Vera Bradley plans $20 million cost cuts in FY 2026

FORT WAYNE, Ind. - Vera Bradley , Inc. (NASDAQ:VRA) has announced an initiative aimed at reducing its annual costs by approximately $20 million starting in fiscal year 2026. The strategic cost efficiency initiative is part of the company's broader Project Restoration, designed to increase profitability and shareholder value. According to InvestingPro data, this move comes as the company faces challenges with profitability, showing negative EBITDA of $3.46 million in the last twelve months.

According to Jackie Ardrey, Chief Executive Officer of Vera Bradley, the initiative will streamline business operations and focus on critical business priorities by significantly reducing outside vendor contracts and spending. These actions are expected to begin early in the year and will be fully realized in the fiscal year 2026. With revenue declining by 16.37% and the stock trading near its 52-week low, these efficiency measures appear timely. InvestingPro subscribers can access 12 additional key insights about Vera Bradley's financial health and future prospects.

The anticipated savings will impact both selling, general, and administrative expenses, which are expected to account for approximately 75% of the cost reductions, with the remaining savings affecting gross profit. The company has clarified that the projected savings do not include any one-time costs associated with the efficiency plans.

Vera Bradley, known for its distinctive handbags, luggage, and accessories, operates alongside Pura Vida, a lifestyle brand offering jewelry and accessories. Both brands share a focus on community, charity, and social consciousness, with a multi-channel distribution strategy and a commitment to long-term brand success.

The company has indicated that it will provide more detailed guidance for fiscal year 2026 in March 2025, in conjunction with its fourth-quarter financial results.

The information in this article is based on a press release statement from Vera Bradley, Inc.

In other recent news, Vera Bradley Inc. reported a significant earnings miss for its third quarter of 2024, with an earnings per share (EPS) of -$0.27 compared to a forecast of $0.19. This disappointing result led to a net loss of $7.5 million, a stark contrast to the previous year's net income. The company's revenues also declined significantly across key segments, with a 27% decrease in the Vera Bradley Direct segment. Furthermore, the company's cash reserves have dwindled, potentially impacting future operations.

Despite these setbacks, Vera Bradley is focusing on Project Restoration and brand collaborations as key strategic initiatives for future growth. The company's CEO, Jackie Ardrey, expressed confidence in the company's strategic direction, stating that Project Restoration is the right path forward for the long-term health and positioning of Vera Bradley.

Looking ahead, Vera Bradley expects full-year consolidated net revenues of approximately $385 million, with sales anticipated to decrease in the mid-teen range. The company projects a consolidated operating loss of around $9 million and an expected EPS loss of $0.25 per share. These recent developments highlight the need for investors to keep a close eye on Vera Bradley's performance in the coming quarters.

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