Brisbane, Calif. – Bebe Stores Inc. will exit its 2b business by July 5, which is the end of the company’s fiscal 2014. The retailer says this will allow it to increase its focus on the core Bebe brand’s retail and outlet stores, e-commerce and international licensing business.
The 16 2b mall-based stores, including e-commerce business are expected to generate pre-tax losses of approximately $5 million-$6 million in fiscal 2014, excluding impairment charges. Bebe has also begun the implementation of a cost reduction program that will target both direct and indirect spending across the organization. This includes plans to reduce corporate and field management positions, in addition to workforce reductions from closing 2b stores.
The workforce reduction impacted approximately 9% of the company's non-store employees, excluding the distribution center, and less than 1% of its store operations team. Employees affected by the workforce reduction have been provided severance. Bebe expects to achieve approximately $4 million in cost savings in fiscal 2015, while pre-tax severance costs are approximately $3 million during fiscal 2014.
Bebe has lost more than 40% of its value in the past year, and former CEO Steve Birkhold left the company June 12. In its most recent fiscal quarter, Bebe reported a shrinking net loss as well as declining net sales. The retailer expects to report negative same-store sales growth during the fourth quarter of fiscal 2014.
"The steps we are announcing today build on our turnaround efforts from the past year," said Jim Wiggett, interim CEO. "Through the closing of our unprofitable 2b brand, and the cost reduction program, we will be better positioned financially and structurally to focus on our core Bebe brand. 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."