bebe stores, inc. today announced unaudited financial results for the first quarter ended October 3, 2009.

Net sales for the quarter ended October 3, 2009 were $125.7 million versus $163.3 million reported for the quarter ended October 4, 2009. Sales decreased 23.0% compared to the corresponding quarter in the prior year. Same store sales for the quarter ended October 3, 2009 decreased 25.7% compared to a decrease of 10.8% for the prior year quarter.

Gross margin as a percentage of net sales decreased to 36.7% in the first quarter of fiscal 2010, compared to 44.9% in the first quarter of fiscal 2009. The decrease in gross margin as a percentage of net sales from the prior year of 8.2% was primarily due to unfavorable occupancy leverage and higher markdowns partially offset by a decrease in other costs.

SG&A expenses for the first quarter of fiscal 2010 were $53.0 million, or 42.2% of net sales, compared to $59.2 million, or 36.2% of net sales for the same period of the prior year. The decrease in SG&A expense is primarily due to lower compensation and advertising expense offset by an increase in depreciation expense and $1.7 million in asset impairment charges related to underperforming stores.

The effective tax rate for the first quarter of fiscal 2010 decreased to 28.1% from 34.8% in the first quarter of fiscal 2009 primarily due to an increase in tax exempt interest income as a percent of taxable income, and a change in the tax treatment related to our stock option exchange in which incentive stock options that were exchanged were converted to non-qualified stock options offset by other discrete adjustments recorded during the quarter.

Net loss for the first quarter was $4.2 million compared to net income of $11.2 million for the same period in the prior year. Diluted loss per share for the first quarter of fiscal 2010 was $0.05 on 86.8 million diluted weighted average shares outstanding compared to net income of $0.12 per share on 90 million diluted weighted average shares outstanding for the first quarter of fiscal 2009.

During the quarter ended October 3, 2009, the Company opened two bebe stores, closed one bebe store, one SPORT store and one 2b bebe store resulting in a reduction of total square footage of less than 1%.

For the first quarter ended October 3, 2009 the Company’s capital expenditures were approximately $3.1 million and depreciation expense was approximately $7.0 million.

Similar to the first fiscal quarter and based on current business, we anticipate fiscal 2010 second quarter comparable stores sales will be less negative than the incoming trend and depending on actual markdowns earnings per share will be in the range of $0.00 to $0.05 per share based on 87 million diluted weighted average shares outstanding versus $0.08 per share based on 89 million diluted weighted average shares outstanding in the second quarter of fiscal 2009. The Company is currently anticipating an effective tax rate of 40.0% for the second quarter of fiscal 2010.

For the second quarter of fiscal 2010, the Company is currently planning finished goods inventory to be down on a per square foot basis compared to the second quarter of fiscal 2009 in the mid to high teens.

bebe stores, inc. will host a conference call today at 1:30 P.M. Pacific Time to discuss first quarter results. Interested parties are invited to listen to the conference by calling 1-866-893-1531. A replay of the call will be available for approximately one week by calling 1-800-642-1687. A link to the audio replay will be available on our web site at www.bebe.com following the conference call.

bebe stores, inc. designs, develops and produces a distinctive line of contemporary women’s apparel and accessories, which it markets under the bebe, BEBE SPORT, bbsp, 2b bebe and PH8 brand names. bebe currently operates 307 stores, of which 212 are bebe stores, 61 are BEBE SPORT stores, 33 are 2b bebe stores and 1 is a bebe accessories store. These stores are located in the United States, U.S. Virgin Islands, Puerto Rico and Canada. In addition, there is an online store at www.bebe.com.

bebe stores, inc.

SELECTED BALANCE SHEET DATA

(UNAUDITED)

(Dollars in thousands)

 
  October 3,   October 4,
  2009   2008
Assets
 
Cash and equivalents $ 80,710 $ 119,565
Available for sale securities 38,477 -
Trading securities 69,460 -
Auction rate securities written put option 12,106 -
Inventories, net 36,483 49,312
Total current assets 283,433 207,674
Property and equipment, net 120,187 137,022
Available for sale securities 120,431 228,155
Total assets $ 554,959 $ 601,704
 
Liabilities and Shareholders' Equity
 
Total current liabilities $ 48,608 $ 63,121
Total liabilities 96,647 114,258
Total shareholders' equity 458,312 487,446
Total liabilities and shareholders' equity $ 554,959 $ 601,704

bebe stores, inc.

STATEMENTS OF OPERATIONS

(UNAUDITED)

(Amounts in thousands except per share data and store statistics)

 
  For the Quarter Ended
Oct. 3   Oct. 4  
  2009   %     2008 %
 
Net sales $ 125,659 100.0 % $ 163,260 100.0 %
Cost of sales, including production and occupancy   79,498   63.3     89,958 55.1
 
Gross margin 46,161 36.7 73,302 44.9
Selling, general and administrative expenses   53,022   42.2     59,155 36.2
 
Operating income (loss) (6,861 ) (5.5 ) 14,147 8.7
Interest and other income, net   1,042   0.8     3,030 1.9
 
Income (loss) before income taxes (5,819 ) (4.6 ) 17,177 10.6
Income tax provision (benefit)   (1,637 ) (1.3 )   5,972 3.7
 
Net income (loss) $ (4,182 ) (3.3 ) % $ 11,205 6.9 %
 
Basic (loss) income per share $ (0.05 ) $ 0.13
Diluted (loss) income per share $ (0.05 ) $ 0.12
 
Basic weighted average shares outstanding 86,766 88,962
Diluted weighted average shares outstanding 86,766 90,038
 
 
Number of stores open at beginning of period 308 303
Number of stores opened during period 2 5
Number of stores closed during period 3 1
Number of stores open at end of period 307 307
 
Number of stores expanded/relocated during period(1) 0 1
 
Total square footage at end of period (000's) 1,155 1,143
 

(1) Expanded/Relocated stores are excluded from comparable store sales for the first year following expansion/relocation.

 
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