Dive Brief:

• Bebe Stores, Inc. will close 21 stores, anticipating an impairment charge related to the closed stores of approximately $2 million. It will also make a termination payment to landlords of some $7.4 million, according to a filing this week with the Securities and Exchange Commission. 

• The company is also continuing to explore options with respect to its remaining stores, according to the filing.

• Last month the struggling women’s apparel retailer said it was exploring strategic alternatives and has retained B. Riley & Co. as its financial advisor. It also engaged a real estate advisor to assist with options related to its lease holdings.

Dive Insight:

Store closures have already been a part of Bebe’s ongoing restructuring efforts: Last month the retailer said it planned to shutter as many as 25 Bebe and outlet stores this year, which would decrease total store square footage by some 16%. Bebe reportedly is also mulling moving entirely online — joining Loehmann’s and Dehlia’s — a risky move considering that stores help drive digital sales.

Unlike many retailers in similar positions, though, Bebe has had some breathing room because it doesn’t have a lot of debt. Last summer the retailer raised some money through a deal with brand management company Bluestar Alliance to develop its wholesale business abroad, where Bebe retains a higher profile than in the U.S. The company has said that it hopes to manage a turnaround without resorting to bankruptcy protection.

As it’s struggled with declining mall traffic and other headwinds bearing down on apparel retail, Bebe has also faced pressure from private equity investor Consac LLC, whose president, Ryan Drexler, in 2014 began leaning on Bebe to consider a sale or go private, expressing criticism of what he called Founder Manny Mashouf's "questionable" financial holdings.

Bebe's troubles have intensified in recent quarters. Second quarter same-store sales fell 10.5%, compared to a 2.5% decline a year ago, as store traffic improvements were inconsistent and inadequate over the holiday period. For the six months ended Jan. 2, same-store sales decreased 7.4%. Q2 net sales were $101.9 million, a decrease of 16.8% from $122.4 million in the same period last year. A tick up in gross margin, which edged up as a percentage of net sales to 34.4% from 34.0% last year (the result of a much-needed reduction in markdowns and promotions), has done little to alter the company’s fortunes.