bebe stores (BEBE) Implements Headcount Reduction; Approves $5M Common Stock Buyback

bebe stores (NASDAQ: BEBE) announced that, as a result of the Company’s focus on more streamlined lifestyle assortments and increased efficiencies across business functions, it has implemented a workforce reorganization. This reorganization will include the reduction of over 50 positions primarily in the design, merchandising, and production areas. The Company expects pre-tax costs associated with this initiative to be approximately $1.5 million, and anticipates annual cost savings of approximately $4.8 million. In addition, Manny Mashouf, Chairman of the Board of bebe, will be re-engaged with the Company, working closely with the design and merchandise teams to help guide this initiative.

bebe also announced today that the Company's Board of Directors has authorized a $5 million share repurchase program. Share repurchases may be made in open market or privately negotiated transactions, subject to market conditions, applicable legal requirements and trading restrictions under the Company's insider trading policy. The program may be suspended or discontinued at any time.

Jim Wiggett, Chief Executive Officer, said, “Following a detailed review of our business, the Company made the strategic decision to narrow the merchandise focus and increase emphasis on lifestyle assortments that most closely align with our customers’ needs. We believe this will position us to maintain a more consistent and better edited offering of fashion that is true to the bebe brand. While the decision to reduce our workforce did not come easily, it was believed to be in the best long term interest of the Company. We appreciate the dedication of the affected employees and thank them for their efforts.”

Mr. Mashouf commented, “I am excited to be working closely with a very talented group of designers and merchants. I look forward to collaborating with the teams to create great, innovative, branded product that speaks to the needs of the bebe woman. In addition, the Board has authorized the share repurchase program, underscoring its confidence in bebe’s ability to achieve our growth objectives.”

The Company also announced that, based on current business trends, it is maintaining its guidance for the first quarter of fiscal 2016. As such, the Company expects comparable store sales to be in the negative mid-single digit range. Gross margin is expected to be lower than the prior year. The net loss per share is expected to be in the high teens. Finished goods inventory per square foot as of the end of the first quarter of fiscal 2016 is anticipated to increase in the mid-teens compared to the first quarter of fiscal 2015.

Mr. Wiggett concluded, “We have seen encouraging trends in the business quarter-to-date. Comparable store sales in September turned positive, and we have largely moved through our underperforming bohemian product. Therefore, we are maintaining our guidance for the first quarter. As we prepare for second half of fiscal 2016, we will continue to evaluate our cost structure and capital expenditure requirements.”

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