Vera Bradley, Inc. (VRA) shares are taking a hit on Wednesday after the company reported disappointing second-quarter results that fell short of analysts’ expectations. The company announced adjusted earnings per share of 13 cents, significantly missing the consensus estimate of 21 cents. Revenue also came in below expectations, reaching $110.82 million compared to the anticipated $123.01 million.
CEO Jackie Ardrey acknowledged the impact of persistent economic challenges on consumer spending, stating that these headwinds overshadowed the progress made in the company’s turnaround efforts. While Vera Bradley saw similar top-line trends to the first quarter, the overall performance was negatively affected by the challenging macroeconomic environment.
Breaking down the segment performance, Vera Bradley Direct revenues decreased by 15.7% year-over-year, reaching $72.2 million. Comparable sales declined by 11.2% in the second quarter, indicating weakness across all direct channels. In contrast, the Vera Bradley Indirect segment saw revenue growth of 25.3%, reaching $21.8 million, primarily driven by increased sales to key accounts and liquidation sales. However, the Pura Vida segment faced a 33% decline in revenue to $16.8 million, attributable to lower e-commerce and wholesale sales, partially offset by new store growth.
The company’s consolidated gross profit margin contracted to 50.9% in the second quarter, down from 56.2% in the previous year. This decline was attributed to increased liquidation sales and promotional activity. Despite the challenging quarter, Vera Bradley maintains a healthy cash position with $44.1 million in cash and equivalents as of August 3.
Looking ahead, Vera Bradley forecasts fiscal year 2025 revenues of $410 million, falling short of the $452.15 million estimate and the previous guidance range of $460 million to $480 million. The company also projects consolidated diluted EPS of approximately $0.10, significantly lower than the $0.35 estimate and the prior range of $0.54 to $0.62.
In response to the disappointing results, VRA shares are trading lower by 10.2% to $4.47 in premarket trading on Wednesday. The company’s ability to navigate the challenging economic landscape and regain momentum in its turnaround efforts will be closely watched by investors in the coming months.
