BEBE 2ND-QUARTER NET FALLS 5 PERCENT

Byline: Kristin Young

LOS ANGELES — Disappointing same-store sales, a rapid store-opening pace and higher markdowns drove Bebe Stores’ second-quarter profits down 5 percent.
Net income for the three months ended Dec. 31 was $11.9 million, or 47 cents a diluted share, against $12.5 million, or 49 cents, in the year-ago period.
Earnings reflect a $900,000 nonrecurring charge for settlement of a lawsuit involving the alleged wrongful exemption of some store managers from overtime laws. Sales advanced 19 percent, to $93 million from $78.1 million, but, as previously reported, declined 1.2 percent on a same-store basis. Year-ago comps were 10.1 percent ahead. The consensus earnings estimate for the quarter was 46 cents.
The Brisbane, Calif.-based contemporary retailer expects “flat to slightly positive same-store sales” in the coming spring months, chief financial officer Blair Lambert said on a conference call Thursday.
Lambert said Bebe is expecting negative same-store sales throughout the remainder of January, noting that the month has “been challenging as the company focuses on selling off the prior season’s goods.”
“Bebe stores received spring goods last Friday,” Lambert continued. “And since that time, we’ve seen some improvement.” Starting in March, the company will be up against less challenging same-store sales figures, he noted.
Bebe settled the overtime complaint without admitting wrongdoing and said it expects no change in its operating cost structure. The settlement has yet to be approved by the courts.
For the six months, net income dropped 11.4 percent to $17.7 million, or 70 cents a diluted share, from $20 million, or 79 cents. Sales rose 15 percent to $155 million from $134.8 million.

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