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Why Vera Bradley, Inc. Stock Fell 25.9% in 2016

IMAGE SOURCE: VERA BRADLEY, INC.

What happened

Shares of Vera Bradley Inc. (NASDAQ: VRA) dropped 25.9% in 2016, according to data provided by S&P Global Market Intelligence, as a pair of disappointing earnings reports more than offset selected optimism throughout the year. 

So what

Vera Bradley's stock had a great start in 2016, climbing more than 30% to a fresh 52-week high by the beginning of April, as analysts applauded the fashion accessory company's compelling product line and its improving profitability (despite continued declines in revenue) as 2015 came to a close.

But the good times didn't last long. Shares drifted lower over the next several months as general fears over Vera Bradley's business prospects were effectively confirmed as its fiscal Q1 report in early June showed an underwhelming return to quarterly revenue growth.

Most recently in December, Vera Bradley stock sank again as the business appeared to lose what momentum it had. Revenue for its fiscal third quarter came in flat from the same year-ago period, at $126.7 million, below guidance for $128 million to $133 million. And adjusted net income per share fell by nearly a third, to $7.3 million, or $0.20 per share. 

Now what

To Vera Bradley's credit, CEO Robert Wallstrom stated consumer engagement in its most recent quarter had improved, crediting both marketing initiatives and the opening of Vera Bradley's new flagship store in SoHo. But Wallstrom also admitted the company has continued to succumb to today's "challenging" retail environment, particularly in the specialty channel, which resulted in the need for higher promotional activity at Vera Bradley's factory locations.

As it stands, Vera Bradley is set to release fiscal fourth-quarter results on Jan. 28, 2017. For perspective, its guidance calls for revenue of $135 million to $140 million (down from $154.1 million in the same period last year), and diluted earnings per share of $0.23 to $0.25 (down from $0.82). If Vera Bradley can't step over that low bar, I fear the stock will have even farther to fall from here.

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Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.