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Form 8-K bebe stores, inc. For: Nov 03

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November 4, 2016 6:09 AM EDT


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
 
Form 8-K
 
 
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (date of earliest event reported):
November 3, 2016
 
 
 bebe stores, inc.
(Exact name of registrant as specified in its charter)
 
 
California
0-24395
94-2450490
(State or other jurisdiction
of incorporation)
(Commission
File No.)
(I.R.S. Employer
Identification No.)
400 Valley Drive
Brisbane, CA 94005
(Address of principal executive offices)
Registrant’s telephone number, including area code:
(415) 715-3900


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 





Item 2.02 Results of Operations and Financial Condition
The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. On November 3, 2016 bebe stores, inc. issued a press release reporting its first quarter fiscal year 2017 earnings.
The press release relating to the first quarter fiscal 2017 earnings is attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
 
(d)    Exhibits

99.1.
Press Release dated November 3, 2016.







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 3, 2016.
bebe stores, inc.
 
/s/ Walter Parks
Walter Parks, President, Chief Operating Officer and Interim Chief Financial Officer





Exhibit 99.1
 image0a01a14.jpg
bebe stores, inc.
Announces First Quarter Fiscal Year 2017 Financial Results

First quarter comparable store sales decreased 3.2%
First quarter gross margin increased 260 bps
First quarter loss per share was $0.10


BRISBANE, CA. - November 3, 2016 - bebe stores, inc. (NASDAQ: BEBE) today announced financial results for the fiscal first quarter ended October 1, 2016.

Manny Mashouf, Chief Executive Officer said, “In the first quarter of Fiscal 2017 we continue to see sustainable changes in our business. We ended the quarter with our inventory and SG&A below the prior year and increased our gross margin 260 bps as a result of fewer markdowns and improved leverage on our occupancy. We had a very strong denim and leggings business which we will continue to invest in offset by weakness in non-apparel and evening dresses. We are working to take advantage of the casual trend taking place and believe we can continue to grow our bottoms business while working to improve our tops business as this is where we believe the fashion direction is taking us. While it is important to consistently get the fashion right we are also finding it a challenge to offset the extremely high levels of markdowns and promotions realized in the prior year. We are committed to protecting the brand image, reducing markdowns and improving inventory turns and believe both our short-term and long-term success depend on our ability to execute our strategic plan.”

For the first quarter of fiscal 2017:

Net sales were $87.2 million, a decrease of 9.4% from $96.3 million reported for the first quarter a year ago. Comparable store sales for the quarter ended October 1, 2016, decreased 3.2% compared to a decrease of 4.1% in the comparable period of the prior year.

Gross margin as a percentage of net sales increased to 31.5% compared to 28.9% in the first quarter of fiscal 2016. The increase in margin was primarily the effect of a reduction in markdowns and promotions and leverage on store occupancy cost.

SG&A expenses were $35.7 million, or 40.9% of net sales, compared to $44.9 million, or 46.6% of net sales, for the same period in the prior year. The prior year includes charges for asset impairment severance and other of $4.3 million or 4.3% of sales. The decrease in SG&A expenses was primarily attributable to a reduction in compensation expense reflecting the effects of savings from restructuring activities offset by $0.8 million in asset impairment cost related to stores.

Net loss for the first quarter of fiscal 2017 was $7.8 million, or $0.10 per share, on 80.1 million diluted shares outstanding, compared to a loss of $17.1 million, or $0.22 per share, on 79.7 million diluted shares outstanding for the same period of the prior year.

During the quarter ended October 1, 2016, the Company closed 4 bebe stores.


Balance sheet summary:
Cash and investments at October 1, 2016 were $47.3 million.
As of October 1, 2016, average finished goods inventory per square foot decreased 16.5% compared to the prior year.
Capital expenditures for the fiscal quarter were approximately $0.2 million, and depreciation expense was approximately $4.3 million.
 




Fiscal 2017 guidance:

For the second fiscal quarter the Company believes comparable store sales will be in the low to mid-single digit negative range with gross margin improvement and lower SG&A expense which is consistent with the fiscal first quarter results.  Contributing to the comparable store sales decrease is a reduction in the number and frequency of in-store and on-line promotions and markdowns which is consistent with our strategic initiative to protect the brand image and improve gross margin.  We currently anticipate the reduction in promotions to be consistent throughout the fiscal year.

Finished goods inventory per square foot is anticipated to decrease in the mid-teens for the remained of the fiscal year compared to the prior year as we implement the strategic plan discussed in the fiscal 2016 year ended earnings release.

Total capital expenditures for the year are anticipated to be approximately $6 million for relocation, remodels and information technology systems. Depreciation for the year is anticipated to be approximately $17 million.

For fiscal year 2017, the Company does not plan to open any new store locations and to close up to 28 bebe and outlet stores, which will result in a decrease in total store square footage of approximately 16% from the end of fiscal year 2016.

Forward-Looking Statements

Certain statements in this release are "forward-looking statements" made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and are subject to various risks and uncertainties that may cause actual results to differ materially from those that we expected The statements in this news release, other than the historical financial information, contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ from anticipated results. Wherever used, the words “expect,” “plan,” “anticipate,” “believe” and similar expressions identify forward-looking statements. Any such forward-looking statements are subject to risks and uncertainties and the company's future results of operations could differ materially from historical results or current expectations. Some of these risks include, without limitation, miscalculation of the demand for our products, effective management of our growth, decline in comparable store sales performance, ongoing competitive pressures in the apparel industry, changes in the level of consumer spending or preferences in apparel, loss of key personnel, difficulties in manufacturing, disruption of supply, adverse economic conditions, and/or other factors that may be described in the Company's annual report on Form 10-K and/or other filings with the Securities and Exchange Commission. Future economic and industry trends that could potentially impact revenues and profitability are difficult to predict. We undertake no obligation to publicly update or revise any forward-looking statement. Financial schedules are attached to this release. Additionally, we cannot provide any assurances as to if, or when, Mr. Mashouf or his affiliates may choose to sell shares of the Company’s common stock.

About bebe
Unique, sophisticated and timelessly sexy, bebe emerged as the first contemporary fashion destination in 1976. Today bebe continues to define next-generation chic while staying true to its assertive, provocative origins. Inspired by Shakespeare’s immortal words “To be, or not to be,” the brand is, at its essence, about living, standing out and truly existing. As a global specialty retailer that designs, develops and produces a unique line of women’s apparel and accessories, bebe currently operates 143 retail stores, 38 outlet stores and bebe.com. In addition to its store locations in the United States, Puerto Rico and Canada, bebe also distributes and sells bebe branded product in approximately 100 doors through its licensees in more than 20 countries.

Contact:

bebe stores, inc.
Walter Parks, President, Chief Operating Officer and Interim Chief Financial Officer
415-715-3900





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

 
October 1, 2016
 
October 3, 2015
 
 
 
 
     Assets
 
 
 
 
 
 
 
Cash and equivalents
$
47,278

 
$
26,542

Available for sale securities
—

 
15,454

Inventories, net
28,321

 
34,931

Total current assets
96,048

 
97,108

Available for sale securities
—

 
5,290

Property and equipment, net
67,516

 
89,804

Total assets
167,012

 
196,063

 
 
 
 
     Liabilities and Shareholders' Equity
 
 
 
 
 
 
 
Total current liabilities
$
28,769

 
$
39,524

Total liabilities
45,781

 
61,906

Total shareholders' equity
121,231

 
134,157

Total liabilities and shareholders' equity
167,012

 
196,063










bebe stores, inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands except per share data and store statistics)
 
For the Three Months Ended
 
October 1,
 
 
 
October 3,
 
 
 
2016
 
%
 
2015
 
%
 
 
 
 
 
 
 
 
Net sales
$
87,238

 
100.0
 %
 
$
96,283

 
100.0
 %
Cost of sales, including production and occupancy
59,743

 
68.5
 %
 
68,420

 
71.1
 %
 
 
 
 
 
 
 
 
Gross margin
27,495

 
31.5
 %
 
27,863

 
28.9
 %
Selling, general and administrative expenses
35,720

 
40.9
 %
 
44,890

 
46.6
 %
Operating loss
(8,225
)
 
(9.4
)%
 
(17,027
)
 
(17.7
)%
Interest and other income, net
14

 
—

 
(87
)
 
(0.1
)%
 
 
 
 
 
 
 
 
Loss before tax provision and earnings from equity investment
(8,211
)
 
(9.4
)%
 
(17,114
)
 
(17.8
)%
Income tax provision
17

 
—

 
27

 
—

Earnings in equity method investment
450

 
0.5
 %
 
—

 
—

Net loss
$
(7,778
)
 
(8.9
)%
 
$
(17,141
)
 
(17.8
)%
 
 
 
 
 
 
 
 
Earnings per share amounts;
 
 
 
 
 
 
 
Basic
$
(0.10
)
 

 
$
(0.22
)
 

Diluted
$
(0.10
)
 
 
 
$
(0.22
)
 
 


 

 

 

 
 
 
 
 
 
 
 
Basic weighted average shares outstanding
80,068

 
 
 
79,722

 
 
Diluted weighted average shares outstanding
80,068

 
 
 
79,722

 
 
 
 
 
 
 
 
 
 
Number of stores open at beginning of period
186

 
 
 
201

 
 
Number of stores opened during period
—

 
 
 
1

 
 
Number of stores closed during period
4

 
 
 
1

 
 
Number of stores open at end of period
182

 
 
 
201

 
 


 
 
 

 
 
Number of stores expanded/relocated during period
—

 
 
 
—

 
 
Total square footage at end of period (000's)
710

 
 
 
787

 
 



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