Vera Bradley Profit Rises, But Again Cuts FY Outlook; Stock Down - Update

(RTTNews) - Women's accessories retailer Vera Bradley Inc. (VRA), Wednesday reported a slight increase in second-quarter profit, helped by a near two percent growth in sales and better margins. Both earnings and sales for the quarter topped Wall Street estimates.

The company provided a weak outlook for the third quarter and again slashed its expectations for 2014, and the news dragged down its shares 9 percent in after-hours trading on the Nasdaq.

CEO Michael Ray said tough business conditions impacted demand for its products during the quarter. Ray expressed a cautious outlook for the remainder of the year as well.

Vera Bradley designs women's handbags and accessories, luggage and travel items, eye wear, stationery and gifts.

The Fort Wayne, Indiana-based company reported quarterly net income of $15 million or $0.37 per share, compared with $13.4 million or $0.33 per share last year.

On average, 11 analysts polled by Thomson Reuters estimated earnings of $0.32 per share for the quarter. Analysts' estimates typically exclude special items.

Sales for the second quarter increased to $125.4 million from $123 million a year ago. Analysts estimated sales of $124.89 million for the quarter.

In the Direct segment, sales climbed 14.2, on growth across all channels, even as same-store sales slid 3.7 percent. Indirect segment sales fell 12.2 percent.

Results were helped by gross margin that grew to 57.2 percent from 55.8 percent in the prior year, with operating margin at 19.2 percent compared 17.7 percent last year.

For the third quarter, Vera Bradley expect earnings in the range of $0.33 to $0.35 per share on sales of $128 million to $130 million. Analysts expect earnings of $0.48 per share on sales of $147.52 million for the quarter.

Gross margin for the quarter is expected to decline 280 to 300 basis points due to a shift in sales mix and increased promotional activity.

For fiscal year 2014, the company now estimates earnings of $1.47 to $1.52 per share on sales of $535 million to $540 million. Vera Bradley had earlier forecast earnings of $1.74 to $1.78 per share on sales of $570 million to $575 million. Analysts currently expect earnings of $1.73 per share on sales of $572.98 million for the quarter.

The company's stock closed Wednesday at $19.46, up $0.49 or 2.56%, on a volume of 1.9 million shares. In after hours, the stock dropped $1.71 or 8.79%.