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): August 29, 2012

 

 

VERA BRADLEY, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Indiana   001-34918   27-2935063

(State or Other Jurisdiction

of Incorporation)

 

(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 August 29, 2012, Vera Bradley, Inc. issued an earnings press release for the quarterly period ended July 28, 2012. The press release, including attachments, is furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits

 

  (d) Exhibits

 

  99.1 Press Release dated August 29, 2012


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: August 29, 2012       /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 August 29, 2012
Press Release

Exhibit 99.1

 

LOGO

Vera Bradley Announces Fiscal 2013 Second Quarter Financial Results

 

   

Net revenues increased 18.5% to $123.0 million.

 

   

Direct net revenues increased 37.2%, including an increase of 5.3% in comparable-store sales; Indirect net revenues increased 2.6%.

 

   

Net income decreased $0.2 million to $13.4 million versus $13.6 million in the second quarter of fiscal 2012, a decrease of 1.9%.

 

   

Diluted EPS were $0.33 compared to $0.34 in the second quarter of fiscal 2012.

FORT WAYNE, Ind., August 29, 2012 — Vera Bradley, Inc. (Nasdaq: VRA) today announced its financial results for the fiscal 2013 second quarter ended July 28, 2012. The Company reported net revenues of $123.0 million for the second quarter, compared to $103.8 million in the second quarter of fiscal 2012, an increase of $19.2 million, or 18.5%. Diluted earnings per share for the quarter were $0.33, a decrease of 3% from earnings per share in the second quarter of fiscal 2012.

“Although there were many accomplishments during the quarter, results fell short of our expectations,” said Michael C. Ray, Vera Bradley’s Chief Executive Officer. “The second quarter was challenging in May and June as we managed a product portfolio that underperformed in the midst of an uncertain consumer environment. Sales trends improved in July, which benefited from the strong reception of our fall collections. We are also encouraged by our future product introductions; however, we remain cautious regarding the second half of the year. Overall, we continue to make progress executing our growth strategies and we remain optimistic about our long-term prospects.”

By segment, Direct revenues increased 37.2% to $65.7 million, driven by the opening of 21 new stores since the second quarter of fiscal 2012, a comparable-store sales increase of 5.3%, and e-commerce revenue growth of 21.2%. Indirect revenues increased 2.6% to $57.3 million, in-line with our expectations.


Gross profit for the second quarter increased 15.1% to $68.6 million, resulting in gross margin of 55.8%, compared to gross margin of 57.5% in the prior year. The second quarter decline in gross margin was due to increased promotional activity, partially offset by positive channel mix, as the Direct segment becomes a larger percentage of our business, as well as operational savings.

Total SG&A expense was $47.8 million for the second quarter, compared to $39.1 million in the prior year. SG&A as a percentage of net revenues was unfavorable by 120 basis points compared to the prior year, due primarily to annualizing fiscal 2012 infrastructure investments made in the second half of last year and higher occupancy costs driven by opening full-price stores earlier than originally anticipated.

Operating income decreased 4.9% to $21.8 million, or 17.7% of net revenues, in the second quarter, compared to operating income of $22.9 million, or 22.1% of net revenues in the second quarter of fiscal 2012.

Net income for the quarter decreased $0.2 million to $13.4 million, or $0.33 per diluted share, compared to $13.6 million, or $0.34 per diluted share, in the second quarter of fiscal 2012.

Year-to-Date Results

For the twenty-six weeks ended July 28, 2012, net revenues increased 17.1% to $240.2 million, from $205.2 million in the same period in the prior year. By segment, Direct revenues increased 35.8% to $124.9 million, with comparable-store sales increasing 4.9%. Indirect revenues increased 1.9% to $115.3 million.

Operating income increased 1.5% to $42.6 million, or 17.7% of net revenues, for the twenty-six weeks, compared to operating income of $42.0 million, or 20.5% of net revenues.

Net income for the twenty-six weeks increased 4.6% to $26.0 million, or $0.64 per diluted share, compared to $24.9 million, or $0.61 per diluted share a year ago.

Cash flow from operations for the twenty-six weeks ended July 28, 2012 totaled $25.5 million, compared to a use of cash of $11.8 million for the same period in the prior year, primarily due to improved inventory management.


Outlook

For the third quarter of fiscal 2013, the Company expects net revenues to be in a range of $134 million to $136 million, compared to $121.1 million in the third quarter of fiscal 2012. Gross margin for the third quarter is expected to expand over the prior year by approximately 200 basis points of which approximately 120 basis points is attributable to a $3.5 million sale to the off price channel in the prior year.

Diluted earnings per share are expected to be in a range of $0.37 to $0.39. The earnings per share estimate assumes an effective tax rate of 39% and fully diluted weighted average shares outstanding of 40.5 million.

For fiscal 2013, the Company expects net revenues to be in a range of $531 million to $536 million. Gross margin for fiscal 2013 is expected to expand over the prior year by approximately 30 basis points.

Diluted earnings per share for the full year are expected to be in a range of $1.60 to $1.63. This guidance includes an effective tax rate of 39% and fully diluted weighted average shares outstanding of 40.6 million.

Call Information

A conference call to discuss fiscal 2013 second quarter results is scheduled for today, August 29, 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 September 12, 2012. To access the recording, listeners should dial (877) 870-5176, and enter the access code, 2089468.

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 July 28, 2012, Vera Bradley accessories can be found in 60 retail stores in the U.S., 10 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


Vera Bradley, Inc.

Condensed Consolidated Balance Sheets

($ in thousands)

(unaudited)

 

     July 28,
2012
     January 28,
2012
     July 30,
2011
 

Assets

        

Current assets:

        

Cash and cash equivalents

   $ 7,612       $ 4,922       $ 788   

Accounts receivable, net

     49,279         38,097         44,719   

Inventories

     117,895         106,967         118,105   

Prepaid expenses and other current assets

     8,177         8,343         7,246   

Deferred income taxes

     8,396         8,010         9,739   
  

 

 

    

 

 

    

 

 

 

Total current assets

     191,359         166,339         180,597   

Property, plant, and equipment, net

     70,220         52,312         45,049   

Other assets

     1,669         862         1,084   
  

 

 

    

 

 

    

 

 

 

Total assets

   $ 263,248       $ 219,513       $ 226,730   
  

 

 

    

 

 

    

 

 

 

Liabilities and Shareholders’ Equity

        

Current liabilities:

        

Accounts payable

   $ 45,016       $ 27,276       $ 30,924   

Accrued employment costs

     11,209         15,738         11,960   

Other accrued liabilities

     17,693         15,297         12,934   

Income taxes payable

     —           1,705         405   

Current portion of long-term debt

     90         89         86   
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     74,008         60,105         56,309   

Long-term debt

     25,301         25,095         71,590   

Deferred income taxes

     4,314         4,205         3,971   

Other long-term liabilities

     8,474         6,101         4,869   
  

 

 

    

 

 

    

 

 

 

Total liabilities

     112,097         95,506         136,739   
  

 

 

    

 

 

    

 

 

 

Shareholders’ equity:

        

Additional paid-in capital

     74,752         73,590         72,661   

Retained earnings

     76,319         50,320         17,256   

Accumulated other comprehensive income

     80         97         74   
  

 

 

    

 

 

    

 

 

 

Total shareholders’ equity

     151,151         124,007         89,991   
  

 

 

    

 

 

    

 

 

 

Total liabilities and shareholders’ equity

   $ 263,248       $ 219,513       $ 226,730   
  

 

 

    

 

 

    

 

 

 


Vera Bradley, Inc.

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

 

     Thirteen Weeks Ended      Twenty-Six Weeks Ended  
     July  28,
2012
     July  30,
2011
     July  28,
2012
     July  30,
2011
 

Net revenues

   $ 123,037       $ 103,789       $ 240,238       $ 205,179   

Cost of sales

     54,425         44,161         106,324         89,107   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

     68,612         59,628         133,914         116,072   

Selling, general, and administrative expenses

     47,833         39,120         95,024         79,109   

Other income

     1,020         2,418         3,719         5,023   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     21,799         22,926         42,609         41,986   

Interest expense, net

     152         329         343         645   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

     21,647         22,597         42,266         41,341   

Income tax expense

     8,274         8,964         16,267         16,484   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 13,373       $ 13,633       $ 25,999       $ 24,857   
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic weighted-average shares outstanding

     40,532         40,507         40,524         40,507   

Diluted weighted-average shares outstanding

     40,568         40,541         40,557         40,537   

Basic earnings per share

   $ 0.33       $ 0.34       $ 0.64       $ 0.61   

Diluted earnings per share

     0.33         0.34         0.64         0.61   


Vera Bradley, Inc.

Consolidated Statements of Cash Flows

($ in thousands)

(unaudited)

 

     Twenty-Six Weeks Ended  
     July 28,
2012
    July 30,
2011
 

Cash flows from operating activities

    

Net income

   $ 25,999      $ 24,857   

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

    

Depreciation of property, plant, and equipment

     4,759        4,461   

Provision for doubtful accounts

     347        75   

Loss on disposal of property, plant, and equipment

     25        —     

Stock-based compensation

     1,431        662   

Deferred income taxes

     (277     (325

Changes in assets and liabilities:

    

Accounts receivable

     (11,529     (10,495

Inventories

     (10,928     (21,388

Other assets

     (641     1,012   

Accounts payable

     17,740        583   

Income taxes payable

     (1,705     (9,605

Accrued and other liabilities

     240        (1,615
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     25,461        (11,778
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchases of property, plant, and equipment

     (22,704     (6,526
  

 

 

   

 

 

 

Net cash used in investing activities

     (22,704     (6,526
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payments on financial-institution debt

     (62,750     (12,000

Borrowings on financial-institution debt

     63,000        16,700   

Payments on vendor-financed debt

     (43     (40

Change in bank overdraft

     —          329   

Tax withholdings for equity compensation

     (269     —     

Other

     —          76   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (62     5,065   
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (5     74   
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     2,690        (13,165

Cash and cash equivalents, beginning of period

     4,922        13,953   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 7,612      $ 788