Shares of Bebe Stores Inc. fell almost 10 percent in Nasdaq trading Tuesday after the company warned that its third-quarter loss would be deeper and its sales lower than previously expected.
The Brisbane, Calif.-based specialty retailer said in a preliminary report on results for the quarter ended April 4 that sales in the period fell 17.2 percent to $93 million as comparable-store sales fell 5.7 percent with gross margins below year-ago levels. Its loss per share, including non-cash impairment charges, is now expected to land between 29 and 32 cents a diluted share.
When the company reported second-quarter results on Feb. 6, it projected flat comps, higher gross margin and a loss per share in the midteens.
Bebe said that extreme weather in the quarter had precipitated 136 temporary store closures. It operates 226 stores, 176 under the Bebe brand.
The company noted that merchandise margins increased by about 50 basis points during the three months but, due to promotional pressure, were below previous expectations. Gross margin fell as sales decelerated.
Steve Birkhold, chief executive officer, said, “We transitioned fully to spring product early and had much lower levels of excess winter product during the sustained cold weather in the quarter. If we were to use our West region performance, without weather impact, as a proxy, comparable-store sales for Bebe and bebe.com combined would have been flat for the fiscal third quarter.”
He said the weakness of the results was attributable to the weather and the Easter shift rather than merchandising issues. “We continue to believe that our new product is being well received by our Bebe girl as we saw e-commerce, which was not impacted by weather, achieved positive comparable-store sales and margin in the high teens for the third quarter. We were also encouraged by the sales and margin performance of our March catalogue, which had the best sell-through rate since November 2011.”
Reiterating her “buy” rating based on the signs of improvement highlighted by the ceo, Janney Capital Markets analyst Adrienne Tennant commented in a note to clients, “While clearly the [turnaround] has been pushed out a few quarters, we continue to believe the business is on the right track and are buying based on weakness, particularly under $6.”
Shares closed at $5.80, down 64 cents or 9.9 percent.
Bebe plans to release final results for the quarter on May 8.
EXCLUSIVE: @tomford is opening its first-ever beauty store. The boutique, which opens November 20 in London’s Covent Gardens, was designed with the over the top glam Ford is known for. Read the full story on WWD.com, link in bio. #wwdbeauty #wwdnews (📷: Simon Wagner) #TomFordBeauty
New York-based DJ @harleyvnewton threw a party to celebrate the holiday collection of her dress and pajama line @hvn at the Ladurée Beverly Hills. It Girls @katebosworth, @rashidajones and more joined in on the fun, which included cocktails, croque monsieur sandwiches and a photo booth. #wwdfashion (📷: Owen Kolasinski/BFA.com)
For the holidays, @Burberry partnered with 20-year-old artist @blondeymccoy on a series of three outdoor murals in downtown Manhattan. The murals are McCoy’s interpretation of a Christmas eve party, the idea of charity and the spirit of family. His third mural, pictured here, is the most personal. The image depicts McCoy’s grandparents and father in London’s Trafalgar Square in the Seventies. “My work often features lots of sentimental objects.” #wwdeye
For spring 2018, designers applied bold colors and cartoonish motifs on everything from sneakers and belts to key chains. See all the top men’s accessories trends on WWD.com. #wwdtrends (📷: George Chinsee; Prop Styling by @rnasti; Market Editor: @luiscampuzano)
The @dior-sponsored @guggenheim international gala pre-party has a history of drawing cool-girl musical acts to serenade the crowd –– and last night was no exception. @haimtheband performed songs both new and old, and lured a star-studded audience with the likes of Rebecca Hall, Kate Mara, Mamoudou Athie and more. #wwdeye (📷: @lexieblacklock)
In a partnership between the @metopera and the @englishnationalopera, “Marnie” was born. The opera, with costumes sponsored by @mrporterlive, is an adaptation of the 1961 thriller by Winston Graham. Arianne Phillips, who created the costumes, is no rookie: She’s styled Madonna for her tours and created costumes for a myriad of films in the past. Read WWD’s interview with Phillips, where she talks about her inspiration for the opera’s costumes on WWD.com #wwdfashion
@barneysnyc took a different approach to their holiday windows this year. Instead of Christmas decor, Barneys tapped @thehaasbrothers to tell a story of positivity, gratitude and inclusivity via heartwarming silliness and humor. “It’s about kids and it’s about coming together and being family and loving each other,” said Simon Haas. #wwdfashion (📷: @joshuascottphoto)
Beauty influencer @kandeejohnson makes her foray into hair care with a collaboration with @ogx_beauty — making it the first time that OGX has teamed up for a product creation. The collab includes shampoos and conditioners in three scents. At 39 and a mom, Johnson is a different profile than the emerging social media stars, but is considered one of the pioneers of the digital beauty influencer world. Read WWD’s interview with her on wwd.com, including the strangest beauty product she’s ever tried #wwdbeauty