increase in traffic, despite declining mall traffic and an aggressive promotional environment across the industry." Bebe Stores closed Friday with a market cap of 429 million dollars, after disclosing that its revenue for the second quarter had fallen by 4.1 percent to 130 million dollars. Nevertheless, the figures beat expectations.

"We believe that the strong messaging in our marketing campaigns connected with our customer and contributed to the improvement in traffic. We also successfully cleared through the vast majority of legacy merchandise, ending the quarter with inventory per square foot down nearly 7 percent. That said, the retail environment remains challenging, and we will continue to operate with disciplined inventory management and cost controls," CEO at Bebe Stores pinpointed.

Results ahead of expectations for Bebe Stores in Q2

Results were ahead of the Zacks Consensus Estimate as well as its own guidance, cheering investors and boosting the stock by 11.2 percent in the after-hour trading session.

"The company reported a loss of 7 cents per share for the quarter, much narrower than the Zacks Consensus Estimate of a loss of 15 cents. However, the quarterly loss was higher than the comparable prior-year quarter loss of 6 cents per share," highlighted analysts at Zacks Equity Analysis.

Janney Montgomery Scott restated their 'neutral' rating on shares of Bebe Stores (NASDAQ:BEBE) in a research note issued to investors on February, 4. The firm currently has a 5 dollars price target on the stock, down from their previous price target of 6 dollars.

According to sources close to the matter that preferred to remain anonymous, Bebe Stores (BEBE) is exploring selling itself and is contacting private-equity firms about a deal, reported Reuters over the weekend.

Reportedly, the fashion retailer would have hired Guggenheim Securities to help with the process.

"Going forward, we expect the company's new merchandising strategy and its practice of lowering inventory to stimulate growth," advanced Zacks.

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