Financial Data and Key Metrics Changes - Consolidated net revenues for Q2 totaled $119.8 million, including $5.4 million from Pura Vida, representing a 0.7% increase from $113.6 million in the prior year [18] - Net income attributable to Vera Bradley for Q2 was $8.7 million or $0.25 per diluted share, compared to $9.3 million or $0.26 per diluted share in the prior year [19] - For the six months, consolidated net revenues totaled $210.8 million, up from $200.2 million last year, with net income of $6.9 million or $0.20 per diluted share [25] Business Line Data and Key Metrics Changes - Direct segment revenues for Q2 were $94.4 million, a 3.7% increase from $91 million in the prior year, with comparable sales up 2.1% [20] - Indirect segment revenues decreased 11.4% to $20 million from $22.6 million, reflecting reduced orders and shipping delays [21] - For the six months, direct segment revenues totaled $165.5 million, a 5.7% increase, while indirect segment revenues decreased 8.7% to $39.9 million [26][27] Market Data and Key Metrics Changes - Comparable sales for the first half of the year increased by 3.3%, despite a challenging North American handbag market [8] - The overall retail environment remains challenging, particularly affecting the handbag market [4] Company Strategy and Development Direction - The company is focused on three key areas for fiscal 2020: growth, operational excellence, and ownership [8][9][11] - The acquisition of Pura Vida is seen as a strategic fit, enhancing the brand's lifestyle positioning and expanding customer engagement [12][14] - The company aims to reduce production exposure in China to less than 25% by the end of the fiscal year [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the pressure from tariffs and shipping costs impacting gross margins [5][22] - The company expects net sales for Q3 to be between $122 million and $129 million, including Pura Vida revenues [34] - Full-year net sales are projected to be between $490 million and $505 million, reflecting a return to positive sales growth [38] Other Important Information - The company has no debt outstanding and had cash and equivalents of $70.5 million at the end of Q2 [31] - Inventory at the end of Q2 was $130.7 million, with $26.2 million attributed to Pura Vida [32] Q&A Session Summary Question: Insights on customer profile from collaborations - Management noted that collaborations have attracted new customers, increasing brand awareness and engagement [76][77] Question: Impact of product and marketing initiatives on factory business - The focus on full-price business is expected to positively influence the factory channel, with strong performance noted in factory stores [79][80] Question: Revenue outlook for Pura Vida - Anticipated revenue for Pura Vida in the back half of the year is $65 million to $70 million, with expected growth in the coming years [81][82] Question: Challenges in the indirect channel - Management acknowledged pressures in the indirect channel but noted positive feedback from specialty accounts regarding full-price sell-through [85][86] Question: Traffic trends and merchandise margins - Traffic in the full-price segment has been softer, but promotional activity is being managed carefully to maintain margins [93][94] Question: Leveraging Pura Vida's digital expertise - The company plans to learn from Pura Vida's success in engaging younger customers and enhancing social media presence [97][98] Question: Seasonality and earnings contribution from Pura Vida - Pura Vida is expected to contribute positively to earnings without significant first-half losses anticipated [110][112] Question: Incremental tariffs and China exposure - Management confirmed that all purchases from China will incur tariffs by the end of the year, impacting costs [116][117]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________ FORM 10-Q ___________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended May 4, 2019 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 ...

Vera Bradley, Inc. (NASDAQ:VRA) Q1 2020 Earnings Conference Call June 5, 2019 9:30 AM ET Company Participants Mark Dely - Chief Administrative Officer Robert Wallstrom - President and Chief Executive Officer John Enwright - Chief Financial Officer Daren Hull - Chief Customer Officer Conference Call Participants Jonna Kim - Cowen & Co. LLC. Steven Marotta - C.L. King & Associates, Inc. Operator Good day, and welcome to the Vera Bradley First Quarter Fiscal 2020 Earnings Conference Call. Today's conference is ...

Financial Performance - Net revenues for fiscal 2019 were $416.1 million, a decrease of 8.5% from $454.6 million in fiscal 2018[195] - Gross profit for fiscal 2019 was $238.6 million, down from $254.0 million in fiscal 2018, reflecting a gross margin of 57.2%[195] - Operating income increased to $27.1 million in fiscal 2019, compared to $15.0 million in fiscal 2018[195] - Net income for fiscal 2019 was $20.8 million, up from $7.0 million in fiscal 2018[209] - Comparable sales decreased by 10.3% in fiscal 2019, compared to a decrease of 6.7% in fiscal 2018[195] - Gross profit was $238.6 million, representing 57.3% of net revenues, compared to 55.9% in fiscal 2018[209] - Operating income increased to $27.1 million (6.5% of net revenue) in fiscal 2019 from $15.0 million (3.3% of net revenue) in fiscal 2018[209] - For fiscal 2019, net income increased by $13.8 million, or 195.9%, to $20.8 million from $7.0 million in fiscal 2018[256] Expenses and Cost Management - Selling, general, and administrative (SG&A) expenses were reduced to $212 million in fiscal 2019, down from $239.8 million in fiscal 2018[204] - SG&A expenses decreased by $27.8 million, or 11.6%, to $212.0 million in fiscal 2019 from $239.8 million in fiscal 2018[243] - Unallocated corporate expenses decreased by $5.5 million, or 6.8%, primarily due to non-recurring expenses from the prior year[252] - Interest income increased by $0.7 million, or 172.4%, to $1.1 million in fiscal 2019 from $0.4 million in fiscal 2018[253] Cash Flow and Investments - The company generated operating cash flow of $43.6 million during fiscal 2019[204] - Cash, cash equivalents, and investments increased to $156.6 million at the end of fiscal 2019 from $138.4 million at the end of fiscal 2018[209] - Net cash provided by operating activities for fiscal 2019 was $43.6 million, compared to $42.6 million in fiscal 2018[279] - Cash flows from operating activities were $43,564 thousand in 2019, slightly up from $42,642 thousand in 2018, indicating a growth of 2.2%[350] Store Operations - The total number of stores open at the end of fiscal 2019 was 156, down from 160 at the end of fiscal 2018[195] - Total stores opened during the period were 6, while 10 stores were closed, resulting in 156 stores open at the end of fiscal 2019[220] - The company closed a total of 15 underperforming full-line stores and one factory outlet store since the beginning of fiscal 2018, with a forecast to close up to an additional 30 full-line stores by the end of fiscal 2022[228] - As of February 2, 2019, Vera Bradley operated 99 full-line stores and 57 factory outlet stores in the United States[354] Strategic Initiatives - The company launched a customization program allowing customers to design their own bags[204] - Vision 20/20 strategic plan was launched to improve product and pricing initiatives, impacting fiscal 2019 revenues negatively[226][227] - The company plans to close up to 30 additional full-line stores by fiscal 2022 as part of its Vision 20/20 initiatives[298] Revenue Recognition and Accounting - The company’s revenue recognition follows a five-step model as per ASC Topic 606, ensuring compliance with accounting standards[368] - The Company adopted the new revenue recognition standard in the first quarter of fiscal 2019, resulting in a $0.5 million cumulative adjustment to beginning retained earnings[390] - Revenue recognition for unredeemed gift cards is now based on historical redemption patterns, leading to accelerated recognition of gift card breakage revenue[392] - The Company no longer adjusts revenue for shipments not yet received, recognizing revenue upon shipment when control is passed to the customer[391] Taxation - The effective tax rate for fiscal 2019 decreased to 26.5% from 54.4% in fiscal 2018, primarily due to the reduction in the U.S. corporate income tax rate to 21%[254] - The Tax Act reduced the corporate tax rate from 35% to 21%, resulting in a provisional income tax expense of $2.1 million recorded in Q4 of fiscal 2018[312] - The company includes interest and penalties related to uncertain tax positions in income tax expense[387] Inventory and Assets - The balance of inventory adjustments decreased to $0.6 million as of February 2, 2019, from $2.7 million in the prior year, reflecting reduced clearance activity and increased full-price purchasing[310] - Total assets increased to $362,148 thousand in 2019 from $350,669 thousand in 2018, representing a growth of 3.4%[339] - Shareholders' equity grew to $294,703 thousand in 2019, compared to $285,283 thousand in 2018, an increase of 3.0%[339] Marketing and Advertising - Total impressions from marketing efforts increased by over 50% to more than 2.1 billion for the fiscal year[204] - For the fiscal year ended February 2, 2019, the total advertising expense was $27.488 million, an increase from $26.953 million in the previous fiscal year[378]