bebe stores, inc. announced that based on its preliminary financial results, the Company is updating its net loss per share guidance for the fiscal third quarter ended April 5, 2014. The Company expects to report actual fiscal third quarter 2014 results on May 8, 2014.
Comparable store sales for the quarter ended April 5, 2014 decreased approximately 5.7%. Net sales were approximately $93 million, a decrease of 17.2% from $113 million reported for the third quarter a year ago. The sales decrease was due partially to one less retail week in January in the current fiscal year coupled with the closure of 19 unproductive stores since the prior year third fiscal quarter.
The Company’s sales results were also negatively impacted by extreme weather throughout the fiscal third quarter this year with up to 136 weather-related temporary store closures. In addition, the Company believes that the timing of Easter in late April had a greater than expected negative impact on sales in the quarter, specifically in the outlet locations. Comparable store sales and traffic in outlet stores were down in the mid-teens for the quarter.
Merchandise margins for the third quarter increased by approximately 50 basis points as compared to fiscal third quarter last year but were below previous expectations due to the increased level of promotions in response to the challenging retail environment. The gross margin rate is expected to be below that of the prior year due to deleveraging of sales.
As a result of these factors, net loss per share for the quarter is now expected to be in the $0.29 to $0.32 range. This assumes estimated non-cash impairment charges for bebe, 2b and outlet stores of up to $0.04 per share. Inventory per square foot at the end of the third quarter was down approximately 2% compared to last year.
Steve Birkhold, Chief Executive Officer, commented, “Our preliminary third quarter results were heavily impacted by the winter storms, unseasonably cold weather, and the greater than expected impact of the Easter shift. In addition, we transitioned fully to spring product early and had much lower levels of excess winter product during the sustained cold weather in the quarter.
“If we were to use our West region performance, without weather impact, as a proxy, comparable stores sales for bebe and bebe.com combined, would have been flat for the fiscal third quarter. We continue to believe that our new product is being well received by our bebe girl as we saw e-commerce, which was not impacted by weather, achieved positive comparable store sales and margin in the high teens for the third quarter. We were also encouraged by the sales and margin performance of our March catalogue, which had the best sell-through rate since November 2011.”
“More recently, we have seen continued progress in our sales and margins, with improved performance in all channels during the past Easter week as consumers responded positively to our April product offerings. We remain focused on executing our six strategic initiatives to move our business forward and anticipate continued improvement in comparable store sales and margin performance. Again, I would like to thank our shareholders for their support as we navigate through this challenging retail environment and continue to transform the business for sustainable long-term growth.”
The Company noted that these third quarter fiscal 2014 results are preliminary and therefore subject to the Company's completion of its customary quarterly closing and review procedures.