Vera Bradley Inc.'s shares fell Friday for the second straight session, after the handbag maker cut its full-year guidance and said that its CEO plans to retire.
THE SPARK: The Fort Wayne, Ind., company cut its full-year profit forecast to a range of $1.74 to $1.78 per share. That's down from its previous forecast of $1.83 to $1.88 per share. It also reduced its fiscal year revenue projection to a range of $570 million to $575 million. It previously expected $585 million to $590 million.
Analysts polled by FactSet expected a profit of $1.81 per share on $591.8 million in revenue. The average estimates have since been reduced to earnings of $1.73 per share, on $574.6 million in revenue.
Vera Bradley also said that Mike Ray, its CEO since 2007 and son-in-law of a company co-founder, plans to retire. Ray plans to stay on until a successor is named.
THE BIG PICTURE: Vera Bradley is known for its colorful handbags and accessories.
The company gave the disappointing outlook after the markets closed on Wednesday, at the same time it reported a first-quarter profit and revenue better than Wall Street expected.
THE ANALYSIS: Sterne Agee analysts Ike Boruchow and Tom Nikic said that the drop in the company's stock price now better reflects its value and remaining risk. They raised their rating on the stock to "Neutral" from "Sell" and set a $20 price target.
In a note to clients, they said Vera Bradley continues to struggle with slow sales, inventory issues and other matters. But the analysts believe the company's plans to slow growth and being in a new CEO, among other changes, could prove beneficial.
SHARE ACTION: Shares fell nearly 59 cents, or 2.9 percent, to $20.11 in afternoon trading, after dropping nearly 8 percent Thursday. The stock is nearing the bottom of its 52-week trading range of $19.26 to $31.
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