Vera Bradley(VRA) - 2026 Q1 - Quarterly Results

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