• Q1 loss of $17.1m versus $10.8m
  • Sales down 5.7% to $96.3m
  • Gross margin falls to 28.9%
Bebe Stores saw its net loss deepen

Bebe Stores saw its net loss deepen

US women's wear retailer Bebe Stores has seen its first-quarter loss widen, with sales and margins falling on a combination of poor product acceptance, inventory cancellations and higher markdowns. 

The company's net loss amounted to US$17.1m for the three months to 3 October, compared to a loss of $10.8m in the same period a year ago. This included a loss from discontinued operations of $1.8m. 

Sales declined 5.7% to $96.3m from $102.2m last year, while comparable store sales fell 4.1%. Gross margin dropped to 28.9% from 32.1%, primarily due to the effect of higher markdowns taken during the quarter compared to last year, coupled with occupancy deleverage. 

“Our first quarter performance reflects the continuation of a challenging retail environment in addition to soft sell-through in our Boho collection,” said CEO Jim Wiggett. “This led to an increase in our promotional activity as well as higher markdowns resulting in reduced gross margin.”

For the second quarter, the company expects to post a net loss per share of $0.06-0.12, comparable store sales to be in the negative high single digit range, and gross margin to be “slightly lower” than the prior year. 

The retailer has already reorganised its design and merchandising organisations into product teams in order to strengthen its focus on collections, and Wiggett added: “Looking ahead, we will continue to evolve the merchandise assortment and enhance our marketing programmes to accelerate the pace of our turnaround.”

Bebe plans to reduce the size of its store base in North America, and close up to 30 stores in fiscal 2016.