Vera Bradley Incorporated reported its second quarter (Q2) sales up 11.6% compared to last year. The company operates two unique lifestyle brands under the names of Vera Bradley and Pura Vida with both brands having a devoted and loyal customer base across multiple generations. Vera Bradely is a lifestyle brand of quilted-cotton luggage, handbags, and accessories and Pura Vida is a digital native brand of jewelry and accessories. The company has its own stores and sells online while also distributing products through other retailers.
The company closed many of its stores in 2020 because of the pandemic, but customer loyalty continued to grow with sales reaching $147 million for Q2 — 23% over the 2019 pre-pandemic levels. Rob Wallstrom, CEO of Vera Bradley, Inc., stated, “We posted a consolidated year-over-year second quarter revenue increase of nearly 12%.” However, the positive results were achieved despite major issues with the supply chain that continue to plague the retailer and the industry as a whole.
Supply chain issues abound for many retailers
Wallstrom discussed the continued issues with the supply chain that have plagued the retailer and the industry. Higher tariff and freight costs have impacted transportation expenses which impact the gross margin. Additionally, port congestion and factory closings due to COVID have slowed product delivery. Wallstrom said in the earnings call, “We did not anticipate having continued supply chain issues going into the second quarter and we did not anticipate having to use as much air shipping.” The company has had to ship more products by air as opposed to by sea, in order to get them into stores in a timely manner. Air shipments are more costly than sea shipments which inflates the cost of goods. Wallstrom added, “We had to make decisions about which products to ship by air versus by sea and it is a very complex process.”
While the average unit retail (the amount spent per customer) is up over last year, the company is having internal conversations about raising prices on some products to offset the increase in the cost of goods. Wallstrom stated, “We are taking a surgical approach in understanding which products will warrant price increases.” The gross margin has slipped in Q2 of this year from both 2020 and 2019 levels, coming in at 54.6%.
MORE FOR YOU
Apple IOS 14.5 update negatively impacted Pura Vida sales
The new Apple IOS update has changed privacy and app tracking data which has negatively impacted digital native brand Pura Vida. Marketing for the Pura Vida brand has previously been highly successful using Facebook and Instagram advertising and consistently ranks as the number-one engaged brand in the jewelry category on Instagram. Based on the Apple update which limits customer app tracking, Pura Vida is looking to expand its marketing initiatives across more platforms including Google SEO, email marketing, and other social media platforms like TikTok and YouTube. Additionally, the company discussed store expansion plans for the Pura Vida brand which will provide better customer data and the ability to optimize analytics to drive loyalty. Wallstrom said, “We expect Pura Vida revenues will continue to rebound in the second half of the year.’
Expanded distribution and new product categories will drive future sales
Vera Bradley Inc. announced 250 new distribution outlets including Nordstrom
Community driven and customer eccentric
In August, Vera Bradley continued its longstanding partnership with Blessings in a Backpack, and, with the help of its customers, is donating $100,000 (bringing its total donation thus far to $750,000) to further support the nonprofit’s mission of providing food to the millions of elementary school children across America who might otherwise go hungry. The partnership supports Vera Bradley’s VB Cares initiative and its mission of “Brightening Futures” and empowering women and children by building a world that is more welcoming and inclusive.
Vera Bradley Foundation For Breast Cancer has contributed $36 million for Breast Cancer Research and is hosting its annual event in September.
Vera Bradley’s core strategy in 2022
Wallstrom echoed the same comments from the first quarter in the Q2 call saying the company remains focused on its core strategy including, driving a digital transformation, continued product innovations, building community connections with a positive brand movement and expanding the distribution model.