Vera Bradley posts expectation-topping revenues but slips deeper into loss

By

Robin Driver

Published
Jun 10, 2019

Fort Wayne, Indiana-based accessories company Vera Bradley, Inc. announced a mixed bag of financial results for the first quarter ended May 4th, 2019, as net sales came in above analysts’ expectations but net losses continued to widen.

 
The company’s quarterly net revenues totaled $91.0 million, up 5.1% from the $86.6 million reported in the prior-year period. This figure was at the higher end of the guidance range of $86 to $91 million previously reported by Vera Bradley and comfortably beat the prediction of $87.9 million made by Wall Street analysts cited by MarketWatch.
 
Comparable sales at the company increased 5.2% during the period, reflecting a 4.0% rise in comparable-store sales and a 9.2% increase in e-commerce revenues, while indirect segment revenues fell 5.7% to $19.9 million, down from $21.1 million in Q1 2018. The decrease in the company’s indirect sales was driven by a reduction in orders and the number of specialty accounts.

Vera Bradley’s quarterly net loss totaled $2.4 million, or $0.07 per diluted share, compared to the loss of $1.4 million, or $0.04 per diluted share, reported in the same period in the previous year.
 
The company’s bottom line was negatively impacted by increased selling, general and administrative expenses, which totaled $54.3 million, or 59.7% of net revenues, up from $50.7 million, or 58.6% of revenues in the first quarter of 2018. This increase was due in large part to new factory store openings and consulting fees, as well as variable expenses to drive revenue.
 
“We are pleased with our 5.2% first quarter comparable sales increase and that revenues were once again at the high end of our guidance, indicating that our customers are responding to both our innovative product and targeted consumer engagement efforts,” said Vera Bradley CEO Robert Wallstrom in a release.

Going on to discuss the company’s ongoing Vision 20/20 strategic turnaround plan, the executive explained, “Moving into Year 2 of our three-year journey, we are focused on expanding our customer base and increasing sales and profitability.”
 
As strategic priorities for this year, Wallstrom therefore highlighted returning to comparable sales growth, streamlining the company’s technology and business processes, and reinforcing Vera Bradley’s ownership-based culture.

Looking forward to the second quarter, the company expects to report net revenues between $115 million and $120 million, while diluted earnings per share are predicted to be in the range of $0.25 to $0.28.
 
In fiscal 2020, Vera Bradley now hopes to see net revenues of $425 to $440 million and diluted EPS of $0.67 to $0.74.