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Vera Bradley Q2 net revenues up 1.5 percent

By Prachi Singh

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Vera Bradley net revenues from continuing operations totalled 120.7 million dollars for the second quarter ended August 1, 2015, compared, an increase of 1.5 percent. For the six months ended August 1, 2015, net revenues were 221.8 million dollars compared to 231.2 million dollars for the six months ended August 2, 2014.

”We are pleased that better than expected revenue, gross margin rate performance, and disciplined expense management drove EPS above our guidance. Our comparable sales trend began to improve toward the end of the quarter, which we believe is reflective of our new product offerings, improved in-store execution, and our initial marketing efforts. Our better than planned revenues were generated in spite of reduced promotional activity,” said Robert Wallstrom, Chief Executive Officer.

Financial highlights of Q2 and H1

The company posted net income from continuing operations of 5.7 million dollars, or 0.15 dollar per diluted share, for the current year second quarter. In the prior year second quarter ended August 2, 2014, net income from continuing operations totalled 7.9 million dollars, or 0.19 dollar per diluted share.

For the current year six month period, the company’s net income from continuing operations was 1.6 million dollars, or 0.04 dollar per diluted share.

Second quarter direct segment revenues totalled 83.8 million dollars, a 7.7 percent increase from 77.8 million dollars in the prior year second quarter. Comparable sales including ecommerce decreased 15 percent for the quarter reflecting a 15.2 percent decline in comparable store sales and a 14.7 percent decrease in ecommerce sales, which was offset by new store growth since the company opened 19 full-line and 17 factory outlet stores during the past 12 months.

Indirect segment revenues decreased 10.3 percent, primarily due to lower average order size from the company's specialty retail accounts and a modest year-over-year reduction in the total number of specialty retail accounts, partially offset by the timing of the company's summer product launch. Gross profit for the quarter totalled 66.6 million dollars, or 55.1 percent of net revenues.

Direct segment revenues for the six month period totalled 154.2 million dollars, a 2.8 percent increase. Comparable sales including ecommerce decreased 15.8 percent for the period reflecting an 18.3percent decline in comparable store sales and a 12.4 percent decrease in ecommerce sales. Indirect segment revenues decreased 16.7 percent. Gross profit for the six months totalled 121.7 million dollars, or 54.9 percent of net revenues

Third quarter and fiscal year 2016 outlook

For the third quarter of fiscal 2016, the company expects net revenues of 120 million dollars to 123 million dollars compared to prior year third quarter revenues of 125.2 million dollars and diluted earnings per share from continuing operations of 0.19 dollar to 0.21 dollar.

For fiscal 2016, the company expects net revenues of 487 million dollars to 495 million dollars compared to 509.0 million dollars last year. Diluted earnings per share from continuing operations are expected to be 0.72 dollar to 0.78 dollars.

In June 2014, the company entered into a five-year agreement with Mitsubishi Corporation Fashion Company and Look Inc to import and distribute Vera Bradley products in Japan. As a result of moving to this wholesale business model, the company exited its direct business in Japan during the third quarter of fiscal 2015.

Vera Bradley