Vera Bradley plans to close 10 full-line stores this fiscal year and about 30 more in the next two fiscal years as leases expire.
Robert Wallstrom, the company’s president and chief executive officer, revealed the store closure plan Wednesday morning during its third-quarter earnings call, with Vera ending the quarter with just 102 full-line locations and plans to pivot to a stronger digital presence.
Wallstrom didn’t specify which locations, but said if sales improve at some of the targeted sites, they may not be closed.
But the American luggage and accessories brand has been in a funk lately, with shares down more than 45 percent in the last three months.
Fiscal year third-quarter earnings for the period ending Nov. 3 were also below Wall Street’s expectations, causing company shares to fall more than 10 percent at the start of the Wednesday trading session.
Company revenue was $97.7 million, compared with $114 million the year before. While sales declines were seen in both stores and online, the biggest loss — more than 21 percent — was in physical stores.
In a statement, Wallstrom said the most recent quarter’s sales figures were “modestly below our expectations,” because of reduced clearance sales and higher-than-expected shipping costs, which affected the company’s bottom line.
In stores and on the web site, Vera reduced its clearance sales by more than 70 percent.
“In our factory stores, we have not been as promotional as some of our peers, which has negatively impacted sales,” Wallstrom also said on the conference call.
Still, income during the same period was $4.2 million, compared with only $359,000 during the same period last year.
Wallstrom said October’s “softer-than-expected” performance were offset by strong back-to-school, Black Friday and Cyber Monday sales in the company’s core categories like travel, beach and gifting, and said solids, as well as Vera’s signature floral, paisley and medallion patterns, are some of its most popular offerings.
And while fewer promotional sales meant less returning customers, Wallstrom said, it was “what we expected.” He pointed out that new customers are “a little bit more open” to paying full price. One example: The launch of the company’s most expensive backpack to date, the Journey Backpack, which retails at more than $160 and did “exceptionally well.”
A low-price backpack, which launched around the same time, did not appeal to shoppers.
“It really showed that our consumers are really valuing what we’re putting into the product and there’s probably room to continue to innovate and push on pricing,” Wallstrom said.