NEW YORK — Shares of Bebe Stores Inc. got hammered Friday after the retailer said its third-quarter earnings results would fall well below Wall Street’s estimates.

This story first appeared in the March 17, 2003 issue of WWD.  Subscribe Today.

Bebe shares were off $2.34, or 16.3 percent, to close at $12.01 in Nasdaq trading, hovering above its 52-week low of $9.58, reached Oct. 7.

Late Thursday, Bebe said it expected earnings of between 3 to 5 cents a share for the quarter ending March 31, below consensus estimates of 11 cents, according to First Call. The Brisbane, Calif.-based specialty retailer said it also anticipates the period’s same-store sales to decrease in the low- to midteens, versus the negative high-single-digit comp decrease it previously forecast.

“Sales have been negatively impacted by a lack of balance in our assortment and lean inventory levels,” John Kyees, Bebe’s chief financial officer, said in a statement. “While gross margin is currently higher than the prior year, the margin is lower than our plans due to higher markdowns and higher manufacturing costs.”

Downgrading the stock to “hold” from “buy,” Wedbush Morgan Securities analyst Adrienne Tennant said she believes the company’s inventory issues continue to plague sales. “At the end of February, the company’s inventory was up 7 percent, but down 13 percent to its internal plan, she wrote in a research note. “We have started to see more suiting and sophisticated merchandise, but not in the depths required to create a full assortment.”

In addition, she said, the Far East sourcing initiative is taking longer than anticipated. She said Bebe planned to have a substantial portion of its manufacturing capacity issues resolved by its fiscal fourth quarter, but now believes that by then, the company will only be running production overseas in a “test capacity” mode, rather than producing at or near full production levels.

Bebe named Paul Mashouf vice president of sourcing on March 5 following the December departure of Jamel Bennoui, vice president of manufacturing, “to pursue other opportunities.”