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bebe stores inc. Reports Operating Results (10-Q)

February 09, 2011 | About:
10qk

10qk

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bebe stores inc. (BEBE) filed Quarterly Report for the period ended 2011-01-01.

Bebe Stores Inc. has a market cap of $495.7 million; its shares were traded at around $6 with and P/S ratio of 0.9. The dividend yield of Bebe Stores Inc. stocks is 1.7%.Hedge Fund Gurus that owns BEBE: Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC. Mutual Fund and Other Gurus that owns BEBE: Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates.

Highlight of Business Operations:

For the six months ended January 1, 2011, net sales from continuing operations increased to $251.5 million from $249.0 million for the comparable period of the prior year, an increase of $2.5 million, or 1.0%. The increase in net sales was primarily driven by a 34.5% increase in wholesale sales to our international licensees.

For the six months ended January 1, 2011, gross margin from continuing operations decreased to $97.1 million from $98.7 million for the comparable period of the prior year, a decrease of $1.6 million, or 1.6%. As a percentage of net sales, gross margin from continuing operations decreased to 38.6% for the six months ended January 1, 2011 from 39.6% in the comparable period of the prior year. The decrease in gross margin as a percentage of net sales was primarily due to decrease in initial mark-up and higher than anticipated markdowns and promotions during December 2010.

Selling, General and Administrative Expenses. Selling, general and administrative expenses from continuing operations increased to $48.0 million during the three months ended January 1, 2011 from $44.0 million for the comparable period of the prior year, an increase of $4.0 million, or 9.0 %. As a percentage of net sales, selling, general and administrative expenses increased to 35.2% during the three months ended January 1, 2011 from 33.4% in the comparable period of the prior year. The increase over the prior year was primarily due to $1.5 million of legal and employment settlement costs and the initial recognition of gift card breakage income in the prior year, which was a $1.1 million reduction to expense versus $0.3 million in the comparable period of the current year.

For the six months ended January 1, 2011, selling, general and administrative expenses from continuing operations increased to $94.3 million from $90.4 million for the comparable period of the prior year, an increase of $3.9 million, or 4.3%. As a percentage of net sales, selling, general and administrative expenses increased to 37.5% from 36.3% in the comparable period of the prior year. The increase over the prior year primarily relates to under-leveraged occupancy costs, $1.5 million in legal and employment settlement costs as well as $1.1 million in store impairment costs in the current year versus $0.6 million in the comparable period of the prior year.

For the six months ended January 1, 2011, our effective tax rate from continuing operations decreased to 41.6% from 52.9% for the comparable period for the prior year. The higher tax rate in the prior year was primarily due to several discrete items recorded in the year related to adjustments to stock options compensation expense and adjustments of temporary and permanent items.

We hold a variety of interest bearing ARS consisting of federally insured student loan backed securities and insured municipal authority bonds. As of January 1, 2011, our ARS portfolio totaled approximately $77.2 million classified as available for sale securities. As of that date, our ARS portfolio included approximately 96% federally insured student loan backed securities and 4% municipal authority bonds and consisted of approximately 38% AAA rated investments, 6% AA rated investments, 30% A rated investments, 6% BBB rated investments and 20% CCC rated investments. As of July 3, 2010, our ARS portfolio consisted of 47% AAA rated investments, 5% AA rated investments, 33% A rated investments, 5% BBB rated investments and 10% CCC rated investments. These ARS investments are intended to provide liquidity via an auction process that resets the applicable interest rate at predetermined calendar intervals, allowing investors to either roll over their holdings or gain immediate liquidity by selling such interests at par. The uncertainties in the credit markets that began in February 2008 have affected our holdings in ARS investments

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