Vera Bradley Announces Fiscal 2013 Third Quarter Financial Results

• Net revenues increased 14.2% to $138.3 million.
  
• Direct net revenues increased 23.6%, including an increase of 7.1% in comparable-store sales; Indirect net revenues increased 7.1%.
  
• Net income increased $4.7 million to $17.7 million versus $13.0 million in the third quarter of fiscal 2012, an increase of 36.9%.
  
• Diluted EPS were $0.44 compared to $0.32 in the third quarter of fiscal 2012.

FORT WAYNE, Ind., Dec. 5, 2012 (GLOBE NEWSWIRE) -- Vera Bradley, Inc. (Nasdaq:VRA) today announced its financial results for the fiscal 2013 third quarter ended October 27, 2012. The Company reported net revenues of $138.3 million for the third quarter, compared to $121.1 million in the third quarter of fiscal 2012, an increase of $17.2 million, or 14.2%. Diluted earnings per share for the quarter were $0.44, an increase of 37.5% from earnings per share in the third quarter of fiscal 2012.

"We are pleased with the strength of our operating results in the third quarter. Our brand and product offering continue to resonate with consumers resulting in meaningful growth across our business segments," said Michael C. Ray, Vera Bradley's Chief Executive Officer. "Our ongoing success is a tribute to the strength of our brand, our distinctive products, our talented team and retail partners, and our loyal customers. We are excited about the balance of the holiday season and remain optimistic about the long term prospects for Vera Bradley."

In the Direct segment, revenues increased 23.6% to $64.3 million, primarily driven by growth across our full-price and outlet stores. In our stores, net revenues grew 44% during the quarter, due to both the opening of 17 full-price and 3 outlet stores during the past year, as well as a comparable-store sales increase of 7.1%. E-commerce growth was 1.2% due to reduced levels of discounting as compared to the prior year. E-commerce growth was 55% in the third quarter of last year. Indirect revenues increased 7.1% to $74.0 million due to strong demand for our product portfolio through specialty retail and department store partners.

Gross profit for the third quarter increased 22.2% to $80.2 million, resulting in gross margin of 58.0%, compared to gross margin of 54.2% in the prior year. The third quarter increase in gross margin was due primarily to operational efficiencies, prior year opportunistic sale of retired inventory and lower input costs, partially offset by a $1.2 million charge, related to damaged inventory written off during the quarter.

Total SG&A expense was $53.6 million for the third quarter, compared to $45.4 million in the prior year. SG&A as a percentage of net revenues was unfavorable by 130 basis points compared to the prior year, due primarily to annualizing fiscal 2012 infrastructure investments made in the second half of last year and increased marketing expenses.

Operating income increased 28.1% to $27.6 million, or 19.9% of net revenues, in the third quarter, compared to operating income of $21.5 million, or 17.8% of net revenues, in the third quarter of fiscal 2012.

The effective tax rate was 35.2% for the quarter, compared to 38.9% in the prior year. The effective tax rate reduction was primarily related to state tax credits received and discrete items recorded during the third quarter.

Net income for the quarter increased $4.7 million to $17.7 million, or $0.44 per diluted share, compared to $13.0 million, or $0.32 per diluted share, in the third quarter of fiscal 2012.

Year-to-Date Results

For the thirty-nine weeks ended October 27, 2012, net revenues increased 16.0% to $378.6 million, from $326.3 million in the same prior-year period. By segment, Direct revenues increased 31.4% to $189.2 million, with comparable-store sales increasing 5.7%. Indirect revenues increased 3.9% to $189.4 million.

Operating income increased 10.5% to $70.2 million, or 18.5% of net revenues, for the thirty-nine weeks, compared to operating income of $63.5 million, or 19.5% of net revenues in the comparable prior-year period.

The effective tax rate for the thirty-nine weeks ended October 27, 2012, was 37.2%, compared to 39.6% for the same period in the prior year. The effective tax rate reduction was primarily related to state tax credits received and discrete items recorded during the third quarter.

Net income for the thirty-nine weeks increased 15.7% to $43.7 million, or $1.08 per diluted share, compared to $37.8 million, or $0.93 per diluted share a year ago.

Cash flow from operations for the thirty-nine weeks ended October 27, 2012 totaled $22.2 million, compared to $6.9 million for the same period in the prior year, primarily from the increase in net income and timing of tax payments.

Outlook

For the fourth quarter of fiscal 2013, the Company expects net revenues to be in a range of $147 million to $152 million, compared to $134.5 million in the fourth quarter of fiscal 2012. Gross margin for the fourth quarter is expected to expand over the prior year by approximately 130 basis points, primarily due to leveraged overhead costs driven by higher than expected inventory levels.

Diluted earnings per share are expected to be in a range of $0.55 to $0.57. The earnings per share estimate assumes an effective tax rate of 38% and fully diluted weighted average shares outstanding of 40.6 million.

For fiscal 2013, the Company expects net revenues to be in a range of $526 million to $531 million and diluted earnings per share for the full year are expected to be in a range of $1.63 to $1.65. The earnings per share guidance includes an effective tax rate of 37.5% and fully diluted weighted average shares outstanding of 40.6 million.

Call Information

A conference call to discuss fiscal 2013 third quarter results is scheduled for today, December 5, 2012, 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 through December 19, 2012. To access the recording, listeners should dial (877) 870-5176, and enter the access code, 5662640.

About Vera Bradley, Inc.

Vera Bradley infuses color into all aspects of women's lives with vibrant handbags, accessories, luggage, eyewear, travel items and gifts. Founded in 1982 by Barbara Bradley Baekgaard and Patricia R. Miller, the brand inspires women to "be colorful" with designs that reflect their personal style. As of October 27, 2012, Vera Bradley accessories can be found in 64 retail stores in the U.S., 11 outlet stores, approximately 3,300 specialty retailers and online at verabradley.com. Vera Bradley employs approximately 2,000 and the company's fiscal 2012 sales were $461 million. The company's commitment to breast cancer research continues to expand through the Vera Bradley Foundation for Breast Cancer. For more information about Vera Bradley (Nasdaq:VRA), visit www.verabradley.com/mediaroom.

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 28, 2012. 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

         pblair@verabradley.com

         (260) 207-5183

         

         ICR, Inc.

         Joseph Teklits

         Jean Fontana

         Jean.fontana@icrinc.com

         (203) 682-8200

         

         Media:

         877-708-VERA (8372)

         Mediacontact@verabradley.com