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.
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%.
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.
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.