Vera Bradley Profit Beats Street, But Shares Down On Weak Outlook

(RTTNews) - Vera Bradley Inc. (VRA) Wednesday reported a drop in profit for the third quarter, as the women's accessory retailer's revenue dropped 6 percent amidst weak margins. Nonetheless, earnings for the quarter came in ahead of analysts' estimates, as did revenues.

However, Vera Bradley shares slipped seven percent in extended hours, after detailing a weak fourth-quarter guidance and lowered its fiscal year 2014 outlook citing "recent trends."

Fort Wayne, Indiana-based Vera Bradley expect fourth quarter earnings in the range of $0.44 to $0.47 per share on revenues of $145 million to $150 million. Analysts polled by Thomson Reuters currently expect earnings of $0.56 per share on revenues of $159.31 million for the quarter. Analysts' estimates typically exclude special items.

For the full year 2014, the company now expect earnings in the range $1.41 to $1.44 per share with revenues of $523 million to $528 million. Analysts currently expect earnings of $1.49 per share on revenues of $536.97 million for the year.

Earlier, Vera Bradley projected earnings of $1.47 to $1.52 per share on revenues of $535 million to $540 million for 2013.

Chief Executive Robert Wallstrom, Chief Executive Officer, stated, "While third quarter sales and earnings results were in line with our expectations, based on recent trends we are lowering our fourth quarter outlook. Although we face a persistently challenging retail environment, we are working diligently to make improvements in our organization that will enable us to stabilize the business and generate more consistent sales and earnings growth over the long term."

Vera Bradley's third-quarter profit dropped to to $15.2 million or $0.37 per share from $17.7 million or $0.44 per share last year. Analysts expected earnings of $0.33 per share for the quarter.

Vera Bradley said revenues for the quarter dropped to $130.1 million from $138.3 million last year. Analysts expected revenues of $129.27 million for the quarter.

Direct segment revenues increased 7.1 percent to 68.9 million reflecting growth across all the channels, while E-commerce revenues declined 7.8 percent hurt by lower traffic and under-performing products.

Gross margin slipped to 55.3 percent from 58 percent a year ago, hurt by product mix and higher promotional activity.

VRA closed Wednesday's trading at $22.76, down $0.72 or 3.07%, on the NYSE. The stock further slipped $1.51 or 6.63% in after-hours trade.