Wednesday, December 25, 2013

Bebe Stores' Comps Continue to Fall - Analyst Blog

Bebe Stores, Inc. (BEBE) posted soft retail sales results for fourth-quarter fiscal 2013 ended Jul 6, 2013, reflecting the persistent weak sales and same store sales trend over the past few quarters.

Bebe reported total retail sales of $109.0 million for the quarter, a decline of 8.5% from the prior-year quarter. Looking at the past performances, retail sales declined 9.4%, 11.7% and 3.7% in the first, second and third quarters, respectively.

Comparable-store sales (comps) decreased 7.1% for the quarter, compared with a decline of 2.5% in the year-ago period. The fall in comps was largely due to unfavorable comparable store traffic during the quarter, especially in April when the traffic trend declined the most.

Total retail sales for fiscal 2013, dipped 8.6% to $442.8 million from $484.2 million recorded in the last fiscal year. Comps for the full year declined 8.8% compared to a rise of 5.3% in the prior year.

As of Jul 6, 2013, the company registered 3.1% growth in average finished goods inventory per square foot. It is to be noted that the company will henceforth announce sales and earnings results together.

Simultaneously, other retailers posted comps results for June. Comps for The Gap, Inc. (GPS), the apparel chain operator, witnessed a 7% rise, while net sales jumped 8% to $1.53 billion. Off-price retailer of apparels, footwear and accessories, Stein Mart Inc. (SMRT) also performed well for the month. The company registered a 6.5% rise in June comps, while total sales increased 2.6% to $109 million.

Discount store operator, Fred's, Inc. (FRED), marked a significant improvement as the company witnessed a 4.5% rise in comps, substantially up from the 4% decrease witnessed in Jun 2012. Net sales for June increased 3% to $187.7 million.

Favorable economic trends including a resurgent housing market, stock prices gaining momentum, falling gas prices and an improving labor market scenario coupled with improved weather conditions have boosted c! onsumer confidence. Consequently, this facilitated retailers, which resorted to clearance discounts alongside, to post healthy sales data for the month under review.

Despite Bebe's weak sales and same store sales trend, we remain optimistic. We believe that the company's endeavors to develop a multi-channel retail format through the enhancement of its e-Commerce capabilities, along with the expansion of its international business, will help it combat waning retail sales.

Bebe carries a Zacks Rank #3 (Hold).

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