OREANDA-NEWS. bebe stores, inc. (NASDAQ:BEBE) today announced unaudited financial results for the second quarter ended January 2, 2016.

Jim Wiggett, Chief Executive Officer said, “We achieved better than expected sales results for the second fiscal quarter of 2016 despite the macroeconomic factors that continued to impact retailers. Our comparable store sales declined in the low single-digit range and gross margin contracted 320 basis points as we focused on selling through inventory during a highly promotional holiday season. Inventory per square foot was up in the low single-digit range at the end of the quarter and we successfully moved through much of the seasonal product. As discussed in the last earnings call, our Founder/Board Chairman has taken a more active role in the company since September with a specific focus on product. As a result of such strategic changes, we will not be providing guidance until we have increased visibility in our business.”

For the second quarter of fiscal 2016:

Net sales decreased 5.0% to $122.4 million, as compared to $128.9 million in the second quarter of fiscal 2015. The net sales decrease was primarily driven by a comparable store sales decrease and store closures. Comparable store sales for the quarter ended January 2, 2016, decreased 2.5% compared to an increase of 8.0% in the same period of the prior year. Traffic and conversion declined while average unit retail was flat.

Gross margin as a percentage of net sales declined to 34.0% compared to 37.2% in the second quarter of fiscal 2015. The decrease in margin primarily reflects an increase in promotional activity and decreased store leverage on lower sales.

SG&A expenses were $47.1 million, or 38.5% of net sales, compared to $47.8 million or 37.1% of net sales for the same period in the prior year. The decrease in SG&A compared to the prior year quarter was due to reductions in compensation and advertising expense partially offset by an increase in depreciation related to planned store closures as well as increased store impairment charges of $2.0 million.

Net loss from continuing operations was $5.5 million and loss per share was $0.07 for the second quarter of fiscal 2016 on 79.9 million shares outstanding, compared to breakeven, or $0.00 per share, based on 79.6 million shares outstanding for the same period of the prior year. Excluding the impairment cost described above, loss from continuing operations was $3.5 million, or $0.05 per share, for the second quarter of fiscal 2016 (a reconciliation of GAAP to non GAAP measures is provided in this earnings release).

Including a loss from discontinued operations of $0.4 million, net loss for the second quarter of fiscal 2015 was $0.4 million, representing breakeven earnings per share.

For the fiscal six months ended January 2, 2016:

Net sales for the first six months ended January 2, 2016, were $218.7 million, a decrease of 5.3% from $231.1 million for the first six months ended January 3, 2015. Comparable store sales for the first six months ended January 2, 2016 decreased 3.2%.

Net loss for the fiscal six months ended January 2, 2016, was $22.6 million, or $0.28 per share, compared to net loss of $11.2 million, or $0.14 per share, in the same prior year period. Included in loss from continuing operations for the first six months of fiscal 2016 were $3.8 million of costs related to store impairment and closure charges and $2.5 million of other costs. Excluding the impact of these charges, net loss from continuing operations was $16.3 million or $0.20 per share, for the first six months of fiscal 2016 (a reconciliation of GAAP to non GAAP measures is provided in this earnings release).

Including loss from discontinued operations of $2.2 million, net loss for the first six months of fiscal 2015 was $11.2 million, or $0.14 per share. Loss from discontinued operations reflects the operating results of the 2b business, which was shut down on July 5, 2014. For the first six months of fiscal 2015, the loss in the discontinued operations was primarily related to additional lease termination costs based on landlord negotiations.

During the quarter ended January 2, 2016, the Company opened one bebe store and three outlet stores and closed two bebe stores.

Subsequent to the quarter end on January 24, 2016 the Company closed one of its bebe stores. In connection with this store closure the Company recorded a lease termination fee of $2.6 million. On January 20, 2016 the board authorized management to sell the Company's ARS. Please refer to the company 10Q for the related subsequent event disclosure.

Balance sheet summary:

Cash and investments at January 2, 2016, were $53.6 million. The increase in cash and investments from the first quarter of fiscal 2016 was primarily due to the cash flow from operations resulting from the timing of working capital, including payment timing for inventory.

As of January 2, 2016, average finished goods inventory per square foot increased approximately 2.3% compared to the prior year.

Capital expenditures for the fiscal year to date were $3.4 million, and depreciation expense was $10.3 million.

About bebe stores, inc.:

bebe stores, inc. is a global specialty retailer, which designs, develops and produces a distinctive line of contemporary women’s apparel and accessories under the bebe, BEBE SPORT and bbsp brand names. bebe currently operates 151 bebe retail stores including the on-line store bebe.com, and 38 bebe outlet stores. These stores are located in the United States, U.S. Virgin Islands, Puerto Rico and Canada. bebe also distributes and sells bebe branded product through its licensees in approximately 23 countries.

 
bebe stores, inc.
SELECTED BALANCE SHEET DATA
(UNAUDITED)

(Dollars in thousands)
         
    January 2, 2016   January 3, 2015
Assets        
         
Cash and equivalents   $ 43,372

 

 $ 75,214
Available for sale securities     5,070     19,996
Inventories, net     28,282     30,108
Total current assets     97,444     142,346
Available for sale securities     5,166     5,455
Property and equipment, net     83,306     93,730
Total assets     189,589     246,067
         
Liabilities and Shareholders' Equity        
         
Total current liabilities   $ 40,167   $ 51,527
Total liabilities     60,991     76,464
Total shareholders' equity     128,598     169,603
Total liabilities and shareholders' equity     189,589     246,067
 
bebe stores, inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

(Amounts in thousands except per share data and store statistics)
 
    For the Three Months Ended   For the Six Months Ended
    January 2,       January 3,       January 2,       January 3,    
    2016   %   2015   %   2016   %   2015   %
                                 
Net sales   $ 122,447     100.0 %   $ 128,914     100.0 %   $ 218,730     100.0 %   $ 231,070     100.0 %
Cost of sales, including production and occupancy     80,767     -66.0 %     81,007     62.8 %     149,188     68.2 %     150,393     65.1 %
                                 
Gross margin     41,680     34.0 %     47,907     37.2 %     69,542     31.8 %     80,678     34.9 %
Selling, general and administrative expenses     47,116     38.5 %     47,816     37.1 %     92,006     42.1 %     89,943     38.9 %
                                 
Operating income (loss)     (5,436 )   -4.4 %     91     0.1 %     (22,464 )   -10.3 %     (9,266 )   -4.0 %
Interest and other income, net     8     0.0 %     28     0.0 %     (79 )   0.0 %     435     0.2 %
                                 
Income (loss) before tax     (5,428 )   -4.4 %     119     0.1 %     (22,543 )   -10.3 %     (8,831 )   -3.8 %
Income tax provision (benefit)     30     0.0 %     139     0.1 %     57     0.0 %     175     0.1 %
                                 
Income (loss) from continuing operations     (5,458 )   -4.5 %     (20 )   0.0 %     (22,600 )   -10.3 %     (9,006 )   -3.9 %
                                 
Income (loss) from discontinued operations, net of tax     -     0.0 %     (365 )   -0.3 %     -     0.0 %     (2,196 )   -0.9 %
                                 
Net Income (loss)   $ (5,458 )   -4.5 %   $ (385 )   -0.3 %   $ (22,600 )   -10.3 %   $ (11,202 )   -4.8 %
     

 

          

 

          

 

          

 

      
Basic loss per share amounts:                                
Loss from continuing operations   $ (0.07 )       $ -         $ (0.28 )       $ (0.11 )    
Loss from discontinued operations     -           (0.00 )         -           (0.03 )    
Net Loss   $ (0.07 )       $ (0.00 )       $ (0.28 )       $ (0.14 )    
                                 
Diluted loss per share amounts:                                
Loss from continuing operations   $ (0.07 )       $ -         $ (0.28 )       $ (0.11 )    
Loss from discontinued operations     -           (0.00 )         -           (0.03 )    
Net Loss   $ (0.07 )       $ (0.00 )       $ (0.28 )       $ (0.14 )    
                                 
Basic weighted average shares outstanding     79,886           79,617           79,809           79,598      
Diluted weighted average shares outstanding     79,886           79,617           79,809           79,598      
                                 
Number of stores open at beginning of period     201           207           201           207      
Number of stores opened during period     4           4           5           6      
Number of stores closed during period     2           -           3           2      
Number of stores open at end of period     203           211           203           211      
                                 
Number of stores expanded/relocated during period     -           2           -           4      
                                 
Total square footage at end of period (000's)     791           828           791           828