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Double-Digit Dip for Bebe Sales

NEW YORK — Lower unit prices and delivery delays pressured Bebe Stores’ August same-store sales down a worse-than-expected 17.6 percent, but strength in its profit margins helped elevate its stock on Friday.<br><br>The Brisbane,...

NEW YORK — Lower unit prices and delivery delays pressured Bebe Stores’ August same-store sales down a worse-than-expected 17.6 percent, but strength in its profit margins helped elevate its stock on Friday.

This story first appeared in the September 9, 2002 issue of WWD.  Subscribe Today.

The Brisbane, Calif.-based contemporary specialty retailer, which operates 169 stores, also said total sales slid 5.1 percent to $26.2 million for the month versus $27.6 million in August 2001. Last August, comps increased 8.9 percent.

Bebe reported August results on Friday, one day after most of its competitors. (Bebe’s comparable-store sales result for last month was given incorrectly on a chart on page 11, Friday.)

John Kyees, chief financial officer, said on a conference call that comps were down in the mid- to high-double-digit range all four weeks of the month. By region, sales in the Northeast were the strongest, offset by weakness in its home market of San Francisco and in Florida and Washington, D.C.

Looking ahead, Kyees said comps are expected to return to positive territory in September, due mostly to easier comparisons, and should finish in the mid- to high-single-digit range. Last September, comps declined 10.2 percent. Comps for the July-August period decreased 13.8 percent. For the first quarter ending Sept. 30, comps are expected to be down in the mid- to high-single digits. Kyees did not comment on earnings expectations, but current consensus estimates are for first-quarter earnings of 22 cents a share versus 25 cents in the year-ago period.

Detailing the quarter, Kyees said retail margins exceeded plan due to fewer markdowns. Inventory on a per-store basis was down roughly 19 percent, but the reduction was due to lower price points as the average unit count per store was flat.

The margin maintenance contributed to a 76-cent, or 5.8 percent, improvement in Bebe’s stock price, which closed at $13.90 in Nasdaq trading Friday. The percentage was even greater than the 3.6 percent pickup registered by the Standard & Poor’s Retail Index, which ended the day at 294.66, up 10.35.

Kimberly Greenberger, a specialty retail analyst at Lehman Bros., said, “Even with the same number of units to sell, the decline in the average price will generate a negative comp,” she said, adding that Bebe is likely to get inventory arriving in stores in a more timely matter as early as November.