So much for it being the year of the dress, at least for bebe stores
Comparable same-store sales for the month of June declined 5.4%, compared to the same period a year ago. What makes this even more disheartening is that the numbers for June 2006 were not all that spectacular either, with comps up on only 3.5%.
Net sales did move into positive territory, rising by 7.6%, but this is due to its aggressive store-opening strategy. It has opened 36 stores already in the year, giving it a year-to-date total of 198 bebe stores.
My greatest concern with bebe's latest performance is that its specialty is the dress category, the very merchandise that nearly every other apparel retailer is claiming great success in this year. Polo Ralph Lauren
We will not have more details until the company's fourth-quarter earnings conference call that is scheduled for August, but we can speculate that one of several issues, or a combination thereof, are involved. It could be that bebe hasn't quite got its inventory management system up to speed, which can cause it to be too light on top-selling categories and have an overabundance on unwanted merchandise. This is not an uncommon problem, particularly for younger, fast-growing retailers such as this one. The issue could also be that customers simply do not like the designs of bebe's merchandise right now. My colleague Alyce Lomax pointed to this problem in an earlier analysis.
Whatever the problem is, I agree that oftentimes these are temporary pains that can turn into extended gains. bebe has struggled as of late, but this is still a young, fast-growing concept that just happens to specialize in what many anticipate will be an important apparel category for some time.
For prospective investors, I would be looking at the current weakness as an opportunity to take a much closer look at bebe stores.
bebe stores is a Motley Fool Stock Advisor selection. Try a free 30-day trial of it and other Motley Fool newsletters today.
Fool contributor Jeremy MacNealy has no financial interest in any company mentioned. The Motley Fool has a disclosure policy.
More from The Motley Fool
Why bebe stores, Tower Group International, and Rayonier Hit New Lows Today
These three stocks fell below their worst levels of the year Monday. Find out why.
Monday's Top Upgrades (and Downgrades)
Analysts shift stance on FedEx, Allegheny Tech, and bebe.
Why Bebe Stores, Arctic Cat, and Puma Biotechnology Tumbled Today
Stocks were generally higher today, with major-market benchmarks hitting new record levels. Find out why these companies missed out.