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): September 11, 2013

 

 

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 September 11, 2013, Vera Bradley, Inc. issued an earnings press release for the quarterly period ended August 3, 2013. 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 September 11, 2013


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: September 11, 2013    

/s/ Kevin J. Sierks

   

Kevin J. Sierks

Vice President – Controller, Chief Accounting Officer and Interim Chief Financial Officer


EXHIBIT INDEX

 

Exhibit No.

  

Description

99.1    Press release dated September 11, 2013
EX-99.1

Exhibit 99.1

 

LOGO

Vera Bradley Announces Fiscal 2014 Second Quarter Financial Results

 

    Net revenues increased 1.9% to $125.4 million.

 

    Direct net revenues increased 14.2%, including a decrease of 3.7% in comparable-store sales; Indirect net revenues decreased 12.2%.

 

    Diluted EPS were $0.37 compared to $0.33 in the second quarter of fiscal 2013.

FORT WAYNE, Ind., September 11, 2013 — Vera Bradley, Inc. (Nasdaq: VRA) today announced its financial results for the fiscal 2014 second quarter ended August 3, 2013. The Company reported net revenues of $125.4 million for the second quarter, compared to $123.0 million in the second quarter of fiscal 2013, an increase of $2.3 million, or 1.9%. Diluted earnings per share for the quarter were $0.37, an increase of 11.6% over earnings per share in the second quarter of fiscal 2013.

“We managed through considerable headwinds in the second quarter, yet delivered results in line with our expectations,” said Michael C. Ray, Vera Bradley’s Chief Executive Officer. “Nonetheless, our product offering underperformed in the midst of an uncertain consumer environment, which affected traffic in our retail stores. While we are encouraged by our strategic progress and remain optimistic about our long-term prospects, we continue to have a cautious outlook for the remainder of the year.”

In the Direct segment, revenues increased 14.2% to $75.0 million, as a result of growth across all channels. In stores, net revenues grew 23.7% during the quarter, primarily a result of opening 20 full-price and four outlet stores since the second quarter of fiscal 2013. Comparable store sales decreased 3.7% during the quarter due to underperformance of the product offering and reduced traffic. E-commerce revenue grew 1.4% due to continued growth in website traffic, offset by reduced conversion. Indirect revenues decreased 12.2% to $50.4 million, primarily due to cautious ordering from specialty retailers.


Gross profit for the second quarter increased 4.6% to $71.8 million, resulting in a gross margin of 57.2%, compared to 55.8% for the same period in the prior year. The second quarter increase in gross margin was due primarily to fewer incentives offered to specialty retailers compared to the prior year.

Total SG&A expense was $48.3 million for the second quarter, compared to $47.8 million in the prior year. SG&A as a percentage of net revenues was favorable by 30 basis points compared to the same period in prior year, due primarily to cost management efforts, as well as reductions in variable compensation expense associated with company performance. This benefit was partially offset by the deleveraging of store operating expenses.

Operating income increased 10.4% to $24.1 million, or 19.2% of net revenues, in the second quarter compared to operating income of $21.8 million, or 17.7% of net revenues, in the second quarter of fiscal 2013.

Net income for the quarter increased $1.6 million to $15.0 million, or $0.37 per diluted share, compared to $13.4 million, or $0.33 per diluted share, in the second quarter of fiscal 2013.

Year-to-Date Results

For the twenty-six weeks ended August 3, 2013, net revenues increased 3.4% to $248.4 million, from $240.2 million in the same period in the prior year. By segment, Direct revenues increased 19.0% to $148.7 million, with a comparable-store sales decline of 1.8%. Indirect revenues decreased 13.5% to $99.7 million.

Operating income decreased 7.9% to $39.3 million, or 15.8% of net revenues, for the twenty-six weeks compared to operating income of $42.6 million, or 17.7% of net revenues, in the prior year.

Net income for the twenty-six weeks decreased 7.2% to $24.1 million, or $0.59 per diluted share, compared to $26.0 million, or $0.64 per diluted share, a year ago.

Cash flow from operations for the twenty-six weeks ended August 3, 2013 totaled $27.0 million compared to $25.5 million for the same period in the prior year.


Outlook

For the third quarter of fiscal 2014, the Company expects net revenues to be in a range of $128 million to $130 million, compared to $138 million in the third quarter of fiscal 2013. Gross margin for the third quarter is expected to decline over the prior year by 280 to 300 basis points primarily due to a shift in sales mix between the full-price and discount channels and increased promotional activity.

Diluted earnings per share are expected to be in a range of $0.33 to $0.35. 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 2014, the Company expects net revenues to be in a range of $535 million to $540 million. Gross margin for fiscal 2014 is expected to decline 100 to 125 basis points.

Diluted earnings per share for the full year are expected to be in a range of $1.47 to $1.52. This guidance includes an effective tax rate of 38% and fully diluted weighted average shares outstanding of 40.6 million.

Call Information

A conference call to discuss fiscal 2014 second quarter results is scheduled for today, September 11, 2013, 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 10, 2013. To access the recording, listeners should dial (877) 870-5176, and enter the access code, 1575606.

About Vera Bradley, Inc.

Vera Bradley is a leading designer of women’s handbags and accessories, luggage and travel items, eyewear, stationery and gifts. Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand’s iconic designs and versatile styles offer women of all ages a colorful way to accessorize every look. Vera Bradley offers a unique, multi-channel sales model as well as a focus on service and a high level of engagement with fans. Fiscal 2013 net revenues increased by 17% to $541 million. The company’s commitment to breast cancer research continues to increase its reach 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 February 2, 2013. 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)

 

     August 3,
2013
    February 2,
2013
    July 28,
2012
 

Assets

      

Current assets:

      

Cash and cash equivalents

   $ 9,331      $ 9,603      $ 7,612   

Accounts receivable, net

     35,494        34,811        49,279   

Inventories

     142,864        131,562        117,895   

Prepaid expenses and other current assets

     9,706        11,016        8,177   

Deferred income taxes

     12,372        11,348        8,396   
  

 

 

   

 

 

   

 

 

 

Total current assets

     209,767        198,340        191,359   

Property, plant, and equipment, net

     82,346        77,211        70,220   

Other assets

     1,438        1,768        1,669   
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 293,551      $ 277,319      $ 263,248   
  

 

 

   

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

      

Current liabilities:

      

Accounts payable

   $ 26,224      $ 14,853      $ 45,016   

Accrued employment costs

     8,442        14,162        11,209   

Other accrued liabilities

     19,967        16,532        17,693   

Income taxes payable

     2,026        7,094        —     

Current portion of long-term debt

     —          58        90   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     56,659        52,699        74,008   

Long-term debt

     —          15,037        25,301   

Deferred income taxes

     6,123        6,078        4,314   

Other long-term liabilities

     11,300        9,250        8,474   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     74,082        83,064        112,097   
  

 

 

   

 

 

   

 

 

 

Shareholders’ equity:

      

Additional paid-in capital

     77,029        75,675        74,752   

Retained earnings

     143,330        119,190        76,319   

Accumulated other comprehensive income

     (890     (610     80   
  

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

     219,469        194,255        151,151   
  

 

 

   

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 293,551      $ 277,319      $ 263,248   
  

 

 

   

 

 

   

 

 

 


Vera Bradley, Inc.

Condensed Consolidated Statements of Income

(in thousands, except per share amounts)

(unaudited)

 

     Thirteen Weeks Ended      Twenty-Six Weeks Ended  
     August 3,
2013
     July 28,
2012
     August 3,
2013
     July 28,
2012
 

Net revenues

   $ 125,372       $ 123,037       $ 248,405       $ 240,238   

Cost of sales

     53,599         54,425         108,166         106,324   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross profit

     71,773         68,612         140,239         133,914   

Selling, general, and administrative expenses

     48,336         47,833         103,563         95,024   

Other income

     630         1,020         2,581         3,719   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     24,067         21,799         39,257         42,609   

Interest expense, net

     82         152         223         343   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income before income taxes

     23,985         21,647         39,034         42,266   

Income tax expense

     9,034         8,274         14,894         16,267   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

   $ 14,951       $ 13,373       $ 24,140       $ 25,999   
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic weighted-average shares outstanding

     40,603         40,532         40,592         40,524   

Diluted weighted-average shares outstanding

     40,623         40,568         40,624         40,557   

Basic earnings per share

   $ 0.37       $ 0.33       $ 0.59       $ 0.64   

Diluted earnings per share

   $ 0.37       $ 0.33       $ 0.59       $ 0.64   


Vera Bradley, Inc.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

     Twenty-Six Weeks Ended  
     August 3,
2013
    July 28,
2012
 

Cash flows from operating activities

    

Net income

   $ 24,140      $ 25,999   

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

    

Depreciation of property, plant, and equipment

     6,796        4,759   

Provision for doubtful accounts

     (117     347   

Loss on disposal of property, plant, and equipment

     9        25   

Stock-based compensation

     1,820        1,431   

Deferred income taxes

     (1,039     (277

Changes in assets and liabilities:

    

Accounts receivable

     (566     (11,529

Inventories

     (11,507     (10,928

Prepaid expenses and other assets

     1,640        (641

Accounts payable

     11,371        17,740   

Income taxes payable

     (5,068     (1,705

Accrued and other liabilities

     (475     240   
  

 

 

   

 

 

 

Net cash provided by operating activities

     27,004        25,461   
  

 

 

   

 

 

 

Cash flows from investing activities

    

Purchases of property, plant, and equipment

     (11,976     (22,704
  

 

 

   

 

 

 

Net cash used in investing activities

     (11,976     (22,704
  

 

 

   

 

 

 

Cash flows from financing activities

    

Payments on financial-institution debt

     (45,000     (62,750

Borrowings on financial-institution debt

     30,000        63,000   

Tax withholdings for equity compensation

     145        (269

Other financing activities, net

     (406     (43
  

 

 

   

 

 

 

Net cash used in financing activities

     (15,261     (62
  

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (39     (5
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (272     2,690   

Cash and cash equivalents, beginning of period

     9,603        4,922   
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 9,331      $ 7,612