- Consolidated Revenues: $80.6 million, down from $94.4 million in the prior year first quarter.
- Net Loss: $6.5 million, or $0.21 per share, compared to a net loss of $2.6 million, or $0.09 per share last year.
- Vera Bradley Direct Segment Revenues: $56.4 million, a 4% decrease from $58.9 million in the prior year first quarter.
- Comparable Sales: Declined 9.6%, primarily driven by weakness in the outlet channel.
- Vera Bradley Indirect Segment Revenues: $11.5 million, a 25% decrease from $15.4 million in the prior year first quarter.
- Pura Vida Segment Revenues: $12.7 million, a 37% decrease from $20.1 million in the prior year first quarter.
- Non-GAAP Gross Margin: $42.7 million or 53% of net revenues, compared to $51.7 million or 54.8% of net revenues in the prior year.
- Non-GAAP SG&A Expense: $52.4 million or 65% of net revenues, compared to $55.6 million or 58.9% of net revenues for the prior year first quarter.
- Quarter-End Cash and Cash Equivalents: $55.2 million, compared to $25.3 million at the end of last year's first quarter.
- Total Quarter-End Inventory: $125.2 million, down 12% from $142.7 million at the end of last year's first quarter.
- Stock Repurchase: Approximately $6.3 million of common stock, equating to approximately 1 million shares at an average price of $6.62.
- Fiscal 2025 Guidance - Consolidated Net Revenues: $460 million to $480 million.
- Fiscal 2025 Guidance - Consolidated Gross Margin: 54% to 55%.
- Fiscal 2025 Guidance - Consolidated SG&A Expense: $229 million to $239 million.
- Fiscal 2025 Guidance - Operating Income: $21 million to $24.5 million.
- Fiscal 2025 Guidance - Diluted Earnings Per Share: $0.54 to $0.62.
- Fiscal 2025 Guidance - Net Cash Flow: Approximately $10 million.
- Fiscal 2025 Guidance - Net Capital Spending: Approximately $12 million to $14 million.
Release Date: June 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Project Restoration is set to drive long-term profitable growth with new product assortments and updated branding.
- Positive response from wholesale partners to new products and collaborations.
- Strong balance sheet with increased cash position and strategic inventory reduction.
- Successful launch of the online outlet store driving revenue and new customer acquisition.
- Focus on marketing efficiency and diversification to improve e-commerce performance.
Negative Points
- First quarter revenues fell 14.6% year-over-year, reflecting economic challenges and transitionary phase.
- Vera Bradley direct revenues decreased by 4%, primarily due to traffic challenges in the outlet channel.
- Pura Vida sales declined 37% year-over-year, impacted by reduced marketing spend and higher costs.
- Vera Bradley Indirect revenues dropped 25% as wholesale partners awaited new launch products.
- First quarter net loss increased to $6.5 million from $2.6 million in the prior year.
Q & A Highlights
Q: Given the current economic challenges and the timing of your initiatives, how confident are you in a strong back half of the year? Are there opportunities for additional upside to your guidance, and what are the key risks?
A: Jacqueline Ardrey, CEO: We expected some of the current weakness due to the transition phase. We have orders booked and are optimistic about the second half. However, consumer response and macroeconomic trends remain uncertain. We are positioned well for growth but remain cautious about potential risks.
A: Michael Schwindle, CFO: The first quarter's drag was anticipated, especially with Pura Vida. We see timing distortions in wholesale that should correct in the back half. We reaffirm our guidance, expecting some upside but acknowledging inherent risks.
Q: What led you to decide to grow the store base, and how do you view stores versus online as growth drivers?
A: Jacqueline Ardrey, CEO: We evaluated store profitability and made adjustments to labor models and rent negotiations. We aim to stop closing stores and grow the fleet. Online, we see growth in both vb.com and our online outlet, with distinct roles for each. We are digital-first and focused on optimizing online assortments and marketing.
Q: How will you manage the split between full price and outlet stores, especially with leather products and collaborations?
A: Jacqueline Ardrey, CEO: We will offer product collaborations in both channels, though not necessarily simultaneously. We are strategically differentiating price points and styles to cater to both full-line and outlet customers. Leather will have specific distribution points, including faux leather in outlets.
Q: How will inventories shift with the introduction of Project Restoration?
A: Michael Schwindle, CFO: We expect inventory to be flat to slightly down by year-end. We are migrating new assortments into branded stores and moving existing assortments to outlet channels. Structural improvements in inventory management will continue.
Q: What is the current channel mix, and how do you see it evolving post-Project Restoration?
A: Michael Schwindle, CFO: Wholesale is mid-teens to 20%, digital is over a quarter, and the rest is retail. We aim to grow the branded side of our business, focusing on full-price assortments and strategic customer targeting.
A: Jacqueline Ardrey, CEO: We are aligning assortments with strategic channels to match products with target customers, enhancing our ability to deliver on growth goals.
Q: With elevated capital spending this year, is this a one-time increase or will it continue?
A: Jacqueline Ardrey, CEO: We are investing in store environments to attract our target customers.
A: Michael Schwindle, CFO: Much of the elevated capital is specific to Project Restoration and new stores. Ongoing maintenance capital will be lower, around sub-$5 million annually.
Q: What are the uses of free cash flow going forward?
A: Michael Schwindle, CFO: We remain conservative on the balance sheet. Future investments will focus on growth opportunities, and we may consider other capital returns.
A: Jacqueline Ardrey, CEO: We repurchased a million shares in Q1 and have $19.2 million remaining on our repurchase authorization.
Q: Is there any talk of a dividend?
A: Michael Schwindle, CFO: We are not providing guidance on dividends at this time. Any decision will be announced if made.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
