Comps fall for Bebe Stores in Q2

Traffic and conversion troubles led to a same store sales decrease for fashion retailer Bebe in the second quarter.

For the period ended Jan. 2, net sales decreased 5% 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 comp decrease and store closures. Same store sales decreased 2.5% compared to an increase of 8% in the same period of the prior year. Traffic and conversion declined while average unit retail was flat.

“We achieved better than expected sales results for the second fiscal quarter of 2016 despite the macroeconomic factors that continued to impact retailers," saidJim Wiggett, CEO. "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.”

Gross margin as a percentage of net sales declined to 34% 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.Net loss from continuing operations was $5.5 million and loss per share was 7 cents for the second quarter.

During the quarter the company opened one bebe store and three outlet stores and closed two bebe stores.

The company currently operates 151 Bebe retail stores including the on-line store bebe.com, and 38 Bebe outlet stores.