Category: Consumer

Release – Vera Bradley Announces Third Quarter Fiscal Year 2024 Results

Posted on by [email protected]

Research News and Market Data on VRA

Dec 6, 2023

Consolidated net revenues totaled $115.0 million

Net income totaled $5.1 million, or $0.16 per diluted share;
non-GAAP net income totaled $6.1 million, or $0.19 per diluted share

Balance sheet strengthens, with cash and cash equivalents of $52.3 million, no debt, and year-over-year inventories down 27.6%

FORT WAYNE, Ind., Dec. 06, 2023 (GLOBE NEWSWIRE) — Vera Bradley, Inc. (Nasdaq: VRA) today announced its financial results for the third quarter and nine months ended October 28, 2023.

In this release, Vera Bradley, Inc. or “the Company” refers to the entire enterprise and includes both the Vera Bradley and Pura Vida brands. Vera Bradley on a stand-alone basis refers to the Vera Bradley brand.

Third Quarter Comments

Jackie Ardrey, Chief Executive Officer of the Company, stated, “Our efforts continue on Project Restoration, and we are very pleased with our progress to date as our associates across the Company work together to position Vera Bradley, Inc. for long-term, profitable growth. Year-over-year third quarter non-GAAP income was essentially flat, as we delivered solid gross margin expansion and carefully managed our expenses, despite sales challenges.”  

“Total third quarter revenues for the Vera Bradley brand decreased 5.0% from last year,” Ardrey noted. “Vera Bradley Direct revenue declines primarily resulted from continued weakness in the outlet store channel and the impact of store closures. Year-over-year Vera Bradley Indirect revenues were up as compared to last year.

“Pura Vida year-over-year sales decreased 18.3%, with declines in both wholesale and ecommerce revenues, as prior year sales were driven by meaningfully higher levels of marketing spend, along with increased liquidation and clearance activity. Store sales remained strong. With our diligent expense management and focus on profitability, Pura Vida year-over-year third quarter operating income improved.

“At both brands, customers have responded to our latest iconic product collaborations and to our new, innovative, and on-trend product offerings, even as they have been more careful and thoughtful with their discretionary spending in the current macro environment.”

Ardrey continued, “We continue to diligently manage our debt-free balance sheet, adding to our year-over-year cash position while strategically lowering our inventory levels. Strength in this area is important in navigating an uncertain retail environment as well as in supporting our Project Restoration initiatives.

“Presently, we are taking targeted and prudent actions to stabilize revenues, and we remain focused on strong financial discipline and controlling what we can control as we react both strategically and tactically to current market conditions. Simultaneously, we have made meaningful progress on our long-term strategic plan, Project Restoration, focusing on four key pillars of the business for each brand – Consumer, Brand, Product, and Channel. We believe execution of Project Restoration will drive long-term profitable growth and deliver value to our shareholders.”

Summary of Financial Performance for the Third Quarter

Consolidated net revenues totaled $115.0 million compared to $124.0 million in the prior year third quarter ended October 29, 2022.

For the current year third quarter, Vera Bradley, Inc.’s consolidated net income totaled $5.1 million, or $0.16 per diluted share. These results included $1.0 million of net after tax charges, comprised of $0.6 million for the amortization of definite-lived intangible assets, $0.2 million of severance charges, and $0.2 million of consulting fees primarily associated with strategic initiatives. On a non-GAAP basis, Vera Bradley, Inc.’s consolidated third quarter net income totaled $6.1 million, or $0.19 per diluted share.

For the prior year third quarter, Vera Bradley, Inc.’s consolidated net income totaled $5.2 million, or $0.17 per diluted share. These results included $1.1 million of net after tax charges, comprised of $0.6 million of consulting and professional fees primarily associated with cost savings initiatives and the CEO search, $0.4 million for the amortization of definite-lived intangible assets, and $0.3 million of severance and stock-based retirement compensation charges, partially offset by a benefit of $0.2 million for the reversal of certain purchase order cancellation fees. On a non-GAAP basis, Vera Bradley, Inc.’s consolidated third quarter net income totaled $6.3 million, or $0.20 per diluted share.

Summary of Financial Performance for the Nine Months

Consolidated net revenues totaled $337.5 million for the current year nine months ended October 28, 2023, compared to $352.9 million in the prior year nine-month period ended October 29, 2022.

For the current year nine months, Vera Bradley, Inc.’s consolidated net income totaled $9.7 million, or $0.31 per diluted share. These results included $4.0 million of net after tax charges, comprised of $1.8 million of severance charges, $1.7 million for the amortization of definite-lived intangible assets, and $0.5 million of consulting and professional fees primarily associated with strategic initiatives. On a non-GAAP basis, Vera Bradley, Inc.’s consolidated net income for the nine months totaled $13.7 million, or $0.44 per diluted share.

For the prior year nine months, Vera Bradley, Inc.’s consolidated net loss totaled ($31.6) million, or ($1.00) per diluted share. These results included $34.2 million of net after tax charges, comprised of $18.2 million of Pura Vida goodwill and intangible asset impairment charges, $5.0 million of severance and stock-based retirement compensation retirement charges and other employee costs, $4.7 million of inventory adjustments associated with the exit of certain technology products and the write-off of excess mask inventory, $3.0 million of consulting and professional fees primarily associated with cost savings initiatives and the CEO search, $1.3 million of intangible asset amortization, $1.0 million of store and right-of-use asset impairment charges, $0.7 million of purchase order cancellation fees for spring 2023 goods, and $0.3 million of goodMRKT exit costs. On a non-GAAP basis, Vera Bradley, Inc.’s consolidated net income for the nine months totaled $2.6 million, or $0.08 per diluted share.

Non-GAAP Numbers

The current year non-GAAP third quarter and nine-month income statement numbers referenced below exclude the previously outlined severance charges, intangible asset amortization, and consulting and professional fees. The prior year non-GAAP third quarter income statement numbers referenced below exclude the previously outlined consulting and professional fees, amortization of definite-lived intangible assets, severance and stock-based retirement compensation charges, and a benefit for the reversal of certain purchase order cancellation fees. The prior year non-GAAP income statement numbers for the nine months referenced below exclude the previously outlined goodwill and intangible asset impairment charges, severance and stock-based retirement compensation retirement charges and other employee costs, inventory adjustments and write-offs, consulting and professional fees, intangible asset amortization, store and right-of-use asset impairment charges, purchase order cancellation fees, and goodMRKT exit costs.

Third Quarter Details

Current year third quarter Vera Bradley Direct segment revenues totaled $72.3 million, a 9.7% decrease from $80.1 million in the prior year third quarter. Comparable sales declined 8.2% in the third quarter, primarily driven by weakness in the outlet channel. Total revenues were also impacted by store closures over the last twelve months, including 15 full-line and two outlet stores. The Company also opened three outlet stores over the last twelve months.

Vera Bradley Indirect segment revenues totaled $25.0 million, a 12.0% increase over $22.3 million in the prior year third quarter, reflecting a significant one-time key account order that did not take place in the prior period.

Pura Vida segment revenues totaled $17.7 million, an 18.3% decrease from $21.7 million in the prior year third quarter, reflecting a decline in sales to wholesale accounts and a decline in ecommerce sales, partially offset by growth in retail store sales.

Third quarter consolidated gross profit totaled $63.0 million, or 54.8% of net revenues, compared to $65.9 million, or 53.1% of net revenues, in the prior year. On a non-GAAP basis, prior year gross profit totaled $65.6 million, or 52.9% of net revenues. The current year gross profit rate compared to the prior year non-GAAP rate was favorably impacted by lower year-over-year inbound and outbound freight expense, lower supply chain costs, and the sell-through of previously-reserved inventory, partially offset by increased promotional activity. Prior year gross profit was materially impacted by high inbound and outbound freight expense as well as deleverage of overhead costs.

Third quarter consolidated SG&A expense totaled $56.4 million, or 49.0% of net revenues, compared to $60.1 million, or 48.4% of net revenues, in the prior year. On a non-GAAP basis, consolidated SG&A expense totaled $55.1 million, or 48.0% of net revenues for the current year third quarter, compared to $57.6 million, or 46.4% of net revenues, in the prior year.   Vera Bradley’s current year non-GAAP SG&A expenses were lower than the prior year primarily due to Company-wide cost reduction initiatives across various areas of the enterprise. The expense deleverage resulted from lower revenues.

The Company’s third quarter consolidated operating income totaled $6.8 million, or 5.9% of net revenues, compared to $6.0 million, or 4.8% of net revenues, in the prior year third quarter. On a non-GAAP basis, the Company’s current year consolidated operating income totaled $8.0 million, or 7.0% of net revenues, compared to $8.2 million, or 6.6%, of net revenues, in the prior year.

By segment:

  • Vera Bradley Direct operating income was $15.7 million, or 21.7% of Direct net revenues, for the third quarter, compared to $17.1 million, or 21.3% of Direct net revenues, in the prior year. On a non-GAAP basis, prior year Direct operating income totaled $16.8 million, or 21.0% of Direct net revenues.
  • Vera Bradley Indirect operating income was $9.0 million, or 35.9% of Indirect net revenues, for the third quarter, compared to $9.0 million, or 40.4% of Indirect net revenues, in the prior year. On a non-GAAP basis, prior year Indirect operating income totaled $9.0 million, or 40.2% of Indirect net revenues.
  • Pura Vida’s operating loss was ($0.6) million, or (3.3%) of Pura Vida net revenues, in the current year, compared to an operating loss of ($1.4) million, or (6.2%) of Pura Vida net revenues, in the prior year. On a non-GAAP basis, Pura Vida’s operating income was $0.1 million, or 0.8% of Pura Vida net revenues, compared to an operating loss of ($0.1) million, or (0.3%) of Pura Vida net revenues, in the prior year.

Details for the Nine Months

Vera Bradley Direct segment revenues for the current year nine-month period totaled $216.9 million, a 5.2% decrease from $228.7 million in the prior year. Comparable sales declined 5.8% for the nine months.

Vera Bradley Indirect segment revenues for the nine months totaled $57.7 million, a 2.0% increase over $56.6 million in the prior year.

Pura Vida segment revenues for the nine months totaled $62.9 million, a 6.9% decrease from $67.5 million in the prior year, reflecting a decline in sales to wholesale accounts and a decline in ecommerce sales, partially offset by growth in retail store sales.

Consolidated gross profit for the nine months totaled $186.8 million, or 55.3% of net revenues, compared to $178.9 million, or 50.7% of net revenues, in the prior year. On a non-GAAP basis, prior year gross profit totaled $185.9 million, or 52.7% of net revenues. The current year gross profit rate compared to the prior year non-GAAP rate was favorably impacted by lower year-over-year inbound and outbound freight expense, lower supply chain costs, and the sell-through of previously-reserved inventory, partially offset by an increase in promotional activity.

For the nine months, consolidated SG&A expense totaled $174.3 million, or 51.6% of net revenues, compared to $195.0 million, or 55.3% of net revenues, in the prior year. On a non-GAAP basis, current year consolidated SG&A expense totaled $169.1 million, or 50.1% of net revenues, compared to $181.0 million, or 51.3% of net revenues, in the prior year. Vera Bradley’s current year non-GAAP SG&A expenses were lower than the prior year primarily due Company-wide cost reduction initiatives across various areas of the enterprise.

For the nine months, the Company’s consolidated operating income totaled $13.3 million, or 3.9% of net revenues, compared to a consolidated operating loss of ($45.1) million, or (12.8%) of net revenues, in the prior year. On a non-GAAP basis, the Company’s current year consolidated operating income was $18.5 million, or 5.5% of net revenues, compared to $5.3 million, or 1.5% of net revenues, in the prior year.

By segment:

  • Vera Bradley Direct operating income was $43.7 million, or 20.1% of net revenues, compared to $32.6 million, or 14.3% of Direct net revenues, in the prior year. On a non-GAAP basis, current year Direct operating income was $44.0 million, or 20.3% of Direct net revenues, compared to $38.6 million, or 16.9% of Direct net revenues, in the prior year.
  • Vera Bradley Indirect operating income was $19.9 million, or 34.4% of Indirect net revenues, compared to $18.4 million, or 32.5% of Indirect net revenues, in the prior year. On a non-GAAP basis, prior year Indirect operating income totaled $19.4 million, or 34.2% of Indirect net revenues.
  • Pura Vida’s operating income was $5.0 million, or 7.9% of Pura Vida net revenues, compared to an operating loss of ($28.8) million, or (42.7%) of Pura Vida net revenues, in the prior year. On a non-GAAP basis, Pura Vida’s operating income was $7.2 million, or 11.5% of Pura Vida net revenues, for the current year, compared to $4.3 million, or 6.4% of Pura Vida net revenues, for the prior year.

Balance Sheet

Net capital spending for the nine months ended October 28, 2023 totaled $2.5 million compared to $7.0 million in the prior year.

Cash and cash equivalents as of October 28, 2023 totaled $52.3 million compared to $25.2 million at the end of last year’s third quarter. The Company had no borrowings on its $75 million asset-based lending (“ABL”) facility at quarter end.

Total quarter-end inventory was $129.1 million, compared to $178.3 million at the end of the third quarter last year.

During the third quarter, the Company repurchased approximately $0.5 million of its common stock (71,807 shares at an average price of $6.76), bringing the total repurchased for the nine months to approximately $1.9 million (320,127 shares at an average price of $5.94). The Company has $25.8 million remaining under its $50.0 million repurchase authorization that expires in December 2024.

Forward Outlook

Management is updating certain components of guidance for the fiscal year ending February 3, 2024 (“Fiscal 2024”) based on performance for the first nine months, Company initiatives underway, and current macroeconomic trends and expectations. The Company has revised the guidance range for diluted earnings per share for the fiscal year.    

Excluding net revenues, all forward-looking guidance numbers referenced below are non-GAAP. The prior year income statement numbers exclude the previously disclosed goodwill and intangible asset impairment charges, severance and stock-based retirement compensation retirement charges and other employee costs, inventory adjustments and write-offs, certain consulting and professional fees, intangible asset amortization, store and right-of-use asset impairment charges, purchase order cancellation fees, and goodMRKT exit costs. Current year guidance excludes any similar charges.

For Fiscal 2024, the Company’s updated expectations are as follows:

  • Consolidated net revenues of $472 to $478 million. Net revenues totaled $500.0 million in Fiscal 2023.
  • A consolidated gross profit percentage of 54.0% to 54.5% compared to 51.4% in Fiscal 2023. The Fiscal 2024 gross profit rate is expected to be favorably impacted by lower year-over-year freight expense, cost reduction initiatives, and the sell-through of previously-reserved inventory, partially offset by an increase in promotional activity.
  • Consolidated SG&A expense of $232.5 to $235.5 million compared to $245.3 million in Fiscal 2023. An expected decline in SG&A expense is being driven by Company-wide cost reduction initiatives, partially offset by restoring short-term and long-term incentive compensation to more normalized levels and incremental marketing investment intended to accelerate customer file growth.
  • Consolidated operating income of $23.3 to $25.9 million compared to $12.3 million in Fiscal 2023.
  • Free cash flow of between $40 and $43 million compared to a cash usage of $21.7 million in Fiscal 2023.
  • Consolidated diluted EPS of $0.56 to $0.62 based on diluted weighted-average shares outstanding of approximately 31.0 million and an effective tax rate of approximately 28%. Diluted EPS totaled $0.24 last year.
  • Net capital spending of approximately $4 million compared to $8.2 million in the prior year, reflecting investments associated with new Vera Bradley outlet stores and technology and logistics enhancements.

Disclosure Regarding Non-GAAP Measures

The Company’s management does not, nor does it suggest that investors should, consider the supplemental non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Further, the non-GAAP measures utilized by the Company may be unique to the Company, as they may be different from non-GAAP measures used by other companies.

The Company believes that the non-GAAP measures presented in this earnings release, including free cash flow (cash usage); gross profit; selling, general, and administrative expenses; operating income (loss); net income (loss); net income (loss) attributable and available to Vera Bradley, Inc.; and diluted net income (loss) per share available to Vera Bradley, Inc. common shareholders, along with the associated percentages of net revenues, are helpful to investors because they allow for a more direct comparison of the Company’s year-over-year performance and are consistent with management’s evaluation of business performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures can be found in the Company’s supplemental schedules included in this earnings release.

Call Information

A conference call to discuss results for the third quarter is scheduled for today, Wednesday, December 6, 2023, at 9:30 a.m. Eastern Time. A broadcast of the call will be available via Vera Bradley’s Investor Relations section of its website, www.verabradley.com. Alternatively, interested parties may dial into the call at (888) 204-4368, and enter the access code 7089328. A replay will be available shortly after the conclusion of the call and remain available through December 20, 2023. To access the recording, listeners should dial (844) 512-2921, and enter the access code 7089328.

About Vera Bradley, Inc.

Vera Bradley, Inc. operates two unique lifestyle brands – Vera Bradley and Pura Vida. Vera Bradley and Pura Vida are complementary businesses, both with devoted, emotionally-connected, and multi-generational female customer bases; alignment as casual, comfortable, affordable, and fun brands; positioning as “gifting” and socially-connected brands; strong, entrepreneurial cultures; a keen focus on community, charity, and social consciousness; multi-channel distribution strategies; and talented leadership teams aligned and committed to the long-term success of their brands.

Vera Bradley, based in Fort Wayne, Indiana, is a leading designer of women’s handbags, luggage and other travel items, fashion and home accessories, and unique gifts.  Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand is known for its innovative designs, iconic patterns, and brilliant colors that inspire and connect women unlike any other brand in the global marketplace.

In July 2019, Vera Bradley, Inc. acquired a 75% interest in Creative Genius, Inc., which also operates under the name Pura Vida Bracelets (“Pura Vida”). Pura Vida, based in La Jolla, California, is a digitally native, highly-engaging lifestyle brand founded in 2010 by friends Paul Goodman and Griffin Thall. Pura Vida has a differentiated and expanding offering of bracelets, jewelry, and other lifestyle accessories. The Company acquired the remaining 25% of Pura Vida in January 2023.

The Company has three reportable segments: Vera Bradley Direct (“VB Direct”), Vera Bradley Indirect (“VB Indirect”), and Pura Vida. The VB Direct business consists of sales of Vera Bradley products through Vera Bradley Full-Line and Factory Outlet stores in the United States, www.verabradley.com, Vera Bradley’s online outlet site, and the Vera Bradley annual outlet sale in Fort Wayne, Indiana. The VB Indirect business consists of sales of Vera Bradley products to approximately 1,600 specialty retail locations throughout the United States, as well as select department stores, national accounts, third party e-commerce sites, and third-party inventory liquidators, and royalties recognized through licensing agreements related to the Vera Bradley brand. The Pura Vida segment consists of sales of Pura Vida products through the Pura Vida websites, www.puravidabracelets.com, www.puravidabracelets.ca, and www.puravidabracelets.eu; through the distribution of its products to wholesale retailers and department stores; and through its Pura Vida retail stores.

Website Information

We routinely post important information for investors on our website www.verabradley.com in the “Investor Relations” section. We intend to use this webpage as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our webpage is not incorporated by reference into, and is not a part of, this document.

Investors and other interested parties may also access the Company’s most recent Corporate Responsibility and Sustainability Report outlining its ESG (Environmental, Social, and Governance) initiatives at https://verabradley.com/pages/corporate-responsibility.

Vera Bradley Safe Harbor Statement

Certain statements in this release are “forward-looking statements” made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company’s current expectations or beliefs concerning future events and are subject to various risks and uncertainties that may cause actual results to differ materially from those that we expected, including: possible adverse changes in general economic conditions and their impact on consumer confidence and spending; possible inability to predict and respond in a timely manner to changes in consumer demand; possible loss of key management or design associates or inability to attract and retain the talent required for our business; possible inability to maintain and enhance our brands; possible inability to successfully implement the Company’s long-term strategic plans; possible inability to successfully open new stores, close targeted stores, and/or operate current stores as planned; incremental tariffs or adverse changes in the cost of raw materials and labor used to manufacture our products; possible adverse effects resulting from a significant disruption in our distribution facilities; or business disruption caused by pandemics. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended January 28, 2023. We undertake no obligation to publicly update or revise any forward-looking statement. Financial schedules are attached to this release.

CONTACTS:
Investors:
Julia Bentley
[email protected]

Media:           
[email protected]
877-708-VERA (8372)

      
Vera Bradley, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
      
 October 28, 2023 January 28, 2023 October 29, 2022
Assets     
Current assets:     
     Cash and cash equivalents$52,266  $46,595  $25,237 
     Accounts receivable, net 25,599   22,105   25,115 
     Inventories 129,140   142,275   178,334 
     Income taxes receivable 1,376   1,311   4,120 
     Prepaid expenses and other current assets 13,025   14,276   14,817 
                    Total current assets 221,406   226,562   247,623 
      
Operating right-of-use assets 67,037   77,954   82,683 
Property, plant, and equipment, net 55,909   58,674   60,388 
Intangible assets, net 13,731   15,918   32,001 
Goodwill –   –   24,833 
Deferred income taxes 18,961   21,542   9,381 
Other assets 5,790   3,851   4,428 
                    Total assets$382,834  $404,501  $461,337 
      
Liabilities, Redeemable Noncontrolling Interest, and Shareholders’ Equity     
Current liabilities:     
     Accounts payable$12,297  $20,350  $31,125 
     Accrued employment costs 11,756   14,312   12,252 
     Short-term operating lease liabilities 18,673   19,714   19,742 
     Other accrued liabilities 13,671   12,723   14,771 
     Income taxes payable 570   558   501 
                    Total current liabilities 56,967   67,657   78,391 
      
Long-term operating lease liabilities 63,915   74,664   80,109 
Other long-term liabilities 71   90   85 
                    Total liabilities 120,953   142,411   158,585 
      
Redeemable noncontrolling interest –   10,712   23,153 
Shareholders’ equity:     
     Additional paid-in-capital 112,397   109,718   109,070 
     Retained earnings 284,322   274,629   302,790 
     Accumulated other comprehensive loss (74)  (105)  (181)
     Treasury stock (134,764)  (132,864)  (132,080)
                    Total shareholders’ equity of Vera Bradley, Inc. 261,881   251,378   279,599 
                    Total liabilities, redeemable noncontrolling interest, and shareholders’ equity$382,834  $404,501  $461,337 
      
Vera Bradley, Inc. 
Condensed Consolidated Statements of Operations 
(in thousands, except per share amounts) 
(unaudited) 
         
         
 Thirteen Weeks Ended Thirty-Nine Weeks Ended 
 October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022 
         
Net revenues$114,987  $124,040  $337,521  $352,870  
Cost of sales 51,980   58,164   150,749   173,963  
     Gross profit 63,007   65,876   186,772   178,907  
Selling, general, and administrative expenses 56,363   60,059   174,274   195,015  
Impairment of goodwill and intangible assets –   –   –   29,338  
Other income, net 142   141   773   350  
     Operating income (loss) 6,786   5,958   13,271   (45,096) 
Interest (income) expense, net (285)  39   (241)  115  
   Income (loss) before income taxes 7,071   5,919   13,512   (45,211) 
Income tax expense (benefit) 1,953   1,090   3,819   (6,429) 
     Net income (loss) 5,118   4,829   9,693   (38,782) 
Less: Net loss attributable to redeemable noncontrolling interest –   (338)  –   (7,208) 
Net income (loss) attributable to Vera Bradley, Inc.$5,118  $5,167  $9,693  $(31,574) 
         
Basic weighted-average shares outstanding 30,814   31,061   30,836   31,721  
Diluted weighted-average shares outstanding 31,322   31,229   31,246   31,721  
         
Basic net income (loss) per share available to Vera Bradley, Inc. common shareholders$0.17  $0.17  $0.31  $(1.00) 
Diluted net income (loss) per share available to Vera Bradley, Inc. common shareholders$0.16  $0.17  $0.31  $(1.00) 
         
      
Vera Bradley, Inc.  
Condensed Consolidated Statements of Cash Flows 
(in thousands) 
(unaudited)  
     
      
 Thirty-Nine Weeks Ended  
 October 28, 2023 October 29, 2022  
Cash flows from operating activities     
Net income (loss)$9,693 $(38,782)  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:     
     Depreciation of property, plant, and equipment5,988 6,685  
     Amortization of operating right-of-use assets15,622 16,151  
     Goodwill and intangible asset impairment– 29,338  
     Other impairment charges– 1,351  
     Amortization of intangible assets2,187 2,305  
     Provision for doubtful accounts87 (80)  
     Stock-based compensation2,365 2,593  
     Deferred income taxes3,155 (5,524)  
     Other non-cash loss, net50 –  
     Changes in assets and liabilities:     
          Accounts receivable(3,581) (4,354)  
          Inventories13,135 (33,453)  
          Prepaid expenses and other assets(688) 2,764  
          Accounts payable(8,134) 49  
          Income taxes(53) 5,772  
          Operating lease liabilities, net(16,495) (19,262)  
          Accrued and other liabilities(2,273) (2,311)  
Net cash provided by (used in) operating activities21,058 (36,758)  
      
Cash flows from investing activities     
     Purchases of property, plant, and equipment(2,546) (6,968)  
     Cash paid for business acquisition(10,000) –  
Net cash used in investing activities(12,546) (6,968)  
      
Cash flows from financing activities     
     Tax withholdings for equity compensation(972) (1,430)  
     Repurchase of common stock(1,900) (17,278)  
     Distributions to redeemable noncontrolling interest– (613)  
Net cash used in financing activities(2,872) (19,321)  
Effect of exchange rate changes on cash and cash equivalents31 (152)  
      
Net increase (decrease) in cash and cash equivalents$5,671 $(63,199)  
Cash and cash equivalents, beginning of period46,595 88,436  
Cash and cash equivalents, end of period$52,266 $25,237  
      
  
Vera Bradley, Inc. 
Third Quarter Fiscal 2024 
GAAP to Non-GAAP Reconciliation Thirteen Weeks Ended October 28, 2023 
(in thousands, except per share amounts) 
(unaudited) 
 Thirteen Weeks Ended  
 As Reported Other Items Non-GAAP
(Excluding Items)		  
Gross profit$63,007  $–  $63,007   
Selling, general, and administrative expenses 56,363   1,216 1 55,147   
Operating income (loss) 6,786   (1,216)  8,002   
Income (loss) before income taxes 7,071   (1,216)  8,287   
Income tax expense (benefit) 1,953   (234)2 2,187   
Net income (loss) 5,118   (982)  6,100   
Less: Net loss attributable to redeemable noncontrolling interest –   –   –   
Net income (loss) attributable to Vera Bradley, Inc. 5,118   (982)  6,100   
Diluted net income (loss) per share available to Vera Bradley, Inc. common shareholders$0.16  $(0.03) $0.19   
        
Vera Bradley Direct segment operating income$15,708  $–  $15,708   
Vera Bradley Indirect segment operating income$8,967  $–  $8,967   
Pura Vida segment operating (loss) income$(580) $(729)3$149   
Unallocated corporate expenses$(17,309) $(487)4$(16,822)  
        
1Items include $729 for the amortization of definite-lived intangible assets; $304 for severance charges; and $183 for certain professional fees and consulting fees associated with strategic initiatives  
2Related to the tax impact of the items mentioned above  
3Related to $729 for the amortization of definite-lived intangible assets  
4Related to $304 for severance charges; and $183 for certain professional fees and consulting fees associated with strategic initiatives  
   
  
Vera Bradley, Inc. 
Third Quarter Fiscal 2023 
GAAP to Non-GAAP Reconciliation Thirteen Weeks Ended October 29, 2022 
(in thousands, except per share amounts) 
(unaudited) 
 Thirteen Weeks Ended  
 As Reported Other Items Non-GAAP
(Excluding Items)		  
Gross profit$65,876  $276 1$65,600   
Selling, general, and administrative expenses 60,059   2,470 2 57,589   
Impairment of goodwill and intangible assets –   –   –   
Operating income (loss) 5,958   (2,194)  8,152   
Income (loss) before income taxes 5,919   (2,194)  8,113   
Income tax expense (benefit) 1,090   (763)3 1,853   
Net income (loss) 4,829   (1,431)  6,260   
Less: Net loss attributable to redeemable noncontrolling interest (338)  (322)  (16)  
Net income (loss) attributable to Vera Bradley, Inc. 5,167   (1,109)  6,276   
Diluted net income (loss) per share available to Vera Bradley, Inc. common shareholders$0.17  $(0.04) $0.20   
        
Vera Bradley Direct segment operating income$17,060  $225 4$16,835   
Vera Bradley Indirect segment operating income$9,012  $51 4$8,961   
Pura Vida segment operating loss$(1,353) $(1,289)5$(64)  
Unallocated corporate expenses$(18,761) $(1,181)6$(17,580)  
        
1Related to the reversal of certain PO cancellation fees  
2Items include $1,133 for consulting fees associated with cost savings initiatives and CEO search, as well as certain Pura Vida professional fees; $768 for the amortization of definite-lived intangible assets; $406 for severance charges; and $163 for CEO stock-based compensation associated with retirement  
3Related to the tax impact of the charges mentioned above  
4Related to an allocation for reversals of certain PO cancellation fees  
5Related to $768 for the amortization of definite-lived intangible assets; and $406 for severance charges; and $115 for certain professional fees  
6Related to $1,018 for consulting fees associated with cost savings initiatives and CEO search and $163 for CEO stock-based compensation associated with retirement  
   
  
Vera Bradley, Inc. 
GAAP to Non-GAAP Reconciliation Thirty-Nine Weeks Ended October 28, 2023 
(in thousands, except per share amounts) 
(unaudited) 
 Thirty-Nine Weeks Ended  
 As Reported Other Items Non-GAAP
(Excluding Items)		  
Gross profit$186,772  $–  $186,772   
Selling, general, and administrative expenses 174,274   5,217 1 169,057   
Operating income (loss) 13,271   (5,217)  18,488   
Income (loss) before income taxes 13,512   (5,217)  18,729   
Income tax expense (benefit) 3,819   (1,247)2 5,066   
Net income (loss) 9,693   (3,970)  13,663   
Less: Net loss attributable to redeemable noncontrolling interest –   –   –   
Net income (loss) attributable to Vera Bradley, Inc. 9,693   (3,970)  13,663   
Diluted net income (loss) per share available to Vera Bradley, Inc. common shareholders$0.31  $(0.13) $0.44   
        
Vera Bradley Direct segment operating income (loss)$43,669  $(342)3$44,011   
Vera Bradley Indirect segment operating income$19,877  $–  $19,877   
Pura Vida segment operating income (loss)$4,982  $(2,266)4$7,248   
Unallocated corporate expenses$(55,257) $(2,609)5$(52,648)  
        
1Items include $2,372 for severance charges; $2,187 for the amortization of definite-lived intangible assets; and $658 for certain professional fees and consulting fees associated with strategic initiatives  
2Related to the tax impact of the items mentioned above  
3Related to severance charges  
4Related to $2,187 for the amortization of definite-lived intangible assets and $79 for severance charges  
5Items include $1,951 for severance charges and $658 associated with certain professional fees and consulting fees for strategic initiatives  
        
  
Vera Bradley, Inc. 
GAAP to Non-GAAP Reconciliation Thirty-Nine Weeks Ended October 29, 2022 
(in thousands, except per share amounts) 
(unaudited) 
 Thirty-Nine Weeks Ended  
 As Reported Other Items Non-GAAP
(Excluding Items)		  
Gross profit (loss)$178,907  $(7,000)1$185,907   
Selling, general, and administrative expenses 195,015   14,057 2 180,958   
Impairment of goodwill and intangible assets 29,338   29,338   –   
Operating (loss) income (45,096)  (50,395)  5,299   
(Loss) income before income taxes (45,211)  (50,395)  5,184   
Income tax (benefit) expense (6,429)  (7,898)3 1,469   
Net (loss) income (38,782)  (42,497)  3,715   
Less: Net (loss) income attributable to redeemable noncontrolling interest (7,208)  (8,285)  1,077   
Net (loss) income attributable to Vera Bradley, Inc. (31,574)  (34,212)  2,638   
Diluted net (loss) income per share available to Vera Bradley, Inc. common shareholders$(1.00) $(1.08) $0.08   
        
Vera Bradley Direct segment operating income (loss)$32,607  $(5,948)4$38,555   
Vera Bradley Indirect segment operating income (loss)$18,409  $(943)5$19,352   
Pura Vida segment operating (loss) income$(28,831) $(33,143)6$4,312   
Unallocated corporate expenses$(67,281) $(10,361)7$(56,920)  
        
1Items include $6,142 for inventory adjustments associated with the exit of certain technology products and the goodMRKT brand, as well as excess mask products and $858 for PO cancellation fees  
2Items include $6,120 for severance charges; $4,038 for consulting fees associated with cost savings initiatives, CEO search, and certain Pura Vida professional fees; $2,305 for the amortization of definite-lived intangible assets; $1,351 for store and right-of-use asset impairment charges; $163 for CEO stock-based compensation associated with retirement; and $80 for goodMRKT brand exit costs  
3Related to the tax impact of the charges mentioned above, as well as goodwill and intangible asset impairment charges  
4Related to $4,872 related to an allocation for certain inventory adjustments and PO cancellation fees; $759 for store impairment charges; $302 for goodMRKT brand exit costs; and $15 for severance charges  
5Related to an allocation for certain inventory adjustments and PO cancellation fees  
6Related to $29,338 of goodwill and intangible asset impairment charges; $2,305 for the amortization of definite-lived intangible assets; $963 for inventory adjustments associated with mask products; $422 for severance charges; and $115 for certain professional fees  
7Related to $5,683 for severance charges; $3,923 for consulting fees associated with cost savings initiatives and CEO search; $592 for a right-of-use asset impairment charge; and $163 for CEO stock-based compensation associated with retirement  

Release – Xcel Brands, Inc. to Present At Upcoming Investor Conferences

Posted on by [email protected]

Research News and Market Data on XELB

PDF Version

NEW YORK, Dec. 01, 2023 (GLOBE NEWSWIRE) — Xcel Brands, Inc. (NASDAQ: XELB) (“Xcel” or the “Company”), a media and consumer products company with significant expertise in livestream shopping and social commerce, today announced that it is scheduled to present at the following investor conferences:

Noble Capital Markets 19th Annual Emerging Growth Equity Conference 
Location: Boca Raton, FL
Date: December 4 – 5, 2023
Presentation Time: December 5 at 3:00 pm ET
Webcast: www.nobleconference.com

Sidoti Small-Cap Virtual Conference
Location: Virtual
Date: December 6 – 7, 2023
Presentation Time: December 6 at 1:00 pm ET
Webcast: https://sidoti.zoom.us/webinar/register/WN_QIGTd7obSLSOIBUV8y5tZg#/registration

Robert W. D’Loren, Chairman and Chief Executive Officer of Xcel Brands, will be leading the formal presentation and answering questions from investors. Xcel Brands will also provide an overview of its growth opportunities and business transformation, including a first look at the Company’s new livestream shopping technology and social commerce platform.

About Xcel Brands

Xcel Brands, Inc. (NASDAQ: XELB) is a media and consumer products company engaged in the design, production, marketing, live streaming, and social commerce sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the acquisition of dynamic consumer lifestyle brands. Xcel was founded in 2011 with a vision to reimagine shopping, entertainment, and social media as one thing. Xcel owns the Judith Ripka, Halston, LOGO by Lori Goldstein, and C. Wonder brands and a minority stake in the Isaac Mizrahi brand. It also owns and manages the Longaberger brand through its controlling interest in Longaberger Licensing LLC. Xcel is pioneering a true modern consumer products sales strategy which includes the promotion and sale of products under its brands through interactive television, digital live-stream shopping, social commerce, brick-and-mortar retail, and e-commerce channels to be everywhere its customers shop. The company’s brands have generated in excess of $4 billion in retail sales via livestreaming in interactive television and digital channels alone, and over 20,000 hours of live-stream and social commerce. Headquartered in New York City, Xcel Brands is led by an executive team with significant live streaming, production, merchandising, design, marketing, retailing, and licensing experience, and a proven track record of success in elevating branded consumer products companies. www.xcelbrands.com

Forward Looking Statements

This press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “ongoing,” “could,” “estimates,” “expects,” “intends,” “may,” “appears,” “suggests,” “future,” “likely,” “goal,” “plans,” “potential,” “projects,” “predicts,” “seeks,” “should,” “would,” “guidance,” “confident” or “will” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements regarding our anticipated revenue, expenses, profitability, strategic plans, and capital needs. These statements are based on information available to us on the date hereof and our current expectations, estimates and projections and are not guarantees of future performance. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including, without limitation, the risks discussed in the “Risk Factors” section and elsewhere in the Company’s Annual Report on form 10-K for the year ended December 31, 2022 and its other filings with the SEC, which may cause our or our industry’s actual results, levels of activity, performance, or achievements to differ materially from those expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. You should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, changed circumstances, or any other reason.

For further information please contact:
Andrew Berger
SM Berger & Company, Inc.
216-464-6400
[email protected]

Pending Home Sales Plunge to Lowest Levels in Over 20 Years

Posted on by [email protected]

Pending home sales in the U.S. unexpectedly plunged in October to their lowest levels since record-keeping began over two decades ago, even below readings seen during the housing crisis in 2008.

The National Association of Realtors (NAR) reported Thursday that its index of pending sales contracts signed on existing homes retreated 1.5% from September. On an annual basis, signings were a staggering 8.5% lower than the same month last year.

October’s reading marks a continuation of the housing market’s steep slide over the past year from blistering pandemic-era sales levels as mortgage rates rocket higher in the most dramatic housing finance shake-up in decades.

“Recent weeks’ successive declines in mortgage rates will help qualify more home buyers, but limited housing inventory is significantly preventing housing demand from fully being satisfied,” said NAR Chief Economist Lawrence Yun.

Spike in Mortgage Rates Strangles Demand

The October pending home sales data reflects buyer activity when popular 30-year fixed mortgage rates shot up above 8% in mid-October before settling back around 7% in more recent weeks.

Skyrocketing borrowing costs over the past year have rapidly depleted home shoppers’ budgets and purchasing power, squeezing huge numbers of Americans out of the market entirely and forcing others to downgrade to lower price points.

With the average rate on a 30-year fixed loan more than double year-ago levels despite the recent retreat, still-high financing costs in tandem with stubbornly elevated home prices continue dampening affordability and sales.

All U.S. regions saw contract signings decline on a monthly basis in October except the Northeast. The Western market, where homes are typically the nation’s most expensive, recorded the largest monthly drop.

Pending transactions fell across all price tiers below $500,000 while rising for homes above that threshold. The shift partly reflects moderately improving supply conditions on the high end, even as demand rapidly recedes at lower price points.

Home Prices Still Climbing for Now

Even against shrinking demand, exceedingly tight inventories of homes listed for sale have so far prevented any meaningful cooling in the torrid home price appreciation that’s stretched affordability near the breaking point for many buyers.

The median existing home sales price rose 6.6% on the year in October to $379,100. While marking a slowdown from mid-2021, when prices were soaring 20% annually, it still represents an acceleration over the 5.7% rate seen last October.

With few homes hitting the market, bidding wars continue breaking out for even modest starter homes in many areas. In such seller-favorable conditions, a plunge in overall sales does little to crimp further rapid home value growth.

Leading indicators suggest home prices likely still have further to climb before lackluster sales and eroding affordability force more substantive cooling. But shifts in home values and sales usually lag moves in rates and mortgage activity by several months.

“The significant decline in pending sales suggests…further weakness in closed existing home sales in upcoming months,” said Swiss bank UBS economist Jonathan Woloshin.

With mortgage activity plunging to a quarter-century low, actual completed sales are widely expected to continue deteriorating into early next year or beyond as the pipe of signed deals still working through the market keeps drying up.

Path Ahead for Housing Market

Most economists expect home sales will likely continue slumping over the next six months or so until lower financing costs combined with a slow improving inventory offer some stability.

“We think housing activity has little prospect of bottoming out until spring 2024, at the earliest,” said Nancy Vanden Houten of Oxford Economics. She projects existing home sales will fall nearly 25% in 2024 from current-year levels.

Other analysts say still-strong demographics and a solid job market should prevent an all-out housing collapse, but that robust spring and summer recovery rallies like those seen earlier this century are unlikely in coming years.

Instead, as mortgage rates settle somewhere above 6% and homes trickle back on the market, sales activity should slowly stabilize around 10-15% below 2018-2019 levels through 2024 and beyond – marking a ‘new normal’ after ultra-hot pandemic conditions.

“I expect mortgage rates to moderate…helping home sales firm up a bit, but still remain below pre-pandemic activity,” said Yun. With fresh records signaling just how devastating this year’s rate spike proved for buyers, Yun expects the spring thaw in housing demand could come slower next year than markets anticipate.

Lifeway Foods (LWAY) – Moving Rating to Market Perform after Sharp Rise in Stock Price

Posted on by [email protected]


Monday, November 27, 2023

Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Moving to Market Perform. With the shares exceeding our recently instituted $13 price target, we are lowering our rating to Market Perform from Outperform. While we remain impressed with operating results, we believe a good portion of the recent share performance is being driven in anticipation of a sale of the Company, which we do not believe is imminent.

Stock Performance. LWAY shares are up 82% since closing at $9.38 on November 13th. While we believe the sell off in the shares following strong operating results was unwarranted, the subsequent price rebound has exceeded our $13 price target. To maintain an Outperform rating, our PT would need to exceed $19.50, which we believe would have LWAY shares “priced to perfection” from an operating standpoint, which, given the uncertain state of the economy, is a stretch in our view.


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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Black Friday 2023 Kicks Off After Strong Online Sales on Thanksgiving

Posted on by [email protected]

Black Friday 2023 is officially here, kicking off the year’s biggest shopping weekend both online and in stores. Early indicators suggest consumers are hungry for deals, with e-commerce sales on Thanksgiving Day jumping 5.5% year-over-year to $5.6 billion according to Adobe Analytics.

The robust online sales activity on Turkey Day comes ahead of an expected $9.6 billion in Cyber Monday revenue, a 5.7% increase from last year. While these growth figures represent a slowdown from the blistering pace set during the pandemic, they highlight that holiday shoppers are still responding to discounts even amidst broader economic uncertainty.

This sets the stage for a pivotal Black Friday that may determine whether projections for up to 4% gains in total holiday sales materialize. Shoppers are expected to turn out in force to scoop up deals on popular items like toys, apparel, jewelry, and consumer tech that were top sellers online on Thanksgiving.

Mobile Shopping Surge Drives Online Revenue

Fueling the growth in Thanksgiving e-commerce sales is the continued surge in smartphone shopping. A record 59% of online revenue came from mobile devices as people browsed and bought gifts on the go. With mobile penetration rising every year, retailers have adapted their sites and apps to make it easier for iPhone and Android users to capitalize on promotions.

Savvy shoppers are discovering they can beat crowds and inventory shortages by taking advantage of online-only deals as well as ordering online and picking up in store. Retailers are encouraging this omnichannel behavior by making curbside pickup fast and frictionless. The convenience of mobile ordering combined with flexible fulfillment options underlies the shift towards more Thanksgiving and Black Friday spending happening digitally.

Top Deals Entice Consumers

Despite economic pressures from inflation and higher interest rates, consumers have shown a willingness to spend when the price is right. Adobe tracked toys discounted up to 28%, electronics up to 27% off, and computers 22% off on Thanksgiving, leading to triple-digit surge in those categories versus October.

Amazon and Target rolled out additional Black Friday toy deals with major markdowns on Barbie dream campers, Marvel action figures, and Nintendo Switch gaming bundles expected to rank among the most popular purchases.

Similarly, doors opening early at retailers like Best Buy, Walmart, and Apple will likely attract shoppers chasing deals on big-screen TVs, Bluetooth speakers, tablets, and the hot new Airpods Pro 2 earbuds. Though buying conditions are tougher this year, bargain hunters still prioritize snagging discounted must-have gifts for loved ones.

What’s at Stake for Retailers

While Thanksgiving and Black Friday don’t determine overall holiday fortunes, they set the tone for retailers during the critical year-end sales period. Those who miss targets this weekend play catch-up and may have to result to profit-busting promotions to move stagnant inventory later in December.

However, retailers who excite shoppers out the gates with alluring deals and experiences create positive momentum they can ride into the New Year. The outperformance of those players better able to adapt to the mobile and omnichannel-centric future of holiday shopping will be on full display this weekend.

For consumers, the state of Black Friday offers clues into buying conditions for the next month as they weigh completing wish lists amidst budget realities. With early reads tilting positive, cautious optimism seems warranted – though restraint may still pay off waiting to see if deals sweeten further in December.

One thing is certain: all eyes turn to how activity plays out on the unofficial start to the holiday sales season. Black Friday retains symbolic importance for retailers and consumers alike – so expect the 2023 version to again provide intrigue and insights into the health of the US consumer.

Xcel Brands (XELB) – All According To Plan

Posted on by [email protected]


Wednesday, November 22, 2023

Xcel Brands, Inc. 1333 Broadway 10th Floor New York, NY 10018 United States https:/Sector(s): Consumer Cyclical Industry: Apparel Manufacturing Full Time Employees: 84 Key Executives Name Title Pay Exercised Year Born Mr. Robert W. D’Loren Chairman, Pres & CEO 1.27M N/A 1958 Mr. James F. Haran CFO, Principal Financial & Accou

Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.

Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Solid Q3 results. The company reported $2.9 million in revenue, which was in-line with our estimate of $2.6 million. Adj. EBITDA loss of $1.4 million was modestly lower than our estimate of a loss of $0.8 million. Notably, Q3 operating results were affected by less QVC programming due to talent scheduling conflicts related to a return to an in-studio production policy and non-recurring restructuring expenses.

Favorable licensing model. In November, the company completed its transition to a licensing model, and should report the last portion of its restructuring costs in Q4. Notably, we anticipate significant reductions in direct operating expenses from 2022 levels of roughly $7.5 million to roughly $4.0 million in 2024. Additionally, in Q4, we estimate sequential licensing revenue growth from Q3.


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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Xcel Brands (XELB) – Likely To Be The Trough Toward Improved Results

Posted on by [email protected]


Tuesday, November 21, 2023

Xcel Brands, Inc. 1333 Broadway 10th Floor New York, NY 10018 United States https:/Sector(s): Consumer Cyclical Industry: Apparel Manufacturing Full Time Employees: 84 Key Executives Name Title Pay Exercised Year Born Mr. Robert W. D’Loren Chairman, Pres & CEO 1.27M N/A 1958 Mr. James F. Haran CFO, Principal Financial & Accou

Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.

Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Solid Q3 results. The company reported $2.9 million in revenue, which was in-line with our estimate of $2.6 million. Adj. EBITDA loss of $1.4 million was modestly lower than our estimate of a loss of $0.8 million, as illustrated in Figure #1 Q3 Results. Notably, Q3 operating results were affected by less QVC programming due to talent scheduling conflicts related to a return to an in-studio production policy and non-recurring restructuring expenses.

Transition toward a licensing model. In November, the company completed a restructuring process by entering into licensing agreements for its Longaberger and made in the US baskets businesses. The new licensing model is expected to significantly lower operating costs and be a key catalyst toward a swing to positive cash flow in 2024.


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Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

Yellen: Food, Rent Inflation Clouding View of Economy

Posted on by [email protected]

Treasury Secretary Janet Yellen recently pointed to persistently high food and rent prices as a major reason why public perception of the economy remains negative, despite progress on overall inflation. With President Biden’s reelection chances closely tied to economic views, this consumer disconnect poses a threat.

In an interview with CNBC, Yellen acknowledged inflation rates have meaningfully declined from last year’s 40-year highs. However, she noted that “Americans still see increases in some important prices, including food, from where we were prior to the pandemic.”

While the administration touts top-line statistics pointing to economic strength, Yellen admitted that “this remains notable to people who go to the store and shop.”

Rent inflation also sticks out painfully to consumers, even as broader price growth cools. “Rents are rising less quickly now, but are certainly higher than they were before the pandemic,” Yellen said.

Polls Reveal Sour Public Mood Despite “Bidenomics”

This stubborn inflation in highly visible categories is clashing with the White House’s rosier messaging. The administration has dubbed the economy “Bidenomics” and trumpets metrics like robust job gains.

But almost 60% of voters disapprove of Biden’s economic leadership in the latest polling. His approval rating lags the economic data as people feel pinched by prices at the grocery store and housing costs.

Per Yellen, the disconnect boils down to prices remaining “higher than they used to be accustomed to.” She stressed the administration must now “explain to Americans what President Biden has done to improve the economy.”

Yellen expressed optimism views will shift “as inflation comes down, prices stop rising, and the labor market remains strong.” Time will tell if this turnaround happens soon enough to impact the 2024 election.

Food Prices Remain a Stinging Reminder of Inflation’s Sting

Of all consumer goods, food prices stand out as a persistent driver of inflation angst. Grocery bills grew 12% year-over-year in October, far above the 7.7% overall inflation rate. From eggs to lunch meats, few foods escape sticker shock at the store.

Russia’s invasion of Ukraine damaged vital grain supplies, resulting in huge price spikes for wheat, corn and cooking oils. Lingering supply chain dysfunction continues hampering food transport and packaging.

Restaurants also face higher food costs, which owners pass along through bigger menu price tags. Rising labor costs further squeeze restaurant margins.

In all, grocery and dining prices have become stinging daily reminders that inflation remains an economic burden. This clouds public sentiment despite falling gas prices and cheaper consumer goods.

Rents and Housing Costs Also Weigh Heavily on Consumers

Along with food, Yellen called out persistent rent inflation as a culprit of economic gloom. Annual rent growth sits around 7%, down from last year but still squeezing household budgets.

Low rental vacancy rates give landlords continued pricing power in many markets. While mortgage rates have shot higher, rents have yet to meaningfully slow for lack of alternatives.

Surging rents are especially painful due to housing’s outsize impact on living costs. One report estimated that housing accounts for 40% of a typical family’s inflation burden.

Beyond rent, housing costs like property taxes, homeowner insurance, and home services are also outpacing overall inflation. And higher mortgage rates make buying a home even less affordable.

These housing stresses help explain why such a large majority of Americans still rate current economic conditions as poor. With shelter eating up more paychecks, consumers feel deprived despite broader progress.

All Eyes on Food and Housing Costs as Midterms Approach

Yellen made clear that stubborn inflation in categories like food and rent is the administration’s biggest obstacle to touting economic gains. As President Biden gears up for a likely 2024 reelection bid, perceptions of the economy will carry substantial weight.

Democrats are hoping the public mood brightens as the impact of cooling prices materializes. But that remains uncertain with high-visibility costs still stinging consumers.

If relief arrives soon across grocery aisles and rent rolls, voters may yet reward President Biden and Democrats for delivering an overdue inflation reprieve. But the clock is ticking with the 2024 campaign cycle fast approaching.

For now, Biden’s political fate remains tied to the cost of bread and monthly housing bills. If lidding inflation can make such necessities feel affordable again, the president may stand to benefit.

Release – The ODP Corporation Achieves Validation of Science-Based Emission Reduction Targets

Posted on by [email protected]

Research News and Market Data on ODP

Validated science-based targets emphasize The ODP Corporation’s commitment to environmental sustainability

BOCA RATON, Fla.–(BUSINESS WIRE)–Nov. 16, 2023– The ODP Corporation is proud to announce that it has successfully earned validation from the Science Based Targets initiative (SBTi) of its science-based targets for scope 1, scope 2, and scope 3 greenhouse gas (GHG) emissions. This significant milestone demonstrates The ODP Corporation’s commitment to environmental sustainability and aligns with its ongoing efforts to combat the effects of climate change.

The science-based targets reflect The ODP Corporation’s goals for reducing GHG emissions, including a commitment to reduce absolute scope 1 and 2 GHG emissions 46.2% by 2030 from a 2019 base year. The Company further commits to reduce scope 3 GHG emissions from downstream transportation and distribution and use of sold products 55% per USD value added by 2030 from a 2019 base year.

As part of its dedication to driving sustainability throughout its supply chain, The ODP Corporation also commits that 75% of its suppliers by spend covering purchased goods and services will have science-based targets by 2027. This collaborative effort will contribute to reducing emissions and fostering an environmentally responsible business ecosystem.

“We are incredibly proud to have our science-based targets validated, as it underscores our commitment to make meaningful changes in our environmental impact,” said Shannon Hunter, vice president of sustainability at The ODP Corporation. “By setting these targets, we are sending a clear message to all of our stakeholders—including our employees, customers, and partners—that we are dedicated to environmental sustainability and actively reducing our carbon footprint.”

Achieving validation of our science-based targets is a testament to The ODP Corporation’s ongoing sustainability journey. The ODP Corporation remains committed to continuously improving its environmental practices and embracing innovative solutions. This announcement marks a pivotal step forward in the company’s sustainability efforts and reinforces its position as a responsible corporate citizen.

For more information about sustainability initiatives at The ODP Corporation, please visit theodpcorp.com/corporate-sustainability.

About The ODP Corporation

The ODP Corporation (NASDAQ:ODP) is a leading provider of products, services, and technology solutions through an integrated business-to-business (B2B) distribution platform and omnichannel presence, which includes world-class supply chain and distribution operations, dedicated sales professionals, a B2B digital procurement solution, online presence and a network of Office Depot and OfficeMax retail stores. Through its operating companies Office Depot, LLC; ODP Business Solutions, LLC; Veyer, LLC; and Varis, Inc., The ODP Corporation empowers every business, professional, and consumer to achieve more every day. For more information, visit theodpcorp.com.

ODP and ODP Business Solutions are trademarks of ODP Business Solutions, LLC. Office Depot is a trademark of The Office Club, LLC. OfficeMax is a trademark of OMX, Inc. Veyer is a trademark of Veyer, LLC. Varis is a trademark of Varis, Inc. Any other product or company names mentioned herein are the trademarks of their respective owners.

Jennifer Robins
Media Relations
[email protected]

Swati Joshi
Media Relations
[email protected]

Source: The ODP Corporation

Release – Xcel Brands To Report Third Quarter 2023 Financial Results On November 20, 2023

Posted on by [email protected]

Research News and Market Data on XELB

November 15, 2023 at 4:15 PM EST

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Conference call scheduled for 5:00 p.m. ET on November 20, 2023

NEW YORK, Nov. 15, 2023 (GLOBE NEWSWIRE) — Xcel Brands, Inc. (NASDAQ: XELB) (“Xcel” or the “Company”), a media and consumer products company with billions of dollars in retail sales generated by its brands through social commerce and live-stream shopping, today announced that it will report its third quarter 2023 financial results on November 20, 2023. The Company will hold a conference call with the investment community on November 20, 2023, at 5:00 p.m. ET.

A webcast of the conference call will be available live on the Investor Relations section of Xcel’s website at https://xcelbrands.co/pages/events-and-presentations or directly at https://edge.media-server.com/mmc/p/8zxctvoi.

Interested parties unable to access the conference call via the webcast may dial 800-715-9871 or 646-307-1963 and use the Conference ID 8167522. A replay of the webcast will be available on Xcel’s website.

About Xcel Brands
Xcel Brands, Inc. (NASDAQ: XELB) is a media and consumer products company engaged in the design, production, marketing, livestreaming, wholesale distribution and direct-to-consumer sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the acquisition of dynamic consumer lifestyle brands. Xcel was founded in 2011 with a vision to reimagine shopping, entertainment and social media as one thing. Xcel owns the Judith Ripka, Halston, LOGO by Lori Goldstein, and C. Wonder brands and a minority stake in the Isaac Mizrahi brand. It also owns and manages the Longaberger brand through its controlling interest in Longaberger Licensing LLC. Xcel is pioneering a true omni-channel sales strategy that includes the promotion and sale of products under its brands through interactive television, digital livestream shopping, social commerce, brick-and-mortar retail and e-commerce channels. The company’s brands have generated in excess of $4 billion in retail sales via livestreaming in interactive television and digital channels alone.

Headquartered in New York City, Xcel Brands is led by an executive team with significant livestreaming, production, merchandising, design, marketing, retailing and licensing experience and has a proven track record of success in elevating branded consumer products companies. With an experienced team of professionals focused on design, production and digital marketing, Xcel maintains control of product quality and promotion across all of its product categories and distribution channels. Xcel differentiates by design. www.xcelbrands.com

For further information please contact:
Andrew Berger
SM Berger & Company
216-464-6400
[email protected]

Source: Xcel Brands, Inc

From Inflation to Deflation: A Seasonal Shift in Consumer Prices

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Consumers tapped out from inflation may finally get a reprieve this holiday season in the form of falling prices. According to Walmart CEO Doug McMillon, deflation could be on the horizon.

On a Thursday earnings call, McMillon said the retail giant expects to see deflationary trends emerge in the coming weeks and months. He pointed to general merchandise and key grocery items like eggs, chicken, and seafood that have already seen notable price decreases.

McMillon added that even stubbornly high prices for pantry staples are expected to start dropping soon. “In the U.S., we may be managing through a period of deflation in the months to come,” he said, welcoming the change as a benefit to financially strapped customers.

His comments echo optimism from other major retailers that inflation may have peaked. Earlier this week, Home Depot CFO Richard McPhail remarked that “the worst of the inflationary environment is behind us.”

Government data also hints the pricing pressures are easing. The consumer price index (CPI) for October was flat compared to September on a seasonally adjusted basis. Core CPI, which excludes volatile food and energy costs, dipped to a two-year low.

This emerging deflationary environment is a reprieve after over a year of runaway inflation that drove the cost of living to 40-year highs. Everything from groceries to household utilities saw dramatic price hikes that squeezed family budgets.

But the October CPI readings suggest the Federal Reserve’s aggressive interest rate hikes are having the desired effect of reining in excessive inflation. As supply chains normalize and consumer demand cools, prices are softening across many categories.

For instance, the American Farm Bureau Federation calculates that the average cost of a classic Thanksgiving dinner for 10 will be $64.05 this year – down 4.5% from 2022’s record high of $67.01. The drop is attributed largely to a decrease in turkey prices.

Still, consumers aren’t out of the woods yet when it comes to stubborn inflation on essentials. While prices are down from their peak, they remain elevated compared to historical norms.

Grocery prices at Walmart are up mid-single digits versus 2022, though up high-teens compared to 2019. Many other household basics like rent, medical care, and vehicle insurance continue to rise at above average rates.

And American shopping habits reflect the impact of lingering inflation. Walmart CFO John David Rainey noted consumers have waited for discounts before purchasing goods such as Black Friday deals.

McMillon indicated shoppers are still monitoring spending carefully. So while deflationary pressure is a tailwind, Walmart doesn’t expect an abrupt return to pre-pandemic spending patterns.

The retailer hopes to see food prices in particular come down faster, as grocery inflation eats up a significant chunk of household budgets. But experts warn it could take the rest of 2023 before inflation fully normalizes.

Consumers have been resilient yet cautious under economic uncertainty. If deflation takes root across the retail landscape, it could provide much-needed relief to wallets and mark a turning point toward recovery. For now, the environment looks favorable for a little more jingle in shoppers’ pockets this holiday season.

Release – ACCO Brands Announced as One of America’s Safest Companies for 2023 by EHS Today

Posted on by [email protected]

Research News and Market Data on ACCO

November 14, 2023

LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands (NYSE: ACCO), a world leader in branded consumer and end user products, was named one of America’s Safest Companies in 2023 by EHS Today. The magazine for environment, health, and safety leaders, announced its list of the 2023 America’s Safest Companies last month with 10 companies on the list. These companies are involved in a broad range of activities, from industrial contracting to robotics, from packaging to cabinetry, from consumer packaged goods to electrical construction, and more.

ACCO Brands was among the outstanding companies being honored because of a committed understanding of the value that safety brings to an organization. This is the third time that ACCO Brands has been awarded this title, something only six other companies have achieved.

For more than 20 years, the America’s Safest Companies competition has sought to identify those characteristics that differentiate good safety programs from great ones, and to then celebrate the best practices and procedures that exemplify safety excellence.

“Every America’s Safest Company winner is a standard-bearer of safety excellence. Each winning company has engrained into their culture and their employees a consistent and constant need to keep every person and every situation free from harm,” said EHS Today Editor-in-Chief Dave Blanchard.

To be considered as one of America’s Safest Companies, organizations must complete an application that requires them to demonstrate excellence in several areas: support from leadership and management for EHS efforts; employee involvement in the EHS process; innovative solutions to safety challenges; injury and illness rates lower than the average for their industries; comprehensive training programs; evidence that prevention of incidents is the cornerstone of the safety process; good communication about the value of safety; and a way to substantiate the benefits of the safety process.

As a company with a personal stake in all things ergonomic, ACCO Brands understands the discomfort of aches and pains. That is why the company provides on-site massages using the certified active release technique (ART) to all U.S. manufacturing and distribution center employees—regardless of whether those aches and pains are job-related or not.

“While there is a significant cost to providing the ART benefit to our employees, we believe we have prevented many minor employee issues from becoming more serious medical issues and have a healthier workforce as a result of this program,” says James Edwards, senior director of environmental, health and safety, ACCO Brands.

The best practices from the 2023 America’s Safest Companies are featured in a special section in the July/August 2023 issue of EHS Today magazine and on the brand’s website, www.ehstoday.com. Since 2002, America’s Safest Companies has honored more than 250 organizations for their unwavering commitment to worker safety, health, and environmental stewardship.

About ACCO Brands
ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play, and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.

About EHS Today
Owned by Endeavor Business Media, EHS Today is an American occupational safety, and health media brand. It is the leading US magazine for environmental, health and safety management professionals in the manufacturing, construction, and service sectors.

Kori Reed
Corporate Communication, ACCO Brands
[email protected]

Source: ACCO Brands Corporation

Release – Fatburger Announces Six New Texan Locations

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Research News and Market Data on FAT

November 14, 2023

The Last Great Hamburger Stand Set to Debut in Hidalgo County

LOS ANGELES, Nov. 14, 2023 (GLOBE NEWSWIRE) — FAT (Fresh. Authentic. Tasty.) Brands Inc., parent company of Fatburger and 17 other restaurant concepts, announces a new development deal set to bring six additional franchised Fatburger locations to Hidalgo County, Texas in the next five years. The news comes on the heels of the recent opening of the first co-branded Fatburger and Round Table Pizza restaurant in Lantana, Texas.

“The Fatburger brand continues to expand in Texas,” said Taylor Wiederhorn, Chief Development Officer of FAT Brands. “Fatburger has a pipeline of approximately 50 restaurants to be built in Texas alone and the franchisee demand to develop more Fatburger restaurants throughout the state has not slowed down. We look forward to adding six more restaurants to our existing development pipeline in Texas with further growth near the southern border.”

Ever since the first Fatburger opened in Los Angeles 70 years ago, the chain has been known for its delicious, grilled-to-perfection and cooked-to-order burgers. Founder Lovie Yancey believed that a big burger with everything on it is a meal in itself; at Fatburger “everything” is not just the usual roster of toppings. Burgers can be customized with everything from bacon and eggs to chili and onion rings. In addition to its famous burgers, the Fatburger menu also includes Fat and Skinny Fries, sweet potato fries, scratch-made onion rings, Impossible™ Burgers, turkeyburgers, hand-breaded crispy chicken sandwiches, and hand-scooped milkshakes made from 100 percent real ice cream.

For more information on Fatburger, visit www.fatburger.com.

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About FAT (Fresh. Authentic. Tasty.) Brands

FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets and develops fast casual, quick-service, casual and polished casual dining restaurant concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Smokey Bones, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.

About Fatburger
An all-American, Hollywood favorite, Fatburger is a fast-casual restaurant serving big, juicy, tasty burgers, crafted specifically to each customer’s liking. With a legacy spanning 70 years, Fatburger’s extraordinary quality and taste inspire fierce loyalty amongst its fan base, which includes a number of A-list celebrities and athletes. Featuring a contemporary design and ambiance, Fatburger offers an unparalleled dining experience, demonstrating the same dedication to serving gourmet, homemade, custom-built burgers as it has since 1952 – The Last Great Hamburger Stand™.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the future financial and operating results of the Company, estimates of future EBITDA, the timing and performance of new store openings, future reductions in cost of capital and leverage ratio, our ability to conduct future accretive acquisitions and our pipeline of new store locations. Forward-looking statements generally use words such as “expect,” “foresee,” “anticipate,” “believe,” “project,” “should,” “estimate,” “will,” “plans,” “forecast,” and similar expressions, and reflect our expectations concerning the future. Forward-looking statements are subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are difficult to predict and beyond our control, which could cause our actual results to differ materially from the results expressed or implied in such forward-looking statements. We refer you to the documents that we file from time to time with the Securities and Exchange Commission, such as our reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause our actual results to differ materially from our current expectations and from the forward-looking statements contained in this press release. We undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this press release.

MEDIA C ONTACT :
Ali Lloyd, FAT Brands
[email protected]
435-760-6168

Source: FAT Brands Inc.