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Vera Bradley unveiled its transformation initiative in an effort to “reinvigorate and restore” its brand, launching shares as much as 6% higher on Thursday.
The news is buoying other names in the sector with Steven Madden (SHOO) up 3%, Designer Brands (DBI) up by 4%, and Victoria’s Secret (VSCO) higher by 7%.
The initiative features a new logo, in-store renovations, optimized website, and updated digital channel presence. The company has also enlisted actress and musician Zooey Deschanel as the new brand ambassador.
“After months of analyzing our business, our competition, our customers, and industry trends, we made the strategic decision to pivot priorities and consciously invest in elevating and reinvigorating Vera Bradley in order to restore our brand relevance,” said CEO Jacqueline Ardrey.
As part of the brand transformation, the company has revamped its online and in-store retail experience, expanding its full line store footprint with the addition of three new stores and differentiating these from Vera Bradley Outlet stores. The company has also redesigned its website and changed the aesthetics of its social media channels.
The strategy hopes to drive long-term profitability through elevated brand marketing aimed at 35-54 year-old women, appealing to a demographic having more disposable income.
If the initiative fails, however, the cost to implement without a corresponding increase in sales will further depress shares. The stock is already down 21% YTD compared to peers like Tapestry (TPR +15% YTD), and Steven Madden (SHOO +2% YTD). Much of the loss in its share price followed a dismal Q1 in which the company reported a loss of $0.21 per share, missing expectations to break even and the second consecutive quarter the company has missed both EPS and revenue estimates.
“If the firm can stabilize operations, with its store count eventually flat-lining and comparable store sales no longer falling, upside could be significant,” Seeking Alpha investor Daniel Jones says. “But if we don’t see these things come to pass, the end result could be more pain for investors,” he adds.