FORT WAYNE, September 16 — Vera Bradley Inc. swung to a $4.50 million profit in its second fiscal quarter, or 15 cents per diluted common share, reversing a $4.67 million loss in the same period a year earlier, the Fort Wayne-based handbag and accessories designer said Tuesday. The swing of almost $9.2 million was driven largely by a $7.7 million refund from the federal government for tariffs the company paid last year. Net revenue rose 1% to $71.6 million during the 13 weeks ended Aug. 1.
Investors rewarded the result. The stock rose $1.05, or 35%, to close at $4.09 Tuesday on the Nasdaq stock market.
Bickley points to back-to-school momentum
Chairman and CEO Ian Bickley said the quarter marked the second consecutive period of overall revenue growth and “reflect continued momentum in (Vera Bradley’s) transformation.” “Momentum built as the back-to-school season took hold during the second quarter, and we entered the third quarter with strength across both our full-price and outlet channels,” Bickley said in a statement. He said the company’s underlying health “continued to strengthen” in online and store sales, which account for 90% of its sales. The remaining sales come through specialty and department stores.
Bickley said “significant work remains, and we’re encouraged by the progress we’re seeing across all five pillars of our transformation,” adding that the company “remains committed to returning the business to long-term sustainable growth, profitability and cash flow generation.”
Licensed characters lift the assortment
On a conference call with analysts Tuesday, Bickley said sales of Hello Kitty-branded items were a standout, and that Winnie the Pooh, Star Wars and Disney princess items also sold well. Vera Bradley, founded in 1982, launched with a selection limited to floral quilted cotton handbags and duffel bags. It has since expanded its assortment to include leather, denim, corduroy and performance twill fabrics with solid, geometric and other patterns.
Styles include backpacks, wallets, insulated lunch bags, makeup bags, rolling luggage, apparel, blankets and journals. The company has formed partnerships allowing it to sell products covered with images trademarked by Disney, Harry Potter, Peanuts, Hello Kitty, Gilmore Girls, Wicked and various colleges.
It has experienced significant ups and downs as trends have shifted over the years.
Headquarters move to Electric Works
Also on Tuesday, Vera Bradley announced it will relocate its corporate headquarters from southwest Allen County to the Electric Works campus in Fort Wayne. The company closed the quarter with $34 million in cash, more than twice the amount from a year earlier, and no debt. Like many retailers, Vera Bradley follows a fiscal year ending in late January or early February to capture returns and end-of-season sales after the holidays.
The current fiscal year will end Jan. 30. What to watch next is whether the third-quarter strength Bickley described carries into the holiday period, and whether the tariff refund that lifted the bottom line gives way to a clearer read on the company’s operating performance.
