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Vera Bradley Announces Fiscal 2013 Third Quarter Financial Results



Vera Bradley Announces Fiscal 2013 Third Quarter Financial Results

  * Net revenues increased 14.2% to $138.3 million.
  * Direct net revenues increased 23.6%, including an increase of 7.1% in
    comparable-store sales; Indirect net revenues increased 7.1%.
  * Net income increased $4.7 million to $17.7 million versus $13.0 million in
    the third quarter of fiscal 2012, an increase of 36.9%.
  * Diluted EPS were $0.44 compared to $0.32 in the third quarter of fiscal
    2012.

FORT WAYNE, Ind., Dec. 5, 2012 (GLOBE NEWSWIRE) -- Vera Bradley, Inc.
(Nasdaq:VRA) today announced its financial results for the fiscal 2013 third
quarter ended October 27, 2012. The Company reported net revenues of $138.3
million for the third quarter, compared to $121.1 million in the third quarter
of fiscal 2012, an increase of $17.2 million, or 14.2%. Diluted earnings per
share for the quarter were $0.44, an increase of 37.5% from earnings per share
in the third quarter of fiscal 2012.

"We are pleased with the strength of our operating results in the third
quarter. Our brand and product offering continue to resonate with consumers
resulting in meaningful growth across our business segments," said Michael C.
Ray, Vera Bradley's Chief Executive Officer. "Our ongoing success is a tribute
to the strength of our brand, our distinctive products, our talented team and
retail partners, and our loyal customers. We are excited about the balance of
the holiday season and remain optimistic about the long term prospects for
Vera Bradley."

In the Direct segment, revenues increased 23.6% to $64.3 million, primarily
driven by growth across our full-price and outlet stores. In our stores, net
revenues grew 44% during the quarter, due to both the opening of 17 full-price
and 3 outlet stores during the past year, as well as a comparable-store sales
increase of 7.1%. E-commerce growth was 1.2% due to reduced levels of
discounting as compared to the prior year. E-commerce growth was 55% in the
third quarter of last year. Indirect revenues increased 7.1% to $74.0 million
due to strong demand for our product portfolio through specialty retail and
department store partners.

Gross profit for the third quarter increased 22.2% to $80.2 million, resulting
in gross margin of 58.0%, compared to gross margin of 54.2% in the prior year.
The third quarter increase in gross margin was due primarily to operational
efficiencies, prior year opportunistic sale of retired inventory and lower
input costs, partially offset by a $1.2 million charge, related to damaged
inventory written off during the quarter.

Total SG&A expense was $53.6 million for the third quarter, compared to $45.4
million in the prior year. SG&A as a percentage of net revenues was
unfavorable by 130 basis points compared to the prior year, due primarily to
annualizing fiscal 2012 infrastructure investments made in the second half of
last year and increased marketing expenses.

Operating income increased 28.1% to $27.6 million, or 19.9% of net revenues,
in the third quarter, compared to operating income of $21.5 million, or 17.8%
of net revenues, in the third quarter of fiscal 2012.

The effective tax rate was 35.2% for the quarter, compared to 38.9% in the
prior year. The effective tax rate reduction was primarily related to state
tax credits received and discrete items recorded during the third quarter.

Net income for the quarter increased $4.7 million to $17.7 million, or $0.44
per diluted share, compared to $13.0 million, or $0.32 per diluted share, in
the third quarter of fiscal 2012.

Year-to-Date Results

For the thirty-nine weeks ended October 27, 2012, net revenues increased 16.0%
to $378.6 million, from $326.3 million in the same prior-year period. By
segment, Direct revenues increased 31.4% to $189.2 million, with
comparable-store sales increasing 5.7%. Indirect revenues increased 3.9% to
$189.4 million.

Operating income increased 10.5% to $70.2 million, or 18.5% of net revenues,
for the thirty-nine weeks, compared to operating income of $63.5 million, or
19.5% of net revenues in the comparable prior-year period.

The effective tax rate for the thirty-nine weeks ended October 27, 2012, was
37.2%, compared to 39.6% for the same period in the prior year. The effective
tax rate reduction was primarily related to state tax credits received and
discrete items recorded during the third quarter.

Net income for the thirty-nine weeks increased 15.7% to $43.7 million, or
$1.08 per diluted share, compared to $37.8 million, or $0.93 per diluted share
a year ago.

Cash flow from operations for the thirty-nine weeks ended October 27, 2012
totaled $22.2 million, compared to $6.9 million for the same period in the
prior year, primarily from the increase in net income and timing of tax
payments.

Outlook

For the fourth quarter of fiscal 2013, the Company expects net revenues to be
in a range of $147 million to $152 million, compared to $134.5 million in the
fourth quarter of fiscal 2012. Gross margin for the fourth quarter is expected
to expand over the prior year by approximately 130 basis points, primarily due
to leveraged overhead costs driven by higher than expected inventory levels.

Diluted earnings per share are expected to be in a range of $0.55 to $0.57.
The earnings per share estimate assumes an effective tax rate of 38% and fully
diluted weighted average shares outstanding of 40.6 million.

For fiscal 2013, the Company expects net revenues to be in a range of $526
million to $531 million and diluted earnings per share for the full year are
expected to be in a range of $1.63 to $1.65. The earnings per share guidance
includes an effective tax rate of 37.5% and fully diluted weighted average
shares outstanding of 40.6 million.

Call Information

A conference call to discuss fiscal 2013 third quarter results is scheduled
for today, December 5, 2012, at 4:30 p.m. Eastern Time. A broadcast of the
call will be available via Vera Bradley's Investor Relations section of its
website, www.verabradley.com. In addition, a replay of the call will be
available shortly after the conclusion of the call and remain available
through December 19, 2012. To access the recording, listeners should dial
(877) 870-5176, and enter the access code, 5662640.

About Vera Bradley, Inc.

Vera Bradley infuses color into all aspects of women's lives with vibrant
handbags, accessories, luggage, eyewear, travel items and gifts. Founded in
1982 by Barbara Bradley Baekgaard and Patricia R. Miller, the brand inspires
women to "be colorful" with designs that reflect their personal style. As of
October 27, 2012, Vera Bradley accessories can be found in 64 retail stores in
the U.S., 11 outlet stores, approximately 3,300 specialty retailers and online
at verabradley.com. Vera Bradley employs approximately 2,000 and the company's
fiscal 2012 sales were $461 million. The company's commitment to breast cancer
research continues to expand through the Vera Bradley Foundation for Breast
Cancer. For more information about Vera Bradley (Nasdaq:VRA), visit
www.verabradley.com/mediaroom.

Website Information

We routinely post important information for investors on our website
www.verabradley.com in the "Investor Relations" section. We intend to use this
website as a means of disclosing material, non-public information and for
complying with our disclosure obligations under Regulation FD. Accordingly,
investors should monitor the Investor Relations section of our website, in
addition to following our press releases, SEC filings, public conference
calls, presentations and webcasts. The information contained on, or that may
be accessed through, our website is not incorporated by reference into, and is
not a part of, this document.

Vera Bradley Safe Harbor Statement

Certain statements in this release are "forward-looking statements" made
pursuant to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such forward-looking statements reflect the Company's
current expectations or beliefs concerning future events and are subject to
various risks and uncertainties that may cause actual results to differ
materially from those that we expected, including: possible adverse changes in
general economic conditions and their impact on consumer confidence and
spending; possible inability to predict and respond in a timely manner to
changes in consumer demand; possible loss of key management or design
associates or inability to attract and retain the talent required for our
business; possible inability to maintain and enhance our brand; possible
inability to successfully implement our growth strategies or manage our
growing business; possible inability to successfully open new stores as
planned; and possible inability to sustain levels of comparable-store sales.
For a discussion of these and other risks and uncertainties that could cause
actual results to differ materially from those contained in our
forward-looking statements, please refer to "Risk Factors" in Part I, Item 1A
of our Annual Report on Form 10-K for the fiscal year ended January 28, 2012.
We undertake no obligation to publicly update or revise any forward-looking
statement. Financial schedules are attached to this release.

Vera Bradley, Inc.
Condensed Consolidated Balance Sheets
($ in thousands)
(unaudited)
                                                                    
                                                                    
                                           October 27, January 28, October 29,
                                           2012        2012        2011
Assets                                                              
Current assets:                                                     
Cash and cash equivalents                   $ 4,468     $ 4,922     $ 8,342
Accounts receivable, net                    46,866      38,097      38,591
Inventories                                 135,311     106,967     111,099
Prepaid expenses and other current assets   9,758       8,343       8,651
Deferred income taxes                       8,784       8,010       10,317
Total current assets                        205,187     166,339     177,000
                                                                    
Property, plant, and equipment, net         76,941      52,312      47,308
Other assets                                1,844       862         967
Total assets                                $ 283,972   $ 219,513   $ 225,275
                                                                    
Liabilities and Shareholders' Equity                                
Current liabilities:                                                
Accounts payable                            $ 36,683    $ 27,276    $ 18,949
Accrued employment costs                    12,283      15,738      12,515
Other accrued liabilities                   17,737      15,297      14,468
Income taxes payable                        58          1,705       --
Current portion of long-term debt           73          89          88
Total current liabilities                   66,834      60,105      46,020
                                                                    
Long-term debt                              35,294      25,095      65,568
Deferred income taxes                       4,371       4,205       4,820
Other long-term liabilities                 8,408       6,101       5,413
Total liabilities                           114,907     95,506      121,821
                                                                    
Shareholders' equity:                                               
Additional paid-in capital                  75,113      73,590      73,115
Retained earnings                           94,061      50,320      30,218
Accumulated other comprehensive (loss)      (109)       97          121
income
Total shareholders' equity                  169,065     124,007     103,454
Total liabilities and shareholders' equity  $ 283,972   $ 219,513   $ 225,275

 
 
 
Vera Bradley, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
                                                                    
                                                                    
                               Thirteen Weeks Ended    Thirty-nine Weeks Ended
                               October 27, October 29, October 27, October 29,
                               2012        2011        2012        2011
                                                                    
Net revenues                    $ 138,346   $ 121,149   $ 378,584   $ 326,328
Cost of sales                   58,118      55,471      164,442     144,578
Gross profit                    80,228      65,678      214,142     181,750
Selling, general, and           53,598      45,365      148,622     124,474
administrative expenses
Other income                    941         1,206       4,660       6,229
Operating income                27,571      21,519      70,180      63,505
Interest expense, net           172         288         515         933
Income before income taxes      27,399      21,231      69,665      62,572
Income tax expense              9,657       8,269       25,924      24,753
Net income                      $ 17,742    $ 12,962    $ 43,741    $ 37,819
                                                                    
Basic weighted-average shares   40,534      40,507      40,527      40,507
outstanding
Diluted weighted-average        40,574      40,540      40,563      40,538
shares outstanding
Basic earnings per share        $ 0.44      $ 0.32      $ 1.08      $ 0.93
Diluted earnings per share      0.44        0.32        1.08        0.93

 
 
 
Vera Bradley, Inc.
Consolidated Statements of Cash Flows
($ in thousands)
(unaudited)
                                                                    
                                                                    
                                                       Thirty-Nine Weeks Ended
                                                       October 27, October 29,
                                                       2012        2011
Cash flows from operating activities                                
Net income                                              $ 43,741    $ 37,819
Adjustments to reconcile net income to net cash                     
provided by
(used in) operating activities:                                     
Depreciation of property, plant, and equipment          7,424       6,992
Provision for doubtful accounts                         370         375
Loss on disposal of property, plant, and equipment      25          -- 
Stock-based compensation                                2,198       1,116
Deferred income taxes                                   (548)       (54)
Changes in assets and liabilities:                                  
Accounts receivable                                     (9,139)     (4,703)
Inventories                                             (28,489)    (14,382)
Other assets                                            (2,397)     (239)
Accounts payable                                        9,407       (11,063)
Income taxes payable                                    (1,647)     (10,010)
Accrued and other liabilities                           1,292       1,018
Net cash provided by operating activities               22,237      6,869
                                                                    
Cash flows from investing activities                                
Purchases of property, plant, and equipment             (32,114)    (11,316)
Net cash used in investing activities                   (32,114)    (11,316)
                                                                    
Cash flows from financing activities                                
Payments on financial-institution debt                  (70,750)    (28,000)
Borrowings on financial-institution debt                81,000      26,700
Payments on vendor-financed debt                        (66)        (61)
Tax withholdings for equity compensation                (736)       --
Other                                                   --          76
Net cash provided by (used in) financing activities     9,448       (1,285)
Effect of exchange rate changes on cash and cash        (25)        121
equivalents
                                                                    
Net decrease in cash and cash equivalents               (454)       (5,611)
Cash and cash equivalents, beginning of period          4,922       13,953
Cash and cash equivalents, end of period                $ 4,468     $ 8,342

CONTACT: Investors:
         Vera Bradley
         Paul G. Blair
         pblair@verabradley.com
         (260) 207-5183
        
         ICR, Inc.
         Joseph Teklits
         Jean Fontana
         Jean.fontana@icrinc.com
         (203) 682-8200
        
         Media:
         877-708-VERA (8372)
         Mediacontact@verabradley.com
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