What happened

Shares of Vera Bradley (NASDAQ:VRA) soared on Wednesday after the company reported mixed third-quarter results. While revenue tumbled due to a decline in comparable sales, both earnings and fourth-quarter guidance came in ahead of analyst expectations. The stock was up about 29.5% at 11:45 a.m. EST.

So what

Vera Bradley reported third-quarter revenue of $114.1 million, down 9.9% year over year and about $0.5 million below the average analyst estimate. Direct segment revenue dropped 3.4% year over year to $83.2 million, while indirect segment revenue slumped 23.8% to $30.9 million. Comparable-store sales fell 6.9%, and e-commerce sales fell 8.9%.

Image source: Vera Bradley.

Despite the revenue decline, Vera Bradley was able to outperform analyst estimates for earnings. The company reported non-GAAP earnings per share of $0.23, up from $0.21 in the prior-year period, and $0.09 higher than analysts were expecting. EPS was just $0.01 on a GAAP basis, with the discrepancy mostly due to various charges, including a $3.7 million store impairment change, a $1.8 million severance change, and $1.5 million in strategic plan consulting fees.

Vera Bradley expects to produce revenue between $127 million and $132 million during the fourth quarter, down from $134.8 million in the prior-year period. EPS is expected between $0.30 and $0.33, mostly above an average analyst estimate of $0.30.

Now what

Vera Bradley is aiming to reduce its reliance on clearance items, and it expects its revenue to be reduced by $30 million to $50 million in fiscal 2019 as a result. The company also expects to reduce operating expenses by about $30 million. Its Vision 20/20 plan will play out over the next three years.

While Vera Bradley's revenue tumbled during the third quarter, the bottom line held up much better than analysts were expecting. Shares of Vera Bradley have crashed nearly 80% since peaking back in 2011, so expectations are depressed to say the least. If the company's turnaround plan continues to show progress, more gains could be ahead.

10 stocks we like better than Vera Bradley
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Vera Bradley wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of December 4, 2017

Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.