Why Fashion Retailer Vera Bradley's Shares Are Plunging Today

Vera Bradley Inc VRA shares are trading lower following a worse-than-expected first-quarter FY25 earnings.

The company reported a first-quarter sales decline of 14.6% year-on-year to $80.60 million, missing the analyst consensus estimate of $90.39 million.

Adjusted EPS loss of $0.21 widened from the prior year’s $0.09 loss. Direct segment revenue decreased by 4.2% to $56.4 million, and Indirect segment revenues declined by 25% to $11.5 million.

The gross margin contracted 280 basis points year over year to 52%, and the gross profit dropped 18.9% to $41.9 million. The quarter’s operating loss widened to $11.4 million, compared to $6.4 million last year.

The company held $55.2 million in cash and equivalents as of May 4. Cash used in operating activities for three months totaled $14.5 million.

Total quarter-end inventory was $125.2 million, down 12% from $142.7 million at the end of last year’s first quarter.

In the first-quarter, Vera repurchased approximately $6.3 million of its shares. About $19.2 million remains under the company’s $50.0 million repurchase authorization that expires in December 2024.  

“As anticipated, economic and pre-transformation headwinds continue to affect first half results as we prepare for our July launch, and we expect to bear the fruits of Project Restoration in the second half,” said CEO Jackie Ardrey.

“We are seeing the impact of reduced visits and spending across all household incomes and channels at Vera Bradley, especially in the under $75,000 households, where we have high penetration in our outlets.”

Outlook, reconfirmed: Vera Bradley sees FY25 sales of $460 million – $480 million, against the Street view of $474.43 million.

The company expects FY25 EPS of $0.54 – $0.62 versus the consensus of $0.58. Vera sees net capital spending of approximately $12 million –  $14 million.

“We continue to operate in a turbulent environment along with this being a rebuilding year for the Company, as Project Restoration enters a customer-facing phase mid-year,” Ardrey added.

Price Action: VRA shares are trading lower by 15.3% at $6.565 at the last check Wednesday.

Photo via Wikimedia Commons