(Updated - Included Q4 Guidance and Vision 20/20 Progress)

Vera Bradley (NASDAQ: VRA) reported Q3 EPS of $0.20, $0.02 better than the analyst estimate of $0.18. Revenue for the quarter came in at $127.5 million versus the consensus estimate of $124.47 million.

Rob Wallstrom, Chief Executive Officer of Vera Bradley, noted, “Both of our brands – Vera Bradley and Pura Vida – had a strong third quarter performance. Vera Bradley’s comparable sales, full-price selling, and customer count once again rose in the quarter, and Pura Vida’s sales were at the high end of our expectations. As a result, our consolidated non-GAAP diluted EPS of $0.20 was at the top of our guidance range and nearly 70% higher than last year’s third quarter diluted EPS of $0.12.”

“The addition of the Pura Vida business to the Vera Bradley, Inc. portfolio has strengthened our positon as a unique lifestyle company,” Wallstrom continued. “We are sharing resources and expertise as we grow our brands together. Pura Vida is a great strategic fit for Vera Bradley with their expertise in social media and other digital marketing strategies, and Pura Vida has already begun to leverage Vera Bradley’s infrastructure, partnerships, and back office support services to bolster its growth.”

Vision 20/20 Progress – Year Two

“In fiscal 2019, the first stage of Vision 20/20 was to restore brand and Company health. We have continued to build upon that progress in fiscal 2020. During the first nine months of this year, we once again improved the quality of sales in our full-line stores and on verabradley.com by increasing comparable full price selling in these two channels by approximately 7%. This is on top of a nearly 20 percent increase in the first nine months of last year.

“As we complete Year Two of our three-year journey, we remain steadfastly focused on growing our customer base, sales, and profitability,” Wallstrom concluded. “As a reminder, our key areas of focus for Fiscal 2020 are:

• Growth: Our plan is to return to positive comparable sales growth this year, and through the first nine months, Vera Bradley comparable sales were up 3.8%, in line with our expectations. Even in the face of a challenging North American handbag market, our improvement is being driven by exciting, innovative product, supported by data-driven marketing and a relentless focus on customer engagement and the consumer experience. Vera Bradley customer count is up double digits year-over-year. The acquisition of Pura Vida is adding to our growth as well.
• Operational Excellence: Mid-year, we began a two-year process of re-platforming our ERP (enterprise resource planning) and other key information systems to become more streamlined, nimble, and efficient in our technology and business processes. We have also successfully focused on mitigating the impact of increased tariffs.
• Ownership: We are reinforcing our unique culture as an ownership-based model, where every Associate can drive significant value creation through both individual and team efforts.”

GUIDANCE:

Vera Bradley sees Q4 EPS of $0.49-$0.53, versus the consensus of $0.52. Vera Bradley sees Q4 Revenues of $155-$162 million, versus the consensus of $162.52 million.

Vera Bradley sees FY2020 EPS of $0.90-$0.94, versus the consensus of $0.90. Vera Bradley sees FY2020 Revenues of $492-$500 million, versus the consensus of $497.4 million.

For the fourth quarter of Fiscal 2020, the Company expects:

• Consolidated net revenues of $155 to $162 million, which includes estimated Pura Vida revenues of $36 to $40 million. Prior year fourth quarter revenues totaled $118.2 million.
• A consolidated gross profit percentage of 57.5% to 57.8% compared to a gross profit percentage of 56.8% in the prior year fourth quarter.
• Consolidated SG&A expense of $66.0 to $67.5 million compared to SG&A expense of $55.6 million in the prior year fourth quarter. Approximately $13.0 to $13.5 million of the estimated fourth quarter expense relates to Pura Vida operations.
• Consolidated diluted earnings per share of $0.49 to $0.53, reflecting accretion of approximately $0.14 to $0.16 from Pura Vida. Diluted earnings per share are based on diluted weighted-average shares outstanding of 33.9 million and an effective tax rate of 23.0%. Net income totaled $8.6 million, or $0.25 per diluted share, in the prior year fourth quarter.
• Inventory of $125 to $135 million at the end of the fourth quarter (including approximately $20 million of Pura Vida inventory), compared to $91.6 million at the end of last year’s fourth quarter.

For Fiscal 2020, the Company’s expectations are as follows:

• Consolidated net revenues of $492 to $500 million, which includes estimated Pura Vida revenues of $66 to $70 million. Net revenues totaled $416.1 million in Fiscal 2019.
• A consolidated gross profit percentage of 57.3% to 57.4% compared to 57.3% in Fiscal 2019. Improvement in full-price selling and sourcing and operational efficiencies are expected to be more than offset by the impact of Chinese tariffs and increased shipping costs. However, the inclusion of Pura Vida should have a positive impact on the consolidated gross margin rate for the year.
• Consolidated SG&A expense of $241.0 to $243.0 million compared to $212.0 million in Fiscal 2019, reflecting incremental expenses related to new factory store locations, partially offset by full-line store closures. Approximately $26.8 to $27.3 million of the estimated expense relates to Pura Vida operations.
• Consolidated diluted earnings per share of $0.90 to $0.94, which includes $0.22 to $0.24 of accretion from the Pura Vida acquisition. Diluted earnings per share are based on diluted weighted-average shares outstanding of 34.3 million and an effective tax rate of 23.0%. Diluted earnings per share totaled $0.59 last year.
• Net capital spending of approximately $13 million compared to $8.1 million in the prior year, reflecting investments associated with new factory locations and technology and logistics enhancements.

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