Vera Bradley Announces Fiscal 2014 Third Quarter Financial Results

Vera Bradley Announces Fiscal 2014 Third Quarter Financial Results

  *Net revenues of $130.1 million, including a 7.1% increase in Direct
    segment net revenues
  *Net income of $15.2 million and diluted EPS of $0.37

FORT WAYNE, Ind., Dec. 11, 2013 (GLOBE NEWSWIRE) -- Vera Bradley, Inc.
(Nasdaq:VRA) (the "Company") today announced its financial results for the
fiscal 2014 third quarter ended November 2, 2013. The Company reported net
revenues of $130.1 million for the current year third quarter, compared to
$138.3 million in the third quarter of fiscal 2013, a decrease of 6.0%.
Diluted earnings per share for the quarter were $0.37, compared to $0.44 in
the third quarter of fiscal 2013.

Robert Wallstrom, Chief Executive Officer, stated, "While third quarter sales
and earnings results were in line with our expectations, based on recent
trends we are lowering our fourth quarter outlook. Although we face a
persistently challenging retail environment, we are working diligently to make
improvements in our organization that will enable us to stabilize the business
and generate more consistent sales and earnings growth over the long term. "

Mr. Wallstrom continued, "Upon joining the Company I have come to more fully
appreciate Vera Bradley's rich history as an authentic American brand with a
highly loyal customer following. I see tremendous opportunity to broaden our
customer base, enter new markets, and expand the product offering. Over the
next several months I will be evaluating several areas of the business,
focusing on the product assortment and the indirect and direct distribution
channels, including e-commerce, in order to develop a strategic plan that will
drive improved financial performance and increase long-term shareholder
value."

Direct segment revenues increased 7.1% to $68.9 million, driven by growth
across the Company's full-price and outlet stores. Third quarter
year-over-year net revenues in the Company's stores grew 18%, primarily as a
result of the opening of 20 full-price and four outlet stores during the past
12 months. Comparable-store sales decreased 6.5% during the quarter primarily
due to lower traffic and underperformance of the product offering. E-commerce
revenue decreased 7.8% compared to the prior year, as a result of both lower
traffic and lower average transaction size. Indirect segment revenues
decreased 17.3% to $61.2 million, primarily due to cautious ordering from the
Company's specialty retailers.

Gross profit for the current year third quarter decreased 10.3% to $71.9
million, resulting in a gross margin rate of 55.3%, compared to 58.0% in the
prior year third quarter. The decrease in gross margin was primarily due to
sales of lower-margin product accounting for a higher percentage of total net
revenues in the current quarter, as well as increased promotional activity
year-over-year.

SG&A expense totaled $48.8 million in the current year third quarter, compared
to $53.6 million in the prior year third quarter. SG&A as a percentage of net
revenues decreased 125 basis points, to 37.5%, compared to 38.7% in the prior
year, primarily a result of expense management measures, as well as reductions
in variable compensation expense associated with company performance.

Operating income totaled $24.2 million, or 18.6% of net revenues, in the
current year third quarter, compared to operating income of $27.6 million, or
19.9% of net revenues, in the prior year third quarter.

The effective tax rate was 36.9% for the current year third quarter, compared
to 35.2% in the prior year third quarter. The increase was primarily related
to discrete items recorded in last year's third quarter, which were partially
offset by a lower net operating loss in Japan for the thirteen weeks ended
November 2, 2013.

Net income for the current year third quarter totaled $15.2 million, or $0.37
per diluted share, from $17.7 million, or $0.44 per diluted share, in the
prior year third quarter.

Year-to-Date Results

For the thirty-nine weeks ended November 2, 2013, net revenues were flat at
$378.5 million compared to $378.6 million for the thirty-nine weeks ended
October 27, 2012. Direct segment revenues increased 15.0% to $217.6 million,
with a comparable-store sales decline of 3.5%. Indirect segment revenues
decreased 15.0% to $160.9 million.

For the thirty-nine weeks, current year operating income totaled $63.4
million, or 16.8% of net revenues, compared to operating income of $70.2
million, or 18.5% of net revenues, in the comparable prior year period.

The effective tax rate for the thirty-nine weeks ended November 2, 2013 was
37.7%, compared to 37.2% for the same prior year period. The increase was
primarily related to discrete items recorded during the prior year third
quarter, which were partially offset by a lower net operating loss in Japan.

Net income for the current year totaled $39.4 million, or $0.97 per diluted
share, compared to $43.7 million, or $1.08 per diluted share for the same
period in the prior year.

Cash flow from operations for the thirty-nine weeks ended November 2, 2013
totaled $34.8 million, compared to $22.2 million for the same period in the
prior year.

Cash and cash equivalents as of November 2, 2013 was $13.7 million, and there
was no interest bearing debt outstanding. Inventory was $150.5 million, which
was lower than the Company's original expectations as a result of the timing
of finished good shipments from suppliers.

Outlook

The Company's fiscal year 2013 was a 53-week year, with the incremental
fifty-third week contributing approximately $4.9 million in sales and $0.02 to
diluted earnings per share for both the fourth quarter and full-year results.

For the fourth quarter of fiscal 2014, the Company expects net revenues to
range from $145 to $150 million, compared to $162.6 million in the fourth
quarter of fiscal 2013. The gross margin rate for the current year fourth
quarter is expected to decline between 340 and 380 basis points from last
year's fourth quarter.

Diluted earnings per share are expected to be in a range of $0.44 to $0.47.
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 2014, the Company expects net revenues to range from $523 to $528
million, and diluted earnings per share to be in a range of $1.41 to $1.44.
The earnings per share guidance includes an effective tax rate of 38% and
fully diluted weighted average shares outstanding of 40.6 million.

The Company expects inventory to be approximately $160 million as of February
1, 2014.

Call Information

A conference call to discuss fiscal 2014 third quarter results is scheduled
for today, December 11, 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 December 25, 2013. To access the recording, listeners should dial
(877) 870-5176, and enter the access code, 2985655.

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.
The Company generates net revenues by selling products through two reportable
segments: Direct and Indirect. The Direct business consists of sales of Vera
Bradley products through the Company's full-price and outlet stores in the
United States, department store locations in Japan, its websites,
verabradley.com and verabradley.co.jp, and its annual outlet sale in Fort
Wayne, Indiana. The Indirect business consists of sales of Vera Bradley
products to approximately 3,400 specialty retailers, substantially all of
which are located in the United States, as well as select department stores,
national accounts, and third party e-commerce sites. 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.

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
webpage 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 webpage 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
(in thousands)
(unaudited)
                                                                
                                          November 2, February 2, October 27,
                                          2013        2013        2012
Assets                                                           
Current assets:                                                  
Cash and cash equivalents                 $13,712   $9,603    $4,468
Accounts receivable, net                  42,922     34,811     46,866
Inventories                               150,512    131,562    135,311
Income taxes receivable                   1,632      --         --
Prepaid expenses and other current assets 9,964      11,016     9,758
Deferred income taxes                     12,373     11,348     8,784
Total current assets                      231,115    198,340    205,187
                                                                
Property, plant, and equipment, net        81,969     77,211     76,941
Other assets                               1,289      1,768      1,844
Total assets                              $314,373  $277,319  $283,972
                                                                
Liabilities and Shareholders' Equity                             
Current liabilities:                                             
Accounts payable                          $27,595   $14,853   $36,683
Accrued employment costs                  11,691     14,162     12,283
Other accrued liabilities                 20,526     16,532     17,737
Income taxes payable                      --        7,094      58
Current portion of long-term debt         --        58         73
Total current liabilities                 59,812     52,699     66,834
                                                                
Long-term debt                             --         15,037     35,294
Deferred income taxes                      6,539      6,078      4,371
Other long-term liabilities                12,249     9,250      8,408
Total liabilities                         78,600     83,064     114,907
                                                                
Shareholders' equity:                                            
Additional paid-in capital                78,061     75,675     75,113
Retained earnings                         158,556    119,190    94,061
Accumulated other comprehensive loss      (844)      (610)      (109)
Total shareholders' equity                235,773    194,255    169,065
Total liabilities and shareholders'       $314,373  $277,319  $283,972
equity
                                                                


Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
(unaudited)
                                                               
                              Thirteen Weeks Ended    Thirty-Nine Weeks Ended
                              November 2, October 27, November 2, October 27,
                              2013        2012        2013        2012
                                                               
Net revenues                   $130,094  $138,346  $378,499  $378,584
Cost of sales                  58,161     58,118     166,327    164,442
Gross profit                  71,933     80,228     212,172    214,142
Selling, general, and          48,771     53,598     152,334    148,622
administrative expenses
Other income                   1,027      941        3,608      4,660
Operating income              24,189     27,571     63,446     70,180
Interest expense, net          58         172        281        515
Income before income taxes    24,131     27,399     63,165     69,665
Income tax expense             8,905      9,657      23,799     25,924
Net income                    $15,226   $17,742   $39,366   $43,741
                                                               
Basic weighted-average shares  40,605     40,534     40,596     40,527
outstanding
Diluted weighted-average       40,652     40,574     40,633     40,563
shares outstanding
Basic earnings per share       $0.37     $0.44     $0.97     $1.08
Diluted earnings per share     0.37       0.44       0.97       1.08
                                                               

                                                                 
Vera Bradley, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
                                                                 
                                                      Thirty-Nine Weeks Ended
                                                      November 2, October 27,
                                                      2013        2012
Cash flows from operating activities                              
Net income                                             $39,366   $43,741
Adjustments to reconcile net income to net cash                   
provided byoperating activities:
Depreciation of property, plant, and equipment        10,651     7,424
Provision for doubtful accounts                       (190)      370
Loss on disposal of property, plant, and equipment    9          25
Stock-based compensation                              2,857      2,198
Deferred income taxes                                 (624)      (548)
Changes in assets and liabilities:                               
Accounts receivable                                   (7,921)    (9,139)
Inventories                                           (19,154)   (28,489)
Prepaid expenses and other assets                     1,531      (2,397)
Accounts payable                                      12,742     9,407
Income taxes                                          (8,726)    (1,647)
Accrued and other liabilities                         4,305      1,292
Net cash provided by operating activities              34,846     22,237
                                                                 
Cash flows from investing activities                              
Purchases of property, plant, and equipment           (15,418)   (32,114)
Net cash used in investing activities                  (15,418)   (32,114)
                                                                 
Cash flows from financing activities                              
Payments on financial-institution debt                (45,000)   (70,750)
Borrowings on financial-institution debt              30,000     81,000
Tax withholdings for equity compensation              (411)      (736)
Other financing activities, net                       122        (66)
Net cash (used in) provided by financing activities    (15,289)   9,448
Effect of exchange rate changes on cash and cash       (30)       (25)
equivalents
                                                                 
Net increase (decrease) in cash and cash equivalents   4,109      (454)
Cash and cash equivalents, beginning of period         9,603      4,922
Cash and cash equivalents, end of period               $13,712   $4,468
                                                                 

CONTACT: Investors:
        
         Vera Bradley
         Kevin Sierks
         ksierks@verabradley.com
         (260) 207-5321
        
         Media:
        
         877-708-VERA (8372)
         Mediacontact@verabradley.com
 
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