Bebe Stores, Inc. Announces Second Quarter Earnings

For the third quarter of fiscal 2012, the Company currently anticipates comparable store sales in the mid-single digit range. Depending on actual sales and markdowns the net loss from continuing operations in the current quarter is expected to be lower than the $0.03 per share in the prior year based on 84 million weighted average shares outstanding. The Company is currently anticipating an effective tax rate of 41.0% for fiscal 2012.

For the third quarter of fiscal 2012, the Company is currently planning finished goods inventory to increase in the range of low single digit on a per square foot basis compared to the increase of 16% in the third quarter of fiscal 2011.

bebe stores, inc. will host a conference call today at 1:30 P.M. Pacific Time to discuss second quarter results. Interested parties are invited to listen to the conference by calling 1-866-893-0531. A replay of the call will be available for approximately one week by calling 1-855-859-2056. 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 and 2b bebe brand names. bebe currently operates 251 stores, of which 208 are bebe stores, including the on-line store bebe.com, and 43 are 2b bebe stores, including the on-line store 2bstores.com. These stores are located in the United States, U.S. Virgin Islands, Puerto Rico, Canada and Japan. bebe also distributes and sells bebe branded product through both its licensees in approximately 19 countries.

The statements in this news release and on our recorded message, other than the historical financial information, contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ from anticipated results. Wherever used, the words “expect,” “plan,” “anticipate,” “believe” and similar expressions identify forward-looking statements. Any such forward-looking statements are subject to risks and uncertainties and the company's future results of operations could differ materially from historical results or current expectations. Some of these risks include, without limitation, miscalculation of the demand for our products, effective management of our growth, decline in comparable store sales performance, ongoing competitive pressures in the apparel industry, changes in the level of consumer spending or preferences in apparel, loss of key personnel, difficulties in manufacturing, disruption of supply, adverse economic conditions, and/or other factors that may be described in the company's annual report on Form 10-K and/or other filings with the Securities and Exchange Commission. Future economic and industry trends that could potentially impact revenues and profitability are difficult to predict.

bebe stores, inc. SELECTED BALANCE SHEET DATA (UNAUDITED) (Dollars in thousands)
				December 31					January 1
					2011					2011
Assets
Cash and equivalents				$	119,897				$	119,410
Available for sale securities					87,582					63,165
Inventories, net					30,756					29,989
Total current assets					259,682					245,826
Available for sale securities					64,047					77,158
Property and equipment, net					90,127					92,463
Total assets					448,206					445,718
Liabilities and Shareholders' Equity
Total current liabilities				$	48,042				$	49,912
Total liabilities					87,574					91,371
Total shareholders' equity					360,632					354,347
Total liabilities and shareholders' equity					448,206					445,718

bebe stores, inc. STATEMENTS OF OPERATIONS (UNAUDITED) (Amounts in thousands except per share data and store statistics)
					For the Three Months Ended																		For the Six Months Ended
					31-Dec								1-Jan										31-Dec								1-Jan
						2011			%					2011				%						2011			%					2011					%
Net sales					$	151,987			100.0	%			$	136,209				100.0		%			$	278,259			100.0	%			$	251,465					100.0		%
Cost of sales, including production and occupancy						91,067			59.9					85,743				62.9						166,853			60.0					154,368					61.4
Gross margin						60,920			40.1					50,466				37.1						111,406			40.0					97,097					38.6
Selling, general and administrative expenses						49,927			32.8					47,958				35.3						96,969			34.8					94,303					37.5
Operating income						10,993			7.2					2,508				1.8						14,437			5.2					2,794					1.1
Interest and other income, net						107			0.1					270				0.2						410			0.1					551					0.2
Income from continuing operations before income taxes						11,100			7.3					2,778				2.0						14,847			5.3					3,345					1.3
Income tax provision						4,539			3.0					1,150				0.8						5,932			2.1					1,390					0.5
Income from continuing operations, net of tax						6,561			4.3					1,628				1.2						8,915			3.2					1,955					0.8
Loss from discontinued operations, net of tax						-			-					(4,355	)			(3.2	)					-			-					(5,835	)				(2.3	)
Net income (loss)					$	6,561			4.3	%			$	(2,727	)			(2.0	)	%			$	8,915			3.2	%			$	(3,880	)				(1.5	)	%
Basic per share amounts:
Income from continuing operations, net of tax					$	0.08							$	0.02									$	0.11							$	0.02
Loss from discontinued operations, net of tax						-								(0.05	)									-								(0.07	)
					$	0.08							$	(0.03	)								$	0.11							$	(0.05	)
Diluted per share amounts:
Income from continuing operations, net of tax					$	0.08							$	0.02									$	0.11							$	0.02
Loss from discontinued operations, net of tax						-								(0.05	)									-								(0.07	)
					$	0.08							$	(0.03	)								$	0.11							$	(0.05	)
Basic weighted average shares outstanding						84,190								84,035										84,156								84,385
Diluted weighted average shares outstanding						84,323								84,134										84,284								84,483
Number of stores open at beginning of period						251								276										253								298
Number of stores opened during period						5								2										5								4
Number of stores closed during period						0								25										2								49
Number of stores open at end of period						256								253										256								253
Number of stores expanded/relocated during period						1								-										1								3
Total square footage at end of period (000's)						1,018								1,022										1,018								1,022

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