Bebe Faces Second Lawsuit, President Exits
Bebe Stores’ surprise announcement of the resignation of its president and chief operating officer, John Parros, may not be such a shocker after all.
The terse press release issued May 28 by the Brisbane, Calif.-based contemporary women’s retailer said Parros “decided to pursue other opportunities.”
However, analysts say there may have been little breathing room for Parros, who oversaw merchandising and licensing and reported to chairman and chief executive officer Manny Mashouf. Widely known as the merchandising eye of the company, Mashouf has witnessed several recent executive shifts at the company. In the last few months, the company has brought on board a new chief financial officer, John Kyees, and a new vice president of stores, Pat McGahan. Head designer Monah Li resigned last December.
“Perhaps there’s not enough room for two,” said Liz Pierce, a retail analyst at Wedbush Morgan Securities in Los Angeles. “It’s fair to speculate that the organization isn’t geared to have someone in addition to John.... He wanted greater responsibility and I’m not sure it was there for the taking.”
Parros, who previously held executive positions with Macy’s and Saks Inc., helped Bebe beef up its design team and shorten its production cycle. Bebe officials have not named a successor but said they will evaluate the position. In the meantime, Mashouf and Bebe’s general merchandise manager, Kathy Lee, will fill in the position.
Like a number of retailers, the 163-store chain has had a tough spring, announcing a 12.4 percent decline in April same-store sales. Pierce blames tight inventories—down 31 percent on a per-store basis for the third quarter ending March 31—for missed sales opportunities.
“We’re in a hot fashion cycle and they should be capitalizing on it,” she said.
In addition, the move of the company’s product and design team to Los Angeles has had a bumpy start. More than 25 people have been hired to fill the new offices since a number of Northern California employees didn’t relocate, creating coordination difficulties.
“It’s inevitable to have issues with a new learning curve,” Pierce said.
Separately, Bebe is the target of its second labor lawsuit in six months. The suit, filed May 23 by six garment workers in Los Angeles, alleges minimum-wage violations and abusive working conditions at a Bebe contractor, the S&W Manufacture Inc. factory in El Monte, Calif. The workers, employed from 1998 to 2001, claim their pay stubs were falsified to show hourly rates for their actual piece-rate work and are seeking back wages.
“It seems that it’s an increasing trend to disguise wage abuses and we’re seeking injunctive relief to stop these practices,” said Julie Su, an attorney with the Asian Pacific American Legal Center, which is representing the workers.
Bebe officials say they hope to meet in the next few weeks with the center’s representatives to discuss the case.
“The meeting will resolve hopefully what pay employees have not received,” said Jeff Kapor, an attorney representing Bebe. “We’d like to find out how much specifically they weren’t paid.”
Kapor said Bebe’s first lawsuit is still pending. —Nola Sarkisian-Miller
