Women's wear retailer Bebe Stores Inc has posted a 10% drop in fourth-quarter profit fell and reduced its outlook for fiscal first quarter.

For the three months to 7 July, net earnings slipped to $19.7m from $21.9m for the same period of the prior year. Diluted earnings per share were down 8.7% to $0.21 from $0.23.

Net sales for the quarter rose 6.9% to $162.7m from $152.2m, while same store sales dropped 5.7% compared to an increase of 3.5% in the prior year.

Gross margin as a percentage of net sales fell to 48.1% from 50.5% last time, due to higher markdowns and unfavourable occupancy leverage partially offset by higher initial markup.

For the fiscal year, net earnings increased 4.7% to $77.3m from $73.8m for the fiscal year ended July 1, 2006. Diluted earnings per share rose to $0.81 from $0.79.

Net sales for the fiscal year were $670.9m, up 15.9% from $579.1m reported for the previous year. Same store sales increased 2.9% compared to an increase of 6.1% in the previous 12 months.

During the fiscal year, the company opened 36 stores, including 20 Bebe stores, 15 Bebe Sport stores and 1 accessories store. It currently operates 274 stores, of which 198 are Bebe stores, 20 are Bebe Outlet stores, 55 are Bebe Sport stores and 1 is a Bebe Accessories store.

For the first quarter of fiscal 2008, the Bebe expects same-store sales will be in the negative mid to high single digit range compared to a positive 12.8% in the first quarter of the prior year.

Earnings per share are forecast in the range of $0.15 to $0.19 versus $0.22 per share in the first quarter of fiscal 2007.