"This decision is consistent with bebe's long-term objectives and we believe that the development of new concepts is integral to store growth," says Greg Scott, chief executive officer. "With the launch of Neda by bebe, the company continues to build customer loyalty to the bebe brand."

Execs say the opening of new stores will depend on the response generated from the initial units. However, the company is optimistic that it will open additional Neda by bebe locations in fiscal 2007.

The name of the concept derives from Neda Mashouf, a director of the company since June 1985 and vice chairman of the board since December 2003. Since joining bebe in 1984, Mashouf has served as general merchandising manager of design of bebe and Bebe Sport, as well as various other positions. She is the wife of Manny Mashouf, chairman of the board, and according to Scott, she is the company's muse. "Her eclectic, sexy and sophisticated style clearly represents the bebe design," Scott says.

She also represents bebe's target audience. Allen Keiter, a retail analyst with Chicago-based Appraisal Research Counselors, says that retailers are responding to a distinct trend in shopping desires—leading away from the larger store and moving toward smaller specialty stores. Rather than finding department categories within one store, today's consumer is looking for department categories within one lifestyle center.

"Retailers in lifestyle centers are often national or larger regional companies with higher-end product lines catering to a narrower, upscale market," Keiter tells GSR. "The primary shopper is upper-income that wants a wider selection of products that are not offered in even the better department stores. Bebe's move is just one more example of upper-end retailers moving to this type of retail venue."

Bebe is indeed following a line of retailers that have branched out into the specialty retail arena. Some of the more recent examples include: American Eagle Outfitters launching Martin + OSA; Pacific Sunwear starting One Thousand Steps, its new accessories and footwear chain; Gap Inc. opening Forth & Towne; and Abercrombie, which last year launched Reuhl, a store that targets shoppers ages 22 to 30.

Bebe Stores Inc. designs, develops and produces women's apparel and accessories, which it markets under the bebe, Bebe Sport and bebe O names. Bebe currently operates 224 stores, of which 170 are bebe stores, 19 are bebe outlet stores and 35 are Bebe Sport stores located in the United States, Puerto Rico and Canada.

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