Bebe to close stores to focus solely on e-commerce

By

Obi Anyanwu

Published
Mar 22, 2017

Bebe in February announced plans to shutter 25 stores in fiscal 2017. According to the American press, the women’s retailer will shut down all of its physical stores to focus on its online business.

 
The Brisbane, CA-based company reportedly plans to turnaround its business as an online brand, in order to avoid filing for bankruptcy, but it may have to file for Chapter 11 bankruptcy anyway if landlords are unwilling to negotiate leases. Bebe hired a real estate advisor to assist with lease negotiations and retained B. Riley & Co. as a financial advisor to explore strategic alternatives for the company.

The company’s fate may be very similar to BCBG, which announced in January that it would close its stores to focus on e-commerce and then filed for Chapter 11 bankruptcy protection in March.

Bebe is the latest fashion retailer or brand to hit financial strife in this year alone. Since the beginning of 2017, Bibhu Mohapatra, Wet Seal, The Limited, BCBG and Gordmans filed for Chapter 11 bankruptcy. Nasty Gal and Yogasmoga filed for bankruptcy at the end of 2016, alongside American Apparel that filed for a second time to close the year. Aeropostale, Sports Authority and PacSun also filed for bankruptcy protection in 2016, with Dick’s Sporting Goods acquiring Sports Authority for $15 million.
 
In addition, Fitch Ratings predicts J. Crew, Nine West Claire’s and Sears to be the next retailers to file Chapter 11 protection. Macy’s and Neiman Marcus may not be rumored to file, but Hudson’s Bay Company was also rumored to be interested in acquiring first Macy’s (which shot down the rumors) and then Neiman Marcus, which confirmed that they are, in fact, discussing a purchase.
 
Online shopping has greatly hindered brick-and-mortar sales, resulting in several popular retailers shutting down, filing for bankruptcy or being acquired. A study from First Insight found that most consumers never pay full price, with 40% of Millennials saying they would not buy an item at full price. Discount websites like Lyst and Yoox contribute to shoppers unwillingness to buy full price, while e-commerce giant Amazon cuts into retail sales.

Bebe in February said it would push its denim and leggings businesses to capitalize on the consumers’ casual clothing buying trend. The company also reduced its quarterly net loss to $5.2 million, despite posting a 13.5% decrease in net sales for the quarter. Bluestar Alliance, the partner company for Catherine Malandrino, Nanette Lepore and Michael Bastian, purchased a 50% stake in Bebe one month after the retailer said it would focus on restructuring.