Wa-ah! What's that sound?
Congratulations, Dad. It's a bouncing bebe (NASDAQ:BEBE)! If you want to check on this clothing retailer's fiscal Q3 2006 health, you're welcome to visit it in the nursery, any time tomorrow after market-close.
What analysts say:
- Buy, sell, or waffle? A baker's dozen of analysts follow bebe, with ratings breaking down as follows: eight buys, four holds, and a sell.
- Revenues. Analysts will be looking for news of a 15% increase in sales, year over year. $134.2 million is the target.
- Earnings. Profits are expected to come in even higher, up 17% to $0.14 per share.
What management says:
In bebe's most recent 8-K filing with the SEC, reporting on March and fiscal Q3 sales, CEO Greg Scott pronounced himself "pleased" with the company's 12.3% rise in sales, supported by a 4.1% increase in same-store sales. He noted that in the fiscal third quarter as a whole, the company did even better, growing total sales 13.2% and same-store sales 4.7%.
At first glance, March's numbers suggest a slowdown in sales growth from the pace set during the early part of the quarter. On the other hand, most of the quarter's growth came in January, and the March results are at least considerably better than the 9.2% sales growth and 1.6% comps growth we saw in February. However, it's worrisome that inventories (per square foot of retail space) grew about 14% year over year -- a bit faster than sales growth.
What management does:
Based on the above numbers, March finished off bebe's hopes of meeting analyst sales estimates for the quarter. Assuming the total sales already stated are confirmed tomorrow, bebe will have managed just $131.1 million in sales, and fallen more than 2% short of analyst targets.
The good news? bebe's doing quite well at milking the sales it does make for greater profits. Over the last 18 months, its gross margin has risen an impressive 200 basis points. And on the bottom line, bebe's 26% more profitable today than it was a year and a half ago.
|
Margins % |
10/04 |
1/05 |
4/05 |
7/05 |
10/05 |
12/05 |
|---|---|---|---|---|---|---|
|
Gross |
47.6 |
48.8 |
48.7 |
49.6 |
49.8 |
49.6 |
|
Op. |
15.6 |
17.9 |
18.5 |
20 |
19.6 |
19.1 |
|
Net |
10 |
11.5 |
11.9 |
13 |
12.9 |
12.6 |
The Fool says:
At the Motley Fool's flagship investing newsletter, Stock Advisor, we don't just recommend a stock and forget it. We constantly monitor each and every active recommendation, updating our members on the companies' progress. This is what Stock Advisor coanalyst Tom Gardner had to say about bebe's recent news: "bebe stores is up about 11% on the heels of its very positive March monthly sales report.. This is a company with an outstanding history of rewarding shareholders, and while the recent results may be a surprise to the market, they're not news to those who have been following the company."
Tom further advised our subscribers to expect a fair amount of volatility in this stock, since the market tends to overreact to monthly sales reports -- both positive and negative -- from retailers like bebe. If you're interested in reading the full update and receiving coverage on all the recommendations of Stock Advisor, click here to get a free 30-day guest pass.
Competitors:
- Abercrombie & Fitch (NYSE:ANF)
- Aeropostale (NYSE:ARO)
- AnnTaylor (NYSE:ANN)
- Guess? (NYSE:GES)
- Wet Seal (NASDAQ:WTSLA)
- Target (NYSE:TGT)
Fool contributor Rich Smith does not own shares of any company named above.
