Bebe Stores, Inc. Announces First Quarter Fiscal Year 2017 Financial Results

bebe stores, inc. (NASDAQ:BEBE) today announced financial results for the fiscal first quarter ended October 1, 2016.

Manny Mashouf, Chief Executive Officer said, "In the first quarter of Fiscal 2017 we continue to see sustainable changes in our business. We ended the quarter with our inventory and SG&A below the prior year and increased our gross margin 260 bps as a result of fewer markdowns and improved leverage on our occupancy. We had a very strong denim and leggings business which we will continue to invest in offset by weakness in non-apparel and evening dresses. We are working to take advantage of the casual trend taking place and believe we can continue to grow our bottoms business while working to improve our tops business as this is where we believe the fashion direction is taking us. While it is important to consistently get the fashion right we are also finding it a challenge to offset the extremely high levels of markdowns and promotions realized in the prior year. We are committed to protecting the brand image, reducing markdowns and improving inventory turns and believe both our short-term and long-term success depend on our ability to execute our strategic plan."

For the first quarter of fiscal 2017:

Net sales were $87.2 million, a decrease of 9.4% from $96.3 million reported for the first quarter a year ago. Comparable store sales for the quarter ended October 1, 2016, decreased 3.2% compared to a decrease of 4.1% in the comparable period of the prior year.

Gross margin as a percentage of net sales increased to 31.5% compared to 28.9% in the first quarter of fiscal 2016. The increase in margin was primarily the effect of a reduction in markdowns and promotions and leverage on store occupancy cost.

SG&A expenses were $35.7 million, or 40.9% of net sales, compared to $44.9 million, or 46.6% of net sales, for the same period in the prior year. The prior year includes charges for asset impairment severance and other of $4.3 million or 4.3% of sales. The decrease in SG&A expenses was primarily attributable to a reduction in compensation expense reflecting the effects of savings from restructuring activities offset by $0.8 million in asset impairment cost related to stores.

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