Apple’s software privacy update negatively impacted Pura Vida’s DTC sales in Q2 as the brand’s advertising on Facebook and Instagram became less effective because of tracking restrictions, according to parent company Vera Bradley.
That was one of the major factors that caused Vera Bradley to miss its Q2 revenue and earnings targets. The other factor was increased freight and tariff expenses.
As a result, Vera Bradley lowered its sales and earnings estimates for the year at a time when most companies have been raising them.
Overall in Q2, Pura Vida revenue increased 0.8% to $33.1 million vs. the same quarter last year. The Apple iOS update made it harder for Pura Vida to target individual customers on Facebook and Instagram, which are Pura Vida’s primary marketing vehicles to drive DTC sales.
The Pura Vida team is working to diversify its marketing spend to other platforms including TikTok, podcasts and YouTube, Vera Bradley executives said during an earnings call yesterday. So far this quarter, Pura Vida has reduced its advertising spend on those platforms by 10% and the decreases will likely continue. By next year, executives estimate under 75% of Pura Vida’s marketing spend will be on Facebook and Instagram.
With the new marketing diversification strategy, Pura Vida’s sales have started to improve and the company expects Pura Vida to return to normal growth rates of 15% to 20% in the second half of the year.
For the full year, Pura Vida revenue should grow over 20%, executives said. Last fiscal year, Pura Vida recorded revenue of $112.5 million.
Currently, Pura Vida’s inventory levels are higher than Vera Bradley would like, largely due to the DTC sales miss and the fact that Pura Vida had some production issues last year and “over indexed” on inventory this year as a result. Pura Vida is working through the extra inventory and is well stocked for holiday.
Other Pura Vida news that came out of the conference call:
- Pura Vida has opened its first standalone store at UTC Mall in San Diego. So far, sales have exceeded initial plans. Customers waited in lines for up to three hours on opening day. Vera Bradley executives indicated the company will open more Pura Vida stores in the future.
- On the wholesale front, Pura Vida has expanded distribution by adding 250 new accounts so far this year. Dillard’s has now joined Nordstrom as a Pura Vida department store partner, executives said.
- Pura Vida’s recent apparel launch of T-shirts and hoodies has gone well. Best sellers include Pura Vida logo, tie dye and surf graphics. Pura Vida is broadening the range to offer more sizes, styles and logos, executives said. “We believe this is a significant revenue opportunity going forward,” Vera Bradley CEO Robert Wallstrom said.
- Pura Vida has also expanded into backpacks and hats.
- This summer, Pura Vida launched a collaboration with Disney that includes Disney-themed jewelry and hair accessories.
