Vera Bradley Benefits From Discount With Inventory Headed South, Says Analyst - Vera Bradley (NASDAQ:VRA)

  • Small Cap Consumer Research analyst Eric M Beder reiterated a Buy rating on the shares of Vera Bradley Inc VRA with a price target of $9.00.
  • The analyst said the company’s Bright Friday sale, which began the week before Black Friday, drove in shoppers looking for a solid bargain.
  • Further, the analyst added the last two weeks before Christmas have been very strong, as multiple new price cuts, incremental items added to the door buster mix.
  • Also, an incremental 10% price cut for Holiday driven patterns drove spending on key patterns, items and categories, added Beder.
  • When Vera Bradley hit the key price points or discounts, the customer was ready willing and able to make aggressive purchases, the analyst said.
  • The Holiday demand remained very strong, with the customer savvy for getting the best price in full bloom, cited the analyst.
  • Items in the Holiday driven categories have aggressively sold down, said Beder.
  • The analyst believes Vera Bradley is increasingly nearing the mission of lowering inventory levels and returning to a more normalized flow of goods as the company enters FY23.
  • The analyst has projected a Y/Y gross margin decline of 230 basis points from already depressed levels in 4QFY22, and view the drop as a necessary cost to move forward after a tough FY23.
  • Beden remarked that pockets of full priced licensing items are still selling down.
  • There has been no slowdown in demand for travel driven goods said the analyst, as the Vera Bradley customer continues to plan for Holiday and resort travel.
  • As such, while margins have remained under pressure, the analyst believes Vera Bradley is well under way to achieving lower inventory levels and creating a somewhat clean slate for Spring and the first fiscal year under new CEO Jackie Ardrey.
  • Price Action: VRA shares are trading higher by 0.36% at $4.14 on the last check Tuesday.
  • Photo Via Wikimedia Commons

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