bebe stores Investor Consac Says Ailing Retailer on Track to No More Than Play "Catch Up"

LOS ANGELES, Sept. 5, 2014 /PRNewswire/ -- bebe stores, inc. investor Ryan Drexler said today that while he was heartened that the ailing retailer had made progress, however slow, in playing "catch up" with its competitors, he sees little in the way that is new and innovative in the brand's retailing and merchandising.

"The company I believe is playing "catch up" at best," Mr. Drexler said.  "I believe that they need to be investing much more aggressively and gearing up much more quickly to keep pace with the competition, not to mention get out in front of it.  What's new at bebe today, is "old hat" at many of its peer group stores."

Mr. Drexler said that he believed the company could better invest the cash to be used to pay out its fourth quarter dividend and its annual payments in excess of $500,000 to SKID LLC, of which bebe founder and chairman Manny Mashouf is president, for consulting services to the bebe Board.

bebe last week declared a quarterly dividend of $0.015 per share, for a total cash use of $1.2 million.  bebe subsequently announced on September 4, 2014 a net loss of $24.2 million for the fourth quarter and of $59.3 million for fiscal year 2014, its eighth consecutive quarter of net losses.

"This says to me and, I believe, other public shareholders that Manny Mashouf and the Board deem it more important to pay themselves than to invest more aggressively in shoring up the company's sagging fundamentals," Mr. Drexler said.  "Of the $7.1 million to be paid out in dividends in fiscal 2014, approximately $4.2 million will go to insiders, almost exclusively to Mr. Mashouf."

Mr. Drexler is president of Consac LLC, which holds approximately 2.7 million shares of bebe's common stock.   Manny Mashouf controls in excess of 53 percent of the outstanding shares.   

"Having successfully run and sold a company of this size, I know the level of investment, both in financial resources and management expertise, required to implement a workable turnaround strategy," Mr. Drexler continued. "Improvements in merchandising, marketing and operations require sustainable levels of capital, and I don't see that happening here in any meaningful way, despite the company's public statements to the contrary."

In a prior separate letter addressed to the Board and Mr. Mashouf, Mr. Drexler said, "I believe the company needs to explore possibilities for maximizing shareholder value, including a sale of the company, whether to a third party or through a going private transaction." He appealed to both to immediately explore the possibilities available to the Board in creating sustainable value for all investors.

About Consac, LLC

Consac, LLC ("Consac") invests in the securities of publicly traded and venture-stage companies. Consac may increase, decrease, dispose of or change the form or substance of its investment in bebe for any or no reason, at any time. Consac also may change its views about bebe at any time. Consac disclaims any obligation to notify the market of any such changes.

The information and opinions contained in this press release are based on publicly available information. Although Consac believes the statements it makes in this press release are accurate in all material respects and do not omit to state material facts necessary to make those statements not misleading, Consac makes no representation or warranty, express or implied, as to the accuracy or completeness of the statements contained in this press release and expressly disclaims any liability relating to those statements (or any inaccuracies or omissions therein). Thus, shareholders and others should conduct their own independent investigation and analysis of those statements and of bebe. Furthermore, some of the statements herein may be forward-looking statements, estimates, projections and opinions. Such statements, estimates, projections and opinions may prove to be substantially inaccurate and are inherently subject to significant risks and uncertainties beyond Consac's control.

The statements that Consac makes herein are not investment advice or a recommendation or solicitation to buy or sell any securities, nor is Consac soliciting any proxy or other action from or by any shareholder. Except where otherwise indicated, those statements speak as of the date made, and Consac undertakes no obligation to correct, update or revise those statements.

SOURCE Consac, LLC