Vera Bradley Q2: EPS Beat, Sales Miss, Narrowed FY24 Outlook & More

Vera Bradley Inc VRA reported a Q2 FY24 revenue of $128.17 million, missed the consensus of $130.95 million. 

Direct segment revenues stood at $85.7 million, down 1.5% Y/Y. Comparable sales declined 5.3% due to weakness in the factory outlet channel. 

Indirect segment revenues rose 0.2% Y/Y to $17.4 million in the quarter. 

Pura Vida segment revenues declined 3.6% Y/Y to $25.1 million, owing to a reduction in sales to wholesale accounts and lower e-commerce sales.

Gross margin expanded to 56.2% from 46.4% a year ago, aided by lower inbound and outbound freight expenses and the sell-through of previously reserved inventory.

Adjusted SG&A expense declined to $58.3 million (45.5% of net revenues) from $64.0 million (49.1% of net revenues) the prior year.

Adjusted operating income was $14.0 million (vs. $3.9 million a year ago), with an operating margin of 10.9%, compared to 3.0% in the prior year.

Adjusted EPS was $0.33, up from $0.08 a year ago, beating the estimate of $0.12.

As of July 29, 2023, the company held $48.5 million in cash and cash equivalents and had no borrowings on its $75 million asset-based lending facility.

VRA permanently closed 19 full-line and two factory outlet stores and opened three stores over the last twelve months. 

Repurchase: During the quarter, the company repurchased ~$0.7 million of its shares, which brings the H1 total to $1.4 million. VRA has $26.3 million worth of shares remaining under its $50.0 million repurchase authorization expiring December 2024.

"We are taking strategic actions to stabilize and steadily grow Pura Vida's revenues and to reverse the trends in Vera Bradley's factory outlet stores through a thorough, multi-pronged approach, including potential pricing adjustments and targeted marketing initiatives aimed to drive traffic and average order size. Our team is focused on generating long-term revenue increases, expanding gross margin, and ensuring strong financial discipline and cost control, which we expect will drive long-term profitable growth," said Jackie Ardrey, Chief Executive Officer. 

FY24 Outlook: VRA narrowed the outlook for FY24 revenues to $490 million - $500 million (from $490 million - $510 million earlier) vs. consensus of $498.11 million, EPS to $0.57 - $0.65 (from $0.57-$0.67 earlier) vs. street view of $0.60. 

Price Action: VRA shares are trading higher by 10% at $7.55 on the last check Wednesday.