It was bad news again for Bebe in the third quarter.
Losses are widening fast at the specialty retailer, which has been in the midst of a turnaround geared at restoring profitability. For the third quarter ended April 2, Bebe said net losses were $30 million—quite a jump from Q2’s $5.5 million, and close to triple the loss in the same period last year.
Net sales fell 13.7% to $79.9 million, down from $92.7 million in the third quarter of 2015, and comparable store sales were down 8.1% owed to declines in traffic and lower international sales. The higher markdowns and promotions seen retail-wide in the period meant gross margin came down to 28.7% from 30.4% in 2015.
So naturally, as has been the trend in retail of late, more store closures are coming.
“During the third quarter, we took significant steps to restructure our operations which included headcount reductions, and the closure of non-productive stores,” Bebe CEO Manny Mashouf, who rejoined the company as CEO in February, said. “Our third quarter results were impacted by the costs we incurred in connection with these efforts.”
Bebe cut 86 corporate positions in the quarter, and the reductions are expected to save the company $9 million annually. The company also closed 12 of its 150 Bebe stores and two of its 38 outlet stores in the period.
“Going into the fourth quarter we are continuing to move forward with our strategy of streamlining the production cycle for our product, improvements to the assortment within each of our stores, further rationalization of the store fleet, and continued focus on discretionary spending,” Mashouf added. “In addition, we are evaluating several different channel expansion opportunities as well as evaluating several potential sources of liquidity through the leveraging of our assets.”
The retailer’s shares were down nearly 31 percent Friday to $0.38.
Bebe said comp sales would be down in the mid to high single digits in the fourth quarter, though the company appears confident about early reads on its spring offering and will invest in increasing inventory roughly 14 percent per square foot as a result.
Two Bebe stores and one outlet store are already on the chopping block for the upcoming quarter, and the retailer anticipates closing up to 40 more stores in 2017, as the losses of those stores combined, over a 12-month period, totaled $5.5 million.