Handbag maker Vera Bradley shows off 1st earnings since IPO

Fort Wayne-based handbag designer Vera Bradley is off to a fashionably fast start, with its first public report of quarterly earnings showing revenues up 26 percent, even though profits took a hit to pay for the company's initial offering of public stock. On Tuesday, the first opportunity for a public peek into the coin purse of the once privately held company showed a drop in quarterly earnings, which was caused by expenses of the initial public stock offering Oct. 21, despite a 26 percent increase in revenues. For the third quarter ending Oct. 30, Vera Bradley's net income was $5.99 million, or 17 cents a share, down from $12.76 million, or 36 cents a share, for the same quarter last year. The quarter was impacted by changes in the company's income tax status and by a $15.7 million charge for restricted-stock awards to company owners and executives following the IPO. On an adjusted basis, the company reported quarterly income of $8.95 million, or 25 cents a share, on the 36.2 million outstanding shares of company stock. Except for the costs of launching a new publicly traded company, Vera Bradley beat the expectations of analysts polled by Thomson Reuters who expected the newly traded company to report earnings of 21 cents a share. Net revenues for the quarter were reported at $91.6 million, compared with $72.7 million for the third quarter last year. That also beat Wall Street's expectations that net revenues would be $88.65 million. In a conference phone call after the close of Wall Street trading Tuesday, stock analysts quizzed company executives about how the company can continue to show such lofty results, particularly in challenging times for retailing. "Our solid sales momentum continued during the quarter, reflecting the strength and expanding appeal of our brand, the ongoing loyalty of our customers and the strong response to our product offerings," said Mike Ray, the company's chief executive officer. It's only been in recent years that founders Barbara Bradley Baekgaard and Patricia Miller took direct charge of their product's sales online, wrestling that from some independent shops. And the company began about six years ago to create a Vera Bradley-branded shop, beginning with stores in Indianapolis-area malls. Now, the company sells through a network of some 3,300 retailers -- but not with the big-box or department stores. Those "indirect" sales were up 10 percent to $59.8 million in the recent quarter. The 74 percent leap in sales to $31.8 million in company-owned stores reflected same-store sales growth of 32 percent from last year. The company's shares closed Tuesday at $35.73, down 49 cents. The stock price has more than doubled since its October debut.