VRA - Earnings call transcript Q1 2020

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Operator

Good day, and welcome to the Vera Bradley First Quarter Fiscal 2020 Earnings Conference Call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Mark Dely, Chief Administrative Officer. Please go ahead.

Mark Dely

Good morning, and welcome, everyone. you us thank first Vera to call. quarter like for for joining Bradley's We'd

statements differ today's may made prepared the Harbor within of Some on the of in made to Safe to the to that could statements meaning remarks of Act unknown risks and expect. Reform Litigation amended. cause call Securities known response your forward-looking results XXXX as questions those the constitute Such uncertainties both that materially forward-looking Private of provisions statements we pursuant actual and and to are our during from subject and

to the Investors release February later update XX-K X, information refer no not statements the should known for the the ended for with undertakes obligation filed to Company's of the SEC assume will a that Please Form call. at today's during remain press operative XXXX, a on time. made year uncertainties. the call any Company and fiscal The discussion and risks discussed

turn now will CEO, Rob? over Wallstrom. Bradley's I to Vera Rob

Robert Wallstrom

Thank you progress us will today's questions for Daren our available joining joining you, today. Customer CFO; review our we the Officer at joining and and of Daren Chief and me thank everyone, John Enwright, conclusion on are call. is us in also answer Good marketing call. as our morning Mark. be Hull, to the

our high to and of comparable and responding that increase innovative end product first indicating revenues customers sales We again engagement very targeted quarter our once at with efforts. our are the X.X% pleased that both were customer are guidance, our

quarter in XXXX. stores in full-price by of we selling continue these the channels approximately improved brand restore was We first XX%. progress and once of in comparable by and sales to we health, stage again the first The XX/XX verabradley.com increasing full-line Company to Vision build two on our fiscal upon made quality and

this second we $X clearance are million another the $X of million from addition, quarter sales year. of In removing to

three-year base journey, on and our expanding of two year we our focused customer sales increasing and into Moving are profitability.

focus of fiscal one, As Growth. a are: Number for XXXX areas our reminder, key

is to by a customer the with good growth comparable innovative sales improvement being and targeted driven year, product were goal in Our positive marketing first combined experiences. and return quarter. off is we compelling, to This to start this engaging

Excellence. and key re-platforming Number two, information streamlined, Operational a year, and efficient will Later planning and business we this become other to process enterprise processes. begin our systems nimble, technology two-year in resource our of more

three, And number Ownership.

reinforce as value where ownership-based team to continue drive efforts. and will culture significant individual creation to an their our model, We associate can every

turn year. to outlook quarter Now, over call John quarter I the to review John? and second our the full first results the for and

John Enwright

and Rob, Thanks, morning. good

Let a for few highlights me go the over quarter.

X.X% revenues to First increased $XX.X last $XX million year. million quarter net from

million line posted loss $X.XX $X.XX per in or share, our $X.X the diluted a per net guidance first of with quarter, For we loss of to share. of range a $X.XX net

share. quarter The year prior loss per first $X.X million $X.XX or totaled net

over First quarter an year. totaled revenues $XX.X increase million $XX.X X.X% Direct segment million, last

performance in for sales some increased was best quite quarter. noted, including comparable Rob X.X% This As time. our e-commerce the

in to $XX.X revenues to accounts. specialty first the number the profit $XX.X million segment first reflecting compared the Indirect quarter, Gross revenues in year million from quarter. for reduction $XX.X the of or orders decreased of prior $XX.X quarter million X.X% and or in prior a totaled XX.X% net year million XX.X%

basis operational a margin by point selling year-over-year improvement and expected, in Chinese XX decline. offset of sourcing more As efficiencies tariffs, and gross than impact full-price the were causing

our margin gross was quarter First range of to XX.X% guidance XX.X%. within

fees, to year revenues quarter, first new due year, or the second of expenses consulting expenses in XX.X% and of variable to prior expenses prior the the SG&A of certain primarily expense revenues. for compared to totaled to $XX.X the drive marketing than opening, expenses were million planned timing million or revenues SG&A related net quarter. net higher factory XX.X% store $XX.X

expenses of expenses certain drive range consulting expenses, million guidance to were marketing and First primarily timing quarter above to of SG&A the revenues. $XX.X to variable the million, fees, $XX.X due

quarter of totaled loss $X.X Our net million or operating prior million of operating net first loss an compared quarter. X.X% revenues X% or of in the revenues $X.X first to year

Indirect prior XX.X% prior was or $X.X for operating first the By segment, or revenues million XX.X% income XX.X% income revenues $X.X million compared of Direct to the quarter. net or Indirect the quarter $X.X the for net net Direct of was of to operating year Indirect or year million revenues in first of first quarter, quarter. first net Direct revenues million XX.X% compared $X.X in

for Now balance spending the totaled sheet. quarter the let to million. me capital $X.X Net turn

we During at XXX,XXX average quarter, first stock approximately million approximately $X.X the common or an of repurchased $XX.XX. our of price shares

$XX.X As approximately had of the the repurchase end remaining share $XX million quarter, of million – we under first authorization. our our on

at compared the last as compared million first last million at debt end investments and within was of first and no $XX.X million $XXX.X and million $XX to guidance end $XXX.X had million totaled quarter-end Cash, year's year range of $XX the Quarter-end our inventory to to $XX.X the we of quarter, million. cash quarter outstanding. equivalents, of

for outlook and Now let's quarter turn second to the our full-year.

million of be approximately of – this compared reflects million estimates quarter million. sales sales quarter, the we million $X removal to second million prior $XXX.X to additional of revenues $X expect to clearance sales The year year. from to second For second quarter $XXX the the $XXX net of

believe net segment range increase in the the in quarter. Direct up low-single-digit be sales. will Indirect sales to to expect flat net for single-digit low-single-digit including low-to-mid the sales range, We comparable We positive our

rate XX.X% XX.X%. will year's quarter second expect of last between gross compared XX% to We quarter second be and margin

offset Chinese Sourcing and expected operational efficiencies be of impact more than are to tariffs. by the

range expense related to $XX compared reflecting $XX.X SG&A store million year's from factory locations. SG&A expense to expected million, $XX incremental to is to last of million expenses new

$X.XX compared be $X.XX quarter. year to EPS to $X.XX to prior the quarter diluted We expect in second second

million The higher-than-normal the end inventory $XXX the of to in last million quarter the due of quarter. inventory second at of $XX range timing to end million range to compared is receipts. the year’s second to the at $XX.X We expect be

the will million will segment we the full-year, sales compared $XXX prior be believe last in up comparable in This the assumes in million for Direct Indirect increase low-single-digit sales flat with range a year. range $XXX net to full-year. to $XXX including sales net million the expect guidance to low-single-digit For compared increase sales. be We revenue year, single-digit net to low-to-mid

to fiscal year. is Gross expected be XX.X% XXXX for XX.X% last XX.X%, compared to margin to

of to offset Chinese efficiencies operational and fully be are Sourcing expected tariffs. the by impact

expense full-line $XXX million million expenses million associated new $XXX $XXX closures. total year, locations, between and compared year, for with last the SG&A partially store We by store to expect offset to incremental reflecting factory

We range $X.XX $X.XX expect from $X.XX will EPS full-year to year. last to compared diluted

balance the estimates. in year, gross A negatively only point to to tariffs XX List basis year, note we on estimated the for impact points $X.XX by be of will per about is equating the our or points The tariffs of for tariffs believe gross basis impact the affect to With moving to margin to fiscal reflected share. approximately tariffs. XX share. per $X.XX would aforementioned XXXX incremental XX% X We margin previously XX the basis $X.XX

There not List $X.X $X.XX affect timing affect impact of to tariffs XXXX of that will shipments. or not expense be capitalized incremental million per majority will the fiscal – The of actually due fiscal duty will XXXX, X XXXX. approximately XXXX, negatively share fiscal will

results. do the we of included our believe not not implementation implemented, have material tariffs fiscal have will X given the We List timing. effect impact a If fiscal uncertainty of XXXX in XXXX on estimates, they

expenditures expect total technology compared with enhancements. reflecting $X.X last new investments million logistic to stores and in $XX We capital year, million approximately factory and

flow fiscal to XXXX. generate Rob? operating in cash to $XX in We million expect $XX million

Robert Wallstrom

Thanks, John.

of me I our focus beginning mentioned areas this Growth, Ownership. year you give on And update each. key Excellence our on As an of at let the Operational and are call,

off in are great returning to We sales this to growth positive a year. start

are and and our product, brand customers innovative our supported and the We customers our engaging to compelling bringing with by new experiences. customer marketing current

Travel, key front, Gifts, Beach our XX franchise we areas the like as On dominance build well in top continue items. and to our Campus, product as

Our pattern is more consistent. performance

becoming our assortment, new innovation product innovations. and authentic Our is our to products fabric important true styles and functionality offer are to that more including brand, but

continue the of piece business, important most is high our lightweight, will add performance cotton to we While the mix. to fabrics

Collection in performance We several and results been Twill have our great. August. The in introduced new tested stores be have the collection will full

novelty our customers special Our growth. our excitement momentum and partners Offering brand centered a limited-edition collaboration of with to limited seasonal capsule for unique and urgency shop. our to collections periods around sense and increases provides collection, or exposure add

out limited-edition in online profile high The mini We of months. March matter a launched collection a and sold in Girls collection product announced New the collaborations last several in hours. three Hope

women provides girls is organization vulnerable Girls non-profit a in for Hope and education refuge that New for Republic. the and Dominican jobs

a of we a launch The the and fall's match. Park continues of was collection are to overwhelming off last end at perfect success Theme collaboration, and with Vera that the partnered create an XX-piece and at pattern limited-edition Merchandise Disney March. a Building collection novelty Bradley success to DISNEY the sell once brisk Disney launched again pace.

magical fans creating committed we both many our also enthusiasts. Bradley of and know experiences, huge that are moments We Disney customer fun to and are Vera

selection Venus a The Vera Venus popular Bradley Vera the features Gillette announced on Bradley. a core grooming Vera fashion edition of special Gillette Venus's and shaving first April, and design In collaboration + with Bradley collection products.

are iconic with to brand. honored We very this work

Vera thoughtful Target quickly since that are and this in launch collection locations The Target's that. have and to collection available The been beautiful Bradley on for does currently been online target.com. out one strives Venus at and have number solutions store. razor create is sold since just + Venus Bradley and replenished women selling functional the Vera products and both nationwide

and beautiful, Pacific debut to partner stores. support May, Asia and and collection we reach international of expansion This brand our drinkware Starbucks, future to their of points, and to expand create collaborative will of products are myriad accessories Pacific, with we our awareness Starbucks help distribution to excited broaden announced international fun Asia strategy. potential customers with for collection In the collection unique a a and a a closely us

to too. that partner aspiration to that Starbucks bring lifestyle passion delighted their fun experiences and like Bradley align unique and we noted team to are they The with are Vera with brands delighted for customers, a modern

and attract like Gillette brand. ability such Disney, a of strength Our to amazing testament is truly the to our Starbucks partners

Stay iconic, and rollout product exciting are future. other in the will collaborations working We that other with brands tuned. internationally-known

our excited I organizations these Moving have to the customer last share marketing and us growth and with on and year to teams digital Hull been working and our digital that am to progress marketing. accelerate made. Daren has joined the middle of

of rollout our reflect first customer Our of in-sourcing strategic results quarter data strong in platform. customer new our the initiative team data progress our and

actively are customer gained mix. insights our We to using adjust data marketing our from the we

result, And seen the four as the we very we as double-digits a To quarter we in count positive Vision business these data brand see analytics. three quarter. hires the The made this We accelerate the over have areas saw results in during in and science accelerate process. progress years. in of our for progress, key XX/XX positive pace customer fastest customer

our We from investments seeing are excited also media partnerships. and our about the in agency we are results digital

and from revenue channels year-over-year. have improved directly visits Online solidly marketing digital derived

to experience we inspirational, are on fiction channel. a and engaging going the e-commerce, free. into to are We dollars best-in-class creating In continue optimize is digital that focused

content adding and vibrant consistently to website our our are messages. marketing We

not mobile-friendly new improved to only times In experience accelerates creates a the the greatly a features first but this launched and product better for and also which functionalities, showcases visualize helping our detail customer by our load paid quarter, XX%, better page, customers. product, mobile we

also e-mail programs throughout driven open and Engagement quarter. and continued e-mail personalization our our models. in results were by new rate this storytelling increases Positive improved

that We while These e-mail time at attributable full-price same circulation. have reinforce revenue relevance matters. reducing to seen the improve, results

the continue Our Vera on we be capabilities, and significant our personalization for communications we relevant in our influencer targeted with expanding remain results and important in brand Bradley to continues purchaser. quarter. engagement focus can the saw so collaborations the and Brand

our select as with mutual patterns brings which female Tour, stores, country CMT Vera partnered of of music. she Bradley she for Country Cassadee Bradley made personal music In Next Women She fans country star love where their April, over the to connected Vera headlined in Pope designs. and the appearances with iconic forefront voices fresh

heightened generated more well as and Cassadee with Gillette, our the Hope as show The enormous partnership buzz. New increased over a Starbucks, last Pope our relevance Disney, media with of than Girls, first and and XX% collaborations year's Media all strength quarter. impressions brand

impactful our and marketing social part will support community we our plans, As media of a engagement and key continue initiatives. charitable

build brand a we will to affecting and positively initiatives this children has long of of Our continue and area. lives history in the women

Golf place Bradley raised We Blessings over season. research. this Breast annual a past for back-to-school look cancer to Classic breast Cancer for partnering Foundation with $X once Backpack and Vera this Our again weekend in took million forward

distribution We will each of work channels in to in fiscal our grow sales XXXX.

enhancements our the and just stores, the enhancing assortments. highest You are In arena, on our our in paying heard our experience about which full-line focusing customer further we are stores, off. localizing potential e-commerce

end the We potentially closed full-line this stores following XX We our two year, in of XX up expect to the full-line fiscal eight had XX approximately we this an more could to and stores. stores total fiscal closings XXXX. first quarter year. full-line the beginning the stores quarter, additional bring since which to of underperforming will close At close

performance year, to highest factories This expand six the Carolina; locations and model, Mississippi, Lehi, pricing we refining In adding Southaven, to by factory performing are Arizona; Phoenix, our first opened Hilton Utah. Texas and our stores maximize beginning in we South Lubbock, new Head, quarter, stores. working

began Branson, stores factory factory locations These Florida XX year. end Sevierville, volume will in stores. plans Destin, we later relocations quarter, had Missouri. the and of this and expanded open also for At We the our of top three expansion Tennessee;

full-line an a associates model that factory the our higher rolled in percentage experience industry-leading in meets customer our that of much customer our store service We focus to us to competitors. full-line that our often saw service creating beats continue add and priced customer customer engaging scores stores quarter. satisfaction and X out on We new points to first both with

lapsed In centered re-engaging the specialty accounts. growing on channel, efforts top and are our accounts

and in include of operational in our this The addressing strong strengthening investing accelerate in on in compete and growth, new order continues foundation pace will technology. to retail change our to focus we establish business world Chinese Our technology, excellence update for processes must tariffs.

of project two-year We systems. are data conversion allowing will current of This experience platform on embarking and customers and reducing adding functionality systems will by become and our a off myriad more us that and our a in result driven to systems, complexity overlap decision the speedy, revamp making. more to new the our enhance agile

phase will design full early begin implementation summer The this XXXX. with expected in calendar

sourcing efforts. and the mitigate of Chinese to continue We impact tariffs to work through pricing

year-end. expected our our to with continuing are XX% about We decrease China, to reliance on drop to production in the by China

and Finally, continue are into will culture model we organization. to associate their has customer-centric and significant build agile, drive an a ownership-based value we every creation our moving And innovative, efforts. where individual the framework data-obsessed to more to team through

brand is Our strong.

remarkable Our and is team future bright. our is

to a made to in great last begun the have year, growth. healthy strides our and foundation Over we Company to return restoring have

double-digit earnings goal Our year-over-year deliver to growth remains year. this

journey looking are completing XX/XX growth. We forward our on to Vision and continued focusing

of future about our optimistic brand the Company. are our We and

to And up call operator, the we now open will questions.

Operator

Please question from our We'll Instructions] take Mark go first Altschwager you. [Operator ahead. Thank with Baird.

Unidentified Analyst

your Nice the on promotional full-price outlets? channel terms first to been Hey, question. late? and the can the for updated guidance My outlet stores activity reflect plan. as is trends believe anything my the has your your fairly versus of XX/XX your embedded year? It's promotional different margin Does of for in I discuss Mark. taking year progression you for start Thanks on Connor guys. in question

Robert Wallstrom

in it. in stores all, are terms our definitely right what are of our the say First and business down of terms full-price they factory I now of full-price so e-commerce performance, business, can breaking leading outpacing is our

margin terms Chinese the it of As the promotional that's really numbers. the impact margin. margin, reflect impact through does in increased at It we is pressure not on look our gross tariffs working of

John Enwright

performance, the embedded number remainder for then for Connor, we the expected And year. the promotional have cadence that into full-year the of

Unidentified Analyst

Thanks. one I guess just then Great. And more.

a year balance. with You had to you action cash the more the balance? How a cash priorities through cash take strong at point, about what this investors need aggressive should see think for to and really your do

John Enwright

Yes.

we've of in uses We're on conversations year of first kind think going cash of this getting use the of were we our best of about XX/XX. cash the the Vision of internally Last spoken I forward. having fairly with kind and conservative now past. the strategic through Board So, with year, kind

continue this year, progress will year. a repurchase So spending we we the $X year, to we later repurchase but little right this through to we're that share as in currently shares to still speak our bit plan, and now million towards spent

the uses cash on So kind would conversations. come we're having because what I of think currently to strategic of be more

Unidentified Analyst

you. Thanks. Best luck to of

John Enwright

Thanks.

Operator

Oliver with We'll Chen take from Please our ahead. Cowen go and Company. next question

Jonna Kim

question, for Jonna is selling seen would performance your your just curious today. you just another given full-price value any this on year? customers for of last lot on this your Thank color Thanks this great. could that you performed our highly how provide just year be back And migrating I'm Oliver versus channel? your And taking about full-line to a partners Hi, deep environment, you. promotional question. have if retail quarter

Robert Wallstrom

Yes.

our terms about all, full-price to of performance, the XX% for First of in see in performance, improvements significant we first up quarter. full-price continue

our So, our we're we customers continue continuing of really overall to beginning growth. outpace to our see strength And to there. see customer are reactivation real

brand are we reengaging customers year. with this So, seeing the

Jonna Kim

that the what partners, can helpful? just color will they any be you that And it. this retail Got provide, quarter, saw

Robert Wallstrom

our When speaking you retail you you speaking of…? or are Indirect partners, say partners to kind are specifically to

Jonna Kim

partners. Indirect Yes.

Robert Wallstrom

Yes.

of Bradley so specialty are in about very been I think hearing the hear encouraging stores, terms channel the well our of lot overall, to their in from a sell-throughs has Vera strength performing that particularly Indirect in we partners them. and

Vera channel. Bradley the see performance are So, we to in in strength beginning some that

Jonna Kim

so you it. Got Thank much.

Operator

C.L. go will Instructions] Steven & King from ahead. next Associates. take question our Please We Marotta with [Operator

Steven Marotta

year China us a you from can Daren. Good standpoint. morning, the Rob, John, exposure where and started remind just Rob,

You year-end. the XX% mentioned did wanting year to begin? be Where at

John Enwright

So, ended John. this last year, we is – Steve,

were we to So, so perspective, we XX%, take expect ended last at that a year was where we China to XX%. it from down

Steven Marotta

fast. that. now? that buying new And can you bit pretty the customer you about customer opting Congratulations have, on ticket increased little from are the in profiles right or can either that the average talk intent, an existing any talk a Do gleaning insight That's can you tell, to best versus you're about them that they list? frequency,

Daren Hull

Hi, this it different Daren. I'd two is look at ways.

new to how adding get of formula customers and of we're diversity to and same still I we're base. buy loyalty focused mix, to frequency through think, on that current the with working some add customer customer one, them our our existing the

alluded frequency to stronger seeing ago. Rob a lot We're moment it reactivation We're last than saw very obviously a seeing in what we strong QX much in of year. QX.

encouraged but new and we're customers of products what we're mix both bringing our by that the picking we're we're the up, through working fold. the into So, still

Steven Marotta

You Great. expected? basis that please didn't now mentioned which again the And just points – John, message the what the tariff were you could it. basis you that garbled. understand to was again? points about got of Can I is impact – expected? sorry there was differential XX That what review in year, actually XX I'm current talk

John Enwright

Yes.

to which year, XX%, anticipate our embedded point List impact point basis to XXXX that Chinese of XX of on with previously impact based an XX X $X.XX the about We timing the or on we've – being So point moving impact for current sort additional that tariffs would expectations. I basis based X have receipts. only we basis XX communicated in List to XX% at a

that got List comes real impact be we with we Now to what to as regards little we embedded a In XX% anything year. moves $X.XX to garbled to year not talking have ultimately, the of bit X a were impact probably this about roughly just if year. might have that, immaterial expect X, has next associated but List pass, next

them. we when expect for on how receipts and take based those Just to will we account

that XXXX X to XXXX. when impact about XX% So will be goes List more versus

Steven Marotta

next do China penetration year comment, to think what like you will fiscal you be? of Would

John Enwright

X Our based that bring if goal to XX%, goal goes number List our – is is on down.

teens in think the we'd to intent be intent. don't where it that up, would the teens. think I know bring I our but down be I in end would the

Steven Marotta

Very helpful. Thank you.

Robert Wallstrom

Thanks, Steve.

Operator

time, this questions. further at And are there no

Robert Wallstrom

you thank us So, for joining today.

We launched X. earnings have and for see we with focus growth on our especially glad XX/XX second Wednesday, quarter are are in on since to we We the you we scheduled pleased momentum this first year. Vision speaking quarter look made September progress as call the with forward to

Operator

This call. you concludes today's Thank participation. your for

may disconnect. You now

Vera Bradley (VRA) 5 Jun 192020 Q1 Earnings call transcript