• Q2 net sales fell 16.8% to US$101.9m, from $122.4m
  • Comparable store sales slipped 10.5%
  • Gross margin increased 40 basis points

Declining mall traffic continued to weigh on US women's wear retailer Bebe Stores in the second quarter, as it booked a loss of US$5.2m and a 16.8% slump in sales.

For the three months to 31 December, net sales fell 16.8% to US$101.9m, compared to $122.4m in the year-ago period. Comparable store sales also slipped, down 10.5% compared to a decrease of 2.5% last time.

Net loss for quarter was almost flat with last year's loss of $5.5m, although gross margin edged up by 40 basis points to 34.4% from 34%, mainly due to a reduction in markdowns and promotions.

The company says it will continue to invest in its "very strong" denim and leggings business and will work to take advantage of the casual trend while improving its tops business.  

"In the second quarter of fiscal 2017 we reacted to sales and traffic trends below the incoming trends of the fiscal first quarter and the month of October," said CEO Manny Mashouf. "While we saw improvement in the week before Thanksgiving and the two weeks before Christmas, the results for those three weeks were not sufficient to offset the overall negative traffic trends in the first three weeks of November.

However, he added: "Consistent with the prior quarter we continue to find it challenging to offset the extremely high levels of markdowns and promotions realised in the prior year."

For the full year, the company expects finished goods inventory per square foot to fall, and says it is reducing the number and frequency of in-store and on-line promotions and markdowns in a bid to protect brand image and improve gross margin.