Vera Bradley announced its financial results for the fiscal first quarter ended April 30, 2016. Net revenues of $105.2 million were at the low end of the company's guidance of $105 million to $109 million.
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Prior year first quarter revenues totaled $101.1 million. Current year first quarter Direct segment revenues totaled $72.9 million, a 3.6% increase from $70.4 million in the prior year first quarter.
Comparable sales (including e-commerce) decreased 6.7% for the quarter (reflecting a 3.8% decline in comparable store sales and an 11.0% decrease in e-commerce sales), which was more than offset by new store growth (the company opened 11 full-line and 7 factory outlet stores during the past 12 months).
First quarter comparable sales were negatively impacted by year-over-year declines in store and e-commerce traffic. E-commerce sales were also negatively impacted by modestly lower levels of promotional activity.
Indirect segment revenues increased 5.1% to $32.2 million from $30.7 million in the prior year first quarter.
Gross profit for the quarter totaled $59.7 million, or 56.7% of net revenues, compared to $55.1 million, or 54.5% of net revenues, in the prior year first quarter. The year-over-year 220 basis point gross profit percentage improvement. The gross profit percentage was at the low end of the guidance range of 56.7% to 57.2%, primarily due to modestly increased promotional activity at the company's factory stores and higher-than-expected sales to certain lower-margin key accounts.
SG&A expense totaled $56.4 million, or 53.6% of net revenues, in the current year first quarter, compared to $55.1 million, or 54.5% of net revenues, in the prior year first quarter. As expected, SG&A dollars increased over the prior year primarily due to new store expenses. The SG&A expense rate was at the low end of the company's guidance of 53.5% to 54.8% due to diligent expense management.
The effective income tax rate was 36.5%, lower than guidance of 45.7%, primarily related to the tax treatment of restricted stock vesting.
Operating income totaled $3.9 million, or 3.7% of net revenues, in the current year first quarter, compared to $0.9 million, or 0.9% of net revenues, in the prior year first quarter.
By segment, Direct operating income was $12.1 million, or 16.6% of sales, compared to $11.5 million, or 16.3% of sales (which excluded $3.5 million of the aforementioned charges), in the prior year, and Indirect operating income was $12.6 million, or 39.1% of sales, compared to $11.1 million, or 36.0% of sales (which excluded $1.1 million of the aforementioned charges), in the prior year.
Cash and cash equivalents and short-term investments as of April 30, 2016 totaled $81.8 million compared to $96.6 at the end of last year's first quarter. The company had no debt outstanding at quarter end.
Quarter-end inventory was $113.4, slightly below guidance of $114 million to $119 million and compared to $101.8 million at the end of last year's first quarter. Net capital spending for the quarter totaled $5.6 million.
During the first quarter, the company repurchased approximately $5.7 million shares of its common stock under its $50 million share repurchase plan (equating to approximately 354,000 shares at an average price of $16.05).
This brings the total repurchases under the $50 million plan to approximately $9.8 million (equating to approximately 637,000 shares at an average price of $15.42). ■