bebe stores Q4 FY'13 sales down 9.4%

For the fourth quarter of fiscal 2013:

Net sales were $119.2 million, a decrease of 9.4% from $131.5 million reported for the fourth quarter a year ago. As previously reported, comparable store sales for the quarter ended July 6, 2013, decreased 7.1% compared to a decrease of 2.5% in the comparable period of the prior year.

Gross margin as a percentage of net sales decreased to 30.6% compared to 40.2% in the fourth quarter of fiscal 2012. The decrease in gross margin was primarily due to the increase in markdowns coupled with unfavorable occupancy leverage. Gross profit included $1.9 million in reserves for inventory and fabric under the legacy strategy. Excluding the additional reserves, gross margin for the fourth quarter was 32.2%.

SG&A expenses were $57.8 million, or 48.5% of net sales, compared to $47.5 million, or 36.1% of net sales, for the same period in the prior year. The increase in SG&A expenses was primarily attributable to current quarter store impairment and closure charges of $5.5 million, costs related to executive transitions of $2.6 million, settlement related expenses of $1.4 million, and rebranding agency costs of $0.7 million. The comparable period of the prior year included $1.7 million of incentive compensation and $0.3 million in store impairment and closure costs.

Net loss for the fourth quarter of fiscal 2013 was $20.8 million, or $0.26 per share, on 79.0 million shares outstanding compared to net income of $3.0 million, or $0.04 per share, on 84.4 million diluted shares outstanding for the same period of the prior year.

Excluding the aforementioned $10.1 million in transitional and/or incremental SG&A costs, net loss for the fourth quarter of fiscal 2013 was $10.7 million, or $0.14 per share, compared to the previously provided guidance of low to mid-teens. Note that such loss reflects the continuing impact of maintaining a valuation allowance against deferred tax assets and thus our effective tax rate approximates 0%.

During the quarter ended July 6, 2013, the Company closed three bebe stores and one 2b bebe store.

Steve Birkhold, Chief Executive Officer, commented, “Fiscal 2013 was a transformational year for the Company, marked by changes in leadership, strategic direction and brand positioning. During this period, we took necessary action to move through legacy merchandise which led to significant sales and gross margin pressure in the second half of the year.

“While we continue to clear through legacy merchandise in the first fiscal quarter of 2014 in order to ensure a clean inventory position as we enter the fall/holiday selling season, we also began to introduce product that reflects our new merchandising strategy and we were highly encouraged by the strong response.

"In addition, we have recently launched our new marketing campaign and completed our website redesign, which garnered favorable reactions from our customers. Looking ahead, we will continue to execute our transitional focuses in branding and product as we move toward a recovery and future long-term sustainable growth.”

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