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Bebe’s Earnings Down 18% in Quarter

Times Staff Writer

Bebe Stores Inc. on Wednesday reported an 18% slip in fiscal fourth-quarter profit, partly because of fabric write-offs and inventory shortfalls that have constricted sales of the retailer’s slim-fitting suits and other body-conscious clothing.

The Brisbane, Calif.-based company posted net income of $3.3 million, or 13 cents a share, down from $3.96 million, or 15 cents, a year earlier. The results topped analysts’ forecasts of 12 cents, according to a Thomson First Call survey.

Bebe this month raised its fourth-quarter earnings-per-share estimate to 11 cents to 13 cents, from 6 cents to 9 cents.

Sales for the quarter ended June 30 rose 9% to $80.1 million, up from $73.5 million last year, as the apparel retailer put together a more balanced mix of career and casual wear, analysts said.

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Same-store sales -- a key measure of a retailer’s financial health -- grew 2.9% in contrast with a decline of 7.9% last year.

The positive turn was a significant step for a company that has logged negative same-store sales for most of the last two years, said Jeffrey Van Sinderen, an analyst with B. Riley & Co.

“It’s definitely a good sign,” Van Sinderen said. “I think they have won back some of that traditional customer base with the suits and career wear.” The company markets its bebe and bebe sport brands to 18- to 35-year-old women.

Bebe, which operates 181 retail stores, has struggled with on-time delivery of some items, such as its signature suits, which can be labor-intensive to make.

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“Certain items have been selling well, but there just wasn’t enough,” said Adrienne Tennant, an analyst with Wedbush Morgan Securities.

Some of the delays have been attributed to last-minute design changes. But with more than 70% of its manufacturing done domestically, the company also has had to contend with a number of plant closures caused by the poor economic climate.

Bebe said profit as a percentage of its net sales decreased 2% in the quarter, as the company wrote off fabrics it had not used.

Nonetheless, over the last few months, Bebe has worked to effect a more seamless delivery schedule, Tennant said.

For the year, Bebe earned $19.3 million, or 74 cents a share, down 27% from $26.5 million, or $1.02, in 2002. Sales rose 22% to $323.5 million, although same-store sales decreased 6.8%.

Bebe’s stock price fell 34 cents to close at $22 on Nasdaq as the company issued cautious guidance. Executives said they anticipated per-share earnings of 18 cents to 21 cents in the fiscal first quarter, with same-store sales growth in the “low single digits.”


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