Vera Bradley Inc. shares had their best day in more than five years after the handbag maker boosted its forecast, helped by cost cuts and fewer discounts.
The company now expects annual earnings of 80 cents to 83 cents a share, excluding some items, according to a statement Wednesday. It had previously forecast 72 cents to 78 cents. Sales will range from $499 million to $503 million, above the previous guidance of no more than $495 million.
The outlook reflects a shift away from promotions, which had crimped Vera Bradley’s margins. The Roanoke, Indiana-based company slashed the number of days with special sales by 50 percent last quarter, relying instead on new products to draw customers. It’s also making more of its bags and accessories directly for outlet malls, making it easier to manage costs.
“We eliminated our hyper-promotions of 60 percent to 70 percent off,” Chief Executive Officer Rob Wallstrom said in the statement. “Customers are responding to our new product offerings.”
Vera Bradley shares jumped 46 percent to $17.08 in New York, the biggest single-day gain since October 2010. Before the rally, the stock had been down 43 percent this year.