Net sales for the fourth quarter ended July 4, 2009 were $130.2 million, down 24% from $171.5 million reported for the fourth quarter ended July 5, 2008. Same store sales for the quarter ended July 4, 2009 decreased 29.6% compared to a decrease of 5.6% for the fourth quarter in the prior year.

Gross margin as a percentage of net sales decreased to 39.5% in the fourth quarter of fiscal 2009, compared to 45.8% in the fourth quarter of fiscal 2008. The decrease in gross margin as a percentage of net sales from the prior year of 6.3% was primarily due to unfavorable occupancy leverage and higher markdowns partially offset by a decrease in other costs.

SG&A expenses for the fourth quarter of fiscal 2009 were $55.9 million, or 43.0% of net sales, compared to $58.1 million, or 33.9% of net sales for the same period of the prior year. The decrease in SG&A expense is primarily due to lower total compensation expense and advertising expense offset by an increase in depreciation expense and approximately $5.4 million in employee acquisition and termination costs, asset write downs and asset write offs.

Operating loss for the fourth quarter of fiscal 2009 was $4.5 million or (3.4)% of net sales, compared to operating income of $20.5 million or 11.9% of net sales for the same period of the prior year.

The effective tax rate for the fourth quarter of fiscal 2009 decreased to 23.7% from 34.1% in the fourth quarter of fiscal 2008, primarily due to our tax exempt interest income as a percent of actual operating income for the year and a tax refund from fiscal 2006 amended returns.

Net losses for the fourth quarter was $323,000 compared to net income of $16.0 million for the same period in the prior year. Diluted loss per share for the fourth quarter of fiscal 2009 was $0.00 which includes $0.04 per share after tax in employee acquisition and termination costs, asset write downs and write offs on 86.7 million diluted weighted average shares outstanding compared to diluted earnings per share of $0.18 on 90.1 million diluted weighted average shares outstanding in the prior year.

Net sales for the year-to-date period ended July 4, 2009 were $603.0 million, down 12% from $687.6 million for the year-to-date period ended July 5, 2008. Same store sales for the year-to-date period ended July 4, 2009 decreased 20.9% compared to a decrease of 7.6% in the prior year.

Net income for the year-to-date period ended July 4, 2009 was $12.6 million compared to $63.1 million in the prior year. Diluted earnings per share for the year-to-date period ended July 4, 2009 was $0.14 which includes a $0.08 per share or $6.9 million after tax reduction in diluted earnings per share due to employee acquisition and termination costs, asset write downs and write offs on 88.2 million diluted weighted average shares outstanding compared to diluted earnings per share of $0.69 on 91.1 million diluted weighted average shares outstanding in the prior year. Year-to-date we have purchased 2.4 million shares under our Board of Director approved stock purchase program.

During the fourth quarter ended July 4, 2009, the Company opened one 2b bebe store and closed one bebe store resulting in flat square footage growth.

For the year-to-date period the Company's capital expenditures were approximately $29 million and depreciation expense was approximately $27 million.

Based on current business we anticipate fiscal 2010 first quarter comparable stores sales will be less negative than the incoming trend and depending on actual markdowns earnings per share before write-offs will be in the range of $0.00 to a loss per share $0.05 based on 87 million diluted weighted average shares outstanding versus $0.12 per share based on 90 million diluted weighted average shares outstanding in the first quarter of fiscal 2009. The Company is currently anticipating an effective tax rate of 30.0% for the first quarter of fiscal 2010 based on a higher penetration of tax exempt interest income.

For the period ending October 3, 2009, the Company is currently planning finished goods inventory to be down on a per square foot basis compared to the first quarter of fiscal 2009 in the mid to high teens range.

For fiscal 2010, the Company anticipates opening six bebe stores, expanding one bebe store and closing up to thirteen stores resulting in an approximate square footage reduction of 1%. The number of planned store closures include four bebe stores, eight BEBE SPORT stores and one 2b bebe store.