Core Insights - Vera Bradley is under investigation for potential securities fraud and unlawful business practices involving its officers and directors [1] - The company reported disappointing financial results for Q1 of the 2026 fiscal year, indicating ongoing negative trends in revenue and profitability [2] - Following the announcement of poor financial results, Vera Bradley's stock price dropped by 19.15%, closing at $1.90 per share [3] Financial Performance - Vera Bradley's CEO acknowledged the need for significant improvements to return to positive growth [2] - The company has experienced continued disappointing performance in both top line and profitability metrics over several quarters [2] Leadership Changes - Vera Bradley announced key leadership changes, including the departure of CEO Jackie Ardrey at the end of July [2]

Group 1 - Vera Bradley's Q1 2026 results were significantly poor, aligning with prior warnings issued in January regarding a complete brand overhaul that has alienated customers [1] - The company is now facing increased financial risks as a result of its operational changes [1] Group 2 - The investment approach discussed focuses on long-term operational aspects rather than market-driven dynamics, emphasizing the importance of understanding a company's earnings power and competitive dynamics [1]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) The unaudited statements reflect a quarterly net loss of $33.5 million, heavily impacted by the sale and reclassification of the Pura Vida business as a discontinued operation - On March 31, 2025, the company completed the sale of its Pura Vida business, now classified as **discontinued operations** with prior period data retrospectively adjusted[34](index=34&type=chunk)[39](index=39&type=chunk) Condensed Consolidated Statements of Operations Highlights (Thirteen Weeks Ended May 3, 2025 vs May 4, 2024) | Metric | Thirteen Weeks Ended May 3, 2025 (in thousands) | Thirteen Weeks Ended May 4, 2024 (in thousands) | | :--- | :--- | :--- | | Net Revenues | $51,652 | $67,948 | | Gross Profit | $22,767 | $34,040 | | Operating Loss from Continuing Operations | $(17,857) | $(10,617) | | Net Loss from Continuing Operations | $(18,260) | $(7,604) | | Loss from Discontinued Operations | $(15,200) | $(517) | | **Net Loss** | **$(33,460)** | **$(8,121)** | | **Diluted Net Loss Per Share** | **$(1.20)** | **$(0.26)** | Condensed Consolidated Balance Sheet Highlights (As of May 3, 2025 vs Feb 1, 2025) | Metric | May 3, 2025 (in thousands) | February 1, 2025 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $11,281 | $28,628 | | Inventories | $99,151 | $91,430 | | Total Assets | $267,940 | $306,690 | | Total Liabilities | $121,906 | $127,735 | | Total Shareholders' Equity | $146,034 | $178,955 | - **Net cash used in operating activities was $17.9 million**, and cash and cash equivalents decreased by $19.1 million to end the period at $11.3 million[26](index=26&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) - The sale of Pura Vida for **$3.5 million in total consideration** resulted in a **net loss on disposal of $15.2 million**[111](index=111&type=chunk)[112](index=112&type=chunk)[115](index=115&type=chunk) - Following the Pura Vida sale, the company now operates under two reportable segments: **Vera Bradley Direct** and **Vera Bradley Indirect**[35](index=35&type=chunk)[103](index=103&type=chunk) Net Revenues by Segment (Thirteen Weeks Ended May 3, 2025) | Segment | Net Revenues (in thousands) | % of Total | | :--- | :--- | :--- | | VB Direct | $43,083 | 83.4% | | VB Indirect | $8,569 | 16.6% | | **Total** | **$51,652** | **100.0%** | - The company has a **$75.0 million asset-based revolving credit agreement** with no borrowings outstanding as of May 3, 2025[73](index=73&type=chunk)[79](index=79&type=chunk) - A new **$30.0 million share repurchase program** was approved, with no repurchases made during the quarter[94](index=94&type=chunk)[95](index=95&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses poor quarterly performance due to macroeconomic pressures, a 24.0% revenue decline, ongoing 'Project Restoration' initiatives, and significant leadership changes - The company announced the departure of its CEO and CFO, appointing an interim Executive Chairman and a new CFO[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) - The company is advancing its **'Project Restoration'** strategy, focusing on expense management and streamlining the organization[121](index=121&type=chunk)[122](index=122&type=chunk) Comparable Sales Performance (Thirteen Weeks Ended May 3, 2025) | Metric | YoY Change | | :--- | :--- | | Comparable Sales (including e-commerce) | (25.0)% | | Comparable Store Sales | (34.3)% | | E-commerce Sales | (11.7)% | - **Gross margin decreased from 50.1% to 44.1%** year-over-year, impacted by channel mix shifts and higher shipping costs[142](index=142&type=chunk) - SG&A expenses decreased by $4.3 million but **increased as a percentage of revenue to 79.0%** from 66.4%[143](index=143&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risks since its last Annual Report on Form 10-K - As of May 3, 2025, there were **no material changes** to the market risks described in the company's most recent Annual Report on Form 10-K[169](index=169&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of May 3, 2025[170](index=170&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[171](index=171&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine legal proceedings, primarily for intellectual property protection, which are not expected to have a material adverse impact - The company is subject to various routine legal proceedings, including lawsuits to police its **intellectual property rights**[172](index=172&type=chunk) - Management does not believe any of these claims would have a **material adverse impact** on the company at this time[173](index=173&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - There have been **no material changes** to the risk factors previously set forth in the Company's Annual Report on Form 10-K[174](index=174&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no shares were repurchased during the quarter under its new $30.0 million share repurchase program - A share repurchase program authorizing up to **$30.0 million** is in effect from December 2024 to December 2027[175](index=175&type=chunk) - **No purchases were made** under the 2024 Share Repurchase Program as of May 3, 2025[176](index=176&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the reported quarter - During the thirteen weeks ended May 3, 2025, **no directors or executive officers adopted or terminated** any Rule 10b5-1(c) trading plans[177](index=177&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists filed exhibits, including executive compensation plans, Sarbanes-Oxley certifications, and XBRL data files - A list of exhibits filed with the report is provided, including compensation plans, CEO/CFO certifications, and XBRL data files[178](index=178&type=chunk)

Core Viewpoint - Vera Bradley Inc. experienced a significant decline of approximately 23%, marking the worst intraday performance since its IPO in the U.S. [1] - The company has suspended its earnings guidance and announced the departure of its CEO [1] Company Summary - Vera Bradley Inc. is a women's fashion, luggage, and handbag design company [1] - The recent stock drop reflects investor concerns regarding the company's future performance and leadership stability [1] Industry Context - The decline in Vera Bradley's stock may indicate broader challenges within the women's fashion and accessories market, particularly in maintaining investor confidence [1]

Core Viewpoint - Vera Bradley, Inc. is undergoing significant changes in leadership and strategy, with a focus on transitioning to new management and enhancing operational effectiveness [4]. Group 1: Leadership Changes - Ian Bickley has been introduced as the incoming Executive Chairman, indicating a shift in the company's governance structure [4]. - The company is emphasizing the importance of the transition and the role of new leadership in guiding future strategies [4]. Group 2: Financial Overview - The earnings conference call is part of the company's regular financial reporting, highlighting its commitment to transparency and communication with investors [1][2]. - The call includes forward-looking statements that reflect the company's expectations and potential risks, which are standard in financial disclosures [3].

Financial Data and Key Metrics Changes - For Q1 2026, consolidated revenues totaled $51.7 million, a decrease from $67.9 million in the prior year [19] - Non-GAAP net loss from continuing operations was $10 million or $0.36 per diluted share, compared to a net loss of $6.6 million or $0.22 per diluted share in the previous year [19] - Non-GAAP gross margin was $24.6 million or 47.5% of net revenues, down from 51.3% in the prior year [21] - Non-GAAP SG&A expenses were $38.3 million or 74.2% of net revenues, compared to 65.7% in the prior year [21] - Cash and cash equivalents at the end of the quarter totaled $11.3 million, with no borrowings on the $75 million ABL facility [22] Business Line Data and Key Metrics Changes - Direct segment revenues for Q1 totaled $43.1 million, a 23.6% decrease from $56.4 million in the prior year [20] - Indirect segment revenues were $8.6 million, a 25.6% decrease from $11.5 million in the prior year, primarily due to a decline in specialty and key account orders [20] Market Data and Key Metrics Changes - E-commerce revenues showed strength, particularly in online outlet and Target Marketplace channels [13] - The company experienced a shift in customer behavior, with recently acquired customers comprising 45% of the active twelve-month file, up from 30% last year [16] Company Strategy and Development Direction - The company is focused on transforming its business model and brand positioning through four pillars: product, brand, customer, and channel [11] - A new strategy and transformation committee has been formed to refine the company's strategic direction and growth initiatives [5] - The company aims to restore brand relevance with a new generation of consumers while simplifying its operating model for greater efficiency [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by macroeconomic pressures but expressed optimism about the brand's potential to connect with consumers [9][16] - The company is suspending prior year guidance due to uncertainties in the consumer environment [24] Other Important Information - The sale of Pura Vida was completed during the first quarter, and its operations are classified as discontinued [18] - The company plans to close 10 unprofitable full-line store locations this year [14] Q&A Session Summary - No specific questions or answers were documented in the provided content, indicating that the call may have concluded without a formal Q&A session.

Financial Data and Key Metrics Changes - Consolidated revenues for Q1 2026 totaled $51.7 million, a decrease from $67.9 million in Q1 2025 [17] - Non-GAAP net loss from continuing operations was $10 million or $0.36 per diluted share, compared to a net loss of $6.6 million or $0.22 per diluted share in the prior year [17] - Non-GAAP gross margin was 47.5% of net revenues, down from 51.3% in the prior year [19] - Non-GAAP SG&A expenses were $38.3 million or 74.2% of net revenues, compared to $44.7 million or 65.7% in the prior year [19] - Cash and cash equivalents at the end of the quarter were $11.3 million, with no borrowings on the $75 million ABL facility [20] Business Line Data and Key Metrics Changes - Direct segment revenues for Q1 2026 were $43.1 million, a 23.6% decrease from $56.4 million in Q1 2025 [18] - Indirect segment revenues totaled $8.6 million, a 25.6% decrease from $11.5 million in the prior year [18] - The indirect segment showed a bright spot, over delivering plan by double digits due to key initiatives [13] Market Data and Key Metrics Changes - E-commerce revenues were stronger, particularly in online outlet and Target Marketplace [12] - The company successfully diversified wholesale accounts, including new partnerships with Costco and Urban Outfitters Marketplace [11] Company Strategy and Development Direction - The company is focused on transforming its business model and brand positioning through four pillars: product, brand, customer, and channel [10] - A new strategy and transformation committee has been formed to refine the company's strategic direction and growth initiatives [5] - The company aims to restore brand relevance with younger consumers while simplifying its operating model for greater efficiency [8] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by macroeconomic pressures affecting customer behavior, particularly by income level [14] - The company is suspending prior year guidance due to uncertainties surrounding the consumer environment [21] - Management expressed optimism about the potential for improved performance and transformation in the future [23] Other Important Information - The company completed the sale of Pura Vida, classifying its operations as discontinued [16] - The leadership transition includes the departure of the current CEO and the appointment of an interim Executive Chairman [4][5] Q&A Session Summary - No specific questions and answers were provided in the transcript, indicating a focus on prepared remarks rather than an interactive Q&A session.

Financial Performance - Vera Bradley reported a quarterly loss of $0.36 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.13, and compared to a loss of $0.21 per share a year ago, indicating a significant earnings surprise of -176.92% [1] - The company posted revenues of $51.65 million for the quarter ended April 2025, missing the Zacks Consensus Estimate by 4.21%, and down from $80.6 million in the same quarter last year [2] - Over the last four quarters, Vera Bradley has consistently failed to surpass consensus EPS and revenue estimates [2] Stock Performance - Vera Bradley shares have declined approximately 40.2% since the beginning of the year, contrasting with the S&P 500's gain of 2.7% [3] - The current Zacks Rank for Vera Bradley is 5 (Strong Sell), indicating expectations for the stock to underperform the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.01 on revenues of $81.91 million, while for the current fiscal year, the estimate is -$0.15 on revenues of $280.39 million [7] - The trend for earnings estimate revisions for Vera Bradley is currently unfavorable, which could impact future stock performance [6] Industry Context - The Retail - Apparel and Shoes industry, to which Vera Bradley belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, suggesting a challenging environment for the company [8]

[First Quarter Fiscal Year 2026 Highlights](index=1&type=section&id=First%20Quarter%20Fiscal%20Year%202026%20Highlights) Overview of Q1 FY26 performance, including CEO commentary, consolidated financial results, and Pura Vida divestiture impact [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Jackie Ardrey noted disappointing Q1 results with continued top-line and profitability declines, with the company addressing product feedback, diversifying wholesale partnerships, and committed to returning to stable growth - Q1 results were disappointing due to continued top-line and profitability trends from previous quarters[2](index=2&type=chunk) - The company is addressing consumer feedback on product styles and functionality and working on diversification of wholesale partnerships[2](index=2&type=chunk) - Management is committed to returning the Company's results to a stable and positive growth story[2](index=2&type=chunk) [Summary of Consolidated Financial Performance](index=1&type=section&id=Summary%20of%20Consolidated%20Financial%20Performance) Consolidated net revenues for Q1 FY26 decreased significantly year-over-year, with the company reporting a substantial GAAP net loss from continuing operations, which was also a loss on a non-GAAP basis after adjusting for various charges Consolidated Net Revenues (Continuing Operations) | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | Change | | :----- | :-------------------- | :-------------------- | :----- | | Net Revenues | $51.7 million | $67.9 million | -23.9% | Net Loss from Continuing Operations (GAAP) | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | | :----- | :-------------------- | :-------------------- | | Net Loss | ($18.3) million | ($7.6) million | | Diluted EPS | ($0.66) | ($0.25) | Net Loss from Continuing Operations (Non-GAAP) | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | | :----- | :-------------------- | :-------------------- | | Net Loss | ($10.1) million | ($6.6) million | | Diluted EPS | ($0.36) | ($0.22) | [Pura Vida Divestiture Impact](index=1&type=section&id=Pura%20Vida%20Divestiture%20Impact) Vera Bradley completed the sale of Creative Genius, Inc. (Pura Vida Bracelets) on March 31, 2025, resulting in Pura Vida's operations being classified as discontinued operations in the consolidated financial statements, with prior periods retrospectively adjusted - The Company sold **100% of Creative Genius, Inc. (Pura Vida Bracelets)** on March 31, 2025[6](index=6&type=chunk) - Pura Vida's operations have been classified as discontinued operations in the consolidated financial statements[6](index=6&type=chunk)[7](index=7&type=chunk) - Prior period amounts have been retrospectively adjusted to conform to the current period presentation[6](index=6&type=chunk) [First Quarter Financial Details](index=3&type=section&id=First%20Quarter%20Financial%20Details) Detailed analysis of Q1 FY26 financial performance, covering segment revenues, profitability, balance sheet, and capital management [Segment Revenues](index=3&type=section&id=Segment%20Revenues) Both Vera Bradley Direct and Indirect segments experienced significant revenue declines in Q1 FY26, with Direct segment comparable sales falling by 25.0% due to reduced traffic and conversion [Vera Bradley Direct Segment](index=3&type=section&id=Vera%20Bradley%20Direct%20Segment) Revenues for the Vera Bradley Direct segment decreased by 23.6% year-over-year, primarily driven by a 25.0% decline in comparable sales due to lower traffic and conversion in full-line and outlet stores Vera Bradley Direct Segment Revenues | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | Change | | :----- | :-------------------- | :-------------------- | :----- | | Revenues | $43.1 million | $56.4 million | -23.6% | - Comparable sales declined **25.0%** in the first quarter, driven by traffic and conversion declines predominantly in full-line and outlet stores[8](index=8&type=chunk) - The Company opened two full-line stores and closed two underperforming full-line stores during the first quarter[8](index=8&type=chunk) [Vera Bradley Indirect Segment](index=3&type=section&id=Vera%20Bradley%20Indirect%20Segment) The Vera Bradley Indirect segment saw a 25.6% decrease in revenues, mainly attributed to a decline in orders from specialty and key accounts Vera Bradley Indirect Segment Revenues | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | Change | | :----- | :-------------------- | :-------------------- | :----- | | Revenues | $8.6 million | $11.5 million | -25.6% | - The decrease was primarily related to a decline in specialty and key account orders[9](index=9&type=chunk) [Profitability Analysis](index=3&type=section&id=Profitability%20Analysis) The company experienced a significant decline in gross profit margin and an increase in SG&A as a percentage of net revenues, leading to a substantially larger operating loss from continuing operations compared to the prior year [Gross Profit](index=3&type=section&id=Gross%20Profit) Gross profit decreased by 33.1% year-over-year, with the gross profit margin falling from 50.1% to 44.1% (GAAP) and from 51.3% to 47.5% (Non-GAAP), attributed to a channel shift from brick & mortar to online, increasing outbound freight costs Gross Profit (GAAP) | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | Change | | :----- | :-------------------- | :-------------------- | :----- | | Gross Profit | $22.8 million | $34.0 million | -33.1% | | % of Net Revenues | 44.1% | 50.1% | -6.0 pp | Gross Profit (Non-GAAP) | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | Change | | :----- | :-------------------- | :-------------------- | :----- | | Gross Profit | $24.6 million | $34.8 million | -29.3% | | % of Net Revenues | 47.5% | 51.3% | -3.8 pp | - The decrease in consolidated gross profit as a percentage of net revenues resulted from channel shift from brick & mortar stores to online sites, which also contributed to increased outbound freight cost[10](index=10&type=chunk) [Selling, General, and Administrative (SG&A) Expenses](index=3&type=section&id=Selling%2C%20General%2C%20and%20Administrative%20(SG%26A)%20Expenses) While absolute SG&A expenses decreased, they increased significantly as a percentage of net revenues, from 66.4% to 79.0% (GAAP) and from 65.7% to 74.2% (Non-GAAP), with the non-GAAP decrease in absolute terms due to cost reduction initiatives and reduced variable costs SG&A Expense (GAAP) | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | Change | | :----- | :-------------------- | :-------------------- | :----- | | SG&A Expense | $40.8 million | $45.1 million | -9.5% | | % of Net Revenues | 79.0% | 66.4% | +12.6 pp | SG&A Expense (Non-GAAP) | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | Change | | :----- | :-------------------- | :-------------------- | :----- | | SG&A Expense | $38.3 million | $44.7 million | -14.3% | | % of Net Revenues | 74.2% | 65.7% | +8.5 pp | - The decrease in non-GAAP SG&A expense resulted from delivery of cost reduction initiatives along with reduced variable costs[11](index=11&type=chunk) [Operating Loss from Continuing Operations](index=3&type=section&id=Operating%20Loss%20from%20Continuing%20Operations) The company's operating loss from continuing operations widened substantially, reaching **($17.9) million (34.6% of net revenues)** on a GAAP basis and **($13.6) million (26.3% of net revenues)** on a non-GAAP basis, indicating a significant deterioration in operational profitability Operating Loss from Continuing Operations (GAAP) | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | | :----- | :-------------------- | :-------------------- | | Operating Loss | ($17.9) million | ($10.6) million | | % of Net Revenues | (34.6%) | (15.6%) | Operating Loss from Continuing Operations (Non-GAAP) | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | | :----- | :-------------------- | :-------------------- | | Operating Loss | ($13.6) million | ($9.4) million | | % of Net Revenues | (26.3%) | (13.8%) | Segment Operating Loss (Non-GAAP) | Segment | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | | :------ | :-------------------- | :-------------------- | | VB Direct | ($2.8) million | $4.9 million | | VB Indirect | $2.2 million | $3.8 million | [Balance Sheet and Capital](index=3&type=section&id=Balance%20Sheet%20and%20Capital) The company maintained a strong financial condition with no debt but experienced a significant decrease in cash and cash equivalents, while inventory levels remained relatively stable and capital spending increased [Cash and Liquidity](index=3&type=section&id=Cash%20and%20Liquidity) Cash and cash equivalents decreased substantially to **$11.3 million** as of May 3, 2025, from **$43.8 million** in the prior year, with the company reporting no borrowings on its **$75 million** asset-based lending (ABL) facility, indicating strong liquidity Cash and Cash Equivalents | Metric | May 3, 2025 | May 4, 2024 | Change | | :----- | :---------- | :---------- | :----- | | Cash & Equivalents | $11.3 million | $43.8 million | -74.2% | - The Company had no borrowings on its **$75 million** asset-based lending (ABL) facility at quarter end[13](index=13&type=chunk) [Inventory](index=3&type=section&id=Inventory) Total quarter-end inventory slightly decreased to **$99.2 million** compared to **$101.8 million** in the prior year, indicating relatively stable inventory management Total Quarter-End Inventory | Metric | May 3, 2025 | May 4, 2024 | Change | | :----- | :---------- | :---------- | :----- | | Inventory | $99.2 million | $101.8 million | -2.6% | [Net Capital Spending](index=3&type=section&id=Net%20Capital%20Spending) Net capital spending for the first quarter increased to **$1.8 million** from **$0.9 million** in the prior year, primarily driven by the timing of new store openings Net Capital Spending | Metric | Q1 FY26 (May 3, 2025) | Q1 FY25 (May 4, 2024) | Change | | :----- | :-------------------- | :-------------------- | :----- | | Capital Spending | $1.8 million | $0.9 million | +100% | - Increase was driven by timing of new store openings in the current year period compared to prior year[14](index=14&type=chunk) [Forward Outlook](index=3&type=section&id=Forward%20Outlook) The company has suspended forward guidance due to executive changes and market uncertainty, allowing the new team to define future expectations [Forward Outlook](index=3&type=section&id=Forward%20Outlook) Due to recent executive and Board leadership changes and significant uncertainty in the consumer environment, Vera Bradley has suspended its forward guidance, allowing the new team time to provide input on future strategic and financial expectations - The Company announced several executive and Board leadership changes[15](index=15&type=chunk) - Forward guidance is suspended due to these changes and significant uncertainty surrounding the consumer environment[15](index=15&type=chunk) - Suspension allows the new team time to provide input on future strategic and financial expectations[15](index=15&type=chunk) [Disclosure Regarding Non-GAAP Measures](index=3&type=section&id=Disclosure%20Regarding%20Non-GAAP%20Measures) Explanation of non-GAAP financial measures used by the company to provide a clearer year-over-year performance comparison, excluding specific charges [Disclosure Regarding Non-GAAP Measures](index=3&type=section&id=Disclosure%20Regarding%20Non-GAAP%20Measures) Vera Bradley provides non-GAAP financial measures to offer a more direct comparison of year-over-year performance, consistent with management's evaluation, excluding specific charges like impairment, cancellation fees, professional fees, and severance, along with their tax impacts, without suggesting these measures replace GAAP - Non-GAAP measures exclude specific charges such as property, plant, & equipment impairment, PO cancellation fees, professional fees related to Pura Vida sale, consulting fees, severance, and inventory write-offs, along with their tax effects[16](index=16&type=chunk)[18](index=18&type=chunk) - Management believes non-GAAP measures are helpful for investors by allowing a more direct comparison of year-over-year performance and are consistent with management's evaluation of business performance[20](index=20&type=chunk) - The Company does not suggest that investors should consider non-GAAP measures in isolation from, or as a substitute for, GAAP financial information[19](index=19&type=chunk) [Company Information](index=4&type=section&id=Company%20Information) Provides background on Vera Bradley, its reportable segments, investor relations details, and a safe harbor statement regarding forward-looking information [About Vera Bradley, Inc.](index=4&type=section&id=About%20Vera%20Bradley%2C%20Inc.) Vera Bradley, based in Fort Wayne, Indiana, is a designer of women's handbags, luggage, travel items, fashion and home accessories, and gifts, founded in 1982 and known for its innovative designs, iconic patterns, and colors - Vera Bradley is a leading designer of women's handbags, luggage and other travel items, fashion and home accessories, and unique gifts[23](index=23&type=chunk) - Founded in 1982, the brand is known for its innovative designs, iconic patterns, and brilliant colors[23](index=23&type=chunk) [Reportable Segments Description](index=4&type=section&id=Reportable%20Segments%20Description) The company operates through two reportable segments: Vera Bradley Direct (VB Direct), which includes sales through its full-line and outlet stores, websites, and annual outlet sale; and Vera Bradley Indirect (VB Indirect), which involves sales to specialty retail locations, department stores, national accounts, third-party e-commerce, liquidators, and licensing royalties - The Company has two reportable segments: Vera Bradley Direct ('VB Direct') and Vera Bradley Indirect ('VB Indirect')[24](index=24&type=chunk) - VB Direct business consists of sales through Vera Bradley Full-Line and Outlet stores, Vera Bradley's websites, and the Vera Bradley annual outlet sale[24](index=24&type=chunk) - VB Indirect business consists of sales to approximately **1,200 specialty retail locations**, select department stores, national accounts, third-party e-commerce sites, third-party inventory liquidators, and royalties recognized through licensing agreements[24](index=24&type=chunk) [Investor Relations and Website Information](index=4&type=section&id=Investor%20Relations%20and%20Website%20Information) Vera Bradley routinely posts important investor information on the 'Investor Relations' section of its website, www.verabradley.com, which serves as a means of disclosing material non-public information and complying with Regulation FD, and also provides access to its Corporate Responsibility and Sustainability Report - Important information for investors is routinely posted on **www.verabradley.com** in the 'Investor Relations' section, used for disclosing material, non-public information and complying with Regulation FD[25](index=25&type=chunk) - The Company's most recent Corporate Responsibility and Sustainability Report outlining its ESG initiatives is available at **https://verabradley.com/pages/corporate-responsibility**[26](index=26&type=chunk) - A conference call to discuss Q1 results was scheduled for June 11, 2025, with broadcast and replay details provided[22](index=22&type=chunk) [Safe Harbor Statement](index=4&type=section&id=Safe%20Harbor%20Statement) The safe harbor statement clarifies that certain statements in the release are forward-looking and subject to various risks and uncertainties that could cause actual results to differ materially, including economic conditions, consumer demand, talent retention, brand maintenance, strategic plan implementation, store operations, tariffs, supply chain disruptions, and macro factors - Certain statements in this release are 'forward-looking statements' made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995[27](index=27&type=chunk) - Such statements are subject to various risks and uncertainties that may cause actual results to differ materially, including adverse changes in economic conditions, inability to predict consumer demand, loss of key management, inability to maintain brands, and challenges in implementing strategic plans[27](index=27&type=chunk)[28](index=28&type=chunk) - The Company undertakes no obligation to publicly update or revise any forward-looking statement[28](index=28&type=chunk) [Condensed Consolidated Financial Statements](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Presents the company's condensed consolidated balance sheets, statements of operations, and cash flows for the first quarter [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows a decrease in total assets, primarily driven by a significant reduction in cash and cash equivalents and the reclassification of Pura Vida assets to discontinued operations, while total liabilities remained relatively stable and shareholders' equity decreased Condensed Consolidated Balance Sheets (Selected Items, in thousands) | Metric | May 3, 2025 | Feb 1, 2025 | May 4, 2024 | | :-------------------------- | :---------- | :---------- | :---------- | | Cash and cash equivalents | $11,281 | $28,628 | $43,810 | | Inventories | $99,151 | $91,430 | $101,836 | | Total current assets | $135,546 | $164,872 | $218,430 | | Total assets | $267,940 | $306,690 | $368,689 | | Total current liabilities | $59,503 | $57,993 | $63,000 | | Total liabilities | $121,906 | $127,735 | $122,773 | | Total shareholders' equity | $146,034 | $178,955 | $245,916 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statements of operations show a substantial decline in net revenues and a significant increase in net loss for Q1 FY26 compared to Q1 FY25, primarily due to lower gross profit, higher SG&A as a percentage of revenue, and a large loss from discontinued operations Condensed Consolidated Statements of Operations (Selected Items, in thousands) | Metric | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | | Net revenues | $51,652 | $67,948 | | Gross profit | $22,767 | $34,040 | | Selling, general, and administrative expenses | $40,804 | $45,095 | | Operating loss from continuing operations | ($17,857) | ($10,617) | | Net loss from continuing operations | ($18,260) | ($7,604) | | Loss from discontinued operations, net of income tax | ($15,200) | ($517) | | Net loss | ($33,460) | ($8,121) | | Diluted net loss per share (Continuing operations) | ($0.66) | ($0.25) | | Diluted net loss per share (Discontinued operations) | ($0.54) | ($0.01) | | Diluted net loss per share | ($1.20) | ($0.26) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement indicates a significant net cash outflow from operating activities in Q1 FY26, primarily driven by the net loss, and a net decrease in cash and cash equivalents, with proceeds from the sale of Pura Vida partially offsetting cash used in investing activities Condensed Consolidated Statements of Cash Flows (Selected Items, in thousands) | Metric | Thirteen Weeks Ended May 3, 2025 | Thirteen Weeks Ended May 4, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | | Net cash used in operating activities | ($17,902) | ($14,549) | | Net cash used in investing activities | ($968) | ($863) | | Net cash used in financing activities | ($171) | ($6,704) | | Net decrease in cash and cash equivalents | ($19,085) | ($22,108) | | Cash and cash equivalents, end of period | $11,281 | $55,195 | - Proceeds from sale of business, net of cash disposed, was **$903 thousand** in Q1 FY26[35](index=35&type=chunk) [GAAP to Non-GAAP Reconciliations](index=9&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliations) Reconciliations of GAAP to non-GAAP financial measures for Q1 FY26 and Q1 FY25, detailing specific adjustments and their impact [Q1 Fiscal 2026 Reconciliation](index=9&type=section&id=Q1%20Fiscal%202026%20Reconciliation) The reconciliation for Q1 FY26 details adjustments totaling **$8.2 million** (net-of-tax) to GAAP net loss, including charges for PPE impairment, PO cancellation fees, Pura Vida sale-related professional fees and inventory write-offs, consulting fees, and severance, to arrive at the non-GAAP net loss Q1 FY26 GAAP to Non-GAAP Net Loss Reconciliation (in thousands) | Adjustment | Amount | | :------------------------------------------ | :----- | | Net loss from continuing operations (GAAP) | ($18,260) | | PPE impairment charges | 1,048 | | PO cancellation fees | 986 | | Professional fees associated with sale of Pura Vida | 976 | | Consulting and professional fees | 721 | | Severance | 290 | | Inventory write-off associated with sale of Pura Vida | 250 | | Income tax adjustments | 3,938 | | Net loss from continuing operations (Non-GAAP) | ($10,051) | | Diluted net loss per share (Non-GAAP) | ($0.36) | - The net-of-tax impact of these adjustments totaled **$8.2 million**[4](index=4&type=chunk) [Q1 Fiscal 2025 Reconciliation](index=10&type=section&id=Q1%20Fiscal%202025%20Reconciliation) The reconciliation for Q1 FY25 outlines adjustments to GAAP net loss, including one-time vendor charges, severance, and consulting fees, along with their tax effects, to arrive at the non-GAAP net loss Q1 FY25 GAAP to Non-GAAP Net Loss Reconciliation (in thousands) | Adjustment | Amount | | :------------------------------------------ | :----- | | Net loss from continuing operations (GAAP) | ($7,604) | | One-time vendor charges | 747 | | Severance | 436 | | Consulting and professional fees | 38 | | Income tax adjustments | (222) | | Net loss from continuing operations (Non-GAAP) | ($6,605) | | Diluted net loss per share (Non-GAAP) | ($0.22) | - The net-of-tax impact of these adjustments totaled **$1.0 million**[5](index=5&type=chunk)

Core Insights - Vera Bradley, Inc. reported first quarter consolidated net revenues of $51.7 million, a decrease from $67.9 million in the same period last year [3][32] - The company experienced a net loss from continuing operations of $18.3 million, or $0.66 per diluted share, compared to a net loss of $7.6 million, or $0.25 per diluted share in the prior year [4][5] - The financial condition remains strong with $86 million in liquidity and no debt [1] Financial Performance Summary - The first quarter gross profit was $22.8 million, representing 44.1% of net revenues, down from $34.0 million or 50.1% in the prior year [10] - Selling, general, and administrative (SG&A) expenses totaled $40.8 million, or 79.0% of net revenues, compared to $45.1 million, or 66.4% in the prior year [12] - The operating loss from continuing operations was $17.9 million, or (34.6%) of net revenues, compared to a loss of $10.6 million, or (15.6%) in the prior year [13] Segment Performance - Vera Bradley Direct segment revenues were $43.1 million, a 23.6% decrease from $56.4 million in the prior year [8] - Comparable sales declined by 25.0%, primarily due to reduced traffic and conversion rates in full-line and outlet stores [8] - The Indirect segment revenues totaled $8.6 million, a 25.6% decrease from $11.5 million in the prior year, attributed to a decline in specialty and key account orders [9] Balance Sheet Highlights - Cash and cash equivalents as of May 3, 2025, were $11.3 million, down from $43.8 million at the end of the previous year's first quarter [13] - Total quarter-end inventory was $99.2 million, compared to $101.8 million at the end of the prior year's first quarter [14] Strategic Outlook - The company announced several executive and Board leadership changes and has suspended forward guidance due to significant uncertainty in the consumer environment [15]