TAL Education Group (XRS)
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Vera Bradley (VRA)
$165mm IPO, market cap of $608 at price range mid-point of $15
Scheduled for Oct 18wk |
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SUMMARY |
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. 100% of proceeds to shareholders
. Compared to Coach (COH), Vera Bradley is priced at about the same P/E ratio, but Coach has a a stronger balance in terms if price-to-equity & price-to-tangible equity ratios |
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COMPARE & CONTRAST |
Mrkt |
Price / |
Price / |
Price / |
Price / |
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Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
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Vera Bradley (VRA) |
$608 |
1.8 |
20 |
17.6 |
24.6 |
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Coach (COH) |
$13,150 |
3.7 |
21 |
8.7 |
11.1 |
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. VRA, on the other hand, seems to have a more aggressive store roll-out plan, starting from a smaller base. See ‘direct growth plan’ below |
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. VRA generated a 26% comparable store sales increase for the six months ended July 31, 2010. For the year ended January 231, 2010 VRA generated a same store sales increase of 36% |
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BUSINESS |
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. A leading designer, producer, marketer and retailer of stylish and highly-functional accessories for women. Products include a wide offering of handbags, accessories and travel and leisure item
. Customers span generations and include young girls, teens, college students, young professionals, mothers and grandmothers |
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DISTRIBUTION |
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Indirect
61% of revenue for the six months ended June, 2010 |
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As of July 31, 2010, Indirect business consisted of sales of Vera Bradley products to approximately 3,300 independent retailers, substantially all of which are located in the U.S., as well as select national retailers and third party e-commerce sites. |
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Direct
39% of revenue for the six months ended June, 2010 |
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. As of July 31, 2010, Direct business consisted of sales of Vera Bradley products through 31 full-price stores, two outlet stores, verabradley.com, and the annual outlet sale in Fort Wayne, Indiana.
. In mid-September 2007, opened the first full-price store. In fiscal year 2010, had more than 23 million visits to verabradley.com, and as of July 31, 2010, had 31 full-price stores and two outlet stores. |
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DIRECT GROWTH PLAN |
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Plans to expand the retail presence in the U.S. by opening new stores.
. Believe the market in the U.S. can support at least 300 Vera Bradley full-price stores.
. Plans to open nine full-price stores and three outlet stores over the course of fiscal year 2011.
. Plans to open 14 to 16 new stores over the course of fiscal year 2012 and 14 to 20 new stores annually for the following five fiscal years.
. Believes that expansion of the store base complements the Indirect segment by increasing brand awareness and reinforcing the brand image. |
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COMPETITION |
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Directly competes with wholesalers and direct sellers of branded handbags and accessories, such as Coach, Nine West, Liz Claiborne and Dooney & Bourke. |
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USE OF IPO PROCEEDS |
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100% of proceeds to shareholders, 4mm from company to shareholders, 7mm directly to shareholders |
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. $53mm from sale of 4mm shares wth $52.7 million of borrowings to pay in full the principal amount of the undistributed earnings notes held by existing shareholders in connection with the final "S" Corporation distribution.
. Therefore, shareholders, which include certain of officers and directors, will receive 100% of the net proceeds |
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Vera Bradley |
VRA, C+, 7 |
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Post-IPO shares: 41mm |
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Women's fashions |
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Jan fiscal year end |
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Fort Wayne IN |
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2009 |
2010 |
July 6mos'09 |
July 6mos'10 |
IPO Mkt |
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Revenue ($mm) |
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$239 |
$289 |
$131 |
$165 |
Cap (mm) |
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Gross profit |
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28% |
30% |
29% |
33% |
$608 |
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Operating profit margin |
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11% |
16% |
11% |
16% |
@$15 |
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Proform tax income ($mm) |
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$26 |
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$15 |
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Proforma after tax income % of rev |
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9% |
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9% |
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Valuation Ratios |
IPO Mrkt |
Price / |
Price / |
Price / |
Price / |
% offered |
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annualizing June 6 mos |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
in IPO |
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Vera Bradley (VRA) |
$608 |
1.8 |
20 |
17.6 |
24.6 |
27% |
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SCORECARD |
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Mgt |
Market |
Market Do- |
Proprie- |
Total |
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1-5, 5 is high |
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Growth |
mination |
tary |
rating |
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20 is perfect |
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2 |
2 |
2 |
1 |
7 |
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COMPARE & CONTRAST |
Mrkt |
Price / |
Price / |
Price / |
Price / |
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annualizing June 6 mos |
Cap (mm) |
Sales |
Earnings |
BookValue |
TangibleBV |
|
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Vera Bradley (VRA) |
$608 |
1.8 |
20 |
17.6 |
24.6 |
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Coach (COH) |
$13,150 |
3.7 |
21 |
8.7 |
11.1 |
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