|UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q


(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended March 31, 2004


OR


( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR
 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File Number 0-24395
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|bebe stores, inc.(Exact name of registrant as specified in its charter)
|-----------------------------------------------------------------------

|California(State or Jurisdiction of Incorporation
 or Organization) | 94-2450490(IRS EmployerIdentification
 Number)
|------------------------------------------------------------------- | ----------------------------------------------

|400 Valley Drive Brisbane, California 94005(Address of principal executive offices) Telephone: (415) 715-3900


Indicate by check mark
 whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
 Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the
 registrant was required to file such reports), and (2) has been subject to such filing requirements
 for the past 90 days.  [X] Yes [ ] No


Indicate by check mark
 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange
 Act).  [X] Yes [ ] No


Indicate the number
 of shares outstanding of each of the issuers of common stock, as of the latest practicable date.


COMMON STOCK, PAR VALUE OF $0.001 PER SHARE,
26,014,451 SHARES OUTSTANDING AS OF APRIL 30, 2004.  SUCH SHARES WERE CONVERTED TO
39,021,677 SHARES AFTER THE 3 FOR 2 STOCK SPLIT.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|bebe stores, inc.


TABLE OF CONTENTS
|-------------------------------------

|                                                                                                                                |                                                                                      
|------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------
|PART I                                                                                                                          | FINANCIAL INFORMATION                                                                
|ITEM 1.                                                                                                                         | Condensed Consolidated Financial Statements                                          
|Condensed Consolidated Balance Sheets as of March 31, 2004, June 30, 2003 and March 31, 2003                                   
|Condensed Consolidated Statements of Earnings for the three months and nine months ended March 31,                2004 and 2003
|Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2004 and 2003                              
|Notes to Condensed Consolidated Financial Statements                                                                           
|ITEM 2.                                                                                                                         | Management's Discussion and Analysis of Financial Condition and Results of Operations
|ITEM 3.                                                                                                                         | Quantitative and Qualitative Disclosures about Market Risk                           
|ITEM 4.                                                                                                                         | Controls and Procedures                                                              
|PART II                                                                                                                         | OTHER INFORMATION                                                                    
|ITEM 1.                                                                                                                         | Legal Proceedings                                                                    
|ITEM 2.                                                                                                                         | Changes in Securities and Use of Proceeds                                            
|ITEM 3.                                                                                                                         | Defaults Upon Senior Securities                                                      
|ITEM 4.                                                                                                                         | Submission of Matters to a Vote of Security Holders                                  
|ITEM 5.                                                                                                                         | Other Information                                                                    
|ITEM 6.                                                                                                                         | Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                                                                                                     
|EXHIBIT INDEX                                                                                                                  

---

|PART I.  FINANCIAL INFORMATIONITEM
 1. Condensed Consolidated Financial Statements
|----------------------------------------------------------------------------------

|bebe stores, inc.CONDENSED CONSOLIDATED BALANCE
 SHEETS(Dollars in thousands, except share data)(unaudited)
|-----------------------------------------------------------------------------------------------------------

|                                                                                                                                                              |  |    |     | As of March 31, |    |     | As of June 30, |    |    | As of March 31, | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -- | --- | --------------- | -- | --- | -------------- | -- | -- | --------------- | 
|                                                                                                                                                              |  |    |     | 2004            |    |     | 2003           |    |    | 2003            | 
|                                                                                                                                                              |  |    |     |                 |    |    
|Assets:                                                                                                                                                       |  |   
|Current assets:                                                                                                                                               |  |   
|Cash and equivalents                                                                                                                                          |  |    | $   | 170,624         |    | $   | 132,889        |    | $  | 120,833         | 
|Short term marketable securities                                                                                                                              |  |    |     | --              |    |     | 10,500         |    |    | 10,400          | 
|Receivables                                                                                                                                                   |  |    |     | 1,794           |    |     | 1,750          |    |    | 5,610           | 
|Inventories                                                                                                                                                   |  |    |     | 26,553          |    |     | 25,422         |    |    | 25,686          | 
|Prepaid and other                                                                                                                                             |  |    |     | 5,681           |    |     | 6,289          |    |    | 5,626           | 
|                                                                                                                                                              |  |    |     |                 |    |    
|Total current assets                                                                                                                                          |  |    |     | 204,652         |    |     | 176,850        |    |    | 168,155         | 
|Equipment and leasehold improvements, net                                                                                                                     |  |    |     | 60,975          |    |     | 52,305         |    |    | 53,115          | 
|Long term marketable securities                                                                                                                               |  |    |     | 7,875           |    |     | 7,875          |    |    | 7,875           | 
|Other assets                                                                                                                                                  |  |    |     | 4,915           |    |     | 4,948          |    |    | 6,287           | 
|                                                                                                                                                              |  |    |     |                 |    |    
|Total assets                                                                                                                                                  |  |    | $   | 278,417         |    | $   | 241,978        |    | $  | 235,432         | 
|                                                                                                                                                              |  |    |     |                 |    |    
|Liabilities and Shareholders' Equity:                                                                                                                         |  |   
|Current liabilities:                                                                                                                                          |  |   
|Accounts payable                                                                                                                                              |  |    | $   | 13,247          |    | $   | 15,310         |    | $  | 13,536          | 
|Accrued liabilities                                                                                                                                           |  |    |     | 16,290          |    |     | 11,700         |    |    | 12,504          | 
|                                                                                                                                                              |  |    |     |                 |    |    
|Total current liabilities                                                                                                                                     |  |    |     | 29,537          |    |     | 27,010         |    |    | 26,040          | 
|Deferred rent                                                                                                                                                 |  |    |     | 16,199          |    |     | 13,623         |    |    | 12,268          | 
|                                                                                                                                                              |  |    |     |                 |    |    
|Total liabilities                                                                                                                                             |  |    |     | 45,736          |    |     | 40,633         |    |    | 38,308          | 
|                                                                                                                                                              |  |    |     |                 |    |    
|Commitments and contingencies                                                                                                                                 |  |   
|Shareholders' equity:                                                                                                                                         |  |   
|Preferred stock-authorized 1,000,000 shares at $0.001 par         value per share; no shares issued and outstanding                                           |  | -- |     |                 | -- |     |                | -- |   
|Common stock-authorized 60,000,000 shares at $0.001 par         value per share; issued and outstanding 38,999,289,          38,524,313 and 38,480,372 shares |  | 26 |     |                 | 26 |     |                | 26 |   
|Additional paid-in capital                                                                                                                                    |  |    |     | 45,694          |    |     | 39,918         |    |    | 39,077          | 
|Deferred compensation                                                                                                                                         |  |    |     | (64             | )  |     | (75            | )  |    | --              | 
|Accumulated other comprehensive income                                                                                                                        |  |    | 422 |                 |    | 269 |                |    | 65 |                
|Retained earnings                                                                                                                                             |  |    |     | 186,603         |    |     | 161,207        |    |    | 157,956         | 
|                                                                                                                                                              |  |    |     |                 |    |    
|Total shareholders' equity                                                                                                                                    |  |    |     | 232,681         |    |     | 201,345        |    |    | 197,124         | 
|                                                                                                                                                              |  |    |     |                 |    |    
|Total liabilities and shareholders' equity                                                                                                                    |  |    | $   | 278,417         |    | $   | 241,978        |    | $  | 235,432         | 
|                                                                                                                                                              |  |    |     |                 |    |    

|See
 accompanying notes to condensed consolidated financial statements.
|-----------------------------------------------------------------------

|3
|-

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|bebe stores, inc.CONDENSED CONSOLIDATED STATEMENTS
 OF EARNINGS(Amounts in thousands, except per share data)(unaudited)
|-----------------------------------------------------------------------------------------------------------------------

|                                                  |   |        | Three Months Ended March 31, |        | Nine Months Ended March 31, |  
|------------------------------------------------- | - | ------ | ---------------------------- | ------ | --------------------------- | -
|                                                  |   |        |                              | 2004   |                             |  
|                                                  |   |        |                              |        |                             |  
|Net sales                                         | $ | 83,637 |                              | $      | 68,772                      |  
|Cost of sales, including production and occupancy |   | 44,924 |                              |        | 39,839                      |  
|                                                  |   |        |                              |        |                             |  
|Gross profit                                      |   |        |                              | 38,713 |                             |  
|Selling, general and administrative expenses      |   | 30,485 |                              |        | 29,258                      |  
|                                                  |   |        |                              |        |                             |  
|Income (loss) from operations                     |   |        |                              | 8,228  |                             |  
|Interest (income) and other, net                  |   |        |                              | (524   | )                           |  
|                                                  |   |        |                              |        |                             |  
|Earnings before income taxes                      |   |        |                              | 8,752  |                             |  
|Provision for income taxes                        |   |        |                              | 3,288  |                             |  
|                                                  |   |        |                              |        |                             |  
|Net earnings                                      |   |        | $                            | 5,464  |                             | $
|                                                  |   |        |                              |        |                             |  
|Basic earnings per share                          |   |        | $                            | 0.14   |                             | $
|Diluted earnings per share                        |   |        | $                            | 0.14   |                             | $
|Basic weighted average shares outstanding         |   | 38,869 |                              |        | 38,475                      |  
|Diluted weighted average shares outstanding       |   | 39,797 |                              |        | 38,832                      |  

|See
 accompanying notes to condensed consolidated financial statements.
|-----------------------------------------------------------------------

|4
|-

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|bebe stores, inc.CONSOLIDATED STATEMENTS OF
 CASH FLOWS(Amounts in thousands)(unaudited)
|----------------------------------------------------------------------------------------

|                                                                                |  |  | Nine Months Ended March 31, |        
|------------------------------------------------------------------------------- |  |  | --------------------------- | -------
|                                                                                |  |  |                             | 2004   
|                                                                                |  |  |                             |        
|Cash flows from operating activities:                                           |  | 
|Net earnings                                                                    |  |  | $                           | 25,395 
|Adjustments to reconcile net earnings to cash provided by operating activities: |  | 
|Non-cash compensation expense                                                   |  |  |                             | 111    
|Depreciation and amortization                                                   |  |  |                             | 9,271  
|Tax benefit from stock options exercised                                        |  |  |                             | 773    
|Net loss (gain) on disposal of property                                         |  |  |                             | 96     
|Changes in operating assets and liabilities:                                    |  | 
|Receivables                                                                     |  |  |                             | (103   
|Inventories                                                                     |  |  |                             | (1,128 
|Other assets                                                                    |  |  |                             | (151   
|Prepaid expenses                                                                |  |  |                             | 621    
|Accounts payable                                                                |  |  |                             | (2,062 
|Accrued liabilities                                                             |  |  |                             | 4,582  
|Income taxes payable                                                            |  |  |                             | 21     
|Deferred rent                                                                   |  |  |                             | 2,576  
|                                                                                |  |  |                             |        
|Net cash provided by operating activities                                       |  |  |                             | 40,002 
|                                                                                |  |  |                             |        
|Cash flows from investing activities:                                           |  | 
|Purchase of equipment and leasehold improvements                                |  |  |                             | (17,883
|Proceeds from sales of equipment                                                |  |  |                             | --     
|Purchase of marketable securities                                               |  |  |                             | --     
|Proceeds from sale of marketable securities                                     |  |  |                             | 10,500 
|                                                                                |  |  |                             |        
|Net cash used by investing activities                                           |  |  |                             | (7,383 
|                                                                                |  |  |                             |        
|Cash flows from financing activities:                                           |  | 
|Repayments of capital leases                                                    |  |  |                             | --     
|Net proceeds from issuance of common stock                                      |  |  |                             | 4,903  
|                                                                                |  |  |                             |        
|Net cash provided by financing activities                                       |  |  |                             | 4,903  
|                                                                                |  |  |                             |        
|Effect of exchange rate changes on cash                                         |  |  |                             | 213    
|Net increase (decrease) in cash and equivalents                                 |  |  |                             | 37,735 
|Cash and equivalents:                                                           |  | 
|Beginning of year                                                               |  |  |                             | 132,889
|                                                                                |  |  |                             |        
|End of period                                                                   |  |  | $                           | 170,624
|                                                                                |  |  |                             |        

|See
 accompanying notes to condensed consolidated financial statements.
|-----------------------------------------------------------------------

|5
|-

---

|bebe stores, inc.


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


INTERIM FINANCIAL STATEMENTS



The
 accompanying condensed consolidated balance sheets of bebe stores, inc. ("The Company") as of March 31, 2004
and March 31, 2003, the condensed consolidated statements of earnings for the three months and
 nine months ended March 31, 2004 and 2003 and the condensed consolidated statements of cash flows for
 the nine months ended March 31, 2004 and 2003 have been prepared in accordance with accounting principles
 generally accepted in the United States of America for interim financial information and with the instructions
 to Form 10-Q and Article 10 of Regulation S-X, without audit. Accordingly, they do not include all of
 the information and footnotes required by accounting principles generally accepted in the United States
 of America for complete financial statements. In the opinion of management, all adjustments (consisting
 of normal recurring accruals) considered necessary to present fairly the financial position at the balance
 sheet dates and the results of earnings for three months then ended have been included. The condensed
 consolidated balance sheet at June 30, 2003, presented herein, was derived from the audited balance
 sheet included in the Form 10-K for the fiscal year ended June 30, 2003.



Our
 business is affected by the pattern of seasonality common to most retail apparel businesses. The results
 for the periods presented are not necessarily indicative of future financial results.



Certain
 notes and other information have been condensed or omitted from the interim condensed consolidated financial
 statements presented in this Quarterly Report on Form 10-Q. Therefore, these condensed consolidated
 financial statements should be read in conjunction with our Annual Report on Form 10-K for the year
 ended June 30, 2003.

In April
 2004, the Company declared a 3 for 2 stock split, which became effective May 5, 2004.  All share and per
 share amounts included herein have been adjusted for this 3 for 2 stock split.


MARKETABLE SECURITIES



The
 Companys marketable securities are classified as available for sale. Marketable securities are comprised
 of closed-end variable interest rate funds that invest primarily in tax-exempt municipal bonds. Short-term
 marketable securities consist of investments with maturities less than or equal to 1 year. Long-term
 marketable securities consist of investments with maturities greater than 1 year. As of March 31, 2004,
 the carrying value approximated the fair value based on the nature of the investments held.


EARNINGS PER SHARE







Basic
 earnings per share is computed as net earnings divided by the weighted average number of common shares
 outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur
 from common shares issuable through stock options, warrants and other convertible securities.


6

The
 following is a reconciliation of the number of shares used in the basic and diluted earnings per share
 computations:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                              |  | Three Months Ended March 31, |  | Nine Months Ended March 31, | 
|------------------------------------------------------------- |  | ---------------------------- |  | --------------------------- | 
|                                                              |  |                              |  |                            
|                                                              |  | 2004                         |  | 2003                        | 
|                                                              |  |                              |  |                             | 
|                                                              |  | (In thousands)               |  | (In thousands)              | 
|Basic weighted average number of shares outstanding           |  | 38,869                       |  | 38,475                      | 
|Incremental shares from the assumed issuance of stock options |  | 928                          |  | 357                         | 
|                                                              |  |                              |  |                             | 
|Diluted weighted average number of shares outstanding         |  | 39,797                       |  | 38,832                      | 
|                                                              |  |                              |  |                             | 

|The
 number of incremental shares from the assumed issuance of stock options is calculated applying the treasury
 stock method.



Excluded
 from the computation of the number of diluted weighted average shares outstanding were antidilutive
 options of 986,876 and 1,724,002 for the three months ended March 31, 2004 and 2003, respectively,
 and 614,051 and 1,809,433 for the nine months ended March 31, 2004 and 2003, respectively.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|COMPREHENSIVE INCOME



Comprehensive
 income consists of net income and other comprehensive income (income, expenses, gains and losses that
 bypass the income statement and are reported directly as a separate component of equity). The Company's
 comprehensive income equals net income plus or minus foreign currency translation adjustments for all periods
 presented.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                  |  |                        |               |                   |               |   |               |  |               |        |  |   |        | 
|--------------------------------- |  | ---------------------- | ------------- | ----------------- | ------------- | - | ------------- |  | ------------- | ------ |  | - | ------ | 
|                                  |  | Three Months Ended     |               | Nine Months Ended
|                                  |  |                        |               |                  
|                                  |  |                        | March 31,2004 |                   | March 31,2003 |   | March 31,2004 |  | March 31,2003 |       
|                                  |  |                        |               |                   |               |   |               |  |               |       
|                                  |  | (Dollars in thousands)
|Net income                        |  |                        | $             | 5,464             |               | $ | 142           |  | $             | 25,395 |  | $ | 16,028 | 
|Other comprehensive income (loss) |  |                        |               | (103              | )             |   | 166           |  |               | 153    |  |   | 102    | 
|                                  |  |                        |               |                   |               |   |               |  |               |       
|Total comprehensive income        |  |                        | $             | 5,361             |               | $ | 308           |  | $             | 25,548 |  | $ | 16,130 | 
|                                  |  |                        |               |                   |               |   |               |  |               |       

|STOCK PLAN INFORMATION



The
 Company has various stock option plans that provide for the granting of stock options to officers, key
 employees and directors. The Company accounts for stock-based compensation using the intrinsic value
 method prescribed in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees,
 whereby the options are granted at market price, and therefore no compensation costs are recognized.
However, the Company recorded compensation expense, net of income tax, of $17,000 for the three months ended March 31, 2004 and $70,000
for the nine months ended March 31, 2004 related to restricted stock units granted to the Board of Directors.
The Company has elected to retain its current method of accounting as described above and has adopted
 the Statement of Financial Accounting Standard (SFAS) Nos. 123 and 148 disclosure requirements.  The fair
value of option grants and shares issued are estimated on the date of the grant
using the Black-Scholes option-pricing model.

7

If
 compensation expense for the Companys various stock option plans had been determined based upon the
 fair values at the grant dates for awards under those plans in accordance with SFAS No. 123, the Companys
 pro-forma net earnings, basic and diluted earnings per common share would have been as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                    |  |                                                  |               |                   |               |   |               |   |               |        |   |   |        |  
|------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------ | ------------- | ----------------- | ------------- | - | ------------- | - | ------------- | ------ | - | - | ------ | -
|                                                                                                                    |  | Three Months Ended                               |               | Nine Months Ended
|                                                                                                                    |  |                                                  |               |                  
|                                                                                                                    |  |                                                  | March 31,2004 |                   | March 31,2003 |   | March 31,2004 |   | March 31,2003 |       
|                                                                                                                    |  |                                                  |               |                   |               |   |               |   |               |       
|                                                                                                                    |  | (Dollars in thousands, except per share amounts)
|Net income                                                                                                          |  |                                                 
|As reported                                                                                                         |  |                                                  | $             | 5,464             |               | $ | 142           |   | $             | 25,395 |   | $ | 16,028 |  
|Add: Stock based employee compensation,         net of income tax                                                   |  |                                                  |               | 17                |               |   | 0             |   |               | 70     |   |   | 0      |  
|Deduct: Stock based employee compensation         determined under the fair value method,         net of income tax |  |                                                  |               | (985              | )             |   | (462          | ) |               | (2,037 | ) |   | (2,012 | )
|                                                                                                                    |  |                                                  |               |                   |               |   |               |   |               |       
|Proforma                                                                                                            |  |                                                  | $             | 4,496             |               | $ | (320          | ) | $             | 23,428 |   | $ | 14,016 |  
|                                                                                                                    |  |                                                  |               |                   |               |   |               |   |               |       
|Basic EPS                                                                                                           |  |                                                 
|As reported                                                                                                         |  |                                                  | $             | 0.14              |               | $ | 0.00          |   | $             | 0.66   |   | $ | 0.42   |  
|Proforma                                                                                                            |  |                                                  | $             | 0.12              |               | $ | (0.01         | ) | $             | 0.60   |   | $ | 0.36   |  
|Diluted EPS                                                                                                         |  |                                                 
|As reported                                                                                                         |  |                                                  | $             | 0.14              |               | $ | 0.00          |   | $             | 0.64   |   | $ | 0.41   |  
|Proforma                                                                                                            |  |                                                  | $             | 0.11              |               | $ | (0.01         | ) | $             | 0.59   |   | $ | 0.36   |  

|LEGAL MATTERS



From
 time to time, we may be involved in litigation relating to claims arising out of our operations. As
 of the date of this filing, we are currently involved in several ongoing legal proceedings.  We cannot
predict with certainty the outcome of these legal proceedings.  Adverse settlements or resolutions could
negatively impact earnings in the quarter of settlement or resolution; however, we do not believe any of
 these proceedings will, individually or in the
aggregate have a material adverse effect on our business, financial condition or results of operations.




Along
 with approximately one hundred and seven other parties, we were named in a class action suit filed on April
 17, 2003, Los Angeles Superior Court (case No. BC294155) concerning the substance of one of the questions on
 our employment application.  Plaintiffs are seeking compensatory, statutory and injunctive relief.  The case
 was dismissed on January 28, 2004, based on a misjoinder of Defendants.  A similar complaint has been filed
 on January 30, 2004, against bebe as an individual Defendant, but bebe has not yet been served.  At this time
 we estimate the potential loss to be approximately $13,000.



Three
 former employees sued bebe on November 20, 2003, in the Superior Court of the State of California, County of
San Mateo (case No. CIV435794) alleging that they were misclassified as exempt employees under California law.
The plaintiffs purport to bring this action on behalf of a class of former and present California bebe store
managers and co-managers.  Plaintiffs are seeking compensatory, statutory and injunctive relief.  At this time
 we are not able to estimate a loss or range of potential losses.




8

A
 former employee sued bebe on January 20, 2004 in the Superior Court of the State of California, County of San
Diego (case No. GIC824505) alleging unpaid wages and unfair business practices.  The plaintiff
 purports to bring the action on behalf of a class of California employees who hold or have held the
 position of Co-Manager or others similarly designated. The lawsuit seeks compensatory, statutory and
 injunctive relief.  At this time we are not able to estimate a loss or range of potential losses.



On February
23, 2004, The Wet Seal, Inc. filed a lawsuit in the Superior Court of the State of California, County of Orange
against bebe and its current Chief Executive Officer, Greg Scott, who previously was employed as President of
The Wet Seal's Arden B. division until January 7, 2004.  The lawsuit asserts causes of action against Scott
and/or bebe for (1) specific performance of contract; (2) intentional interference with contract; (3) misappropriation
of trade secrets; and (4) unfair competition.  At this time we are not able to estimate a loss or range
of potential losses.



We
 intend to defend ourselves vigorously against the above claims.


ITEM 2.   MANAGEMENT'S DISCUSSION AND
 ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The
 following discussion contains forward-looking statements that involve risks and uncertainties. Our actual
 results may differ materially from the results discussed in the forward-looking statements. This Form
 10-Q includes forward-looking statements that could differ from actual future results. Statements that
 are predictive in nature, that depend upon or refer to future events or conditions that include words
 such as expects, anticipates, intends, plans, believes, estimates, thinks, and similar
 expressions are forward-looking statements. These statements involve known and unknown risks, uncertainties
 and other factors, including our ability to respond to changing fashion trends, competition within our
 industry, our ability to manage our growth and other factors described below, that may cause our actual
 results and performance to be materially different from any future results or performance expressed
 or implied by these forward-looking statements. Although we believe that these statements are based
 upon reasonable assumptions, we cannot assure you that our goals will be achieved. These forward-looking
 statements are made as of the date of this Form 10-Q, and we assume no obligation to update or revise
 them or provide reasons why actual results may differ. Factors that might cause such a difference include,
 but are not limited to, openings in key management positions, miscalculation of the demand for our products,
 effective management of our growth, decline in comparable store sales performance, ongoing competitive
 pressures in the apparel industry, changes in the level of consumer spending or preferences in apparel,
 our ability to attract and retain key management personnel and/or other factors discussed in Risks
 That May Affect Results and elsewhere in this Form 10-Q.

Our
 current fiscal year end is June 30, 2004 and we report on a calendar month basis.  Effective July 1, 2004,
we will switch our month end to a 4-4-5 week period end.  Each period will end on a Saturday.  Fiscal year
2005 will start on July 1, 2004 and will end on July 2, 2005.  The quarter end beginning with July 1, 2004 will
end October 2, 2004 and will include 3 additional days in the reporting period.



9

OVERVIEW



We
 design, develop and produce a distinctive line of contemporary womens apparel and accessories. While
 we attract a broad audience, our target customers are 21 to 35-year-old women who seek current fashion
 trends interpreted to suit their lifestyle needs. The bebe look, appeals to a hip, sophisticated,
 body-conscious woman who takes pride in her appearance. The bebe customer expects value in the form
 of quality at a competitive price.








Our
 broad product offering includes tops, pants, skirts, dresses, suits, logo products, casual sportswear,
 activewear, outerwear, handbags and other accessories. We design and develop the majority of our merchandise
 in-house. The merchandise is then manufactured to our specifications, the majority of which is produced
 domestically. The remainder of our merchandise is selected directly from third party manufacturers
 lines.











Our
 stores are designed to create a clean, upscale boutique environment, featuring contemporary furnishings
 and sophisticated details. The open floor design allows customers to readily view the majority of the
 merchandise on display while store fixtures allow for the efficient display of garments, outfits and
 accessories.





We
 market our products under the bebe and BEBE SPORT brand names through our 189 retail stores, of which
 155 are bebe stores, 16 are BEBE SPORT stores, and 18 are bebe outlet stores. These stores are located
 in 32 states, the District of Columbia and Canada. In addition, we have an on-line store at www.bebe.com
 and our licensees operate 12 international stores.





bebe stores. The Company was founded by Manny
 Mashouf, our current Chairman of the Board. We opened our first store in
 San Francisco, California in 1976, which was also the year we incorporated.



BEBE SPORT stores. The Company launched BEBE
 SPORT in the first half of fiscal 2003 to satisfy the casual lifestyle needs of the bebe customer. The
 BEBE SPORT product line is active inspired sportswear featuring cotton knits, fleece, casual active
 bottoms, sweaters, outerwear and accessories that are easy, sexy and modern.



bebe outlet stores. The Company utilizes the
 outlets as a clearance vehicle for merchandise from our retail stores. Additionally, we round out the
 inventory of these stores with full price logo merchandise and, to a lesser extent, garments specifically
 produced for the outlet stores often using excess fabric inventory.



On-line store.The on-line store offers the
 customer an extension of the bebe store experience and provides a broader merchandise assortment from
 which the customer can choose. It is also used as a vehicle to communicate with our customers through
 advertising and direct mail. For the nine months ended March 31, 2004, bebe.com represented
 approximately 3% of total revenue.



We
 reinforce our brand with a distinctive lifestyle image advertising campaign, using prominent fashion
 photographers. We believe that our emphasis on non-product specific lifestyle advertising promotes brand
 awareness and attracts customers. We communicate the images to consumers through a variety of advertising
 vehicles including fashion magazines, bus shelters, in-store displays, customer mailings and the BEBE
 SPORT catalog. We further enhance the bebe brand image by designing our on-line and retail stores to
 create an upscale, inviting, boutique environment.



10

CRITICAL ACCOUNTING POLICIES



Managements
 Discussion and Analysis of Financial Condition and Results of Operations are based upon our consolidated
 financial statements, which have been prepared in conformity with accounting principles generally accepted
 in the United States of America.



The
 preparation of these financial statements requires the appropriate application of certain accounting
 policies, many of which require us to make estimates and assumptions about future events and their impact
 on amounts reported in our financial statements and related notes. Since future events and their impact
 cannot be determined with certainty, the actual results will inevitably differ from our estimates. Such
 differences could be material to the financial statements. We believe our application of accounting
 policies, and the estimates inherently required therein, are reasonable. These accounting policies and
 estimates are constantly reevaluated, and adjustments are made when facts and circumstances dictate
 a change. Our accounting policies are more fully described in Note 1 to the financial statements in
 our annual report on Form 10-K for the year ended June 30, 2003.



We have identified certain critical accounting policies,
 which are described below:



Inventories.  Our inventories are stated
 at the lower of weighted average cost or market. We estimate shrinkage for the period between the last
 physical count and balance sheet date. Our estimate can be affected by shrinkage trends. In order to
 assess that raw material is recorded properly, we age the fabric inventory and record a reserve to reduce
 the cost in accordance with our established policy, which is based on historical experience. To ensure
 that finished goods inventory is recorded properly, we review our inventory and reduce the cost if the
 selling price is marked down below cost. These assumptions can have an impact on current and future
 operating results and financial position.







Long-lived assets.  We review long-lived
 assets for impairment whenever events or changes in circumstances, such as store closures or poor performing
 stores, indicate that the carrying value of an asset may not be recoverable. If the undiscounted cash
 flows from the long-lived assets are less than the carrying value we record an impairment charge equal
 to the difference between the carrying value and the assets fair value. In addition, at the time a
 decision is made to close a store, we record an impairment charge, if appropriate, or accelerate depreciation
 over the revised useful life. Historically, our impairment charges have been immaterial. During the
 nine months ended March 31, 2004, we recorded an impairment charge of $81,000 for a poor performing store where
 the carrying value of the asset will not be recovered.  We believe at this time that the long-lived assets' carrying
values and useful lives continue to be appropriate.



Sales Return Reserve. We record a reserve
 for estimated product returns based on historical return trends. As of March 31, 2004, we had a sales return
 reserve of $653,000. If actual returns are greater than those projected, additional
sales returns may be recorded in the future.
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|Income Taxes. We record reserves for estimates
 of probable settlements of domestic and foreign tax audits.  At any one time, many tax years may
 be subject to audit by various taxing jurisdictions.  The results of these audits and negotiations
 with taxing authorities may affect our tax expense. Our effective tax rate in a given financial statement
 period may be materially impacted by changes in the mix and level of earnings.


11

RESULTS OF OPERATIONS



We
 operated 189 stores at March 31, 2004 compared to 177 stores at March 31, 2003. We opened 10 new stores
 in the first nine months of fiscal 2004 and expect to open approximately 20 stores during fiscal 2004.
 In addition to our traditional retail locations, we also operate an on-line store, which can be found
 at www.bebe.com.



The
 following table sets forth certain financial data as a percentage of net sales for the periods indicated:
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                      |  | Three Months Ended March 31, |   | Nine Months Ended March 31, |   |      
|----------------------------------------------------- |  | ---------------------------- | - | --------------------------- | - | -----
|                                                      |  |                              |  
|                                                      |  | 2004                         |   | 2003                        |   | 2004 
|                                                      |  |                              |   |                             |   |      
|Statements of Operations Data:                        | 
|Net sales                                             |  | 100.0                        | % | 100.0                       | % | 100.0
|Cost of sales, including production and occupancy (1) |  | 53.7                         |   | 57.9                        |   | 53.0 
|                                                      |  |                              |   |                             |   |      
|Gross profit                                          |  | 46.3                         |   | 42.1                        |   | 47.0 
|Selling, general and administrative expenses (2)      |  | 36.5                         |   | 42.5                        |   | 33.0 
|                                                      |  |                              |   |                             |   |      
|Income from operations                                |  | 9.8                          |   | (0.4                        | ) | 14.0 
|Interest income and other, (net)                      |  | (0.7                         | ) | (0.8                        | ) | (0.6 
|                                                      |  |                              |   |                             |   |      
|Earnings before income taxes                          |  | 10.5                         |   | 0.4                         |   | 14.6 
|Provision for income taxes                            |  | 4.0                          |   | 0.2                         |   | 5.5  
|                                                      |  |                              |   |                             |   |      
|Net earnings                                          |  | 6.5                          | % | 0.2                         | % | 9.1  
|                                                      |  |                              |   |                             |   |      

| | (1) | Cost of sales includes the cost of merchandise, production costs and occupancy costs.
| | --- | -------------------------------------------------------------------------------------

| | (2) | Selling, general and administrative expenses primarily consist of non-occupancy store costs, corporate overhead and advertising costs.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------

|Net
 Sales. Net sales increased to $83.6 million during the three months ended March 31, 2004 from $68.8
 million in the same period of the prior year, an increase of $14.8 million,
 or 21.5%. Net sales for the quarter included $73.0 million from stores open more than one year. During
 the quarter comparable store sales increased 16.7% versus the prior year. The increase in comparable
 store sales performance was largely due to a more balanced assortment of merchandise that contributed
 to an increase in transactions per store. The remaining sales of $10.6 million were generated by stores
 not included in the comparable store sales base, on-line sales, wholesale sales to international licensees,
 and royalty revenue from product licensees.         For
 the nine months ended March 31, 2004, net sales increased to $279.2 million from $243.4 million in the
 same nine-month period of the prior year, an increase of $35.8 million, or 14.7%. Net sales for the
 nine-month period included $245.8 million from stores open more than one year, representing a9.7% increase in comparable store sales versus the prior year. The increase in comparable store
 sales performance was largely due to a more balanced assortment of merchandise that contributed to an
 increase in transactions per store. The remaining sales of $33.4 million were generated by stores not
 included in the comparable store sales base, on-line sales, wholesale sales to international licensees,
 and royalty revenue from product licensees.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12

---

|                                                      |  | Three Months Ended March 31, |   | Nine Months Ended March 31, |    |            
|----------------------------------------------------- |  | ---------------------------- | - | --------------------------- | -- | -----------
|                                                      |  |                              |  
|                                                      |  | 2004                         |   | 2003                        |    | 2004       
|                                                      |  |                              |   |                             |    |            
|Net sales (In thousands)                              |  | $  83,637                    |   | $ 68,772                    |    | $279,203   
|Total net sales increase (decrease) percentage        |  | 21.5                         | % | (2.6                        | %) | 14.7       
|Comparable store sales increase (decrease) percentage |  | 16.7                         | % | (11.0                       | %) | 9.7        
|Net sales per average square foot (1)                 |  | $       124                  |   | $       107                 |    | $       419
|Square footage - at end of period (In thousands)      |  | 673                          |   | 643                         |    | 673        
|                                                      |  |                              |   |                             |    |            
|Number of Store Locations:                            | 
|Beginning of Period                                   |  | 188                          |   | 178                         |    | 180        
|New store locations                                   |  | 2                            |   | 2                           |    | 10         
|Closed store locations                                |  | 1                            |   | 3                           |    | 1          
|End of Period                                         |  | 189                          |   | 177                         |    | 189        
|                                                      |  |                              |   |                             |    |            

| | (1) | Net sales per average square foot is calculated using net store sales and a monthly average store square footage.
| | --- | -----------------------------------------------------------------------------------------------------------------

|
|

|Gross
 Profit.Gross profit increased to $38.7 million during the three months ended March 31, 2004 from
 $28.9 million for the same three-month period of the prior year, an increase of $9.8 million, or 33.9%.
 As a percentage of net sales, gross profit increased to 46.3% for the three-month period ended March
 31, 2004 from 42.1% in the same three-month period of the prior year. The increase in gross profit as
 a percentage of net sales from the prior year of 4.2% was the result of improved merchandise margins
 and favorable occupancy leverage as a result of higher comparable store sales.    
     Gross profit increased to $131.3 million during the nine months ended March
 31, 2004 from $111.0 million for the same nine-month period of the prior year, an increase of $20.3
 million, or 18.3%. As a percentage of net sales, gross profit increased to 47.0% for the nine-month
 period ended March 31, 2004 from 45.6% in the same nine-month period of the prior year. The increase
 in gross profit as a percentage of net sales from the prior year of 1.4% was the result of improved
 merchandise margins and favorable occupancy leverage as a result of higher comparable store sales.



Selling,
 General and Administrative Expenses.Selling, general and administrative expenses, which primarily
 consist of non-occupancy store costs, corporate overhead and advertising costs, increased to $30.5 million
 during the three months ended March 31, 2004 from $29.3 million in the same period of the prior year,
 an increase of $1.2 million, or 4.1%. As a percentage of net sales, these expenses decreased to 36.5%
 during the three-month period from 42.5% in the same period of the prior year. This decrease as a percentage
 of net sales was primarily due to lower compensation associated with improved store productivity and lower
 depreciation expense due to fully depreciated assets and store closures offset by the accrual for incentive
compensation.
         For the nine months ended March
 31, 2004, selling, general and administrative expenses increased to $92.1 million from $87.0 million
 in the same nine-month period of the prior year, an increase of $5.1 million, or 5.9%. As a percentage
 of net sales, these expenses decreased to 33.0% during the nine-month period from 35.7% in the same
 period of the prior year. This decrease as a percentage of net sales was primarily due to lower compensation
 associated with improved store productivity and lower depreciation expense due to fully depreciated assets
 and store closures offset by the accrual for incentive compensation.

13

Interest
 Income and Other, Net. We generated approximately $0.5 million of interest income and other, net
 during the three months ended March 31, 2004 as compared to approximately $0.6 million in the same three-month
 period of the prior year. For the nine months ended March 31, 2004, we generated approximately $1.5
 million of interest income and other, net as compared to approximately $1.6 million in the same nine-month
 period of the prior year. The decreases are the result of lower interest rates offset by higher average
 cash balances.





Provision
 for Income Taxes.The effective tax rate was approximately
 37.5% for both periods.





Seasonality of Business and Quarterly Results



Our
 business varies with general seasonal trends that are characteristic of the retail and apparel industries.
 As a result, our typical store generates a disproportionate amount of our annual net sales in the first
 half of our fiscal year (which includes the fall and holiday selling seasons) compared to the second
 half of our fiscal year. If for any reason our sales were below seasonal norms during the first half
 of our fiscal year, our annual operating results would be negatively impacted. Because of the seasonality
 of our business, results for any quarter are not necessarily indicative of results that may be achieved
 for a full fiscal year.


LIQUIDITY AND CAPITAL RESOURCES



Our
 working capital requirements vary widely throughout the year and generally peak in the first and second
 fiscal quarters. At March 31, 2004, we had approximately $178.5 million of cash and equivalents, and
 marketable securities on hand. In addition, we have a revolving line of credit, under which we can
 borrow or issue letters of credit up to a combined total of $10.0 million. As of March 31, 2004, there
 were no borrowings under the line of credit. As of March 31, 2004, letters of credit outstanding totaled
 $3.9 million.



Net
 cash provided by operating activities for the nine months ended March 31, 2004 was $40.0 million versus
 $26.9 million for the nine months ended March 31, 2003. Cash provided by operating activities for the
 period was primarily generated by earnings before depreciation and deferred rent and changes in working
 capital. The increase from prior year is due primarily to higher net earnings and changes in working capital.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Net
 cash used by investing activities for the nine-month period ended March 31, 2004 was $7.4 million primarily
 due to the purchase of an office building and the opening of 10 new stores
 offset by the sale of marketable securities, whereas, for the nine-month period ended March 31, 2003,
 $30.0 million was used primarily in the purchases of marketable securities, expenditures related to
 the opening of 15 new stores, and investments in management information systems. We expect to open approximately
 20 stores during fiscal 2004 and estimate that total capital expenditures will be approximately $25.0
 million in fiscal 2004.



Net
 cash provided by financing activities was $4.9 million for the nine months ended March 31, 2004 compared
 to $0.4 million for the nine months ended March 31, 2003, and was derived from proceeds from stock option
 exercises.



We
 believe that our cash on hand, together with our cash flows from operations, will be sufficient to meet
 our capital and operating requirements for at least the next 12 months. Our future capital requirements,
 however, will depend on numerous factors, including without limitation, the size and number of new and
 expanded stores and/or store concepts, investment costs for management information systems, corporate
 office and distribution center expansions, potential acquisitions and/or joint ventures, stock repurchase,
 and future results of operations.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14

---

|Inflation



We
 do not believe that inflation has had a material effect on the results of operations in the recent past.
 However, we cannot assure that our business will not be affected by inflation in the future.




RISKS THAT MAY AFFECT RESULTS



Factors
 that might cause our actual results to differ materially from the forward looking statements discussed
 elsewhere in this report, as well as affect our ability to achieve our financial and other goals, include,
 but are not limited to, the following:
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|RISKS RELATING TO OUR BUSINESS:




1.     The success of our business
 depends in large part on our ability to identify fashion trends as well as to react to changing customer
 demand in a timely manner.Consequently, we depend in part upon the continuing favorable market
 response to the creative efforts of our merchandising, design and marketing teams ability to anticipate
 trends and fashions that will appeal to our consumer base. If we miscalculate our customers product
 preferences or the demand for our products, we may be faced with significant excess inventory or lack
 of inventory. Historically, this type of occurrence has resulted in excess fabric for some products,
 missed sales opportunities and markdowns and/or write-offs, which has impaired our profitability, and
 may do so in the future. Similarly, any failure on our part to anticipate, identify and respond effectively
 to changing consumer demands and fashion trends will adversely affect our sales.



2.     If we are unable to obtain
 raw materials or find manufacturing facilities, our financial condition may be harmed.We do not
 own any manufacturing facilities and therefore depend on a limited number of third parties to manufacture
 our products. We place all of our orders for production of merchandise and raw materials by purchase
 order and do not have any long-term contracts with any manufacturer or supplier. If we fail to obtain
 sufficient quantities of raw materials, it could have a harmful effect on our results of operations.
 Furthermore, we have received in the past, and may receive in the future, shipments of products from
 manufacturers that fail to conform to our quality control standards. In such event, unless we are able
 to obtain replacement products in a timely manner, we may lose sales. If we fail to maintain favorable
 relationships with these production facilities and to obtain an adequate supply of quality raw materials
 on commercially reasonable terms, it could harm our business and results of operations.



3.     We depend on third party
 apparel manufacturers for production and storage, and our sales may be negatively affected if the manufacturers
 do not perform acceptably, or if design changes are communicated after the production has begun.We
 develop a significant portion of our merchandise in conjunction with third party apparel manufacturers.
 In some cases, we select merchandise directly from these manufacturers lines. We do not have long-term
 contracts with any third party apparel manufacturers and purchase all of the merchandise from such manufacturers
 by purchase order. Furthermore, we have received in the past, and may receive in the future, shipments
 of products from third party apparel manufacturers that fail to conform to our quality control standards.
 In such event, unless we are able to obtain replacement products in a timely manner, we may lose sales.
 We cannot assure you that third party manufacturers (1) will not supply similar products to our competitors,
 (2) will not stop supplying products to us completely or (3) will supply products that satisfy our quality
 control standards. In addition, certain of our third party manufacturers store our raw materials. In
 the event our inventory was damaged or destroyed and we were unable to obtain replacement raw materials,
 our earnings may be negatively impacted.



In addition, if we decide to change a key element of
 the design after the manufacturing process has begun we may negatively impact the manufacturers ability
 to deliver the products on a timely basis which could impact earnings.

15

4.     Our success depends on
 our ability to attract and retain key employees in order to support our existing business and future
 expansion.From time to time, we actively recruit qualified candidates to fill key positions within
 the Company. There is substantial competition for experienced personnel, which we expect to continue.
 We compete for experienced personnel with companies who have greater financial resources than we do.
 In the past, we have experienced significant turnover of our executive management team and retail store
 personnel. We are also exposed to employment practice litigation due to the large number of employees
 and high turnover of our sales associates. If we fail to attract, motivate and retain qualified personnel,
 it could harm our business and limit our ability to expand.



In addition, we depend upon the expertise and execution
 of our key employees, particularly Manny Mashouf, the founder, Chairman of the Board, and majority shareholder.
We do not carry key person life insurance policies on any of our
 employees. If we lose the services of Mr. Mashouf or any key officers or employees, it could harm our
 business and results of operations.



5.     If we are not able to
 successfully develop and expand our new BEBE SPORT store concept our revenue base and earnings may be
 impaired.During fiscal 2003, we launched a new store concept, BEBE SPORT, in which our product
 offering is focused on active inspired sportswear branded with BEBE SPORT. We have committed significant
 financial and human resources to developing and expanding this concept. The failure of this new store
 concept might result in a negative impact to earnings.



6.     There can be no assurance
 that future store openings will be successful.We expect to open approximately 20 stores in fiscal
 2004, of which approximately 13 will be BEBE SPORT stores. There can be no assurance that these stores,
 or any other stores that we might open in the future, will be successful or that our overall gross profit
 will increase as a result of opening these stores. In addition, most of our new store openings in fiscal
 2004 will be in existing markets. These openings may affect the existing stores net sales volumes and
 profitability. Our failure to predict accurately the demographic or retail environment at any future
 store location could have a material adverse effect on our business, financial condition and results
 of operations.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------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|7.     Any serious disruption
 at our major facilities could have a harmful effect on our business. We currently operate our corporate
 office in Brisbane, California, a distribution facility in Benicia, California, and a design studio
 and production facility in Los Angeles, California. Any serious disruption at these facilities whether
 due to construction, relocation, fire, earthquake, terrorist acts or otherwise would harm our operations
 and could have a harmful effect on our business and results of operations.
 We are in process of implementing a business continuity plan that will address recovery in the event
 of a serious disruption at one of our major facilities.



8.     We face significant competition
 in the retail and apparel industry, which could harm our sales and profitability. The retail and
 apparel industries are highly competitive and are characterized by low barriers to entry. We expect
 competition in our markets to increase. The primary competitive factors in our markets are: brand name
 recognition, sourcing strategies, product styling, quality, presentation and pricing, timeliness of
 product development and delivery, store ambiance, customer service and convenience.

16

We compete with traditional department stores, specialty
 store retailers, business to consumer websites, off-price retailers and direct marketers for, among
 other things, raw materials, market share, retail space, finished goods, sourcing and personnel. Because
 many of these competitors are larger and have substantially greater financial, distribution and marketing
 resources than we do, we may lack the resources to adequately compete with them. If we fail to compete
 in any way, it could harm our business, financial condition and results of operations.



9.     Purchases of the merchandise
 we sell are generally discretionary and are therefore particularly susceptible to economic slowdowns.
 If economic conditions change, our business, financial condition and results of operations
 could be adversely affected. Consumers are generally more willing to make discretionary purchases, including
 purchases of fashion products, during periods in which favorable economic conditions prevail.



The United States economy is directly affected by global
 political factors that are beyond our control. Any escalation of
 military action involving the United States could cause increased volatility in financial markets, which could
 adversely affect consumer confidence and spending habits.



10.     If we are not able to
 successfully protect our intellectual property our ability to capitalize on the value of our brand name
 may be impaired. Even though we take actions to establish, register and protect our trademarks and
 other proprietary rights, we cannot assure you that we will be successful or that others will not imitate
 our products or infringe upon our intellectual property rights. In addition, we cannot assure you that
 others will not resist or seek to block the sale of our products as infringements of their trademark
 and proprietary rights.



We are seeking to register our trademarks domestically
 and internationally. Obstacles may exist that may prevent us from obtaining a trademark for the bebe name or
 related names. We may not be able to register certain trademarks, purchase the right or obtain a license to
use the bebe name or related names on commercially reasonable terms. If we fail to obtain trademark registrations,
 ownership or license the requisite rights, it would limit our ability to expand. Furthermore, if we do not
 show use of our trademarks, our trademark rights may lapse over time.



11.     If an independent manufacturer
 violates labor or other laws, or is accused of violating any such laws, or if their labor practices
 diverge from those generally accepted as ethical, it could harm our business and brand image.While
 we maintain a policy to monitor the operations of our independent manufacturers by having an independent
 firm inspect these manufacturing sites, and all manufacturers are contractually required to comply with
 such labor practices, we cannot control the actions or the publics perceptions of such manufacturers,
 nor can we assure that these manufacturers will conduct their businesses using ethical or legal labor
 practices. Apparel companies can be held jointly liable for the wrongdoings of the manufacturers of
 their products. While we do not control their employees employment conditions or the manufacturers
 business practices, and the manufacturers act in their own interest, they may act in a manner that result
 in negative public perceptions of us and/or employee allegations or court determinations that we are
 jointly liable.

17
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---

|RISKS RELATING TO OUR COMMON STOCK:



1.     Our stock price may fluctuate
 because of the small number of shares that can be publicly traded and the low average daily trading
 volumes. The vast majority of our outstanding shares of our common stock are not registered and
 are subject to trading restrictions. As of March 31, 2004, only 9,251,808 (split adjusted) shares of our
common stock were available to be publicly traded, and as a result, our average daily trading volumes are
 relatively low, and our stock price is vulnerable to market swings due to large purchases, sales and short
 sales of our common stock.



2.     Because a principal shareholder
 controls the Company, other shareholders may not be able to influence the direction the Company takes.
 As of March 31, 2004, Manny Mashouf, the Chairman, beneficially owned approximately
 76.3% of the outstanding shares of our common stock. As a result, he alone can control the election
 of directors and the outcome of all issues submitted to the shareholders. This may make it more difficult
 for a third party to acquire shares, may discourage acquisition bids, and could limit the price that
 certain investors might be willing to pay for shares of common stock. This concentration of stock ownership
 may have the effect of delaying, deferring or preventing a change in control of our Company.



ITEM 3.  QUANTITATIVE AND QUALITATIVE
 DISCLOSURES ABOUT MARKET RISK



We
 are exposed to market risks, which include changes in U.S. interest rates and, to a lesser extent, foreign
 exchange rates. We do not engage in financial transactions for trading or speculative purposes.


Interest Rate Risk



We
 currently maintain a portfolio of variable investments consisting of cash equivalents, short-term marketable
 securities and long-term marketable securities. Marketable securities are comprised of closed-end variable
 interest rate funds that invest primarily in tax-exempt municipal bonds. Due to the variable nature
 of these investments, their value is typically not subject to market rate changes. According to our
 investment policy, we may invest in taxable and tax exempt instruments. In addition, the policy establishes
 limits on credit quality, maturity, issuer and type of instrument. Marketable securities are classified
 as available for sale. We do not use derivative financial instruments in our investment portfolio.



All
 highly liquid investments with a maturity of three months or less at the date of purchase are considered
 to be cash equivalents. The remaining investments are considered short-term marketable securities if
 maturities range between four and twelve months or long term marketable securities if maturities are
 over twelve months.

18

The
 following table lists our cash equivalents and long-term marketable securities at March 31, 2004:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                |  |  |                        | 2004    |   |   | Fair Value | 
|------------------------------- |  |  | ---------------------- | ------- | - | - | ---------- | 
|                                |  |  |                       
|                                |  |  | (Dollars in thousands) |        
|Cash equivalents                |  |  | $                      | 162,454 |   | $ | 162,454    | 
|Weighted average interest rate  |  |  |                        | 1.07    | %
|Long term marketable securities |  |  |                        | 7,875   |   |   | 7,875      | 
|Weighted average interest rate  |  |  |                        | 1.77    | %
|Total                           |  |  | $                      | 170,329 |   | $ | 170,329    | 

|
|

|The
 interest payable on our bank line of credit is based on variable interest rates and therefore affected
 by changes in market interest rates. If interest rates rose 10% from
 the banks reference rate as of March 31, 2004, our results from operations and cash flows would not
 be affected since we have no outstanding borrowings.


Foreign Currency Risks



We
 enter into a significant amount of purchase obligations outside of the U.S. which are settled in U.S.
 Dollars and, therefore, have only minimal exposure to foreign currency exchange risks. We also operate
 a subsidiary with a base currency other than the U.S. Dollar. This subsidiary represented approximately
 two percent of total revenues for the quarter ended March 31, 2004 and, therefore, presents only minimal
 exposure to foreign currency exchange risks. We do not hedge against foreign currency risks and believe
 that foreign currency exchange risk is immaterial.



ITEM 4.  CONTROLS AND PROCEDURES



Under
 the supervision and with the participation of our management, including our Chief Executive Officer
 and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures,
 as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
 amended. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded
 that our disclosure controls and procedures were effective as of the end of the period covered by this
 quarterly report. No significant changes were made to our internal controls during our most recent quarter
 that have materially affected, or are reasonably likely to materially affect, our internal controls
 over financial reporting.

19

PART II OTHER INFORMATION



ITEM 1.  LEGAL PROCEEDINGS



From
 time to time, we may be involved in litigation relating to claims arising out of our operations. As
 of the date of this filing, we are currently involved in several ongoing legal proceedings.  We cannot
predict with certainty the outcome of these legal proceedings.  Adverse settlements or resolutions could
negatively impact earnings in the quarter of settlement or resolution; however, we do not believe any of
 these proceedings will, individually or in the
aggregate have a material adverse effect on our business, financial condition or results of operations.




Along
 with approximately one hundred and seven other parties, we were named in a class action suit filed on April
 17, 2003, Los Angeles Superior Court (case No. BC294155) concerning the substance of one of the questions on
 our employment application.  Plaintiffs are seeking compensatory, statutory and injunctive relief.  The case
 was dismissed on January 28, 2004, based on a misjoinder of Defendants.  A similar complaint has been filed
 on January 30, 2004, against bebe as an individual Defendant, but bebe has not yet been served.  At this time
 we estimate the potential loss to be approximately $13,000.



Three
 former employees sued bebe on November 20, 2003, in the Superior Court of the State of California, County of
San Mateo (case No. CIV435794) alleging that they were misclassified as exempt employees under California law.
The plaintiffs purport to bring this action on behalf of a class of former and present California bebe store
managers and co-managers.  Plaintiffs are seeking compensatory, statutory and injunctive relief.  At this time
 we are not able to estimate a loss or range of potential losses.



A
 former employee sued bebe on January 20, 2004 in the Superior Court of the State of California, County of San
Diego (case No. GIC824505) alleging unpaid wages and unfair business practices.  The plaintiff
 purports to bring the action on behalf of a class of California employees who hold or have held the
 position of Co-Manager or others similarly designated. The lawsuit seeks compensatory, statutory and
 injunctive relief.  At this time we are not able to estimate a loss or range of potential losses.



On February
23, 2004, The Wet Seal, Inc. filed a lawsuit in the Superior Court of the State of California, County of Orange
against bebe and its current Chief Executive Officer, Greg Scott, who previously was employed as President of
The Wet Seal's Arden B. division until January 7, 2004.  The lawsuit asserts causes of action against Scott
and/or bebe for (1) specific performance of contract; (2) intentional interference with contract; (3) misappropriation
of trade secrets; and (4) unfair competition.  At this time we are not able to estimate a loss or range
of potential losses.




We
 intend to defend ourselves vigorously against the above claims.



ITEM 2.  CHANGES IN SECURITIES AND USE
 OF PROCEEDS


Not
 applicable.



ITEM 3.  DEFAULTS UPON SENIOR SECURITIES


Not
 applicable.

20
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ITEM 4.  SUBMISSION OF MATTERS TO A VOTE
 OF SECURITY HOLDERS


Not
 applicable.
|--------------------------------------------------------------------------------

|ITEM 5.  OTHER INFORMATION


Not
 applicable.



ITEM 6.  EXHIBITS AND REPORTS ON FORM
 8-K



(a)     Exhibits. The following
 is a list of exhibits filed as part of this Report on Form 10-Q.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Exhibit |  | Description                                          
|------- |  | -----------------------------------------------------
|        |  |                                                      
|31.1    |  | Section 302 Certification of Chief Executive Officer.
|31.2    |  | Section 302 Certification of Chief Financial Officer.
|32.1    |  | Section 906 Certification of Chief Executive Officer.
|32.2    |  | Section 906 Certification of Chief Financial Officer.

(b)     Reports on Form 8-K.

|Date of Report   |  | Items |  | Description                                                                                              
|---------------- |  | ----- |  | ---------------------------------------------------------------------------------------------------------
|                 |  |       |  |                                                                                                          
|January 8, 2004  |  | 7,12  |  | The Company issued a press release announcing December 2003 sales.                                       
|January 22, 2004 |  | 7, 12 |  | The Company issued a press release announcing its results for the fiscal quarter ended December 31, 2003.
|February 5, 2004 |  | 7, 12 |  | The Company issued a press release announcing January 2004 sales.                                        
|March 4, 2004    |  | 7, 12 |  | The Company issued a press release announcing February 2004 sales and updated third quarter guidance.    

|21
|--

---

|SIGNATURES



Pursuant
 to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused
 this report to be signed on its behalf by the undersigned thereunto duly authorized.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Dated May 14, 2004bebe stores, inc./s/  Walter Parks______________________________________Walter Parks, Chief Financial Officer
| | -------------------------------------------------------------------------------------------------------------------------------

---

|EXHIBIT INDEX
|-------------

|Exhibit |  | Number      |  | Description                             
|------- |  | ----------- |  | ----------------------------------------
|        |  |             |  |                                         
|31.1    |  | Section 302 |  | Certification of Chief Executive Officer
|31.2    |  | Section 302 |  | Certification of Chief Financial Officer
|32.1    |  | Section 906 |  | Certification of Chief Executive Officer
|32.2    |  | Section 906 |  | Certification of Chief Financial Officer

---

|EXHIBIT 31.1


SECTION 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER


I, Gregory Scott, certify that:
|-----------------------------------------------------------------------------------------------------

| | 1. | I have reviewed this Form 10-Q of bebe stores, inc.;
| | -- | ----------------------------------------------------

| | 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Disclosed in this report any change to the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: May 14, 2004 | /s/ Gregory ScottGregory ScottChief Executive Officer
|------------------ | -----------------------------------------------------

---

|EXHIBIT 31.2


SECTION 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER


I, Walter Parks, certify that:
|----------------------------------------------------------------------------------------------------

| | 1. | I have reviewed this Form 10-Q of bebe stores, inc.;
| | -- | ----------------------------------------------------

| | 2. | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | Disclosed in this report any change to the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: May 14, 2004 | /s/ Walter ParksWalter ParksChief Financial Officer
|------------------ | ---------------------------------------------------

---

|EXHIBIT 32.1


CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In
 connection with the Quarterly Report of bebe stores, inc. (the Company) on Form 10-Q for the quarter
 ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the
 Report), I, Gregory Scott, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section
 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:



(1)       
 The Quarterly Report fully complies with the requirements of section 13(a) of the Securities Exchange
 Act of 1934 (15 U.S.C. 78m); and



(2)       
 The information contained in the Report fairly presents, in all material respects, the financial condition
 and results of operations of the Company.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: May 14, 2004 | /s/ Gregory ScottGregory ScottChief Executive Officer
|------------------ | -----------------------------------------------------

|A
 signed original of this written statement required by Section 906 has been provided to the Company and
 will be retained by the Company and furnished to the Securities and Exchange Commission.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|EXHIBIT 32.2


CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In
 connection with the Quarterly Report of bebe stores, inc. (the Company) on Form 10-Q for the quarter
 ended March 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the
 Report), I, Walter Parks, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section
 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:



(1)       
 The Quarterly Report fully complies with the requirements of section 13(a) of the Securities Exchange
 Act of 1934 (15 U.S.C. 78m); and



(2)       
 The information contained in the Report fairly presents, in all material respects, the financial condition
 and results of operations of the Company.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: May 14, 2004 | /s/ Walter ParksWalter ParksChief Financial Officer
|------------------ | ---------------------------------------------------

|A
 signed original of this written statement required by Section 906 has been provided to the Company and
 will be retained by the Company and furnished to the Securities and Exchange Commission.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---