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bebe stores, inc. (NASDAQ:BEBE)

Q3 2014 Earnings Conference Call

May 8, 2014 4:30 pm ET

Executives

Liyuan Woo - CFO

Steve Birkhold - CEO

Analysts

Betty Chen - Wedbush Securities

Adrienne Tennant - Janney Capital Markets

Jeffrey Van Sinderen - B Riley & Co.

Dana Telsey - Telsey Advisory Group

Operator

Greetings and welcome to bebe stores Investor Relations Third Quarter Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ms. Liyuan Woo, Chief Financial Officer. You may begin.

Liyuan Woo

Good afternoon and welcome to bebe's fiscal third quarter 2014 update. On the call with me today is Steve Birkhold, Chief Executive Officer. After Steve's opening remarks and business highlights, I will discuss the fiscal third quarter results as well as our expectations for the current fourth quarter of fiscal 2014. Our call will be limited in time to one hour. After we have completed our prepared remarks, we will take your questions.

Before I get started, I'd like to remind you of the Company's Safe Harbor language. During the course of this call, we will make projections and/or other forward-looking statements regarding future events and the future financial performance of the Company. We wish to caution you that such statements are just predictions and that actual events or results may differ materially. We refer you to the Company's forms 10-K, 10-Q and other filings made with SEC for additional information on risk factors that could cause actual results to differ materially from our current expectations.

And now, I'll turn the call over to Steve for his opening remarks.

Steve Birkhold

Thanks, Liyuan, and good afternoon everyone. As we outlined in our preannouncement two weeks ago, our third quarter performance was negatively impacted by the winter storms, unseasonably cold weather, a tough overall retail environment and a greater than expected impact of the Easter shift. In addition, after a very strong holiday performance, we transitioned fully to spring products early and had much lower levels of excess winter product during sustained cold weather in the quarter. As a result, we saw a significant downturn in traffic, sales comp and margins for the month of January and February.

That said, we also saw highly encouraging signs that we are moving in the right direction. In our Western region where weather did not have a negative impact, comparable sales for bebe and bebe.com combined were flat for the fiscal quarter. In addition, we continue to believe that our new products have been well received by our bebe girl as we saw our e-commerce business achieve comparable sales increases in the high teens with improved margins for the third quarter, and this trend continued strongly for the month of April.

We are pleased to report that our March catalog had the best sell-through rate since November of 2011. In addition, bebe retail and bebe.com combined delivered mid-single digit increase in comparable store sales in March with an improved gross margin rate.

Our overall merchandise margin was up 50 basis points compared to the third quarter of last year, despite the highly promotional environment, although the gross margin rate was down to the prior year due to the deleveraging of sales. Inventory per square foot at the end of third quarter was down approximately 2% compared to last year and we're pleased with our inventory position heading into the spring/summer selling season. We also continue to carefully manage our costs while investing in high-impact SG&A areas, including human capital and marketing.

I will now turn to some highlights in our progress in our six strategic initiatives to move our business forward. Our first priority is to increase product distinction with a contemporary, accessible, fashion merchandise offering designed for the confident, sexy bebe girl. We are pleased with the strong response to our spring assortment in a variety of categories including non-denim bottoms, sweater dresses, jumpsuits, logo and shoes. The strong response to our March receipt included woven tops, outerwear, and intimates, reinforces our confidence that our growth structure with in-house design will enable us to deliver a compelling, differentiated fashion assortment that appeals to our bebe girl.

Our performance in our logo business remained strong, which we believe demonstrates our customers' continued strong connection to the brand. In categories where performance remained challenging, including denims, knit tops and sweaters, we have begun to make adjustments while taking steps to move through slower selling products. We made excellent progress moving through marked-down merchandise and ended the quarter with a very fresh inventory position.

Overall, we remain committed to refining our merchandising strategy with open-to-buy, test, and chase or cancel process. We look forward to our May/June deliveries as we believe that our product offering will resonate well with the bebe girl.

We are very encouraged by our performance in April and with the Easter week up in this low single digit against prior year Easter week and high single digits positive comp in margin. We are carefully monitoring the continued promotional retail environment. We try to remain focused on the regular price selling and expect to be relatively less promotional than other retailers, which may create some top line pressure in the short-term but will benefit the margin in the long term.

Our second strategic focus is to align our marketing campaign across traditional and new media, focused on messaging that speaks to our bebe girl. Our stronger messaging about daywear for spring has been received positively and we believe our Rule the Day and Conquer the Night messaging and sports presentation supporting the daywear business and showcasing the bucket of products that we offer for the bebe girl has created some excitement.

We continue to believe our most effective communication with the bebe girl is through our frequent distribution of catalog and mailers and a shift in our marketing investments accordingly. We have committed to further revamping our CRM data, refining our current clubbebe program offering and continuing to reallocate our marketing investments into digital media and brand communications across catalogs and store events and revenue generating investments in paid search as we know. We are excited about the opportunities in front of us to further acquire, engage and retain our bebe customers.

Our third strategic focus is to create an omni-channel strategy to engage our customer wherever she shops. We mentioned during the last quarter's call that we use our online channel to test new product offerings with very positive results. Our e-commerce site delivered high-teens in sales growth during the quarter and in the high 20s in the month of March and April. For the spring season, we continue to experience improved full price selling with a more compelling online assortment and we achieve better margin on markdown products. We plan to maintain a balanced offering of full price and markdown merchandise in order to optimize regular price selling while utilizing the site to clear through excess inventory.

Our omni-channel capabilities also allow us to optimize our inventory productivity and merchandise margin. We have the ability to allocate back stock from our DC both to stores and to our e-commerce orders since August of last year, which has enabled us to efficiently manage our inventory and fulfil orders at a higher rate. We continue to see significant growth opportunity as online shopping becomes more prominent shopping channel for our customers. We also recognize that our website is an important marketing tool to stay connected with our customer and drive her into our stores.

Our fourth strategic focus is on 2b store optimization as we continue with our outlet conversion and expansion efforts. We will continue to monitor the performance in our 17 mall-based 2b concept stores as we continue to evolve our product assortment and expand upon the outlet effort. Our 32 outlet locations experienced significant negative traffic during the fiscal third quarter. We have converted all outlets from 2b to bebe recently and saw a strong reaction in acceptance to our small introduction of our made-for-outlet bebe products.

Traffic has rebounded somewhat in April with the Easter shift and weather improvement. While it's still too early in the transitional period against the tough retail environment, we believe that our made-for-outlet product, which is higher-margin product, can ultimately represent 65% of our outlet sales longer term and increase our AUR margin substantially.

Our fifth strategic focus is on our international business. Our partners saw strong reaction to our March and April product offerings with similar trends to U.S. stores. Near term, we will continue to work on enhancing our product assortments and branding efforts while managing the very tight inventory. In the long term, as we shared during the Investor Meeting, we believe that there is substantial growth potential globally for retail, wholesale and online, and we will talk more about this as the strategy unfolds.

Our sixth strategic focus is on the ROI-based investment for sustainable long-term growth. We have developed multiple versions of our new store prototype depending on the floor plan which more effectively represents our look and facilitates an elevated shopping experience. The new prototype offer improved store flow and incorporates better visual merchandising including window displays and live streaming of the content into the store screens that highlight newness, create excitement, and give her the omni-channel and brand experience we want to convey. Our goal is to have consistency across our retail stores, websites, and in our marketing message.

We opened our first prototype last month in Short Hills, New Jersey. While it's only been three weeks since the grand opening, we have doubled our sales per square foot in the new store concept. We have also opened a second new store in El Paso, Texas and the customer response has been equally positive. We look forward to the next store opening to be in the Galleria in Houston, Texas which is our bigger store plan concept. We will continue to evaluate the ROI, fine-tune the model and decide to roll it out once we achieve our objectives.

While we are pleased with the progress that we have made in March and April of 2014, we are aware of what is happening from a macro perspective as we enter our fourth quarter. The environment remains challenging and promotional activities in the mall have been working against us since the holiday season. However, we remain cautiously optimistic and believe that we're well-positioned in inventory, quality of our products and we'll optimize our margin position for the current quarter. We have much less markdown inventory compared to last year and have positioned ourselves with fresh assortments. Liyuan will provide a little more detail on this when she speaks to you about our fourth quarter guidance in just a few minutes.

In summary, we are advancing our merchandising, marketing and omni-channel strategies with disciplined investments and analysis so that we can measure our progress and adjust accordingly. We have consistently said that we plan to deliver sequential improvements in our results during our turnaround, despite the challenging retail environment. We will continue to be extremely disciplined in monitoring our sales performance, managing our inventories and controlling our expenses as we make our way through this turnaround. We also continue to learn as we go and will move forward with the things that are working while course-correcting in areas that don't generate adequate returns.

Overall, we remain focused on driving our strategic plan forward and feel good about the number of positive indicators that we're seeing, giving us the confidence that we will achieve our long-term goals. With that, I will turn the call back over to Liyuan to go through our fiscal third quarter performance and provide some color on fiscal fourth quarter guidance. Liyuan?

Liyuan Woo

Thanks Steve. Net sales for the third quarter of fiscal 2014 were $93.5 million, a decrease of 17.2% from $112.9 million reported for the third quarter a year ago. Comparable store sales for the quarter ended April 5, 2014 decreased 5.7%. The sales decrease was due partially to one fewer retail week in January in the current fiscal year coupled with the closure of 19 unproductive stores since the prior year third fiscal quarter. The Company’s sales results were also negatively impacted by extreme weather throughout the fiscal third quarter this year with up to 136 weather-related temporary store closures.

In addition, we believe that the timing of Easter in late April had a greater than expected negative impact on sales in the quarter, specifically in outlet locations. Comparable store sales and traffic in outlet locations were down in the mid-teens for the quarter.

Gross margin decreased to 27.1% compared to 29.7% in the third quarter of fiscal 2013. The decrease in gross margin was primarily due to deleveraging of sales. While we have experienced an increased level of promotions in response to the challenging retail environment, merchandising margin was 50 basis points higher than the third fiscal quarter of the prior year.

SG&A expenses were $49.7 million, or 53.1% of net sales, compared to $52.2 million, or 46.2% of net sales, for the same period in the prior year. The SG&A expenses in the third quarter of fiscal 2014 reflect $2.9 million of store impairment charges. The SG&A expenses in the prior year third quarter included $4.8 million costs related to hiring of a new CEO, store impairment charges, rebranding agency costs, as well as other transition related recruiting and severance costs.

Net loss for the third quarter of fiscal 2014 was $24.3 million, or $0.31 per share, on 79.3 million shares outstanding, compared to a net loss of $49.3 million, or $0.62 per share, on 80.1 million shares outstanding for the same period of the prior year. Note that fiscal 2014 net loss reflects the continuing impact of maintaining a valuation allowance against deferred tax assets, which was recorded in the third quarter of prior year in the amount of $31.4 million or $0.39 per share. Our effective tax rate approximates 0% in the current fiscal quarter.

Net sales for the year-to-date period ended April 5, 2014 were $337.6 million, a decrease of 7.6% from $365.5 million for the year-to-date period ended April 6, 2013. Comparable store sales for the year-to-date period ended April 5, 2014 decreased 3.3%.

Net loss for the year-to-date period ended April 5, 2014 was $38.9 million compared to a net loss of $56.7 million in the prior year. Loss per share for the year-to-date period ended April 5, 2014 was $0.49 per share on 79.2 million shares outstanding, compared to a net loss of $0.68 per share on 82.8 million shares outstanding in the prior year. Note that fiscal 2014 net loss also reflects the continuing impact of maintaining a valuation allowance against deferred tax assets, which was recorded in the third quarter of fiscal 2013, in aforementioned amount, our effective tax rate approximates 0%.

Our total cash and investments at April 5, 2014 were $139 million. Inventory as of April 5, 2014 was $31.9 million compared with $37.4 million last year. At the end of fiscal third quarter, average finished goods inventory per square foot decreased approximately 1.7% compared to the prior year. As Steve mentioned, our inventory is clean and we're well-positioned for the next season.

Capital expenditures for the fiscal year-to-date period were $11.8 million, and depreciation expense was approximately $15 million. During the quarter ended April 5, 2014, we closed six bebe stores. We ended the quarter with approximately 900,000 square feet.

Now, let me review the current fourth fiscal quarter expectation and items that relate to the fiscal year of 2014. As Steve mentioned, we're encouraged by the positive signs exhibited in March and April. However, we remain cautious with the continuing promotion on retail environment.

Taking this into account, for the fourth quarter of fiscal 2014, we expect comparable store sales to be flat. Gross margin is expected to exhibit sequential improvement. We expect net loss per share for the fourth quarter to be in the mid-teens range prior to any non-recurring expenses. The expected loss per share range also reflects the continuing impact of maintaining a valuation allowance against deferred tax assets or a close to 0% effective tax rate. Finished goods inventory per square foot as of the end of fiscal fourth quarter of 2014 is anticipated to increase in the low to mid-single digit range.

For the remainder of fiscal year 2014, the Company plans to open one outlet store and close one 2b bebe store, which will result in approximately 8% decrease in total store square footage from the end of fiscal year 2013. Depreciation expense for the year will be approximately $21 million. Total capital expenditures for the year are anticipated to be up to $25 million, which will include capital expenditures for new stores, remodels, store expansions, information technology systems and office improvements.

I will now turn the call over to Steve for his closing remarks.

Steve Birkhold

Thanks, Liyuan. As we look ahead to the rest of our fiscal year of 2014, we'll continue to focus on executing our transitional strategies. As I said earlier, we cannot control the macro environment but we have a very strong team in place and are well-positioned to carefully manage our inventory and control our costs as necessary, while remaining focused on our customers and executing on our plans. Overall, it comes down to product and we believe we can drive enhanced sales performance longer term as we continue to refine our product assortments. In short, we will continue to focus on our long-term growth and manage through the current market environment.

I'd like to thank our shareholders for their support as we continue to work to transform the business and focus on long-term sustainable growth. Thank you and I would now like to open the call up for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Betty Chen with Wedbush Securities.

Betty Chen - Wedbush Securities

I was wondering if you can talk a little bit about the quarter-to-date trends. It certainly sounds like April rebounded nicely, maybe partly due to Easter and weather, but yet the guide is looking for flat comps. Just curious if you're seeing any change in the business during the month of May or are we just being sort of cautious given the rest of the sector? And similarly, in terms of the geographical color, can you give us a sense whether you're also seeing the East or the Midwest rebound nicely during the month of April?

Steve Birkhold

So I think, Betty, I think obviously we are just remaining cautious just based on the macro environment that we're seeing. We are pleased with our performance so far in April and May. One of the other cautions that we are putting out there is that our goal is to be a little bit less promotional than we have been last year and less promotional – if you've noticed what we've done, we've been – when we do a promotion, we spend at a relatively low percentage of versus some of our competition. So we're anticipating continued strong promotional activity while we continue to drive regular price sell-throughs and try to minimize promotions on our regular priced products. So, the reason for our caution is just because we want to find the right balance between top line and protecting the bottom line and the margin. As far as the performance amongst regions, we have kind of seen the trend kind of flatten itself out in the month of April and early May. So we're not really speaking to any dramatic differences in trend around the country at this stage.

Betty Chen - Wedbush Securities

And then, Steve, if I could have a follow-up, so certainly in terms of merch margins, the team managed really nicely despite a very tough third quarter. Can you give us a sense where we are in terms of merch margins compared to the Company's peak in the past and whether that's even a valid comparison or perhaps with the right assortment we could see greater merch margin opportunity than that?

Steve Birkhold

Again, as I think I wrapped at my comments, I mean the team and myself clearly recognize that our success going forward is completely hinged on the consumer acceptance of our product with a higher percentage of it being at full price. So I don't actually have all the comparisons from a peak merch margin perspective, but I think the formula going forward will improve for us based on the product improvements that we're seeing, the designs, and the adoption rates from our design teams to our merchandise teams continue to increase rather dramatically, and we're seeing very, very strong response to the products that are designed in-house versus products that are done on the outside.

So I think Liyuan can follow-up with you on what we think future merch margins are versus historical, because quite honestly I don't have that in front of me, but we have confidence that we can get back to an acceptable range as we improve our product and dial down on the promotional activity.

Liyuan Woo

So there's definitely room for ongoing improvement at this juncture. So, yes, there is certainly upside.

Betty Chen - Wedbush Securities

Great, that's great to hear. Well, the stores look a lot better, so best of luck for the quarter.

Operator

Your next question comes from the line of Adrienne Tennant with Janney Capital Markets.

Adrienne Tennant - Janney Capital Markets

Steve, my question for you is, the incremental marketing dollar, the incremental marketing spend, where have you been putting that and what kinds of return have you seen on that? And then secondarily, the inventory, I'll call it build for lack of a better word, the low to mid single digits at the end of the fourth quarter, what categories is that invested in and is that a bigger investment to drive positive comps going forward? And then Liyuan for you, I'm trying to navigate the guidance here for the negative mid-teen loss per share. You closed about 20 stores over the course of the year. So if sales come out of the top line, the comp is relatively flat. Should we expect the SG&A dollars to be down that mid-single? And if that is the case, I mean it's a pretty big sequential improvement in gross margin rate and even on a year-over-year basis that would imply a pretty significant move there. So I just want to make sure I have my numbers correct. Thank you.

Steve Birkhold

So I'll speak to the incremental margin. I mean obviously with additional work done on our customer database and our CRM initiatives, our highest spending customer really appreciates the direct mail communications that we do vis-a-vis our catalog and other direct mail kind of vehicles as well as e-mail. So we have reallocated marketing dollars from what I would classify as traditional spend, whether it would be magazine or outdoor assets, to more e-mail communication and direct mail communication, and we have seen improvements in our comp store sales in regards to our catalog and be more targeted and more effective with that vehicle.

So I think that's a really important thing and I think is part of what we will discuss in the future as we outline our 2015 strategy, but we are investing in more kind of marketing initiatives that we can clearly put an ROI against and ones that we actually can pretty reasonably comfortable at driving traffic into our stores.

One of the other areas of the allocation of marketing is the effort that we're putting into what we would call in-store marketing, the visual merchandising in the windows and then also a lot of attention to the visual merchandising within the store and the consistent flow of new products. And I think those of you who have been in our stores frequently can clearly see that we have accelerated the pace and the flow of new products on a weekly basis and I see very strong benefits to be having a slightly enlargement of assortments with a little bit of less depth that we've been able to drive greater velocity and give our bebe girl, who is a big consumer of fashion, a lot of newness, and she has a lot about to tell you for new products. So we're still working on the balance of depth of products and breadth of products but we're really finding that she has a very high expectation of continuous flow of new products.

I'll let Liyuan speak to about some of the SG&A questions you have.

Liyuan Woo

So you mentioned about the inventory growth. Yes, we definitely are making investments in the right areas. There are certain categories we're really focusing on such as tops, and then there's also element of increasing inventory investment. When we think about when we are going to be speaking again in the next quarter, and actually we mentioned about this before, we definitely wanted to look at all that expansion plan. So in order to achieve that, we are anticipating buying inventory for opening stores early on in the next year as well.

Steve Birkhold

The other thing that we talked a little bit about in our strategy was our MFO, which is our made-for-outlet strategy. We delivered our first made-for-outlet product which is in the stores now, very well merchandised at the front of the store. So when you walk in, you see the made-for-outlet product on the right-hand side of the store, our bebe logo product on the left-hand side of the store, and we are seeing a substantial increase in margins and average unit retail on those made-for-outlet products at margins that are very, very high compared to what the 2b margins were.

So as we continue to ramp up the percentages of made-for-outlet getting to about 65% of the business by end of second quarter fiscal '15, we're very confident that the decisions that we made to convert the outlets to – the 2b stores to bebe outlet stores was really the right one and you'll see a stepped up investment in marketing around the outlet stores for a real full march in outlet of around Memorial Day. So I think we see very, very strong signs that that's going to be a successful strategy for us.

Adrienne Tennant - Janney Capital Markets

Okay. And Liyuan, did you comment on the gross margin rate or help there?

Liyuan Woo

I mean we definitely want to pull most of accountable to continuing type inventory improvement, and the fact that we're relatively clean, we believe we should have increase in margin percent on a merchandising side. Now in terms of SG&A, we closed 19 unproductive doors, albeit we're losing the top line there, but really because the fact that they are unproductive, we should see some level of bottom line accretion.

Adrienne Tennant - Janney Capital Markets

In both the rent portion in gross margin and the SG&A, so they are both – okay, wonderful. The stores look great, so good luck.

Operator

Our last question comes from Jeffrey Van Sinderen with B Riley & Co.

Jeffrey Van Sinderen - B Riley & Co.

Maybe just a follow-up on the real estate fleet, just wondering how many stores you feel you have left at this point that are negative contribution that you might decide to close?

Steve Birkhold

Most of our I would say housecleaning when it comes to profitable stores has been done. Most of the stores that we have some level of negative contribution are showing positive signs of improvement. So we're continuing to monitor that number. I think right now we would say we have about just our 2b stores which are 17 that we continue to really keep a very, very close eye on. That's a channel for us that has actually not been very productive in the mall-based areas and we're continuing to evaluate what our strategies are going forward.

Jeffrey Van Sinderen - B Riley & Co.

Okay, understandable. And then as far as the e-com or the digital part of your business, did you say how much that is as a part of the whole at this point or could you tell us what t is?

Steve Birkhold

We did not say what that is as a percent of our total. I mean we really haven't commented on that. I would just say that obviously it's a very, very strong growth [indiscernible] for us. We're taking a lot of actions to really continue to improve and I think we had a big target in improving our conversion rates and continuing the momentum, but I think our one comment was that the growth has accelerated in March and April and continues to be a very, very strong contributor to the bottom line and top line.

Jeffrey Van Sinderen - B Riley & Co.

Okay, that's good to hear. And then just a follow-up on inventory, I think you said, if I heard you right, that you were planning inventory to be up per foot by low to mid single digits, is that correct, going into the next quarter? And then if that is correct, just wondering would you plan inventory up at that level if you were expecting negative comps or if there's something else we should read into that?

Liyuan Woo

It's really, as I mentioned earlier, Jeff, it's the planning for the opening stores for outlet, and Steve had mentioned there's the AUR [increasing] (ph) in relation to made-for-outlet inventory, and that's really the main factor driving that.

Jeffrey Van Sinderen - B Riley & Co.

Okay, so on a sort of a like basis, then we shouldn't really think that your comp inventory is up other than being driven by AUR or made-for-outlet, is that fair to say?

Liyuan Woo

Yes, I mean on the bebe side, we clearly are making investments in certain categories. So it depends on [indiscernible] and all that stuff. So we're usually being relatively conservative when it comes to that as well.

Steve Birkhold

And Jeff, we will speak to our fiscal '15 initiatives and strategies at a future date, but as we discussed with our focus on other categories other than just the going out occasion, especially towards the end of the quarter, we begin to build some inventories amongst some categories that we will be strategically driving in first quarter and most of fiscal '15, and I think some of the day, occasions are very important to the brand, some of the price points in some of those categories are slightly higher than some of the other categories that we did last year. So I would say that our focus is still to turn very quickly in our stores, the backroom of our stores have very, very little inventory and we really count on the flow of frequent new deliveries to really drive sales and margin.

Jeffrey Van Sinderen - B Riley & Co.

Got it. Okay, thanks and good luck.

Operator

The final question comes from Dana Telsey with Telsey Advisory Group.

Dana Telsey - Telsey Advisory Group

As you speak about being less promotional, do you think of it more in the outlet store, the full-line store, and given exactly as you mentioned some of the daywear does have a higher price point, how do you see that pricing, and with the strategy to less promotional, what are you seeing on the margin side in terms of product costs?

Steve Birkhold

I mean I do think that promotional activity is obviously we will continue to monitor what our competitors do, because at the end of the day we can't be at a competitive traffic disadvantage in the stores. For us it's really about balancing our messaging. We really do find that as we deliver new products, our full-price sell-throughs, whenever we drop new products at the beginning of the week, are very, very strong, and we tend to focus most of our promotional efforts on the product categories that maybe that aren't resonating as well with the customers. So instead of doing a lot of across-the-board promotions where we get the customer a percentage off of our best products as well as our products that may be not performing as well, we're just going to be more focused on where we put those promotions.

As you may have seen last week, we launched a 20-off promotion going after particularly our current clubbebe members and also an incentive to sign up additional clubbebe members, which is very, very successful for us. So again, being more targeted and focused where we can get the greatest return is where we're going to really focus our promotions.

Liyuan Woo

Yes, and then just to add [indiscernible], it is about going shallower and if we need to be a little bit more frequent, it is what it is, but obviously we have different strategy from a cost perspective, especially when you think about made-for-outlet and for the outlet chain in general, we're definitely focused very heavily on how [yield] (ph) will come to play and there would be less room to really work up the margin as well.

Steve Birkhold

And strategically to answer your question about pricing, again our goal is not overall to have big price increases at the category level, but our focus really is adding that kind of value to make sure that the historical price points that we know, our customer appreciates that she has a lot of value in those categories, whether it would be wear-to-work categories, weekend categories, or those [indiscernible] all-day and the evening kind of focused categories.

So I think we've done a really good job of growing our core price points, obviously with the very strong efforts that we've done on logo which will maintain a reasonable percentage of our business, but I think it really does show the engagement that the customer has with our brands. Those price points obviously are relatively lower than other price points. But other than the logo category – actually including logo, our price points remain very flat to where they are historically. We're just putting a lot of emphasis around getting her a little bit more value within the price points that we have.

Dana Telsey - Telsey Advisory Group

Got it. Thank you very much.

Operator

At this time, we have no further questions. This will conclude the third quarter results call for bebe. Thank you for joining us.

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Source: bebe stores' (BEBE) CEO Steve Birkhold on Q3 2014 Results - Earnings Call Transcript

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