Vera Bradley Expected To Report 87.5% YoY Decline In Earnings

Shares of Vera Bradley, Inc. (NASDAQ: VRA) are surging on Tuesday, ahead of the announcement of the company’s first quarter (fiscal 2016) financial results, scheduled for Wednesday morning.

However, expectations point towards the worst quarter –- in terms of earnings -- in at least four years. For the quarter, the company guided earnings of $0.02 per share on revenue of $106 million; the Street is modeling earnings in line with guidance on slightly lower revenue of $105.81 million (Estimize).

Taking a look at Vera Bradley’s earnings history between 2011 and the present, one thing stands out: no earnings were as low as the figures expected for this quarter. Earnings had hit their lowest in the first quarter last year, when they came in at $0.16 per share on revenue of $113.5 million.

Nonetheless, the current estimates would set a new record, with earnings down 87.5 percent year-over-year.

A look at the table above reveals another interesting fact. Only one of the last eight quarters saw earnings rise year-over-year. In the seven remaining periods, earnings fell by at least 10 percent.

'No Reason To Be Aggressive'

A couple of months ago, analysts at Wunderlich Securities reiterated a Hold rating and $15.00 price target on Vera Bradley, after meeting with the company’s management.

Related Link:Wunderlich Securities Believes Vera Bradley Needs Time To Settle

The analysts explained that they " believe that management is making the correct choices to try to expand the customer base, widen top-line and bottom-line results, and elevate the brand.”

Related Link: Cowen Downgrades Vera Bradley On Worries About Long-Term Viability

“However, like any brand evolution, customer response to the progress will take some time and the material moving pieces at the company will ensure that the turn will take time. As such, while we agree with management's direction and the changes, we see no reason to be aggressive,” they concluded.