Financial Data and Key Metrics Changes - Consolidated net revenues totaled $124 million, a decrease from $134.7 million in the prior year third quarter [18] - Consolidated net income was $6.3 million or $0.20 per diluted share, compared to $6.2 million or $0.18 per diluted share last year [18] - Third quarter gross margin was $65.6 million, representing 52.9% of net revenues, down from 53.6% in the prior year [20] - Consolidated SG&A expense totaled $57.6 million or 46.4% of net revenues, compared to $63.7 million or 47.3% of net revenues in the prior year [21] - Total quarter-end inventory was $178.3 million, up from $148.3 million at the end of the third quarter last year [23] Business Line Data and Key Metrics Changes - Vera Bradley direct segment revenues were $80.1 million, a 7.6% decrease from $86.6 million last year, with comparable sales down 9.6% [19] - Vera Bradley indirect segment revenues increased by 6.7% to $22.3 million from $20.9 million in the prior year [19] - Pura Vida segment revenues decreased by 20.3% to $21.7 million from $27.2 million last year [19] Market Data and Key Metrics Changes - The direct full price channel customers with higher household incomes remained more engaged, while customers with lower household incomes faced inflationary pressures [8] - The indirect channel experienced its third consecutive quarter of year-over-year growth [8] Company Strategy and Development Direction - The company is focusing on innovation and lifestyle merchandising in core areas such as travel and collaborations, including partnerships with Disney and Harry Potter [9] - The company is rationalizing its store base, closing underperforming stores as leases expire, with 10 full-line Vera Bradley locations closed this year [10] - Pura Vida is working on building a more effective marketing program and implementing a customer data platform to enhance customer targeting [12] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment is expected to remain unpredictable, with inflationary pressures impacting lower-income customers [25] - The company anticipates consolidated net revenues for the fourth quarter to be between $136 million and $141 million, down from $149.6 million last year [26] - For the full year, updated expectations are consolidated net revenues of $489 million to $494 million, compared to $540.5 million in fiscal 2022 [27] Other Important Information - The company is implementing a comprehensive customer data platform for Pura Vida to enhance marketing effectiveness [12] - The company has a solid cash position, with cash, cash equivalents, and investments totaling $25.2 million, down from $75.3 million at the end of last year's third quarter [24] Q&A Session Summary Question: Insights on channel right-sizing and factory performance - The company is consolidating full price store counts and leveraging e-commerce and indirect business to reach customers efficiently [32] - The factory channel is facing challenges due to economic conditions and inflation, but remains an important part of the business [33] Question: Attractiveness of Vera Bradley and key priorities - The new CEO is focused on leveraging the company's heritage and opportunities in merchandising and marketing for long-term growth [35] Question: Inventory growth relative to sales - The company expects to align inventory levels with sales by the end of next year, with a focus on reducing inventory [38] Question: Consumer dynamics and gross margin considerations - The company observed a weak October but saw a pickup during Black Friday, with promotional activity being crucial for stimulating consumer spending [41] Question: NFT strategy and customer trends - The company views entering the NFT space as an opportunity to innovate and stay relevant with younger customers [46] Question: Pura Vida digital trends and marketing diversification - The company is working on a customer data platform and diversifying marketing strategies to improve Pura Vida's performance [56] Question: Expansion plans for Pura Vida stores - The company is gathering insights from existing stores before deciding on further expansion [77] Question: Gross margin guidance changes - The decline in gross margin estimates is attributed to increased tactical discounting to drive revenue [66]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________ FORM 10-Q ___________________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended July 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From to Commission File Number: 001-34918 VERA BRADLEY, INC. (Exact name of registrant as specified in ...

Vera Bradley, Inc. (NASDAQ:VRA) Q2 2023 Earnings Conference Call August 31, 2022 9:30 AM ET Company Participants Mark Dely - Chief Administrative Officer Rob Wallstrom - Chief Executive Officer John Enwright - Chief Financial Officer Conference Call Participants Oliver Chen - Cowen and Company Joe Gomes - Noble Capital Eric Beder - SCC Research Operator Good day and welcome to the Vera Bradley Second Quarter Fiscal 2023 Earnings Conference Call. Today's conference is being recorded. At this time, I would li ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________ FORM 10-Q ___________________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended April 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From to Commission File Number: 001-34918 VERA BRADLEY, INC. (Exact name of registrant as specified in ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________________________ FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended January 29, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From to Commission File Number: 001-34918 _____________________________________________ VERA BRADLEY, INC. (Exact name of registrant a ...

Vera Bradley, Inc. (NASDAQ:VRA) Q4 2022 Earnings Conference Call March 9, 2022 9:30 AM ET Company Participants Mark Dely - Chief Administrative Officer Rob Wallstrom - Chief Executive Officer John Enwright - Chief Financial Officer Conference Call Participants Oliver Chen - Cowen Eric Beder - SCC Research Steve Marotta - CLK & Associates Operator Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Vera Bradley Fourth Quarter and Fiscal Year-End Conference Call. At this time, all pa ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Vera Bradley, Inc. as of October 30, 2021, including the Balance Sheets, Statements of Operations, Statements of Comprehensive Income, Statements of Shareholders' Equity, Statements of Cash Flows, and accompanying notes, providing a detailed view of the company's financial position and performance [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of October 30, 2021, shows a slight increase in total assets to $520.7 million compared to $513.8 million at January 30, 2021, driven by increases in cash and inventories, while total liabilities decreased slightly from $169.1 million to $162.6 million, and total shareholders' equity increased to $327.4 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Oct 30, 2021 | Jan 30, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $277,315 | $259,683 | | Cash and cash equivalents | $74,784 | $64,175 | | Inventories | $148,265 | $141,416 | | **Total Assets** | **$520,742** | **$513,787** | | **Total Current Liabilities** | $78,538 | $77,426 | | **Total Liabilities** | **$162,593** | **$169,071** | | **Total Shareholders' Equity** | **$327,448** | **$314,907** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the thirteen weeks ended October 30, 2021, net revenues increased to $134.7 million from $124.8 million year-over-year, but operating income decreased to $8.0 million from $12.2 million, and net income attributable to Vera Bradley, Inc. fell to $5.8 million from $8.9 million, while for the thirty-nine-week period, net revenues grew significantly to $390.9 million, driving net income attributable to Vera Bradley, Inc. up to $12.7 million from just $0.8 million in the prior year Statement of Operations Summary (in thousands, except per share data) | Metric | Thirteen Weeks Ended Oct 30, 2021 | Thirteen Weeks Ended Oct 31, 2020 | Thirty-Nine Weeks Ended Oct 30, 2021 | Thirty-Nine Weeks Ended Oct 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $134,735 | $124,849 | $390,877 | $325,903 | | Gross profit | $72,278 | $73,831 | $211,803 | $187,640 | | Operating income | $7,952 | $12,164 | $18,641 | $4,089 | | Net income attributable to Vera Bradley, Inc. | $5,778 | $8,874 | $12,683 | $753 | | Diluted EPS | $0.17 | $0.26 | $0.37 | $0.02 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the thirty-nine weeks ended October 30, 2021, net cash provided by operating activities was $19.2 million, a significant improvement from $1.6 million in the prior-year period, with net cash used in investing activities at $3.2 million, a shift from $18.0 million provided in the prior year, and net cash used in financing activities at $5.4 million, resulting in the company's cash and cash equivalents increasing by $10.6 million to end the period at $74.8 million Cash Flow Summary (in thousands) | Cash Flow Activity | Thirty-Nine Weeks Ended Oct 30, 2021 | Thirty-Nine Weeks Ended Oct 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $19,211 | $1,630 | | Net cash (used in) provided by investing activities | $(3,173) | $17,995 | | Net cash (used in) provided by financing activities | $(5,415) | $6,201 | | **Net increase in cash and cash equivalents** | **$10,609** | **$25,848** | | **Cash and cash equivalents, end of period** | **$74,784** | **$75,765** | [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's accounting policies and financial statement components, including its structure with two lifestyle brands (Vera Bradley and Pura Vida) and three reportable segments (VB Direct, VB Indirect, Pura Vida), as well as details on revenue recognition, lease obligations, earnings per share calculations, debt facilities, and segment-level financial performance - The company operates two distinct lifestyle brands, Vera Bradley and Pura Vida, and is organized into three reportable segments: Vera Bradley Direct (VB Direct), Vera Bradley Indirect (VB Indirect), and Pura Vida[38](index=38&type=chunk)[41](index=41&type=chunk) Segment Net Revenues - Thirteen Weeks Ended Oct 30, 2021 (in thousands) | Segment | Net Revenues | | :--- | :--- | | VB Direct | $86,646 | | VB Indirect | $20,913 | | Pura Vida | $27,176 | | **Total** | **$134,735** | Segment Operating Income - Thirteen Weeks Ended Oct 30, 2021 (in thousands) | Segment | Operating Income | | :--- | :--- | | VB Direct | $17,825 | | VB Indirect | $7,341 | | Pura Vida | $1,794 | | **Total Segment Operating Income** | **$26,960** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for the third quarter of fiscal 2022, highlighting a 7.9% increase in net revenues to $134.7 million, covering the ongoing impacts of the COVID-19 pandemic and supply chain disruptions, which have led to shipping delays and increased freight expenses, detailing the performance of its three segments: VB Direct sales grew 10.8%, Pura Vida sales increased 11.7%, while VB Indirect sales decreased 6.4%, and noting that despite revenue growth, operating income declined due to lower gross margins from increased shipping costs and the expiration of GSP duty-free status [Executive Summary and External Factors](index=27&type=section&id=Executive%20Summary%20and%20External%20Factors) The company faced significant supply chain disruptions, including shipping delays and increased freight expenses, which are expected to continue, with the expiration of the GSP duty-free status also contributing to higher costs, but despite these challenges, strategic progress was made, including product collaborations (Harry Potter, Disney, Hello Kitty), expansion of apparel and jewelry collections, and the launch of a Canadian website for Vera Bradley and the first Pura Vida retail store - The company is experiencing supply chain disruptions causing delivery delays and increased freight expenses, which are expected to persist. Higher tariffs are also impacting costs due to the expiration of the GSP duty-free status[137](index=137&type=chunk) - Strategic initiatives in Q3 included expanding product collaborations (Disney, Harry Potter), launching a Canadian e-commerce site, and opening the first Pura Vida retail store in San Diego[138](index=138&type=chunk)[143](index=143&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) For the third quarter (13 weeks ended Oct 30, 2021), consolidated net revenues rose 7.9% to $134.7 million, with VB Direct revenue growing 10.8% driven by an 18.3% increase in comparable store sales, while Pura Vida revenue increased 11.7%, and VB Indirect revenue fell 6.4% due to lower mask sales, leading to a gross margin decline from 59.1% to 53.6%, primarily due to higher shipping costs, GSP expiration, and lapping high-margin mask sales from the prior year, and SG&A expenses increasing 4.5% to $64.5 million, consequently, operating income fell to $8.0 million from $12.2 million year-over-year Q3 Net Revenues by Segment (in millions) | Segment | Q3 FY2022 | Q3 FY2021 | % Change | | :--- | :--- | :--- | :--- | | VB Direct | $86.6 | $78.2 | +10.8% | | VB Indirect | $20.9 | $22.3 | -6.4% | | Pura Vida | $27.2 | $24.3 | +11.7% | | **Total** | **$134.7** | **$124.8** | **+7.9%** | - Gross profit margin decreased to **53.6%** from **59.1%** in the prior year, negatively impacted by increased shipping expenses (**155 bps**), GSP duty-free status expiration (**95 bps**), and lapping higher-margin mask sales (**230 bps**)[166](index=166&type=chunk) - SG&A expenses increased by **$2.8 million (4.5%)** to **$64.5 million**, primarily due to the non-recurrence of prior-year COVID-19 expense reduction measures[167](index=167&type=chunk) - For the thirty-nine weeks, net revenues increased **19.9%** to **$390.9 million**, and operating income rose to **$18.6 million** from **$4.1 million** in the prior year, largely due to lapping the temporary store closures from 2020[180](index=180&type=chunk)[188](index=188&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company's primary liquidity sources are cash on hand ($74.8 million at quarter-end), investments, and operating cash flow, with a $75.0 million asset-based revolving credit agreement with no outstanding borrowings, and for the first nine months of fiscal 2022, net cash from operations was $19.2 million, with projected capital expenditures for the full fiscal year between $6.0 million and $8.0 million - The company ended the quarter with **$74.8 million** in cash and cash equivalents and no debt outstanding under its **$75.0 million** revolving credit facility[16](index=16&type=chunk)[199](index=199&type=chunk) Cash Flow Summary - Thirty-Nine Weeks Ended (in thousands) | Activity | Oct 30, 2021 | Oct 31, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $19,211 | $1,630 | | Net cash (used in) provided by investing activities | $(3,173) | $17,995 | | Net cash (used in) provided by financing activities | $(5,415) | $6,201 | - Projected capital expenditures for fiscal 2022 are expected to be between **$6.0 million** and **$8.0 million**[205](index=205&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that as of October 30, 2021, there have been no material changes in the market risks previously disclosed in its Annual Report on Form 10-K for the fiscal year ended January 30, 2021 - There were no material changes to the company's market risk disclosures as of October 30, 2021[220](index=220&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of October 30, 2021, with no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[221](index=221&type=chunk) - No material changes were made to the company's internal control over financial reporting during the most recent fiscal quarter[222](index=222&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a lawsuit filed by Vesi Incorporated in August 2019, alleging breach of fiduciary duty and other claims, seeking damages of at least $10.0 million, which the company is vigorously defending, while a separate class action lawsuit filed by Chidimma Igboakaeze in April 2020 regarding California labor code violations was settled in the first quarter of fiscal 2022 for an immaterial amount - The company is defending a lawsuit from Vesi Incorporated seeking damages of at least **$10.0 million** related to its licensing business. The company has filed a motion for summary judgment and is awaiting a court decision[224](index=224&type=chunk) - A class action lawsuit in California (Chidimma Igboakaeze) concerning labor code violations was settled for an immaterial amount during the first quarter of fiscal 2022[225](index=225&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section highlights material updates to the company's risk factors, including new risks identified such as potential adverse effects from disruptions in distribution systems and worldwide ports, like those caused by COVID-19, which could lead to increased freight costs and inventory shortages, and the inability to attract and retain a sufficient number of qualified retail and distribution center employees amidst intense competition and high turnover, amplified by the pandemic - The company identifies new risks related to disruptions in its distribution systems and worldwide ports, noting that events like the COVID-19 pandemic have caused shipping container shortages and backlogs, which could lead to increased costs and missed sales[228](index=228&type=chunk)[229](index=229&type=chunk) - The company highlights the risk of being unable to attract and retain sufficient retail and distribution center employees due to intense competition and high turnover, exacerbated by the COVID-19 pandemic[230](index=230&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the third quarter, the company repurchased 214,030 shares of its common stock at an average price of $9.90 per share under its 2018 Share Repurchase Program, with $30.8 million remaining available as of October 30, 2021, and subsequent to the quarter's end, in December 2021, the board approved a new $50.0 million share repurchase program, effective December 13, 2021, and expiring in December 2024 Share Repurchases - Thirteen Weeks Ended Oct 30, 2021 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Aug 29 - Oct 2, 2021 | 97,403 | $9.98 | | Oct 3 - Oct 30, 2021 | 116,627 | $9.83 | | **Total** | **214,030** | **$9.90** | - As of October 30, 2021, **$30.8 million** remained available under the 2018 Share Repurchase Program[109](index=109&type=chunk)[234](index=234&type=chunk) - A new **$50.0 million** share repurchase program was approved by the board in December 2021, set to expire in December 2024[233](index=233&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as well as Inline XBRL instance and taxonomy documents - Exhibits filed include CEO and CFO certifications (302 and 906) and Inline XBRL data files[236](index=236&type=chunk)

Financial Data and Key Metrics Changes - Consolidated net revenues for Q3 2022 totaled $134.7 million, a 7.9% increase from $124.8 million in the prior year and a 5.7% increase over $127.5 million in Q3 2020 [15] - Consolidated net income for Q3 2022 was $6.2 million or $0.18 per diluted share, compared to $10.2 million or $0.30 per diluted share in the prior year [15] - Non-GAAP EPS for the year-to-date was $0.41, ahead of last year and pre-pandemic levels [10] Business Line Data and Key Metrics Changes - Vera Bradley Direct segment revenues were $86.6 million, a 10.8% increase over $78.2 million last year, with comparable sales up 7.8% year-over-year [16] - Vera Bradley Indirect segment revenues decreased by 6.4% to $20.9 million, reflecting lower mask sales and reduced orders from key accounts [16] - Pura Vida segment revenues increased by 11.7% to $27.2 million, driven by growth in wholesale account sales [16] Market Data and Key Metrics Changes - The travel category for Vera Bradley exceeded both last year and fiscal 2020 levels, indicating a recovery in consumer behavior [25] - Digital sales for Vera Bradley grew nearly 60% over fiscal 2020 levels, highlighting the importance of e-commerce in revenue generation [33] - Pura Vida's e-commerce revenues were impacted by the Apple iOS update, which reduced the effectiveness of Facebook and Instagram advertising [6][37] Company Strategy and Development Direction - The company focuses on four key growth drivers: elevating digital strategy, enhancing product innovation, expanding customer community, and evolving distribution channels [11][45] - The company aims to balance online and physical distribution channels for Pura Vida, with plans to open 3 to 5 additional stores next year [6][38] - The company is committed to sustainability, with a goal to update 100% of fabrics to more sustainable alternatives by 2025 [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing supply chain challenges and increased freight costs, which negatively impacted gross margins [7][21] - The company expects continued pressure on gross margins due to supply chain costs and inflationary pressures, but is implementing strategic price increases to mitigate these effects [8][55] - Management remains optimistic about long-term growth opportunities despite current headwinds [10][12] Other Important Information - The company resumed stock repurchasing, buying back 214,000 shares for approximately $2.1 million, and has a new $50 million share repurchase authorization plan [24] - Cash and cash equivalents at quarter-end totaled $75.3 million, with no borrowings on the credit facility [23] Q&A Session Summary Question: Can you provide more detail on customer file growth and engagement of newer customers? - Management noted that new collaborations are driving customer growth, with a younger and more diverse customer base emerging [51][53] Question: What is the outlook for gross margin in 2022 considering supply chain costs and price increases? - Management indicated that freight expenses are expected to remain high, and price increases are being implemented to offset these costs, with guidance to be provided in March [54][55] Question: How is the pricing strategy evolving and what is the inventory situation? - Management is taking a targeted approach to price increases, with overall increases expected to be in the low single digits, while Pura Vida inventory levels are higher than desired [58][60] Question: What is the status of the delayed renewal of GSP and its impact? - Management explained that the delay is due to differing perspectives in Congress, affecting sourcing from countries like Cambodia and Indonesia [62][65] Question: How is the company addressing the challenges posed by the iOS update on digital marketing? - Management emphasized the need to diversify marketing platforms and balance digital and traditional methods to engage customers effectively [67][68]

PART I. FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents Vera Bradley, Inc.'s unaudited condensed consolidated financial statements and accompanying notes for the periods ended July 31, 2021, and August 1, 2020 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) **Condensed Consolidated Balance Sheets (in thousands):** | Metric | July 31, 2021 | January 30, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $75,753 | $64,175 | | Inventories | $148,048 | $141,416 | | Total current assets | $276,341 | $259,683 | | Total assets | $525,059 | $513,787 | | Total current liabilities | $83,818 | $77,426 | | Total liabilities | $171,873 | $169,071 | | Total shareholders' equity of Vera Bradley, Inc. | $322,822 | $314,907 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) **Condensed Consolidated Statements of Operations (in thousands, except per share data):** | Metric | Thirteen Weeks Ended July 31, 2021 | Thirteen Weeks Ended August 1, 2020 | Twenty-Six Weeks Ended July 31, 2021 | Twenty-Six Weeks Ended August 1, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $147,048 | $131,770 | $256,142 | $201,054 | | Gross profit | $80,361 | $79,621 | $139,525 | $113,809 | | Operating income (loss) | $12,648 | $17,499 | $10,689 | $(8,075) | | Net income (loss) attributable to Vera Bradley, Inc. | $9,050 | $7,216 | $6,905 | $(8,121) | | Diluted net income (loss) per share | $0.26 | $0.42 | $0.20 | $(0.24) | [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) **Condensed Consolidated Statements of Comprehensive Income (in thousands):** | Metric | Thirteen Weeks Ended July 31, 2021 | Thirteen Weeks Ended August 1, 2020 | Twenty-Six Weeks Ended July 31, 2021 | Twenty-Six Weeks Ended August 1, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $9,857 | $8,327 | $8,339 | $(7,210) | | Comprehensive income (loss) attributable to Vera Bradley, Inc. | $9,046 | $7,231 | $6,893 | $(8,281) | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) **Condensed Consolidated Statements of Shareholders' Equity (in thousands, except share data):** | Metric | July 31, 2021 | January 30, 2021 | | :--- | :--- | :--- | | Common Stock (shares outstanding) | 34,021,330 | 33,414,490 | | Additional paid-in-capital | $106,455 | $105,433 | | Retained earnings | $323,431 | $316,526 | | Total shareholders' equity of Vera Bradley, Inc. | $322,822 | $314,907 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) **Condensed Consolidated Statements of Cash Flows (in thousands):** | Activity | Twenty-Six Weeks Ended July 31, 2021 | Twenty-Six Weeks Ended August 1, 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $16,487 | $(77) | | Net cash (used in) provided by investing activities | $(1,671) | $18,901 | | Net cash (used in) provided by financing activities | $(3,229) | $6,816 | | Net increase in cash and cash equivalents | $11,578 | $25,651 | | Cash and cash equivalents, end of period | $75,753 | $75,568 | [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [1. Description of the Company and Basis of Presentation](index=12&type=section&id=1.%20Description%20of%20the%20Company%20and%20Basis%20of%20Presentation) Vera Bradley, Inc. operates two lifestyle brands, Vera Bradley and Pura Vida, across three reportable segments, with no material impact from ASU 2019-12 adoption in fiscal 2022 - Vera Bradley, Inc. operates two unique lifestyle brands: Vera Bradley and Pura Vida, both targeting emotionally-connected, multi-generational female customer bases with multi-channel distribution strategies[37](index=37&type=chunk) - The company has three reportable segments: Vera Bradley Direct (VB Direct), Vera Bradley Indirect (VB Indirect), and Pura Vida[40](index=40&type=chunk) - The adoption of ASU 2019-12, Income Taxes (Topic 740), in the first quarter of fiscal 2022 did not have a material impact on the Company's consolidated financial statements[46](index=46&type=chunk) [2. Revenue from Contracts with Customers](index=13&type=section&id=2.%20Revenue%20from%20Contracts%20with%20Customers) The company disaggregates net revenues by segment, with contract liabilities decreasing to **$3.6 million** and net accounts receivable increasing to **$28.7 million** as of July 31, 2021 Net Revenues by Segment (in thousands) **Thirteen Weeks Ended July 31, 2021 Net Revenues by Segment (in thousands):** | Segment | Net Revenues | | :--- | :--- | | VB Direct | $97,138 | | VB Indirect | $16,832 | | Pura Vida | $33,078 | | **Total** | **$147,048** | **Twenty-Six Weeks Ended July 31, 2021 Net Revenues by Segment (in thousands):** | Segment | Net Revenues | | :--- | :--- | | VB Direct | $163,870 | | VB Indirect | $32,096 | | Pura Vida | $60,176 | | **Total** | **$256,142** | - Contract liabilities (unearned revenue) were **$3.6 million** as of July 31, 2021, down from **$4.1 million** at January 30, 2021, primarily related to Pura Vida's monthly bracelet and jewelry clubs, unredeemed gift cards, and loyalty points[58](index=58&type=chunk) - Accounts receivable from contracts with customers, net of allowances, increased to **$28.7 million** as of July 31, 2021, from **$26.0 million** at January 30, 2021[59](index=59&type=chunk) [3. Leases](index=15&type=section&id=3.%20Leases) Total lease costs for the twenty-six weeks ended July 31, 2021, were **$15.9 million**, with cash paid for operating lease liabilities increasing to **$18.3 million** Total Lease Cost (in thousands) **Total Lease Cost (in thousands):** | Period | July 31, 2021 | August 1, 2020 | | :--- | :--- | :--- | | Thirteen Weeks Ended | $8,404 | $8,339 | | Twenty-Six Weeks Ended | $15,949 | $16,460 | - The weighted-average remaining lease term as of July 31, 2021, was **5.4 years**, with a weighted-average discount rate of **4.7%**[65](index=65&type=chunk)[67](index=67&type=chunk) - Cash paid for operating lease liabilities for the twenty-six weeks ended July 31, 2021, was **$18.3 million**, compared to **$11.8 million** in the prior-year period, which included rent payment deferrals due to COVID-19[62](index=62&type=chunk)[68](index=68&type=chunk) [4. Earnings Per Share](index=16&type=section&id=4.%20Earnings%20Per%20Share) Diluted EPS for Vera Bradley, Inc. decreased to **$0.26** for the thirteen weeks but improved to **$0.20** for the twenty-six weeks ended July 31, 2021 Diluted Net Income (Loss) Per Share **Diluted Net Income (Loss) Per Share Available to Vera Bradley, Inc. Common Shareholders:** | Period | July 31, 2021 | August 1, 2020 | | :--- | :--- | :--- | | Thirteen Weeks Ended | $0.26 | $0.42 | | Twenty-Six Weeks Ended | $0.20 | $(0.24) | - The noncontrolling interest in Pura Vida is classified as redeemable temporary equity due to a Put/Call Agreement, which allows the sellers or the company to buy/sell the remaining **25%** interest[71](index=71&type=chunk)[72](index=72&type=chunk) [5. Fair Value of Financial Instruments](index=18&type=section&id=5.%20Fair%20Value%20of%20Financial%20Instruments) Fair value measurements are classified into three levels, with no store asset impairment charges recorded in the current period, contrasting with **$3.8 million** in the prior year - Fair value measurements are classified into Level 1 (quoted prices), Level 2 (observable inputs), and Level 3 (unobservable inputs) Cash equivalents are Level 1, and short-term investments are Level 2[75](index=75&type=chunk)[76](index=76&type=chunk)[79](index=79&type=chunk) - No impairment charges were recorded for store assets (property, plant, and equipment, and lease right-of-use assets) for the thirteen weeks ended July 31, 2021, and August 1, 2020, or the twenty-six weeks ended July 31, 2021[77](index=77&type=chunk) - The company recorded **$3.8 million** in impairment charges related to store assets during the twenty-six weeks ended August 1, 2020[77](index=77&type=chunk) [6. Debt](index=19&type=section&id=6.%20Debt) The company maintains a **$75.0 million** asset-based revolving Credit Agreement with no outstanding borrowings and full covenant compliance as of July 31, 2021 - The company has an asset-based revolving Credit Agreement with an aggregate principal amount not to exceed **$75.0 million**, maturing on September 7, 2023[82](index=82&type=chunk)[88](index=88&type=chunk) - As of July 31, 2021, and January 30, 2021, there were no borrowings outstanding, and **$75.0 million** was available under the Credit Agreement[88](index=88&type=chunk) - The company was in compliance with all covenants under the Credit Agreement as of July 31, 2021[206](index=206&type=chunk) [7. Income Taxes](index=20&type=section&id=7.%20Income%20Taxes) The effective tax rate decreased to **21.3%** for the thirteen weeks but increased to **20.4%** for the twenty-six weeks ended July 31, 2021, due to various tax impacts Effective Tax Rate **Effective Tax Rate:** | Period | July 31, 2021 | August 1, 2020 | | :--- | :--- | :--- | | Thirteen Weeks Ended | 21.3% | 51.1% | | Twenty-Six Weeks Ended | 20.4% | 16.5% | - The decrease in the thirteen-week effective tax rate was primarily due to the reversal of the impact from the net operating loss (NOL) carryback in the prior-year, estimated as a result of the CARES Act[91](index=91&type=chunk) - The increase in the twenty-six-week effective tax rate was primarily due to the relative impact of permanent and discrete items in the current-year period compared to the prior-year period, mainly stock-based compensation[92](index=92&type=chunk) [8. Stock-Based Compensation](index=20&type=section&id=8.%20Stock-Based%20Compensation) The company granted **640,915** RSUs with an aggregate fair value of **$6.6 million**, with **$8.7 million** in unrecognized compensation cost as of July 31, 2021 Restricted Stock Units Granted (Twenty-Six Weeks Ended) **Restricted Stock Units Granted (Twenty-Six Weeks Ended):** | Metric | July 31, 2021 | August 1, 2020 | | :--- | :--- | :--- | | Time-based & Performance-based RSUs | 640,915 | 1,412,024 | | Aggregate Fair Value | $6.6 million | $5.8 million | - As of July 31, 2021, total unrecognized compensation cost related to nonvested restricted stock units was **$8.7 million**, expected to be recognized over a weighted-average period of **1.8 years**[101](index=101&type=chunk) [9. Commitments and Contingencies](index=21&type=section&id=9.%20Commitments%20and%20Contingencies) The company faces a legal dispute with Vesi Incorporated seeking at least **$10.0 million** in damages, while a prior class-action lawsuit was settled for an immaterial amount - Vesi Incorporated filed a lawsuit against the company in August 2019, alleging breach of fiduciary duty, unfair competition, defamation, and tortious interference, seeking damages of not less than **$10.0 million** The company denies liability and is vigorously defending itself[103](index=103&type=chunk) - A class-action lawsuit filed in April 2020 regarding California Labor Code violations was settled for an immaterial amount in the first quarter of fiscal 2022[104](index=104&type=chunk) [10. Common Stock](index=22&type=section&id=10.%20Common%20Stock) The **$50.0 million** share repurchase program resumed in March 2021, with no shares repurchased during the twenty-six weeks ended July 31, 2021, leaving **$32.9 million** available - The 2018 Share Repurchase Program, authorizing up to **$50.0 million** in common stock repurchases, was extended through December 11, 2021, and resumed on March 11, 2021, after a temporary suspension due to COVID-19[106](index=106&type=chunk) - No shares were purchased under the program during the twenty-six weeks ended July 31, 2021[107](index=107&type=chunk) - **$32.9 million** remained available to repurchase shares under the 2018 Share Repurchase Program as of July 31, 2021[107](index=107&type=chunk) [11. Cloud Computing Arrangements](index=22&type=section&id=11.%20Cloud%20Computing%20Arrangements) The company capitalizes and amortizes Cloud Computing Arrangement implementation costs, with unamortized costs totaling **$8.5 million** as of July 31, 2021 - Unamortized Cloud Computing Arrangement (CCA) implementation costs totaled **$8.5 million** as of July 31, 2021, up from **$8.1 million** at January 30, 2021[109](index=109&type=chunk) - CCA costs are amortized over the term of the related hosting agreement, with amortization expense recorded within selling, general, and administrative expenses[109](index=109&type=chunk) [12. Acquisition of Pura Vida](index=22&type=section&id=12.%20Acquisition%20of%20Pura%20Vida) Vera Bradley acquired a **75%** interest in Pura Vida for approximately **$75.0 million**, with a **$18.7 million** contingent payment made in fiscal 2021 - The company acquired a **75%** ownership interest in Creative Genius, Inc. (Pura Vida) on July 16, 2019, for approximately **$75.0 million** in cash[110](index=110&type=chunk) - A contingent payment of **$18.7 million**, based on Pura Vida's 2019 adjusted EBITDA, was made during the first quarter of fiscal 2021[111](index=111&type=chunk) [13. Redeemable Noncontrolling Interest](index=23&type=section&id=13.%20Redeemable%20Noncontrolling%20Interest) The redeemable noncontrolling interest in Pura Vida increased to **$30.36 million** as of July 31, 2021, reflecting attributable net income and distributions Redeemable Noncontrolling Interest (in thousands) **Redeemable Noncontrolling Interest (in thousands):** | Metric | July 31, 2021 | January 30, 2021 | | :--- | :--- | :--- | | Balance | $30,364 | $29,809 | **Net Income Attributable to Redeemable Noncontrolling Interest (in thousands):** | Period | July 31, 2021 | August 1, 2020 | | :--- | :--- | :--- | | Thirteen Weeks Ended | $807 | $1,111 | | Twenty-Six Weeks Ended | $1,434 | $911 | [14. Intangible Assets and Goodwill](index=24&type=section&id=14.%20Intangible%20Assets%20and%20Goodwill) Intangible assets, excluding goodwill, totaled **$45.76 million**, with goodwill at **$44.3 million**, and no impairment charges recorded in fiscal 2022 Intangible Assets, Excluding Goodwill (in thousands) **Intangible Assets, Excluding Goodwill (in thousands):** | Asset | July 31, 2021 | January 30, 2021 | | :--- | :--- | :--- | | Customer Relationships | $8,625 | $10,083 | | Non-competition Agreements | $466 | $545 | | Pura Vida Brand | $36,668 | $36,668 | | **Total** | **$45,759** | **$47,296** | - Goodwill totaled **$44.3 million** as of July 31, 2021, and January 30, 2021, recorded within the Pura Vida segment[120](index=120&type=chunk) - No impairment charge was recorded for goodwill or intangible assets as a result of the annual impairment test for fiscal 2022[123](index=123&type=chunk) [15. Segment Reporting](index=25&type=section&id=15.%20Segment%20Reporting) The company operates and reports across three segments: VB Direct, VB Indirect, and Pura Vida, with all segments contributing positively to operating income - The company has three operating segments: Vera Bradley Direct (VB Direct), Vera Bradley Indirect (VB Indirect), and Pura Vida[124](index=124&type=chunk) Segment Net Revenues and Operating Income (in thousands) **Segment Net Revenues (in thousands):** | Segment | 13 Weeks Ended July 31, 2021 | 13 Weeks Ended August 1, 2020 | 26 Weeks Ended July 31, 2021 | 26 Weeks Ended August 1, 2020 | | :--- | :--- | :--- | :--- | :--- | | VB Direct | $97,138 | $81,233 | $163,870 | $118,070 | | VB Indirect | $16,832 | $17,730 | $32,096 | $28,959 | | Pura Vida | $33,078 | $32,807 | $60,176 | $54,025 | | **Total** | **$147,048** | **$131,770** | **$256,142** | **$201,054** | **Segment Operating Income (in thousands):** | Segment | 13 Weeks Ended July 31, 2021 | 13 Weeks Ended August 1, 2020 | 26 Weeks Ended July 31, 2021 | 26 Weeks Ended August 1, 2020 | | :--- | :--- | :--- | :--- | :--- | | VB Direct | $23,168 | $22,822 | $34,028 | $11,857 | | VB Indirect | $5,601 | $6,477 | $10,062 | $9,233 | | Pura Vida | $3,226 | $4,445 | $5,734 | $3,644 | | **Total Segment Op. Income** | **$31,995** | **$33,744** | **$49,824** | **$24,734** | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses Vera Bradley, Inc.'s financial condition, operating results, liquidity, and cash flows, highlighting COVID-19 impacts, supply chain disruptions, and strategic progress for both brands [The COVID-19 Pandemic](index=27&type=section&id=The%20COVID-19%20Pandemic) The COVID-19 pandemic significantly impacted prior-year operations with store closures and workforce adjustments, and future effects on liquidity and results remain uncertain - During the first and second quarters of the prior-year, the COVID-19 pandemic caused global travel restrictions, quarantines, factory/mall closures, temporary store closures, workforce furloughs (**80%**), and temporary base compensation reductions[133](index=133&type=chunk) - Vera Bradley retail stores began phased re-opening on May 5, 2020, with substantially all stores open by the end of July 2020 All stores remained open during the first six months of the current year[134](index=134&type=chunk)[135](index=135&type=chunk) - The company cannot predict the future impact of the COVID-19 pandemic on its liquidity, operating results, and financial condition, but it could have a significant adverse effect[136](index=136&type=chunk) [Supply Chain Disruptions](index=27&type=section&id=Supply%20Chain%20Disruptions) The Vera Bradley brand experienced supply chain disruptions, leading to delivery delays, increased freight expenses, and higher tariffs due to GSP expiration - The Vera Bradley brand faced supply chain disruptions, causing average delivery delays of **30 days** for product launches[137](index=137&type=chunk) - The company expects shipping delays and freight expense increases to continue for the near future[137](index=137&type=chunk) - Higher tariffs resulted from the expiration of the GSP duty-free status at the end of calendar year 2020, which could have a material adverse effect on liquidity, operating results, and financial condition[137](index=137&type=chunk) [Executive Summary](index=27&type=section&id=Executive%20Summary) Vera Bradley launched a Recycled Cotton Collection, Pura Vida completed ERP integration and expanded wholesale, while net revenues increased **11.6%** but operating income decreased - Vera Bradley launched its Recycled Cotton Collection, 'Cotton ReImagined,' and committed to updating **100%** of fabrics to sustainable alternatives by 2025[138](index=138&type=chunk) - Pura Vida substantially completed its Project Novus ERP integration, expanded wholesale distribution by over **250** new accounts, and rolled out Pura Vida shop-in-shops in **23** Vera Bradley full-line locations[140](index=140&type=chunk) Financial Summary (Q2 Fiscal 2022 vs Q2 Fiscal 2021) **Financial Summary (all comparisons are to the second quarter of fiscal 2021):** | Metric | Q2 FY22 | Q2 FY21 | Change | | :--- | :--- | :--- | :--- | | Net revenues | $147.0 million | $131.8 million | +11.6% | | VB Direct segment sales | $97.1 million | $81.2 million | +19.6% | | VB Indirect segment sales | $16.8 million | $17.7 million | -5.1% | | Pura Vida segment sales | $33.1 million | $32.8 million | +0.8% | | Gross profit | $80.4 million | $79.6 million | +0.9% | | Operating income | $12.6 million | $17.5 million | -27.8% | | Net income attributable to Vera Bradley, Inc. | $9.1 million | $7.2 million | +26.4% | | Cash and cash equivalents and investments (at July 31, 2021) | $76.5 million | N/A | N/A | [How We Assess the Performance of Our Business](index=28&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) The company assesses business performance using key financial measures such as net revenues, gross profit, SG&A, operating income, and net income, with comparable sales not meaningful due to prior-year store closures - Key performance indicators include Net Revenues, Comparable Sales, Gross Profit, Selling, General, and Administrative Expenses (SG&A), Other Income, Operating Income (Loss), and Net Income (Loss)[141](index=141&type=chunk)[144](index=144&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - Comparable sales calculations were not meaningful for the current period due to the temporary closure of all Vera Bradley stores during portions of the first and second quarters of the prior-year due to COVID-19[143](index=143&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Net revenues increased **11.6%** to **$147.0 million** for thirteen weeks, but operating income decreased **27.8%**; for twenty-six weeks, net revenues surged **27.4%** to **$256.1 million**, with operating income improving to **$10.7 million** Consolidated Financial Highlights (in thousands, except percentages) **Consolidated Financial Highlights (in thousands, except percentages):** | Metric | 13 Weeks Ended July 31, 2021 | 13 Weeks Ended Aug 1, 2020 | YoY Change | 26 Weeks Ended July 31, 2021 | 26 Weeks Ended Aug 1, 2020 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net revenues | $147,048 | $131,770 | +11.6% | $256,142 | $201,054 | +27.4% | | Cost of sales | $66,687 | $52,149 | +27.9% | $116,617 | $87,245 | +33.7% | | Gross profit | $80,361 | $79,621 | +0.9% | $139,525 | $113,809 | +22.6% | | Gross profit % | 54.6% | 60.4% | -5.8 pts | 54.5% | 56.6% | -2.1 pts | | SG&A expenses | $68,729 | $62,155 | +10.6% | $129,625 | $121,937 | +6.3% | | SG&A % | 46.7% | 47.2% | -0.5 pts | 50.6% | 60.6% | -10.0 pts | | Operating income (loss) | $12,648 | $17,499 | -27.8% | $10,689 | $(8,075) | N/A (from loss to profit) | | Operating income (loss) % | 8.6% | 13.3% | -4.7 pts | 4.2% | -4.0% | +8.2 pts | | Net income (loss) attributable to Vera Bradley, Inc. | $9,050 | $7,216 | +25.4% | $6,905 | $(8,121) | N/A (from loss to profit) | Vera Bradley Store Data **Vera Bradley Store Data:** | Metric | July 31, 2021 | August 1, 2020 | | :--- | :--- | :--- | | Total stores open at end of period | 145 | 149 | | Total gross square footage at end of period (all stores) | 393,592 | 389,144 | [Thirteen Weeks Ended July 31, 2021, Compared to Thirteen Weeks Ended August 1, 2020](index=32&type=section&id=Thirteen%20Weeks%20Ended%20July%2031,%202021,%20Compared%20to%20Thirteen%20Weeks%20Ended%20August%201,%202020) - Net revenues increased **$15.2 million** (**11.6%**) to **$147.0 million**, primarily driven by a **19.6%** increase in VB Direct segment sales due to higher store sales as stores were temporarily closed in the prior year[161](index=161&type=chunk)[162](index=162&type=chunk) - VB Indirect net revenues decreased **5.1%** to **$16.8 million**, mainly due to a reduction in mask sales, partially offset by a rebound in other product categories[163](index=163&type=chunk) - Pura Vida net revenues increased **0.8%** to **$33.1 million**, but e-commerce sales were negatively impacted by the Apple iOS 14.5 update affecting primary marketing vehicles like Facebook and Instagram[164](index=164&type=chunk) - Gross profit margin decreased to **54.6%** from **60.4%**, primarily due to a decrease in higher-margin mask sales and an increase in shipping and duty costs[165](index=165&type=chunk) - SG&A expenses increased **$6.5 million** (**10.6%**) to **$68.7 million**, mainly due to the non-recurrence of prior-year COVID-19 expense reduction initiatives (furloughs, compensation reductions, marketing cuts)[166](index=166&type=chunk) - Operating income decreased **$4.9 million** (**27.8%**) to **$12.6 million**, primarily due to the factors affecting gross profit and SG&A[169](index=169&type=chunk) - Net income attributable to Vera Bradley, Inc. increased **$1.9 million** (**26.4%**) to **$9.1 million**[177](index=177&type=chunk) [Twenty-Six Weeks Ended July 31, 2021, Compared to Twenty-Six Weeks Ended August 1, 2020](index=34&type=section&id=Twenty-Six%20Weeks%20Ended%20July%2031,%202021,%20Compared%20to%20Twenty-Six%20Weeks%20Ended%20August%201,%202020) - Net revenues increased **$55.0 million** (**27.4%**) to **$256.1 million**, with VB Direct segment sales up **38.8%** due to higher store sales as stores were temporarily closed in the prior year[178](index=178&type=chunk)[179](index=179&type=chunk) - VB Indirect net revenues increased **10.8%** to **$32.1 million**, driven by increased orders from specialty and key accounts, partially offset by a decline in mask sales[180](index=180&type=chunk) - Pura Vida net revenues increased **11.4%** to **$60.2 million**, with wholesale sales increasing, but e-commerce sales negatively impacted by the Apple iOS 14.5 update[181](index=181&type=chunk) - Gross profit margin decreased to **54.5%** from **56.6%**, primarily due to a decline in higher-margin mask sales and increased shipping and duty costs[182](index=182&type=chunk) - SG&A expenses increased **$7.7 million** (**6.3%**) to **$129.6 million**, primarily due to the non-recurrence of prior-year COVID-19 expense reductions, increased incentive compensation, and cloud computing amortization, partially offset by the absence of prior-year store impairment charges and reduced depreciation[183](index=183&type=chunk) - Operating income significantly improved by **$18.8 million**, turning from a loss of **$(8.1) million** to a profit of **$10.7 million**[185](index=185&type=chunk) - Net income attributable to Vera Bradley, Inc. increased **$15.0 million**, turning from a net loss of **$(8.1) million** to a net income of **$6.9 million**[193](index=193&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with cash, investments, and a **$75.0 million** credit facility; operating cash flow significantly improved to **$16.5 million**, while investing and financing activities shifted to net cash used - Primary sources of liquidity include cash on hand, cash equivalents, investments, and cash flow from operations, with access to a **$75.0 million** asset-based revolving credit agreement (no debt outstanding as of July 31, 2021)[194](index=194&type=chunk) Cash Flow Summary (Twenty-Six Weeks Ended, in thousands) **Cash Flow Summary (Twenty-Six Weeks Ended, in thousands):** | Activity | July 31, 2021 | August 1, 2020 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $16,487 | $(77) | | Net cash (used in) provided by investing activities | $(1,671) | $18,901 | | Net cash (used in) provided by financing activities | $(3,229) | $6,816 | - Net cash provided by operating activities increased to **$16.5 million**, primarily due to improved net income and favorable changes in assets and liabilities (e.g., accounts receivable collections, lower inventory receipts)[198](index=198&type=chunk) - Net cash used in investing activities was **$1.7 million**, a shift from cash provided in the prior year, primarily due to non-recurring proceeds from investment activity in the prior-year period Capital expenditures for fiscal 2022 are expected to be **$8.0 million** to **$10.0 million**[200](index=200&type=chunk) - Net cash used in financing activities was **$3.2 million**, a shift from cash provided in the prior year, primarily due to non-recurring prior-year activities such as net borrowings under the credit agreement and a contingent consideration payment for the Pura Vida acquisition[201](index=201&type=chunk) [Off-Balance-Sheet Arrangements](index=38&type=section&id=Off-Balance-Sheet%20Arrangements) The company has no off-balance-sheet financing or unconsolidated special-purpose entities - The company does not have any off-balance-sheet financing or unconsolidated special-purpose entities[210](index=210&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No significant changes occurred in the company's critical accounting policies and estimates as of July 31, 2021, compared to the prior Annual Report on Form 10-K - There were no significant changes to any of the critical accounting policies and estimates described in the Annual Report as of July 31, 2021[212](index=212&type=chunk) [Recently Issued Accounting Pronouncements](index=38&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Recently issued accounting pronouncements are discussed in Note 1, 'Description of the Company and Basis of Presentation,' within Item 1 of this Quarterly Report on Form 10-Q - Refer to Note 1 'Description of the Company and Basis of Presentation' within Item 1 'Financial Statements' for a discussion of recently issued accounting pronouncements[213](index=213&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes occurred in the company's market risks as of July 31, 2021, compared to those described in the prior Annual Report on Form 10-K - As of July 31, 2021, there was no material change in the market risks described in the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2021[214](index=214&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of July 31, 2021, with no material changes in internal control over financial reporting during the most recent fiscal quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of July 31, 2021[215](index=215&type=chunk) - There has been no change in internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal control over financial reporting[216](index=216&type=chunk) PART II. OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in a lawsuit with Vesi Incorporated seeking at least **$10.0 million** in damages, while a prior class-action lawsuit was settled for an immaterial amount - Vesi Incorporated filed a lawsuit against the company in August 2019, seeking not less than **$10.0 million** for punitive damages, attorney fees, and prejudgment interest The company denies liability and intends to vigorously defend itself[218](index=218&type=chunk) - A class-action lawsuit filed in April 2020 regarding California Labor Code violations was settled for an immaterial amount in the first quarter of fiscal 2022[219](index=219&type=chunk) [ITEM 1A. RISK FACTORS](index=40&type=page&id=Item%201A.%20Risk%20Factors) No material changes to prior risk factors, but new risks include distribution system disruptions and challenges in attracting and retaining qualified employees, exacerbated by the pandemic - No material changes to risk factors previously set forth in the Company's Annual Report on Form 10-K, except for those related to distribution systems and employee retention[221](index=221&type=chunk) - New or emphasized risks include losses or disruptions associated with distribution systems, such as those caused by public health pandemics (COVID-19), port disruptions, shipping container shortages, and lack of available shipping vessels[222](index=222&type=chunk)[223](index=223&type=chunk) - The company faces risks if it is unable to attract and retain a sufficient number of qualified retail and distribution center employees, a challenge amplified by the COVID-19 pandemic[224](index=224&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The **$50.0 million** share repurchase program resumed in March 2021, with no shares repurchased during the thirteen weeks ended July 31, 2021, leaving **$32.9 million** available - The 2018 Share Repurchase Program, authorizing up to **$50.0 million** of common stock repurchases, was extended through December 11, 2021, and resumed on March 11, 2021, after a temporary suspension due to COVID-19[226](index=226&type=chunk) - There was no activity under the share repurchase program during the thirteen weeks ended July 31, 2021[227](index=227&type=chunk)[228](index=228&type=chunk) - **$32,939,607** remained available to repurchase shares under the program as of July 31, 2021[228](index=228&type=chunk) [ITEM 6. EXHIBITS](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including CEO and CFO certifications and various Inline XBRL documents - Exhibits include CEO Section 302 Certification (31.1) and CFO Section 302 Certification (31.2)[229](index=229&type=chunk) - The filing includes various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF) and a Cover Page Interactive Data File (104)[229](index=229&type=chunk) [SIGNATURE](index=43&type=section&id=SIGNATURE) The Quarterly Report on Form 10-Q was signed by John Enwright, Chief Financial Officer, on behalf of Vera Bradley, Inc. on September 8, 2021 - The report was signed by John Enwright, Chief Financial Officer, on behalf of Vera Bradley, Inc. on September 8, 2021[231](index=231&type=chunk)

Vera Bradley, Inc. (NASDAQ:VRA) Q2 2022 Results Earnings Conference Call September 1, 2021 9:30 AM ET Company Participants Robert Wallstrom - President, Chief Executive Officer John Enwright - Executive Vice President, Chief Financial Officer Mark Dely - Chief Administrative Officer Conference Call Participants Mark Altschwager - Baird Eric Beder - SCC Research Oliver Chen - Cowen Steve Marotta - CLK & Associates Dana Telsey - Telsey Group Operator Good morning ladies and gentlemen. Thank you for standing b ...