By  on December 21, 2005

BEVERLY HILLS, Calif. — Bebe, the sexy, edgy specialty chain, is movin' on up to Rodeo Drive in its first foray into the luxury market.

Company executives said the 7,500-square-foot West Coast flagship, across the street from the Celine and Dior stores, is a prototype. They want to roll out the higher-end concept in other upscale shopping areas such as Oak Street in Chicago and New York's SoHo. Bebe also plans to open Neda, its first freestanding accessories chain, in the spring. A location hasn't been set.

The Brisbane, Calif.-based retailer has revved itself up with new concepts and categories, accelerated advertising and raised catalogue circulation, which has boosted sales productivity to more than $700 per square foot. The company reported a 26 percent same-store increase in 2004, and executives said the brand has a $1 billion potential. The company operates 228 retail stores: 172 Bebe, 36 Bebe Sport and 20 Bebe outlet locations.

"As we've grown through the years, we've become somewhat of a mass brand," said Bebe chief executive officer Greg Scott. "Now it's a little more upscale, designer driven, unique and special."

And there's a higher price point to match. At Bebe's typical mall-based stores prices are about $150 for dresses, $300 to $400 for outerwear and $130 for shoes. At the Rodeo Drive store, however, there are dresses for $400, shoes for $500 and a crystal-encrusted evening bag for about $850.

With the company's best-selling jean at a $158 price point, Scott said he felt the timing was right for the move to Beverly Hills. In fact, some of its top-selling pieces since opening Dec. 4 have included $498 platform sandals with Swarovski encrusted heels and bejeweled belts for more than $200.

"Before, I would have said, ‘We will not be able to sell [this level of product],'" Scott said. "What we're finding is that the higher price point will elevate the brand."

To play at that level, Bebe is not only raising its prices. It is changing the level of craftsmanship on some of its products. Scott said the company is starting to make some of its bags in Italy.Industry sources expect the new stores to do between $500 and $1,000 per square foot in sales.

The three-level Rodeo Drive store's sleek, contemporary design also plays well on the street. Clean white walls, marble flooring, dark woods, seating areas with low, white leather couches and less merchandise on the racks set the space apart from its mall-based siblings.

Scott said this is not a long-term strategy for the stores, but rather one of the ways in which the company is seeking to raise the brand's cachet with consumers. He would not discuss companies he sees as competition for the new store, saying only that Bebe is "playing against the best in the world."

Indeed, shoppers streaming into the store on the day of the opening party last Wednesday were toting bags from neighbors such as Chanel and Michael Kors, as well as flaunting the ultimate Rodeo Drive accessory — pampered pooches.

The company is trying to court a more glittering clientele, with perks such as the soon-to-be created VIP and studio services area on the third floor. Britney Spears recently went on a shopping spree at the store, snapping up the $498 platform sandals as well as plenty of logoed items. And the opening party saw celebs such as Virginia Madsen, Natasha Henstridge, Daisy Fuentes and Kimberly Stewart.

With higher price points and a new breed of customer, is there a danger of alienating the old customer?

"We know this doesn't play everywhere," Scott said. "But the competition is getting better."

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