Vera Bradley Inc. will close or move up to 15 underperforming stores over the next two years as the company regroups from disappointing fourth-quarter and fiscal-year financial results, officials announced Wednesday.
The Fort Wayne company designs, makes and sells women’s handbags, luggage, accessories and home decor items.
In a statement, CEO Rob Wallstrom said the company’s five-year turnaround plan "is taking longer than we had originally planned, and the overall retail environment and accessories space are significantly more challenging than anticipated."
Vera Bradley’s net revenues declined by 13 percent in the fourth quarter to $135 million as compared to the same 13 weeks of the prior year. Earnings for the same period plummeted by 78 percent to $3.45 million.
For the fiscal year, which ended Jan. 28, net revenues declined by 3 percent to $486 million. Earnings were $19.8 million, or 53 cents per diluted share, a 28 percent decline from the $27.6 million, or 71 cents a share, posted for fiscal 2016.
Although the company’s profits declined, they are still profits. And Vera Bradley ended its fiscal year with cash, cash equivalents and short-term investments totaling $117 million. The company founded 35 years ago by friends Barbara Bradley Baekgaard and Patricia Miller doesn’t carry any debt.
Wallstrom, the CEO, described the company as solid financially.
He listed three areas the company will focus on this year: making the brand more desirable, making individual products more desirable to shoppers and strengthening the distribution network.
The third priority will include closing or moving full-price stores with sluggish sales, Wallstrom said. Vera Bradley officials will make decisions as leases expire or can be renegotiated. Most closures will happen late in the current fiscal year, which ends in January 2018, or early in the next fiscal year.
Highlights from last year include opening four new full-price stores, opening six factory outlet stores, inking six new licensing agreements and launching a new marketing campaign, "It’s Good to be a Girl." The company also updated more than a dozen high-performing stores with new facades, logs and interior.
Although the updated stores didn’t report significantly higher sales after the changes, Wallstrom believes positive customer feedback will eventually drive more shoppers to the stores and to the retailer’s recently enhanced website.
Increasing shopper traffic in stores and online, he said, is crucial to Vera Bradley’s success.