bebe stores (BEBE) Misses Q4 EPS by 8c, Comps Declined 4.6%

September 1, 2016 4:02 PM EDT
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bebe stores (NASDAQ: BEBE) reported Q4 EPS of ($0.08). Revenue for the quarter came in at $94.9 million, versus $104.3 million reported last year.

Fourth quarter comparable store sales decreased 4.6%

Fiscal 2017 guidance:

For the fiscal year, the Company expects comparable store sales to be in the negative low-single digit to positive low-single digit range. Gross margin is expected to be higher than the prior year as a result of inventory management initiatives which include a 20% reduction in receipts and SKU’s. We believe this change will begin to address the over assortment in our stores and the high level of markdowns experienced in prior periods. Our objective is to turn the inventory faster, improve the sell through at full price and the return on our inventory investment.

Finished goods inventory per square foot is anticipated to decrease in the low-teens this fall and single digits next spring compared to the prior year as we implement the strategic plan discussed in the prior paragraph.

Total capital expenditures for the year are anticipated to be approximately $6 million for a relocation, remodels and information technology systems. Depreciation for the year is anticipated to be approximately $16 million.

For fiscal year 2017, the Company does not plan to open any new store locations and to close up to 40 bebe and outlet stores, which will result in approximately a 20% decrease in total store square footage from the end of fiscal year 2016.

For the year we anticipate, at the mid-point of the sales range provided and before one-time charges EBITDA, to be a loss of approximately $6 million compared to the trailing three year average loss of $33 million. We anticipate cash used including the purchase of fixed assets to be approximately $6 million compared to an average three year usage of $31.2 million. At the high end of the range provided above we believe each will be flat for the fiscal year.

We are working diligently to change the model that had become unsustainable as evidenced by the recent financial results. We have made significant strides to create a sustainable financial model to move the business forward. There is much work to be done, but we have stabilized the business and positioned the company to return to a reasonable level of profitability in fiscal 2018 and remain committed to the challenge.

For the eight weeks ended August 27, 2016, comparable store sales decreased 3.1%. For the eight weeks gross margin as a percent of sales increased 150 basis points with August increasing 550 basis points. Contributing to this comparable store sales decrease is a reduction in the number and frequency of in-store and on-line promotions which is consistent with our strategic initiative to improve gross margin. We currently anticipate the reduction in promotions to be consistent throughout the fiscal year.

For earnings history and earnings-related data on bebe stores (BEBE) click here.

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