Bebe Stores Inc. announced that it suffered a third-quarter loss and was exploring ways to sell its assets.
Chief executive officer Manny Mashouf said, “We are evaluating several different channel expansion opportunities as well as evaluating several potential sources of liquidity through the leveraging of our assets.”
The net loss for the quarter fell 37.5 percent to $30.0 million, or 37 cents a diluted share, from a loss of $10.8 million, or 14 cents, a year ago. This missed the estimate from B Riley analyst Jeff Van Sinderen for a loss of 11 cents per share.
Net sales for the three months ended April 2, decreased 13.7 percent to $79.9 million from $92.7 million a year earlier. This is just shy of Van Sinderen’s estimate for $81 million in revenues. The drop in sales was blamed on a decline in traffic and average unit retail, as well as a reduction in international sales.
“During the third quarter, we took significant steps to restructure our operations, which included headcount reductions, and the closure of nonproductive stores,” said Mashouf. “Going into the fourth quarter we are continuing to move forward with our strategy of streamlining the production cycle for our product, improvements to the assortment within each of our stores, further rationalization of the store fleet and continued focus on discretionary spending.”
Gross margins declined to 28.7 percent versus 30.4 percent in the third quarter of fiscal 2015. Cash and investments was down to $27.9 million a drop from January’s level of $48.4 million as of January 2. The company had cash of $113 million in July of 2014 and it has continued to fall as the company has struggled.
During the third quarter, the company closed 12 Bebe stores and 2 outlet stores. The company also plans to close two Bebe stores and one outlet store during the fourth quarter. Forty additional stores will be closed in fiscal 2017. Having said that, Bebe said it expected its capital expenditures to be approximately $6 million for new stores and remodels.
Looking ahead, Bebe is forecasting for the fourth quarter of fiscal 2016 that comparable-store sales will decrease in mid- to high-single digits. The company expects the net loss per share to be in the range of 8 cents to 12 cents.
Bebe made no mention in its earnings release of its ongoing battle with activist investor Prentice Capital Management and its founder Michael Zimmerman.
Van Sinderen wrote in a February report, “Our focus continues to be on strategic alternatives of some kind.” It seems Mashouf is looking for those alternatives.