Vera Bradley (VRA 11.12, +1.05) has spiked 10.4% in pre-market after modestly beating earnings expectations.
The apparel company reported above-consensus second quarter earnings of $0.13 per share on a 5.7% year-over-year decline in revenue to $112.42 million, which was just ahead of expectations.
Comparable sales declined 4.3%. This included a 4.0% decline in comparable store sales and a 4.9% drop in e-commerce sales. The declines were more than offset by new store growth. Two full-line stores and five factory outlets were opened during the past 12 months.
Direct segment revenue increased 2.4% year-over-year to $89.30 million while Indirect segment revenue fell 27.9% to $23.10 million due to a reduction in number of specialty accounts and a reduction in orders from specialty accounts and certain key accounts.
Gross margin declined 110 basis points year-over-year to 57.4%. Increased promotional activity at factory outlet stores, a reserve taken against slow-moving inventory, and channel mix changes were partially offset by lower product costs.
Vera Bradley is conducting a comprehensive review of its business and strategic plan to find areas of potential improvement. The plan is called Vision 20/20 and it is focused on evaluating products and pricing while looking for ways to reduce selling, general, and administrative expenses.
Looking ahead, the company sees some softness during the third quarter, but expects to make up the difference by the end of the fiscal year. For the third quarter, the company expects to report below-consensus earnings between $0.13 and $0.15 per share on revenue between $112 million and $117 million. For the full year, Vera Bradley expects to report above-consensus earnings between $0.44 and $0.50 per share on revenue between $460 million and $470 million.