Our Pura Vida brand total sales grew just over 6% for the year. We saw double-digit growth in Pura Vida wholesale revenues and our first successful retail store opening during fiscal 2022. However, the significant shift in social and digital media effectiveness due to the Apple IDFA update affecting DTC companies resulted in e-commerce sales falling short of expectations.
In addition to the Apple IDFA update, we faced a series of other unprecedented macro issues, including dramatic supply chain delays and freight cost increases, the delayed renewal of GSP tariff relief, and substantial digital advertising cost increases, all of which materially affected profitability during the year.
The incremental freight costs and GSP impact combined affected our EPS by approximately $0.25 for the full year. Excluding these two items, we would have -- would have put the company in line with our original guidance of $0.80 to $0.90. Even though our earnings results were below our expectations, much of what negatively affected our earnings, particularly the supply chain challenges and GSP related to those two issues.
In the fourth, we began initiating strategic price increases across both of our brands to mitigate some of these inflationary and supply chain pressures, and we are continuing to implement price increases throughout 2022.
+-> passing on cost
In hindsight, we should have implemented price changes more quickly. The price increases should more than offset continuing rising freight costs to deliver year-over-year gross margin improvement in fiscal 2023.
GSP, or Generalized System of Preferences, is more specific to the Vera Bradley brand. The lower gross margin rate throughout the year reflected higher tariffs from previously duty-free countries where we source products whose GSP or duty-free status expired at the beginning of 2021.
--> tariffs!
Our expectation was that Congress would pass the GSP legislation early in 2021. But they are still working on the legislation as we head into 2022. In the past, Congress has retroactively reinstated the duty-free status of such tariffs to the beginning of the year.
Although industry and government sources are still expecting it to be retroactive, we are not certain when or if this will happen. We continue to diligently manage our expenses, and we ended the fiscal year with a solid balance sheet, with ample cash of over $88 million and no debt.
+ no debt
Even facing the macro challenges of the last year, we generated $34 million of free cash flow, slightly above our 10-year average and returned $7.7 million to shareholders through stock repurchases.
We remain in a strong position to continue to invest in our two lifestyle brands, take advantage of additional growth opportunities overtime and return capital to shareholders through continued share repurchases or future dividends.
- THE STOCK OF THE DAY - VRA VERA BRADLEY (NOT WANG)
