– Newly appointed CFO Michael Schwindle brings well-rounded fiscal, operational, and strategic leadership to support Project Restoration –
– Company targeting $12 million in incremental cost reductions in addition to $27 million previously identified –
FORT WAYNE, Ind., April 25, 2023 (GLOBE NEWSWIRE) — Vera Bradley, Inc. (Nasdaq: VRA) (the “Company”) today announced the Company is making additional corporate organizational changes and targeting $12 million in incremental cost reductions for the fiscal year ending February 3, 2024, including the elimination of approximately 25 corporate positions as part of an overall plan to further right-size the expense structure of the enterprise.
Jackie Ardrey, Chief Executive Officer of the Company, noted, “We are committed to returning Vera Bradley and Pura Vida to profitable growth and generating strong cash flow as a Company, which I believe will deliver value to our shareholders over the long term. Earlier this year, we launched Project Restoration, focusing on four key pillars of the business for each brand – Consumer, Brand, Product, and Channel – to drive this long-term profitable growth.”
“The work on Project Restoration started this quarter,” Ardrey continued, “and it is supported by improved financial discipline and cost control. These efforts together will make us a stronger, healthier Company on the top and bottom line.”
“I am pleased to announce that Michael Schwindle will join the Company as Chief Financial Officer on May 8. His track record of driving profitable growth, along with his passion for retail and operational excellence, will be instrumental as the Company executes Project Restoration and in the years beyond,” Ardrey said.
Schwindle is a retail industry veteran with over 30 years of experience, including more than 15 years in Chief Financial Officer roles, delivering strong results through profit improvement and by providing innovative solutions. Since early 2020, he has served as CFO for accessory and jewelry retailer Claire’s. Previously, he held CFO roles at specialty retailers Fleet Farm, Payless ShoeSource, Harry & David, and Musician’s Friend, as well as other key financial roles at Home Depot and Limited Brands. Schwindle began his career at Deloitte & Touche LLP.
John Enwright, the Company’s Chief Financial Officer, will be stepping down as a result of the reorganization. Enwright will work closely with Schwindle through early June to ensure a smooth transition. Ardrey noted, “On behalf of the Board and our entire team, I want to thank John for his many contributions during his nine years of service and for his commitment to our Company, brands, culture, and Associates. We wish him all the best in the future.”
The Company is making several organizational changes in the Marketing, Ecommerce, Product Design, and Product Development areas that will eliminate approximately 25 corporate positions. The Company will also reduce other non-payroll costs throughout the organization, including but not limited to: non-working marketing expenses, third-party contracts and professional services, logistics, operational costs, and travel.
Ardrey noted, “This flattened and streamlined organizational structure will help us improve execution; make faster decisions; and provide support for the Consumer, Brand, Product, and Channel pillars of Project Restoration. These most recent organizational changes and non-payroll expense reductions are expected to produce annualized savings of approximately $12 million, on top of the $27 million of cost reductions previously identified and largely realized in fiscal 2023. All of these initiatives should position Vera Bradley, Inc. to be a stronger, more nimble organization.”
“We are committed to delivering improved value to our shareholders,” Ardrey continued. “These efforts will allow us to reset our expense base and simplify the organization, so we can focus fully on Project Restoration and on delivering both healthy top- and bottom-line growth in the future.”
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.
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. Risks, uncertainties, and assumptions also include the possibility that Pura Vida acquisition benefits may not materialize as expected and that Pura Vida’s business may not perform as expected. 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.
CONTACTS: Investors: Julia Bentley, VP of Investor Relations and Communications jbentley@verabradley.com (260) 207-5116
One popular meme stock, Bed Bath & Beyond (BBBY) is being delisted from the Nasdaq exchange, according to a company announcement. There are a number of reasons a public company can delist from an exchange. In BBBY’s case it is related to their recent bankruptcy filing, according to management. Below are examples of the many reasons a company would delist, what happened in BBBY’s case, and what delisting means for investors.
Many Reasons to Delist
Delisting from the stock exchange refers to the removal of a company’s shares from public trading on a particular exchange. It occurs by management choice or at the exchange’s request. The process can happen for various reasons, such as regulatory violations, bankruptcy, or a company’s decision to go private. Delisting can have significant consequences for the corporation and its investors, including decreased liquidity and visibility in the market.
A common reason for delisting is regulatory violations. For example, if a company fails to comply with the reporting requirements of the Securities and Exchange Commission (SEC), it may face delisting from the stock exchange. This was the case with Chinese tech giant Alibaba, which was delisted from the Hong Kong Stock Exchange in 2020 because of regulatory violations.
Sometimes, companies have a reason to take themselves private and delist as part of that process. Going private means that a corporation’s shares are no longer traded on public stock exchanges. In 2013, computer maker Dell was taken private in a deal worth $24.9 billion. The company’s delisted its shares from the NASDAQ exchange. Twitter was recently purchased and taken private.
As is the case with Bed Bath and Beyond, bankruptcy often causes shares not to meet the exchange’s criteria, forcing a delisting. Another retailing example is Toys R Us in 2018. It filed for bankruptcy and was subsequently delisted from the New York Stock Exchange (NYSE).
Delisting can have significant implications for a company and its shareholders. One of the main consequences is a decrease in liquidity. When a company is delisted, its shares are no longer traded on public stock exchanges, which means that investors may have a harder time finding buyers or sellers for their shares.
Additionally, delisting can impact a company’s visibility in the market. Without a public listing, a company may find it more difficult to attract investors and raise capital. This can be particularly challenging for small and mid-sized companies that rely on the stock market to raise funds.
Bed Bath and Beyond’s Delisting
Trading in BBBY common stock will cease at the opening of the trading day on May 3 – according to a filing with the Securities and Exchange Commission (SEC).
In its bankruptcy announcement, the company said trading of shares would halt on the Nasdaq exchange. Nasdaq and the NYSE have standards companies need to meet for their stocks to be listed and stay listed. This includes minimum levels of liquidity, market value, or price level.
Back in January, Nasdaq warned the company its shares would be delisted after it failed to report quarterly results in a timely manner. The company eventually filed the report and returned to compliance. This time Bed Bath and Beyond said it doesn’t intend to appeal.
Shareholders will still own the stock and fractional shares of the company after May 3. However, without the help of a major exchange, trading between stockholders and speculators is usually much more difficult. Some bankrupt companies’ stocks continues to trade in over-the-counter markets (OTC). They typically have the letter “Q” at the end of their stock symbol. It isn’t yet clear if BBBY will trade as BBBYQ.
After a company files for Chapter 11, unsecured creditors—including suppliers and leaseholders—line up in an attempt to get repaid. How much creditors get paid back depends on how much money Bed Bath and Beyond can raise from the sale of either parts of its business or the chain itself.
Take Away
Delisting from major stock exchanges can happen for various reasons and can have significant consequences for investors. While regulatory violations and bankruptcy can lead to forced delisting, companies may choose to delist voluntarily to go private or for other strategic reasons. Regardless of the reason, delisting can impact a company’s liquidity and visibility in the market, making it important for investors to carefully consider the implications before investing in delisted companies or those facing delisting.
JERICHO, N.Y.–(BUSINESS WIRE)– 1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS) (the “Company”),a leading provider of gifts designed to help inspire customers to give more, connect more, and build more and better relationships, today announced that the Company will release financial results for its fiscal 2023 third quarter on Thursday, May 11, 2023. The press release will be issued prior to market opening and will be followed by a conference call with members of senior management at 8:00 a.m. (ET).
The conference call will be available via live webcast from the Investors section of the Company’s website at 1800flowersinc.com. A recording of the call will be posted on the website within two hours of the call’s completion. A telephonic replay of the call can be accessed beginning at 2:00 p.m. (ET) on May 11, 2023, through May 18, 2023, at: (US) 1-877-344-7529; (Canada) 855-669-9658; (International) 1-412-317-0088; enter conference ID: #4785326.
Special Note Regarding Forward-Looking Statements:
Some of the statements contained in the Company’s scheduled Thursday, May 11, 2023, press release and conference call regarding its results for its fiscal 2023 third quarter, other than statements of historical fact, may be forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the applicable statements. For a more detailed description of these and other risk factors, please refer to the Company’s SEC filings including its Annual Reports and Forms 10K and 10Q available at the Investor Relations section of the Company’s website at 1800flowersinc.com. The Company expressly disclaims any intent or obligation to update any of the forward-looking statements made in the scheduled conference call and any recordings thereof, or in any of its SEC filings, except as may be otherwise stated by the Company.
About 1-800-FLOWERS.COM, Inc.
1-800-FLOWERS.COM, Inc. is a leading provider of gifts designed to help inspire customers to give more, connect more, and build more and better relationships. The Company’s e-commerce business platform features an all-star family of brands, including: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl’s Cookies®, Harry & David®, PersonalizationMall.com®, Shari’s Berries®, FruitBouquets.com®, Things Remembered®, Moose Munch®, The Popcorn Factory®, Wolferman’s Bakery®, Vital Choice®, Stock Yards® and Simply Chocolate®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. strives to deepen relationships with customers. The Company also operates BloomNet®, an international floral and gift industry service provider offering a broad-range of products and services designed to help members grow their businesses profitably; Napco℠, a resource for floral gifts and seasonal décor; DesignPac Gifts, LLC, a manufacturer of gift baskets and towers; and Alice’s Table®, a lifestyle business offering fully digital livestreaming and on demand floral, culinary and other experiences to guests across the country. 1-800-FLOWERS.COM, Inc. was recognized among the top 5 on the National Retail Federation’s 2021 Hot 25 Retailers list, which ranks the nation’s fastest-growing retail companies, and was named to the Fortune 1000 list in 2022. Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS. For more information, visit 1800flowersinc.com or follow @1800FLOWERSInc on Twitter.
Elon Musk Announces New Financial Functionality on Twitter
Starting today, Twitter will provide tweeters the ability to buy and sell stocks and crypto on its platform via eTORO. Twitter owner, Elon Musk has been indicating he intends to turn the popular micro-blogging platform into a “super app.” Today’s move shows substantial headway in allowing financial transactions to be conducted on the social media platform. Other company goals since Musk’s purchase of the company include ride hailing, and attracting video influencers that may be disenchanted with YouTube restrictions on speech.
What Will the Twitter eTORO Partnership Provide?
Founded in 2007, eTORO has become one of the largest social investment networks and trading platforms. According to its website, it is “built on social collaboration and investor education: a community where users can connect, share, and learn.”
Twitter will partner with the platform to allow users (known as tweeters and Twitterers) to trade stocks and cryptocurrencies as part of a deal with the social investing company.
This partnership will provide access to view charts and trade stocks, cryptocurrencies, and other investment assets from eToro via its mobile platform. Together this significantly expands real-time trading data available to users who already have access on Twitter to real-time data, however this arrangement adds all the bells and whistles a modern trading app can provide.
Twitter will be expanding its use of cashtags as well. Twitter added pricing data for $Cashtags (company ticker preceded by “$”) in December 2022. Since January, there have been more than 420 million searches using Cashtags – the number of searches averages 4.7 million a day.
eToro CEO Yoni Assia told CNBC the deal will help better connect the two brands, adding that in recent years its users have increasingly turned to Twitter to “educate themselves about the markets.”
Assia said there is a great deal of “very high quality” content available in real-time and that the partnership with Twitter will help eToro expand to reach new audiences tapping this as a source of information.
Update on Elon
After Musk’s purchase of Twitter, many advertisers stepped back and watched to see how far the company would go to allow less moderated interaction. On Wednesday (April 12) Musk said that “almost all” advertisers had returned to the app. However, Stellantis and Volkswagen, two large competitors with Musk run Tesla, said they do not yet plan to resume advertising.
Musk told a Morgan Stanley conference last month he wants Twitter to become “the biggest financial institution in the world.” This begs those that follow Musk to ask, “Why stop there, why not include Mars?”
What Else
Be sure to follow Channelchek on Twitter (@channelchek) to stay up to date on market insights, news, videos, and of course, top-tier investment analyst research on small and microcap opportunities.
On May 11 the Covid National Emergency Will Be Declared Over – Are You in the Right Stocks?
Were there any companies that had lasting benefits from the shutdowns and lockdowns in response to the pandemic? During the first two years of the 2020s, pandemic consumer behavior caused sports equipment makers, communications, ecommerce, and healthcare companies to be favorites of investors. As investors then pivoted and began to look for the “post-covid” trade, many of these high-flyers, including Peleton (PTON), Teledoc (TDOC), Chlorox (CLX) and others, no longer held the advantage they had, and sold off. The focus then turned to energy, leisure, and other segments that had been decimated during forced lockdowns and fear. While some once strong sectors and segments faltered, some ecommerce companies, that were experiencing growth going into the pandemic, received a huge, albeit challenging, boost during the changed economy. The astute ones took the opportunity to grow deeper roots.
Online businesses are one segment where many companies maintained their bulge from the Covid lockdowns. The following insights are largely from a roadshow I attended, supplemented by research by Noble Capital Markets on Channelchek.com. While this isn’t the only ecommerce business that has retained substantial benefits from the pandemic, it is a company that can serve as a template as to what to look for when doing your own fundamental analysis.
Toll free numbers (eight hundred numbers) for decades helped consumers overcome the reluctance to incur long-distance phone charges when needing help ordering from a mail order company. At the same time they saved the company from time-consuming collect calls. Introduced in 1967, it was a win-win technology that was quickly adopted and allowed broader reach.
From very humble beginnings an entrepreneur who still heads the company grew a 14-store flower shop based on Long Island by amassing enough financing to acquire 1-800-FLOWERS (FLWS), an ailing store based in Texas. His company instantly became a national brand through the use of this toll-free technology.
The company today is worth over $621 million and has not forgotten that they are a technology-based retailer. Their product is also not narrowly defined as flowers, but instead gifts for special occasions and people who are special to you. FLWS is a successful online retailer, willing to engage pertinent technology, learn from it, adapt that which works, and commercialize it to maintain a competitive edge in the ecommerce segment. This includes automation which helps offset post-pandemic era wage increases; artificial intelligence, which can help customers customize a notecard with a poem; and of course all that helps online retail build customers.
The pandemic allowed FLOWERS to double the size of its file of customers. On the revenue side, the company went from $1.2 billion in 2019, then quickly grew and peaked at $2.2 billion by March of 2022. They have been able to keep much of this revenue gain, and it isn’t going backward. This is because the ecommerce trend was already in place, but the pandemic helped accelerate the use and permanent adoption by individuals that are now in the habit of thinking online when it comes to special occasion gifts. This trend continues, even as the overall economy is showing cracks.
The negative for FLOWERS, like other retailers operating during the pandemic period, was grappling with supply chain issues and dramatically higher shipping costs. The cost of having a container shipped has now dropped significantly. FLWS, during the worst period, had worked to keep more than ample inventory of non-perishables since the supply-chain was not reliable. As a result, they are still working off more expensive inventory, which has the effect of a higher cost of goods sold, this shows up on financials as narrower profit margins. The working off of this more expensive inventory and replenishing it with goods with lower shipping costs should serve to expand profit margins going forward, even if revenue remains neutral.
Ecommerce
How might this this apply to other ecommerce companies? Flowers has innovative management that is not afraid to experiment with technology and adapt to their business those which helps save them money or reach more customers. A good way to discern this is by attending industry conferences such as NobleCon19 in December or attending roadshows as I did to meet FLWS management.
Another characteristic that this company had, that is admirable, is an acceleration of users during the pandemic that may not have otherwise decided to buy online. The company makes good use of this larger root system and stays in touch with the customers using its expanded list, sharing thoughts on other offerings.
An interesting situation of 1(800)-FLOWERS.com that may exist with others is the changed cost of shipping and inventory. This negative, which is still unwinding, provides a declining cost of goods sold for a period of time. This could translate into higher earnings, depending on other market and business factors – this could get the attention of investors. It’s important to note that once inventories are worked off, margins would stabilize, and lower-cost inventories would no longer contribute to net earnings.
Take Away
Meeting with management, in this case at a road show sponsored by Noble Capital Markets (see calendar here), or at a large investor conference such as NobleCon (Information provided here) helps provide insight into a company itself, an evaluation of management, plus ideas of what to look for in related companies. I wouldn’t expect CNBC or Bloomberg to spend as much time discussing a $621 million company as they spend on AAPL or MSFT, nor would I expect that the average investor can have breakfast with Elon Musk of Tesla or Mark Zuckerberg of META, and get to know their plans, their company, and current industry factors that they are challenged with.
If you are serious about discovering what’s beyond CNBC, Stocktwits, and Yahoo Finance, I recommend attending a meet-the-management style road show and if you can, an investment conference that showcases industries you are interested in.
Net revenues totaled $500.0 million for the fiscal year
Net loss totaled ($59.7) million, or ($1.90) per diluted share, for fiscal year; excluding certain items, non-GAAP net income totaled $7.6 million, or $0.24 per diluted share
Balance sheet remains strong, with cash and cash equivalents of $46.6 million and no debt
Management provides guidance for fiscal year ending February 3, 2024
FORT WAYNE, Ind., March 08, 2023 (GLOBE NEWSWIRE) — Vera Bradley, Inc. (Nasdaq: VRA) (or the “Company”) today announced its financial results for the fourth quarter and fiscal year ended January 28, 2023 (“Fiscal 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 only to the Vera Bradley brand.
Fourth Quarter and Fiscal Year Comments
Jackie Ardrey, Chief Executive Officer of the Company, noted, “We focused on driving revenues in the fourth quarter through targeted, strategic promotions on seasonal, giftable, and key items. As a result, total Company fourth quarter revenues outperformed our guidance, although gross margins remained under pressure. Diligent expense control enabled us to deliver fourth quarter non-GAAP diluted EPS of $0.16, which was nearly flat with last year.
“In the fourth quarter, sales trends at both Vera Bradley and Pura Vida improved over prior quarters, with Vera Bradley total sales down just 1% and Pura Vida sales down less than 5% on a year-over-year basis. For the fourth consecutive quarter, the Vera Bradley Indirect Channel experienced year-over-year revenue growth. Targeted customer retention efforts led to increased Vera Bradley e-commerce revenues, while Full-Line and Factory store revenues continued to be negatively affected by traffic levels, although trends improved throughout the quarter.”
Ardrey continued, “At Pura Vida, e-commerce trends improved over previous quarters due to strategic promotions; however, overall challenges continued to persist in our social and digital media effectiveness coupled with rising digital media costs. And, we experienced a year-over-year sales decline in our wholesale channel. On the plus side, Pura Vida Full-Line retail stores continued to perform ahead of our expectations, and they drove improved e-commerce traffic and revenues in their markets.
“We also took the opportunity in the fourth quarter to reset and appropriately position the Pura Vida business for the future, by recording goodwill and tradename impairments and necessary inventory write-offs.
“We ended the fiscal year with consolidated revenues of $500 million. During the year, we began to see stabilization in our supply chain, diligently controlled our expenses, and carefully managed our cash. During the fourth quarter, we meaningfully reduced our year-end inventory levels from the third quarter.”
Ardrey added, “Although Fiscal 2023 had its challenges, we took actions and laid the groundwork to position the Company for the future.
“On a corporate basis:
In mid-2022, we collaboratively identified $25 million in annualized cost-reduction initiatives and efficiency processes. The expense savings were derived across various areas of the Company, including payroll reductions, retail store efficiencies, marketing expenses, information technology contracts and projects, professional services, and logistics and operational costs. Many of the savings were realized in Fiscal 2023.
In January 2023, we further streamlined our corporate structure by eliminating the positions of Vera Bradley Brand President, Chief Creative Officer, and Chief Revenue Officer, and by adding the position of Chief Marketing Officer, designed to drive additional annual cost savings of approximately $2 million, add more focus on marketing and merchandising, and position the Company to deliver steady top- and bottom-line growth. These decisions were made in order to right-size our leadership team and cost structure for the size of our business, to address the continuing challenging macro environment, and to best position us to achieve our long-term strategic plans.
Subsequent to the end of Fiscal 2023, in January 2023, we acquired the remaining 25% interest in Pura Vida from founders Griffin Thall and Paul Goodman for $10 million.
We continued to make investments in customer data science, business analytics, and pricing optimization, allowing us to collect and analyze data and make fact-based decisions to more efficiently run our business.
“At the Vera Bradley brand:
We expanded our robust product innovation pipeline, including launching our Featherweight Collection; continued another year of iconic product collaborations, including with Disney, Harry Potter, and Crocs; and expanded our cozy, sleep, and outerwear collections.
We continued to strengthen and rationalize our store base. We opened five new Factory stores and closed 19 underperforming Full-Line stores and one Factory store, ending the fiscal year with 51 Full-Line and 79 Factory locations. We also continued to expand options for customers to shop, like enhancing our presence in third-party marketplaces and adding boutiques in select high-traffic airports.
“At the Pura Vida brand:
We entered into several high-profile product collaborations, with brands such as Hello Kitty, Disney, and Harry Potter, and expanded our product offerings by launching our demi-fine collection and expanding our assortment of engravable jewelry, all designed to bring new customers to our brand.
We focused on building a more diverse, innovative, effective, and performance-based marketing program to drive Pura Vida e-commerce sales. We began the process of implementing a comprehensive customer data platform to build a single, coherent, complete view of each Pura Vida customer so that we can better target and personalize marketing and become less reliant on third-party marketing. This project is scheduled for completion this spring. We continued to engage our micro influencers, significantly expanded our TikTok presence, launched impactful ads on connected TV, optimized SMS, and aggressively explored other methods to effectively reach our customers.
We opened three new Pura Vida Full-Line stores during the year, bringing our Full-Line store count to four, which collectively are exceeding our expectations. These four stores are playing a role in driving new customer acquisition as we continue to diversify our marketing platforms, and they demonstrate the power a retail presence can have in driving digital sales, omni-channel loyalty, and spending.”
Summary of Financial Performance for the Fourth Quarter
Consolidated net revenues totaled $147.1 million for the current year fourth quarter compared to $149.6 million in the prior year fourth quarter.
For the current year fourth quarter, Vera Bradley, Inc.’s consolidated net loss totaled ($28.2) million, or ($0.91) per diluted share. These results included $33.1 million of net after tax charges, comprised of $22.4 million of goodwill and intangible asset impairment charges; $6.7 million of net inventory and purchase order-related adjustments; $2.4 million of severance, retention, and stock-based retirement compensation charges; $0.8 million related to new CEO sign-on bonus and relocation expenses; $0.5 million for the amortization of definite-lived intangible assets; and $0.3 million of consulting and professional fees primarily associated with strategic initiatives. On a non-GAAP basis, Vera Bradley, Inc.’s consolidated fourth quarter net income totaled $5.0 million, or $0.16 per diluted share.
For the prior year fourth quarter, Vera Bradley, Inc. consolidated net income totaled $5.2 million, or $0.15 per diluted share. These results included $0.5 million of net after tax charges primarily related to intangible asset amortization. On a non-GAAP basis, excluding these charges, Vera Bradley, Inc.’s prior year consolidated fourth quarter net income totaled $5.7 million, or $0.17 per diluted share.
Summary of Financial Performance for the Fiscal Year
Consolidated net revenues totaled $500.0 million for Fiscal 2023 compared to $540.5 million for Fiscal 2022.
For the current fiscal year, Vera Bradley, Inc.’s consolidated net loss totaled ($59.7) million, or ($1.90) per diluted share. These results included $67.4 million of net after tax charges, comprised of $40.6 million of goodwill and intangible asset impairment charges; $12.2 million of net inventory and purchase order-related adjustments; $7.4 million of severance, retention, and stock-based retirement compensation charges; $3.3 million of consulting and professional fees primarily associated with cost savings initiatives, the CEO search, and strategic initiatives; $1.8 million for the amortization of definite-lived intangible assets; $1.0 million of store and right-of-use asset impairment charges; $0.8 million related to the new CEO sign-on bonus and relocation expenses; and $0.3 million of goodMRKT exit costs. On a non-GAAP basis, Vera Bradley, Inc.’s consolidated net income totaled $7.6 million, or $0.24 per diluted share.
For the prior fiscal year, Vera Bradley, Inc.’s consolidated net income totaled $17.8 million, or $0.52 per diluted share. These results included $1.8 million of net after tax charges primarily related to intangible asset amortization. On a non-GAAP basis, excluding these charges, Vera Bradley, Inc.’s prior year consolidated net income totaled $19.7 million, or $0.57 per diluted share.
Looking Ahead
Ardrey noted, “We are committed to returning Vera Bradley and Pura Vida to profitable growth and generating strong cash flow as a Company, which I believe will deliver value to our shareholders over the long term. Since joining the Company in November, I am more convinced than ever that both brands have enormous potential, and I am very excited about the future of Vera Bradley, Inc. We have a portfolio of two iconic, lifestyle brands; multi-generational customers with remarkable loyalty and devotion; impressive brand recognition; a solid balance sheet; and an extraordinary culture. We have some heavy lifting to do in fiscal 2024, but I am confident that we will emerge a stronger Company.”
Ardrey continued, “At both brands, we are embarking on Project Restoration and will focus on four key pillars – Consumer, Brand, Product, and Channel – to drive this long-term profitable growth.
“At Vera Bradley:
Consumer: We will focus on restoring brand relevancy, targeting casual and feminine 35 to 54 year old women who value both fashion and function.
Brand: We will strategically market our distinctive and unique position as a feminine, fashionable brand that connects with consumers on a deep, emotional level.
Product: We will refocus on core categories and items we are “best at,” by innovating and expanding within our core products. We will elevate our colorful feminine heritage, keeping it distinctive but more trend relevant through updated print and design. We also will innovate into strategic adjacent lifestyle item introductions that make sense for our customers.
Channel: We will accelerate our digital-first focus and online presence, build a balanced footprint that more clearly differentiates Full-Line from Factory stores, and target and/or strengthen relationships with strategically-aligned wholesale partners.
“At Pura Vida:
Consumer: We will sharpen our focus on the care-free 18 to 24 collegiate girl, who both those younger and older aspire to be.
Brand: We will recenter our brand ethos on “living life to the fullest,” with marketing authentically sharing real moments, places, and faces.
Product: We will focus on delivering unique, fun, playful designs that are affordable and accessible with a dominant emphasis on bracelets and jewelry, as well as other strategic, adjacent categories.
Channel: We will have a strong focus on restoring e-commerce growth; strategic growth of wholesale by pursuing larger, more strategic partnerships and expanding larger existing accounts; and refining our existing store model.”
“To support growth and development of our two brands, on a corporate basis, we will continue to make strategic investments in the right talent to help drive the transformation and diligently manage our supply chain, gross margin, SG&A expenses, and cash flow,” Ardrey concluded.
Non-GAAP Numbers
The current year non-GAAP fourth quarter income statement numbers referenced below exclude the previously outlined charges for goodwill and intangible asset impairment; net inventory and purchase order-related adjustments; severance, retention, and stock-based retirement compensation; new CEO sign-on bonus and relocation; amortization of definite-lived intangible assets; and consulting and professional fees primarily associated with strategic initiatives. The current year non-GAAP fiscal year income statement numbers also exclude the previously outlined charges for cost savings initiatives and the CEO search, store and right-of-use asset impairment charges, and goodMRKT exit costs. The prior year non-GAAP fourth quarter and fiscal year income statement numbers referenced below exclude the previously outlined intangible asset amortization and store impairment charges.
Fourth Quarter Details
Current year fourth quarter Vera Bradley Direct segment revenues totaled $99.5 million, a 4.6% decrease from $104.4 million in the prior year fourth quarter. Comparable sales decreased 4.5% from the prior year. The Company permanently closed 19 Full-Line stores and one Factory store and opened five Factory stores in the last twelve months.
Vera Bradley Indirect segment revenues totaled $16.7 million, a 28.5% increase over $13.0 million in the prior year fourth quarter. The increase was broad-based with both specialty and key accounts posting year-over-year sales gains.
Pura Vida segment revenues totaled $30.9 million, a 4.2% decrease from $32.2 million in the prior year fourth quarter. The decline was primarily related to lower wholesale sales, partially offset by new store openings.
Fourth quarter consolidated gross profit totaled $60.0 million, or 40.8% of net revenues, compared to $76.1 million, or 50.9% of net revenues, in the prior year fourth quarter. On a non-GAAP basis, current year consolidated gross profit totaled $71.3 million, or 48.5% of net revenues. The current year gross profit rate primarily was negatively affected by higher inbound and outbound freight expense and increased promotional activity, partially offset by price increases.
Consolidated SG&A expense totaled $70.0 million, or 47.6% of net revenues, compared to $67.9 million, or 45.4% of net revenues, in the prior year fourth quarter. On a non-GAAP basis, consolidated SG&A expense totaled $64.4 million, or 43.8% of net revenues, compared to $67.1 million, or 44.8% of net revenues, in the prior year fourth quarter. Vera Bradley’s SG&A current year expenses were lower than the prior year primarily due to cost reduction initiatives and a reduction in variable-related expenses due to the lower sales volume.
The Company’s fourth quarter consolidated operating loss totaled ($49.8) million, or (33.8%) of net revenues, compared to operating income of $8.3 million, or 5.5% of net revenues, in the prior year fourth quarter. On a non-GAAP basis, fourth quarter consolidated operating income totaled $7.0 million, or 4.8% of net revenues, compared to $9.1 million, or 6.1% of net revenues, in the prior year.
By segment:
Vera Bradley Direct fourth quarter operating income was $18.5 million, or 18.6% of Direct net revenues, compared to $21.7 million, or 20.7% of Direct net revenues, in the prior year. On a non-GAAP basis, current year Direct fourth quarter operating income was $19.8 million, or 19.9% of Direct net revenues, compared to $21.7 million, or 20.8% of Direct net revenues, in the prior year.
Vera Bradley Indirect fourth quarter operating income was $4.6 million, or 27.3% of Indirect net revenues, compared to $2.9 million, or 22.5% of Indirect net revenues, in the prior year. On a non-GAAP basis, current year Indirect fourth quarter operating income was $5.3 million, or 32.0% of Indirect net revenues.
Pura Vida’s current year fourth quarter operating loss was ($49.8) million, or (161.2%) of Pura Vida net revenues, compared to operating income of $2.0 million, or 6.2% of Pura Vida net revenues, in the prior year. On a non-GAAP basis, Pura Vida’s current year fourth quarter operating income was $0.4 million, or 1.3% of Pura Vida net revenues, compared to $2.8 million, or 8.6% of Pura Vida net revenues, in the prior year.
Details for the Fiscal Year
Vera Bradley Direct segment revenues for the current fiscal year totaled $328.2 million, 7.5% decrease from $354.9 million in the prior year. Comparable sales declined 9.5% for the fiscal year.
Vera Bradley Indirect segment revenues for the fiscal year totaled $73.3 million, an 11.1% increase over $66.0 million in the prior year, primarily reflecting an increase in certain key account orders.
Current year Pura Vida segment revenues totaled $98.4 million, a 17.7% decrease from $119.6 million in the prior year. Pura Vida’s e-commerce revenues continue to be negatively impacted by the shift in social and digital media effectiveness and rising digital media costs, and a decline in sales to wholesale accounts.
Consolidated gross profit for the current fiscal year totaled $238.9 million, or 47.8% of net revenues, compared to $287.9 million, or 53.3% of net revenues, last year. On a non-GAAP basis, gross profit for the current fiscal year totaled $257.2 million, or 51.4% of net revenues. The current year gross profit rate primarily was negatively affected by higher inbound and outbound freight expense and increased promotional activity, partially offset by price increases.
For the fiscal year, consolidated SG&A expense totaled $265.0 million, or 53.0% of net revenues, compared to $262.0 million, or 48.5% of net revenues, in the prior year. On a non-GAAP basis, SG&A expense totaled $245.3 million, or 49.1% of net revenues, in the current year, compared to $258.8 million, or 47.9% of net revenues, in the prior year. Vera Bradley’s SG&A current year expenses were lower than the prior year primarily due to cost reduction initiatives and a reduction in variable-related expenses due to the lower sales volume.
For the fiscal year, the Company’s consolidated operating loss totaled ($94.9) million, or (19.0%) of net revenues, compared to operating income of $26.9 million, or 5.0% of net revenues, in the prior year. On a non-GAAP basis, the Company’s consolidated operating income was $12.3 million, or 2.5% of net revenues, compared to $30.1 million, or 5.6% of net revenues, in the prior year.
By segment:
Vera Bradley Direct operating income was $51.1 million, or 15.6% of Direct net revenues, compared to $73.5 million, or 20.7% of Direct net revenues, in the prior year. On a non-GAAP basis, Direct operating income was $58.3 million, or 17.8% of Direct net revenues, for the current year, compared to $73.6 million, or 20.7% of Direct net revenues, in the prior year.
Vera Bradley Indirect operating income was $23.0 million, or 31.3% of Indirect net revenues, compared to $20.3 million, or 30.8% of Indirect net revenues, in the prior year. On a non-GAAP basis, current year Indirect operating income totaled $24.7 million, or 33.7% of Indirect net revenues.
Pura Vida’s operating loss was ($78.6) million, or (79.9%) of Pura Vida net revenues, compared to operating income of $9.5 million, or 8.0% of Pura Vida net revenues, in the prior year. On a non-GAAP basis, Pura Vida’s operating income was $4.7 million, or 4.8% of Pura Vida net revenues, compared to $12.6 million, or 10.5% of Pura Vida net revenues, in the prior year.
Balance Sheet
Net capital spending for the fiscal year totaled $8.2 million compared to $5.5 million in the prior year.
Cash and cash equivalents as of January 28, 2023 totaled $46.6 million compared to $88.4 million at the prior fiscal year end. The Company had no borrowings on its $75 million ABL credit facility at fiscal year end.
Total fiscal year-end inventory was $142.3 million, compared to $144.9 million at last fiscal year end. Total current year inventory was lower than the prior year primarily due to inventory adjustments associated with excess and discounted inventory, partially offset by incremental logistics costs burdening overall inventory.
During the fourth quarter, the Company repurchased approximately $0.8 million of its common stock (approximately 187,000 shares at an average price of $4.20), bringing the Company’s Fiscal 2023 purchases to $18.1 million (approximately 2.8 million shares at an average price of $6.40). The Company’s $50.0 million share repurchase authorization expires in December 2024. Since Fiscal 2015, the Company has repurchased $132.9 million, or approximately 12.1 million shares, of its common stock.
Forward Outlook
Management is providing estimates for the fiscal year ending February 3, 2024 (“Fiscal 2024”) based on current macroeconomic trends and expectations. Ardrey noted, “We anticipate the Fiscal 2024 macroeconomic environment to continue to be unpredictable and that this year will be a rebuilding year for both of our brands. We expect to take advantage of gross margin improvement opportunities and manage our expense structure diligently.”
The Company is not providing detailed guidance for the first fiscal quarter of 2024 but expects revenues and diluted loss per share to be approximately in line with the prior year. Ardrey stated, “In the first quarter, we will work to stabilize the business. We hope to see momentum build as the year progresses.”
Excluding net revenues, all forward-looking guidance numbers referenced below are non-GAAP. The prior year income statement numbers exclude the previously disclosed charges for goodwill and intangible asset impairment; net inventory and purchase order-related adjustments; severance, retention, and stock-based retirement compensation; consulting and professional fees primarily associated with cost savings initiatives, the CEO search, and strategic initiatives; amortization of definite-lived intangible assets; store and right-of-use asset impairment charges; new CEO sign-on bonus and relocation; and goodMRKT exit costs. Current year guidance excludes any similar charges.
For Fiscal 2024, the Company’s expectations are as follows:
Consolidated net revenues of $490 to $510 million. Net revenues totaled $500.0 million in Fiscal 2023. Both Vera Bradley and Pura Vida revenues are expected to be approximately flat on a year-over-year basis.
A consolidated gross profit percentage of 52.6% to 53.6% compared to 51.4% in Fiscal 2023. The expected year-over-year increase is primarily related to reduced inbound freight expense, partially offset by deleveraged overhead costs related to reduced inventory purchases.
Consolidated SG&A expense of $241 to $251 million compared to $245.3 million in Fiscal 2023. Year-over-year changes in SG&A expense primarily are being driven by restoring short-term and long-term incentive compensation to normal levels, offset by Company-wide cost reduction initiatives.
Consolidated operating income of $17.3 to $21.7 million compared to $12.3 million in Fiscal 2023.
Free cash flow of between $25 and $30 million compared to a cash usage of $21.7 million in Fiscal 2023.
Consolidated diluted EPS of $0.40 to $0.50 based on diluted weighted-average shares outstanding of 31.0 million and an effective tax rate of approximately 28%. Diluted EPS totaled $0.24 last year.
Net capital spending of approximately $5 million compared to $8.2 million in the prior year, reflecting investments associated with new Vera Bradley Factory 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 (cash usage) free cash flow; cost of sales; gross profit; selling, general, and administrative expenses; impairment of goodwill and intangible assets; operating (loss) income; net (loss) income; net (loss) income attributable and available to Vera Bradley, Inc.; and diluted net (loss) income 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 fourth quarter and fiscal year is scheduled for today, Wednesday, March 8, 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 3761893. A replay will be available shortly after the conclusion of the call and remain available through March 22, 2023. To access the recording, listeners should dial (844) 512-2921, and enter the access code 3761893.
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, subsequent to the end of Fiscal 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 stores in the United States, www.verabradley.com, www.verabradley.ca, 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 1,700 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.eu, and www.puravidabracelets.ca; 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. Risks, uncertainties, and assumptions also include the possibility that Pura Vida acquisition benefits may not materialize as expected and that Pura Vida’s business may not perform as expected. 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 29, 2022. We undertake no obligation to publicly update or revise any forward-looking statement. Financial schedules are attached to this release.
CONTACTS: Investors: Julia Bentley, VP of Investor Relations and Communications jbentley@verabradley.com (260) 207-5116
Why NobleCon19 Will Provide Even Greater Benefit to Presenters and Investors
In a significant announcement, the organizer of one of the investment industries leading conferences released information on an update to the annual event’s conference facility for 2023 along with format enrichments. The changes are designed to improve the overall benefit to presenting companies, corporate sponsors, and institutional and individual investors. In a press release dated March 1, 2023, Noble Capital Markets, along with Florida Atlantic University, gave details of the special location, and provided information on some of the many reasons why the 19th NobleCon investor Conference (NobleCon19), will provide even more value to the company’s presenters and attending investors.
The New Facility
NobleCon19 will take advantage of the entire 54,000-square-foot College of Business Executive Education facility at Florida Atlantic University (FAU). The new facility in Boca Raton, FL, will provide tiered seating, which will provide easier visibility for both presenters and attendees. Investors will find the three large-screen monitors in each presenting room will make it easier to see and comprehend the presenters slide deck and other materials. Seeing the screen is a problem at many conferences of this magnitude. As a newly built presentation center, there will be full webcasting capabilities that include the most current technologically advanced conference environment.
Florida Atlantic University is surrounded by beauty. It’s in Boca Raton, Fl, which allows attendees to choose to stay on the ocean or at one of the other properties where conference organizers are negotiating discounts. South Florida is a popular destination for travelers from all over the world.
Noble Capital Markets joint press release with Florida Atlantic University announcing NobleCon19
NobleCon19 Format
NobleCon19 has always led the industry in its ability to place investors and executives of small-cap companies in a position to explore and interact. This year it was announced the presentations will be followed by fire-side chats with Noble analysts, so investors can gain insight from the industry analyst and company stock expert. One-on-one meetings will also be arranged for qualified investors. Several industry panel presentations are also planned for additional discovery. NobleCon19 will also feature high-profile keynote speakers and an evening event that includes entertainment for all to unwind and meet more casually with others of similar interests.
All company presentations and panel discussions will be digitally streamed and made available exclusively on www.channelchek.com
Take Away
Noble Capital Markets, through its annual NobleCon investor conference, has always been an innovator in bringing lesser-known companies with interesting stories to investors. It attracts investors that are looking for actionable ideas that they may not have discovered through other outlets. This year’s event again takes place in Florida. This is important because, over the past couple of years, the advantages of doing business in the sunshine state have drawn many new investment firms to the area. The joint press release did not say what the overall theme will be for NobleCon19; I’ll be attending and personally hope its theme ties to all that is worthwhile in this fast-growing region.
Net sales were $1.95 billion, down 4 percent; comparable sales up 1 percent
Gained market share across multiple product categories in North America in 2022
Achieved quarterly sequential margin improvement in EMEA as pricing actions took hold
Realized double-digit sales and profit growth in the International segment
Generated $78 million of cash from operations; adjusted free cash flow of $78 million
During fourth quarter of 2022 actioned annual cost savings of $13 million from significant restructuring initiatives
Full year 2023 outlook anticipates margin expansion and profit growth
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced its fourth quarter and full year results for the period ended December 31, 2022.
“We delivered 1% comparable sales growth in 2022 as we continue to execute on our strategic transformation, including expanding our product categories, broadening our geographic reach and bringing innovative new consumer-centric products to market. This enabled us to achieve market share gains with many of our brands, including Five Star®, Kensington®, Mead®, Quartet® and AT-A-GLANCE®. These successes give us confidence that our strategy of being a more consumer, brand and technology centric company and our portfolio of strong brands will position us to deliver sustainable organic growth over the long-term,” said Boris Elisman, Chairman and Chief Executive Officer of ACCO Brands.
“In 2023 our top priority is to restore our margin profile through incremental pricing actions implemented in January of 2023, the restructuring initiatives undertaken during the fourth quarter of 2022 and the additional productivity programs we will implement in 2023. We expect these actions will drive margin expansion and profit growth for the full year of 2023. With our expected continued strong cash flow in 2023, we will support our quarterly dividend, pay down debt and continue to invest in new product development and go-to-market initiatives, which we expect will better position us for future growth,” added Elisman.
Fourth Quarter Results
Net sales declined 12.4 percent to $499.4 million from $570.3 million in 2021. Adverse foreign exchange reduced sales $25.5 million, or 4.5 percent. Comparable sales fell 7.9 percent. Both reported and comparable sales declines were due to weaker sales of gaming accessories, lower inventory replenishment by our retailer customers and reduced volumes due to a deterioration in the macroeconomic environment. These more than offset global price increases.
Operating income was $35.6 million versus $63.6 million in 2021, and adjusted operating income decreased to $52.3 million from $79.1 million in the prior year. Both reported and adjusted operating income reflect the impact of lower sales volumes and higher inflation on raw materials, finished goods and transportation costs, which was partially offset by price increases, and reduced SG&A expense due to lower incentive compensation expense. Adverse foreign exchange reduced operating income by $2.2 million.
The Company reported net income of $18.8 million, or $0.20 per share, compared with prior year net income of $53.5 million, or $0.55 per share, which included $13.0 million of favorable discrete tax items. Adjusted net income was $30.5 million, or $0.32 per share, compared with $53.1 million, or $0.54 per share in 2021. The remaining declines in underlying reported net income, as well as adjusted net income were due to the items noted above in operating income.
Full Year Results
Net sales decreased 3.8 percent to $1.95 billion from $2.03 billion in 2021. The unfavorable impact of foreign exchange reduced sales by $93.9 million, or 4.6 percent. Comparable sales increased 0.8 percent. Both reported and comparable sales reflect the benefit of higher prices in all segments and strong volume growth in the International segment, partially offset by weaker sales of gaming accessories, and lower volumes in North America and EMEA due to the challenging macroeconomic environment.
Operating income was $34.8 million compared to $151.0 million in 2021, with the decline primarily due to the non-cash goodwill impairment charge of $98.7 million, partially offset by the favorable change in fair value of $28.0 million related to the PowerA contingent earnout. Adjusted operating income declined to $175.8 million from $227.9 million in 2021. The declines in both reported and adjusted operating income also reflect the impact of inflation that exceeded the benefit of price increases, and reduced volumes, partially offset by reduced SG&A expense which includes lower incentive compensation expense. Unfavorable foreign exchange reduced operating income by $6.3 million.
Net loss was $13.2 million, or ($0.14) per share, compared with net income of $101.9 million, or $1.05 per share, in 2021. The current year net loss includes $98.7 million in non-cash goodwill impairment charges, mitigated by the favorable change in fair value of the contingent earnout consideration of $20.9 million. Prior year net income also included $19.7 million of additional favorable discrete tax items, partially offset by $9.9 million of expenses related to the debt refinancing. Adjusted net income was $101.0 million, compared with $136.8 million in 2021, and adjusted earnings per share were $1.04 compared with $1.41 in 2021. The remaining declines in reported net income and adjusted net income reflect the changes noted above for adjusted operating income, partially offset by higher interest income due to higher cash balances and increased interest rates in Brazil. Interest expense was similar to the prior year.
Capital Allocation and Dividend
For the full year, the Company’s cash generated by operating activities was $77.6 million versus $159.6 million in the prior year. Adjusted free cash flow in 2022 was $77.5 million, reflecting net investing activity and excluding the operating component of the contingent earnout payment. In 2022 the Company paid $28.6 million in dividends, repurchased 2.7 million shares for $19.4 million and fully paid $27.0 million related to the 2021 PowerA contingent earnout.
ACCO Brands announced on February 17, 2023, that its board of directors declared a regular quarterly cash dividend of $0.075 per share. The dividend will be paid on April 5, 2023, to stockholders of record at the close of business on March 10, 2023.
Restructuring Actions
During the fourth quarter of 2022, the Company developed restructuring plans for both its North America and EMEA operating segments, intended to expand margins through initiatives focused on improving operating efficiency and reducing cost. In the Company’s North America segment, the plan is focused on consolidation of supply chain operations, SKU reduction, automating our sales support process, and sourcing optimization. In the Company’s EMEA segment, the focus is on reducing redundancy and enhancing productivity in its operations, SKU reduction, and sourcing initiatives. The Company anticipates these initiatives will create operating efficiencies and improve profitability, as well as provide for future growth investments. The Company has the following expectations for the restructuring plans:
Targeted annualized operating profit improvement of $13 million, with the vast majority of these savings delivered in 2023
Total profit improvements to be realized approximately 75% through lower SG&A costs and 25% through reduced cost of goods sold
Pre-tax restructuring charges of approximately $7 million were recorded in the fourth quarter, primarily comprised of severance and employee related costs
In addition, the Company has implemented plans to reduce inventory levels, increase inventory turns and improve cash flow and working capital.
Business Segment Results
ACCO Brands North America – Fourth quarter segment net sales of $225.7 million decreased 16.7 percent versus the prior year’s segment net sales of $271.0 million. Adverse foreign exchange reduced sales by 0.6 percent. Comparable sales of $227.3 million were down 16.1 percent. The decrease was primarily due to lower demand for gaming accessories and channel inventory destocking, more than offsetting price increases.
Fourth quarter operating income in North America was $8.9 million versus $34.2 million a year earlier, and adjusted operating income was $18.7 million compared to $41.9 million a year ago, with the decline in both primarily reflecting the impact of lower sales, reduced gross margin rates from negative fixed cost leverage and higher inflation on raw materials, finished goods and transportation costs. In addition, we incurred one-off items in the quarter of $7.8 million, reducing the margin rate by 340 basis points. We anticipate stabilization of product costs in select areas and improved ocean freight rates, which should benefit our margin profile in future periods.
For the full year, 2022 North America net sales of $998.0 million decreased 4.3 percent from $1,042.4 million in 2021, and comparable sales declined 3.9 percent. Higher sales and market share gains in many brands and product categories were more than offset by weaker demand for gaming accessories. Sales were stronger in the first half of 2022, driven by early demand for back-to-school products as retailers pulled their shipments to earlier in the year seeking to secure product for the selling season, while second half sales were challenged by both this pull forward, as well as inventory destocking and a slowdown in demand related to the macroeconomic environment.
In North America, the full year operating loss was $4.9 million versus operating income of $121.9 million in 2021. The loss was primarily due to the $98.7 million non-cash goodwill impairment charge. Adjusted operating income of $121.5 million decreased from $154.6 million in 2021. The decreases to reported operating loss/income and adjusted operating income reflect lower sales volumes and reduced gross margin from higher inflation on raw materials, finished goods and transportation costs.
ACCO Brands EMEA – Fourth quarter segment net sales of $156.0 million decreased 17.0 percent versus the prior year’s segment revenue of $187.9 million. Adverse foreign exchange reduced sales by 11.7 percent. Comparable sales of $177.9 million decreased 5.3 percent versus the prior-year period. Both reported and comparable sales declines were due to lower volumes which more than offset price increases. In Europe, the current energy crisis and significant inflation have created a challenging macroeconomic environment impacting sales.
Fourth quarter operating income in EMEA was $12.7 million versus $21.6 million a year earlier, and adjusted operating income was $18.4 million compared to $24.9 million a year ago. The decreases in both reported operating income and adjusted operating income were due primarily to lower sales and reduced gross margins reflecting negative fixed cost leverage and higher costs for finished goods, raw materials and freight due to significant inflation. In the fourth quarter, EMEA’s operating margin improved on a sequential basis benefiting from pricing actions and deflation in certain product and transportation costs.
Net sales for the full year in the EMEA segment of $580.3 million decreased 12.5 percent from $662.9 million in 2021. The impact of adverse foreign exchange reduced sales $78.2 million, or 11.8 percent. Comparable sales of $658.5 million decreased $4.4 million or 0.7 percent. Both reported and comparable sales declines reflect stronger sales volumes in early 2022 driven by computer accessories and business products, offset by persistent inflation and a challenging demand environment in the second half of the year, as well as the stoppage of sales to Russia.
The EMEA segment posted full-year operating income of $21.7 million compared with operating income of $61.7 million in 2021. Adjusted operating income was $37.0 million, down from $77.2 million in 2021. The declines in both reflects the impact of lower sales volumes and reduced gross margins reflecting higher costs for finished goods, raw materials and freight due to significant inflation and negative fixed cost leverage.
ACCO Brands International – Fourth quarter segment sales of $117.7 million increased 5.7 percent versus the prior year’s segment revenue of $111.4 million. Adverse foreign exchange reduced sales by 1.8 percent. Comparable sales of $119.7 million increased 7.5 percent versus the year-ago period. Both reported and comparable sales increased primarily due to price increases, more than offsetting lower volumes. Strong sales in Brazil benefited from a return to in-person education.
Fourth quarter operating income in the International segment was $22.7 million versus $20.9 million a year earlier, and adjusted operating income was $24.3 million compared to $22.9 million a year ago. The increases in both operating income and adjusted operating income were due primarily to price increases, and the strong performance in our Brazil business.
International segment sales of $369.3 million for the full year increased 15.4 percent from $320.0 million in 2021. Adverse foreign exchange reduced sales by $11.4 million. Comparable sales were $380.7 million, up 19.0 percent, due to increased volume and higher prices, primarily in Latin America from a return of in-person education and work.
Operating income of $50.5 million increased from $31.6 million in 2021. Adjusted operating income of $58.3 million increased from $40.6 million. The increases in both operating and adjusted operating income were primarily due to higher sales volumes, pricing and improved expense leverage.
Commentary and Outlook for 1Q and Full Year 2023
“Our priority in 2023 is to improve our operating profitability and free cash flow through pricing, productivity and restructuring initiatives and more efficient use of working capital. We anticipate that these actions, along with a moderating rate of inflation, will allow us to deliver margin expansion and profit and cash flow growth in 2023. We achieved comparable sales growth in 2022 and are confident in the long term sales potential of our business. Our proven business strategy, which includes geographic diversity, and our strong portfolio of brands and innovative products have us well positioned for continued long term profitable growth,” added Elisman.
“While the current economic environment remains fluid, we have an experienced management team with a proven track record of navigating periods of economic uncertainties. We are also well-capitalized, with no near-term debt maturities and generate consistent free cash flow. We remain confident in our strategic transformation and believe we have taken the right actions to drive long-term shareholder value,” Elisman concluded.
The Company is providing full year 2023 and 1Q outlook. For the full year, we expect comparable sales to be down 3 percent to flat, reflecting a challenging near-term demand environment. Foreign exchange is expected to be neutral to reported revenue. Full year adjusted EPS is expected to rise 4 percent to 8 percent, to $1.08 to $1.12, approaching low double-digit growth in adjusted operating income, partially offset by higher interest and non-cash non-operating pension expenses. 2023 free cash flow is expected to grow to at least $100 million.
Our quarterly sales and profit projection for 2023 will reflect a different cadence than last year. In 2022, the Company experienced good sales growth in the first half of the year reflecting strong demand from the post-pandemic economic recovery. In addition, North America sales benefited from the pull forward of purchases by retailers to ensure product availability for back-to-school. Concerns about the economy, the war in Ukraine and related energy crisis in EMEA challenged demand and our sales in the second half of 2022. In addition, our retail customers proactively curtailed purchases in the back half of the year to aggressively reduce their inventory levels. Against these comparisons, we are projecting our sales to be down in both the first quarter and first half of 2023, with growth anticipated in the second half of the year.
In the first quarter, we expect comparable sales to decline 10 percent to 7 percent, primarily due to the timing of back-to-school shipments and lower sales of gaming accessories in North America, partially offset by higher sales in our International segment. First quarter adjusted EPS is expected to be $0.05 to $0.07 with higher gross margins offset by sales deleveraging, higher interest and non-cash, non-operating pension expenses.
Webcast
At 8:30 a.m. ET on February 24, 2023, ACCO Brands Corporation will host a conference call to discuss the Company’s fourth quarter and full year 2022 results. The call will be broadcast live via webcast. The webcast can be accessed through the Investor Relations section of www.accobrands.com. The webcast will be in listen-only mode and will be available for replay following the event.
About ACCO Brands Corporation
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.
Non-GAAP Financial Measures
In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this earnings release to aid investors in understanding the Company’s performance. Each non-GAAP financial measure is defined and reconciled to its most closely related GAAP financial measure in the “About Non-GAAP Financial Measures” section of this earnings release.
Forward-Looking Statements
Statements contained herein, other than statements of historical fact, particularly those anticipating future financial performance, business prospects, growth, strategies, business operations and similar matters, results of operations, liquidity and financial condition, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and assumptions of management based on information available to us at the time such statements are made. These statements, which are generally identifiable by the use of the words “will,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “forecast,” “project,” “plan,” and similar expressions, are subject to certain risks and uncertainties, are made as of the date hereof, and we undertake no duty or obligation to update them. Because actual results may differ materially from those suggested or implied by such forward-looking statements, you should not place undue reliance on them when deciding whether to buy, sell or hold the company’s securities.
Our outlook is based on certain assumptions, which we believe to be reasonable under the circumstances. These include, without limitation, assumptions regarding the impact of the COVID-19 pandemic and the war in Ukraine; the impact of inflation and global economic uncertainties, fluctuations in foreign currency exchange rates and acquisitions; and the other factors described below.
Among the factors that could cause our actual results to differ materially from our forward-looking statements are: our ability to successfully execute our restructuring plans and realize the benefits of our productivity initiatives; our ability to obtain additional price increases and realize longer-term cost reductions; the ongoing impact of the COVID-19 pandemic; a relatively limited number of large customers account for a significant percentage of our sales; issues that influence customer and consumer discretionary spending during periods of economic uncertainty or weakness; risks associated with foreign currency exchange rate fluctuations; challenges related to the highly competitive business environment in which we operate; our ability to develop and market innovative products that meet consumer demands and to expand into new and adjacent product categories that are experiencing higher growth rates; our ability to successfully expand our business in emerging markets and the exposure to greater financial, operational, regulatory, compliance and other risks in such markets; the continued decline in the use of certain of our products; risks associated with seasonality; the sufficiency of investment returns on pension assets, risks related to actuarial assumptions, changes in government regulations and changes in the unfunded liabilities of a multi-employer pension plan; any impairment of our intangible assets; our ability to secure, protect and maintain our intellectual property rights, and our ability to license rights from major gaming console makers and video game publishers to support our gaming business; continued disruptions in the global supply chain; risks associated with inflation and other changes in the cost or availability of raw materials, transportation, labor, and other necessary supplies and services and the cost of finished goods; the continued global shortage of microchips which are needed in our gaming and computer accessories businesses; risks associated with outsourcing production of certain of our products, information technology systems and other administrative functions; the failure, inadequacy or interruption of our information technology systems or its supporting infrastructure; risks associated with a cybersecurity incident or information security breach, including that related to a disclosure of personally identifiable information; our ability to grow profitably through acquisitions; our ability to successfully integrate acquisitions and achieve the financial and other results anticipated at the time of acquisition, including planned synergies; risks associated with our indebtedness, including limitations imposed by restrictive covenants, our debt service obligations, and our ability to comply with financial ratios and tests; a change in or discontinuance of our stock repurchase program or the payment of dividends; product liability claims, recalls or regulatory actions; the impact of litigation or other legal proceedings; our failure to comply with applicable laws, rules and regulations and self-regulatory requirements, the costs of compliance and the impact of changes in such laws; our ability to attract and retain qualified personnel; the volatility of our stock price; risks associated with circumstances outside our control, including those caused by public health crises, such as the occurrence of contagious diseases like COVID-19, severe weather events, war, terrorism and other geopolitical incidents; and other risks and uncertainties described in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, “Part II, Item 1A Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 and in other reports we file with the Securities and Exchange Commission.
About Non-GAAP Financial Measures
We explain below how we calculate each of our non-GAAP financial measures and a reconciliation of our current period and historical non-GAAP financial measures to the most directly comparable GAAP financial measures follows.
We use our non-GAAP financial measures both to explain our results to stockholders and the investment community and in the internal evaluation and management of our business. We believe our non-GAAP financial measures provide management and investors with a more complete understanding of our underlying operational results and trends, facilitate meaningful period-to-period comparisons and enhance an overall understanding of our past and future financial performance.
Our non-GAAP financial measures exclude certain items that may have a material impact upon our reported financial results such as restructuring charges, transaction and integration expenses associated with material acquisitions, the impact of foreign currency exchange rate fluctuations and acquisitions, unusual tax items, goodwill impairment charges, and other non-recurring items that we consider to be outside of our core operations. These measures should not be considered in isolation or as a substitute for, or superior to, the directly comparable GAAP financial measures and should be read in connection with the Company’s financial statements presented in accordance with GAAP.
Our non-GAAP financial measures include the following:
Comparable Sales : Represents net sales excluding the impact of material acquisitions with current-period foreign operation sales translated at prior-year currency rates. We believe comparable sales are useful to investors and management because they reflect underlying sales and sales trends without the effect of acquisitions and fluctuations in foreign exchange rates and facilitate meaningful period-to-period comparisons. We sometimes refer to comparable sales as comparable net sales.
Adjusted Gross Profit : Represents gross profit excluding the effect of the amortization of the step-up in inventory from material acquisitions. We believe adjusted gross profit is useful to investors and management because it reflects underlying gross profit without the effect of inventory adjustments resulting from acquisitions that we consider to be outside our core operations and facilitates meaningful period-to-period comparisons.
Adjusted Selling, General and Administrative (SG&A) Expenses : Represents selling, general and administrative expenses excluding transaction and integration expenses related to material acquisitions. We believe adjusted SG&A expenses are useful to investors and management because they reflect underlying SG&A expenses without the effect of expenses related to acquiring and integrating acquisitions that we consider to be outside our core operations and facilitate meaningful period-to-period comparisons.
Adjusted Operating Income/Adjusted Income Before Taxes/Adjusted Net Income/Adjusted Net Income Per Diluted Share :Represents operating income, income before taxes, net income, and net income per diluted share excluding restructuring and goodwill impairment charges, the amortization of intangibles, the amortization of the step-up in value of inventory, the change in fair value of contingent consideration, transaction and integration expenses associated with material acquisitions, non-recurring items in interest expense or other income/expense such as expenses associated with debt refinancing, a bond redemption, or a pension curtailment, and other non-recurring items as well as all unusual and discrete income tax adjustments, including income tax related to the foregoing. We believe these adjusted non-GAAP financial measures are useful to investors and management because they reflect our underlying operating performance before items that we consider to be outside our core operations and facilitate meaningful period-to-period comparisons. Senior management’s incentive compensation is derived, in part, using adjusted operating income and adjusted net income per diluted share, which is derived from adjusted net income. We sometimes refer to adjusted net income per diluted share as adjusted earnings per share or adjusted EPS.
Adjusted Income Tax Expense/Rate :Represents income tax expense/rate excluding the tax effect of the items that have been excluded from adjusted income before taxes, unusual income tax items such as the impact of tax audits and changes in laws, significant reserves for cash repatriation, excess tax benefits/losses, and other discrete tax items. We believe our adjusted income tax expense/rate is useful to investors because it reflects our baseline income tax expense/rate before benefits/losses and other discrete items that we consider to be outside our core operations and facilitates meaningful period-to-period comparisons.
Adjusted EBITDA: Represents net income excluding the effects of depreciation, stock-based compensation expense, amortization of intangibles, the change in fair value of contingent consideration, interest expense, net, other (income) expense, net, and income tax expense, the amortization of the step-up in value of inventory, transaction and integration expenses associated with material acquisitions, restructuring and goodwill impairment charges, non-recurring items in interest expense or other income/expense such as expenses associated with debt refinancing, a bond redemption, or a pension curtailment and other non-recurring items. We believe adjusted EBITDA is useful to investors because it reflects our underlying cash profitability and adjusts for certain non-cash charges, and items that we consider to be outside our core operations and facilitates meaningful period-to-period comparisons.
Adjusted Free Cash Flow: Represents cash flow from operating activities, excluding cash payments made for contingent earnouts, less cash used for additions to property, plant and equipment, plus cash proceeds from the disposition of assets. We believe adjusted free cash flow is useful to investors because it measures our available cash flow for paying dividends, funding strategic material acquisitions, reducing debt, and repurchasing shares.
Consolidated Leverage Ratio: Represents balance sheet debt, plus debt origination costs and less any cash and cash equivalents divided by adjusted EBITDA. We believe that consolidated leverage ratio is useful to investors since the company has the ability to, and may decide to use a portion of its cash and cash equivalents to retire debt.
We also provide forward-looking non-GAAP comparable sales, adjusted earnings per share, adjusted free cash flow, adjusted EBITDA, and adjusted tax rate, and historical and forward-looking consolidated leverage ratio. We do not provide a reconciliation of these forward-looking and historical non-GAAP measures to GAAP because the GAAP financial measure is not currently available and management cannot reliably predict all the necessary components of such non-GAAP measures without unreasonable effort or expense due to the inherent difficulty of forecasting and quantifying certain amounts that are necessary for such a reconciliation, including adjustments that could be made for restructuring, integration and acquisition-related expenses, the variability of our tax rate and the impact of foreign currency fluctuation and material acquisitions, and other charges reflected in our historical results. The probable significance of each of these items is high and, based on historical experience, could be material.
Christopher McGinnis Investor Relations (847) 796-4320
Scion’s Michael Burry Owns Online Retailers, Tech Firms, a Mortgage Servicer, and a Detention Provider
GEO Group (GEO), the publicly held prison company organized as a REIT, again tops Michael Burry’s public market holdings as of the end of last year. This is one of nine holdings; a few are on-again, off-again favorites of the revered hedge fund manager. If there is one theme in his positions, it is that of select online retail merchants. While the overall size of the positions as of quarter-end is known, these positions may not represent all investments, just those that are public and reportable to the SEC on form 13F. Burry famous for his portrayal in the movie “The Big Short” was not short any publicly traded securities as 2022 drew to a close.
Below are the nine holdings, in size order, copied directy from the 13F-HR filing. GEO, Alibaba, and JD.com are familiar to followers of Dr. Burry’s holdings as this is not the first time they have appeared in his portfolio.
Geo Group (GEO) runs private detention systems. As shown below, at the end of the second quarter of 2022, it represented 100% of Scion Asset Management’s public market positions. The current holding is roughly half the dollar amount of what it was three months prior.
Black Knight (BKI) is making its first appearance in the Scion portfolio. The mid-cap company provides mortgage and loan servicing products.
Coherent Corporation (COHR) has not been in the hedge fund manager’s portfolio prior to the last quarter. The small-cap technology company is involved in communications networks for aerospace, automotive, life sciences, and various other electronics and systems.
Alibaba (BABA) is often described as the “Chinese Amazon.com”. The only other time Scion held this well-known online retailer was during the second quarter of 2019.
JD.com (JD) is China’s largest online retailer and largest internet company by revenue. Burry owned shares once before during the first quarter of 2019.
Wolverine Worldwide (WWW) makes active footwear and apparel. Brands include Sperry, Saucony, and Hush Puppies. The small-cap company has not been in the Scion portfolio previously.
MGM Resorts (MGM) is a mid-cap company that owns and manages hotels and casinos worldwide. This is the first time Michael Burry has owned this name.
Qurante (QRTEA), formerly Liberty Interactive Corporation, is yet another direct marketer through the internet and video. The small-cap company is headquartered in Colorado.
Skywest Inc. (SKYW) is Burry’s smallest holding but still represents 4.4%. The airline has scheduled flights, including international, and also leases equipment for non-commercial flights. This is the first time the small-cap company has made an appearance in the Scion portfolio.
Take Away
Four times each year the SEC requires asset managers above a certain size to make a public filling of its portfolio.
Scion Asset Management is not exempt, but may, in addition to transacting in public securities, be creating positions in assets that are not required to be reported here. The reputation of Michael Burry has at times caused a lot of interest around less followed stocks.
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that it will release its fourth quarter and full year 2022 earnings after the market close on February 23, 2023. The Company will host a conference call and webcast to discuss the results on February 24 at 8:30 a.m. EST. The webcast can be accessed through the Investor Relations section of www.accobrands.com and will be available for replay.
About ACCO Brands Corporation
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.
Christopher McGinnis Investor Relations (847) 796-4320
The Percentage Volume of Retail Transactions Has Surpassed 2020’s Level
Retail investors were a strong market force in 2021, and after a hiatus through much of 2022, they may be setting the tone in 2023. As a whole, the investors that fall into this category are watching signs that the US Federal Reserve and other central banks may be near the end of their rate hikes. This, coupled with last year’s sell-off, was taken as a sign to selectively jump back into positions. The positions they have been putting on have been moving the needle in the “risk-on” category; this has sent many of last year’s losers up double digits.
Data from JP Morgan demonstrate retail transactions have recently surpassed the market volume peak reached in the Fall of 2020. The more volume as a percentage of trades, the more influence over price movements any investment group has.
JPMorgan Data Shows Retail’s Market Percentage Has Quickly Grown
Retail Investors as % of Investors (JPM)
What Prices Have They Impacted?
During the last week in January, retail market orders as a percent of market value reached 23%, according to JPMorgan. Comparatively, it got to 22% a few times when GameStop (GME) was confounding institutional money while surging in valuation. As with the increase in retail volume during 2020, the renewed interest in committing to trades can have an outsized impact on sector movements and those of favorite stocks.
During the pandemic lockdown period, many self-directed investors chose to follow groups such as r/WallStreetBets on Reddit and forums on other chatrooms and platforms. One strategy that worked was directed at hedge fund short positions. It involved massive buying of stocks that were heavily shorted. The goal was to force the shorts to cover, which would produce buying and a higher stock price. This was effective enough to have caused significant problems with both institutional investors and the brokerage community settling the trades.
As January came to a close Many of the same risk trades, have gotten attention. AMC Theatres (AMC) is up 70% YTD. Cathie Wood’s ARKK fund, which invests in speculative disruptive companies, has risen nearly 46%. Also in the fund category is an ETF that invests in so-called meme stocks (MEME), this is up 41%.
Bitcoin (BTC.X), which had been presumed on its deathbed toward the end of last year, is up over 42% as it continues to track technology.
Will They Again Score?
“Mark my words, it’s going to end in tears,” was a popular line amongst market pundits back in 2020-2021. The Great Unwashed, the Meme Stock Investors, the market participants Jim Kramer called Robin Hoodies don’t have a long track record. But the track record they do have is worth noting.
According to JP Morgan, as of the first week in February, Tesla (TSLA) was the most sold stock by retail investors. Others that have been sold include those categorized as green and infrastructure stocks tied to EVs and 5G broadband.
The most purchased were Amazon (AMZN) and APPLE (AAPL). The hashtag #MOASS, or Mother of All Short Squeezes, has been trending most days on Twitter. The stock tied to the posts is AMC (AMC, APE), as there has been ongoing news surrounding this classic meme stock. One meme stock that has not attracted that much attention is Bed Bath and Beyond (BBBY). The company, which is trading at $3.20 after having been at $22.80 less than a year ago, is on life support, and closing dozens of stores amongst talk of bankruptcy. For those that were able to withstand the retail short-squeeze in BBBY, they may be able to cash in.
Take Away
If the “risk-on” trend among retail investors continues, discretionary institutional money has learned to pay attention. Self-directed investors should also pay attention to new activity, and any rotation from one cooling sector to one that is heating up.
In addition to following the news on Channelchek, investors can watch the Investor Movement Index (IMX) reported on the last weekend of each month by TDAmeritrade. For additional insight, it is always fun to check in on what the message boards are buzzing about and sorting through the serious and the nonsensical on Reddit and Twitter.
Second Quarter Results Reflect Successful Holiday Performance
Generates Net Income of $82.5 million and Adjusted EBITDA1 of $131 million
Updates Fiscal 2023 Guidance
(1) Refer to “Definitions of Non-GAAP Financial Measures” and the tables attached at the end of this press release for reconciliation of non-GAAP results to applicable GAAP results.)
JERICHO, N.Y.–(BUSINESS WIRE)– 1-800-FLOWERS.COM, Inc. (NASDAQ: FLWS), a leading provider of gifts designed to help inspire customers to give more, connect more, and build more and better relationships, today reported results for its Fiscal 2023 second quarter ended January 1, 2023.
Fiscal 2023 Second Quarter Highlights
Total consolidated revenues decreased 4.8% to $897.9 million, compared with total consolidated revenues of $943.0 million in the prior year period.
Gross profit margin for the quarter was 41.0%, as compared with 40.1% in the prior year period.
Operating expenses were 28.1% of total sales, as compared with 27.9% in the prior year period.
Net income for the quarter was $82.5 million, or $1.27 per diluted share, as compared with net income of $88.5 million, or $1.34 per diluted share in the prior year period.
Adjusted EBITDA1 for the quarter was $131.4 million, as compared to Adjusted EBITDA1 of $133.1 million in the prior year period.
Expands leadership position in personalized gifting marketplace through the acquisition of the Things Remembered® brand, which occurred after the second quarter ended.
Chris McCann, CEO of 1-800-FLOWERS.COM, Inc., said, “Our second quarter results benefited from the strength of our Gourmet Foods and Gift Baskets business with improving gross margins, as well as an enterprise-wide reduction in operating expenses. As we had anticipated, consumers continued to spend for the major holidays and they reverted to their historical shopping patterns, shopping much later in the holiday period. PersonalizationMall.com® kicked off our holiday period with its biggest Cyber Monday ever, and as demand on our platform grew throughout the month of December, Harry & David® achieved record revenues for the quarter on the consumer side of its business. We did see demand soften in corporate gifting, which we attribute to macro-economic pressures and hybrid work environments, whereas a year ago there were fewer in-person holiday get-togethers.”
McCann added, “Our margins began to stabilize during the quarter, as we started to benefit from lower inbound freight costs and strategic pricing initiatives. Margins within our Gourmet Foods and Gift Baskets business also benefited from our logistics optimization and automation initiatives. We expect these favorable trends to continue and further improve our margins throughout the remainder of this fiscal year and beyond.”
“As we look to the balance of the year, we expect consumers to continue to shop and spend for the major upcoming holidays, while continuing to moderate their spend on everyday gifting occasions due to macro inflationary pressures.”
Second Quarter 2023 Financial Results
Total consolidated revenues decreased 4.8% to $897.9 million, as compared with total consolidated revenues of $943.0 million in the prior year period.
Gross profit margin for the quarter was 41.0%, increasing 90 basis points as compared with 40.1% in the prior year period. Gross profit margin improved based on strong performance within our Gourmet Foods and Gift Baskets business, primarily related to strategic pricing initiatives, lower in-bound freight costs, as well as an improvement in labor availability and automation. Operating expenses were 28.1% of total sales, as compared with 27.9% in the prior year period. On a dollar basis, operating expenses declined $10.1 million, primarily reflecting lower marketing costs, as the Company shifted its advertising investments to lower cost, higher return on investment areas of the marketing funnel.
As a result, the Company generated net income of $82.5 million, or $1.27 per diluted share, and Adjusted Net Income1 of $82.7 million, or $1.28 per share, as compared with net income of $88.5 million, or $1.34 per share, and Adjusted Net Income1 of $88.6 million, or $1.34 per share, in the prior year period. Adjusted EBITDA1 for the quarter was $131.4 million, as compared with Adjusted EBITDA1 of $133.1 million in the prior year period.
Segment Results
The Company provides selected financial results for its Gourmet Foods and Gift Baskets, Consumer Floral and Gifts, and BloomNet segments in the tables attached to this release and as follows:
Gourmet Foods and Gift Baskets: Revenues for the quarter decreased 0.4% to $588.4 million, compared with $590.9 million in the prior year period, reflecting the resiliency of our gourmet food gifting businesses. Gross profit margin was 41.0%, compared with 39.3% in the prior year period, benefiting from strategic pricing, lower inbound transportation costs, and automation initiatives. As a result, segment contribution margin1 was $123.5 million, compared with $110.5 million a year ago.
Consumer Floral and Gifts: Revenues decreased 12.1% to $277.0 million, compared with $315.1 million in the prior year period. Gross profit margin decreased to 40.5%, compared with 41.3% in the prior year period, primarily due to higher fulfillment costs and outbound transportation costs. Segment contribution margin1 was $27.9 million, compared with $38.2 million the prior year.
BloomNet: Revenues for the quarter decreased 13.4% to $32.9 million, compared with $37.9 million in the prior year period. Gross profit margin of 42.2% was flat with the prior year. Segment contribution margin1 was $9.3 million, compared with $11.9 million in the prior year period.
Company Guidance
The Company is updating its Fiscal 2023 guidance based on its second quarter performance and the current economic environment. While the highly unpredictable nature of the current macro economy makes it difficult to forecast in this environment, the Company continues to expect that after growing revenues 77% over the past three fiscal years, revenues will decline in Fiscal 2023 on cautious consumer behavior. The Company also anticipates that as a result of the investments it has made, and continues to make, in its business platform, along with strategic pricing programs and a moderation of certain cost inputs, gross margins and bottom-line results will gradually improve during the latter half of the current fiscal year.
Full Year Fiscal 2023 Guidance
Total revenues to decline in the mid-single digit range on a percentage basis as compared with the prior year;
Adjusted EBITDA1 is now expected to be in a range of $80 million to $85 million; and
Free Cash Flow1 to exceed $75 million.
Conference Call
The Company will conduct a conference call to discuss the above details and attached financial results today, Thursday, February 2, at 8:00 a.m. (ET). The conference call will be webcast from the Investors section of the Company’s website at www.1800flowersinc.com. A recording of the call will be posted on the Investors section of the Company’s website within two hours of the call’s completion. A telephonic replay of the call can be accessed beginning at 2:00 p.m. (ET) today through February 9, 2023, at: (US) 1-877-344-7529; (Canada) 855-669-9658; (International) 1-412-317-0088; enter conference ID #: 7691597. If you have any questions regarding the above information, please contact the Investor Relations office at invest@1800flowers.com.
Definitions of non-GAAP Financial Measures:
We sometimes use financial measures derived from consolidated financial information, but not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Certain of these are considered “non-GAAP financial measures” under the U.S. Securities and Exchange Commission rules. Non-GAAP financial measures referred to in this document are either labeled as “non-GAAP” or designated as such with a “1”. See below for definitions and the reasons why we use these non-GAAP financial measures. Where applicable, see the Selected Financial Information below for reconciliations of these non-GAAP measures to their most directly comparable GAAP financial measures. Reconciliations for forward-looking figures would require unreasonable efforts at this time because of the uncertainty and variability of the nature and amount of certain components of various necessary GAAP components, including, for example, those related to compensation, tax items, amortization or others that may arise during the year, and the Company’s management believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. For the same reasons, the Company is unable to address the probable significance of the unavailable information. The lack of such reconciling information should be considered when assessing the impact of such disclosures.
EBITDA and Adjusted EBITDA:
We define EBITDA as net income (loss) before interest, taxes, depreciation, and amortization. Adjusted EBITDA is defined as EBITDA adjusted for the impact of stock-based compensation, Non-Qualified Plan Investment appreciation/depreciation, and for certain items affecting period-to-period comparability. See Selected Financial Information for details on how EBITDA and Adjusted EBITDA were calculated for each period presented. The Company presents EBITDA and Adjusted EBITDA because it considers such information meaningful supplemental measures of its performance and believes such information is frequently used by the investment community in the evaluation of similarly situated companies. The Company uses EBITDA and Adjusted EBITDA as factors to determine the total amount of incentive compensation available to be awarded to executive officers and other employees. The Company’s credit agreement uses EBITDA and Adjusted EBITDA to determine its interest rate and to measure compliance with certain covenants. EBITDA and Adjusted EBITDA are also used by the Company to evaluate and price potential acquisition candidates. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. Some of the limitations are: (a) EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, the Company’s working capital needs; (b) EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company’s debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and EBITDA does not reflect any cash requirements for such capital expenditures. EBITDA and Adjusted EBITDA should only be used on a supplemental basis combined with GAAP results when evaluating the Company’s performance.
Segment Contribution Margin:
We define Segment Contribution Margin as earnings before interest, taxes, depreciation, and amortization, before the allocation of corporate overhead expenses. See Selected Financial Information for details on how Segment Contribution Margin was calculated for each period presented. When viewed together with our GAAP results, we believe Segment Contribution Margin provides management and users of the financial statements meaningful information about the performance of our business segments. Segment Contribution Margin is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. The material limitation associated with the use of Segment Contribution Margin is that it is an incomplete measure of profitability as it does not include all operating expenses or non-operating income and expenses. Management compensates for these limitations when using this measure by looking at other GAAP measures, such as Operating Income and Net Income.
Adjusted Net Income (Loss) and Adjusted or Comparable Net Income (Loss) Per Common Share:
We define Adjusted Net Income (Loss) and Adjusted or Comparable Net Income (Loss) Per Common Share as Net Income (Loss) and Net Income (Loss) Per Common Share adjusted for certain items affecting period-to-period comparability. See Selected Financial Information below for details on how Adjusted Net Income (Loss) Per Common Share and Adjusted or Comparable Net Income (Loss) Per Common Share were calculated for each period presented. We believe that Adjusted Net Income (Loss) and Adjusted or Comparable Net Income (Loss) Per Common Share are meaningful measures because they increase the comparability of period-to-period results. Since these are not measures of performance calculated in accordance with GAAP, they should not be considered in isolation of, or as a substitute for, GAAP Net Income (Loss) and Net Income (Loss) Per Common share, as indicators of operating performance and they may not be comparable to similarly titled measures employed by other companies.
Free Cash Flow:
We define Free Cash Flow as net cash provided by operating activities less capital expenditures. The Company considers Free Cash Flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of fixed assets, which can then be used to, among other things, invest in the Company’s business, make strategic acquisitions, strengthen the balance sheet, and repurchase stock or retire debt. Free Cash Flow is a liquidity measure that is frequently used by the investment community in the evaluation of similarly situated companies. Since Free Cash Flow is not a measure of performance calculated in accordance with GAAP, it should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. A limitation of the utility of Free Cash Flow as a measure of financial performance is that it does not represent the total increase or decrease in the Company’s cash balance for the period.
About 1-800-FLOWERS.COM, Inc.
1-800-FLOWERS.COM, Inc. is a leading provider of gifts designed to help inspire customers to give more, connect more, and build more and better relationships. The Company’s e-commerce business platform features an all-star family of brands, including: 1-800-Flowers.com®, 1-800-Baskets.com®, Cheryl’s Cookies®, Harry & David®, PersonalizationMall.com®, Shari’s Berries®, FruitBouquets.com®, Things Remembered®, Moose Munch®, The Popcorn Factory®, Wolferman’s Bakery®, Vital Choice®, Stock Yards® and Simply Chocolate®. Through the Celebrations Passport® loyalty program, which provides members with free standard shipping and no service charge across our portfolio of brands, 1-800-FLOWERS.COM, Inc. strives to deepen relationships with customers. The Company also operates BloomNet®, an international floral and gift industry service provider offering a broad-range of products and services designed to help members grow their businesses profitably; Napco℠, a resource for floral gifts and seasonal décor; DesignPac Gifts, LLC, a manufacturer of gift baskets and towers; and Alice’s Table®, a lifestyle business offering fully digital livestreaming and on demand floral, culinary and other experiences to guests across the country. 1-800-FLOWERS.COM, Inc. was recognized among the top 5 on the National Retail Federation’s 2021 Hot 25 Retailers list, which ranks the nation’s fastest-growing retail companies, and was named to the Fortune 1000 list in 2022. Shares in 1-800-FLOWERS.COM, Inc. are traded on the NASDAQ Global Select Market, ticker symbol: FLWS. For more information, visit 1800flowersinc.com or follow @1800FLOWERSInc on Twitter.
FLWS–COMP
FLWS-FN
Special Note Regarding Forward Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent the Company’s current expectations or beliefs concerning future events and can generally be identified using statements that include words such as “estimate,” “expects,” “project,” “believe,” “anticipate,” “intend,” “plan,” “foresee,” “forecast,” “likely,” “will,” “target” or similar words or phrases. These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results expressed or implied in the forward-looking statements, including, but not limited to, statements regarding the Company’s ability to achieve its guidance for the full Fiscal year; the impact of the Covid-19 pandemic on the Company; its ability to leverage its operating platform and reduce its operating expense ratio; its ability to sell through existing inventories; its ability to successfully integrate acquired businesses and assets; its ability to successfully execute its strategic initiatives; its ability to cost effectively acquire and retain customers; the outcome of contingencies, including legal proceedings in the normal course of business; its ability to compete against existing and new competitors; its ability to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; its ability to reduce promotional activities and achieve more efficient marketing programs; and general consumer sentiment and industry and economic conditions that may affect levels of discretionary customer purchases of the Company’s products. The Company undertakes no obligation to publicly update any of the forward-looking statements, whether because of new information, future events or otherwise, made in this release or in any of its SEC filings. Consequently, you should not consider any such list to be a complete set of all potential risks and uncertainties. For a more detailed description of these and other risk factors, refer to the Company’s SEC filings, including the Company’s Annual Reports on Form 10-K and its Quarterly Reports on Form 10-Q.
Note: The following tables are an integral part of this press release without which the information presented in this press release should be considered incomplete.
FORT WAYNE, Ind., Feb. 01, 2023 (GLOBE NEWSWIRE) — Vera Bradley, Inc. (Nasdaq: VRA) (“Vera Bradley” or the “Company”) today announced that it plans to report results for the fourth quarter and fiscal year ended January 28, 2023 at 8:00 a.m. Eastern Time on Wednesday, March 8, 2023.
The Company will host a conference call to discuss its financial results at 9:30 a.m. Eastern Time that same day. A live webcast of the conference call will be available on the Investor Relations section of the Company’s website, www.verabradley.com. Alternatively, interested parties may dial into the call at (888) 204-4368 or (323) 994-2093 and enter the access code 3761893. A replay will be available shortly after the conclusion of the call and remain available through March 22, 2023. To access the recording, listeners should dial (844) 512-2921, and enter the access code 3761893.
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”), and acquired the remaining 25% interest in January 2023. 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.
CONTACTS: Investors: Julia Bentley, VP of Investor Relations and Communications jbentley@verabradley.com (260) 207-5116
