Women's clothing chain Bebe Stores Inc on Thursday warned it will fail to meet its third quarter earnings target amid a slump in same-store sales, heavy markdowns and rising manufacturing costs.

The California-based operator of 176 stores in the US and Canada said in a statement it now sees earnings per share for the quarter of between three cents and five cents per share, down from 16 cents a year ago.

It added it also expects same-store sales to slide in the low to mid-teens on a percentage basis.

CFO John Kyees said: "Sales have been negatively impacted by a lack of balance in our assortment and lean inventory levels. While gross margin is currently higher than the prior year, the margin is lower than our plans due to higher markdowns and higher manufacturing costs."