Exhibit 99.1
Contact: Walter Parks |
| Chief Operating Officer |
| bebe stores, inc. |
| (415) 715-3900 |
bebe stores, inc.
Announces Second Quarter Earnings of $0.26 per share versus $0.26
in the Prior Year
BRISBANE, CALIF. — January 31, 2008 — bebe stores, inc. (NASDAQ:BEBE) today announced unaudited financial results for the second quarter ended January 5, 2008.
Net sales for the second quarter of fiscal 2008 were $203.3 million, up 3.3% from $196.8 million reported for the second quarter a year ago. As previously reported, same store sales for the quarter ended January 5, 2008 decreased 7.9% compared to an increase of 5.5% in the prior year.
Gross margin as a percentage of net sales decreased to 46.2% in the second quarter of fiscal 2008, compared to 47.9% in the second quarter of fiscal 2007. The decrease in gross margin as a percentage of net sales from the prior year of 1.7% was primarily due to higher markdowns and unfavorable occupancy leverage partially offset by a reduction in raw material reserves.
SG&A expenses for the second quarter of fiscal 2008 were $62.8 million, or 30.9% of net sales, compared to $58.9 million, or 30.0% of net sales for the same period of the prior year. The increase in SG&A expenses as a percent of sales is primarily due to higher total compensation expense as a result of timing differences associated with stock based compensation and the recording of a small provision for bonuses in the current year verses a reversal of the bonus accrual in the prior year partially offset by lower advertising.
Operating income for the second quarter of fiscal 2008 was $31.2 million or 15.3% of net sales, compared to $35.4 million or 17.9% of net sales for the same period of the prior year. Net earnings for the second quarter were $23.4 million compared to $24.3 million for the same period of the prior year. Diluted earnings per share for the second quarter were $0.26 versus $0.26 per share in the same period of fiscal 2007.
The effective tax rate for the second quarter of fiscal 2008 decreased to 33.8% from 35.9% in the second quarter of fiscal 2007 primarily due to an increase in tax free interest income as a percent of total pretax income and an increase in our allowable domestic manufacturing deduction during the current year.
Net sales for the year-to-date period ended January 5, 2008 were $364.4 million, up 3.0% from $353.9 million for the year-to-date period ended December 30, 2006. Same store sales for the year-to-date period ended January 5, 2008 decreased 8.5% compared to an increase of 8.6% in the prior year.
Net earnings for the year-to-date period ended January 5, 2008 were $38.7 million compared to $44.7 million in the prior year. Diluted earnings per share for the year-to-date period ended January 5, 2008 were $0.42 compared to $0.47 per share in the prior year.
During the quarter ended January 5, 2008, the Company opened eleven stores, including six bebe stores and five BEBE SPORT stores and expanded one existing bebe store resulting in total square footage growth of 4%.
For the year-to-date period the Company’s capital expenditures were approximately $18 million and depreciation expense was approximately $10.8 million.
For the third quarter of fiscal 2008, the Company anticipates comparable store sales will be in the negative mid-single digit range and earnings per share will be in the range of $0.08 to $0.12 per share based on 91 million diluted weighted average shares outstanding, which reflect the reduction of 5 million shares repurchased in the first fiscal quarter, versus $0.14 per share based on 95 million diluted weighted average shares outstanding in the third quarter of fiscal 2007, which includes fourteen weeks or approximately $.02 of net earnings per share associated with the
extra week in January. The Company is currently anticipating an effective tax rate of 35.0% for the third quarter of fiscal 2008.
For the third quarter of fiscal 2008, the Company is currently planning finished goods inventory to be down on a per square foot basis compared to the third quarter of fiscal 2007 in the low to mid-single digit range.
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 (888) 889-5848. A replay of the call will be available for approximately one week by calling (866) 393-0872. 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, COLLECTION bebe, BEBE SPORT, bbsp and bebe O brand names. bebe currently operates 286 stores, of which 204 are bebe stores, 20 are bebe outlet stores, 61 are BEBE SPORT 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.
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)
| | January 5, | | December 30, | |
| | 2008 | | 2006 | |
Assets | | | | | |
| | | | | |
Cash and equivalents | | $ | 69,395 | | $ | 67,461 | |
Short-term marketable securities | | 296,050 | | 314,467 | |
Inventories, net | | 46,242 | | 46,343 | |
Total current assets | | 439,823 | | 450,859 | |
Property and equipment, net | | 123,611 | | 102,557 | |
Total assets | | $ | 592,886 | | $ | 571,295 | |
| | | | | |
Liabilities and Shareholders’ Equity | | | | | |
| | | | | |
Total current liabilities | | $ | 66,486 | | $ | 71,389 | |
Total liabilities | | 115,323 | | 108,247 | |
Total shareholders’ equity | | 477,563 | | 463,048 | |
Total liabilities and shareholders’ equity | | $ | 592,886 | | $ | 571,295 | |
bebe stores, inc.
STATEMENTS OF OPERATIONS
(UNAUDITED)
(Amounts in thousands except per share data and store statistics)
| | For the Quarter Ended | | For the Year-to-Date Ended | |
| | Jan. 5, | | | | Dec. 30, | | | | Jan. 5, | | | | Dec. 30, | | | |
| | 2008 | | % | | 2006 | | % | | 2008 | | % | | 2006 | | % | |
| | | | | | | | | | | | | | | | | |
Net sales | | $ | 203,329 | | 100.0 | % | $ | 196,802 | | 100.0 | % | $ | 364,411 | | 100.0 | % | $ | 353,861 | | 100.0 | % |
Cost of sales, including production and occupancy | | 109,328 | | 53.8 | | 102,457 | | 52.1 | | 193,896 | | 53.2 | | 180,229 | | 50.9 | |
| | | | | | | | | | | | | | | | | |
Gross margin | | 94,001 | | 46.2 | | 94,345 | | 47.9 | | 170,515 | | 46.8 | | 173,632 | | 49.1 | |
Selling, general and administrative expenses | | 62,755 | | 30.9 | | 58,948 | | 30.0 | | 118,935 | | 32.6 | | 109,239 | | 30.9 | |
| | | | | | | | | | | | | | | | | |
Operating income | | 31,246 | | 15.3 | | 35,397 | | 17.9 | | 51,580 | | 14.2 | | 64,393 | | 18.2 | |
Interest and other income, net | | 4,058 | | 2.0 | | 2,497 | | 1.3 | | 7,753 | | 2.1 | | 5,670 | | 1.6 | |
| | | | | | | | | | | | | | | | | |
Income before income taxes | | 35,304 | | 17.3 | | 37,894 | | 19.2 | | 59,333 | | 16.3 | | 70,063 | | 19.8 | |
Income tax provision | | 11,936 | | 5.9 | | 13,621 | | 6.9 | | 20,587 | | 5.6 | | 25,363 | | 7.2 | |
| | | | | | | | | | | | | | | | | |
Net earnings | | $ | 23,368 | | 11.4 | % | $ | 24,273 | | 12.3 | % | $ | 38,746 | | 10.7 | % | $ | 44,700 | | 12.6 | % |
| | | | | | | | | | | | | | | | | |
Basic earnings per share | | $ | 0.26 | | | | $ | 0.26 | | | | $ | 0.43 | | | | $ | 0.48 | | | |
Diluted earnings per share | | $ | 0.26 | | | | $ | 0.26 | | | | $ | 0.42 | | | | $ | 0.47 | | | |
| | | | | | | | | | | | | | | | | |
Basic weighted average shares outstanding | | 88,712 | | | | 92,833 | | | | 90,697 | | | | 92,406 | | | |
Diluted weighted average shares outstanding | | 90,167 | | | | 95,184 | | | | 92,173 | | | | 94,835 | | | |
| | | | | | | | | | | | | | | | | |
Number of stores open at beginning of period | | 279 | | | | 248 | | | | 273 | | | | 242 | | | |
Number of stores opened during period | | 11 | | | | 10 | | | | 17 | | | | 16 | | | |
Number of stores closed during period | | 0 | | | | 0 | | | | 0 | | | | 0 | | | |
Number of stores open at end of period | | 290 | | | | 258 | | | | 290 | | | | 258 | | | |
| | | | | | | | | | | | | | | | | |
Number of stores expanded/relocated during period(*) | | 1 | | | | 2 | | | | 2 | | | | 4 | | | |
| | | | | | | | | | | | | | | | | |
Total square footage at end of period (000’s) | | 1,051 | | | | 937 | | | | 1,051 | | | | 937 | | | |
* Expanded/Relocated stores are excluded from comparable store sales for the first year following expansion/relocation.
###
