Vera Bradley(VRA) - 2022 Q2 - Quarterly Report

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