Sterne Agee CRT Cuts Price Target on Vera Bradley (VRA) After Q1 EPS Miss

Sterne Agee CRT maintains an Underperform rating on Vera Bradley (NASDAQ: VRA), and cuts the price target to $10.00 (from $12.00), following Q1.VRA reported break even EPS in Q1 (below $0.03 estimates). Retail comps were reported at -16.9% (below estimates of -12.4%).

Analyst Ike Boruchow commented, "The turnaround efforts at VRA are struggling to gain traction, as the company missed sales and EPS expectations in Q1. Management noted a persistent inability to attract new customers to the brand (which may have been exacerbated by the decision to pull back significantly on promotional activity). Even after reducing FY EPS guidance by ~20%, we continue to see risk to numbers (the outlook assumes sequential improvement as the year progresses). With little visibility into a turnaround, we remain Underperform on VRA shares."

Boruchow also added, "Guidance Significantly Lowered For the Year. VRA now projects full-year EPS of $0.64-$0.74, which is well below the prior outlook of $0.82-$0.92 (a reduction of ~20% at the midpoint). Management now projects net sales down 3-6% (from flat to +3% prior), with retail comps and Indirect sales both planned down low-mid teens. Notably, the guidance includes ~300bps of GM improvement this year, which implies ~400bps of expansion in 2H. For Q2, management's outlook is for EPS of $0.10-$0.13 (below the Street's $0.16 estimate), with net sales planned roughly flat (retail comps down mid-high teens, Indirect sales down HSD to low-teens)."

For an analyst ratings summary and ratings history on Vera Bradley click here. For more ratings news on Vera Bradley click here.

Shares of Vera Bradley closed at $14.14 yesterday.

You May Also Be Interested In

• Correction: Citi Upgrades Sirius XM Radio (SIRI) to Neutral
• Akzo Nobel NV (AKZA:NA) (AKZOY) PT Raised to EUR70 at JPMorgan
• Pivotal Research Upgrades Sirius XM Radio (SIRI) to Buy