Vera Bradley Shares Fall After Q3 Earnings and Sales Miss Estimates

Vera Bradley

Vera Bradley Inc., (VRA: NASDAQ)

Shares of Vera Bradley dropped 10% on Wednesday after it reported third quarter earnings and revenue that fell short of analyst estimates.

The handbag and accessories company posted a decrease in both overall sales and identical-store sales from the year-ago period. Management attributed the decrease in revenue to reduced clearance during the three months ended Nov. 3.

Vera Bradley also issued its earnings and revenue guidance for the current quarter and fiscal 2019. Shares of the company have dropped 16% since the year began compared to the S&P 500’s fall of 1.4%.

VRA Earnings & Outlook

Vera Bradley said it had net income of $4.2 million, or 12 cents a share compared with $359,000, or 1 cent a share in the prior-year period. Net revenue fell to $97.7 million from $114.1 million a year earlier. Analysts polled by FactSet had expected adjusted earnings of 16 cents per share on sales of $101.7 million.

Identical-store sales during the quarter decreased 16.5% compared to the consensus estimate of a 13% decrease. The 16.5 % decrease consisted of a 24.8% drop in e-commerce sales and a 13.1% drop in identical-store sales.

For the fourth quarter, the company expects adjusted earnings of 22 cents to 25 cents a share and revenue of $114 million to $119 million. Wall street had predicted adjusted earnings of 20 cents a share on revenue of $115.9 million.

Vera Bradley sees full-year earnings in the range of 57 cents to 60 cents a share on sales of $412 million to $417 million. Analysts surveyed by factset had expected adjusted earnings of 59 cents per share on sales of $417.9 million.

Vera Bradley CEO Comments

Vera Bradley Chief Executive Robert Wallstrom commented, “Third quarter earnings were modestly below our expectations, primarily due to revenues at the low end of our guidance and a gross margin rate that was slightly below our guidance. Higher-than-expected shipping costs offset some of our margin expansion, which brought our overall margin rate modestly under guidance.”

“As we dramatically adjusted the level of clearance on and in our full-line stores, we expected that sales performance this year could be a bit inconsistent. While softer than expected October sales affected third quarter performance, we were pleased to see strong performance over Black Friday weekend and on Cyber Monday, particularly as we focused more on full-price selling and less on clearance,” Wallstrom added.

Vera Bradley Inc., Company Profile

Vera Bradley, Inc. designs, produces, markets and retails accessories for women. Its products include handbags, accessories and travel and leisure items. The company operates through two segments: Direct and Indirect. The Direct segment consists of the sales of Vera Bradley products through full-price and outlet stores.

The Indirect segment handles the sales of Vera Bradley products to specialty retailers, which are located in the United States. It also offers accessories, which includes wallets, wristlets, eyeglass cases, cosmetics cases, and paper and gift products. Vera Bradley was founded by Patricia R. Miller and Barbara Bradley Baekgaard in 1982 and is headquartered in Roanoke, Indiana. Its competitors include Michael Kors and Tapestry Inc. – CNN Money