Vera Bradley, Inc. (NASDAQ:VRA) Q1 2025 Earnings Call Transcript June 12, 2024 9:30 AM ET Company Participants Mark Dely - Chief Administrative Officer Jackie Ardrey - CEO Michael Schwindle - CFO Conference Call Participants Daniel Harriman - Sidoti & Company Eric Beder - SCC Research Doug Lane - Water Tower Research Operator Greetings. Welcome to the Vera Bradley First Quarter Fiscal 2025 Earnings Conference Call. At this time, all participants will be in listen-only mode. A question-and-answer session wil ...

VERA BRADLEY ANNOUNCES FIRST QUARTER FISCAL YEAR 2025 RESULTS First quarter consolidated net revenues totaled $80.6 million, compared to $94.4 million last year Strong balance sheet, with cash and cash equivalents of $55.2 million, no debt, and year-over-year inventories down over 12% First quarter net loss totaled ($8.1) million, or ($0.26) per diluted share, compared to a net loss of ($4.7) million, or ($0.15) per diluted share, last year First Quarter Comments "Our team continues to diligently work on Pr ...

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 February 3, 2024 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 ANNOUNCES FOURTH QUARTER AND FISCAL YEAR 2024 RESULTS Consolidated net revenues totaled $470.8 million for the fiscal year, compared to $500.0 million last year Net income totaled $7.8 million, or $0.25 per diluted share, for the fiscal year, compared to a net loss of ($59.7) million, or ($1.90) per diluted share, last year Non-GAAP net income totaled $17.2 million, or $0.55 per diluted share, for the fiscal year, compared to a net loss of ($3.2) million, or ($0.10) per diluted share, last year ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section provides the unaudited condensed consolidated financial statements and their accompanying detailed notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | October 28, 2023 ($k) | January 28, 2023 ($k) | Change ($k) | Change (%) | | :----------------------------------- | :---------------------- | :-------------------- | :---------- | :--------- | | **Assets** | | | | | | Cash and cash equivalents | 52,266 | 46,595 | 5,671 | 12.17% | | Accounts receivable, net | 25,599 | 22,105 | 3,494 | 15.81% | | Inventories | 129,140 | 142,275 | (13,135) | -9.23% | | Total current assets | 221,406 | 226,562 | (5,156) | -2.28% | | Total assets | 382,834 | 404,501 | (21,667) | -5.36% | | **Liabilities & Equity** | | | | | | Accounts payable | 12,297 | 20,350 | (8,053) | -39.57% | | Total current liabilities | 56,967 | 67,657 | (10,690) | -15.79% | | Total liabilities | 120,953 | 142,411 | (21,458) | -15.07% | | Redeemable noncontrolling interest | — | 10,712 | (10,712) | -100.00% | | Total shareholders' equity | 261,881 | 251,378 | 10,503 | 4.18% | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | 13 Weeks Ended Oct 28, 2023 ($k) | 13 Weeks Ended Oct 29, 2022 ($k) | Change ($k) | Change (%) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :---------- | :--------- | | Net revenues | 114,987 | 124,040 | (9,053) | -7.30% | | Gross profit | 63,007 | 65,876 | (2,869) | -4.36% | | Selling, general, and administrative expenses | 56,363 | 60,059 | (3,696) | -6.15% | | Operating income (loss) | 6,786 | 5,958 | 828 | 13.90% | | Net income (loss) attributable to Vera Bradley, Inc. | 5,118 | 5,167 | (49) | -0.95% | | Diluted net income (loss) per share | 0.16 | 0.17 | (0.01) | -5.88% | | Metric | 39 Weeks Ended Oct 28, 2023 ($k) | 39 Weeks Ended Oct 29, 2022 ($k) | Change ($k) | Change (%) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :---------- | :--------- | | Net revenues | 337,521 | 352,870 | (15,349) | -4.35% | | Gross profit | 186,772 | 178,907 | 7,865 | 4.40% | | Selling, general, and administrative expenses | 174,274 | 195,015 | (20,741) | -10.64% | | Impairment of goodwill and intangible assets | — | 29,338 | (29,338) | -100.00% | | Operating income (loss) | 13,271 | (45,096) | 58,367 | 129.43% | | Net income (loss) attributable to Vera Bradley, Inc. | 9,693 | (31,574) | 41,267 | 130.60% | | Diluted net income (loss) per share | 0.31 | (1.00) | 1.31 | 131.00% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) | Metric | 13 Weeks Ended Oct 28, 2023 ($k) | 13 Weeks Ended Oct 29, 2022 ($k) | Change ($k) | Change (%) | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :---------- | :--------- | | Comprehensive income (loss) attributable to Vera Bradley, Inc. | 5,113 | 5,121 | (8) | -0.16% | | Metric | 39 Weeks Ended Oct 28, 2023 ($k) | 39 Weeks Ended Oct 29, 2022 ($k) | Change ($k) | Change (%) | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :---------- | :--------- | | Comprehensive income (loss) attributable to Vera Bradley, Inc. | 9,724 | (31,726) | 41,450 | 130.65% | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) - Total Shareholders' Equity of Vera Bradley, Inc. increased from **$251,378k** as of January 28, 2023, to **$261,881k** as of October 28, 2023[24](index=24&type=chunk) - Net income attributable to Vera Bradley, Inc. for the thirty-nine weeks ended October 28, 2023, was **$9,254k** (as of July 29, 2023) and **$5,118k** (as of October 28, 2023)[24](index=24&type=chunk) - Treasury stock purchased for the thirty-nine weeks ended October 28, 2023, amounted to **$(1,900)k**[30](index=30&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity | 39 Weeks Ended Oct 28, 2023 ($k) | 39 Weeks Ended Oct 29, 2022 ($k) | Change ($k) | Change (%) | | :--------------------------------------- | :------------------------------- | :------------------------------- | :---------- | :--------- | | Net cash provided by (used in) operating activities | 21,058 | (36,758) | 57,816 | 157.29% | | Net cash used in investing activities | (12,546) | (6,968) | (5,578) | 80.05% | | Net cash used in financing activities | (2,872) | (19,321) | 16,449 | -85.13% | | Net increase (decrease) in cash and cash equivalents | 5,671 | (63,199) | 68,870 | 108.98% | | Cash and cash equivalents, end of period | 52,266 | 25,237 | 27,029 | 107.18% | [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [1. Description of the Company and Basis of Presentation](index=12&type=section&id=1.%20Description%20of%20the%20Company%20and%20Basis%20of%20Presentation) - Vera Bradley, Inc. operates two lifestyle brands: Vera Bradley and Pura Vida, targeting emotionally-connected, multi-generational female customer bases[38](index=38&type=chunk) - The Company's reportable segments are Vera Bradley Direct (VB Direct), Vera Bradley Indirect (VB Indirect), and Pura Vida[41](index=41&type=chunk) - On January 30, 2023, the Company acquired the remaining **25% interest** in Pura Vida, making it a wholly-owned subsidiary[40](index=40&type=chunk) [2. Revenue from Contracts with Customers](index=13&type=section&id=2.%20Revenue%20from%20Contracts%20with%20Customers) Net Revenues by Product Category and Segment (Thirteen Weeks Ended October 28, 2023) | Product categories | VB Direct Segment ($k) | VB Indirect Segment ($k) | Pura Vida Segment ($k) | Total ($k) | | :----------------- | :--------------------- | :----------------------- | :--------------------- | :--------- | | Bags | 30,970 | 13,167 | 111 | 44,248 | | Travel | 15,374 | 5,038 | — | 20,412 | | Accessories | 12,782 | 3,566 | 16,757 | 33,105 | | Home | 7,824 | 1,415 | — | 9,239 | | Apparel/Footwear | 3,601 | 1,081 | 357 | 5,039 | | Other | 1,758 | 719 | 467 | 2,944 | | **Total net revenues** | **72,309** | **24,986** | **17,692** | **114,987** | Net Revenues by Product Category and Segment (Thirty-Nine Weeks Ended October 28, 2023) | Product categories | VB Direct Segment ($k) | VB Indirect Segment ($k) | Pura Vida Segment ($k) | Total ($k) | | :----------------- | :--------------------- | :----------------------- | :--------------------- | :--------- | | Bags | 89,267 | 31,123 | 348 | 120,738 | | Travel | 50,740 | 11,696 | — | 62,436 | | Accessories | 38,416 | 7,511 | 59,440 | 105,367 | | Home | 22,890 | 2,956 | — | 25,846 | | Apparel/Footwear | 10,591 | 1,865 | 1,117 | 13,573 | | Other | 5,012 | 2,571 | 1,978 | 9,561 | | **Total net revenues** | **216,916** | **57,722** | **62,883** | **337,521** | - Contract liabilities decreased from **$3.2 million** as of January 28, 2023, to **$2.5 million** as of October 28, 2023, primarily consisting of unredeemed gift cards and unearned revenue from Pura Vida clubs[59](index=59&type=chunk) [3. Leases](index=15&type=section&id=3.%20Leases) Total Net Lease Cost | Period | 2023 ($k) | 2022 ($k) | Change ($k) | Change (%) | | :--------------------- | :-------- | :-------- | :---------- | :--------- | | Thirteen Weeks Ended | 7,755 | 7,703 | 52 | 0.68% | | Thirty-Nine Weeks Ended | 23,724 | 23,341 | 383 | 1.64% | - The weighted-average remaining lease term as of October 28, 2023, was **5.4 years**[68](index=68&type=chunk) - Cash paid for amounts included in the measurement of operating lease liabilities for the thirty-nine weeks ended October 28, 2023, was **$22,111k**, up from **$19,883k** in the prior year[69](index=69&type=chunk) [4. Earnings Per Share](index=17&type=section&id=4.%20Earnings%20Per%20Share) Earnings Per Share (EPS) Attributable to Vera Bradley, Inc. Common Shareholders | Period | Basic EPS 2023 | Basic EPS 2022 | Diluted EPS 2023 | Diluted EPS 2022 | | :--------------------- | :------------- | :------------- | :--------------- | :--------------- | | Thirteen Weeks Ended | $0.17 | $0.17 | $0.16 | $0.17 | | Thirty-Nine Weeks Ended | $0.31 | $(1.00) | $0.31 | $(1.00) | [5. Fair Value of Financial Instruments](index=18&type=section&id=5.%20Fair%20Value%20of%20Financial%20Instruments) Fair Value Measurements of Investments (October 28, 2023) | Asset | Level 1 ($k) | Level 2 ($k) | Level 3 ($k) | | :-------------- | :----------- | :----------- | :----------- | | Cash equivalents | 34,882 | — | — | - No long-lived asset impairment charges were recorded for the thirteen and thirty-nine weeks ended October 28, 2023[79](index=79&type=chunk) - No goodwill or intangible asset impairment charges were recorded during the thirteen and thirty-nine weeks ended October 28, 2023, contrasting with a **$29.3 million** charge in the prior year's thirty-nine-week period[81](index=81&type=chunk)[83](index=83&type=chunk) [6. Debt](index=19&type=section&id=6.%20Debt) - The Company's asset-based revolving Credit Agreement provides for credit facilities up to **$75.0 million**, with an option to increase by **$50.0 million**[84](index=84&type=chunk)[90](index=90&type=chunk) - As of October 28, 2023, there were no borrowings outstanding and **$75.0 million** of availability under the Credit Agreement[94](index=94&type=chunk) - A Third Amendment to the Credit Agreement was entered into on August 3, 2023, extending the maturity date to May 2028 and updating interest rate calculations (CBFR, SOFR)[89](index=89&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk) [7. Income Taxes](index=20&type=section&id=7.%20Income%20Taxes) Effective Tax Rate | Period | 2023 | 2022 | Change (pp) | | :--------------------- | :--- | :--- | :---------- | | Thirteen Weeks Ended | 27.6% | 18.4% | 9.2 | | Thirty-Nine Weeks Ended | 28.3% | 14.2% | 14.1 | - The year-over-year increase in effective tax rates was primarily due to the relative impact of permanent items (noncontrolling interest in the prior-year period, non-deductible executive compensation) and discrete items (stock-based compensation)[96](index=96&type=chunk)[97](index=97&type=chunk) [8. Stock-Based Compensation](index=20&type=section&id=8.%20Stock-Based%20Compensation) - During the thirteen weeks ended October 28, 2023, the Company granted **15,267 restricted stock units** with an aggregate fair value of **$0.1 million**[101](index=101&type=chunk) - During the thirty-nine weeks ended October 28, 2023, the Company granted **753,454 restricted stock units** with an aggregate fair value of **$4.4 million**, compared to **841,369 units** with a fair value of **$6.3 million** in the prior year[102](index=102&type=chunk) - As of October 28, 2023, total unrecognized compensation cost related to nonvested restricted stock units was **$5.1 million**, expected to be recognized over a weighted-average period of **2.0 years**[106](index=106&type=chunk) [9. Commitments and Contingencies](index=21&type=section&id=9.%20Commitments%20and%20Contingencies) - Management believes that current claims and contingencies will not have a material adverse effect on the Company's financial condition, results of operations, or cash flows[107](index=107&type=chunk) - On November 9, 2023, the U.S. Court of Appeals for the Sixth Circuit affirmed the District Court's judgment in favor of the Company, dismissing Vesi Incorporated's claims and granting the Company's counterclaims[108](index=108&type=chunk) [10. Common Stock](index=22&type=section&id=10.%20Common%20Stock) - The 2021 Share Repurchase Program authorized up to **$50.0 million** for common stock repurchases, expiring in December 2024[110](index=110&type=chunk) - The Company purchased **320,127 shares** for **$1.9 million** during the thirty-nine weeks ended October 28, 2023[111](index=111&type=chunk) - **$25.8 million** remained available under the 2021 Share Repurchase Program as of October 28, 2023[111](index=111&type=chunk) [11. Cloud Computing Arrangements](index=22&type=section&id=11.%20Cloud%20Computing%20Arrangements) Unamortized CCA Implementation Costs | Date | Amount ($k) | | :---------------- | :---------- | | October 28, 2023 | 4,300 | | January 28, 2023 | 6,400 | - Amortization expense for CCA implementation costs is recorded within selling, general, and administrative expenses[113](index=113&type=chunk) [12. Redeemable Noncontrolling Interest](index=22&type=section&id=12.%20Redeemable%20Noncontrolling%20Interest) - On January 30, 2023, the Company acquired the remaining **25% interest** in Pura Vida for **$10.0 million** cash, resulting in **100% ownership**[116](index=116&type=chunk) - The transaction resulted in a **$10.7 million** decrease to redeemable noncontrolling interest and a **$1.3 million** increase in additional paid-in capital[118](index=118&type=chunk)[120](index=120&type=chunk) - There was no redeemable noncontrolling interest as of October 28, 2023[120](index=120&type=chunk) [13. Intangible Assets and Goodwill](index=23&type=section&id=13.%20Intangible%20Assets%20and%20Goodwill) Intangible Assets, Excluding Goodwill (October 28, 2023) | Asset Category | Gross Basis ($k) | Accumulated Amortization ($k) | Carrying Amount ($k) | | :----------------------------- | :--------------- | :---------------------------- | :------------------- | | Customer Relationships | 24,208 | (22,143) | 2,065 | | Non-competition Agreements | 788 | (788) | — | | Pura Vida Brand (indefinite-lived) | 11,666 | — | 11,666 | | **Total** | **36,662** | **(22,931)** | **13,731** | - There was no goodwill balance as of October 28, 2023, due to impairment charges recorded during fiscal 2023[125](index=125&type=chunk) - No impairment charge was recorded for the Pura Vida brand during the second quarter of fiscal 2024 or for the thirteen and thirty-nine weeks ended October 28, 2023. In the prior year, impairment charges of **$9.9 million** for the Pura Vida brand and **$19.4 million** for goodwill were recorded[128](index=128&type=chunk) [14. Cost Savings Initiatives and Other Charges](index=25&type=section&id=14.%20Cost%20Savings%20Initiatives%20and%20Other%20Charges) - The Company is implementing targeted cost reductions across various areas (retail store efficiencies, marketing, IT, professional services, logistics, corporate payroll) expected to be fully realized in fiscal 2025[133](index=133&type=chunk) Cost Savings Initiatives and Severance Charges | Period | Severance Charges ($k) | Consulting Fees and Other Costs ($k) | Total Expense ($k) | | :--------------------- | :--------------------- | :----------------------------------- | :----------------- | | 13 Weeks Ended Oct 28, 2023 | 304 | — | 304 | | 13 Weeks Ended Oct 29, 2022 | 406 | 1,133 | 1,539 | | 39 Weeks Ended Oct 28, 2023 | 2,372 | 105 | 2,477 | | 39 Weeks Ended Oct 29, 2022 | 6,120 | 4,340 | 10,460 | - No similar 'Other Charges' (inventory adjustments, purchase order cancellation fees) were recorded during the thirteen and thirty-nine weeks ended October 28, 2023, compared to **$6.7 million** in the prior year's thirty-nine-week period[141](index=141&type=chunk) [15. Segment Reporting](index=27&type=section&id=15.%20Segment%20Reporting) Segment Net Revenues and Operating Income (Loss) (Thirteen Weeks Ended) | Segment | Net Revenues 2023 ($k) | Net Revenues 2022 ($k) | Operating Income (Loss) 2023 ($k) | Operating Income (Loss) 2022 ($k) | | :-------------- | :--------------------- | :--------------------- | :-------------------------------- | :-------------------------------- | | VB Direct | 72,309 | 80,061 | 15,708 | 17,060 | | VB Indirect | 24,986 | 22,314 | 8,967 | 9,012 | | Pura Vida | 17,692 | 21,665 | (580) | (1,353) | | **Total Segment** | **114,987** | **124,040** | **24,095** | **24,719** | Segment Net Revenues and Operating Income (Loss) (Thirty-Nine Weeks Ended) | Segment | Net Revenues 2023 ($k) | Net Revenues 2022 ($k) | Operating Income (Loss) 2023 ($k) | Operating Income (Loss) 2022 ($k) | | :-------------- | :--------------------- | :--------------------- | :-------------------------------- | :-------------------------------- | | VB Direct | 216,916 | 228,710 | 43,669 | 32,607 | | VB Indirect | 57,722 | 56,616 | 19,877 | 18,409 | | Pura Vida | 62,883 | 67,544 | 4,982 | (28,831) | | **Total Segment** | **337,521** | **352,870** | **68,528** | **22,185** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis covers financial performance, condition, liquidity, and cash flows, emphasizing strategic progress and macroeconomic impacts [Strategic Progress, Macroeconomic Factors, and Other Factors Impacting our Financial Condition and Results of Operations](index=29&type=section&id=Strategic%20Progress%2C%20Macroeconomic%20Factors%2C%20and%20Other%20Factors%20Impacting%20our%20Financial%20Condition%20and%20Results%20of%20Operations) - The Company is continuing 'Project Restoration,' focusing on Consumer, Brand, Product, and Channel pillars to drive long-term profitable growth, including product innovation and collaborations[151](index=151&type=chunk) - Cost reductions are being identified across retail store efficiencies, marketing, IT contracts, professional services, logistics, and corporate payroll, with full realization expected in fiscal 2025[152](index=152&type=chunk)[153](index=153&type=chunk) - Macroeconomic challenges include higher tariffs due to the expiration of GSP duty-free status and inflationary pressures impacting consumer discretionary spending[154](index=154&type=chunk) - Supply chain disruptions have stabilized, leading to reduced inbound and outbound shipping costs in the third quarter of fiscal 2024[155](index=155&type=chunk) [How We Assess the Performance of Our Business](index=29&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) - Key performance indicators include Net Revenues, Comparable Sales, Gross Profit, Selling, General, and Administrative Expenses (SG&A), Operating Income (Loss), Net Income (Loss), Net Income (Loss) Attributable to Vera Bradley, Inc., and Impairment Charges[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - The annual impairment test for the indefinite-lived Pura Vida brand (and goodwill in prior years) is performed in the second quarter. No additional impairment was found for the Pura Vida brand as of October 28, 2023, despite an operating loss in the third quarter[168](index=168&type=chunk)[169](index=169&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) [Thirteen Weeks Ended October 28, 2023, Compared to Thirteen Weeks Ended October 29, 2022](index=35&type=section&id=Thirteen%20Weeks%20Ended%20October%2028%2C%202023%2C%20Compared%20to%20Thirteen%20Weeks%20Ended%20October%2029%2C%202022) - Net revenues decreased by **$9.0 million (7.3%)** to **$115.0 million**, primarily due to declines in VB Direct and Pura Vida, partially offset by a significant one-time key account order in VB Indirect[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) - Gross profit margin increased to **54.8%** from **53.1%**, favorably impacted by lower inbound/outbound freight expense and sell-through of previously-reserved inventory, partially offset by increased promotional activity[183](index=183&type=chunk) - SG&A expenses decreased by **$3.7 million (6.2%)** to **$56.4 million**, mainly due to reduced employee-related expenses and cost savings initiatives, but increased as a percentage of net revenues (**49.0%** vs **48.4%**) due to sales deleverage[184](index=184&type=chunk) - Operating income increased by **$0.8 million (13.9%)** to **$6.8 million**, and net income attributable to Vera Bradley, Inc. slightly decreased by **$0.1 million** to **$5.1 million**[187](index=187&type=chunk)[196](index=196&type=chunk) [Thirty-Nine Weeks Ended October 28, 2023, Compared to Thirty-Nine Weeks Ended October 29, 2022](index=37&type=section&id=Thirty-Nine%20Weeks%20Ended%20October%2028%2C%202023%2C%20Compared%20to%20Thirty-Nine%20Weeks%20Ended%20October%2029%2C%202022) - Net revenues decreased by **$15.4 million (4.4%)** to **$337.5 million**, with declines in VB Direct and Pura Vida, partially offset by increased key account orders in VB Indirect and the return of the Vera Bradley annual outlet sale[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk) - Gross profit increased by **$7.9 million (4.4%)** to **$186.8 million**, with the gross profit margin improving to **55.3%** from **50.7%**, driven by lower freight expense and sell-through of reserved inventory[201](index=201&type=chunk) - SG&A expenses decreased by **$20.7 million (10.6%)** to **$174.3 million**, primarily due to reduced employee-related expenses, lower severance charges, decreased professional fees, and reduced marketing spend[202](index=202&type=chunk) - Operating income significantly improved by **$58.4 million (129.4%)** to **$13.3 million**, from an operating loss of **$(45.1) million** in the prior year, largely due to the absence of **$29.3 million** in goodwill and intangible asset impairment charges[203](index=203&type=chunk)[205](index=205&type=chunk) - Net income attributable to Vera Bradley, Inc. increased by **$41.3 million** to **$9.7 million**, from a net loss of **$(31.6) million** in the prior year[213](index=213&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary liquidity sources are cash on hand, cash equivalents, and cash flow from operations, supplemented by a **$75.0 million** asset-based revolving credit agreement with no outstanding debt as of October 28, 2023[214](index=214&type=chunk)[94](index=94&type=chunk) - Net cash provided by operating activities for the thirty-nine weeks ended October 28, 2023, was **$21.1 million**, a significant improvement from net cash used of **$36.8 million** in the prior year[216](index=216&type=chunk)[218](index=218&type=chunk) - Net cash used in investing activities increased to **$12.5 million**, primarily due to the **$10.0 million** purchase of the remaining **25% interest** in Pura Vida[216](index=216&type=chunk)[220](index=220&type=chunk) - Net cash used in financing activities decreased to **$2.9 million** from **$19.3 million** in the prior year, mainly due to lower common stock repurchases[216](index=216&type=chunk)[222](index=222&type=chunk) - Capital expenditures for fiscal 2024 are expected to be approximately **$4.0 million**[221](index=221&type=chunk) [Critical Accounting Policies and Estimates](index=40&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There were no significant changes to the critical accounting policies and estimates as of October 28, 2023, compared to those described in the Annual Report on Form 10-K for the fiscal year ended January 28, 2023[228](index=228&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in the Company's market risks have occurred since the disclosures in its Annual Report on Form 10-K - No material change in market risks as of October 28, 2023, compared to the Annual Report on Form 10-K[230](index=230&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) The Company's disclosure controls and procedures were effective as of October 28, 2023, with no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were effective as of October 28, 2023[231](index=231&type=chunk) - There has been no material change in internal control over financial reporting during the most recent fiscal quarter[232](index=232&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) An update on the Vesi Incorporated lawsuit confirms the U.S. Court of Appeals affirmed the District Court's judgment in favor of the Company, dismissing Vesi's claims - On November 9, 2023, the U.S. Court of Appeals for the Sixth Circuit affirmed the District Court's judgment in favor of the Company, dismissing Vesi Incorporated's claims and granting the Company's counterclaims[234](index=234&type=chunk) - The Company does not believe other legal proceedings in the ordinary course of business would have a material adverse impact[235](index=235&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K have occurred - There have been no material changes to the risk factors previously set forth in the Company's Annual Report on Form 10-K for the fiscal year ended January 28, 2023[236](index=236&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the share repurchase activity under the 2021 Share Repurchase Program for the thirteen weeks ended October 28, 2023 Share Repurchase Activity (Thirteen Weeks Ended October 28, 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share ($) | Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Program ($) | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------------------------------------------------------------------------- | | July 30, 2023 - August 26, 2023 | 22,000 | 6.80 | 26,165,760 | | August 27, 2023 - September 30, 2023 | 28,300 | 6.71 | 25,975,768 | | October 1, 2023 - October 28, 2023 | 21,507 | 6.79 | 25,829,670 | | **Total** | **71,807** | **6.76** | | [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) This section reports that no directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the thirteen weeks ended October 28, 2023 - None of the Company's directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the thirteen weeks ended October 28, 2023[239](index=239&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including CEO and CFO certifications and various Inline XBRL documents - Exhibits include CEO Section 302 Certification, CFO Section 302 Certification, Section 906 Certifications, and various Inline XBRL documents[240](index=240&type=chunk)

Financial Data and Key Metrics Changes - Consolidated net revenues for Q3 totaled $115 million, a decrease from $124 million in the prior year [30] - Consolidated net income was $6.1 million or $0.19 per diluted share, compared to $6.3 million or $0.20 per diluted share last year [30] - Third quarter gross margin was $63 million or 54.8% of net revenues, compared to $65.6 million or 52.9% of net revenues in the prior year [33] - SG&A expenses totaled $55.1 million or 48% of net revenues, down from $57.6 million or 46.4% of net revenues in the prior year [34] - Cash and cash equivalents at quarter end totaled $52.3 million, up from $25.2 million at the end of last year's third quarter [36] Business Line Data and Key Metrics Changes - Vera Bradley Direct segment revenues were $72.3 million, a 9.7% decrease from $80.1 million in the prior year [30] - Vera Bradley Indirect segment revenues increased to $25 million, a 12% increase from $22.3 million in the prior year [32] - Pura Vida segment revenues were $17.7 million, an 18.3% decrease from $21.7 million in the prior year [32] Market Data and Key Metrics Changes - Comparable sales for Vera Bradley declined 8.2%, primarily due to weakness in the outlet channel [31] - Pura Vida's sales decline was attributed to reduced wholesale and e-commerce revenues, although retail store sales remained strong [6][32] Company Strategy and Development Direction - The company is focused on Project Restoration, which aims for long-term profitable growth through four key pillars: consumer, brand, product, and channel [10] - The strategy includes restoring brand relevancy, targeting specific consumer demographics, and enhancing marketing effectiveness [11][13] - There is an emphasis on digital-first strategies and improving full-line store profitability [19][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in stabilizing revenues and maintaining strong financial discipline amid current market conditions [9] - The company anticipates a consolidated net revenue range of $472 million to $478 million for the fiscal year, down from $500 million last year [39] - Expected consolidated gross margin percentage is projected to be between 54% and 54.5%, compared to 51.4% in the prior year [39] Other Important Information - The company has taken strategic actions to reduce inventory levels, which were $129.1 million at the end of the quarter, down from $178.3 million last year [36] - The company repurchased approximately 72,000 shares of common stock during the quarter [37] Q&A Session Summary Question: Traffic improvement initiatives - Management noted that marketing initiatives in Q3 were successful in driving traffic but conversion metrics were less effective in driving sales [44] Question: Pura Vida sales decline - Management explained that the decline was due to a lack of repeat promotional activity and a focus on profitability, with retail stores performing well [46] Question: Inventory management - Management expects inventory to decrease by 10% to 15% year-over-year by the end of the year, with ongoing opportunities for improvement [48][49] Question: Indirect sales channel growth - Management highlighted strong performance in the indirect channel due to successful product reorders and a strong partnership with Amazon [52] Question: Leather and performance products - Management confirmed plans to expand the leather collection and noted that existing customers were excited about the new offerings [56] Question: 53rd week in Q4 - Management confirmed the presence of a 53rd week in the fiscal year, though it is expected to contribute a relatively small amount of sales [57]

[General Information](index=1&type=section&id=General%20Information) [Filing Information](index=1&type=section&id=Filing%20Information) The basic filing details for the Form 10-Q are provided, identifying Vera Bradley, Inc. as an accelerated filer for the quarterly period ended July 29, 2023, with 30,822,993 shares of common stock outstanding as of August 30, 2023 | Detail | Value | | :--- | :--- | | Filing Type | Form 10-Q | | Period Ended | July 29, 2023 | | Registrant | Vera Bradley, Inc. | | Commission File Number | 001-34918 | | Filer Status | Accelerated filer | | Common Stock Outstanding (as of Aug 30, 2023) | 30,822,993 shares | [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) The nature of forward-looking statements within the report is outlined, emphasizing that they are subject to risks and uncertainties that could cause actual results to differ materially from current expectations and projections - Forward-looking statements are based on current expectations and projections, but actual results may differ materially due to various risks and uncertainties[10](index=10&type=chunk)[11](index=11&type=chunk)[13](index=13&type=chunk) - Key risks include inability to implement strategic plans (Project Restoration), declines in comparable sales, inability to maintain and enhance brands, failure of multi-channel distribution, adverse general economic conditions, inability to predict consumer demand, operational challenges (new stores, talent, data security, supply chain), increased tariffs, and public health pandemics[14](index=14&type=chunk) [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (unaudited)](index=4&type=section&id=Item%201%2E%20Financial%20Statements%20%28unaudited%29) The unaudited condensed consolidated financial statements are presented, including the balance sheets, statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, along with detailed notes explaining significant accounting policies and financial performance for the thirteen and twenty-six weeks ended July 29, 2023, compared to the prior-year periods [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric (in thousands) | July 29, 2023 | January 28, 2023 | Change | | :-------------------- | :------------ | :--------------- | :----- | | Total Assets | $391,500 | $404,501 | $(13,001) | | Total Liabilities | $134,981 | $142,411 | $(7,430) | | Total Shareholders' Equity | $256,519 | $251,378 | $5,141 | | Cash and cash equivalents | $48,522 | $46,595 | $1,927 | | Inventories | $139,301 | $142,275 | $(2,974) | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric (in thousands) | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :-------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net revenues | $128,172 | $130,371 | $222,534 | $228,830 | | Gross profit | $72,016 | $60,517 | $123,765 | $113,031 | | SG&A expenses | $59,405 | $74,042 | $117,911 | $134,956 | | Impairment of goodwill and intangible assets | $0 | $29,338 | $0 | $29,338 | | Operating income (loss) | $12,871 | $(42,821) | $6,485 | $(51,054) | | Net income (loss) attributable to Vera Bradley, Inc. | $9,254 | $(29,767) | $4,575 | $(36,741) | | Diluted EPS | $0.30 | $(0.95) | $0.15 | $(1.15) | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20%28Loss%29) | Metric (in thousands) | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :-------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $9,254 | $(36,901) | $4,575 | $(43,611) | | Comprehensive income (loss) attributable to Vera Bradley, Inc. | $9,300 | $(29,842) | $4,611 | $(36,847) | [Condensed Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) | Metric (in thousands) | Balance at Jan 28, 2023 | Balance at July 29, 2023 | Change | | :-------------------- | :---------------------- | :----------------------- | :----- | | Additional Paid-in Capital | $109,718 | $111,663 | $1,945 | | Retained Earnings | $274,629 | $279,204 | $4,575 | | Treasury Stock | $(132,864) | $(134,279) | $(1,415) | | Total Shareholders' Equity | $251,378 | $256,519 | $5,141 | - The company purchased the remaining noncontrolling interest in Pura Vida, resulting in a **$1.3 million increase in additional paid-in capital**[24](index=24&type=chunk)[117](index=117&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (in thousands) | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | Change | | :-------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by (used in) operating activities | $15,975 | $(27,118) | $43,093 | | Net cash used in investing activities | $(11,727) | $(4,391) | $(7,336) | | Net cash used in financing activities | $(2,357) | $(18,500) | $16,143 | | Net increase (decrease) in cash and cash equivalents | $1,927 | $(50,115) | $52,042 | | Cash and cash equivalents, end of period | $48,522 | $38,321 | $10,201 | - Investing activities included a **$10.0 million cash payment** for the acquisition of the remaining 25% interest in Pura Vida[30](index=30&type=chunk)[214](index=214&type=chunk) - Capital expenditures for fiscal 2024 are projected to be approximately **$5.0 million**[215](index=215&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Description of the Company and Basis of Presentation](index=12&type=section&id=Note%201%2E%20Description%20of%20the%20Company%20and%20Basis%20of%20Presentation) - Vera Bradley, Inc. operates two lifestyle brands: Vera Bradley (handbags, luggage, accessories, gifts) and Pura Vida (bracelets, jewelry, lifestyle accessories)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - The company completed the acquisition of the remaining **25% interest in Pura Vida** on January 30, 2023, making it a wholly-owned subsidiary[40](index=40&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - The three reportable segments are Vera Bradley Direct (stores, e-commerce, outlet sale), Vera Bradley Indirect (specialty retailers, department stores, licensing), and Pura Vida (websites, wholesale, retail stores)[41](index=41&type=chunk)[43](index=43&type=chunk) [Note 2. Revenue from Contracts with Customers](index=13&type=section&id=Note%202%2E%20Revenue%20from%20Contracts%20with%20Customers) | Product Category (in thousands) | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :------------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Bags | $45,200 | $48,755 | $76,490 | $84,401 | | Travel | $23,439 | $23,104 | $42,024 | $41,265 | | Accessories | $40,799 | $41,662 | $72,262 | $73,789 | | Home | $10,091 | $9,458 | $16,607 | $16,306 | | Apparel/Footwear | $4,836 | $3,880 | $8,534 | $6,719 | | Other | $3,807 | $3,512 | $6,617 | $6,350 | | **Total Net Revenues** | **$128,172** | **$130,371** | **$222,534** | **$228,830** | - Contract liabilities, primarily unredeemed gift cards and unearned revenue from Pura Vida clubs, decreased from **$3.2 million to $2.5 million**[59](index=59&type=chunk) [Note 3. Leases](index=15&type=section&id=Note%203%2E%20Leases) | Lease Cost (in thousands) | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :------------------------ | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $6,502 | $6,114 | $13,067 | $12,364 | | Variable lease cost | $1,401 | $1,564 | $2,757 | $2,982 | | Short-term lease cost | $233 | $102 | $355 | $316 | | Sublease income | $(105) | $(24) | $(210) | $(24) | | **Total net lease cost** | **$8,031** | **$7,756** | **$15,969** | **$15,638** | - Weighted-average remaining lease term as of July 29, 2023, was **5.4 years**[68](index=68&type=chunk) - One new Vera Bradley retail store lease, not yet commenced, has undiscounted payments of approximately **$2.4 million** over **10 years**, starting in fiscal year 2024[66](index=66&type=chunk) [Note 4. Earnings Per Share](index=17&type=section&id=Note%204%2E%20Earnings%20Per%20Share) | Metric (in thousands, except per share data) | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :----------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) attributable to Vera Bradley, Inc. | $9,254 | $(29,767) | $4,575 | $(36,741) | | Basic weighted-average shares outstanding | 30,901 | 31,429 | 30,847 | 32,051 | | Diluted weighted-average shares outstanding | 31,139 | 31,429 | 31,208 | 32,051 | | Basic net income (loss) per share | $0.30 | $(0.95) | $0.15 | $(1.15) | | Diluted net income (loss) per share | $0.30 | $(0.95) | $0.15 | $(1.15) | - All potential common shares were excluded from diluted EPS calculation in the prior year due to net loss, making them anti-dilutive[74](index=74&type=chunk) [Note 5. Fair Value of Financial Instruments](index=18&type=section&id=Note%205%2E%20Fair%20Value%20of%20Financial%20Instruments) - No long-lived asset impairment charges were recorded in the current period (13 & 26 weeks ended July 29, 2023)[78](index=78&type=chunk) - No goodwill or intangible asset impairment charges were recorded in the current period (13 & 26 weeks ended July 29, 2023)[80](index=80&type=chunk) - In the prior year (13 & 26 weeks ended July 30, 2022), the company recorded **$0.8 million** and **$1.4 million** in long-lived asset impairment charges, and a **$29.3 million impairment charge** related to goodwill and the Pura Vida brand asset[78](index=78&type=chunk)[82](index=82&type=chunk) [Note 6. Debt](index=19&type=section&id=Note%206%2E%20Debt) - As of July 29, 2023, the company had no outstanding borrowings and **$75.0 million availability** under its Credit Agreement[89](index=89&type=chunk) - A Third Amendment to the Credit Agreement was executed on August 3, 2023, extending the maturity to May 2028, adding Creative Genius, LLC as a borrower, and increasing the option to expand the principal amount by up to **$50.0 million**[90](index=90&type=chunk)[92](index=92&type=chunk) [Note 7. Income Taxes](index=20&type=section&id=Note%207%2E%20Income%20Taxes) | Metric | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :----- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Effective Tax Rate | 28.0% | 13.9% | 29.0% | 14.7% | - The increase in effective tax rate was primarily due to the impact of permanent and discrete items, including noncontrolling interest in the prior year and non-deductible executive compensation[95](index=95&type=chunk)[96](index=96&type=chunk) [Note 8. Stock-Based Compensation](index=20&type=section&id=Note%208%2E%20Stock-Based%20Compensation) | Metric | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :----- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Restricted Stock Units Granted | 195,617 | 0 | 738,187 | 841,369 | | Aggregate Fair Value of RSUs Granted | $1.1 million | $0 | $4.3 million | $6.3 million | - As of July 29, 2023, **$5.9 million** of total unrecognized compensation cost related to nonvested restricted stock units is expected to be recognized over a weighted-average period of **2.2 years**[105](index=105&type=chunk) [Note 9. Commitments and Contingencies](index=21&type=section&id=Note%209%2E%20Commitments%20and%20Contingencies) - A lawsuit filed by Vesi Incorporated in 2019 was dismissed in the company's favor on January 4, 2023, with judgment granted on its counterclaims. Vesi has appealed[107](index=107&type=chunk)[228](index=228&type=chunk) - Management believes it is not probable that any current claims will have a material adverse effect on the company's financial condition, results of operations, or cash flows[106](index=106&type=chunk) [Note 10. Common Stock](index=22&type=section&id=Note%2010%2E%20Common%20Stock) | Metric | 26 Weeks Ended July 29, 2023 | As of July 29, 2023 | | :----- | :----------------------------- | :------------------ | | Shares Repurchased | 248,320 | N/A | | Aggregate Repurchase Amount | $1.4 million | N/A | | Remaining Repurchase Authorization | N/A | $26.3 million | | Treasury Shares Held | N/A | 12,328,010 | | Aggregate Carrying Amount of Treasury Shares | N/A | $134.3 million | [Note 11. Cloud Computing Arrangements](index=22&type=section&id=Note%2011%2E%20Cloud%20Computing%20Arrangements) | Metric (in millions) | July 29, 2023 | January 28, 2023 | Change | | :------------------- | :------------ | :--------------- | :----- | | Unamortized CCA Implementation Costs | $4.9 | $6.4 | $(1.5) | [Note 12. Redeemable Noncontrolling Interest](index=22&type=section&id=Note%2012%2E%20Redeemable%20Noncontrolling%20Interest) - On January 30, 2023, the company acquired the remaining **25% interest in Pura Vida** for **$10.0 million cash**, making it a wholly-owned subsidiary[115](index=115&type=chunk) | Metric (in thousands) | January 28, 2023 | July 29, 2023 | Change | | :-------------------- | :--------------- | :------------ | :----- | | Redeemable Noncontrolling Interest | $10,712 | $0 | $(10,712) | - The transaction resulted in a **$1.3 million increase in additional paid-in capital**[117](index=117&type=chunk)[118](index=118&type=chunk) [Note 13. Intangible Assets and Goodwill](index=23&type=section&id=Note%2013%2E%20Intangible%20Assets%20and%20Goodwill) | Intangible Asset (in thousands) | July 29, 2023 Carrying Amount | January 28, 2023 Carrying Amount | | :------------------------------ | :------------------------------ | :------------------------------- | | Customer Relationships | $2,794 | $4,252 | | Pura Vida Brand | $11,666 | $11,666 | | **Total Intangible Assets (excluding goodwill)** | **$14,460** | **$15,918** | - No goodwill balance as of July 29, 2023, due to impairment charges recorded in fiscal 2023[126](index=126&type=chunk) - No impairment charge was recorded for the Pura Vida brand during the current period (fiscal 2024 test), while the prior year (fiscal 2023 test) included charges of **$9.9 million** for the Pura Vida brand and **$19.4 million** for goodwill[129](index=129&type=chunk) [Note 14. Cost Savings Initiatives and Other Charges](index=25&type=section&id=Note%2014%2E%20Cost%20Savings%20Initiatives%20and%20Other%20Charges) - Cost savings initiatives are expected to be fully realized in fiscal 2025, targeting retail store efficiencies, marketing, IT, logistics, and corporate payroll[132](index=132&type=chunk) | Charge Type (in thousands) | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Severance charges | $79 | $5,714 | $2,068 | $5,714 | | Consulting fees and other costs | $0 | $3,057 | $105 | $3,207 | | **Total Charges** | **$79** | **$8,771** | **$2,173** | **$8,921** | - No inventory adjustments or purchase order cancellation fees were recorded in the current period (13 & 26 weeks ended July 29, 2023). In the prior year (13 & 26 weeks ended July 30, 2022), **$5.9 million** in inventory adjustments and **$1.1 million** in purchase order cancellation fees were recorded[136](index=136&type=chunk) [Note 15. Segment Reporting](index=26&type=section&id=Note%2015%2E%20Segment%20Reporting) | Segment Net Revenues (in thousands) | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :---------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | VB Direct | $85,702 | $87,013 | $144,607 | $148,649 | | VB Indirect | $17,363 | $17,325 | $32,736 | $34,302 | | Pura Vida | $25,107 | $26,033 | $45,191 | $45,879 | | **Total** | **$128,172** | **$130,371** | **$222,534** | **$228,830** | | Segment Operating Income (Loss) (in thousands) | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | | :--------------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | VB Direct | $20,621 | $10,044 | $27,961 | $15,547 | | VB Indirect | $6,204 | $3,918 | $10,910 | $9,397 | | Pura Vida | $4,000 | $(28,534) | $5,562 | $(27,478) | | Corporate unallocated | $(17,954) | $(28,249) | $(37,948) | $(48,520) | | **Total Operating Income (Loss)** | **$12,871** | **$(42,821)** | **$6,485** | **$(51,054)** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) A comprehensive analysis of the company's financial performance, condition, liquidity, and cash flows for the thirteen and twenty-six weeks ended July 29, 2023 is provided, highlighting strategic progress, macroeconomic factors, detailed results of operations by segment, and an overview of liquidity and capital resources [Strategic Progress, Macroeconomic Factors, and Other Factors Impacting our Financial Condition and Results of Operations](index=28&type=section&id=Strategic%20Progress%2C%20Macroeconomic%20Factors%2C%20and%20Other%20Factors%20Impacting%20our%20Financial%20Condition%20and%20Results%20of%20Operations) - Continued Project Restoration, focusing on Consumer, Brand, Product, and Channel pillars for long-term profitable growth[145](index=145&type=chunk) - Cost reduction initiatives are ongoing, expected to be fully realized in fiscal 2025, targeting retail store efficiencies, marketing, IT, logistics, and corporate payroll[148](index=148&type=chunk)[149](index=149&type=chunk) - Macroeconomic challenges include inflationary pressures, high gas prices, and the expiration of GSP duty-free status, impacting consumer discretionary spending. Supply chain disruptions have stabilized, and strategic price increases were implemented[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) [How We Assess the Performance of Our Business](index=28&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) - Key performance indicators include Net Revenues, Comparable Sales (stores and e-commerce), Gross Profit, SG&A, Operating Income (Loss), Net Income (Loss), and Impairment Charges[153](index=153&type=chunk)[154](index=154&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk)[159](index=159&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[166](index=166&type=chunk) - Comparable sales are affected by economic trends, consumer preferences, competition, new product releases, product mix, pricing, promotions, traffic, customer service, sourcing efficiency, store openings/closures, and marketing efforts[157](index=157&type=chunk)[159](index=159&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) | Metric (in thousands) | 13 Weeks Ended July 29, 2023 | 13 Weeks Ended July 30, 2022 | YoY Change (%) | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | YoY Change (%) | | :-------------------- | :----------------------------- | :----------------------------- | :------------- | :----------------------------- | :----------------------------- | :------------- | | Net revenues | $128,172 | $130,371 | -1.7% | $222,534 | $228,830 | -2.8% | | Gross profit | $72,016 | $60,517 | +19.0% | $123,765 | $113,031 | +9.5% | | Gross profit % | 56.2% | 46.4% | +9.8 pp | 55.6% | 49.4% | +6.2 pp | | SG&A expenses | $59,405 | $74,042 | -19.8% | $117,911 | $134,956 | -12.6% | | SG&A expenses % | 46.3% | 56.8% | -10.5 pp | 53.0% | 59.0% | -6.0 pp | | Operating income (loss) | $12,871 | $(42,821) | +130.1% | $6,485 | $(51,054) | +112.7% | | Net income (loss) attributable to Vera Bradley, Inc. | $9,254 | $(29,767) | +131.1% | $4,575 | $(36,741) | +112.5% | - VB Direct net revenues decreased by **1.5%** (13 weeks) and **2.7%** (26 weeks), with comparable sales down **5.3%** and **4.5%** respectively, impacted by reduced factory outlet and e-commerce sales, partially offset by the return of the annual outlet sale[173](index=173&type=chunk)[190](index=190&type=chunk) - VB Indirect net revenues increased by **0.2%** (13 weeks) but decreased by **4.6%** (26 weeks), primarily due to a non-recurring key account order in the prior year[174](index=174&type=chunk)[191](index=191&type=chunk) - Pura Vida net revenues decreased by **3.6%** (13 weeks) and **1.5%** (26 weeks) due to declines in wholesale and e-commerce, partially offset by new retail store sales[175](index=175&type=chunk)[192](index=192&type=chunk) - Gross profit margin improved significantly due to decreased inbound/outbound freight costs, sell-through of previously reserved excess inventory, and the absence of prior-year inventory adjustments and purchase order cancellation fees[176](index=176&type=chunk)[193](index=193&type=chunk) - SG&A expense reduction was driven by lower severance charges (including former CEO retirement in prior year), reduced cost savings initiative fees, decreased employee-related expenses (headcount reduction), and absence of prior-year store impairment charges[177](index=177&type=chunk)[194](index=194&type=chunk) - Operating income for Pura Vida segment significantly improved due to the absence of prior-year goodwill and intangible asset impairment charges (**$29.3 million** for 13 weeks, **$29.3 million** for 26 weeks), decreased marketing and employee expenses, and improved gross margin[178](index=178&type=chunk)[183](index=183&type=chunk)[196](index=196&type=chunk)[201](index=201&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary liquidity sources are cash on hand, cash equivalents, cash flow from operations, and a **$75.0 million** asset-based revolving credit agreement (no outstanding debt as of July 29, 2023)[207](index=207&type=chunk)[208](index=208&type=chunk)[217](index=217&type=chunk) | Cash Flow Activity (in thousands) | 26 Weeks Ended July 29, 2023 | 26 Weeks Ended July 30, 2022 | Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by (used in) operating activities | $15,975 | $(27,118) | $43,093 | | Net cash used in investing activities | $(11,727) | $(4,391) | $(7,336) | | Net cash used in financing activities | $(2,357) | $(18,500) | $16,143 | - The increase in cash used in investing activities was primarily due to the **$10.0 million purchase** of the remaining **25% interest in Pura Vida**[214](index=214&type=chunk) - The decrease in cash used in financing activities was primarily due to lower common stock repurchases (**$1.4 million** in current period vs. **$16.5 million** in prior year)[216](index=216&type=chunk) [Critical Accounting Policies and Estimates](index=38&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No significant changes to critical accounting policies and estimates as of July 29, 2023, from those disclosed in the Annual Report on Form 10-K for the fiscal year ended January 28, 2023 [Recently Issued Accounting Pronouncements](index=39&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) No new accounting pronouncements issued or effective during the period had a significant impact on the financial statements[47](index=47&type=chunk)[223](index=223&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There were no material changes to the market risks previously described in the company's Annual Report on Form 10-K for the fiscal year ended January 28, 2023 - No material changes in market risks as of July 29, 2023, compared to the prior Annual Report on Form 10-K[224](index=224&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204%2E%20Controls%20and%20Procedures) The company's disclosure controls and procedures were effective as of July 29, 2023, and there have been no material changes in internal control over financial reporting during the most recent fiscal quarter - Disclosure controls and procedures were effective as of July 29, 2023[225](index=225&type=chunk) - No material changes in internal control over financial reporting during the most recent fiscal quarter[226](index=226&type=chunk) [PART II. OTHER INFORMATION](index=40&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201%2E%20Legal%20Proceedings) A legal proceeding with Vesi Incorporated is detailed, where the court granted the company's motion for summary judgment in January 2023, dismissing Vesi's claims and granting judgment on the company's counterclaims. Vesi has appealed, but management believes the company has meritorious defenses and cannot estimate a material adverse effect at this time - A lawsuit by Vesi Incorporated was dismissed in the company's favor on January 4, 2023, with judgment granted on counterclaims; Vesi has appealed[228](index=228&type=chunk) - Management believes the company has meritorious legal defenses and cannot estimate a possible material loss from this matter[228](index=228&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A%2E%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended January 28, 2023 - No material changes to risk factors previously set forth in the Annual Report on Form 10-K for the fiscal year ended January 28, 2023[230](index=230&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company's share repurchase activity under the 2021 Share Repurchase Program is reported, noting that 120,220 shares were repurchased for an average price of $5.68 per share during the thirteen weeks ended July 29, 2023, with approximately $26.3 million remaining available under the program | Period | Total Shares Purchased | Average Price Paid per Share | Maximum Approximate Dollar Value Remaining | | :-------------------------- | :--------------------- | :--------------------------- | :----------------------------------------- | | April 30, 2023 - May 27, 2023 | 47,620 | $5.25 | $26,748,176 | | May 28, 2023 - July 1, 2023 | 44,100 | $5.72 | $26,496,016 | | July 2, 2023 - July 29, 2023 | 28,500 | $6.34 | $26,315,414 | | **Total (13 weeks)** | **120,220** | **$5.68** | **N/A** | [Item 5. Other Information](index=42&type=section&id=Item%205%2E%20Other%20Information) No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans for company securities during the thirteen weeks ended July 29, 2023 - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the thirteen weeks ended July 29, 2023[234](index=234&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206%2E%20Exhibits) The exhibits filed with the Form 10-Q are listed, including CEO and CFO certifications, Section 906 Certifications, and various Inline XBRL documents - Exhibits include CEO and CFO Section 302 Certifications, Section 906 Certifications, and Inline XBRL documents[235](index=235&type=chunk)

Vera Bradley, Inc. (NASDAQ:VRA) Q2 2024 Earnings Conference Call August 30, 2023 9:30 AM ET Company Participants Mark Dely - Chief Administrative Officer Jacqueline Ardrey - President & CEO Michael Schwindle - CFO Conference Call Participants Joe Gomes - Noble Capital Eric Beder - SCC Research Operator Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Vera Bradley Second Quarter Conference Call for Fiscal 2024. At this time, all participants are in a listen-only mode. Following t ...

Financial Performance - For the thirteen weeks ended April 29, 2023, net revenues decreased by $4.1 million, or 4.2%, to $94.4 million compared to $98.5 million in the prior year[148]. - Gross profit for the same period was $51.7 million, representing a gross margin of 54.8%, compared to $52.5 million and a gross margin of 53.3% in the prior year[146]. - Operating loss for the thirteen weeks ended April 29, 2023, was $6.4 million, an improvement from an operating loss of $8.2 million in the prior year[146]. - Net loss for the thirteen weeks ended April 29, 2023, decreased by $2.0 million to $(4.7) million compared to the prior-year period[163]. - Net cash used in operating activities was $8.8 million, a decrease from $11.1 million in the prior-year period, primarily due to a decrease in net loss[170]. Segment Performance - The VB Direct segment generated revenues of $58.9 million, while the VB Indirect segment brought in $15.4 million, and the Pura Vida segment contributed $20.1 million[146]. - For the thirteen weeks ended April 29, 2023, net revenues in the VB Direct segment decreased by $2.7 million, or 4.4%, to $58.9 million[149]. - VB Indirect segment net revenues decreased by $1.6 million, or 9.4%, to $15.4 million, primarily due to a one-time key account order that did not recur[150]. - Pura Vida segment net revenues increased by $0.3 million, or 1.2%, to $20.1 million, driven by four non-comparable retail stores opened in the prior year[151]. Expenses and Cost Management - Selling, general, and administrative expenses (SG&A) were $58.5 million, accounting for 62.0% of net revenues, compared to $60.9 million or 61.9% in the prior year[146]. - The company recorded severance charges of approximately $2.0 million within SG&A expenses during the thirteen weeks ended April 29, 2023[126]. - SG&A expenses decreased by $2.4 million, or 4.0%, to $58.5 million, but as a percentage of net revenues, SG&A expenses increased to 62.0%[153]. - Operating loss decreased by $1.8 million to $(6.4) million, with an operating loss percentage of (6.8)%[156]. Strategic Initiatives - The company is implementing cost savings initiatives expected to be fully realized by fiscal 2025, including reductions in retail store efficiencies and marketing expenses[124]. - The company has begun Project Restoration, focusing on four key pillars: Consumer, Brand, Product, and Channel, to drive long-term profitable growth[123]. Market Conditions - The company experienced challenges from higher tariffs and inflationary pressures, impacting consumer discretionary spending and overall financial condition[127]. Cash Flow and Investments - Net cash used in investing activities increased to $10.8 million, primarily due to the purchase of the remaining 25% interest in Pura Vida for $10.0 million[172]. - Capital expenditures for fiscal 2024 are expected to be approximately $5.0 million[173]. Accounting and Risk - No significant changes to critical accounting policies and estimates as of April 29, 2023[180]. - No material change in market risks as of April 29, 2023[183].

Vera Bradley, Inc. (NASDAQ:VRA) Q1 2024 Earnings Conference Call June 7, 2023 9:30 AM ET Company Participants Mark Dely - CAO Jacqueline Ardrey - President and CEO John Enwright - Departing CFO Michael Schwindle - CFO Conference Call Participants Joe Gomes - Noble Capital Eric Beder - SCC Research Operator Please standby. Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Vera Bradley First Quarter Conference Call for Fiscal 2024. At this time, all participants are in a listen-only ...