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The company's unique fashion-statement purses appeal to younger demographics in a price range of $28 to $128. This design niche seemed very promising with the company's IPO in October 2010 at $23. But after a quick peak above $50 in the first half of 2011, it's been all down hill.
Drop that Bag
In its June 5 earnings report, the handbag maker cut forecasts and said its CEO was leaving as inventories were bulging, soaring 41% from a year earlier. The stock dropped over 10% the next day, bouncing off of $19.50 as investors scooped up shares and prevented a new 52-week low, which was exactly one-year ago today at $19.26.
"With wholesale revenues continuing to weaken and same-store sales flattening out with just 85 stores, top-line growth continues to come into question," said an analyst from Sterne Agee.
The CEO switch did not impress analysts either with CEO Michael Ray's pending departure coming just 5 months after CFO Jeff Blade left. But it was the guidance which dampened sentiment the most.
The company announced they expect Q2 EPS of $0.31 to $0.33 on revenues of $123-126 million vs. analyst consensus expectations of $0.39 on revenues of $136 million.
VRA also lowered its FY14 guidance, seeing EPS of $1.74-1.78 on revenues of $570-575 million. Analysts were looking for EPS of $1.81 on revenues of $591 million.
Subsequently, analysts at Piper Jaffray, Wells Fargo and Baird all cut their ratings and estimates on the stock. Here's how the forward view of earnings has taken shape over the past year while VRA has frequently been a Zacks #5 Rank Strong Sell or #4 Rank Sell.
As VRA sits near all-time lows just above $20, some investors may be looking for a turn-around. But until the earnings estimate picture changes, it's probably best to wait.
Kevin Cook is a Senior Stock Strategist with Zacks.com