Bear of the Day: Vera Bradley (VRA)

Today’s Bear of the Day brings us back to one of the toughest corners of the market: apparel. In an industry known for fierce competition, shifting consumer preferences and relentless margin pressure, brands come and go like fashion trends. 

Vera Bradley (VRA), a widely recognized name in handbags and accessories, has struggled to keep pace with the evolving retail landscape. The company has faced a severe drop in sales growth over the last several years as new brands better suited to the modern industry emerge. Those challenges are now reflected in its Zacks Rank #5 (Strong Sell), driven by a wave of downward earnings estimate revisions.

The broader apparel industry has been a laggard over the last decade, falling 31% over that period. But Vera Bradley’s performance has been even more severe: the stock is down a staggering 85.2% in the last 10 years and has already shed more than 50% year-to-date. With continued fundamental deterioration and limited near-term catalysts, VRA is a stock investors should avoid until a material turnaround.

Vera Bradley Sales Crater and Earnings Estimates Fall

Vera Bradley’s fundamental outlook has deteriorated sharply, with the company facing a severe contraction in both revenue and earnings expectations. Over the past year, sales have declined 21%, falling back to levels not seen since 2011, effectively erasing more than a decade of growth.

Unfortunately, the outlook continues to worsen. Sales are projected to decline another 24.6% this fiscal year, signaling continued challenges and weakening consumer demand. These pressures are clearly reflected in the company’s earnings forecast. Since the summer of 2024, earnings estimates have been steadily trending lower, continuing a broader downtrend that began in 2021.

In just the past two months, next quarter’s earnings estimate has plunged 95%, while expectations for next year have dropped 62%. This steep downward revision trend has pushed Vera Bradley to a Zacks Rank #5 (Strong Sell), indicating serious caution for investors.

Should Investors Avoid Vera Bradley Stock?

With declining sales, collapsing earnings expectations, and no clear catalysts for a turnaround, Vera Bradley remains firmly out of favor. The company is losing relevance in a rapidly evolving retail environment, and the steady deterioration in estimates suggests that Wall Street expects the pain to continue.

Until signs of stabilization emerge, either through a strategic pivot, renewed consumer interest, or improved financial performance, VRA is a stock best left on the sidelines. For now, the combination of weak fundamentals and a Zacks Rank #5 (Strong Sell) makes it one of the more cautionary stories in the market.

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This article originally published on Zacks Investment Research (zacks.com).

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