Vera Bradley Inc. is ending the second shift at its New Haven manufacturing facility, a move that will affect 150 workers. It’s unclear how many employees will be left without work when the dust settles.
The Fort Wayne-based handbag maker, which has been facing pressure from investors and declining profits, informed its employees last week.
Melissa Schenkel, Vera Bradley spokeswoman, said the company will be able to offer some of the affected workers employment in other areas of the company. Officials plans to offer a severance package for the rest.
Vera Bradley will give displaced employees first shot at open sewing and cutting positions on the first shift at the leased New Haven site, 2808 Adams Center Road, she said. They will also be at the top of the application pile for open first-, second- and third-shift shipping and distribution positions at its Stonebridge Road distribution center in Roanoke.
Between (those) two locations, there are nearly 100 open positions, Schenkel said Wednesday in an email. We are also offering a generous voluntary separation package to certain associates. Thus, we could end up with a relatively small number of employees who may separate from the company.
Even so, this latest move continues to shine a light on the difficulties the company has encountered since going public in October 2010.
Even though Vera Bradley revised its earnings guidance downward during the first fiscal quarter, it still missed its own sales projections.
Revenue was $113.5 million. The range was $116 million to $120 million.
Some analysts are beginning to question Vera Bradley’s stock as a good investment. Earlier this summer, Zacks Equity Research suggested that investors might be better off buying shares of American Apparel Inc., Foot Locker Inc. or The Men’s Wearhouse Inc. – all in the retail-wholesale sector with Vera Bradley.
New Haven Mayor Terry McDonald has his concerns as well.
McDonald said he is pleased the company is acting quickly to find positions for the displaced employees. But the potential for job loss is never good, he said.
The elimination of any jobs is of great concern, and we will work with our partners at Northeast Indiana Works and the WorkOne Northeast center to assist affected individuals, he said in a statement. The city and Vera Bradley are keeping our lines of communication open. We are encouraged that some employees will be offered positions within the company and on the first shift of the manufacturing plant.
Schenkel said production at the New Haven center, where 7 percent of Vera Bradley’s products are made, will be cut by 25 percent. It is still a profitable company with a popular brand and has a cult-like following, supporters say.
Those are reasons why proponents of the company are confident Vera Bradley will right the ship.
We certainly take great pride in being able to produce a portion of our inventory in the U.S., and our Fort Wayne facility provides us with a great deal of flexibility when we are chasing’ business and need a quick turnaround, Schenkel said.
Unfortunately, it costs substantially more to manufacture goods domestically than in overseas factories, and domestic manufacturing costs have continued to increase, she said. We have made several process improvements at the facility to lower costs, but we determined further actions were necessary.