Vera Bradley misses Q1 revenue guidance

Vera Bradley reported that net revenues from continuing operations in the first quarter totaled 101.1 million dollars compared to 112.2 million dollars in the prior year first quarter ended May 3, 2014. The company posted a net loss from continuing operations of 4.1 million dollars, or 0.10 dollars per diluted share.

Commenting on the first quarter performance, Robert Wallstrom, Chief Executive Officer, said, "Excluding the previously outlined charges, we achieved first quarter diluted EPS at the low end of our guidance. Reduced promotional activity led to better-than-planned gross margin rate performance while revenues fell below our expectations. Growing Vera Bradley to a one billion dollars company generating a high-teen operating margin remains our ultimate goal. However, until we begin to see recovery in the business, we cannot predict the timing of or provide additional updates on achieving those long-term financial targets.”

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.

Current year first quarter net revenues of 101.1 million dollars fell below the Company's guidance of 103 million dollars to 109 million dollars. Direct segment revenues totaled 70.4 million dollars, a 2.4 percent decrease from 72.2 million dollars in the prior year first quarter. Comparable sales including e-commerce decreased 16.9 percent for the quarter reflecting a 22.3 percent decline in comparable store sales and a 9.7 percent decrease in e-commerce sales, which was partially offset by new store growth (the Company opened 14 full-line and 18 factory outlet stores during the past 12 months.

Indirect segment revenues decreased 23.3 percent to 30.7 million dollars from 40 million dollars in the prior year first quarter. Gross profit for the quarter totaled 55.1 million dollars, or 54.5 percent of net revenues, compared to 59.8 million dollars, or 53.3 percent of net revenues, in the prior year first quarter. The gross margin rate exceeded guidance of 53 percent to 53.5 percent primarily due to reduced promotional activity relative to plan.

For the second quarter of fiscal 2016, the company expects net revenues of 116 million dollars to 120 million dollars compared to prior year second quarter revenues of 119 million dollars and diluted earnings per share from continuing operations of 0.10 dollars to 0.13 dollars. For fiscal 2016, the company expects net revenues of 480 million dollars to 495 million dollars compared to 509 million dollars last year.