Sold my Bebe Longs ($BEBE)

Sold my BEBE longs today with a 4% loss in the midday after a retail sales numbers gave a very grim outlook about consumer spending for the second time.  I think fundamentally this business will do better than other as their products are more affordable than most other quality brands.  But sentiments have changed over the retail apparel industry so I guess I have to wait for the selling to become exhausted before I consider reentering.  Might think about placing some short positions at the close and adding more tomorrow if there’s any significant pullback on the upside.

Bought BEBE stores at the close ($BEBE)

Bought Bebe stores at the close today at $9.00, based on the fundamentals that the markets favored the other day on optimism that the store’s sales are gaining traction again QoQ and expects to report positive earnings by the second half of the year.

Technicals looks great sustaining above the prior $8.94 resistance level well into the close.  The $8.94 level was broken through with high volume on May 8th, 2009.  Short term target price is $10.20.  Stop price at $8.50 prior to closing as my selling point. 

 

The thing that pulled BEBE down today was the comments made by well known analyst who predicted the banking collapse, Meredith Whitney.  But like they say, not all paintings should be painted with the same brush and I am going to give BEBE the benefit of the doubt.  

Keen interest in Bebe stores ($BEBE)

• Bebe stores reported a better than expected net loss of -$5 million or -$0.06 per share vs. a profit of$8.3 million or $0.09 per share YoY. 
• Consensus estimate for a loss of -$0.08 per share
• Sales declined 15.8% to $127.7 million from $151.7 million last year.  Analysts expected revenue to be $123.7 million.
• Same-store sales dropped 23.5% in the quarter
• Gross margin as a percentage of sales decreased 37.8% from 43.8% in the year earlier quarter from higher markdowns.
• Company now forecasts earnings to be positive again between 2c to 10c in Q4.  Compared to 18c / share in the same period last year.
• Bebe expects same-store sales percentage drop in the mid-teens to low-twenties.

Technicals.

Technicals looks favorably well with huge volume piercing through the $8.94 level on Friday after they reported better than expected earnings.  Moving average also seems to be flattening out well on the 150MA and 200MA.  10 20 50 have also intersected the 100 and 160 showing favorable moving to the upside.  Looks like the bottom has been formed on the $4.60. 

Looking for an entry opportunity on Monday if there’s any pull back close to the $9.00 level.  Next key level of resistance at $11.15 and minor resistance at $10.20. Fibonacci retracement confirmed the bullish move when it bounced back off the the 23.6% failure rate showing now that there’s more resumption to the upside.

Source: Forbes, RTT News