Biggest Vera Bradley shareholder calls for brand to look into strategic alternatives
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The largest shareholder of Vera Bradley, Fund 1 Investments, has sent a letter to the women’s accessories brand board which underlines the potential for enhancing value through alternative offerings.
According to the letter sent to the board of directors this morning, Fund 1 maintains that Vera Bradley's iconic brand holds significant value, which is not adequately represented in its current share price. Fund 1 aims to bring Vera Bradley back to its former success, noting that in its first year as a public company, Vera Bradley achieved 366 million dollars in revenue and nearly 50 million dollars in free cash flow, valuing the business at 1.5 billion dollars.
Today, however, despite analysts projecting a similar revenue of 380 million dollars, the company is expected to burn cash, and its enterprise value, adjusted for the acquisition of jewelry brand Pura Vida, suggests a negative valuation. Fund 1 goes on to write that Vera Bradley faces significant challenges, including a history of value erosion, weak operational performance, a stalled brand turnaround, negative market sentiment for fashion brands, and limited public float.
In the letter, Fund 1 suggests that exploring strategic alternatives, such as joining a larger organization or transitioning to private ownership, could be the best path forward for Vera Bradley and its shareholders. It adds that the board's openness to all options is encouraging and aligns with this view.
Beneficially owning 10 percent of the company’s outstanding shares, Fund 1 stresses that it brings extensive retail expertise and a proven track record of collaborating with management teams and boards to provide strategic ideas, key connections, and capital. The investment fund encourages the family-owned brand to speak with other executives from its portfolio companies to learn more about the value it aims to deliver through its measured approach.
- Fund 1 Investments, Vera Bradley's largest shareholder, proposes strategic alternatives to boost brand value.
- The letter highlights Vera Bradley's underperformance despite strong revenue projections and suggests exploring options like acquisition or private ownership.
- Fund 1, possessing significant retail expertise, offers collaboration and capital to help Vera Bradley regain its former success.