- Prachi Singh |
Net revenues totalled 132 million dollars for the current year fourth quarter ended February 3, 2018, compared to 134.8 million dollars in the prior year fourth quarter ended January 28, 2017. The company posted net income of 8.5 million dollars or 0.24 dollar per diluted share for the quarter compared to 3.5 million dollars or 0.09 dollar per diluted share in the same quarter last year. Net revenues totalled 454.6 million dollars for fiscal 2018 compared to 485.9 million dollars last year. Net income for the year was 7 million dollars or 0.19 dollar per diluted share. As a part of its growth strategy, Vera Bradley plans to close around 45 additional full-line stores by the end of fiscal 2021.
Commenting on the results and outlook, Robert Wallstrom, Vera Bradley’s CEO, said in a media statement: “We are pleased that our fourth quarter revenues were at the high end of our guidance and our gross margin rate exceeded our expectations. A primary goal for FY19 is to get healthy. The majority of the product and pricing initiatives are being implemented this year, and we believe these changes will negatively impact year-over-year revenues by 30 million to 50 million dollars, which is reflected in our revenue guidance of 405 to 425 million dollars.”
Vera Bradley to reduce discounts, categories to drive growth
Wallstrom added that in February 2018, the company began significantly reducing the amount of clearance product available on verabradley.com and in full-line stores and as part of this strategy, Vera Bradley will implement a limited number of flash sale events throughout the year.
“Second, we are focusing on our best categories and narrowing our current product offerings by eliminating unproductive or incongruent categories and SKUs from our assortment. For example, we are discontinuing our fragrance and jewellery collections this year. Reductions are coming through right-sizing our corporate infrastructure. We are forecasting to close up to 45 additional full-line stores by the end of fiscal 2021, primarily as leases expire.” Wallstrom added.
Vera Bradley’s Q4 and full year segment results
Current year fourth quarter direct segment revenues were 110.4 million dollars, a 1.4 percent with the additional week contributing approximately 3 million dollars in net revenues during the current year fourth quarter. Comparable sales including ecommerce decreased 4.6 percent for the quarter reflecting a 4.2 percent decline in comparable store sales and a 5.4 percent decrease in ecommerce sales, which was offset by new store growth. The company opened one full-line store and six factory outlet stores during the past 12 months. Comparable sales, the company added, continue to be negatively impacted by year-over-year declines in store and ecommerce traffic.
Direct segment revenues for the current year totalled 351.8 million dollars, a 1 percent decrease from the prior year. The additional week contributed approximately 3 million dollars in net revenues during the current year. Comparable sales including ecommerce decreased 6.7 percent for the period reflecting a 5.5 percent decline in comparable store sales and a 9.3 percent decrease in ecommerce sales.
Indirect segment revenues decreased 17 percent to 21.6 million dollars from 26 million dollars in the prior year fourth quarter, reflecting a reduction in the number of specialty accounts coupled with a reduction in orders from both specialty accounts and certain key accounts. The additional week contributed approximately 1.1 million dollars in net revenues during the current year fourth quarter.
Indirect segment revenues for current year decreased 21.3 percent to 102.9 million dollars from the prior year, reflecting a reduction in the number of specialty accounts coupled with a reduction in orders from both specialty accounts and certain key accounts. The additional week contributed approximately 1.1 million dollars in net revenues during the current year.
Gross profit for the quarter totalled 74.2 million dollars or 56.2 percent of net revenues, compared to 75.1 million dollars or 55.7 percent of net revenues, in the prior year fourth quarter. Gross profit for fiscal totalled 254 million dollars or 55.9 percent of net revenues or 56.8 percent of net revenues, in the prior year. Excluding charges, gross profit for the current year totalled 255.1 million dollars or 56.1 percent of net revenues. The year-over-year 70 basis point adjusted gross profit decline primarily related to increased promotional activity at the Company’s factory outlet stores, channel mix changes, and a second quarter adjustment taken against slow moving inventory, partially offset by a reduction in product cost.
Vera Bradley projects lower revenues for Q1 and FY18
For the first quarter of fiscal 2019, the company expects net revenues of 84 to 89 million dollars compared to prior year first quarter revenues of 96.1 million dollars. A gross profit percentage of flat to slightly up over 54.8 percent in the prior year first quarter and diluted loss per share of 0.08 dollar to 0.10 dollar, based on diluted weighted-average shares outstanding of 35.7 million and an effective tax rate of 20 percent. The adjusted net loss, excluding charges, totalled 3.2 million dollar or 0.09 dollar per diluted share, in the prior year first quarter.
For fiscal 2019, the company expects net revenues of 405 to 425 million dollars compared to 454.6 million dollars in fiscal 2018. A gross profit percentage of flat to slightly up over the adjusted gross profit percentage of 56.1 percent in fiscal 2018 and diluted earnings per share of 0.35 dollar to 0.45 dollar, based on diluted weighted-average shares outstanding of 35.7 million and an effective tax rate of 25 percent. Excluding charges, adjusted diluted earnings per share totalled 0.60 dollar last year.