Vera Bradley Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of handbag maker Vera Bradley (NAS: VRA) are falling 11% today after reporting its fourth-quarter results and releasing uninspiring first-quarter guidance.

So what: The company's fourth-quarter results were solid. Profits jumped 41% to $0.50, while sales increased by 23% to $134.5 million. Same-store sales echoed this growth by rising 9.3%. It was Vera Bradley's cautious first-quarter forecast of $0.27-$0.29 in EPS and $115 million-$117 million in sales that has investors unhappy. Wall Street had been expecting $0.32 in EPS on sales of $117 million.

Now what: This one actually has me stumped. I can't tell if Vera Bradley is just being cautious, or if there really is a growth problem with the company. If you look at other branded merchandise recently, it's on fire. Michael Kors (NAS: KORS) grew same-store sales by 38% in the United States, and Kenneth Cole Productions (NYS: KCP) blew past analysts estimates by 75% thanks to a 47% pop in wholesale revenue. I'm more inclined to believe that Vera Bradley is just being cautious, but that doesn't make me confident about the stock's valuation even after today's drop. However, it's definitely a company worth adding to your watchlist.

Craving more input? Start by adding Vera Bradley to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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