Vera Bradley Inc. delivered first-quarter earnings that beat expectations, but revenues were below estimates.
Net income for the quarter was $2.4 million, or 6 cents a diluted share, up from a loss last year of $4.1 million, or 10 cents. This topped the FactSet estimate for earnings per share of 5 cents. Vera Bradley has been in the process of a turnaround and looks as if it is making some progress. The stock is essentially flat on the news and was lately trading at $15.30.
Revenues for the three months ending May 2 increased 4 percent to $105.2 million from $101 million a year earlier. However, they were shy of the FactSet estimate for $107 million and at the low end of the previous company guidance for revenues in the range of $105 million to $109 million.
“First-quarter diluted EPS was at the high end of our guidance, primarily due to diligent expense management and a lower-than-planned tax rate,” said chief executive officer Robert Wallstrom. “We achieved this EPS despite revenues at the low end of our guidance range, a reflection of a more challenging retail environment.”
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Comparable sales (including e-commerce) decreased 6.7 percent. This reflected a drop of 3.8 percent for the stores and a decline of 11 percent for e-commerce sales. The company pointed out that it opened 11 full-line and 7 factory outlet stores during the last year.
Gross profit for the quarter totaled $56.4 million or 53.6 percent of the net revenues. This was better than last year’s $55.1 million or 54.5 percent of net revenues.
Looking ahead, Vera Bradley now expects second-quarter net revenues to be between $118 million and $123 million. Diluted earnings per share are forecast to be in the range of 13 cents to 15 cents. Both of these forecasts are at the low end of FactSet’s estimates, which are for sales of $123 million and earnings of 18 cents.
“Our three main objectives for fiscal 2017 are to complete our brand transformation, to drive core growth, and to begin to explore additional licensing and international growth opportunities,” Wallstrom added. “Our exciting new brand positioning will be launched in September, and we believe this will lay the foundation for comparable sales growth in the second half of this year as we introduce our fall product assortment; launch our comprehensive fall creative campaign; open our SoHo flagship store; begin to update key full-line stores, incorporating our new logo and modern visual package, and launch our new digital flagship, verabradley.com.”