UPDATE: Vera Bradley (VRA) Tops Q2 EPS by 1c; Comps Miss Views; Guides Q3, FY17 EPS Below Views

September 1, 2016 8:01 AM EDT
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(Updated - September 1, 2016 8:11 AM EDT)

Vera Bradley (NASDAQ: VRA) reported Q2 EPS of $0.14, $0.01 better than the analyst estimate of $0.13. Revenue for the quarter came in at $119.2 million versus the consensus estimate of $118.73 million.

Comps fell 5.7 percent, versus a drop of 4 percent expected.

Guidance:

For the third quarter of fiscal 2017, the Company expects:

  • Net revenues of $128 million to $133 million compared to prior year third quarter revenues of $126.7 million. (NOTE: The Street sees $129.7 million.)
  • A gross profit percentage of 58.0% to 58.5% compared to 57.9% in the prior year third quarter. The modest planned improvement reflects sourcing and operational efficiencies.
  • SG&A as a percentage of net revenues of 47.6% to 48.6% compared to 45.0% in the prior year third quarter. Third quarter SG&A will include approximately $3.0 million of incremental year-over-year expenses related to marketing, store renovations, and e-commerce.
  • Diluted earnings per share of $0.22 to $0.24, based on diluted weighted-average shares outstanding of 36.6 million and an effective tax rate of 38.1%. Diluted earnings per share totaled $0.27 in the prior year third quarter. (NOTE: The Street sees $0.28.)
  • Inventory of $95 million to $100 million at the end of the third quarter, compared to $118.2 million at the end of last year’s third quarter.

Prior year full-year numbers referenced below exclude the aforementioned charges related to the Company’s manufacturing facility closing, other severance and restructuring costs, and the income tax adjustment.

For fiscal 2017, the Company expectations are as follows:

  • Net revenues of $510 million to $515 million compared to $502.6 million last year. (NOTE: The Street sees $512.9 million.)
  • A gross profit percentage of 57.3% to 57.5% compared to 56.6% last year. The planned improvement reflects sourcing and operational efficiencies and increased sales penetration of higher-margin MFO products.
  • SG&A as a percentage of net revenues of 47.3% to 47.5% compared to 46.6% last year. The planned increase is primarily related to incremental expenses related to new stores, store renovations, e-commerce, severance, and second quarter store impairment charges.
  • Diluted earnings per share (including second quarter impairment charges) of $0.88 to $0.92, based on diluted weighted-average shares outstanding of 36.9 million and an effective tax rate of 37.6%. Diluted earnings per share totaled $0.82 last year. (NOTE: The Street sees $0.93.)
  • Net capital spending of approximately $20.0 million compared to $26.3 million in the prior year.

For earnings history and earnings-related data on Vera Bradley (VRA) click here.



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