Bebe wants to win back Wall Street, but the company admits it hasn’t made it easy for investors to buy into its story.
New chief executive officer Jim Wiggett isn’t hiding from investors and even rung the opening bell at Nasdaq as New York Fashion Week kicked off. Wiggett took over in December and under his watch, the company has begun a turnaround that it hopes will bring back a skeptical Wall Street that has been burned by a parade of bankrupt retailers.
“We have a long-standing relationship with the Nasdaq and were proud to be there today to ring the opening bell with Longgoal LLC as we celebrate our partnership and expansion into greater China, said Wiggett.
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The stock has plunged 80 percent over the past two years to trade lately at $1.10 as the company has delivered disappointing earnings and fashion misses. On top of that, the company’s founder Manny Mashouf said he was selling his 46.9 million shares, then reversed course and decided to keep them. The flip-flop scared away investors that became suspicious of the founders motives.
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Chief financial officer Liyuan Woo said, “I think that confused people. That the founder Manny said I’m of a certain age and I’m ready to do other things and I want to sell. Then when the stock sold off, he decided against selling.”
The company also suspended its dividend, which was another black mark by Wall Street standards. Woo thought Wall Street would appreciate that Bebe was being responsible by keeping more money in-house, but instead it was seen as a sign that the company was hurting for cash.
Woo stressed that Bebe has strung together four positive quarters of same store sales and has $70 million in cash and no debt. Woo worries that investors are unfairly lumping Bebe in with recently bankrupt retailers like Cache, Coldwater Creek and more recently Quiksilver.
Bebe is making several moves to fix the company’s problems and hopes Wall Street will recognize its efforts. The company is finally expanding into China, something that Woo felt should have been done a while ago. While there is a lot of discussion regarding the economy in China, Woo isn’t worried. “The average consumer in China isn’t a stock gambler,” she said.
In addition to the Chinese expansion, Bebe is also rolling out a sport shoe in 800 Macy’s stores to capture some of the sporty market. The company should start to see revenue from China by next summer, growth in outlet stores as it adds six new outlets and the results from the shoes with Macy’s.
One problem is that Bebe has already warned that its next quarter will not be good. At least the company isn’t hiding from its mistakes and it does have some cushion to right itself.