Ahead of the Bell: Bebe

Analyst cuts FY profit prediction for Bebe citing expected drop in key 1st-qtr sales figure

Associated Press

NEW YORK (AP) -- A Wedbush analyst on Thursday cut her earnings estimates for Bebe Stores Inc., saying that she expects the women's clothing retailer to report a drop in a key sales metric for the fiscal first-quarter.

Analyst Betty Chen predicted that for the quarter ending in September, Bebe will post a 6 to 8 percent decrease in revenue at stores open at least a year. In comparison, the company posted a same-store sales increase of 7 percent for the same quarter last year.

The metric is a key measure of a retailer's health, because it excludes revenue from stores that recently opened or closed.

"We believe the company continues to lose market share to other fast fashion retailers as well as softlines peers, especially given stale promotional messages that are losing resonance with target shoppers as cited by our retail specialists," Chen wrote in a note to investors.

Chen backed her "Neutral" rating for Bebe, but cut her full-year profit prediction for the company to 7 cents per share from 12 cents per share. Analysts, on average, expect a profit of 6 cents per share, according to a FactSet poll.

Chen added that while select woven tops and bottoms, along with work-to-wear styles, have sold well, demand for its knit tops hasn't been as strong.

Bebe shares finished at $4.97 per share on Wednesday after falling to a 52-week low of $4.94 earlier in the session.

Separately on Thursday, Chen backed her "Neutral" rating for teen clothing retailer Zumiez Inc., predicting a better-than-expected 3 to 5 percent increase in September revenue at stores open at least a year.

Zumiez shares finished at $27.35 on Wednesday. They are down 35 percent from a 52-week high of $41.96 per share on June 19. They traded as low as $15.85 almost year ago.

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