Bebe Stores, Inc. (BEBE) seems to be derailing as its shares have plunged 12.2% since it posted dismal fourth-quarter fiscal 2014 results. Moreover, this Zacks Rank #4 (Sell) stock hit a 52-week low of $2.48 yesterday, before closing at $2.51 and plunging 53.3% year to date.
Bebe has been losing momentum owing to intense promotional headwinds, a tough retail environment and higher operating costs. Also, the company recently closed its 2b division completely, as the brand was a financial burden, weighing significantly on its sales.
In its last reported quarter, Bebe’s loss per share from continuing operations came in at 30 cents, wider than both the prior-year quarter figure and the Zacks Consensus Estimate of a loss of 20 cents.
Further, net sales of this women’s clothing and accessories designer fell 8.7% to $103.6 million and missed the Zacks Consensus Estimate of $106 million. The decline was a result of store closures leading to slow traffic, coupled with a 1.9% decline in the company’s quarterly comparable store sales.
Additionally, the company’s selling, general and administrative expenses, as a percentage of sales, expanded 820 basis points to 54.2%, on account of higher advertising costs and costs associated with corporate restructuring, store closures, impairment and CEO transition.
Following these shortfalls, the Zacks Consensus loss estimates for both fiscal 2015 and 2016 have widened significantly over the past 30 days, from 40 to 59 cents and 3 to 39 cents per share, respectively. This is likely to further reduce investors’ confidence in the stock.
Although the company has been disappointing lately, it has undertaken several initiatives for brand development, delivery of operational efficiencies and cash savings to enhance shareholder value.
Further, it plans to retain its commitment toward efficient inventory management, cost cutting and investments in projects which require less capital and generate more revenues. With these efforts underway, Bebe hopes to boost sales and enhance margins.
Better-ranked stocks in the apparel-shoe industry include Citi Trends, Inc. (CTRN), Christopher & Banks Corp. (CBK) and Finish Line Inc. (FINL), each carrying a Zacks Rank #1 (Strong Buy).
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