Vera Bradley is in expansion mode.
On Thursday, Vera Bradley said it would spend $75 million to buy 75 percent of La Jolla, California-based Creative Genius Inc., which operates under the name Pura Vida Bracelets. The cash deal would effectively move Vera into the jewelry business, selling string bracelets, anklets, stackable rings and other items.
“The acquisition of Pura Vida is a terrific fit for Vera Bradley as we move into year two of our Vision 20/20 strategic plan and focus on growth,” said Robert Wallstrom, chief executive officer of Vera Bradley. “As we pursue ways to increase revenues, grow shareholder value, expand our customer community and diversify the business, Pura Vida will be a great addition to our portfolio.”
Last year, Pura Vida sold $68.3 million worth of goods, making $3.8 million in profits. As of June, Vera Bradley had no debt, but more than $156 million in cash and other investments.
“With Vera Bradley providing the financial, organizational, and operational infrastructure, the Pura Vida lifestyle can grow as high and far as we want it to,” said Griffin Thall and Paul Goodman, cofounders of Pura Vida, in a joint statement.
And Vera Bradley can pick up a trick or two from Pura Vida, which is a digital native brand that appeals to Millennial and Gen Z shoppers. (Pura Vida has 1.6 million followers on Instagram, while Vera Bradley has fewer than half a million.)
“The brand resonates with individuals worldwide,” Wallstrom said, “creating a community of fun-loving, socially conscious, and stylish advocates, reflecting its potential to become a full-fledged lifestyle brand.”
The industry might see more deals with traditional retailers picking up digital businesses.
Paul Altman, managing director and partner at The Sage Group, the firm that represented Pura Vida in the transaction, said digital retailers are a hot commodity, one that offers benefits to both parties.
“Companies like Pura Vida know how to drive sharp marketing messages, messages that strategic buyers are craving in their companies,” Altman said.
And Andrew Dunst, vice president and head of e-commerce at The Sage Group, added that “large brick-and-mortar retailers have significant legacy infrastructures in place that allow start-ups to expand their product categories. It’s the perfect marriage between digital natives and brick-and-mortar retailers.”
Certainly, Vera Bradley is a company on the move. The firm said in December that it’s redirecting its attention to the digital business while closing about 40 full-line stores over the next two years.
Vera Bradley’s comeback strategy also includes plans to move into new markets — like Asia. In May, the brand launched a temporary collaboration with Starbucks, selling drinkware and stationery in places like South Korea, Singapore, Hong Kong and Vietnam, among others.
So far the plan seems to be working. Shares of Vera Bradley are up more than 37 percent year-to-date.
Vera Bradley’s board has already approved the Pura Vida deal, which is expected to close in fiscal 2020’s second quarter.