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Vera Bradley Q4 revenues in line with guidance, outlook upbeat

By Prachi Singh

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Management |REPORT

Vera Bradley net revenues totaled 154.1 million dollars for the current year fourth quarter ended January 30, 2016, compared to 152.6 million dollars in the prior year fourth quarter, representing an increase of 1 percent. Net revenues totaled 502.6 million dollars for fiscal 2016, compared to 509 million dollars for the fiscal year ended January 31, 2015.

Commenting on the results, Robert Wallstrom, Chief Executive Officer, noted, "We are pleased with our fourth quarter sales and EPS performance, both of which were within our guidance. We generated these results despite the continued challenging and promotional retail environment. While our overall fourth quarter comparable sales (including e-commerce) fell 4.6 percent, our comparable store sales were essentially flat, declining just 0.2 percent. We took a very disciplined approach to enhancing gross profit in fiscal 2016, and we are especially proud of our 370 basis point gross profit percentage increase for the year."

Fourth quarter and full year highlights

For the current year fourth quarter, the company posted net income of 15.7 million dollars, or 0.41 dollar per diluted share against 17.3 million dollars, or 0.43 dollar per diluted share, same quarter last year. For the current year, the company posted net income of 27.6 million dollars, or 0.71 dollar per diluted share against 40.8 million dollars, or 1 dollar per diluted share, for fiscal 2015.

Fourth quarter direct segment revenues totaled 112.9 million dollars, a 4.9 percent increase and comparable sales including e-commerce decreased 4.6 percent for the quarter reflecting a 0.2 percent decline in comparable store sales and a 10 percent decrease in e-commerce sales. Indirect segment revenues decreased 8.4 percent. Gross profit for the quarter totaled 89.6 million dollars, or 58.2 percent of net revenues, compared to 80 million dollars, or 52.4 percent of net revenues, in the prior year fourth quarter.

Direct segment revenues for the current fiscal year totaled 351.3 million dollars, a 4.7 percent increase, but comparable sales including e-commerce decreased 10.6 percent for the fiscal year reflecting an 8.6 percent decline in comparable store sales and a 13.2 percent decrease in e-commerce sales. Indirect segment revenues decreased 12.7 percent to 151.3 million dollars. Gross profit for the fiscal year totaled 284.6 million dollars, or 56.6 percent of net revenues, compared to 269 million dollars, or 52.9 percent of net revenues, in the prior year.

The company opened 15 full-line stores, all in its new modern store design; opened 11 factory stores and successfully transitioned to a MFO model and nearly doubled its department store presence at Macy's, added distribution at select Belk and Bon-Ton stores, and began the Amazon partnership.

Outlook for the year ahead

“Our top priority continues to be to make Vera Bradley more relevant in order to attract even more new customers to the brand. We are continuing to execute our long-term strategic plan laid out in March 2014, focusing on the key planks of product, distribution, and marketing. Our three main objectives for fiscal 2017 are to complete our brand transformation, drive core growth, and to begin to explore additional licensing and international growth opportunities,” added Wallstrom.

For the first quarter of fiscal 2017, the company expects net revenues of 105 million dollars to 109 million dollars compared to prior year first quarter revenues of 101.1 million dollars. A gross profit percentage of 56.7 percent to 57.2 percent compared to 54.5 percent in the prior year first quarter. Diluted earnings per share from continuing operations of 0.04 dollar to 0.06 dollar.

For fiscal 2017, the company expects net revenues of 510 million dollars to 525 million dollars compared to 502.6 million dollars last year. A gross profit percentage of 57.7 percent to 58.1 percent compared to 56.6 percent last year and diluted earnings per share from continuing operations of 0.90 dollar to 0.98 dollar.

Vera Bradley