Bebo is a social networking website launched in July 2005. It is currently owned by Criterion Capital Partners.
The website's name is an acronym for Blog Early, Blog Often.[4] Users receive a personal profile page where they can post blogs, photographs, music, videos and questionnaires to which other users may answer. Additionally, users may add others as friends and send them messages, and update their personal profiles to notify friends about themselves.[1]
Bebo was founded by Michael Birch and his wife Xochi Birch in January 2005 at their home in San Francisco.[1]
It was acquired by AOL on March 13, 2008 for $850 million.[5][6] In April 2010, AOL announced it was planning to sell or shut down Bebo,[7] with the sale being completed on June 17, 2010 to Criterion Capital Partners for an undisclosed sum.[8] It has been reported that the sale raised less than $10 million.[9]

Bebe Stores, Inc. (NASDAQ: BEBE) produces and sells clothing and accessories to women between 21 and 35 years of age who follow the latest fashion trends. BEBE competes with other medium-upper luxury women's apparel chains such as Guess? and Express.

Manufacturing costs are increasing for retail companies that produce their goods in China, which bebe is attempting to avoid by manufacturing its goods in other countries, such as Brazil and Italy. In addition, recessionary fears in the United States have led consumers to be more conservative with their spending, which the company is trying to account for by offering less trendy, more traditional items that it believes its clientèle will want to buy.

Company Overview

Bebe produces and sells its own line of contemporary women's apparel. Its target demographic is women between the ages of 21 and 35 who follow fashion trends. Bebe markets its products under a number of different brands.

Business Financials
As a whole, fiscal 2010 was a down year for BEBE. The firm saw decreased sales in each quarter, with sales decreasing 23% in the first half of the year.[1] In response to sluggish performance, BEBE plans to cut compensation by $2.1 million for the fiscal year.[2]

Fiscal Year 2010 Performance (ended July 3rd, 2010)
First Quarter: Net sales decreased 23% for the quarter, from $163.3 million in Q1 fiscal 2009 to $125.7 million.[1] Comparable store sales decreased 25.7% for the quarter and online sales decreased 16.6% for the quarter, both due to lower store traffic.[1] BEBE posted an operating income loss of $6.86 million, compared to a gain of $14.15 million in Q1 fiscal 2009.[1] BEBE posted a net income loss of $4.18 million, compared to a gain of $11.21 million in Q1 fiscal 2009.[1]
Contents
1 Company Overview
1.1 Business Financials
1.1.1 Fiscal Year 2010 Performance (ended July 3rd, 2010)
1.1.2 Q1 Fiscal 2011 (ended October 2nd, 2010).
1.2 Business Segments
1.2.1 bebe
1.2.2 bebe design lab
1.2.3 bebe SPORT
1.2.4 bebe.com
2 Trends and Forces
2.1 International Expansion is Big Business for bebe
2.2 Economic Uncertainty Leads bebe to be More Cautious about Product Offerings
2.3 Rising Manufacturing Costs
3 Competition
4 References
Second Quarter: Net sales were $141.5 million, a 22.2% decreased compared to Q2 fiscal 2009.[3] Due to harsh macroeconomic conditions, comparable store sales decreased 22.5% and online sales decreased 12.1%.[3] Operating income decreased by more than 50% for the quarter, from $8.66 million in Q2 fiscal 2009 to $4.11 million.[3] Net income decreased 64% for the quarter, from $6.80 million in Q2 fiscal 2009 to $2.44 million.[3]
Third Quarter: BEBE reported retail sales of $106.8 million -- a 12.5% decrease from Q3 FY 2009.[4] The mid-luxury women's retail firm is still struggling from harsh economic conditions in 2008-2009, as it's sales per store figures have dropped 11.2% and 23.5% in the past two third quarters, respectively.[4] BEBE had a net income loss in the quarter of $5.471 million -- a 4.8% decline from Q3 FY 2010.[2]
Fourth Quarter: Net sales decreased 2.1% compared to Q4 fiscal 2009, from $130.2 million to $127.4 million.[5] The firm reduced Selling, General & Administrative Expenses (SG&A) by 1.5%.[5] BEBE reported net income of $2.0 million, compared to a $0.3 million loss in Q4 fiscal 2009.[5]
Q1 Fiscal 2011 (ended October 2nd, 2010).
BEBE posted net sales of $117.9 million, a 2.4% decrease compared to Q1 fiscal 2010.[6] Comparable store sales also decreased 4.7% compared to Q1 fiscal 2010.[6]
Despite decreased sales, BEBE was able to improve performance by cutting operating losses, from a $3.94 million loss in Q1 fiscal 2010 to a $1.41 million loss.[6]
BEBE occured a net loss of $1.15 million, compared to a net loss of $4.18 million in Q1 fiscal 2010.[6]
During the quarter, BEBE closed 24 stores and opened two new stores due to expectations of lower business.[6]

Financial Metrics[7] FY2006 FY2007 FY2008 FY2009 FY2010
Net Sales ($MM) $579.1 $670.9 $687.6 $603.0 $509.0
Net Income ($MM) $73.8 $77.3 $63.1 $12.6 ($5.2)
Number of Stores 242 273 303 308 297
Sales per Store Change 6.1% 2.9% (7.6%) (20.9%) (12.5%)
Operating Margin 18.0% 15.7% 11.5% 1.6% 2.0%
Note: BEBE's fiscal year ends on July 4th of that calendar year.

Business Segments
BEBE operates with one business segment; within this business segment, BEBE has bebe, BEBESPORT, bbsp, and 2b bebe brand names.[8]


bebe
bebe is the company's main product line. It provides clothing for a number of different occasions, such as suits, coats, blazeres, sweaters and dresses.[9] Bebe has its own team of designers that use the latest fashion trends as inspiration for its own collection.[10] On August 4th, 2010, BEBE CEO Manny Mashouf announced Emelia Fabricant as the new President of bebe stores, inc.[11]

bebe design lab
bebe design lab (formerly COLLECTION bebe) features collections by designers outside the bebe design team. This line provides new products that are different from the bebe product line, but are still meant for the same demographic.[12]

bebe SPORT
bebe SPORT sells athletic gear (track pants, jackets, shorts) in addition to jeans, dresses, t-shirts, bags, and shoes.[13]

bebe.com
bebe.com is the company's website. It sells bebe and bebe SPORT merchandise, and serves as a medium for the company to communicate with its customers.[14]

Bebe has been expanding its mainline and sport product lines in the past three years, while keeping the number of outlets relatively steady. Bebe also opened its first (and so far, only) accessories store in 2007, and has plans to expand its international presence from 14 to 22 stores in the next fiscal year. The company plans to open stores in Saudi Arabia, Egypt, Kuwait, Russia, Ukraine, Romania and Mexico. Bebe is almost doubling its international presence, demonstrating the company is optimistic about international expansion given total international sales rose by 163% during the first half of fiscal year 2008. [15]

Trends and Forces

International Expansion is Big Business for bebe
Since 2008, bebe has made a strong effort to expand its global business model. International sales increased by 163% during the first half of fiscal year 2008,[16] with BEBE continuing to see international revenue growth in 2009 and the first half of 2010.[5] The strong 2008 growth was attributed to a stable economy in the United Arab Emirates and an especially profitable year for Israel's economy-it grew 5.4% in 2007, the fastest pace since 2000.[17] Bebe has stores in UAE, Israel, Thailand, Singapore, Malaysia and Indonesia, and plans to open even more stores to exploit its international success. The strength of the international market is one of the factors that have bolstered revenues despite less than stellar performance of the core Bebe product line in the North American market.[18] In fiscal 2009, BEBE had 33 international stores -- including locations in the Middle East, Asia Pacific, and Mexico.[19] The retailer plans to increase the international store number to 54 in 2010.[19]

Economic Uncertainty Leads bebe to be More Cautious about Product Offerings
Due to the general uneasiness concerning the economy, many consumers are unsure of their financial security and thus have started spending less money on unnecessary items, which has led to lower sales for many retail companies. In response to this development, bebe--which usually provides merchandise that is up-to-date with the latest trends--has decided to decrease the number of "fashionable" items with unproven viability that it offers and instead focus on selling only those products that have proven to sell well and have a limited risk of being marked down. In other words, bebe wants to stock its stores with more items it is sure its customers will buy and decrease the risk of unpopular items that will stay on the shelves for months. Avoiding inventory buildup and keeping customers in its stores are bebe's main priorities.[20]

Rising Manufacturing Costs
40% of all clothing purchased by Americans is imported from China. Bebe is one of many companies that have contracts with Chinese manufactures to produce their goods.[21] However, in the past few years manufacturing costs in China have been increasing, due to higher energy costs and an 80% increase in wages.[22] Bebe is hedged against these rising costs, however, as it already has contracts with manufacturers in other countries, such as Italy and Brazil.[23]

Competition

Express operates over 620 stores in the U.S. It supplies men's and women's apparel and accessories. Express has been closing and consolidating its stores for the past few years in response to decreasing sales.[24]
Guess? operates 350 standalone stores in the U.S. and Europe. It also sells its clothing through department stores such as Macy's and Bloomingdale's as well as its own website.
Wet Seal operates 490 stores under the Wet Seal and Arden B. brand names. It sells both brand name and company-produced apparel and accessories. Its clothing is geared towards young women. The company also sells clothing through two websites.
Ann Taylor operates 935 stores in the U.S., Canada, and Europe. Like BEBE, ANN targets female consumers, but has a more conservative clothing line than BEBE.
Competition BEBE Express Wet Seal Ann Taylor
Sales ($MM) 603.0 9,043.0 141.55 462.41
Net Income ($MM) 12.63 220.00 4.51 2.07
Sales per Square Foot ($) 610 830 293 402
Operating Margin 1.64% 6.50% 3.32% 0.59%
Bebe's annual sales are higher than Wet Seal's but lower than both Guess? and Express. Wet Seal, like bebe, sells clothing exclusively for females. Express and Guess, on the other hand, sell clothing for both genders. Out of all bebe's main competitors, Express is the only one that does not sell its goods online.
 
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