LOS ANGELES, Sept. 5, 2014 /PRNewswire/ — bebe stores, inc. investor Ryan Drexler said today that while he was heartened that the ailing retailer had made progress, however slow, in playing “catch up” with its competitors, he sees little in the way that is new and innovative in the brand’s retailing and merchandising.
“The company I believe is playing “catch up” at best,” Mr. Drexler said. “I believe that they need to be investing much more aggressively and gearing up much more quickly to keep pace with the competition, not to mention get out in front of it. What’s new at bebe today, is “old hat” at many of its peer group stores.”
Mr. Drexler said that he believed the company could better invest the cash to be used to pay out its fourth quarter dividend and its annual payments in excess of $500,000 to SKID LLC, of which bebe founder and chairman Manny Mashouf is president, for consulting services to the bebe Board.
bebe last week declared a quarterly dividend of $0.015 per share, for a total cash use of $1.2 million. bebe subsequently announced on September 4, 2014 a net loss of $24.2 million for the fourth quarter and of $59.3 million for fiscal year 2014, its eighth consecutive quarter of net losses.
“This says to me and, I believe, other public shareholders that Manny Mashouf and the Board deem it more important to pay themselves than to invest more aggressively in shoring up the company’s sagging fundamentals,” Mr. Drexler said. “Of the $7.1 million to be paid out in dividends in fiscal 2014, approximately $4.2 million will go to insiders, almost exclusively to Mr. Mashouf.”
Mr. Drexler is president of Consac LLC, which holds approximately 2.7 million shares of bebe’s common stock. Manny Mashouf controls in excess of 53 percent of the outstanding shares.
“Having successfully run and sold a company of this size, I know the level of investment, both in financial resources and management expertise, required to implement a workable turnaround strategy,” Mr. Drexler continued. “Improvements in merchandising, marketing and operations require sustainable levels of capital, and I don’t see that happening here in any meaningful way, despite the company’s public statements to the contrary.”
In a prior separate letter addressed to the Board and Mr. Mashouf, Mr. Drexler said, “I believe the company needs to explore possibilities for maximizing shareholder value, including a sale of the company, whether to a third party or through a going private transaction.” He appealed to both to immediately explore the possibilities available to the Board in creating sustainable value for all investors.