Higher product clearance promotions drove down gross margin in the first fiscal quarter ended October 27, 2014, at women's apparel retailer and NASDAQ listed, Bebe Stores.
Bebe Stores said gross margin from continuing operations as a percentage of net sales fell to 32.1% in the first quarter of fiscal 2015 from 36.3% in the corresponding fiscal quarter of 2014.
"Although we saw improvement from the previous quarter, the reduction in margin was higher, due to planned promotional activity to clear aged products,, Bebe Stores said.
Primarily as a result of store closures, net sales from continuing operations were down 6.5% to $102.2 million in the reporting quarter, versus $109.3 million in the first quarter of fiscal 2014.
However, the first quarter of fiscal 2015 marked the first quarter of positive comparable store sales since fiscal 2012, when it rose 0.7% compared to a decline of 3.0%, in the same period of prior fiscal year.
Reduction in advertising expenses and other cost cutting measures helped Bebe cut SG&A expenses to $42.1 million, or 41.2% of net sales, down from $47.8 million or 43.8% of net sales for the comparable quarter of fiscal 2014.
Net loss from continuing operations for the quarter under review rose higher to $9.0 million, or $0.11 per share, on 79.6 million shares outstanding, which compares unfavourably with net loss of $7.9 million, or $0.10 per share, on 79.1 million shares outstanding.
Cash and investments at the end of October 4, 2014 were $93.3 million, which the retailer attributed to timing of payments, including the restructuring and lease settlement payments made for discontinued operations.
As of October 4, 2014, average finished goods inventory per square foot rose around 4.6% from a year ago and capital expenditures and depreciation expense from continuing operations, totalled $6.8 million and $3.9 million, respectively.
For the second quarter of fiscal 2015, Bebe Stores forecasts comparable store sales to be in the flat to low single digit positive range and expects gross margin to be slightly higher than the prior year quarter.
It anticipates finished goods inventory per square foot to increase in the mid to high teens range in the second quarter of fiscal 2015, from same quarter of fiscal 2014, primarily from floor set planning for the calendar year 2015.
Total capital expenditures for the year are anticipated to be approximately $16 million for new stores, remodels and information technology systems.
The retailer plans to open four bebe stores and two outlet stores, and close up to 12 bebe and outlet stores in fiscal 2015, which will result in around 2% decline in total store square footage from fiscal 2014.
Meanwhile, its Board of Directors declared a quarterly cash dividend of $0.015 per share, which is payable on December 18, 2014 to shareholders of record at the close of business on December 4, 2014.
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