With shoppers seemingly on a general strike, there is no shortage of
turnaround/recovery ideas in the apparel sector. It's different
situation with bebe stores (BEBE),
though, as this company isn't suffering from the fickle whims of teen
fashion or the sudden drop in mall traffic. Rather, bebe has seen its
reported sales decline year over year since 2008 and hasn't sniffed a
double-digit operating margin since that same year.
The company
has a turnaround strategy in place, as well as a CEO who is less than a
year into the job. While management has done a good job of telegraphing
what are likely to be ugly-looking numbers until legacy merchandise is
off the shelves and out of the stores, I'm not sure the probable
long-term gains are worth the pains. The shares do look a little
undervalued, but bebe will have to go from its current stressed state to
new all-time performance records to justify a target price that would
make it a superior investing option to names like American Eagle (AEO) or Aeropostale (ARO) in the broader retail space.
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Relative To The Risks, The Turnaround Rewards At Bebe Don't Impress
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