Bebe fall 2016 ad campaign

Bebe Stores Inc. will close up to 25 Bebe and outlet stores in 2017.

The company made the disclosure on Thursday when it posted second-quarter results for sales at its stores.

For the three months ended Dec. 31, the company slightly improved its net loss to $5.2 million, or 65 cents a diluted share, from a net loss of $5.5 million, or 68 cents, a year ago. Net sales fell 16.8 percent to $101.9 million from $122.4 million. The company said comparable-store sales dropped 10.5 percent, on top of a 2.5 percent drop a year ago.

The quarter saw gross margin for the quarter improving — barely — to 34.4 percent from 34 percent a year ago. The company said the improvement was due to a reduction in markdowns and promotions. And the company’s selling, general and administrative expenses saw improvement to $41.4 million, or 40.6 percent of net sales, compared with $47.1 million, or 38.5 percent of net sales, for the same period a year ago. The retailer attributed the decline to savings from restructuring initiatives.

Looking to 2017, Bebe said while there has been improvement in traffic and comparable-store sales, both measures continue to trend negative to the prior year.

Manny Mashouf, chief executive officer, said Bebe saw a strong denim and leggings business, which the company will “continue to invest in. We also had improved results in knit tops, total outerwear and evening dresses offset by weakness in day dresses, woven tops and nonapparel.”

The retailer last year leveraged its brand equity through a new business model by entering into a joint venture with Bluestar Alliance LLC. That venture allowed Bebe to remain a public company, retaining the operating component that consists of its stores and e-commerce site. The company contributed trademarks and related intellectual property to the venture, with the brand management firm contributing $35 million. The women’s specialty chain owns more than 50 percent of the venture. Bluestar is responsible for leveraging its brand management infrastructure to develop a wholesale domestic and international lifestyle licensing business, as well as manage day-to-day operations. Fifty percent of the royalties go to the joint venture, and then is distributed to Bebe on a quarterly basis.

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