Bebe Stores Inc.’s stock price fell more than 8 percent Friday, a day after the women’s apparel retailer surprised analysts with a first-quarter loss.


For the period ended Oct. 3, the Brisbane, Calif.-based retailer said it registered a net loss of $4.2 million, or 5 cents a diluted share. This compared with a profit of $11.2 million, or 12 cents a share, in the year-ago period. Net sales for the quarter declined 23 percent to $125.7 million from $163.3 million, last year. Analysts polled by Yahoo expected earnings of 5 cents a share on revenue of $157.8 million.


Same-store sales in the first quarter plummeted 25.7 percent, the company said, and gross margin as a percentage of sales decreased to 36.7 percent of sales, versus 44.9 percent a year earlier, due mainly to unfavorable occupancy leverage and higher markdowns.


In the conference call to analysts and investors, chief merchandising officer Kathleen Fong-Lee said, “It is very clear to us that we have to improve our merchandising mix to reduce markdowns and improve sell-through to increase market share.”


The company said, however, that it reduced selling, general and administrative expenses by 10.4 percent to $53 million, as it incurred lower compensation and advertising expenses.


Following disclosure of the results Thursday evening, shares ended Friday’s trading session at $5.98, down 55 cents, or 8.4 percent.


Eric Beder, a Brean Murray, Carret & Co. retail analyst, downgraded Bebe’s stock to “hold” from “buy” because the company indicated that its “potential turn will be pushed out until spring 2010, at the earliest.”
“While we can see the longer-term potential of the company when it begins to turn and net cash per share of $3.70 provides a cushion, we are afraid we are going to be caught in a “value trap” until visibility returns and believe our current estimates, even on a cash-adjusted basis, do not support a valuation materially higher than current levels,” he said. “As such, we are moving to the sidelines until we can obtain better visibility and confidence that the business has begun to turn.”


Depending on markdowns, Bebe said it expects second-quarter EPS of between breakeven and a profit of 5 cents a share. The company said it also anticipates same-store sales to improve over the first quarter.
Analysts are looking for the company to have a net loss of 1 cent on sales of $120 million. 

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