Contemporary women's retailer Bebe Stores' earnings fell in its third quarter, along with its same-store sales and gross margins, but results did manage to exceed consensus estimates.

The firm also issued fourth-quarter guidance below the current analysts' projection.

In the three months ended 7 April, net income fell 2.8% to US$12.9m, or $0.14 a diluted share, from $13.3m, also $0.14, in the prior-year quarter. Anaysts had expected the Brisbane, California-based company to earn $0.13 a share.

Net sales were up 16.2% to $154.4m from $132.8m while same-store sales, as previously noted, fell 0.4%, after the exclusion of an extra week in the current year.

Gross margin fell to 45.3% of sales from 46.9% in the 2006 quarter. The company said that lower than expected sales, higher markdowns and unfavourable occupancy leverage served to reduce margins, which were lifted slightly by lower inventory reserves.

In the fourth quarter, Bebe expected same-store sales to fall in the mid- to low-single digit range and earnings per share to finish between $0.17 and $0.21. The current consensus estimates is $0.25 and the year-ago result was $0.23.

For the first nine months of the year, net income rose 11.1% to $57.6m, or $0.61 a diluted share, from $51.9m, or $0.55. Net sales were up 19.1% to $508.2m from $426.9m.

Bebe currently operates 262 stores, 190 of them under the Bebe banner, 20 as Bebe outlets, 51 under the Bebe Sport nameplate and one as Bebe Accessories store.
By Arnold J Karr.