Us Women'S Wear Brand Bebe Enters China Q4 Sales Narrowed

Struggling US in the weak retail market

The retailer BebeStoreInc. has made a bold decision for the current environment: to enter the Greater China market.

On Thursday, BebeStoreInc. announced the fourth quarter of fiscal year 2015 and its annual results, announcing that it has signed an international retail brand dealer Langhao Holdings Limited in Shanghai. Since the summer of 2016, 60-150 Bebe have been set up in mainland China, Hongkong, Macao and Taiwan in the next 5 years.

And wholesale outlets.

JimWiggett, the group's chief executive, said in a statement that entering the Greater China market will become an important opportunity to accelerate growth and consolidate Bebe's brand status as a global lifestyle for women.

To cater to the fashion demand of Chinese consumers, less than 30% of the Bebe brand clothing sold in China will be designed and developed by local teams. The group has also planned to expand handbags, shoes and underwear by authorized cooperation.

Langhao Holdings Limited is the Chinese agent of the American leisure brand GANT and MOET & CHANDON Hennessy LV group's British high-end shirts brand ThomasPink.

When the 5 year contract with BebeStoreInc. expires, the company will receive an additional 10 years' priority.

JimWiggett apparently not.

The slowdown and the recent turmoil in stock and exchange markets have not been deterred. He believes that the market is only a short-term adjustment, and China's demand for brand clothing is still huge.

JimWiggett said Chinese tourists have already known about the Bebe brand in the US, and the price of the brand is also higher than that of the Chinese brand.

It has a broader consumer group.

On the other hand, LiyuanWoo, chief financial officer of BebeStoreInc., points out that sales will be settled in US dollars under wholesale agreements, so the exchange rate risk is not large.

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News of China's move to BebeStoreInc. rose by 8.72% on Thursday and $1.87 a day, narrowing its stock to 16.5% in 2015.

However, after the release of the earnings report triggered investors to sell, BebeStoreInc. after a sharp setback of 12%, eventually dropped 9.1% to 1.70 U.S. dollars.

In the four quarter ended July 4th, the group's net loss narrowed sharply from the same period last year to US $34 million 500 thousand to US $5 million 200 thousand, and the diluted share loss dropped from US $0.43 to US $0.07.

The adjusted loss per share was $0.05, slightly less than the $0.04 expected by the market.

Revenues increased by 0.7% to 104 million 300 thousand dollars a year, less than 106 million 300 thousand dollars of market expectations.

Same store sales increased 1.1%, and achieved 4 consecutive quarters of growth.

JimWiggett was satisfied with the four quarter's group revenue and profits. The gross margin was significantly improved by 390 basis points to 34.8%, and the SG&A expenditure share also continued to shrink, from 54.2% to 54.2% in the same period last year.

In the 2015 fiscal year, the group's net loss was $27 million 700 thousand, and in the 2014 fiscal year it was $73 million 400 thousand, and the diluted share loss was reduced from $0.93 to 0.35 US dollars.

The total income was $428 million, up 0.7% from the previous year's US $425 million 100 thousand.

BebeStoreInc. expects the same store sales in the first quarter of 2016 fiscal year will drop in median, and the diluted share loss will reach 0.17-0.19 dollars per share.