The new year is upon us and some investors and companies are setting their sights on both gains and areas for improvement.
Some corporations are looking inward with high ambitions for 2025 to turn into a bumper year for growth and expansion.
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A recovering economy and consumers’ renewed vigor for spending has plenty of brands feeling hopeful about the year ahead.
Take Walmart (WMT) , for example. Its management has told investors in recent weeks that 2025 could hold the promise of expansion and increased returns thanks to a plan that renews stores and focuses squarely on grocery.
“We’ve got a very high-quality produce offering for people, and it invites them in,” Walmart Chief Financial Officer John David Rainey said in an interview in early January. “It’s a much broader assortment than what we’ve had historically.”
But not every retail brand is looking at opportunities the same way. While many of the giants are in growth mode, some labels are simply struggling to survive.
Popular brand has been troubled for years
One struggling brand is Vera Bradley (VRA) .
Known best for its vibrantly printed handbags and accessories, Vera Bradley was popular in the early 2000s among college-age women and mature crowds who prized colorful resort wear and quilted patterns.
The company went public in 2015, well after the peak of its popularity and has been on a financial downtrend ever since. Its stock is down 48% over the past year and 66% over the past five years.
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But the $100 million company still has a loyal following. Thanks to its heavy presence in outlet malls and considerable partnerships with larger retailers like Amazon (AMZN) , Vera Bradley has managed to retain a foothold in the handbag industry.
Investor takes firm stance on Vera Bradley
Not everybody is pleased with the status quo.
Such is the case for Vera Bradley’s largest shareholder, Fund 1 Investments. The firm controls 10% of the company’s shares and has economic exposure to 20%.
And in late December, the firm sent a letter to Vera Bradley’s board, urging the directors to explore other modalities to become profitable.
“We, as your largest shareholder, simply want Vera Bradley to return to its winning ways,” the letter reads.
Fund 1 explains that in 2015, the first year it traded publicly, Vera Bradley brought in $366 million in revenue and nearly $50 million of free cash flow. Fast forward to today and analysts expect revenue of $380 million — nearly the same as when Vera Bradley went public.
The key difference is that Vera Bradley is not expected to generate free cash flow and a number of its key financials are down. For the fiscal third quarter ended Nov. 2, the company swung to a loss of 46 cents a share from net income of 16 cents in the year-earlier quarter.
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“It is clear to us that the best option for Vera Bradley and its shareholders is to commence a strategic alternatives process and pursue opportunities to fix the company under the umbrella of a larger organization or in the private markets,” Fund 1 writes.
The Rincon, Puerto Rico, investment firm added that it was pleased that Vera Bradley’s board was willing to work on a solution, including taking the company private.
If Vera Bradley did go private, Fund 1 says, it could focus on reenergizing the brand without worrying about missing quarterly targets and upsetting investors in the public market. It would also free up time to focus on the things that matter to its bottom line, including creativity and cost savings.
For now, Fund 1 says Vera Bradley is struggling with “poor recent operational performance … a failed brand turnaround [and] extremely negative macro sentiment for fashion brands.”
The company has not yet responded publicly. TheStreet has requested comment from Vera Bradley.
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