FILE - In this Monday, Dec. 10, 2012, file photo, workers sort packages at a FedEx sorting facility in Kansas City, Mo. FedEx is more pessimistic about the U.S. economy than it was three months ago, but more assured of its own ability to grow earnings. The world's second-largest package delivery company lowered its economic forecast for the U.S., saying that there remains a lot of uncertainty for the company and the country. Its forecast for the current quarter, which incorporates the critical holiday season, falls short of Wall Street expectations. (AP Photo/Charlie Riedel, File)

Ahead of the Bell: Vera Bradley

Published: 12:12:25 PM, Thu 14 March 2013 UTC

NEW YORK (AP) — Shares of Vera Bradley may come under pressure Thursday after the women's accessories company provided fiscal first-quarter and full-year 2014 forecasts below Wall Street expectations.

Late Wednesday the company said that it anticipates first-quarter earnings between 20 cents and 22 cents per share on revenue of $120 million to $122 million. Analysts surveyed by FactSet predict earnings of 35 cents per share on revenue of $131.5 million.

For the full year, Vera Bradley Inc. expects earnings of $1.83 to $1.88 per share on revenue of $585 million to $590 million. Wall Street was looking for $1.89 per share on revenue of $598 million.

The company's stock dropped more than 3 percent in after-hours trading on Wednesday. They closed at $24.89 on Wednesday,

William Blair's Amy Nolin lowered Vera Bradley's rating to "Market Perform" from "Outperform." In a client note, the analyst said that she believes in the company's brand and its growth potential long term but that it is offset by near-term concerns about issues such as excess inventory and a 2013 earnings outlook that assumes there will be a meaningful pickup in business during the second half of the year.

Ike Bochco of Sterne, Agee & Leach cut Vera Bradley's price target to $20 from $22, saying that the lackluster first-quarter outlook overshadowed its better-than-expected fourth-quarter results. The analyst said that the retailer's revenue growth is slowing and its inventory level is up 23 percent and could be up 40 percent to 45 percent at the first quarter's end. If the inventory level continues to rise it could pressure gross margins and be a serious concern given the slowing sales trends, Bochco said.

"Vera Bradley's long lead times and low turnover may cause inventory issues to linger, as evidenced by the 18 to 24 months it took to recover from its last inventory problem (less than three years ago)," he wrote.

Bochco maintained an "Underperform" rating.

Tags: ap, factset, leach, william blair, vera bradley inc., vera bradley, cents, income, wednesday, first-quarter earnings, after-hours trading, forecasts, women, earnings, revenue growth, price target, percent, wall street, stock, wall street expectations, business, company, analysts, stock market, revenue, shares, share, new york, analyst, accessories company, client note, the analyst, late wednesday, outperform, agee, sterne, earnings outlook, inventory, extended hours trading, underperform, better-than-expected fourth-quarter results, gross margins, excess inventory, sales trends, inventory level, fiscal first-quarter, long lead times, inventory issues, lackluster first-quarter outlook, bochco, potential long term, ike bochco, amy nolin, near-term concerns, low turnover, meaningful pickup, inventory problem

Close
Loading
Close