Vera Bradley announces Vision 20/20 plan, sees $40M-$60M impact to FY19 revenue

Robert Wallstrom, Vera Bradley CEO, noted, "Over the last three years, as we embarked on a plan to strengthen and modernize our brand, we've made meaningful progress on many fronts including evolving our product offerings, distribution channels, and marketing as well as broadening our customer base. However, given the backdrop of a challenging retail environment, our progress has not been at the pace that we planned. Consequently, we are in the process of refining our business model and strategic plan which will involve taking a much more aggressive approach to turning around our business over the next three years. Our ultimate goal is to restore brand and company health by methodically moving to a less clearance-driven business model and reducing our SG&A expenses. We have engaged an outside consulting firm, working alongside our team, in performing a comprehensive review of our business model, existing strategic plan, and historic performance and to provide us with in-depth analysis and research on critical components of our business. This information and research is being integrated into our plan which we are calling 'Vision 20/20.' We will have more details and specific action plans to share in the coming months, but Vision 20/20 will primarily center around two key areas - (i) product and pricing and (ii) SG&A expense reductions." Wallstrom continued, "On the product and pricing front, we will focus on three key initiatives: resetting our customers' pricing perception and restoring our full-price business by significantly reducing the amount of clearance product available on verabradley.com and in our full-line stores; streamlining our current product offerings by eliminating unproductive or incongruent categories and SKUs from our assortment; and building more discipline into our overall assortment architecture by developing strong assortment standards around introducing new categories, prices, and patterns. The majority of the product and pricing initiatives will not be implemented until FY19; management expects annualized revenues will be negatively impacted by these initiatives by $40M-$60M in FY19. Conversely, management expects to reduce annual net SG&A spending by up to $30M by right-sizing the organization to better align with the reduced size of the business. Certain cost reductions have already begun and are reflected in the company's fiscal 2018 SG&A guidance. The majority of the balance of the reductions is expected to be made in fiscal 2019. In addition, the company will also continue to look for ways to enhance its marketing efficiency, optimize its distribution channels, and reduce cost of goods sold through incremental sourcing and distribution efficiencies. Full guidance for FY19 will be provided in conjunction with the company's fiscal year-end conference call in March 2018." Wallstrom concluded, "By executing Vision 20/20, we believe we are on the right course for the future, restoring our brand health, improving operating performance, and enhancing shareholder value."