• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Consumer Discretionary

Better Days Ahead For Vera Bradley

Specialty retail is indeed a tough area, but in classic form, markets have overly punished a number of them.
By JONATHAN HELLER
Jun 06, 2018 | 01:00 PM EDT
Stocks quotes in this article: VRA, SHLD, JCP, HIBB, CATO, BGFV, FOSL

Score another small victory for specialty retail, a hated sector that has been on the comeback trail over the past several months as Real Money Sweet Sixteen pick Vera Bradley  (VRA) put up decent first quarter results, and upped guidance. Through yesterday, shares were up 28% since RMs Sweet Sixteen feature ran in March.

VRA beat consensus earnings estimates by 6 cents, posting a 4 cent loss (versus 10 cent loss consensus). Revenue came in at $86.6 million, slightly below the $88.25 million consensus. The company increased full year 2019 revenue guidance to $405- $422 million, versus the $411 consensus estimate. It also increased 2019 earnings guidance to 40-50 cents, versus a prior range of 35-45 cents, and the 42 cent consensus estimate.

What's more, the balance sheet remained solid, which was a major reason I took a position in this much-disliked company in the $8.80 range last June. The company ended the quarter with $132.3 million or $3.72 per share in cash and investments, up from $101.4 million or $2.80 per share when I took my initial position. VRA also remains debt free. The stock currently trades at less than 2.6 X net current asset value (current assets minus total liabilities), a cheap valuation which shows the disdain that markets have for the name.

Like many of the small specialty retailers, VRA has been a major disappointment to investors, especially those who bought shares early in the company's history as a publicly traded company. After its $16/share IPO in October 2010, shares eclipsed $50 the following May, but it's been mostly downhill ever since. Shares closed yesterday at $13.07, 18% below the IPO price.

Specialty retail is indeed a tough area, but in classic form, markets have overly punished (in my view) a number of them, especially since last summer. This does not include the old time, big box retailers such as Sears (SHLD) and J.C. Penney's (JCP) of the world, which sadly, continue to die slow and painful deaths. The presumed deaths of some of the smaller names, however, such as Hibbett Sports (HIBB) , Cato (CATO) , Big Five Sporting Goods (BGFV) , Fossil (FOSL) , and VRA, however, were a bit premature. Will they be around in 10 or 15 years? That's hard to say. However, over the past year or so, they have been rare opportunities, a deep value investor's dream; a significant market inefficiency.

As for VRA, it may not appear exactly cheap at 27 X next year's earnings, but better days may be ahead. In addition, still a solid well-known brand name despite its stumbles over the years with a current enterprise value (market cap plus debt minus cash) of just $277 million, it might make an interesting acquisition candidate for a bigger fish looking to build out its brand portfolio. In this case, however, insiders, which own nearly 40% of the company would have to be on board.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Jonathan Heller was Long VRA, HIBB, CATO, BGFV, FOSL.

TAGS: Investing | U.S. Equity | Consumer Discretionary | E-Commerce | Stocks

More from Consumer Discretionary

The Sagas of a Cruise Operator and a Burger Joint Continue

Jonathan Heller
Feb 24, 2021 10:00 AM EST

Carnival Corp. continues to sell debt and equity as it works to stay afloat, while Steak n Shake deals with problems of its own.

A Furniture Seller and Footwear Retailer With Room to Run

Bret Jensen
Feb 24, 2021 8:46 AM EST

Hooker Furniture and Foot Locker recently raised their dividends and could provide more upside to buyers of the shares in the months ahead.

DoorDash's Charts Tell Me to Stay Near the Exit Door

Bruce Kamich
Feb 22, 2021 8:55 AM EST

Buyers of DASH are not being aggressive.

Ruth's Hospitality Group Serves Up Medium-Rare Charts

Bruce Kamich
Feb 19, 2021 8:28 AM EST

The pace of the advance in the steakhouse operator's shares has been slowing and volume is shrinking, too, so be cautious.

Norwegian Cruise Lines? Get Off at the Nearest Port

Bruce Kamich
Feb 17, 2021 1:00 PM EST

The charts suggest that people will continue to be disappointed.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:29 AM EST GARY BERMAN

    Where Does the Nasdaq Go From Here?

    Where does the Nasdaq Composite (CCMP) index go fr...
  • 12:31 PM EST GARY BERMAN

    Has the Short-Term Top Come for the XLF/Banks?

    The has triggered a long-term overbought signal ...
  • 10:10 AM EST GARY BERMAN

    DLTR: The Buck Might Not Stop Here, but I Am Looking for a Bounce

    Dollar Tree is trading inside our long-term boun...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login