Bebe Stores Inc. is seeing some upside with its recently forged partnership with Bluestar Alliance.
In June, Bebe formed a joint venture with brand management firm Bluestar Alliance for licensing opportunities for its Bebe and Bebe Sport brands. The joint venture owns the Bebe trademarks and related intellectual property assets. Bebe has a majority stake in the venture.
As reported, Bluestar contributed $35 million to the joint venture, which has since been transferred to Bebe’s balance sheet. Under the terms of the agreement, Bluestar will leverage its brand management infrastructure to develop a global wholesale lifestyle licensing business for Bebe. Fifty percent of the royalties go to the joint venture, which will be disbursed to Bebe on a quarterly basis. That income stream is expected to give Bebe some breathing room and liquidity to fund its operating model. Since Bebe remains a public firm, the expectation is that shareholders will be able to share in the upside as licensing opportunities expand the brand base and build up the chain’s balance sheet.
The venture appears to have gotten off to a fast start. So far licensing deals have been struck with Gbg USA Inc., for sportswear and denim, Mamiye Bros. Inc. for children’s apparel, PPI Apparel Group Inc. for intimates, Accutime Watch Corp. for watches, Gbg Sock LLC for socks, American Traveler Inc. for luggage, Haskel Jewels LLC for jewelry and Miworld Accessories for travel accessories. Categories such as dresses, activewear, outerwear, handbags and cold weather accessories are also being negotiated. These product classifications will be available in better department stores in spring 2017.
The venture also seeks to expand Bebe’s overseas presence. With 150 points of sale, the strategy is to double that number within two years through strategic retail licensing agreements. Bebe has a Middle Eastern presence in countries such as the United Arab Emirates and Saudi Arabia, and the joint venture will focus of expanding the brand’s retail presence in Central and South America, Europe and Asia-Pacific. Simultaneously, the joint venture will implement licensing deals for new product categories, looking to spur international growth and new wholesale business.
To raise its profile, the brand will be advertised in print publications such as Elle and InStyle, point-of-sale, and marketing in over four continents in 150 stores, as well as digital and social media marketing.
Manny Mashouf, founder, chairman and chief executive of Bebe, said, “I am pleased with the efforts by my team to turn around the Bebe’s retail business and Bluestar’s efforts to expand the brand’s reach. Working with Bluestar has confirmed our strategic decision to aggressively pursue a licensing strategy to capitalize on the value of our brand in all categories and channels on a global scale. Bluestar has seen significant demand from prospective licensees and expects to generate long-term, committed royalties.”
Ralph Gindi, chief operating officer of Bluestar, added that he sees long-term growth potential for Bebe with an omnichannel distribution approach, social media presence and brand awareness. “In a short period of time, since the formation of this joint venture, we have added new product classifications to capitalize on what Bebe has already established and further enhance it into a contemporary lifestyle brand.”
As reported in May, Bebe Stores Inc. said it suffered a third-quarter loss and was evaluating options in connection with its assets. The net loss for the quarter dropped 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. Net sales for the three months ended April 2, decreased 13.7 percent to $79.9 million from $92.7 million a year earlier. The drop in sales was attributed to a decline in traffic and average unit retail, as well as a reduction in international sales.