bebe stores, inc. (NASDAQ:BEBE) today announced unaudited financial results for the fiscal second quarter ended January 4, 2014.
For the second quarter of fiscal 2014:
Net sales were $130.0 million, a decrease of 4.1% from $135.5 million reported for the second quarter a year ago. Comparable store sales for the quarter ended January 4, 2014 decreased 1.9% compared to a decrease of 2.8% in the first quarter of fiscal 2014. The sequential improvement in sales was driven by improvement in both traffic and conversion.
Gross margin decreased to 33.6% compared to 33.9% in the second quarter of fiscal 2013. The decrease in gross margin was primarily due to an increase in markdowns to clear through legacy products as well as heightened promotional activities throughout the holiday season.SG&A expenses were $49.3 million, or 37.9% of net sales, compared to $53.4 million, or 39.4% of net sales, for the same period in the prior year. The SG&A expenses in the second quarter of fiscal 2014 reflect planned increases in advertising expenses, decreases in contractor and professional fees costs, as well as benefited from a $0.5 million legal settlement. Net loss for the second quarter of fiscal 2014 was $5.5 million, or $0.07 per share, on 79.1 million shares outstanding compared to net loss of $4.8 million, or $0.06 per share, on 84.1 million shares outstanding for the same period of the prior year. Note that the fiscal 2014 net loss also reflects the continuing impact of maintaining a valuation allowance against deferred tax assets and thus our effective tax rate approximates 0%. During the quarter ended January 4, 2014, the Company closed two bebe stores and one 2b bebe store. Steve Birkhold, Chief Executive Officer, commented, “We are encouraged by the sequential improvement we experienced in the second quarter, especially during Black Friday weekend and the month of December. December continued the sequential improvement with positive comparable store sales, as we saw a favorable response to the new merchandise and an increase in traffic, despite declining mall traffic and an aggressive promotional environment across the industry. We believe that the strong messaging in our marketing campaigns connected with our customer and contributed to the improvement in traffic. We also successfully cleared through the vast majority of legacy merchandise, ending the quarter with inventory per square foot down nearly 7%. That said, the retail environment remains challenging, and we will continue to operate with disciplined inventory management and cost controls. Overall, we believe we are entering the spring season with an enhanced merchandise assortment supported by a lean inventory position. Looking ahead, we remain focused on executing our Six Strategic initiatives to move our business forward and anticipate continued improvement in comparable store sales and margin performance. Again, I would like to thank our shareholders for their support as we continue our work to transform the business and focus on sustainable growth for the long term.”