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Vera Bradley announces fall in Q2 revenues

By Prachi Singh

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Business

Vera Bradley net revenues totalled 119.2 million dollars for the second quarter ended July 30, 2016 compared to 120.7 million dollars for the second quarter ended August 1, 2015. The company posted net income of 5.1 million dollars, or 0.14 dollar per diluted share against net income of 5.7 million dollars, or 0.15 dollar per diluted share, in the prior year second quarter.

Commenting on the results, Robert Wallstrom, CEO, noted, "Second quarter diluted EPS of 0.14 dollar was within our guidance range and ahead of consensus. Although the overall retail environment certainly remains challenging, we are pleased that we achieved total revenues within our guidance range. We are also pleased with our 230 basis point gross profit expansion, primarily related to sourcing and operational efficiencies."

Send quarter performance review

Current year second quarter direct segment revenues totalled 87.2 million dollars, a 4.1 percent increase over 83.8 million dollars in the prior year second quarter. Comparable sales including e-commerce decreased 5.7 percent, reflecting a 5.9 percent decline in comparable store sales and a 5.4 percent decrease in e-commerce sales, which was more than offset by new store growth. The company opened six full-line and seven factory outlet stores during the past 12 months. Second quarter comparable sales were negatively impacted by year-over-year declines in store and e-commerce traffic.

Indirect segment revenues decreased 13.4 percent to 32 million dollars from 36.9 million dollars in the prior year second quarter, primarily due to lower orders from the company's specialty retail accounts and the timing of a product launch in the specialty channel, which negatively impacted current year second quarter revenues, partially offset by higher-than-expected sales to certain non-department store key accounts.

Gross profit for the quarter totalled 68.4 million dollars, or 57.4 percent of net revenues, compared to 66.6 million dollars, or 55.1 percent of net revenues, in the prior year second quarter.

Summary of H1 performance

Net revenues totalled 224.4 million dollars for the six months ended July 30, 2016 compared to 221.8 million dollars for the six months ended August 1, 2015, an increase of 1.2 percent. The company posted net income of 7.5 million dollars, or 0.20 dollar per diluted share against 1.6 million dollars, or 0.04 dollar per diluted share last year.

Direct segment revenues totalled 160.2 million dollars, a 3.9 percent increase over 154.2 million dollars in the same prior year period. Comparable sales including e-commerce decreased 6.1 percent for the period reflecting a 5.1 percent decline in comparable store sales and an 8.1 percent decrease in e-commerce sales, which was more than offset by new store growth.

Indirect segment revenues decreased 5 percent to 64.2 million dollars from 67.6 million dollars in the prior year, primarily due to lower orders from the company's specialty retail accounts, partially offset by higher than expected sales to certain non-department store key accounts. Gross profit totalled 128 million dollars, or 57.1 percent of net revenues, compared to 121.7 million dollars, or 54.9 percent of net revenues, in the prior year.

Third quarter and fiscal year 2017 outlook

For the third quarter of fiscal 2017, the company expects net revenues of 128 million dollars to 133 million dollars, a gross profit percentage of 58 percent to 58.5 percent compared to 57.9 percent in the prior year third quarter. Diluted earnings per share are expected to be of 0.22 dollar to 0.24 dollar.

For fiscal 2017, the company expects net revenues of 510 million dollars to 515 million dollars compared to 502.6 million dollars last year and a gross profit percentage of 57.3 percent to 57.5 percent compared to 56.6 percent last year. Diluted earnings per share are expected to be of 0.88 dollar to 0.92 dollar.

"The third fiscal quarter will be an exciting and important one for our company and our brand," Wallstrom said, adding, “We are beginning the launch of Vera Bradley's new brand positioning which we believe will lay the foundation for positive comparable sales growth by the end of the fiscal year. Our comprehensive marketing initiatives, new SoHo flagship store, refreshed key full-line stores, and launch of our new Verabradley.com digital flagship will all be drivers of our growth.”

Picture:Facebook/Vera Bradley

Vera Bradley