(USA TODAY) Wall Street rained on Vera VRA Bradley's paisley parade Wednesday, pushing shares of the handbag and fashion accessories retailer down 16% to $15.13.
Behind the drop: fourth-quarter revenue fell 3% to $152.6 million from the year-ago quarter and net income fell 13% to $17.3 million. Vera Bradley also lowered full 2016 fiscal year revenue and earnings guidance as CEO Robert Wallstrom said "overall business trends remain difficult."
"By this time, we had expected to regain momentum in the business, but that has not happened," Wallstrom said. "Our core customers are continuing to buy our products. However, our primary issue is that we have not attracted enough new customers to the brand, and therefore, both traffic and sales remain extremely challenging."
In a cost-cutting move, the Fort Wayne, Ind., -based company said it was closing its six-year old manufacturing plant in nearby New Haven – which employs 250 – in May. Instead, it will turn to cheaper overseas production.
"It costs approximately 90% more to manufacture goods domestically than in overseas factories, and our domestic manufacturing costs have continued to rise year over year," Wallstrom said. "We have been working hard to figure out how to run our operations more efficiently. After careful analysis and consideration, we concluded that closing this facility is the right long-term financial decision."
Vera Bradley sandbagged some on Wall Street as well.
Tuesday, Wunderlich Securities Eric Beder reiterated a buy rating on Vera Bradley and set a $27 price target. By Wednesday, Beder recanted, cutting his recommendation to a hold and setting a $15 price target.
"While we agree with virtually everything management is doing to widen the reach and pricing of the brand and to register higher returns, it is obvious that until Vera can materially widen their customer base, results will remain under material pressure; we see no reason to be overly aggressive (again) until the customer base begins to turn," Beder said in a research note.
Vera Bradley, started in 1982 by friends Barbara Bradley Baekgaard and Patricia Miller, went public at $16 a share in 2010, peaking at nearly $50 in 2011.
