Vera Bradley (VRA +3.47%) will release its quarterly report on Wednesday, and investors have braced themselves for the worst, bidding the stock to its lowest levels since its 2010 IPO. Yet Vera Bradley earnings aren't expected to fall much, and a positive result could get shares back on a more even keel going forward.
Vera Bradley makes handbags, totes, cosmetics cases, and other travel and fashion accessories, selling them through its own network of retail stores as well as to third-party department stores and websites. Although its largest presence is within the U.S., it also has more than a dozen locations in Japan. Let's take an early look at what's been happening with Vera Bradley over the past quarter and what we're likely to see in its report.
Stats on Vera Bradley
|
Analyst EPS Estimate |
$0.32 |
|
Change From Year-Ago EPS |
(3.3%) |
|
Revenue Estimate |
$124.81 million |
|
Change From Year-Ago Revenue |
1.4% |
|
Earnings Beats in Past 4 Quarters |
3 |
Source: Yahoo! Finance.
How are Vera Bradley earnings poised to perform this quarter?
Analysts have cut back very slightly on their views on Vera Bradley earnings in recent months, keeping their July quarter estimates stable but reducing their full-year projections by $0.02 per share. The stock has fallen much more dramatically, though, dropping 16% since early June.
Vera Bradley came into the quarter on a dour note, as its April-quarter earnings report painted a gloomy forecast of the company's future prospects. Even though earnings beat expectations, net income nevertheless fell 27% on same-store sales gains of less than 1%. The company cut its earnings guidance by a dime per share for the full year, and even worse, longtime CEO Mike Ray announced his impending retirement, forcing Vera Bradley to add a leadership change to its list of challenges.
One big problem that Vera Bradley faces is competition. Michael Kors (KORS +0.40%) has taken the accessories market by storm, posting extremely rapid growth rates that have necessarily made it more difficult for Vera Bradley and its other peers to maintain their competitive positions. Traditional leader Coach (COH 1.52%) has also had trouble holding off Michael Kors and other small retailers, with North America in particular being a battleground for new-store competition.
The one thing Vera Bradley has going for it is a huge overhang of shares sold short. With short interest topping 11 million shares on reported float of less than 22 million shares, any positive news could result in massive short-covering that could send the shares soaring higher. Thus far, though, the stock's price movements have only proven short-sellers correct.
In the Vera Bradley earnings report, watch to see how well the company does at holding off the adverse trends that have led to sluggish sales growth and falling net income recently. If those poor trends continue, then the direction for Vera Bradley shares could continue to be down.
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