Vera Bradley’s once red-hot sales momentum has faded to pink.
The Fort Wayne company added a plea for patience Thursday when it reported fiscal first-quarter earnings that were 29 percent lower than last year.
As we have noted, this will be an important year of transition and transformation for Vera Bradley, CEO Robert Wallstrom said in a statement.
Ike Boruchow, an equity analyst with Sterne Agee, lowered his estimates for the company after the earnings release.
We believe there is a lot of heavy lifting ahead that could take significant time and effort, he wrote in a report. Stay sidelined.
Wallstrom, who has led Vera Bradley Inc. since November, believes changes being made to the company’s products, distribution and marketing are on point.
While the short term will remain challenging, I am pleased with the progress we are making against these key elements of our five-year plan, he said.
Vera Bradley designs, makes and sells quilted cotton handbags, luggage, accessories and other items.
First-quarter sales of $113 million – an 8 percent decline – were modestly below expectations, but earnings per share were higher than Vera Bradley executives had predicted because they were able to hold expenses down, Wallstrom said.
However, we continue to face a difficult environment, one that is proving much more challenging than we anticipated just two short months ago.
Three months ago, when Vera Bradley reported annual results, executives said too many Vera Bradley patterns and styles contributed to customer fatigue.
Sue Fuller, chief merchandising officer, said then that the company will transition to more solid-colored fabrics and reduce the assortment of products by 30 percent to 40 percent.
Wallstrom on Thursday said existing customers continue to buy the company’s products, but our traditional patterns and products simply are not attracting enough new shoppers to our brand, and overall traffic is down substantially in company-owned retail stores.
Sales to boutique retailers are also down significantly, he said.
Until we can make meaningful changes to our product offering and marketing initiatives, we don’t expect these sales trends to substantially improve, Wallstrom said.
On a brighter note, Vera Bradley on Thursday announced an agreement with Macy’s to sell selected Vera Bradley products in about 70 Macy’s stores nationwide.
Boruchow praised the agreement but said that at only about 100 square feet of display space per Macy’s store, the partnership is unlikely to contribute significantly to Vera Bradley’s sales.