Vera Bradley, Inc. (NASDAQ:VRA) Q2 2020 Earnings Conference Call - Final Transcript
Sep 04, 2019 • 09:30 am ET
we anticipate accretion in the first half.
Yeah. I think one way to think about it is that the profitability and the way their business model works, since it's a low overhead business and a lot of its marketing and sales, that the flow-through relative to the sales is not super differences in over seasons.
I think you're going to see a little bit smoother earnings flow than maybe you see in some retail businesses because there's not a big fixed cost base that you're leveraging now in fourth quarter. So we'll obviously give more guidance next year, but it's definitely a very healthy business and very accretive.
Okay. That's helpful. And just reiterating your China exposure. You mentioned it was 54% last year, 25% that you spoke about, that's a run rate at the end of the year, correct, that's not the blended rate for the entire year?
No, that's actually the blended rate of the total purchases that we had made out of China this year when we're roughly about 25% or a little bit less than that and we anticipate that we're going to move that down a little bit next year.
Okay. All right. That's very good. And were there any incremental tariffs associated with this September 1, upping to that 5% to 25% to 30%?
Yeah. There is incremental tariffs associated with kind of the September 1, for List 4. So we had product that was being excluded from tariffs when it was List 3. So now all the products that we purchase out of China will have tariffs as of December 15, once they implement the incremental tariffs associated with the broken up List 4 between September 1 and December 15. So by the end of the year, if there are no changes, we will have incremental tariffs for 100% of our purchases out of China.
Okay. That's helpful. Thank you very much.
And at this time, that will conclude the question-and-answer session, I would like to turn the call back over to Rob Wallstrom for any additional or closing remarks.
Thank you very much for joining us on today's call. We are very pleased with the progress we have made since we launched Vision 20/20. Although the current North American handbag market is challenging, we are steadfastly focused on the future and on delivering growth in revenue, profit and shareholder value. Don't forget to sign up for our Investor and Analysts Day in our SoHo store on Thursday, October 3. Griffin Thall and Paul Goodman, Pura Vida's Founders will be there along with members of the Vera Bradley management team, including Beatrice Mac Cabe, our Chief Creative Officer and Daren Hull, our Chief Customer Officer. So if you are interested contact Julia Bentley, our Vice President of Investor Relations at email@example.com. Thank you for your time.
[Operator Closing Remarks]