bebe, Wake Up From Your Nap

Things have been tough for retailer bebe stores (Nasdaq: BEBE  ) here lately, and it looks like its first quarter was no exception.

bebe's comps dropped 9.3% in the first quarter, and while that's up against an impressive 12.8% rise this time last year, it's still not good news for investors who have been waiting for bebe to get back on track. According to the company's pre-recorded sales call, comps were negative in all its regions for all three months of the quarter, with the best showing in the southeast. Average dollar sales decreased 3%, units per transaction slipped 1%, and transactions fell 7%.

The retailer's total sales increased 1.3% to $158.5 million in the quarter, and it also revealed that inventory per square foot decreased 7% on a year-over-year basis. The company plans to release its full profit data on Nov. 1.  

Misery loves company; the truth is, many retailers reported disappointing September comps, blaming some combination of unseasonably warm weather and nervous consumers. Bear in mind, though, bebe no longer reports its sales data on a monthly basis, which is why we're getting its entire first-quarter view today, and that data makes it clear bebe has work to do to get its apparel back in its customers' good graces.

When it comes to bebe's direct rivals, it's hard to find details on how they're doing at this moment -- Guess? (NYSE: GES  ) didn't report September sales figures, Limited (NYSE: LTD  ) sold a majority interest in its Express brand, and BCGB is a private company.

bebe has had a heck of a time in 2007, with a 40% decrease in its stock price over the past year. The advent of the troubles seemed to coincide with the departure of key employee Neda Mashouf, who had a hand in design and merchandising.

Of course, bebe probably sounds tantalizing for bargain-hunting investors who aren't afraid of temporary difficulties. The stock's trading at only 14 times forward earnings (it's expected to generate 23% earnings growth over the next year) and has a PEG ratio of just 0.96. (For related analysis, see my Foolish colleague David Meier's retail scavenger hunt in August.) For those who see bebe's problems as fixable, the current price presents quite a value.