Bear of the Day: Bebe (BEBE) - Bear of the Day
15 Mayo 2014 - 3:50AM
Zacks
Incorporated in 1976,
Bebe Stores (BEBE) designs, develops and produces
contemporary women's apparel and accessories. They market their
products under bebe, BEBE SPORT and 2b brand names through their
retail stores located in the United States, Canada and
internationally licensed stores.
Disappointing Results
BEBE reported its Q3 fiscal 2014 results on May 8, 2014. Net sales
were down 17.2% to $93.5 million from $112.9 million in the
prior-year quarter. Comparable store sales for the quarter ended
Apr 5, 2014, fell about 5.7%.
Sales decline was primarily due to the loss of a retail week in
January, coupled with the shutdown of 19 non-performing stores,
since Q3 last fiscal year.
Results were also greatly impacted by adverse weather conditions,
which led to nearly 136 temporary store closures. Moreover, the
shift of Easter into late April had a negative impact on the
company’s Q3 sales.
Net loss for the quarter was $24.3 million, or $0.31 per
share, compared to prior-year quarter loss of $49.3 million or
$0.62 per share.
For Q4, Bebe forecasts same store sales to be flat. Gross margin is
expected to improve sequentially, while net loss is expected to be
in the mid-teens per share range.
Estimates Revised Downwards
As a result of the earnings miss and weak guidance, analysts have
been revising their estimates downwards in the last few days. Zacks
consensus estimate now calls for a loss of $0.67 per share for the
current fiscal year and a loss of $0.28 per share for the next
year, compared to a loss of $0.46 per share and $0.16 per share
respectively, 30 days ago.
The following “Price & Consensus” chart shows the downward
estimates revisions for the stock:
Declining estimates sent BEBE to a Zacks Rank # 5 (Strong
Sell).
Better Play?
Investors seeking exposure to “Retail—Apparel/Shoes” industry could
look at Citi Trends (CTRN), which currently enjoys a Zacks Rank # 1
(Strong Buy).
The Bottom Line
After remaining in a rather tight range for almost a year, this
stock had seen unusual interest in February on reports that the
company had hired a strategic advisor to explore a potential
sale.But the investor optimism for the stock was short lived and
the shares declined again after the retailer released its
preliminary results for Q3 in late April.
Operating with a weak product line in a highly competitive industry
implies that the company is unlikely to see better days anytime
soon. Further recent retail sales numbers suggest that the sector
still remains pressure and has failed to rebound after a brutal
winter. The industry has a rather unimpressive Zacks Industry rank
of 211 out of 265 (bottom 20%) currently.
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