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At a glance
•Vera Bradley Inc. has been on a hiring spree since Jan. 1. The following executives have joined the Fort Wayne company this year:
Sue Fuller – Chief merchandising officer, previously with Polo Ralph Lauren, Land’s End and L.L. Bean, announced Jan. 7
Rosemary Ricketts – Vice president – merchandising, previously with Avon, announced April 17
Steve Bohman – Vice president – global production, previously with Radio Shack, announced April 17
Thomas Giacalone – Vice president – e-commerce, previously with OfficeMax and Sears Holdings, announced May 12
Karen Peters – Executive vice president – retail and wholesale sales, previously with Saks Fifth Avenue OFF 5th, announced June 3
Angel Ilagan – Executive vice president and chief marketing officer, previously with Pandora Jewelry, announced June 12
Source: Vera Bradley Inc.
By the numbers
•If an investor sank $100 into the stock market on Oct. 21, 2010, the day Vera Bradley stock started trading, as of Feb. 1 the investment would have been worth:
$150.12 – If invested in Vera Bradley stock
$162.28 – If invested in the Standard & Poor’s 500 Index
$170.15 – If invested in the S&P 500 Apparel, Accessories and Luxury Goods Index
Source: Vera Bradley annual report
Photos by Michelle Davies | The Journal Gazette
Kim Dawson, center, and her daughter Taylor Dawson, 16, shop for Christmas gifts at the Vera Bradley Outlet sale at Memorial Coliseum. Dawson, who lives in Detroit, said it was her third year attending the event.

Vera Bradley’s strategy

Recruited executives to lead products, distribution, marketing

Pat Frain shops for a new bag at the Vera Bradley location at Jefferson Pointe.
Wallstrom
Fuller

Vera Bradley’s leaders are betting there’s nothing wrong with the company that a few new executives can’t fix.

Since naming a new chief executive in November, the handbag and luggage manufacturer has recruited six men and women from outside the company to head up areas including global production, marketing, merchandising and e-commerce.

Their to-do list is considerable.

In quarterly earnings calls with analysts, CEO Robert Wallstrom has outlined numerous strategic changes the Fort Wayne company intends to make. Almost nothing is safe from scrutiny. Executives will tackle which products are made, how they’re advertised and where they’re sold.

There’s no time to waste. Although the company continues to make a profit, the amount is dwindling. Vera Bradley’s fiscal 2014 profit – for the 12 months ended Feb. 1 – was 15 percent lower than the previous year. The slide grew even steeper in the fiscal first quarter ended May 3, when earnings were 29 percent lower than the same 13 weeks of the previous year.

Meanwhile, the company’s stock has fallen by more than 20 percent in the past two months.

“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 in a statement.

The Vera Bradley faithful are still opening their quilted cotton wallets to buy the company’s products, he said, “but our traditional patterns and products simply are not attracting enough new customers to our brand, and overall (shopper traffic in retail stores) is down substantially.”

The five-year plan is divided into three categories: products, distribution and marketing.

Setting strategy

Six new executives – and a few familiar faces who have received loftier titles – have been assigned to tackle various aspects of the strategic plan.

Wallstrom is pleased by how his executive ranks have filled out.

“Fortunately, we have been able to draw from both our own talented leaders and to attract great new talent to the organization,” he told analysts this month. “I am really pleased that such high-caliber and seasoned retail executives … have joined Vera Bradley. I believe we have assembled the right team to meet our long-term goals.”

The makeover plans include:

•Discontinuing the baby gift and clothing lines

•Shortening the time needed to develop new designs, a process that has taken 12 to 18 months

•Shifting from predominantly floral-patterned fabric to include more solids

•Shrinking the variety of handbag styles by between 30 percent and 40 percent

•Creating products exclusively for sale in Vera Bradley outlet stores

•Streamlining retail store displays

•Paying closer attention to customer demand

Sue Fuller, the company’s new chief merchandising officer, stressed that last point to analysts in March after the company reported annual earnings.

“We need to produce what is ordered, rather than trying to sell what is produced,” she said.

Fuller again emphasized satisfying customers when she talked to analysts in June.

“To grow, we must become more relevant by modernizing and elevating our products to appeal to a wider array of customers,” she said. “This will take time.”

Plans call for Vera Bradley handbags made from faux leather and leather, including some quilted bags. Some styles being rolled out in September will be priced between $98 and $298.

“This is elevated from our typical price point, but still very competitively priced,” Fuller said.

With the addition of leather and more solid materials, Vera Bradley will ratchet back the number of new quilted floral patterns it introduces each year. The schedule calls for 14 this year, down from 18 last year. Future floral introductions could be as few as eight a year, Fuller said.

Brand extensions call for broadening Vera Bradley’s product line to include more stationery, rolling luggage, scarves and jewelry. A Vera fragrance is also in the plans.

Challenging days

Twelve months ago, then-CEO Michael Ray announced plans to retire as Vera Bradley reported disappointing earnings.

Even then, company officials planned significant changes. They outlined details in a quarterly call with analysts. Steps that have already been accomplished include hiring an executive to lead online sales and an executive to be chief merchandising officer.

The CMO will be asked to refine store layouts to make them “more shoppable,” despite the fact that Vera Bradley rang up the ninth-highest sales per square foot of 150 specialty retailers in 2013, according to RetailSails, a New York research and consulting firm.

Marc Heller, the firm’s president, crunched the numbers and found that Vera Bradley’s stores reported $1,013 in sales per square foot last year. Competitors Michael Kors, which tallied $1,817 per square foot, and Coach, which reported $1,562 per square foot for the same year, were the only handbag-makers with higher averages than Vera Bradley.

Another Vera Bradley goal was finding a partner to help crack the Japanese market.

In June, the company announced it had signed a five-year agreement giving Look Inc. exclusive rights to market and distribute Vera Bradley products in Japan. Mitsubishi Corp., a partner of Look, has been granted exclusive rights to import Vera Bradley products into Japan for the duration of the contract.

Vera Bradley will cut expenses by closing its 13 existing Japan stores.

The company also signed a deal to put Vera Bradley products in 70 Macy’s stores. It’s unclear whether Glenbrook Square’s store will be one of the stores that devotes about 100 square feet to the local company’s product line.

Retail research shows that shoppers looking for leather handbags head to department stores that sell brands including Michael Kors, Coach and Kate Spade, Wallstrom said. The Macy’s partnership allows Vera Bradley to expand its upscale department store presence beyond existing deals with Dillard and Von Maur.

Additional initiatives outlined a year ago included:

•Guiding retailers that sell Vera Bradley products to limit their orders to the line’s most popular items so they don’t get bogged down with items that don’t sell quickly

•Slowing the pace of opening new full-price and outlet stores

•Increasing productivity by ending sales to some retailers that don’t sell much Vera Bradley merchandise

•Reducing spending on air freight and payroll

As of Feb. 1, Vera Bradley employed about 2,900, including 1,850 employees in company-owned retail stores.

The company that shipped most of its production to China from the U.S. to save money is now looking for even lower-cost factories and workforces.

sslater@jg.net

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