Handbag maker Vera Bradley (VRA) saw its shares fall to an all time low on Friday. Shares now trade for $19.81 and can be picked up close to the company's IPO price back in 2010. The drop in Friday's share price was a little puzzling, as Thursday's earnings report saw shares shoot up over 8% to $23.65 in after hours trading.
Net income increased to $12.6 million for the first quarter. Earnings per share increased to $0.31. The figures in the prior year were $11.2 million and $0.28 respectively. Revenue increased 16% to $117.2 million. Revenue from Vera Bradley's retail stores increased 34% to $59.2 million, thanks to the addition of 19 retail stores. Online revenue increased 26% for the quarter. Sales from other retailers selling Vera products increased 1% to $58 million. Same stores sales, for retail stores open more than a year, increased 4.3% for the quarter.
Vera Bradley Locations (Coming Soon):
· Alabama - 1, Arizona - 2, California - 4, Colorado - 1, Connecticut - 1, Delaware - 1, Florida - 3, Georgia - 1, Hawaii - 1, Illinois - 4, Indiana - 2, Kansas - 1, Kentucky -1, Maryland - 2 (1), Massachusetts - 4, Michigan - 2, Minnesota - 1, Missouri - 1, New Jersey -3 (1), New York - 3 (1), North Carolina - 1, Ohio - 2, Oklahoma -0 (1), Pennsylvania - 2, Rhode Island - 1, Tennessee - 2, Texas - 7, Virginia - 1, Washington - 1, Wisconsin - 1
Along with the retail stores in the United States, Vera Bradley also has nine Outlet Stores in the country. The Outlet Stores, which offer items up to 60% off, are found in Florida, Illinois, Massachusetts, New York, Pennsylvania, Tennessee, Texas, and Virginia. The company also has five retail stores in Canada. With stores in only thirty states, Vera Bradley has plenty of retail expansion in its future. The company forecasts that it will open 16-18 new stores in fiscal 2013. The long term goal for the company is to open 14-20 stores each year.
Vera Bradley began opening retail stores in 2007. The company has plans for 300 stores throughout the United States. The international market is potentially huge for an affordable luxury item like Vera Bradley as well. The company has stores in Canada as its only other retail outlet. Last year, the company began expanding in Japan through partnerships. The potential to open retail stores in Asia could be seen as early as this year.
A couple recent partnerships will further expand Vera Bradley's reach:
· On June 1st, Vera Bradley announced a partnership with Dillard's (DDS). Dillard's will sell a limited collection of Vera brands in thirty five stores beginning in July. The number of stores carrying Vera Bradley handbags will increase to 65 stores in the fall.
· Vera Bradley is introducing a line of cell phone cases for Verizon (VZ) stores. The cases will be available at Verizon stores and kiosks and online through Verizon's website. The cases will work for Apple's iPhone 4S and iPhone, along with Motorola's Droid Razr phones.
· Vera Bradley also announced a partnership with Von Maur stores. Beginning in July, Vera Bradley will sell handbags at the department store chain's locations.
Morningstar remains bullish on shares of Vera Bradley. They see fair value on the company's shares as $33. Zacks ranks the company a #2 Buy as well. Vera Bradley has also seen strong insider ownership in 2012. Vera Bradley continues to be picked up as a holding in many small cap mutual funds.
The company forecasted earnings per share of $0.34 to $0.36 in the second quarter. Revenue was guided at $121 to $123 million. The company also reiterated full year guidance of $1.68-$1.71 earnings per share. The company did lower revenue guidance for the year to $535-$540 million, from a previous guided $540-$545 million range. Analysts on Yahoo Finance see the company reporting earnings per share at the higher end of the range of $1.71. The following year, analysts see the company earning $2.03. This puts a forward price to earnings ratio of 9.8.
I recommend looking into shares of Vera Bradley. The company produces affordable products across many platforms. The company's strong relationships with independent retailers, along with a growing base of retail stores will power the company further. Investors are not pricing in the possibility of international expansion or more retail announcements like Dillard's. Shares could bounce at any point and should be valued higher. I have a price target of $30, representing 15 times next year's earnings of $2.03.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in VRA over the next 72 hours.