Vera Bradley, Inc. Q4 FY2025 earnings call

• Fourth quarter remained challenging with Project Restoration ongoing, showing sequential improvement in direct channel but transformation taking longer than initially anticipated. Migration of business from stores to e-commerce created near-term profitability challenges. - Refining product and pricing strategy: expanding heritage products, reducing assortment at higher price points, bringing back licensed products. - Strong pipeline in indirect channel to bear fruit later this year; sale of Pura Vida business to concentrate resources. - Q4 highlights: Target Marketplace success, Urban Outfitters collaboration, data-driven product refinements with adjusted styles outperforming, year-end inventory down 7% with target 10% reduction in 2026.

Vera Bradley direct segment: Fourth quarter revenues totaled $76.5 million, a 17.8% decrease from the prior year fourth quarter. On a 52-week basis, direct revenue decreased approximately 17.5% with the largest impact in the outlet channel. Vera Bradley indirect segment: Fourth quarter revenues were $9.9 million, a 39% decrease from the prior year fourth quarter, due to a reduction in specialty accounts and liquidation sales. Pura Vida segment: Fourth quarter revenues were $13.6 million, a 44% decrease from the prior year fourth quarter, primarily related to declines in e-commerce and wholesale revenues, partially offset by retail store growth.

• Fiscal 2026 consolidated net revenues expected approximately $280 million. - Consolidated gross margin expected approximately 52.5%. - Consolidated SG&A expense expected approximately $155 million. - Consolidated operating loss expected approximately $6 million. - Capital spend expected ~$4 million, inventory reduction target 10%, end-of-year cash balance ~$40 million.

• Near-term profitability challenges from migration of business to e-commerce. - Macro-economic pressures affecting outlet business with customers under $75k. - Transformation taking longer than initially anticipated.

Q: About digital marketplaces and collaborations, A: Jackie Ardrey said Target Marketplace has been extremely successful and helped pivot into an indirect strategy, and IP collaborations like the Wicked collection will bring new customers.

Q: About balancing old and new customers, A: Jackie Ardrey said they watch selling data closely in terms of age ranges and new vs existing to understand customers better, and adjusted styles based on feedback are outperforming.

Q: About pivoting and revenue guide, A: Jackie Ardrey said pivots were expected given change, and guidance reflects conservative approach and macro headwinds.