Small Cap Consumer Research analyst Eric M Beder reiterated a Buy rating on the shares of Vera Bradley Inc VRA with a price target of $9.00.
The analyst said the company’s Bright Friday sale, which began the week before Black Friday, drove in shoppers looking for a solid bargain.
Further, the analyst added the last two weeks before Christmas have been very strong, as multiple new price cuts, incremental items added to the door buster mix.
Also, an incremental 10% price cut for Holiday driven patterns drove spending on key patterns, items and categories, added Beder.
When Vera Bradley hit the key price points or discounts, the customer was ready willing and able to make aggressive purchases, the analyst said.
The Holiday demand remained very strong, with the customer savvy for getting the best price in full bloom, cited the analyst.
Items in the Holiday driven categories have aggressively sold down, said Beder.
The analyst believes Vera Bradley is increasingly nearing the mission of lowering inventory levels and returning to a more normalized flow of goods as the company enters FY23.
The analyst has projected a Y/Y gross margin decline of 230 basis points from already depressed levels in 4QFY22, and view the drop as a necessary cost to move forward after a tough FY23.
Beden remarked that pockets of full priced licensing items are still selling down.
There has been no slowdown in demand for travel driven goods said the analyst, as the Vera Bradley customer continues to plan for Holiday and resort travel.
As such, while margins have remained under pressure, the analyst believes Vera Bradley is well under way to achieving lower inventory levels and creating a somewhat clean slate for Spring and the first fiscal year under new CEO Jackie Ardrey.
Price Action: VRA shares are trading higher by 0.36% at $4.14 on the last check Tuesday.
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