Vera Bradley Posts Downbeat Q1 Results, Issues Weak Forecast

Shares of

tumbled over 11 percent in pre-market trading after the company reported weaker-than-expected results for the first quarter and issued a weak forecast. The Roanoke, Indiana-based company posted a quarterly net loss from continuing operations of $4.1 million, or $0.10 per share, down from $6.9 million, or $0.17 per share, in the year-ago period. Excluding charges, the company's net income from continuing operations came in at $0.00 per share. Its net revenue from continuing operations slipped to $101.1 million from $112.2 million. However, analysts were expecting a profit of $0.02 per share on revenue of $105.48 million. The average estimate among 6 Estimize users was for earnings of $0.02 per share and revenue of $106.18 million. Direct segment revenue slipped 2.4 percent to $70.4 million from $72.2 million, while indirect segment revenue fell 23.3 percent to $30.7 million from $40.0 million. Comparable sales (including e-commerce) dropped 16.9 percent in the quarter. Comparable store sales dipped 22.3 percent, while e-commerce sales declined 9.7 percent. Excluding charges, gross profit for the latest quarter came in at $55.1 million, or 54.5 percent of net revenue, from $59.8 million, or 53.3 percent of net revenue in the year-ago quarter. During the first quarter, Vera Bradley repurchased around 425,000 shares at an average price of $16.90. As of May 2, 2015, cash and cash equivalents increased to $96.6 million, versus $81.5 million at the end of year-ago quarter. 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." The executive added, "The progress we continue to make on our key initiatives is not yet reflected in our current financial results. We are not attracting enough new customers to the brand, and traffic and sales are still very challenging." Vera Bradley projects Q2 earnings from continuing operations of $0.10 to $0.13 per share, on sales of $116 million to $120 million. Analysts had expected earnings of $0.17 per share on sales of $121.2 million. The company expects FY16 earnings from continuing operations of $0.64 to $0.74, on revenue of $480 million to $495 million. Analysts had projected earnings of $0.84 per share on revenue of $513 million. Vera Bradley shares dipped 11.60 percent to $12.50 in pre-market trading.