After retaining a new financial advisor last month and announcing that it will move to an online-only sales model, fashion brand Bebe has said that it will close 21 stores—about 12% of its retail operations.
This marks the first sweeping closure for the retailer, who currently operates 312 stores, including 215 Bebe stores, 32 2b Bebe stores, 64 BebeSport stores and one Bebe accessories store.
The news comes in a time when Bebe has been affected by declining mall traffic, as well as pressure from private equity investor Consac LLC, who suggested that Bebe consider a sale or go private.
Instead, the company has set their sights on a turnaround without a sale or filing for Chapter 11 bankruptcy, a move that differentiates it from other struggling retailers.
Store locations of the closings have not been announced, but filings show that the company will have to pay an impairment charge of $2 million from the closures. It will pay a termination fee of roughly $7.4 million and work with its real estate partners to relieve itself from lease obligations as it continues to shut down locations nationwide.
On the plus side, Bebe doesn’t have a lot of company debt. Lately, Q2 same-store sales fell 10.5%, compared to 2.5% a year ago. Q2 net sales were reportedly $101.9 million, which reflects a 16.8% decrease from its $122.4 million sales from the same period last year.
Bebe was founded in San Francisco in 1976 by then-couple Manny and Neda Mashouf. Following the couple’s divorce in 2007, Neda Mashouf exited the company as its creative director, while Manny Mashouf still maintained on-and-off contact with the company through the years. Manny Mashouf is currently the CEO of Bebe.