New Vera Bradley (VRA) CEO Robert Wallstrom is having a tough go after the women's apparel maker beat expectations in Q3 but issued dour Q4 guidance. He noted: "based on recent trends, we are lowering our fourth quarter outlook ... Although we face a persistently challenging retail environment, we are working diligently to make improvements in our organization that will enable us to stabilize the business and generate more consistent sales and earnings growth over the long term."
Direct segment revenue grew 7.1% to $68.9M, driven by an 18% jump in sales at company stores (with 20 full-price and 4 outlet locations opened in the past year). Indirect revenue plunged 17.3% Y/Y to $61.2M due to "cautious ordering." E-commerce revenue declined 7.8%.
Comps declined 6.5% Y/Y "due to lower traffic and underperformance of the product offering."
Gross margin fell to 55.3% due to sales of lower-margin products and increased promotional activity, a 270 bp decline from Q3 2012.
Management expects Q4 revenue of $145M-$150M (-9.3% Y/Y at the midpoint), a far cry from analyst expectations of $159.1M, and EPS of $0.44-$0.47, vs. analyst expectations of $0.56. Gross margin is expected to decline 340-380 bp Y/Y.
Shares are halted until 4:35pm ET, but 24.6K shares went off AH down 3.1% from the close.
Conference call at 4:30pm ET, PR