Shares of Bebe Stores, Inc. (BEBE) surged 18.6% in the after-hours trading session yesterday, after the company announced solid preliminary comparable store sales (comps) data and narrowed its loss per share forecast for the second quarter of fiscal 2015.
Backed by strong growth across all geographies, comps for the quarter ended Jan 3, 2015, jumped roughly 8%, beating the company’s previous guidance of a flat to positive low-single digit range. This, in turn, was driven by better holiday and fall season product offerings at all outlets of the company at greater average unit retail (“AUR”).
The holiday shopping season this year has been an uplifting one for most retailers, with many of them reporting solid combined sales numbers for November and December in 2014. Apart from Bebe, some retailers with solid sales results include Macy's, Inc. (M), American Eagle Outfitters, Inc. (AEO) and Aeropostale, Inc. (ARO).
Coming to Bebe, the company remains impressed with its holiday sales results which also led to improved margins. The company’s strategy of keeping promotions at a subdued level and providing a diverse product assortment at attractive rates fuelled strong momentum at stores and online, even amid a tough consumer traffic scenario.
Following the solid momentum, management of this Zacks Rank #3 (Hold) company revised its net loss per share guidance for the second quarter. The company now expects net loss from continuing operations to come in a low-single digit range. Prior to this, management had projected net loss to be in the low to mid-single digit range.
We believe despite the challenging retail headwinds, encouraging customer response backed sequential growth in Bebe’s results. Also, the company’s inventory position remained impressive as it ended the second quarter, leaving it well placed for the third quarter of fiscal 2015.
The company’s second-quarter fiscal 2015 results are expected to be released on Feb 5, 2015.
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