Business and Economic Leads

Bebe Stores, Inc. (NASDAQ: BEBE) produces and sells clothing and accessories to women between 21 and 35 years of age who follow the latest fashion trends. Sales of sweaters, shoes, handbags and jewelry have increased since last year, and its international business is rapidly expanding--international sales rose by 163% last year.Manufacturing costs are increasing for retail companies that produce their goods in China, which bebe is attempting to avoid by manufacturing its goods in other countries, such as Brazil and Italy. In addition, recessionary fears in the United States have led consumers to be more conservative with their spending, which the company is trying to account for by offering less trendy, more traditional items that it believes its clientèle will want to buy.
http://www.wikinvest.com/image/Bebe_Graph.JPG

^[8] Note: bebe's fiscal year ends in June.

Bebe has had mixed performance: on one hand it had decreasing sales in the second quarter of the fiscal year However, sales increased in the third quarter. Also, revenues have been increasing due to strong performance in shoes, handbags, and international sales. The company website has also been performing well, with a 23% increase in sales last year, due in part to a 21% increase in traffic to the site.

Due to the general uneasiness concerning the economy, many consumers are unsure of their financial security and thus have started spending less money on unnecessary items, which has led to lower sales for many retail companies. In response to this development, bebe--which usually provides merchandise that is up-to-date with the latest trends--has decided to decrease the number of "fashionable" items with unproven viability that it offers and instead focus on selling only those products that have proven to sell well and have a limited risk of being marked down. In other words, bebe wants to stock its stores with more items it is sure its customers will buy and decrease the risk of unpopular items that will stay on the shelves for months. Avoiding inventory buildup and keeping customers in its stores are bebe's main priorities.