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Vera Bradley reports Q3 revenues at low end of its guidance

By Prachi Singh

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Business

Net revenues at Vera Bradley totalled 97.7 million dollars for the current year third quarter ended November 3, 2018 compared to 114.1 million dollars in the prior year third quarter. The company said, revenues were at the low end of the company’s guidance range of 98 million dollars to 103 million dollars. The company posted net income of 4.2 million dollars or 12 cents per diluted share compared to 0.4 million dollars or 1 cent per diluted share.

Commenting on the company’s results, Robert Wallstrom, Vera Bradley’s CEO noted in a statement: “We lowered our clearance selling by over 70 percent, and our full-price business once again grew by double digits over last year. As a result, we are especially pleased with our year-over-year third quarter gross margin rate improvement. 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.”

Highlights of Vera Bradley’s third quarter results

Third quarter direct segment revenues totalled 73.5 million dollars, an 11.7 percent decrease from 83.2 million dollars in the prior year third quarter. Comparable sales including e-commerce and the event shift, decreased 16.5 percent for the quarter, reflecting a 13.1 percent decrease in comparable store sales and a 24.8 percent decrease in e-commerce sales, which was partially offset by new store growth. The company opened six factory outlet stores during the past 12 months. Excluding the event shift, management estimates comparable sales would have declined by 9.5 percent for the quarter.

Indirect segment revenues were 24.2 million dollars, a decrease of 21.7 percent from 30.9 million dollars in the prior year third quarter. Gross profit was 57.2 million dollars or 58.5 percent of net revenues, compared to 63.8 million dollars or 55.9 percent of net revenues, in the prior year third quarter. On a non-GAAP basis, the prior year gross profit for the quarter was 64.8 million dollars or 56.8 percent of net revenues. The company said, year-over-year 170 basis point gross profit percentage improvement primarily related to reduced clearance activity and increased full-price selling on Verabradley.com and in the company’s full-line stores, channel mix changes, and a reduction in product cost.

Review of Vera Bradley’s results for nine months

Net revenues totalled 297.9 million dollars for the nine months compared to 322.6 million dollars in the prior year nine-month period ended October 28, 2017. The company posted net income of 12.1 million dollars or 34 cents per diluted share. For the prior year nine months, the company posted a net loss of 1.5 million dollars or 4 cents per diluted share.

Direct segment revenues were 230 million dollars, a 4.7 percent decrease from the prior year. Comparable sales including e-commerce decreased 9.9 percent for the period reflecting a 4.9 percent decline in comparable store sales and a 23.2 percent decrease in e-commerce sales, which was partially offset by new store growth. Indirect segment revenues for the nine months decreased 16.5 percent to 67.9 million dollars, reflecting a reduction in orders from both specialty accounts and certain key accounts.

Gross profit for the period was 171.5 million dollars or 57.6 percent of net revenues, compared to 179.8 million dollars or 55.7 percent of net revenues, in the prior year. On a non-GAAP basis, gross profit was 180.8 million dollars or 56 percent of net revenues, a 160 basis point improvement. For the nine months, the Company’s operating income was 15.4 million dollars or 5.2 percent of net revenues, compared to an operating loss of 0.6 million dollars or 0.2 percent of net revenues. On a non-GAAP basis, the company’s operating income was 17.1 million dollars or 5.3 percent of net revenues, in the prior year.

Picture:Facebook/Vera Bradley

Vera Bradley