Vera Bradley (NASDAQ: VRA) reported Q1 EPS of ($0.09), $0.01 better than the analyst estimate of ($0.10). Revenue for the quarter came in at $86.6 million versus the consensus estimate of $88.25 million.

For the second quarter of fiscal 2019 the Company expects:

Revenue of $127 to $128 million on both a GAAP and non-GAAP basis.
Net loss per share of $0.16 to $0.17 and non-GAAP net loss per share of $0.05 to $0.06.

Based on first quarter fiscal 2019 performance and current business trends, the Company has updated its guidance for the full fiscal year 2019. The Company now expects:

Comments on First Quarter Performance and Looking Ahead

Robert Wallstrom, Chief Executive Officer, said, “We are pleased that our first quarter results exceeded both expectations and prior year performance, primarily driven by a higher-than-planned gross margin rate, largely due to reduced clearance and improved full-price selling, as well as better-than-expected expense leverage. Revenues were in line with our guidance.”

Wallstrom continued, “Vision 20/20 – our plan to strengthen our brand and Company health by materially reducing clearance and realigning our expense structure – continues to be the driving force behind every action we take. We made excellent progress against our initiatives in the first quarter. We reduced clearance activity in our full-line stores and on verabradley.com by over 75% and increased full-price selling in these two channels in the high-single digit range. We continued to deliver on our SG&A reductions through diligent expense management, and we increased our year-over-year cash and investment balances by over $30 million to $132.3 million.

“A primary goal for fiscal 2019 is to drive brand desirability through product and marketing innovation, and we made substantial progress on these fronts as well.”

“By executing Vision 20/20, we expect that our business and brand will become healthier, operating performance will improve, and cash flows will remain strong over the next three years. We are laying the foundation of the future growth of the business,” Wallstrom concluded.

Summary of First Quarter Financial Performance

• Net revenues totaled $86.6 million for the current year first quarter ended May 5, 2018, compared to $96.1 million for the prior year first quarter ended April 29, 2017. Revenues were in line with the Company’s guidance range of $84 million to $89 million.
• For the current year first quarter, the Company posted a net loss of ($1.4) million, or ($0.04) per diluted share. For the prior year first quarter, the Company posted a net loss of ($4.0) million, or ($0.11) per diluted share.
• The results for the prior year first quarter included $0.8 million of after-tax severance charges. On a non-GAAP basis, excluding these charges, the Company’s net loss totaled ($3.2) million, or ($0.09) per diluted share.

For the second quarter of fiscal 2019, the Company expects:

• Net revenues of $111 to $116 million compared to prior year second quarter revenues of $112.4 million. This estimate reflects the movement of approximately $6 million in revenues to the second quarter this year from the third quarter last year, related to promotional event timing shifts.
• A gross profit percentage of flat to slightly down compared to 56.3% in the prior year second quarter. The gross profit rate may be down slightly due to promotional event shifts into the second quarter from the third quarter last year.
• SG&A expense of $55.0 to $57.0 million compared to adjusted SG&A expense of $55.9 million in the prior year second quarter. The SG&A estimate reflects expense management and implementation of Vision 20/20 savings, offset by the timing of certain SG&A expenses (primarily marketing) expected to shift into the second quarter this year.
• Diluted earnings per share of $0.15 to $0.17, based on diluted weighted-average shares outstanding of 35.7 million and an effective tax rate of 25.0%. The previously mentioned event shifts equate to incremental income of approximately $0.07 per diluted share in the current year second quarter. On a non-GAAP basis, excluding charges, adjusted net income totaled $4.6 million, or $0.13 per diluted share, in the prior year second quarter.
• Inventory of $85 to $95 million at the end of the second quarter, compared to $104.1 million at the end of last year’s second quarter.

For fiscal 2019, Company’s updated expectations are as follows:

• Net revenues of $405 to $422 million compared to $454.6 million in fiscal 2018.
• A gross profit percentage of 56.3% to 56.6% compared to the adjusted gross profit percentage of 56.1% in fiscal 2018. The gross profit percentage should be boosted by reduced reliance on clearance selling and lower product costs, partially offset by channel mix changes and expected overhead deleverage due to lower inventory levels.
• SG&A expense of $210 to $215 million compared to adjusted SG&A expense of $221.4 million in fiscal 2018, reflecting expense management and implementation of Vision 20/20 savings.
• Diluted earnings per share of $0.40 to $0.50, based on diluted weighted-average shares outstanding of 35.7 million and an effective tax rate of 25.0%. Excluding charges, adjusted diluted earnings per share totaled $0.60 last year.
• Net capital spending of approximately $10 million compared to $11.8 million in the prior year.

GUIDANCE:

Vera Bradley sees FY2019 EPS of $0.40-$0.50, versus the consensus of $0.42.

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