Despite Q2 Profit Rise, Vera Bradley Lowers Outlook

Vera BradleyFort Wayne, IN—Vera Bradley Inc. reported Wednesday afternoon that its second quarter profit rose 12%, but lowered its full year forecast disappointed analysts and drove down the company’s stock price.

For the quarter ended August 3, the handbag and accessories company posted earnings of $14.95 million, or 37 cents a share, compared with earnings of $13.37 million, or 33 cents a share, a year ago. Analysts’ average estimate expected 32 cents a share.

Net sales were up 2% to $125.4 million, compared to analysts’ estimate for $124.7 million in sales.

An ‘Uncertain Consumer Environment’

Sales in Vera Bradley’s direct segment rose 14% to $75 million. Its retail stores posted a 24% increase due mostly to the addition of 20 full price and four outlet stores in the last year. Comparable store sales were down, however, due to weaker sales resulting from reduced traffic.

Online revenue rose 1.4% “due to continued growth in website traffic, offset by reduced conversion.” Indirect sales to the company’s wholesale accounts were down 12% to $50.4 million as retailers pulled back on orders.

“We managed through considerable headwinds in the second quarter, yet delivered results in line with our expectations,” said Michael C. Ray, chief executive. “Nonetheless, our product offering underperformed in the midst of an uncertain consumer environment, which affected traffic in our retail stores.”

Despite the second quarter increases, the company took a “cautious outlook for the remainder of the year.”

For its third quarter, Vera Bradley now expects earnings in the range of 33 cents to 35 cents a share on sales in the range of $128 million to $130 million. But analysts’ average estimate had expected earnings of 48 cents a share on sales of $146.6 million.

The company also reduced its fiscal full year forecast well below what analysts expected. Now Vera Bradley forecast full year earnings between $1.47 to $1.52 a share on sales ranging from $535 million to $540 million. Analysts, however, look for earnings of $1.71 a share on revenue of $571.4 million.

 

 

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Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com

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