It hasn't been a good time for the retail industry at large, but it hasn't been a good time for bebe stores (Nasdaq: BEBE) for even longer, and these issues pre-date the current economic firestorm. The latest shoe to drop is that CEO Gregory Scott has abruptly resigned.
The company's press release says that as of Jan. 9, Scott had left the retailer "in order to pursue other interests," which is the generic explanation used by so many companies in these types of circumstances. It was a short and cursory announcement, although Scott has been CEO since 2004, and has an even longer history at bebe than that. Although he temporarily left the company for stints at Liz Claiborne (NYSE: LIZ) and Wet Seal (Nasdaq: WTSLA), he was also vice president of merchandising at bebe from 1996-2000, so he certainly had some tenure.
Chairman and founder Manny Mashouf will take on the role of CEO.
Needless to say, the abrupt nature of Scott's departure is enough to raise eyebrows, especially since it occurred at the same time the retailer cut earnings expectations for the fiscal second quarter, and December same-store sales plunged 20.1%.
The tough economy has hit many retailers hard, and we are starting to see some change-ups in high places. For example, Borders Group (NYSE: BGP) has shaken up management ranks recently, and last week Chico's FAS (NYSE: CHS) announced a replacement after long-standing CEO Scott Edmonds retired.
The ex-CEOs at both Borders and Chico's arguably presided over major troubles in these companies (although admittedly, Edmonds was also at Chico's when the retailer was still a high-growth company and stock). Given the poor economy and the many companies that are now suffering, it seems pretty reasonable to expect that we will see many CEO departures.
As far as bebe goes, its turnaround has been a long time coming. Some might wonder if putting the founder back at the helm might help turn this retailer around, and that can be a legitimate theory. However, for my own part, I'd rather look for stocks where the companies are already doing things right, and leave alone ones like bebe that have long been struggling to turn around their businesses.
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