Bebe Stores Inc. plans to close all of its stores by the end of May, according to an April 18 filing with the Securities and Exchange Commission signed Thursday.
The specialty apparel retailer operates 134 retail stores, 34 outlet stores and its website, according to a March press release. Through licensing agreements, in addition to locations in the U.S., Puerto Rico and Canada, the company also distributes and sells bebe branded merchandise in some 75 stores in more than 21 countries.
The company’s financial advisor, Great American Group, LLC, an affiliate of B. Riley & Co., and Tiger Capital Group, LLC will sell all merchandise and inventory in the stores as well as furnishings, trade fixtures, equipment and improvements to property, according to the SEC filing.
In February, bebe was already in the process of shrinking its store base. It closed one store in the second quarter and made plans to close as many 25 bebe and outlet stores in fiscal 2017; Those plans have now expanded to include all stores.
The retailer has been struggling for a while. Second-quarter same-store sales fell 10.5%, compared to a 2.5% decline a year ago, as store traffic improvements were inconsistent and inadequate over the holiday period. For the six months ended Jan. 2, same-store sales decreased 7.4%. Q2 net sales were $101.9 million, a decrease of 16.8% from $122.4 million in the same period last year. Gross margin as a percentage of net sales edged up to 34.4% compared to 34.0% last year, thanks to a reduction in markdowns and promotions.
Bebe, a brand with a solid reputation for chic fashion, hasn’t been the same since the departure of creative director Neda Mashouf, who exited after her 2007 divorce from founder Manny Mashouf, who was president and controlling investor at the time and took over as CEO a little over year ago.
Facing declining mall traffic and other headwinds in the apparel sector, the retailer has also faced pressure from private equity investor Consac LLC, whose president, Ryan Drexler, in 2014 began leaning on bebe to consider a sale or go private, expressing criticism of what he called Manny Mashouf's "questionable" financial holdings. Bebe's fortunes seemed to revive somewhat later that year after naming retail veteran and Jackson Hole Group founder Jim Wigget as CEO, but the company struggled to gain traction, and Wigget stepped down early last year.
Last summer the retailer struck a deal with brand management company Bluestar Alliance to develop its wholesale business abroad, where the retailer retains a higher profile than in the U.S. In his second quarter statement, Mashouf said the retailer’s reduction of expenses helped its bottom line. Still, the small improvements weren't enough to save the retailer's stores. The company hasn't said whether it will continue operations online.
“While we saw improvement in the week before Thanksgiving and the two weeks before Christmas, the results for those three weeks were not sufficient to offset the overall negative traffic trends in the first three weeks of November,” Mashouf said in February.