Vera Bradley (NASDAQ:VRA) stock started Wednesday on the front-foot after the company reported a return to profit and what it described as a “meaningful year-over-year improvement in second quarter earnings”, supported by better margins.
At US$128.2 million, revenue for the quarter represented only a modest reduction from $130.4 million last year, whilst net income was reported at $9.3 million or 30 cents per share, improving from a $29.8 million loss and negative 95 cents per share in the same period last year.
Adjusted earnings were marked at 33 cents per share.
The bags and purses retailer meanwhile confirmed its full-year outlook broadly in line with last year’s total and its previously upgraded guidance for 2023, set between $490 million and $500 million.
“Our transformational efforts continue to bear fruit,” chief executive Jackie Ardrey said in a statement.
In New York, Vera Bradley (NASDAQ:VRA) stock was up 1.6%, changing hands at $6.97 in premarket deals.
“We are very pleased with the meaningful year-over-year improvement in second quarter earnings, driven by significant gross margin expansion and successful expense reduction efforts,” Ardrey added.
In more detail, the company said its direct retail business generated $84.7 million of second-quarter sales, marking a 1.5% improvement on the prior year, whilst comparable sales were down 5.3% amid lower volumes through outlet stores.
The company noted that it has in the past year closed 19 regular stores and two outlet stores (plus opened three new outlet stores) and this year it held an ‘annual’ outlet sale which did not take place last year.
Indirect brand sales totaled $17.4 million, down 0.2% year-on-year, whilst the Pura Vida bracelet brand saw a 3.6% decrease in sales to total $25.1 million, with most of its decline in wholesale accounts.
Net spending reduced significantly, and it ended the reporting period with cash and cash equivalents of $48.5 million and it recently renegotiated a key credit line. The company ended the period with $139.3 million of inventory, down substantially from $179.6 million at the same point last year.
“We carefully managed our debt-free balance sheet, adding to our cash position while continuing to strategically improve our inventory position,” Ardrey said.
She added: “We are taking strategic actions to stabilize and steadily grow Pura Vida’s revenues and to reverse the trends in Vera Bradley’s factory outlet stores through a thorough, multi-pronged approach, including potential pricing adjustments and targeted marketing initiatives aimed to drive traffic and average order size.
“Our team is focused on generating long-term revenue increases, expanding gross margin, and ensuring strong financial discipline and cost control, which we expect will drive long-term profitable growth.”