By Lisa Beilfuss
Vera Bradley Inc. said profit tumbled in its latest quarter, as the handbag retailer continues to struggle to turn itself around amid lower traffic and a steep drop in a key sales metric.
Results, however, beat the company's downbeat guidance and the company lifted its full-year guidance.
Vera Bradley, which has traditionally relied on its cotton-quilted products to drive business, has been struggling to sell customers on a revamped assortment of laser-cut, leather and microfiber handbags. Chief Executive Robert Wallstrom has acknowledged that the company hasn't attracted enough new customers to the brand, and the CEO has expressed frustration that the progress the company has made isn't showing up in its financials.
The company has also been trying to reign in profit-eating promotions. Other handbag retailers, including Coach Inc. and Kate Spade & Co., have similarly worked to cut discounts, but with mixed results.
Mr. Wallstrom on Wednesday said Vera's same-store sales trend began to improve toward the end of the quarter, thanks to new product offerings. Still, second-quarter sales at stores open at least a year plunged 15% while online sales dropped by a similar rate, amid lower traffic and reduced promotional activity.
"We have made meaningful progress but know our turnaround will take time, " the CEO said.
Overall, Vera reported a profit of $5.7 million, or 15 cents a share, down from $7.6 million, or 19 cents, a year earlier. Revenue edged 1.5% higher to $120.7 million.
The company had guided for per-share earnings of 10 cents to 13 cents on revenue of $116 million to $120 million.
The retailer, which earlier slashed its outlook for the year, now expects to report 72 cents to 78 cents in earnings per share, up from earlier guidance of 64 cents to 74 cents and above the 66 cents analysts have predicted.
Shares in the company, which have erased about 49% this year, were inactive premarket.
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