Women's fashion and apparel chain bebe stores
Revenue for the quarter grew by 8.3% at $132.2 million from $122.1 million a year ago. Earnings more than doubled to $4.7 million or $0.06 per share compared with $2 million or $0.02 per share last year.
Gross margin, however, slid slightly to 41.1% from 42.2% last year. This was because bebe, like its competitors such as Guess?
bebe tried to win back clientele favor and correct fashion missteps. The California-based company used celebrity endorsements to promote its brands. Plus, it did away with its underperforming PH8 line. Consequently, same-store sales, an important measure of retail health, grew a healthy 7% this quarter.
The company has 212 bebe stores, 39 2b branded stores, and 1 online store. It plans to open 2 new bebe locations and seven new 2b stores in the new fiscal year. With an eye on international wholesale penetration, it is expected to increase its international licenses to 30 stand-alone stores and 30 shop-in-shops. Although the company is somewhat cautious with its first-quarter outlook, it has shown significant growth. Moreover, return on equity increased to 5.4% from 2% last year, and the company has no debt on its books.
The Foolish bottom line
bebe has shown good top-line and bottom-line growth in an inflation-struck apparel industry. The company has a strong balance sheet and a good growth strategy in place. Even with the management lowering its outlook for the next quarter, this company looks cheap for the long run. Fools looking for a long-term investment should take note.
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Navjot Kaur does not own any shares in the companies mentioned in this article. The Motley Fool owns shares of Guess? and Gap. Motley Fool newsletter services have recommended writing covered calls in Guess?. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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