Sweeping Changes in Store for Bebe

Bebe Stores Inc. founder Manny Mashouf announced sweeping changes to his suffering business on May 7 as he presided over his first analyst conference call since coming out of a semi-retirement and reassuming his position of chief executive for the Brisbane, Calif.–based Bebe. The company operates 308 stores across the United States.

“We have not done a good job over the past 18 months,” he said. “It’s no secret.”

Bebe’s same-store sales plummeted 23.5 percent during its third quarter. Its net sales for the quarter were $127.7 million, compared with $151.7 million reported for the same quarter in the previous year. Mashouf took steps to rebuild his company on Jan. 9, when former Chief Executive Gregory Scott left the company and Mashouf assumed his duties.

Mashouf claimed one reason for his company’s problems was that it had veered away from its roots as an outfitter of sexy, fashionable clothes for young women.

In addition to introducing a new merchandising mix to its core brand, Bebe, Mashouf said his company is re-examining price points for Bebe fashions. It planned to keep 15 percent at a high price point and the rest of the store at lower price points. By fall 2009, he also promised a rebranding of Bebe Sport stores and the 2BBebe outlet concept.

Mashouf also named Tara Poseley as the new president of the Bebe Sport division. Since 2007, she has been president of Disney Stores North America (The Children’s Place).

The revamp of 2BBebe will focus on affordable fashion and cheap, chic clothes that will not necessarily carry the Bebe name. Perhaps 10 of the 2BBebe stores will remain outlet stores, Mashouf said.

The company will close underperforming stores and hold off on opening new stores, Mashouf said. Walter Parks, Bebe’s chief financial officer, forecast that same-store sales for the fourth quarter will decline by a percentage in the mid-10s to mid-20s. —Andrew Asch