This case study summarizes key operational deficits of Vera Bradley, Inc., discusses their strategic approach, strategic issues and suggests recommendations for management to consider.
Vera Bradley ranks as the fourth largest handbag company in the U.S. Barbara Bradley began selling colorful handbags—from home—in 1982 with $250 loan from her then husband. Thirty years later, her brand is sold in over 3000 retail shops around the globe. However, Vera Bradley has been struggling for some time and it can be credited to untrendy products and similar strategic plan their competitors are using. Although Bradley has tried moderating its strategy by implementing a more aggressive international plan, and by adding new products to its line, it provides
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Products include a wide offering of handbags, accessories, travel and leisure items. Over a 30-year history, Vera Bradley has become a lifestyle brand that appeals to a broad range of loyal consumers. According to the text, Vera Bradley is using a broad differentiation strategy, “seeking to differentiate the company products from its rivals and is appealing to a broad spectrum of buyers” (Thompson, et al., 2015).
The company generate revenues by selling products through multi-channel distribution model: Direct and Indirect. Its Direct segment consisted of sales of Vera Bradley products through its 84 full-price stores and 15 outlet stores in the U.S.; 13 department stores in Japan; online stores: verabradley.com and verabradley.co.jp; and an annual outlet sale in Indiana. The Indirect segment consisted of sales to approximately 3,000 specialty retailers, substantially all of which are located in the United States, as well as select department stores and third party e-commerce sites. Below is operating income for both
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However, the problem is that its out of style patterns aren’t luring new customers, hence the reason sales are on a downward trend.
The challenges Vera Bradley is facing led the company to cut its financial targets for the year. It now sees earnings between $1 to $1.10 a share on net revenue ranging between $510 million to $530 million, new targets that signal both measures will decline from the year-ago results.
The company will find it tough to turn its business around since it faces strong competition from some of the most well-known names in the industry – Coach, Michael Kors and Kate Spade & Company – both of which have been doing well as of late.
Michael Kors reported an explosive increase of 59% in revenues during the fourth quarter of 2013 to $1 billion, and demand was notoriously healthy across the board. Retail sales grew 51.3% to $503.4 million, driven by a 27.8% increase in comparable-store sales and 98 net new store openings (Sighn,