NEW YORK — Growing sales and lower costs resulted in spectacular earnings growth for Bebe Stores in the third quarter.
For the three months ended March 31, the Brisbane, Calif.-based designer saw earnings skyrocket to $5.5 million, or 21 cents a diluted share, easily outpacing Wall Street’s consensus estimate of 18 cents a share. Comparatively, the company reported earnings of $142,000, or 1 cent, in the same period a year ago.
Sales for the quarter jumped 21.6 percent to $83.6 million, from $68.8 million in the year-ago period. Comparable-store sales rose 16.7 percent.
At the end of the quarter, the company had 189 stores in operation, compared with 177 a year ago. The company intends to end fiscal 2004 with 199 stores in operation.
Fueling results was a higher gross margin rate along with lower expenses as a percentage of sales. The company said the higher gross margin rate is the result of “improved merchandise margins and leverage on the fixed occupancy cost.” Cost of sales during the quarter increased slightly to $44.9 million from $39.8 million. However, cost of sales declined 420 basis points to 53.7 percent of sales from 57.9 percent of sales in the year-ago period.
It was a similar story for selling, general and administrative expenses, coming in at $30.5 million compared with $29.3 million in the year-ago quarter. SG&A expenses declined 610 basis points to 36.4 percent of sales from 42.5 percent of sales in the same period a year ago.
For the nine-month period, earnings increased 58.4 percent to $25.4 million, or 96 cents a share, from $16 million, or 62 cents, last year. Sales ballooned 14.7 percent to $279.2 million from $243.4 million, while comps gained 9.7 percent.
— Ross Tucker