As most companies on Wall Street continue talking Q2, fashionista retailer bebe
What analysts say:
- Buy, sell, or waffle? Fifteen analysts track bebe. Buy and hold ratings get seven each, while one analyst says to sell it.
- Revenues. On average, the analysts are looking for 7% sales growth, to $162.4 million.
- Earnings. Meanwhile, profits are predicted to surge 36%, to $0.19 per share.
What management says:
Is my Foolish namesake, Rich Duprey, a soothsayer? It sure looks like it. On Aug. 6, he posited "Dangerous Curves Ahead" for bebe, as the world of fashion slowly realizes that not all women are Twiggy. That there's a reason plus-size offerings at stores like Charming Shoppes
No sooner said than done. On August 9, bebe took its place toward the end of the line of a retail parade headed by positive comps-sporting Wal-Mart
What management does:
Meanwhile, profits earned on those sales have been sagging. For two quarters running, margins have slid at each of the rolling gross, operating, and net levels.
|
12/05 |
4/06 |
7/06 |
9/06 |
12/06 |
4/07 |
|
|---|---|---|---|---|---|---|
|
Gross |
49.6% |
49.6% |
49.5% |
49.8% |
49.0% |
48.5% |
|
Operating |
19.2% |
19.9% |
19.6% |
20.1% |
19.6% |
18.0% |
|
Net |
12.6% |
12.7% |
12.7% |
13.2% |
12.5% |
12.0% |
One Fool says:
What's the problem at bebe? Motley Fool Stock Advisor co-advisor Tom Gardner suggested, in the May semiannual review of all recommendations on his side of the portfolio, that:
Part of the problem seems to be the dissolution of the marriage of Neda Mashouf to bebe chairman and founder Manny Mashouf. Neda was the company's vice chairman and general merchandising manager of design and bebe Sport. As of the last proxy statement, the Mashoufs owned a combined 72.8% of the company. So bebe has lost one of its key designers, and the chairman is distracted by personal matters. Perhaps that is enough to explain the recent fashion missteps that have kept previously happy buyers from finding what they want in the bebe stores.
Even so, Tom notes: "We've followed Manny and his work with this company for a long time, and we have confidence that bebe will regain its touch with customers. It's not easy to predict when a fashion turnaround will come."
(Will the turnaround arrive on Thursday, against all the evidence? To get the inside view on bebe's results, make sure to activate your trial subscription to Stock Advisor today.)
Wal-Mart is a Motley Fool Inside Value recommendation.
Fool contributor Rich Smith does not own shares of any company named above. Disclosure is always in fashion at The Motley Fool.
