Following in the footsteps of The Limited stores that shut all of its brick and mortar operations in early January, women’s apparel chain Bebe Stores Inc. is doing the same.
Bebe, a Northern California-based chain that sold women’s apparel and accessories, with locations across the U.S., is planning to shut its stores, including locations at the Philadelphia Mills, King of Prussia, Cherry Hill Malls and at the Gloucester Premium Outlets, which is owned by Simon Property Goup.
The company — which operates about 170 boutique and outlet stores, will seek a turnaround as an online brand, according to people familiar with the situation — which is what The Limited announced in January as its plans.
On January 7, The Limited announced that all 250 retail stores in 2016 would close, forcing the layoffs of about 4,000 jobs, including seasonal and temporary ones. The Limited is owned by Sun Capital Partners, a private-investment firm.
Another retailer, Kenneth Cole Productions, announced last November that it would close almost all of its store locations to focus exclusively on its online and wholesale operations.
Retail analysts say such retailers have had a particularly rough go after weak fourth quarter holiday sales from 2016 and the growing impact of online shopping.
“Apparel, auto retail, consumer electronics, department stores, discounters, entertainment & sporting goods retailers, home furnishings, luxury, and teen apparel chains are all expected to report lower-year over-year earnings,” said Ken Perkins, president of Retail Metrics Inc. which tracks the retail industry for investors. “Only auto parts, drug stores, footwear, home improvement, office supply, and personal care retailers are projected to see positive fourth quarter year-over-year earnings increases.”
Perkins added that the fourth quarter was characterized by intense e-commerce competition which in turn fueled industry wide markdowns that pressured retail margins.
A Fitch Ratings March 2017 report said, “The rise of off-price and fast fashion retailers, lack of a strong fashion cycle and fundamental changes to the way consumers contemplate their discretionary budgets have eroded many apparel retailers' competitive footholds. These dynamics hit mid-tier apparel and accessories retailers hardest, including both department stores and specialty retailers.”
Unlike many retailers, Bebe has no significant debt. But the company has lost about $200 million over the past four years, and negotiating with landlords to get out of leases may prove difficult.
Manny Mashouf founded the company in San Francisco in 1976 as a twist on Shakespeare’s "To be or not to be."
Last year, Bebe sold half of its brand to Bluestar Alliance LLC to develop a wholesale licensing business, a move that helped raise cash. The stock has fallen more than 80 percent over the past two years, though it began to rebound last month. It had been up 26 percent in 2017 through Monday’s close.
Prior to Tuesday’s announcement, Bebe already announced some store closures for the current year. It said in February that it would be shuttering as many as 25 locations in fiscal 2017, reducing square footage by about 16 percent.
This article contains information from Bloomberg.