Why Is Fashion Retailer Vera Bradley Stock Plunging Today?

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

The company reported a fourth-quarter sales decline of 25% year-on-year to $99.96 million, missing the analyst consensus estimate of $107.94 million.

Adjusted EPS loss of 30 cents also missed the consensus estimate of 7 cents profit. Direct segment revenue decreased by 17.8% to $76.5 million, and Indirect segment revenues declined by 38.5% to $9.9 million.

The gross margin contracted 730 basis points year over year to 45%, and the gross profit dropped 35% to $45 million. The quarter’s operating loss widened to $23.3 million, compared to $2.8 million last year.

The company held $30.36 million in cash and equivalents as of February 1. Cash used in operating activities for twelve months totaled $14.1 million.

Total quarter-end inventory was $110 million, down 7% from $118.3 million at the end of last year’s fourth quarter.

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In the fourth-quarter, Vera repurchased approximately $0.6 million of its shares under the 2021 share repurchase program that expired in December 2024. The Board of Directors has approved an additional $30.0 million repurchase authorization, which commenced December 14, 2024, and expires December 2027.  

“The fourth quarter remained challenging as we continued to navigate the early stages of Project Restoration, our comprehensive strategic initiative to transform our business model and brand positioning,” said CEO Jackie Ardrey.

“Separately, in order to further focus our efforts on Vera Bradley’s long term transformation, yesterday we signed an interest purchase agreement to sell all of the ownership interests of the Pura Vida business. This sale of Pura Vida represents a significant step in our strategic evolution.”

Pura Vida segment revenues totaled $13.6 million, a 43.8% decrease from the prior year fourth quarter, driven by decreased ecommerce and wholesale sales.

“Finally, as part of our planned Board transition, Barbara Bradley Baekgaard, the co-founder of Vera Bradley, is stepping down from the Board and will not be standing for re-election,” concluded Ardrey.

Outlook: Vera Bradley sees FY26 revenue of $280 million versus net revenues of $318.8 million in fiscal 2025, excluding the Pura Vida segment. The analyst consensus estimate stands at $398.545 million.

The company anticipates FY26 loss per share of $0.15 versus the EPS estimate of $0.10.

Vera sees net capital spending of approximately $4 million and end of year cash balance of about $40 million.

Price Action: VRA shares are trading lower by 19% at $2.20 in premarket at last check Wednesday.

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