Vera Bradley Announces Fiscal 2014 First Quarter Financial Results
*Net revenues increased 5% to $123.0 million.
*Direct net revenues increased 24%, including an increase of 0.9% in
comparable-store sales; Indirect net revenues decreased 15%.
*Diluted EPS were $0.23 compared to $0.31 in the first quarter of fiscal
FORT WAYNE, Ind., June 5, 2013 (GLOBE NEWSWIRE) -- Vera Bradley, Inc.
(Nasdaq:VRA) today announced its financial results for the fiscal 2014 first
quarter ended May 4, 2013. The Company reported net revenues of $123.0 million
for the first quarter, compared to $117.2 million in the first quarter of
fiscal 2013, an increase of $5.8 million, or 5.0%. Diluted earnings per share
for the quarter were $0.23, a decrease of 26% over diluted earnings per share
in the first quarter of fiscal 2013.
Mike Ray, Chief Executive Officer commented, "We delivered on our expectations
for the first quarter. Net revenue slightly exceeded our guidance, with
comparable store sales growth of 0.9%, and indirect performance in line with
expectations, while gross margin was slightly ahead. We also continue to be
pleased with our new store performance as well as the growth in our e-commerce
channel.Looking forward, in light of our outlook, we have narrowed our focus
to ensure that we can execute our strategies as quickly as possible, both to
address our challenges and to achieve our longer-term vision for the brand."
In the Direct segment, revenues increased 24% to $73.7 million, as a result of
growth across all of our channels.In our stores, net revenues grew 34% during
the quarter, due to the opening of 19 full-price and four outlet stores since
the first quarter of fiscal 2013. Comparable store sales increased
0.9%.E-commerce revenue grew 23% primarily due to continued growth in website
traffic. Indirect revenues decreased 15% to $49.3 million, primarily due to
cautious ordering from our specialty retailers in this challenging retail
Gross profit for the first quarter increased 4.8% to $68.5 million, resulting
in a gross profit margin of 55.6%, in line with the first quarter of fiscal
Total SG&A expense was $55.2 million for the first quarter, compared to $47.2
million in the prior year.SG&A as a percentage of net revenues was 44.9%,
unfavorable by 460 basis points compared to the prior year, primarily due to
lower revenues in the Indirect segment and full-price stores and annualization
of employee-related expenses.
Operating income decreased 27% to $15.2 million, or 12.3% of net revenues, in
the first quarter, compared to operating income of $20.8 million, or 17.8% of
net revenues in the first quarter of fiscal 2013.
The effective tax rate was 38.9% for the quarter, in line with the prior year.
Net income for the quarter was $9.2 million, or $0.23 per diluted share,
compared to $12.6 million, or $0.31 per diluted share, in the first quarter of
Cash flow from operations during the first quarter totaled $14.9 million,
compared to $30.7 million for the first quarter of fiscal 2013, with the
decrease primarily a result of increased inventory.Cash flow for the quarter
was used to pay down the Company's debt facility to $5.0 million at quarter
For the second quarter of fiscal 2014, the Company expects net revenues to be
in a range of $123 million to $126 million, compared to $123 million in the
second quarter of fiscal 2013.Gross margin for the second quarter is expected
to expand by approximately 200 basis points.
Diluted earnings per share are expected to be in a range of $0.31 to
$0.33.The earnings per share estimate assumes an effective tax rate of 38.5%
and fully diluted weighted average shares outstanding of 40.6 million.
For fiscal 2014, the Company now expects net revenues to be in a range of $570
million to $575 million.Gross margin is expected to decline up to 20 basis
points for the full year.
Diluted earnings per share for the full year are now expected to be in a range
of $1.74 to $1.78.This guidance includes an effective tax rate of 38.5% and
fully diluted weighted average shares outstanding of 40.7 million.Capital
spending for the full year remains at approximately $20 million.
Other Company Developments
Vera Bradley also announced today in a separate press release that Michael Ray
has informed the Board of Directors that he plans to retire as CEO. The Board
is conducting a search for his successor, and Mr. Ray will continue to serve
as CEO until a successor is in place.
A conference call to discuss fiscal 2014 first quarter results is scheduled
for today, June 5, 2013, 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 June 19, 2013. To access the recording, listeners should dial (877)
870-5176, and enter the access code, 9551028.
About Vera Bradley, Inc.
Vera Bradley is a leading designer of women's handbags and accessories,
luggage and travel items, eyewear, stationery and gifts. Founded in 1982 by
friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand's iconic
designs and versatile styles offer women of all ages a colorful way to
accessorize every look. Vera Bradley offers a unique, multi-channel sales
model as well as a focus on service and a high level of engagement with
fans.Fiscal 2013 net revenues increased by 17% to $541 million. The company's
commitment to breast cancer research continues to increase its reach through
the Vera Bradley Foundation for Breast Cancer. For more information about Vera
Bradley (Nasdaq:VRA), visit www.verabradley.com/mediaroom.
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 February 2, 2013.
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
May 4, February 2, April 28,
2013 2013 2012
Cash and cash equivalents $8,229 $9,603 $6,022
Accounts receivable, net 26,758 34,811 36,109
Inventories 138,949 131,562 98,231
Prepaid expenses and other current assets 9,211 11,016 8,447
Deferred income taxes 11,860 11,348 8,203
Total current assets 195,007 198,340 157,012
Property, plant, and equipment, net 79,652 77,211 61,535
Other assets 1,630 1,768 766
Total assets $276,289 $277,319 $219,313
Liabilities and Shareholders' Equity
Accounts payable $17,768 $14,853 $31,195
Accrued employment costs 9,571 14,162 8,047
Other accrued liabilities 18,335 16,532 16,613
Income taxes payable 5,761 7,094 7,374
Current portion of long-term debt 42 58 90
Total current liabilities 51,477 52,699 63,319
Long-term debt 5,030 15,037 7,322
Deferred income taxes 6,102 6,078 4,243
Other long-term liabilities 10,134 9,250 7,619
Total liabilities 72,743 83,064 82,503
Additional paid-in capital 76,032 75,675 73,950
Retained earnings 128,379 119,190 62,946
Accumulated other comprehensive (loss) (865) (610) (86)
Total shareholders' equity 203,546 194,255 136,810
Total liabilities and shareholders' equity $276,289 $277,319 $219,313
Vera Bradley, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
Thirteen Weeks Ended
May 4, April 28
Net revenues $123,033 $117,201
Cost of sales 54,567 51,899
Gross profit 68,466 65,302
Selling, general, and administrative expenses 55,227 47,191
Other income 1,951 2,699
Operating income 15,190 20,810
Interest expense, net 141 191
Income before income taxes 15,049 20,619
Income tax expense 5,860 7,993
Net income $9,189 $12,626
Basic weighted-average shares outstanding 40,580 40,515
Diluted weighted-average shares outstanding 40,624 40,547
Basic earnings per share $0.23 $0.31
Diluted earnings per share $0.23 $0.31
Vera Bradley, Inc.
Consolidated Statements of Cash Flows
Thirteen Weeks Ended
May 4, April 28,
Cash flows from operating activities
Net income $9,189 $12,626
Adjustments to reconcile net income to net cash provided
(used in) operating activities:
Depreciation of property, plant, and equipment 3,323 2,268
Provision for doubtful accounts (213) 195
Loss on disposal of property, plant, and equipment 2 21
Stock-based compensation 806 625
Deferred income taxes (548) (155)
Changes in assets and liabilities:
Accounts receivable 8,266 1,793
Inventories (7,567) 8,587
Prepaid expenses and other assets 1,943 (8)
Accounts payable 2,915 3,919
Income taxes payable (1,333) 5,669
Accrued and other liabilities (1,904) (4,857)
Net cash provided by operating activities 14,879 30,683
Cash flows from investing activities
Purchases of property, plant, and equipment (5,811) (11,512)
Net cash used in investing activities (5,811) (11,512)
Cash flows from financing activities
Payments on financial-institution debt (35,000) (32,750)
Borrowings on financial-institution debt 25,000 15,000
Payments on vendor-financed debt (23) (22)
Tax withholdings for equity compensation (389) (265)
Net cash used in financing activities (10,412) (18,037)
Effect of exchange rate changes on cash and cash (30) (34)
Net increase (decrease) in cash and cash equivalents (1,374) 1,100
Cash and cash equivalents, beginning of period 9,603 4,922
Cash and cash equivalents, end of period $8,229 $6,022
Paul G. Blair
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