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Why Shares of Vera Bradley Surged Today

By Timothy Green – Updated Apr 12, 2019 at 9:06PM

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The fashion company sees a return to growth this year.

What happened

Shares of Vera Bradley (VRA 1.01%) soared on Wednesday following a fourth-quarter report that beat expectations. The fashion specialist's revenue and earnings came in ahead of analyst estimates, and its full-year guidance was better than expected. As of 11:55 a.m. EDT, the stock was up about 19.9%.

So what

Vera Bradley reported fourth-quarter revenue of $118.2 million, down 10.5% year over year but nearly $2 million above the average analyst estimate. The company's guidance had called for revenue between $114 million and $119 million.

Check out the latest earnings call transcript for Vera Bradley.

A Vera Bradley bag.

Image source: Vera Bradley.

Comparable-store sales dropped by 2.4% in the quarter, while e-commerce sales plunged 27.4%. Overall comparable sales were down 11.2%. The company closed 10 full-line stores and opened six factory outlet stores over the past year, which hurt sales. The prior-year period also featured an extra week that produced $3 million of additional revenue last year.

Earnings per share came in at $0.25, up from $0.24 in the prior-year period and $0.02 better than analysts were expecting. Lower revenue was offset by a reduction in operating expenses, a slightly higher gross margin, and a substantially lower tax rate.

Now what

Vera Bradley expects to return to growth in the first quarter. The company forecast revenue between $86 million and $91 million, up from $86.6 million in the prior-year period.

For the full year, Vera Bradley expects revenue of $420 million to $440 million, up from $416.1 million in fiscal 2019. EPS is forecast to rise to a range of $0.64 to $0.74, up from $0.59 last year. Analysts were expecting revenue of $407 million and EPS of $0.63.

With Vera Bradley calling for a return to growth this year, the worst may finally be over for the struggling fashion company.

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.

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