Vera Bradley (VRA) - Get Vera Bradley, Inc. Report shares dropped on Wednesday after the handbag and accessories retailer posted third-quarter earnings that beat analyst expectations but missed the revenue target.
The stock of the Fort Wayne, Ind., company at last check was down 4.4% at $8.03.
For the three months ended Oct. 31 the luggage and handbag design company posted net income of $8.8 million, or 26 cents a share, compared with $139,000, or break-even per share, in the year-earlier period. The latest adjusted earnings were 30 cents a share.
Revenue dropped 2.1% to $124.8 million from $127.5 million.
Same-store sales for Vera Bradley dropped 19.1% for the quarter due to the coronavirus pandemic.
A survey of analysts by FactSet produced consensus estimates of adjusted earnings of 24 cents a share on revenue of $130 million. Analysts were estimating that same-store sales dropped 2%.
"We expanded our gross margin rate primarily through sales of cotton masks and controlled promotional activity, and we diligently managed our expenses, achieving meaningful expense leverage," said Chief Executive Rob Wallstrom in a statement.
"Our multibrand strategy is proving to be powerful.”
For the period gross profit grew 8.8% to $73.8 million. Gross margin widened to 59.1% from 53.2%.
The company said that "e-commerce sales growth of 48.8% offset the 19.1% decline in comparable-store sales" since store traffic continues to be hurt by the pandemic.
The company closed 10 full-line stores and opened six factory outlet stores in the past 12 months.
"Our consolidated e-commerce business was very strong in the third quarter, reflecting growth from both Vera Bradley and Pura Vida," Wallstrom said.
"Even as our stores were reopened during the third quarter, our Vera Bradley digital business rose nearly 50% over last year. And Pura Vida’s e-commerce year-over-year sales grew over 17% for the quarter, despite supply chain disruptions.
"E-commerce sales comprised over a third of total company revenues for the quarter."
The company also awarded a quarterly bonus of $500 to each distribution-center, store and customer-service employee based on hours worked.
Vera Bradley did not provide guidance for the fourth quarter because of the economic uncertainty created by the pandemic.