Vera Bradley beats earnings guidance in Q2, shares details of Vision 20/20 plan
Vera Bradley has once again met and exceeded expectations on decreases in this fiscal year.
The Indiana-based company posted a decrease in net revenues in the first quarter that met expectations, and a decrease in net loss that exceeded its guidance, reporting similar results in the second quarter, with net revenues decreasing to $112.4 million from $119.2 million and net income falling to $2.2 million, or $0.06 per diluted share, compared to net income of $5.1 million, or $0.14 per diluted share, in the prior year.
Comparable sales, including e-commerce, decreased 4.3% but were offset by new store growth. In addition, gross profit was $63.3 million, or 56.3% of net revenues, compared to $68.4 million, or 57.4% of net revenues.
"Although comparable sales trends improved over those in the first quarter, challenges in the retail environment continued into the second quarter,” said CEO Robert Wallstrom. “Total revenues were in line with our expectations. Our second quarter net income per share of $0.13 (excluding the charges outlined) exceeded guidance, primarily due to diligent expense management."
The challenging retail environment has been a setback for Vera Bradley’s Vision 20/20 plan as well. Wallstrom said that the company’s progress has not been on pace. Vera Bradley also hired a consulting firm to execute the plan that includes, “resetting our customers’ pricing perception and restoring our full-price business by significantly reducing the amount of clearance product available” on the Vera Bradley website and in stores.
Other initiatives include the streamlining of current products by eliminating categories and SKUs, and developing new standards for categories, prices and patterns. The Vision 20/20 plan is expected to negatively impact the company’s revenues by $40 million to $60 million in fiscal 2019, when the majority of the product and pricing initiatives in the plan will be implemented.
"By executing Vision 20/20,” Wallstrom said, “We believe we are on the right course for the future, restoring our brand health, improving operating performance, and enhancing shareholder value."
Vera Bradley also shared the results of its first six months of fiscal 2018. Net revenues were $208.6 million compared to $224.4 million in the previous year, comparable sales fell 7.8% and gross profit was $116.0 million, or 55.6% of net revenues, versus $128.0 million, or 57.1% of net revenues in the prior year.
The company expects its third quarter net revenues to be in range of $112 million and $117 million, and diluted earnings per share to be between $0.13 and $0.15. The full year outlook was updated, and Vera Bradley expects net revenues to be in range of $460 million to $470 million and now expects diluted earnings per share to be in range of $0.44 and $0.50.
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