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Vera Bradley, Inc. Message Board

  • sjsrhs sjsrhs Aug 21, 2013 7:55 PM Flag

    Told you the bag is as drag

    Do the math, stores are empty and if you do the math at best they are worth 3 to 5 bucks a share.

    Sentiment: Strong Sell

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    • That's ridiculous. This company generates approximately 33% return on its net tangible assets ($69 mm / $194 mm). As the company reinvests its earnings into new stores and new distribution centers, and replenishes its working capital, you should see a similar return on that capital.

      Of course, we can't buy the company at book value. We pay far above book value. Still, it's far better to buy a wonderful company at a fair price, than a mediocre company at a wonderful price. Shareholders will do well holding Vera for a long, long time.

      • 1 Reply to jtuck10787
      • The companies stock is going to be under pressure until they lap the drop in indirect(wholesale) sales.

        Last quarter wholesale sales dropped 8 million and was more than made up for by retail sales, but the profit dropped because while the gross margin on retail is higher the sga from running their own stores made the profit drop. In addition the cost of opening the new stores adds to the quarterly expenses and does not add to the bottom line until after they are open.

        At the end of last quarter the company had 85 stores open, they currently have 97. Some of the pre opening expenses had to be in last quarters numbers and the opening expenses will fall into this one.If the indirect sales number follows last quarters trend sales in that channel could drop 5 to 10 million again, unless they add some fairly large customers to make up for the drop in sales.

        At the rate the company has been adding stores and the sale growth in online sales could put the direct sales at over 75% of the business by the holiday season. With a possible flat or down profit number for next quarter and growth in inventory due to the fact that when you have stores you carry the inventory until the end purchase is made could allow downward pressure to be placed on the stock for the next few months. That being said this is not a bad entry point to nibble on a few shares.

        If the company has same store sales drops at their stores there could be continued pressure. but if the numbers continues to rise the stock could start moving up again.

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