Bebe’s Profit Up; Shares Tumble

Women’s clothing retailer Bebe Stores Inc. on Thursday posted sharply higher fiscal second-quarter earnings but fell short of Wall Street expectations, sending its shares down 14%.

Strong December sales for Bebe had raised hopes among some analysts that the retailer’s earnings would come in at or above the high end of Wall Street forecasts.

Despite a solid financial performance, the shares fell “due to the high expectations set for the company by the Street,” Monarch Research analyst Ann Poole said.

In addition, Bebe shares were near a record closing high on Wednesday and more than doubled in price last year, raising fears among analysts in recent weeks that the stock was overvalued.

The Brisbane, Calif.-based retailer said earnings for its second quarter ended Jan. 1 rose to $24.3 million, or 39 cents a share, from $13.9 million, or 23 cents, a year earlier.

Wall Street analysts’ average forecast was 40 cents a share, according to Reuters Estimates.

Net sales for the second quarter were $152.6 million, up 36.3% from a year earlier. Sales at stores open at least a year, a key gauge of retail strength known as same-store sales, rose 27.3%.

Same-store sales rose 28% in December.

Strong demand for Bebe’s fitted feminine fashions have pushed its sales -- and its stock price -- sharply higher over the last year.

Bebe forecast third-quarter same-store sales would rise in the mid-teens on a percentage basis, with earnings of 11 cents to 14 cents a share. According to Reuters Estimates, analysts expect 13 cents a share.

The company said it was on track to open 20 new stores in fiscal 2005 -- 11 Bebe stores and nine Bebe Sport stores -- and is looking to increase that figure in fiscal 2006. Planned capital spending for fiscal 2005 is about $20 million.

Bebe shares slumped $3.85 to $23.35 on Nasdaq. On Wednesday, the shares closed at $27.30, just shy of their record close at $27.69 in late December.