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bebe stores announces second quarter earnings
04
Feb '11
bebe stores inc announced unaudited financial results for the second quarter ended January 1, 2011. In the second quarter of fiscal 2011, the Company closed the remaining 25 PH8 stores, with the entire PH8 division results being presented as discontinued operations for all periods herein.

Net sales from continuing operations for the second quarter of fiscal 2011 were $136.2 million, up 3.3% from $131.9 million reported for the second quarter a year ago. As previously reported, comparable store sales for the quarter ended January 1, 2011 were flat compared to a decrease of 22.5% in the prior year.

Gross margin from continuing operations as a percentage of net sales decreased to 37.1% in the second quarter of fiscal 2011, compared to 40.9% in the second quarter of fiscal 2010. The decrease in gross margin as a percentage of net sales from the prior year of 3.8% was primarily due to a decrease in initial mark-up and higher than anticipated mark-downs and promotions during December.

SG&A expenses from continuing operations for the second quarter of fiscal 2011 were $48.0 million, or 35.2% of net sales, compared to $44.0 million, or 33.4% of net sales for the same period of the prior year. SG&A expenses in the current quarter included $1.5 million of legal and employment settlement costs and $1.0 million of impairment charges and store closure costs. As a result of these charges, the current quarter's EPS was reduced by approximately $0.02 net of income taxes.

The effective tax rate for the second quarter of fiscal 2011 was 41.4% compared to 36.1% in the second quarter of fiscal 2010. The low tax rate in the prior year second quarter was primarily due to various discrete items in the areas of depreciation and stock option adjustments.

Operating income from continuing operations for the second quarter of fiscal 2011 was $2.5 million or 1.8% of net sales, compared to $9.9 million or 7.5% of net sales for the same period of the prior year. During the quarter the company had net earnings from continuing operations of $1.6 million or $0.02 per share on 84.1 million diluted shares outstanding compared to $6.9 million or $0.08 per share on 86.8 million diluted shares outstanding for the same period of the prior year.

Net loss from discontinued operations for the second quarter of fiscal 2011 was $4.4 million or $0.05 per share on 84.1 million diluted shares outstanding, compared to a net loss of $4.4 million or $0.05 per share on 86.8 million diluted shares outstanding in the prior year fiscal second quarter. The Company expensed $2.2 million as expected future liabilities of the discontinued operations, which included a provision of $1.9 million related to lease termination costs.

Net sales from continuing operations for the year-to-date period ended January 1, 2011 were $251.5 million, up 1.0% from $249.0 million for the year-to-date period ended January 2, 2010. Comparable store sales for the year-to-date period ended January 1, 2011 decreased 2.3% compared to a decrease of 24.1% in the prior year.


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