Bebe Stores, Inc. is scheduled to release its Q4 2010 results after the market closes on August 26, 2010.For the fourth quarter of fiscal 2010, the Company currently anticipates that comparable store sales will be in the mid single digit negative to mid single digit positive range and depending on actual sales and markdowns the net earnings will be in the range of $(0.02) to $0.04 per share based on 86.1 million diluted weighted average shares outstanding versus a net loss of $(0.00) per share based on 86.7 million diluted weighted average shares outstanding in the fourth quarter of fiscal 2009. The Company is currently anticipating an effective tax rate of 45.0% for fiscal 2010, withplanning finished goods inventory to be down on a per square foot basis compared to the fourth quarter of fiscal 2009 in the low teens. In addition, we anticipate the Company's capital expenditures will be under $17.0 million for the fiscal year.
Bebe Stores designs, develops and produces a distinctive line of contemporary women''s apparel and accessories. They market their products under the bebe, bebe moda and bbsp brand names through their retail stores located in Canada and the United Kingdom. Their broad product offering includes suits, tops, pants, skirts, dresses, logo and other activewear, outerwear, and handbags and other accessories. Bebe Stores design and develop most of the merchandise in-house.
As for the Q3 of 2010, net sales were $114.4 million, down 10.4% from $127.7 million reported for the third quarter a year ago. As previously reported, comparable store sales for the quarter ended April 3, 2010 decreased 11.2% compared to a decrease of 23.5% in the prior year. Operating loss for the third quarter of fiscal 2010 was $7.8 million or 6.8% of net sales, compared to an operating loss of $8.5 million or 6.7% of net sales for the same period of the prior year. Net loss for the third quarter was $5.5 million compared to $5.0 million for the same period of the prior year. Diluted loss per share for the third quarter was $0.06 and was flat to the prior year after taking into account the non-cash stock based compensation adjustment. Gross margin as a percentage of net sales increased to 38.8% in the third quarter of fiscal 2010, compared to 37.8% in the third quarter of fiscal 2009. SG&A expenses for the third quarter of fiscal 2010 were $52.1 million, or 45.6% of net sales, compared to $56.8 million, or 44.5% of net sales for the same period of the prior year. The effective tax rate for the third quarter of fiscal 2010 decreased to 26.2% from 35.3% in the third quarter of fiscal 2009 primarily due to incentive stock option compensation expense offset by higher tax exempt interest income as a percent of taxable income.
Analysts' estimates for Q4 2010 range from a low of-$0.02 to a high of $0.02, compared to a consensus estimate of $0.01, with number of estimates being 7and the co-efficient variance 221.01. Clothing retailer bebe stores has reported comparable store sales for the fourth quarter ended July 3, 2010 decreased 3.4% compared to a decrease of 29.6% for the corresponding period of 2009. Sales for the fourth quarter of fiscal 2010 were $119.2 million, compared to $124.6 million for the fourth quarter of fiscal 2009, a decrease of 4.4%. Comparable store sales for the year-to-date period ended July 3, 2010 decreased 17.1% compared to a decrease of 20.9% for the year-to-date period ended July 4, 2009. Sales for the year-to-date period of fiscal 2010 were $481.7 million, compared to $580.3 million for the year-to-date period of fiscal 2009, a decrease of 17%.
On July 30, bebe stores, inc. announced that its Board of Directors declared a one-time cash dividend of $1.00 per share.The dividend is payable on July 30, 2010 to shareholders of record at the close of business on July 21, 2010. The ex-dividend date is July 19, 2010.
On August 6, bebe stores, inc. introduced bebe SHEER, a new fragrance complementing the distinctive ‘bebe look' that incorporates timeless quality and style with an unmistakable hint of sensuality.
We are encouraged to see gross margins beginning to turn and early indications that comps are beginning to stabilize (yet again-with comps now trending up MSD for May). In addition, a revamp of the product line including the limited edition Kardashian merchandise continues to make new sell-through records. We believe additional focus on key items such as logo'd merchandise and improved fit profiles will continue to help the overall trend of business.
In addition, the company continues to face the compounded pressure of figuring out the 2B Bebe and to PH8 concepts as the company attempts to preserve the core Bebe brand equity-which could very much be distractions in the near term.
With relatively high sales productivity of ~$500 psf compared to the industry average of ~$400 psf (although significantly below bebe's ~$850 just a few years ago), the new comp trend in the positive low-single-digit level will help the company begin to get some leverage on the company's fixed costs. Furthermore, should the company be able to maintain a better full-priced selling cadence, margins should begin to inflect-we note that every 100bp of comp translates to $0.04-0.06 of EPS on an annualized basis.
In addition, the company is expected to end its fiscal year with over $335 million in cash and investments ($3.85 per share) and no debt; the company maintains a sizeable balance sheet which amounts to nearly 50% of the company's market cap.
The stock closed at $5.92, up 1.02% on August 24, 2010 and most analysts' recommend holding the stock with an average price target of $9.10.
