Fort Wayne-based Vera Bradley Inc. (Nasdaq: VRA) has reached an agreement to have its products sold at 70 Macy's locations throughout the United States. The company also announced fiscal first quarter net income of $6.6 million, compared to $9.2 million during the same period a year earlier.
June 5, 2014
Fort Wayne, Ind. — Vera Bradley, Inc. (Nasdaq:VRA) (“Vera Bradley” or the “Company”) today announced that its products will be sold at select Macy's locations.
By mid-July, Macy's will offer a selection of Vera Bradley handbags, totes, and accessories in approximately 70 locations across the country.
“We are excited about our new relationship with Macy's,” noted Robert Wallstrom, Chief Executive Officer of Vera Bradley. “Department stores are the number one destination for handbag purchasing, and Macy's will be a great place to showcase our products, especially as we launch our leather and faux leather collections. This important relationship will allow us to introduce Vera Bradley to new customers and broaden our geographic reach.”
About Vera Bradley, Inc.
Vera Bradley, Inc. is a leading designer of women's handbags and accessories, luggage and travel items, eyewear, stationery and gifts. Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand's iconic designs and versatile styles offer women of all ages a colorful way to accessorize. Vera Bradley offers a unique, multi-channel sales model as well as a focus on service and a high level of engagement with fans. The Company's products are currently sold through its own stores, on verabradley.com, in Dillard's and Von Maur department stores and in independent retail stores across the country. Fiscal 2014 net revenues totaled approximately $536 million. The Company's commitment to breast cancer research continues to increase its reach through the Vera Bradley Foundation for Breast Cancer. For more information about Vera Bradley (Nasdaq:VRA), visit www.verabradley.com/mediaroom.
Source: Vera Bradley Inc.
June 5, 2014
Fort Wayne, Ind. — Vera Bradley, Inc. (Nasdaq:VRA) (“Vera Bradley” or the “Company”) today announced its financial results for the first quarter ended May 3, 2014.
Net revenues totaled $113.5 million for the current year first quarter, compared to $123.0 million in the prior year first quarter ended May 4, 2013. Net income totaled $6.6 million, or $0.16 per diluted share, for the current year first quarter compared to net income of $9.2 million, or $0.23 per diluted share, in the prior year first quarter.
Robert Wallstrom, Chief Executive Officer, noted, “While our first quarter revenues were modestly below our expectations, we were able to post earnings per share above our guidance due to better than expected gross margin and expense performance.”
“However, we continue to face a difficult environment, one that is proving much more challenging than we anticipated just two short months ago,” Wallstrom continued.
“Direct segment revenues are weaker than we expected,” Wallstrom also noted. “Sales from existing customers have been relatively stable, but our traditional patterns and products simply are not attracting enough new customers to our brand, and overall traffic is down substantially. In our Indirect segment, while orders from our major accounts are up, orders from our specialty gift channel retailers are down significantly on a year-over-year basis. Until we can make meaningful changes to our product offering and marketing initiatives, we don't expect these sales trends to substantially improve. As a result, we are lowering our revenue and earnings per share projections for the fiscal year.
“As we have noted, this will be an important year of transition and transformation for Vera Bradley. We believe that the product, distribution, and marketing initiatives we previously outlined as part of our long-term strategic plan are absolutely the right ones for the future. While the short-term will remain challenging, I am pleased with the progress we are making against these key elements of our five-year plan. Importantly, we have assembled a team of talented and seasoned retail executives – both from within the organization and new to the Company – that will help us achieve our long-term goals.”
First Quarter Details
Current year first quarter revenues of $113.5 million fell modestly below the Company's guidance of $116 million to $120 million. The sales miss to guidance primarily was due to lower than expected orders from the Company's Indirect specialty retail partners, weaker than expected comparable store sales performance in the Company's retail stores, and a shortfall at the Company's annual outlet sale.
Current year first quarter Direct segment revenues totaled $73.4 million, essentially flat with $73.7 million in the prior year first quarter. In the Company's stores, first quarter year-over-year net revenues grew 5.9%, reflecting the opening of 16 full-line and three outlet stores during the past 12 months, which was partially offset by a comparable-store sales decline. Total company comparable store sales fell 9.4% for the quarter (which includes a 14.4% decline in store sales and a 3.2% decline in e-commerce sales). Comparable store revenues were negatively impacted by year-over-year declines in traffic and underperformance of the product offering. Severe winter weather negatively affected store traffic during the first two months of the quarter.
Indirect segment revenues decreased 18.9% to $40.0 million from $49.3 million in the prior year first quarter, primarily due to lower orders from the Company's specialty retail accounts.
Gross profit for the quarter totaled $60.5 million, or 53.3% of net revenues, compared to $68.5 million, or 55.6% of net revenues, in the prior year first quarter. The year-over-year decline in gross margin rate was primarily related to overhead costs deleveraging and increased year-over-year promotional activity. The first quarter gross margin rate was better than guidance of 52.0% to 52.6%, primarily due to the timing of a portion of the inventory liquidation initially planned for the first quarter that will now occur later in the year.
SG&A expense totaled $51.3 million, or 45.2% of net revenues, in the current year first quarter, compared to $55.2 million, or 44.9% of net revenues, in the prior year first quarter. In spite of lower than expected revenues, the SG&A expense rate was favorable to guidance of 46.0% to 46.6% primarily due to cost containment efforts as well as payroll associated with certain management positions that were budgeted but unfilled in the first quarter.
Operating income totaled $10.8 million, or 9.5% of net revenues, in the current year first quarter, compared to operating income of $15.2 million, or 12.3% of net revenues, in the prior year first quarter.
The effective tax rate was 38.7% for the quarter compared to 38.9% in the prior year first quarter.
Cash flow from operations for the first quarter totaled $27.0 million, compared to $14.9 million for last year's first quarter. The improvement was driven primarily by a reduction in inventory levels.
Cash and cash equivalents as of May 3, 2014 totaled $81.5 million compared to $8.2 million at the end of last year's first quarter. The Company had no debt outstanding at May 3, 2014. Quarter-end inventory was $126.6 million, modestly below guidance of $128 million to $133 million and compared to $138.9 million last year. Net capital spending for the quarter totaled $7.1 million.
On June 4, 2014, the Company entered into a five-year agreement with Mitsubishi Corporation and Look Inc. to import and distribute Vera Bradley products in Japan. As a result of moving to this wholesale business model, the Company will exit its direct business in Japan during the third quarter and will account for this busin