Brisbane, CA–Bebe Stores Inc. said it would exit its unprofitable “2b bebe” business, under which it sells affordable apparel and accessories, by July as part of a cost-cutting program.
The exit will allow the company to focus on its main brand’s retail and outlet stores, and online and international licensing businesses, Bebe said.
The company said it would take a pretax charge of $5 million-$6 million related to the closure of the 2b bebe business, including 16 mall-based stores. Overall, the company has 224 locations.
“Through the closing of our unprofitable 2b brand, and the cost reduction program, we will be better positioned financially and structurally to focus on our core bebe brand,” the company said Friday. Bebe Stores said “we continue to evaluate our cost structure, capital expenditure requirements and dividend payments.”
Bebe also said it would lay off about 9% of its total non-store employees and 1% of its store employees, taking pretax severance costs of about $3 million in the year ending July.
The job cuts are expected to save about $4 million in fiscal 2015, the company said.
Bebe estimated pretax annual savings of $9 million to $10 million from the cost-cutting program, beginning fiscal 2015.
Earlier this month, Bebe said CEO Steve Birkhold resigned and the board named Jim Wiggett, who has been advising the struggling retailer, as interim CEO.
The company also said it expected same-store sales to fall in low single digits in percentage terms in the current quarter.
In May, Bebe reported a net loss of 31 cents a share for the third quarter. Bebe also said
sales fell 17%, hurt by the impact of severe winter weather and the closing of some underperforming stores.