Vera Bradley Announces Fiscal 2012 Second Quarter Financial Results

• Net revenues increased 30% to $103.8 million; Indirect net revenues increased 18% and Direct net revenues rose 46%, including an increase of 10.5% in comparable-store sales.
  
  
• Operating income increased 44% to $22.9 million, or 22% of net revenues, compared to $15.9 million on an adjusted basis, or 20% of net revenues, in the second quarter of fiscal 2011.
  
  
• Diluted EPS were $0.34 for the quarter, compared to $0.26 on a GAAP basis and $0.23 adjusted for the same quarter of fiscal 2011, an increase of 31% and 48%, respectively.

FORT WAYNE, Ind., Aug. 30, 2011 (GLOBE NEWSWIRE) -- Vera Bradley, Inc. (Nasdaq:VRA) today announced its financial results for the fiscal 2012 second quarter ended July 30, 2011. The Company reported net revenues of $103.8 million for the second quarter, compared to $80.1 million in the same period of the prior year, an increase of $23.7 million, or 30%. Diluted earnings per share for the quarter were $0.34, an increase of 48% over adjusted diluted earnings per share in the prior year period.

"Our second quarter performance was characterized by strong consumer response to our fall product assortment and our continued expansion into underpenetrated markets. We also managed margins in line with our expectations, despite pressure on input costs, and focused on disciplined expense management, yielding improved leverage," said Michael C. Ray, Vera Bradley's Chief Executive Officer. "Our success is a tribute to the strength of our brand, our distinctive portfolio of products, our talented team and retail partners, and our loyal customers. Looking ahead, we will continue to execute our growth strategies and remain very optimistic about the long term prospects for Vera Bradley."

By segment, Indirect net revenues increased 18% to $55.9 million, and Direct net revenues increased 46% to $47.9 million, driven by the opening of 12 full-price and four outlet stores since the second quarter of last year, strong product introductions, increased traffic in our e-commerce business and a 10.5% increase in comparable-store sales. During the second quarter, gross profit rose 27% to $59.6 million, and gross margin was in line with expectations at 57.5%, compared to 58.5% in the second quarter of fiscal 2011.  

Operating income increased 44% to $22.9 million, or 22% of net revenues, in the second quarter, compared to adjusted operating income of $15.9 million, or 20% of net revenues, excluding $6.1 million of compensation expense for bonuses paid to recipients of the restricted-stock awards and $0.1 million of stock-based compensation expense related to the restricted-stock awards in the comparable prior-year period.  

On a GAAP basis, net income for the quarter was $13.6 million, or $0.34 per diluted share, compared to $9.2 million, or $0.26 per diluted share, in the second quarter of fiscal 2011. After adjusting the second quarter of fiscal 2011 for the previously discussed bonuses paid and stock-based compensation expense, income taxes as if the Company had been a "C" Corporation at the beginning of the quarter, at an assumed rate of 40%, and an increase in the number of common shares outstanding, adjusted net income for the second quarter of fiscal 2011 was $9.3 million or $0.23 per diluted share on 40.5 million weighted-average diluted shares outstanding.

Year-to-Date Results

For the twenty-six weeks ended July 30, 2011, net revenues increased 24% to $205.2 million, from $165.1 million in the comparable prior-year period.  By segment, Indirect revenues increased 11% to $113.2 million, and Direct revenues increased 45% to $92.0 million, with comparable-store sales increasing 14.9%.

Operating income increased 27% to $42.0 million, or 20% of net revenues, for the twenty-six weeks, compared to adjusted operating income of $33.2 million, or 20% of net revenues, excluding $6.1 million of compensation expense for bonuses paid to recipients of the restricted-stock awards and $0.1 million of stock-based compensation expense related to the restricted-stock awards in the comparable prior-year period. 

On a GAAP basis, net income for the twenty-six weeks was $24.9 million, or $0.61 per diluted share, compared to $26.0 million, or $0.73 per diluted share a year ago. After adjusting the second quarter of fiscal 2011 for the previously discussed bonuses paid and stock-based compensation expense, income taxes as if the Company had been a "C" Corporation at the beginning of the year, at an assumed rate of 40%, and an increase in the number of common shares outstanding, adjusted net income for the twenty-six weeks of fiscal 2011 was $19.5 million or $0.48 per diluted share on 40.5 million weighted-average diluted shares outstanding.

Outlook

For the third quarter of fiscal 2012, the Company expects net revenues to be in the range of $107 million to $110 million and diluted earnings per share to be in the range of $0.26 to $0.28, based on diluted weighted-average shares outstanding of 40.5 million.

For fiscal 2012, the Company now expects net revenues to be in the range of $438 million to $443 million and diluted earnings per share to be in the range of $1.32 to $1.35, based on diluted weighted-average shares outstanding of 40.5 million.

Call Information

A conference call to discuss fiscal 2012 second quarter results is scheduled for today, August 30, 2011, at 4:30 p.m. Eastern Time. A broadcast of the call will be available via Vera Bradley's Investor Relations section of its website, www.verabradley.com. In addition, a replay of the call will be available shortly after the conclusion of the call and remain available until September 13, 2011. To access the recording, listeners should dial (877) 870-5176, and enter the access code, 3644247.

About Vera Bradley, Inc.

Friends Barbara Bradley Baekgaard and Patricia R. Miller founded Vera Bradley in 1982. Today, Vera Bradley is sold through 3,300 specialty stores as well as 49 Vera Bradley stores nationwide. Vera Bradley handbags, accessories, and paper & gift and travel items have recently been spotted on Desperate Housewives, Brothers and Sisters, Entourage, and Modern Family, and in over 20 feature-length films. Vera Bradley's fiscal 2011 sales were $366 million. Visit www.verabradley.com for a store near you or to learn more.

Website Information

We routinely post important information for investors on our website www.verabradley.com in the "Investor Relations" section. We intend to use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Vera Bradley Safe Harbor Statement

Certain statements in this release are "forward-looking statements" made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and are subject to various risks and uncertainties that may cause actual results to differ materially from those that we expected, including: possible adverse changes in general economic conditions and their impact on consumer confidence and spending; possible inability to predict and respond in a timely manner to changes in consumer demand; possible loss of key management or design associates or inability to attract and retain the talent required for our business; possible inability to maintain and enhance our brand; possible inability to successfully implement our growth strategies or manage our growing business; possible inability to successfully open new stores as planned; and possible inability to sustain levels of comparable-store sales. For a discussion of these and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 29, 2011.  We undertake no obligation to publicly update or revise any forward-looking statement. Financial schedules are attached to this release.

CONTACT: Investors:

         Vera Bradley

         Paul G. Blair

         (260) 207-5183

         

         ICR, Inc.

         Joseph Teklits

         Jean Fontana

         Jean.fontana@icrinc.com

         (203) 682-8200

         

         Media:

         877-708-VERA (8372)

         Mediacontact@verabradley.com

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