• Q1 loss narrows to $1.2m from $4.2m
  • Net sales down 2.4% to $117.9m
  • Gross margin rose to 39.1% of sales

Women’s fashion retailer Bebe Stores Inc has narrowed its first quarter loss after lower markdowns helped offset falling sales, but says second quarter margins are unlikely to rise due to higher costs on imports from China.

The company posted a net loss of $1.2m or $0.01 a share, in the three months to 2 October, compared with a loss of $4.2m or $0.05 a share, last year.

Net sales were $117.9m, a drop of 2.4% on the $120.8m posted in last year’s quarter. Comparable store sales were down 4.7%.

Gross margin from continuing operations rose to 39.1% of sales, up from 36.1% a year ago, helped by higher merchandise margins as a result of lower markdowns.

The company, which operates 276 stores under names including Bebe, Bebe Sport and 2b Bebe, is in the process of shuttering its PH8 stores.

It expects second quarter same-store sales in the flat to low single digit positive range, and earnings from continuing operations in the range of $0.02 to $0.06 per share. This is lower than the $0.09 per share booked a year earlier.