Bebe Stores, Inc. (BEBE) SEC Filing 10-K Annual report for the fiscal year ending Saturday, July 5, 2008

Exhibit 99.1

Contact:  Walter Parks

Chief Operating Officer

bebe stores, inc.

(415) 715-3900

bebe stores, inc.

Announces fourth Quarter Earnings of $0.18 per share

BRISBANE, CALIF. – August 21, 2008 – bebe stores, inc. (NASDAQ:BEBE) today announced unaudited financial results for the fourth quarter ended July 5, 2008.

Net sales for the fourth quarter ended July 5, 2008 were $171.5 million, up 5.4% from $162.7 million reported for the fourth quarter ended July 7, 2007. Same store sales for the quarter ended July 5, 2008 decreased 5.6% compared to a decrease of 5.7% for the fourth quarter in the prior year.

Gross margin as a percentage of net sales decreased to 45.8% in the fourth quarter of fiscal 2008, compared to 48.1% in the fourth quarter of fiscal 2007.  The decrease in gross margin as a percentage of net sales from the prior year of 2.3% was primarily due to an increase in inventory reserves, outbound freight expense and unfavorable occupancy leverage, partially offset by higher merchandise margin.

SG&A expenses for the fourth quarter of fiscal 2008 were $58.1 million, or 33.9% of net sales, compared to $53.2 million, or 32.7% of net sales for the same period of the prior year.  The increase in SG&A expenses as a percent of sales is primarily due to deleveraging of fixed store expenses.

Operating income for the fourth quarter of fiscal 2008 was $20.4 million or 11.9% of net sales, compared to $25.1 million or 15.4% of net sales for the same period of the prior year.

The effective tax rate for the fourth quarter of fiscal 2008 increased to 33.0% from 30.2% in the fourth quarter of fiscal 2007, primarily due to a year end adjustment to our effective tax rate made in the fourth quarter of fiscal 2007.

Net income for the fourth quarter was $16.0 million compared to $19.7 million for the same period in the prior year.  Diluted earnings per share for the fourth quarter were $0.18 compared to $0.21 per share in the prior year.

Net sales for the year-to-date period ended July 5, 2008 were $687.6 million, up 2.5% from $670.9 million for the year-to-date period ended July 7, 2007.  Fiscal 2007 includes an additional week of sales due to the 53^rd week in fiscal 2007. Same store sales for the year-to-date period ended July 5, 2008 decreased 7.6% compared to an increase of 2.9% in the prior year.  Due to the 53^rd week in fiscal 2007, same store sales exclude the additional week from fiscal January 2007.

Net income for the year-to-date period ended July 5, 2008 was $63.1 million compared to $77.3 million in the prior year.  Diluted earnings per share for the year-to-date period ended July 5, 2008 was $0.69 compared to $0.81 per share in the prior year.

As of July 5, 2008, we had cash and investments totaling approximately $359 million of which approximately $236 million were invested in auction rate securities (“ARS”). Due to the recent failures of these auctions we recorded an impairment charge of approximately $7.8 million as of July 5, 2008.  During the quarter, approximately $30 million of our auction rate securities were called or sold in successful auctions.  Because our auction rate securities are comprised of federally insured student loan backed securities and insured municipal authority bonds we believe the impairment to be temporary and therefore the impairment charge has been recorded in other comprehensive income, a component of shareholders’ equity as opposed to the income statement.

During the fourth quarter ended July 5, 2008, the Company opened fourteen stores, including six bebe stores and one BEBE SPORT store, seven 2b bebe outlet stores and closed one bebe store. In addition, we expanded four existing bebe stores resulting in total square footage growth of 6%.

For the year-to-date period the Company’s capital expenditures were approximately $41.8 million and depreciation expense was approximately $22.7 million.