Jefferies Says Vera Bradley 'Tough To Stomach,' Cuts Target

In a report published Thursday, Jefferies analyst Randal J. Konik maintained a Buy rating on

, while lowering the price target from $23 to $18. While trends continue to be extremely challenges for the company, the situation is exacerbated due to signs of softening in the handbag segment. Although the new management team appears to be moving in the right direction in terms of their focus on products, eCommerce and distribution, the analyst believes that a turnaround for the company is still in its nascent stage. The analyst also expressed concern regarding Vera Bradley's top line results. "While part of this weakness stemmed from the planned pull-back in promos, we believe there may be larger, brand-related issues at play. Big picture, the brand is struggling to attract new customers, leading to weak traffic trends across its store base," Konik said. With regard to the Indirect channel, the company has continued to expand its department store business, although the specialty doors segment has seen continued softening of reorders. The overall handbag market has also been showing signs of progressive weakening. "We think management is taking the necessary course of action, retooling the product and revamping the store experience, while slowing go-forward new unit growth. However, at the end of the day, it all goes back to the brand, which clearly is not resonating with consumers as it had in the past. While the company looks to makeover the brand with investments in marketing spend & the addition of a new Chief Marketing Officer, the reality is that brand transformations, even when successful, typically take time," Konik added. On a more positive note, however, Vera Bradley's balance sheet remains healthy and the company continues to be profitable.