Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): December 6, 2011

 

 

VERA BRADLEY, INC.

(Exact name of registrant as specified in its charter)

 

 

Indiana

(State or Other Jurisdiction

of Incorporation)

 

001-34918   27-2935063

(Commission

File Number)

 

(IRS Employer

Identification No.)

2208 Production Road, Fort Wayne, Indiana   46808
(Address of Principal Executive Offices)   (Zip Code)

(877) 708-8372

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


The information in Items 2.02 and 9.01 of this Form 8-K is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.

Item 2.02 Results of Operations and Financial Condition

On December 6, 2011, Vera Bradley, Inc. issued an earnings press release for the quarterly period ended October 29, 2011. The press release, including attachments, is furnished as Exhibit 99.1 to this report.

The press release furnished as Exhibit 99.1 contains financial measures that are not calculated in accordance with accounting principles generally accepted in the United States (GAAP). The non-GAAP financial measures are adjusted selling, general, and administrative expenses, adjusted operating income, adjusted income tax expense, adjusted net income, adjusted net income (or earnings) per share, and adjusted weighted-average shares outstanding. The non-GAAP financial information should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Management, however, believes that these non-GAAP financial measures, when used in conjunction with the results presented in accordance with GAAP, may provide a more complete understanding of the Company’s results and may facilitate a fuller analysis of the Company’s results, particularly in evaluating performance from one period to another. Management has chosen to provide this supplemental information to investors, analysts, and other interested parties to enable them to perform additional analyses of results and to illustrate the results giving effect to the non-GAAP adjustments shown in the reconciliation. Management strongly encourages investors to review the Company’s consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1 Press release dated December 6, 2011


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

      Vera Bradley, Inc.
      (Registrant)
Date: December 6, 2011      

/s/ Jeffrey A. Blade

     

Jeffrey A. Blade

Executive Vice President – Chief

Financial and Administrative Officer


EXHIBIT INDEX

 

Exhibit

No.

  

Description

99.1    Press release dated December 6, 2011
Press Release

Exhibit 99.1

LOGO

Vera Bradley Announces Fiscal 2012 Third Quarter Financial Results

 

   

Net revenues increased 32% to $121.1 million; Indirect net revenues increased 16% and Direct net revenues rose 63%, including an increase of 7.4% in comparable-store sales.

 

   

Operating income increased 38.7% to $21.5 million, or 17.8% of net revenues, compared to $15.5 million on an adjusted basis, or 16.9% of net revenues, in the third quarter of fiscal 2011.

 

   

Diluted EPS were $0.32 for the quarter, compared to $0.17 on a GAAP basis and $0.22 on an adjusted basis for the same quarter of fiscal 2011, an increase of 88% and 45%, respectively.

FORT WAYNE, Ind., December 6, 2011 — Vera Bradley, Inc. (Nasdaq: VRA) today announced its financial results for the fiscal 2012 third quarter ended October 29, 2011. The Company reported net revenues of $121.1 million for the third quarter, compared to $91.6 million in the same period of the prior year, an increase of $29.5 million, or 32%. Diluted earnings per share for the quarter were $0.32, an increase of 45% over adjusted diluted earnings per share in the prior year period.

“We are pleased with the strength of our operating results in the third quarter. Our brand and product assortment continue to resonate with consumers resulting in meaningful sales growth across all of our distribution channels,” 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 we remain optimistic about the long term prospects for Vera Bradley.”

By segment, Indirect net revenues increased 16% to $69.1 million, with solid performance across all regions driven by strong reception to our product offerings. Direct net revenues increased 63% to $52.0 million, driven by the opening of 13 full-price and four outlet stores since the third quarter of last year, increased traffic in e-commerce business, improved conversion rates in all channels and a 7.4% increase in comparable-store sales.


Gross profit for the third quarter increased 27% to $66 million resulting in a gross profit margin of 54.2% versus 56.4% in the prior year. The 220 basis point decline in gross margin during the quarter was due primarily to ongoing and effective efforts to manage inventory. This included supply chain process improvements as well as the opportunistic sale of certain retired inventory. These efforts have now aligned inventory with sales growth ahead of schedule.

Operating income increased 38.7% to $21.5 million, or 17.8% of net revenues, in the third quarter, compared to adjusted operating income of $15.5 million, or 16.9% of net revenues, excluding $15.7 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 $13.0 million, or $0.32 per diluted share, compared to $6.0 million, or $0.17 per diluted share, in the third quarter of fiscal 2011. After adjusting the third quarter of fiscal 2011 for the previously discussed stock-based compensation expense, and income taxes as if the Company had been a “C” Corporation at the beginning of the quarter, at an assumed rate of 40%, adjusted net income for the third quarter of fiscal 2011 was $9.0 million or $0.22 per diluted share on 40.5 million weighted-average diluted shares outstanding.

At the end of the third quarter, cash and cash equivalents were $8.3 million and accounts receivable were $38.6 million. The accounts receivable balance at the end of the third quarter, compared to the end of the same quarter in fiscal 2011, was in line with sales growth during the quarter. During the third quarter, long-term debt declined by $6.0 million to $65.6 million. Inventory at the end of the third quarter was $111 million compared to $84 million in the prior year, in line with the increase in net revenues on a percentage basis.

Year-to-Date Results

For the thirty-nine weeks ended October 29, 2011, net revenues increased 27% to $326.3 million, from $256.7 million in the comparable prior-year period. By segment, Indirect revenues increased 13% to $182.3 million, and Direct revenues increased 51% to $144.0 million, with comparable-store sales increasing 12.0%.


Operating income increased 30.4% to $63.5 million, or 19.5% of net revenues, for the thirty-nine weeks, compared to adjusted operating income of $48.7 million, or 19.0% of net revenues, excluding $15.8 million of stock-based compensation expense related to the restricted-stock awards and $6.1 million of compensation expense for bonuses paid to recipients of the restricted-stock awards in the comparable prior-year period.

On a GAAP basis, net income for the thirty-nine weeks was $37.8 million, or $0.93 per diluted share, compared to $32.0 million, or $0.90 per diluted share a year ago. After adjusting fiscal 2011 for the previously discussed bonuses paid and stock-based compensation expense, and income taxes as if the Company had been a “C” Corporation at the beginning of the year, at an assumed rate of 40%, adjusted net income for the thirty-nine weeks of fiscal 2011 was $28.5 million or $0.70 per diluted share on 40.5 million weighted-average diluted shares outstanding.

Outlook

For the fourth quarter of fiscal 2012, the Company expects net revenues to be in the range of $125 million to $130 million and diluted earnings per share to be in the range of $0.44 to $0.47, 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 $451 million to $456 million and diluted earnings per share to be in the range of $1.37 to $1.40, based on diluted weighted-average shares outstanding of 40.5 million.

Call Information

A conference call to discuss fiscal 2012 third quarter results is scheduled for today, December 6, 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 December 20, 2011. To access the recording, listeners should dial (877) 870-5176, and enter the access code, 9415340.

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. Today, you’ll find Vera Bradley accessories in 48 retail stores in the U.S., 8 outlet stores, 3,400 specialty retailers and online at verabradley.com. Vera Bradley’s fiscal 2011 sales were $366 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 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


Vera Bradley, Inc.

Condensed Consolidated Balance Sheets

($ in thousands)

(unaudited)

 

     October 29,
2011
     January 29,
2011
    October 30,
2010
 
     (unaudited)            (unaudited)  

Assets

       

Current assets:

       

Cash and cash equivalents

   $ 8,342       $ 13,953      $ 5,873   

Accounts receivable, net

     38,591         34,300        28,842   

Inventories

     111,099         96,717        83,688   

Other current assets

     8,651         6,754        5,724   

Deferred income taxes

     10,317         8,743        9,105   
  

 

 

    

 

 

   

 

 

 

Total current assets

     177,000         160,467        133,232   

Property, plant, and equipment, net

     47,308         42,984        41,140   

Other assets

     967         2,588        2,525   
  

 

 

    

 

 

   

 

 

 

Total assets

   $ 225,275       $ 206,039      $ 176,897   
  

 

 

    

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

       

Current liabilities:

       

Accounts payable

   $ 18,949       $ 30,012      $ 20,785   

Accrued employment costs

     12,515         17,892        13,814   

Other accrued liabilities

     14,468         10,551        10,744   

Income taxes payable

     —           10,010        —     

Current portion of long-term debt

     88         83        82   
  

 

 

    

 

 

   

 

 

 

Total current liabilities

     46,020         68,548        45,425   

Long-term debt

     65,568         66,934        76,978   

Deferred income taxes

     4,820         3,300        2,501   

Other long-term liabilities

     5,413         2,935        1,996   
  

 

 

    

 

 

   

 

 

 

Total liabilities

     121,821         141,717        126,900   
  

 

 

    

 

 

   

 

 

 

Shareholders’ equity:

       

Additional paid-in-capital

     73,115         71,923        71,833   

Retained earnings (accumulated deficit)

     30,218         (7,601     (21,836

Accumulated other comprehensive income

     121         —          —     
  

 

 

    

 

 

   

 

 

 

Total shareholders’ equity

     103,454         64,322        49,997   
  

 

 

    

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 225,275       $ 206,039      $ 176,897   
  

 

 

    

 

 

   

 

 

 


Vera Bradley, Inc.

Consolidated Statements of Income

($ in thousands, except per share amounts)

(unaudited)

 

     Thirteen Weeks Ended     Thirty-Nine Weeks Ended  
     October 29,
2011
     October 30,
2010
    October 29,
2011
     October 30,
2010
 

Net revenues

   $ 121,149       $ 91,595      $ 326,328       $ 256,672   

Cost of sales

     55,471         39,921        144,578         109,362   
  

 

 

    

 

 

   

 

 

    

 

 

 

Gross profit

     65,678         51,674        181,750         147,310   

Selling, general, and administrative expenses

     45,365         53,239        124,474         125,824   

Other income

     1,206         1,373        6,229         5,286   
  

 

 

    

 

 

   

 

 

    

 

 

 

Operating income (loss)

     21,519         (192     63,505         26,772   

Interest expense, net

     288         584        933         1,227   
  

 

 

    

 

 

   

 

 

    

 

 

 

Income (loss) before income taxes

     21,231         (776     62,572         25,545   

Income tax (benefit) expense

     8,269         (6,775     24,753         (6,418
  

 

 

    

 

 

   

 

 

    

 

 

 

Net income

   $ 12,962       $ 5,999      $ 37,819       $ 31,963   
  

 

 

    

 

 

   

 

 

    

 

 

 

Basic weighted-average shares outstanding

     40,506,670         36,082,298        40,506,670         35,654,464   

Diluted weighted-average shares outstanding

     40,540,429         36,213,361        40,538,022         35,699,156   

Basic net income per share

   $ 0.32       $ 0.17      $ 0.93       $ 0.90   

Diluted net income per share

     0.32         0.17        0.93         0.90   


Vera Bradley, Inc.

Consolidated Statements of Cash Flows

($ in thousands)

(unaudited)

 

     Thirty-Nine Weeks Ended  
      October 29,
2011
    October 30,
2010
 

Cash flows from operating activities

    

Net income

   $ 37,819      $ 31,963   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization of property, plant, and equipment

     6,992        6,193   

Provision for doubtful accounts

     375        119   

Loss on disposal of property, plant, and equipment

     —          278   

Write-off of debt-issuance costs

     —          227   

Stock-based compensation

     1,116        15,799   

Deferred income taxes

     (54     (6,604

Changes in assets and liabilities:

    

Accounts receivable

     (4,703     2,052   

Inventories

     (14,382     (17,153

Other assets

     (239     700   

Accounts payable

     (11,063     1,564   

Income taxes payable

     (10,010     —     

Accrued and other liabilities

     1,018        1,143   
  

 

 

   

 

 

 

Net cash provided by operating activities

     6,869        36,281   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchases of property, plant, and equipment

     (11,316     (7,303

Restricted cash on deposit

     —          1,500   
  

 

 

   

 

 

 

Net cash used in investing activities

     (11,316     (5,803
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payments on financial-institution debt

     (28,000     (58,900

Borrowings on financial-institution debt

     26,700        105,673   

Payments on vendor-financed debt

     (61     (34

Payments of debt-issuance costs

     —          (1,104

Issuance of stock, net of costs

     —          56,337   

Repurchase of stock

     —          (304

Payments of distributions

     —          (132,782

Other

     76        —     
  

 

 

   

 

 

 

Net cash used in financing activities

     (1,285     (31,114
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     121        —     
  

 

 

   

 

 

 

Decrease in cash and cash equivalents

   $ (5,611   $ (636

Cash and cash equivalents, beginning of period

     13,953        6,509   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 8,342      $ 5,873   
  

 

 

   

 

 

 


Vera Bradley, Inc.

  

Supplemental Information—Consolidated Statements of Income

  

Reconciliation of Selling, General and Administrative Expense, as reported to Selling, General and

Administrative Expense, as adjusted

  

  

($ in thousands)

  

(unaudited)

  

     Thirteen Weeks
Ended
    Thirty-Nine
Weeks Ended
 
     October 30,
2010
    October 30,
2010
 

Selling, general, and administrative expenses, as reported

   $ 53,239      $ 125,824   

Adjustments

    

Stock-based compensation expense related to restricted-stock awards

     15,703        15,790   

Bonus compensation expense related to restricted-stock awards

     —          6,132   
  

 

 

   

 

 

 

Selling, general, and administrative expenses, as adjusted

   $ 37,536      $ 103,902   
  

 

 

   

 

 

 

Vera Bradley, Inc.

  

Supplemental Information—Consolidated Statements of Income

  

Reconciliation of Operating Income, as reported to Operating Income, as adjusted

  

($ in thousands)

  

(unaudited)

  

     Thirteen Weeks
Ended
    Thirty-Nine
Weeks Ended
 
     October 30,
2010
    October 30,
2010
 

Operating income, as reported

   $ (192   $ 26,772   

Adjustments

    

Stock-based compensation expense related to restricted-stock awards

     15,703        15,790   

Bonus compensation expense related to restricted-stock awards

     —          6,132   
  

 

 

   

 

 

 

Operating income, as adjusted

   $ 15,511      $ 48,694   
  

 

 

   

 

 

 

Vera Bradley, Inc.

  

Supplemental Information—Consolidated Statements of Income

  

Reconciliation of Net Income, as reported to Net Income, as adjusted

  

($ in thousands, except per share amounts)

  

(unaudited)

  

     Thirteen Weeks
Ended
    Thirty-Nine
Weeks Ended
 
     October 30,
2010
    October 30,
2010
 

Net income, as reported

   $ 5,999      $ 31,963   

Adjustments

    

Stock-based compensation expense related to restricted-stock awards

     15,703        15,790   

Bonus compensation expense related to restricted-stock awards

     —          6,132   

Tax benefit for transition from “S” Corporation to “C” Corporation

     (6,775     (6,418

Adjustment to income taxes

     (5,971     (18,987
  

 

 

   

 

 

 

Net income, as adjusted

   $ 8,956      $ 28,480   
  

 

 

   

 

 

 

Basic weighted-average shares outstanding

     36,082,298        35,654,464   

Share count adjustment

     4,424,372        4,852,206   
  

 

 

   

 

 

 

Adjusted basic weighted-average shares outstanding*

     40,506,670        40,506,670   

Diluted weighted-average shares outstanding

     36,213,361        35,699,156   

Share count adjustment

     4,327,068        4,838,866   
  

 

 

   

 

 

 

Adjusted diluted weighted-average shares outstanding*

     40,540,429        40,538,022   

Adjusted net income per share:

    

Basic

   $ 0.22      $ 0.70   

Diluted

     0.22        0.70   

 

 

* Adjusted weighted-average shares outstanding for the thirteen weeks and thirty-nine weeks ended October 30, 2010, equal GAAP weighted-average shares outstanding for the thirteen weeks and thirty-nine weeks ended October 29, 2011, respectively.