Womenswear retailer Bebe Stores Inc., said Friday that it would cease all operations of its 2b Bebe lower priced concept stores in an effort to cut costs as part of an ongoing turnaround.
Bebe said exiting the unprofitable business, which sells affordable apparel and accessories for women, would allow it to focus on its core Bebe brand retail, outlet and e-commerce stores. The retailer will close all 16 of its mall-based 2b stores including its online platform, 2bbebe.com, by the end of this fiscal year, July 5, 2014.
The company said it expects the 2b closure to generate pre-tax losses of $5-6 million in fiscal 2014.
Bebe has also begun implementing a cost-cutting intiative and has said it will reduce its non-store workforce by 9 percent and its store operations team by 1 percent, in addition to the cuts resulting from the 2b closure.
The job cuts are expected to result in $4 million in cost savings, and Bebe estimates it will generate roughly $9-10 million in annualized pre-tax savings, starting in fiscal 2015.
Jim Wiggett, Bebe’s interim chief executive officer said, “The steps we are announcing today build on our turnaround efforts from the past year.” He added, “Our objective is to drive long term growth and sustainable profitability. We will also continue to focus on our merchandising, marketing and operational strategies designed to reposition the bebe brand. We thank the affected employees for their efforts and dedication. This is a difficult step, but important to the long term success of our brand. As we prepare for the next fiscal year, we continue to evaluate our cost structure, capital expenditure requirements and dividend payments, and we will remain focused on carefully managing expenses and inventories, as well as preserving our cash.”
Bebe’s net sales for the third quarter ended April 5, 2014 were down 17.2% to $93.5 million. Comparable store sales for the quarter were down 5.7% owed to one fewer retail week in January and the closure of 19 unproductive stores since the prior year third quarter, according to the retailer.
For the fourth quarter, Bebe said it expects comparable store sales to be in the negative low single digit range, and the loss per share to be in the mid-teen range prior to any non-recurring expenses.