Missing analysts’ estimates, Bebe Stores Inc. posted a second-quarter net loss of $5.5 million, or 7 cents per share, and said it would no longer provide guidance due to “strategic changes.”
The highly promotional holiday season clearly hurt the specialty retailer. Net sales decreased 5 percent to $122.4 million as compared to $128.9 million in the same period last year. Bebe missed the FactSet consensus for earnings, which called for a loss of 6 cents a share, but the company beat the sales estimate — pegged at $111 million. Comparable store sales declined 2.5 percent versus last year’s increase of 8 percent for the same period.
“Our comparable store sales declined in the low single-digit range and gross margin contracted 320 basis points as we focused on selling through inventory during a highly promotional holiday season,” said Jim Wiggett, chief executive officer. Wiggett also reminded investors that the founder had resumed a more involved role with the company.
Manny Mashouf founded the company, but then announced he wanted to sell his stake in Bebe during 2015. That caused investors to sell off the stock, prompting Mashouf to come back. Wiggett went on to say, “As a result of such strategic changes, we will not be providing guidance until we have increased visibility in our business.”
Gross margins as a percentage of net sales declined to 34 percent compared to 37.2 percent for the same period last year. The company said sales were good during the Black Friday weekend, but then slowed as the holiday season progressed. Bebe also said it suffered from slowing outlet mall traffic.
During the quarter ending Jan. 2, the company opened one Bebe store and three outlet stores, and closed two stores. Subsequent to the quarter end, Bebe closed another store and paid $2.6 million in a lease termination fee. The board also authorized management to sell the company’s auction -ate securities, which it said was detailed in the company’s 10-Q filing. As of 9 a.m. EST, the filing did not appear on the Securities Exchange Commission site.
Bebe had not given investors any notice of when its results would be reported and then did not offer a conference call that would be open to questions. Instead it merely provided a recorded call. The financial results were unaudited.