Same-store sales for June were a mixed bag, with some retailers stumbling a bit, like Gap
Overall sales at bebe increased 11.9% to $56.6 million, and same-store sales increased 3.5% in June. Modest, yes, but bear in mind bebe's same-store sales had increased a whopping 34.2% at the same time last year. That's a pretty tough comparison, so the retailer deserves some credit for keeping the upward momentum going.
Shares of bebe have been on a rollercoaster ride of late. Tom Gardner recommended bebe for Motley Fool Stock Advisor back in February, explaining that he had previously owned the stock, sold it as a six-bagger when its price soared and he felt it no longer justified its valuation (he still liked the company, but not the price), and then recommended it for subscribers when it dropped back down to reasonable levels again (about the level it trades at now). Bear in mind that back in April, bebe's quarterly earnings were good -- but the market didn't deem them good enough, and the stock's still treading water.
Part of bebe's investment thesis is that it sports a strong balance sheet, with plenty of cash, no debt, and double-digit margins. To further sweeten the deal, it's arguable that bebe has a sustainable competitive advantage, a very important note in retail -- sexy clothes for young, body-conscious professional women. What it doesn't have much of is direct competition, although bebe's 10-K filing names a few contenders: Guess
Retail investing has been nerve-racking lately, given major fashion shifts and the media's blaring headlines about consumers' increasingly constrained spending abilities. That may be a lot of short-term noise for those of us who are focused on the long term, but it has managed to knock quite a few retailers off once-high peaks, and it seems here lately performance, good or bad, is often tempered or compounded by pessimism. It's definitely a time to exercise caution, in retail in particular.
That said, it's also a prudent time to do some research, identify quality companies, and pick up stocks at bargain prices. And given its attractive attributes, bebe seems like an interesting stock to consider putting on the shopping list.
For related Foolish commentary, see the following articles:
- Are some retailers embarking on a dangerous trend?
- In April, bebe had a bumpy ride.
- Flash back to bebe in January as well.
Alyce Lomax does not own shares of any of the companies mentioned.