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Ask Matt: Is the Vera Bradley comeback real?


Q: Is the Vera Bradley comeback for real?

A: Investors have patiently waited for a resurgence of Vera Bradley (VRA) for years. The comeback is far from being in the bag, but investors like what they see.

Shares of the handbag and accessory maker for woman jumped $2.89, or 27.7%, to $13.32 Wednesday after the company reported an adjusted profit a share of 15 cents, which was 50% better than expected. Revenue for the quarter totalled $120.7 million, which surpassed expectations by 5%. Investors are hoping new products - focusing more on leather - not to mention different marketing can turn the company's fortunes around.

But while the quarterly results were better than expected, they are far from healthy. Adjusted earnings per share during the quarter dropped 21% from the same year-ago period and revenue grew just 1.4%. Sales at stores open at least a year declined 15%.

Don't be fooled by the sizeable one-day jump in the stock in reaction to the news. This company's turnaround is still a work in progress. The company's adjusted earnings are expected to fall by about a third in the current fiscal year according to S&P Capital IQ and revenue to drop by about 3%. The stock is down 40% from a year ago, but analysts still rate it a "hold."

Paste BN markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com or on Twitter @mattkrantz.