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What changed in Vera Bradley, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Vera Bradley, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+318 added−338 removedSource: 10-K (2024-03-29) vs 10-K (2023-03-28)

Top changes in Vera Bradley, Inc.'s 2024 10-K

318 paragraphs added · 338 removed · 254 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

91 edited+25 added−21 removed62 unchanged
Biggest changeTo reach our existing customers in person, to acquire new customers, and to expose customers to the experiential aspect of our brand, we have hosted several successful events at our retail stores, including for store openings and seasonal-based events such as for Valentine's Day. 9 Seasonality Because Vera Bradley and Pura Vida products are frequently given as gifts, we have historically realized, and expect to continue to realize, higher sales and operating income in the fourth quarter of our fiscal year, which includes the holiday months of November and December.
Biggest changeSeasonality Because Vera Bradley and Pura Vida products are frequently given as gifts, we have historically realized, and expect to continue to realize, higher sales and operating income in the fourth quarter of our fiscal year, which includes the holiday months of November and December. In addition, our products are popular during back-to-school periods of August and September.
The factory outlet channel participated in center marketing throughout the year highlighting key seasonal moments, such as: Spring Break, Back to School, Labor Day, and Holiday. Direct Mail. Vera Bradley mailers are a vehicle for promoting the Vera Bradley brand and product portfolio. Each mailer is sent to a targeted customer mailing list.
The outlet channel participated in center marketing throughout the year highlighting key seasonal moments, such as: Spring Break, Back to School, Labor Day, and Holiday. Direct Mail. Vera Bradley mailers are a vehicle for promoting the Vera Bradley brand and product portfolio. Each mailer is sent to a targeted customer mailing list.
Pura Vida products for the U.S. e-commerce site and wholesale accounts are distributed primarily through a third-party provider in Tijuana, Mexico. Pura Vida also distributes product through a third-party provider in the Netherlands and Canada, which supports European e-commerce and Canadian wholesale operations, respectively.
Pura Vida products for the U.S. e-commerce site and wholesale accounts are distributed primarily through a third-party provider in Tijuana, Mexico. Pura Vida also distributes product through third-party providers in the Netherlands and Canada, which supports European e-commerce and Canadian wholesale operations, respectively.
Our team monitors fashion trends and customer needs by typically attending trend and industry shows, subscribing to trend monitoring services, and engaging in comparison shopping. 7 Our product development team works closely with our marketing and merchandising teams to gather consumer insights through a variety of methodologies, including seasonal market research, in-store testing, scheduled interviews, and online and in-person surveys conducted by our internal team.
Our team monitors fashion trends and customer needs by typically attending trend and industry shows, subscribing to trend monitoring services, and engaging in comparison shopping. 7 Table of Contents Our product development team works closely with our marketing and merchandising teams to gather consumer insights through a variety of methodologies, including seasonal market research, in-store testing, scheduled interviews, and online and in-person surveys conducted by our internal team.
Baekgaard retired from Vera Bradley operations in 2017 but continues to serve 4 on the Board of Directors and as a brand ambassador. Ms. Miller retired in October 2012 as our National Spokesperson and in August 2019 from the Board of Directors. In July 2019, Vera Bradley, Inc. acquired a majority interest in Pura Vida.
Baekgaard retired from Vera Bradley operations in 2017 but continues to serve 4 Table of Contents on the Board of Directors and as a brand ambassador. Ms. Miller retired as our National Spokesperson in October 2012 and from the Board of Directors in August 2019. In July 2019, Vera Bradley, Inc. acquired a majority interest in Pura Vida.
We will continue to look for the right strategic partners and licensees that can augment the brand and provide established distribution networks for certain categories of business. Additional arrangements will be launched in fiscal 2024. Pura Vida . Pura Vida continues to develop new styles and re-invent existing styles.
We will continue to look for the right strategic partners and licensees that can augment the brand and provide established distribution networks for certain categories of business. Additional arrangements will be launched in fiscal 2025. Pura Vida . Pura Vida continues to develop new styles and re-invent existing styles.
Manufacturing and Supply Chain Model During fiscal 2023, we continued to be impacted by higher tariffs from previously duty-free countries, where we source products, as a result of the Generalized System of Preferences (“GSP”) duty-free status expiring at the end of calendar year 2020.
Manufacturing and Supply Chain Model During fiscal 2024, we continued to be impacted by higher tariffs from previously duty-free countries, where we source products, as a result of the Generalized System of Preferences (“GSP”) duty-free status expiring at the end of calendar year 2020.
This automated, computerized facility allows Vera Bradley employees to receive information directly from the order-collection center and quickly identify the products and quantities necessary to fulfill a particular order. The facility’s technology enables us to accurately process and pack orders, as well as track shipments and inventory.
This facility allows Vera Bradley employees to receive information directly from the order-collection center and quickly identify the products and quantities necessary to fulfill a particular order. The facility’s technology enables us to accurately process and pack orders, as well as track shipments and inventory.
The Pura Vida segment represents revenues generated through the Pura Vida websites, www.puravidabracelets.com, www.puravidabracelets.eu, and www.puravidabracelets.ca and through the distribution of Pura Vida-branded products to wholesale retailers and department stores, substantially all of which are located in the United States, as well as through its five retail stores.
The Pura Vida segment represents revenues generated through the Pura Vida websites (www.puravidabracelets.com, www.puravidabracelets.eu, and www.puravidabracelets.ca); through the distribution of Pura Vida-branded products to wholesale retailers and department stores, substantially all of which are located in the United States; and through its five retail stores.
We sell our remaining inventory of retired products primarily through our websites (including our online outlet site), factory outlet stores, typically our annual outlet sale, and third-party liquidators. Pura Vida . We introduce new Pura Vida products seasonally, approximately three times a year (spring, summer, and fall).
We sell our remaining inventory of retired products primarily through our websites (including our online outlet site), outlet stores, our annual outlet sale, and third-party liquidators. Pura Vida . We introduce new Pura Vida products seasonally, approximately three times a year (spring, summer, and fall).
If we violate any laws or regulations, however, it could have a material adverse effect on our business or financial performance. 14 Information About Our Executive Officers The following table sets forth certain information concerning each of our executive officers: Name Age Position(s) Jacqueline Ardrey 53 Chief Executive Officer, President and Director, Vera Bradley, Inc.
If we violate any laws or regulations, however, it could have a material adverse effect on our business or financial performance. Information About Our Executive Officers The following table sets forth certain information concerning each of our executive officers: Name Age Position(s) Jacqueline Ardrey 54 Chief Executive Officer, President and Director, Vera Bradley, Inc.
Copyrights and Trademarks For Vera Bradley, the development of new patterns includes the design of primary and secondary prints. Once developed, we generally copyright our patterns as appropriate. We currently have over 1,200 copyrights related to the Vera Bradley business.
Copyrights and Trademarks For Vera Bradley, the development of new patterns includes the design of primary and secondary prints. Once developed, we generally copyright our patterns as appropriate. We currently have over 1,250 copyrights related to the Vera Bradley business.
For Vera Bradley, we have captured approximately 7.5 million active customer e-mail addresses in our online customer file, with many of these customers providing age, occupation, and location data.
For Vera Bradley, we have captured approximately 7.8 million active customer e-mail addresses in our online customer file, with many of these customers providing age, occupation, and location data.
Our retention advertising focuses on informing Pura Vida customers of new product launches, exclusive offers, inventory restocks of best sellers, upselling subscription products, promoting referral and loyalty rewards, and the latest Pura Vida news. New Customer Acquisition Advertising. Pura Vida focuses on digital advertising through Facebook, Instagram, TikTok, Google, Snapchat, and Pinterest to acquire new customers.
Our retention advertising focuses on informing Pura Vida customers of new product launches, exclusive offers, inventory restocks of best sellers, promoting referral and loyalty rewards, and the latest Pura Vida news. New Customer Acquisition Advertising. Pura Vida focuses on digital advertising through Facebook, Instagram, TikTok, Google, Snapchat, and Pinterest to acquire new customers.
No information contained on our website is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K. 15
No information contained on our website is intended to be included as part of, or incorporated by reference into, this Annual Report on Form 10-K. 15 Table of Contents
Consequently, an essential requirement for the success of our stores is our ability to attract, train, and retain talented, highly motivated district managers, store managers, and sales associates. E-Commerce. We sell our products through the verabradley.com and verabradley.ca websites.
Consequently, an essential requirement for the success of our stores is our ability to attract, train, and retain talented, highly motivated district managers, store managers, and sales associates. E-Commerce . We sell our products through the verabradley.com, outlet.verabradley.com and international.verabradley.com websites.
Our four full-line stores are playing a role in driving new customer acquisition as we continue to diversify our marketing platforms, and they demonstrate the power a retail presence can have in driving digital sales, omni-channel loyalty, and spending. Our Product Release Strategy Vera Bradley . We typically introduce new collections monthly.
Our four full-line Pura Vida stores are playing a role in driving new customer acquisition as we continue to diversify our marketing platforms, and they demonstrate the power a retail presence can have in driving digital sales, omni-channel loyalty, and spending. Our Product Release Strategy Vera Bradley . On average, we typically introduce new collections monthly.
Our Instagram has grown to over 570,000 followers and is our most highly engaged social medium. In addition, we often partner with brand-right bloggers to promote our products. Mall Advertising . We had representation in key markets with mall partner participation. Collaborations and holiday promotions were the primary focus for our retail store locations.
Our Instagram has grown to nearly 600,000 followers and is our most highly engaged social medium. In addition, we often partner with brand-right bloggers to promote our products. Mall Advertising . We had representation in key markets with mall partner participation. Collaborations and holiday promotions were the primary focus for our retail store locations.
On January 30, 2023, subsequent to the end of fiscal 2023, the Company acquired the remaining interest in Pura Vida. Similar to the Vera Bradley brand, Pura Vida was founded by two friends, Griffin Thall and Paul Goodman. Thall and Goodman, from Southern California, were traveling through Costa Rica in 2010 and crossed paths with two bracelet artisans.
On January 30, 2023, the Company acquired the remaining interest in Pura Vida. Similar to the Vera Bradley brand, Pura Vida was founded by two friends, Griffin Thall and Paul Goodman. Thall and Goodman, from Southern California, were traveling through Costa Rica in 2010 and crossed paths with two bracelet artisans.
We offer a mix of seasonally inspired designs and next generation designs of core bestsellers. 6 Our Products The following chart presents net revenues generated by each of the Company’s product categories and other revenues as a percentage of our total net revenues for fiscal years 2023, 2022, and 2021.
We offer a mix of seasonally inspired designs and next generation designs of core bestsellers. 6 Table of Contents Our Products The following chart presents net revenues generated by each of the Company’s product categories and other revenues as a percentage of our total net revenues for fiscal years 2024, 2023, and 2022.
Approximately half of Vera Bradley product sales are cotton-based. Our other fabrics include primarily fleece, polyester, and microfiber. We source our raw materials from various suppliers in Asia, with the majority of non-cotton based products coming from China and South Korea. Our cotton-based products are sourced from areas outside of China.
Approximately half of Vera Bradley product sales are cotton-based. Our other fabrics include fleece, polyester, and microfiber. We source our raw materials from various suppliers in Asia, with the majority of non-cotton based products coming from China and South Korea.
The subscription club is a mechanism to continue to build brand loyalty and stimulate higher retention. Wholesale. The Pura Vida wholesale channel is comprised primarily of specialty stores including Tilly’s, The Paper Store, Ron Jon Surf Shops, and Hallmark stores, among others. Pura Vida also has a presence on Amazon through a third-party wholesaler.
The subscription club is a mechanism to continue to build brand loyalty and stimulate higher retention. Wholesale. The Pura Vida wholesale channel is comprised primarily of specialty stores including Tilly’s, The Paper Store, Ron Jon Surf Shops, and Hallmark stores, among others. Pura Vida also sells in select department stores and has a presence on Amazon.com through a third-party wholesaler.
The VB Indirect business consists of sales of Vera Bradley products to approximately 1,700 specialty retail locations, substantially all of which are located in the United States; sales to department stores, national accounts, third-party e-commerce sites, and third-party inventory liquidators; and royalties recognized through licensing agreements related to the Vera Bradley brand.
The VB Indirect business consists of sales of Vera Bradley products to approximately 1,600 sp ecialty retail locations, substantially all of which are located in the United States; sales to department stores, national accounts, third-party e-commerce sites, and third-party inventory liquidators; and royalties recognized through licensing agreements related to the Vera Bradley brand.
We will sharpen our focus on the care-free 18-24 year old girl, who both those younger and older aspire to be. Our target customer is free-spirited, a trendsetter, and focused on “living her best life.” Pura Vida jewelry is a way of expressing herself and fits her personality. Brand .
We are sharpening our focus on the 18-24 year old girl, who both those younger and older aspire to be. Our target customer is free-spirited, a trendsetter, and focused on “living her best life.” Pura Vida jewelry is a way of expressing herself and fits her personality. Brand .
We also pursue brand extensions through licensing agreements and we have partnered with Discovery, Warner Brothers Consumer Products, Disney Consumer Products, Sanrio, and other companies that are consistent with our brand.
We also pursue brand extensions through licensing agreements and we have partnered with Discovery, Warner Brothers Consumer Products, Disney Consumer Products, Sanrio Inc. (Hello Kitty), and other companies that are consistent with our brand.
While we have temporarily suspended full-line store growth and forecast that we will close additional full-line stores, we believe that long-term expansion of our store base is necessary to increase brand awareness and reinforce our brand image by contributing to our omni-channel retail strategy.
While we forecast that we will close additional full-line stores, we believe that long-term expansion of our store base is necessary to increase brand awareness and reinforce our brand image by contributing to our omni-channel retail strategy.
Our sales associates are passionate about our products and customer service, which we believe translates into a superior shopping experience. Factory Outlet Stores. Our factory outlet stores are a vehicle for selling factory exclusive styles, as well as retired merchandise at discounted prices, while maintaining brand integrity.
Our sales associates are passionate about our products and customer service, which we believe translates into a superior shopping experience. Outlet Stores . Our outlet stores are a vehicle for selling styles made specifically for our outlet channel, as well as retired merchandise at discounted prices, while maintaining brand integrity.
The feedback gave us insight into improvement opportunities and was instrumental in decisions we made to shape, strengthen, and improve our Company. As a result of the survey feedback, over the last several years we have made meaningful improvements to benefits, career development, compensation, mental health and wellness programs, and our facilities.
The feedback gave us insight into improvement opportunities and is instrumental in decisions we make to shape, strengthen, and improve our Company. As a result of the survey feedback, over the last several years we have made meaningful improvements to benefits, career development, compensation, mental health and 13 Table of Contents wellness programs, and our facilities.
Between January 2013 and August 2016, Mr. Dely served as Senior Vice President, Chief Legal Officer, General Counsel and Secretary of Fred’s, Inc., a publicly-traded retailer and pharmacy with locations throughout the Southeast. From July 2007 to December 2012, Mr.
Dely served as Senior Vice President, Chief Legal Officer, General Counsel and Secretary of Fred’s, Inc., a publicly-traded retailer and pharmacy with locations throughout the Southeast. From July 2007 to December 2012, Mr.
In July 2019, Vera Bradley, Inc. acquired a 75% interest in Creative Genius, Inc., which operates under the name Pura Vida Bracelets (“Pura Vida”). Pura Vida results are consolidated within the Company’s financial statements beginning on July 17, 2019, the first full day following the acquisition.
In July 2019, Vera Bradley, Inc. acquired a 75% interest in Creative Genius, Inc., which operates under the name Pura Vida Bracelets (“Pura Vida”). Pura Vida results are consolidated within the Company’s financial statements beginning on July 17, 2019, the first full day following the acquisition. On January 30, 2023, the Company acquired the remaining 25% interest in Pura Vida.
As of January 28, 2023, our in-house sales team consisted of approximate ly 25 full-time sales consultants. In addition to acquiring new and growing existing accounts, our sales consultants serve as a support center for our Indirect customers by assisting and educating them in areas such as merchandising and visual presentation, marketing the brand, product selection, and inventory management.
As of February 3, 2024, our in-house sales team consisted of approximate ly 20 full-time sales consultants. In addition to acquiring new and growing existing accounts, our sales consultants serve as a support center for our Indirect customers by assisting and educating them in areas such as merchandising and visual presentation, marketing the brand, product selection, and inventory management.
The market for handbags and accessories, in particular, is highly competitive. Our competitors include not only established companies that are expanding their production and marketing of handbags and accessories, but also frequent new entrants to the market. We directly compete with wholesalers and direct sellers of branded handbags and accessories.
Our competitors include not only established companies that are expanding their production and marketing of handbags and accessories, but also frequent new entrants to the market. We directly compete with wholesalers and direct sellers of branded handbags and accessories.
During fiscal 2023, under the umbrella of VB Cares, we reinforced our position as a total stakeholder-focused and socially-conscious organization and continued to strengthen our community support and charitable initiatives that are meaningful to our customers and that make a significant impact on those in need, particularly women and children.
During fiscal 2024, under the umbrella of VB Cares, we reinforced our position as a socially-conscious organization and continued to strengthen our community support and charitable initiatives that are meaningful to our customers 8 Table of Contents and that make a significant impact on those in need, particularly women and children.
Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Bags 34.3 % 32.0 % 28.2 % Travel 18.8 % 17.5 % 15.3 % Accessories 32.0 % 34.5 % 35.1 % Home 8.5 % 8.6 % 7.3 % Apparel/Footwear 3.7 % 4.7 % 11.1 % Other (1) 2.7 % 2.7 % 3.0 % Total 100.0 % 100.0 % 100.0 % (1) Includes primarily stationery, licensing, freight, merchandising, and gift card breakage revenue.
Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Bags 33.9 % 34.3 % 32.0 % Travel 19.3 % 18.8 % 17.5 % Accessories 30.8 % 32.0 % 34.5 % Home 8.8 % 8.5 % 8.6 % Apparel/Footwear 4.4 % 3.7 % 4.7 % Other (1) 2.8 % 2.7 % 2.7 % Total 100.0 % 100.0 % 100.0 % (1) Includes primarily stationery, licensing, freight, merchandising, and gift card breakage revenue.
Typically, approximately 95% of the merchandise found in our factory outlet stores consists of factory exclusive styles. Factory outlet stores are an integral part of our distribution strategy, as this format provides an additional channel of distribution for our products and enables us to better target value-oriented customers.
Typically, approximately 95% of the merchandise found in our outlet stores consists of exclusive styles. Outlet stores are an integral part of our distribution strategy, as this format provides an additional channel of distribution for our products and enables us to better target value-oriented customers. Our outlet stores average approximately 3,500 square feet per store.
Accessories include Vera Bradley-branded fashion accessories such as ID holders, lanyards, wallets, wristlets, eyewear, scarves, various technology accessories, hair accessories, as well as Pura Vida-branded accessories such as bracelets, rings, and necklaces. A majority of products are sold through the accessories category in the Pura Vida business.
Accessories include Vera Bradley-branded fashion accessories such as ID holders, lanyards, wallets, wristlets, eyewear, scarves, various technology accessories, and hair accessories, as well as Pura Vida-branded accessories such as bracelets, rings, and necklaces. The majority of products sold by Pura Vida are included under the accessories category.
Vera Bradley Direct Segment Full-Line Stores. We have developed a retail presence through our full-line stores, all located in the United States, which provides us with a format to showcase our brand and the full array of Vera Bradley products. As of January 28, 2023, we operated 51 full-line stores averaging approximately 2,000 square feet per store.
We have developed a retail presence through our full-line stores, all located in the United States, which provides us with a format to showcase our brand and the full array of Vera Bradley products. As of February 3, 2024, we operated 43 full-line stores averaging approximately 2,000 square feet per store.
Of the total, approximately 1,475 were engaged in Vera Bradley retail selling positions; approximately 315 were engaged in Vera Bradley distribution, sourcing and quality functions; approximately 50 were engaged in Vera Bradley product design; approximately 90 were involved in the Pura Vida business, including the Pura Vida retail stores; and approximately 250 were engaged in corporate support and administrative functions.
Of the total, approximately 1,495 were engaged in Vera Bradley retail selling positions; approximately 280 were engaged in Vera Bradley distribution, sourcing and quality functions; approximately 35 were engaged in Vera Bradley product design; approximately 90 were involved in the Pura Vida business, including the Pura Vida retail stores; and approximately 235 were engaged in corporate support and administrative functions.
Indirect Sales Force We believe that having a combination of an in-house field sales force and a third-party agency, covering certain geographies, results in a more consistent brand presentation and messaging, enhanced support for our Indirect customers, and a more predictable, scalable, and cost-efficient business model.
The majority of our Indirect retailers have been customers for over five years. 10 Table of Contents Indirect Sales Force We believe that having a combination of an in-house field sales force and a third-party agency, covering certain geographies, results in a more consistent brand presentation and messaging, enhanced support for our Indirect customers, and a more predictable, scalable, and cost-efficient business model.
The focus of our store operations is providing consumers with a comfortable and memorable shopping experience. We strive to make the experience interactive through special store events, such as showcasing newly launched products or celebrating our namesake’s birthday. Our customer service philosophy emphasizes friendly service, merchandise knowledge, and passion for the brand.
The focus of our store operations is providing consumers with a comfortable and memorable shopping experience. We strive to make the experience interactive through special store events. Our customer service philosophy emphasizes friendly service, merchandise knowledge, and passion for the brand.
This information provides us with deeper insight into the products and categories that are of the highest interest to our customers, and allows us to better target our customers with appropriate messages. As of January 28, 2023, we had approximately 2.0 million Facebook fans and approximately 72,000 Twitter followers.
This information provides us with deeper insight into the products and categories that are of the highest interest to our customers and allows us to better target our customers with appropriate messages. As of February 3, 2024, we had approximately 2.0 million Facebook fans, approximately 70,000 Twitter ("X") followers, and approximately 45,000 TikTok followers.
John Enwright 50 Chief Financial Officer, Vera Bradley, Inc. Mark C. Dely 47 Chief Administrative & Legal Officer and Corporate Secretary, Vera Bradley, Inc. Alison Hiatt 52 Chief Marketing Officer, Vera Bradley Jacqueline Ardrey has served as our Chief Executive Officer and Director since November 2022. Prior to joining Vera Bradley, Inc., Ms.
Michael Schwindle 56 Chief Financial Officer, Vera Bradley, Inc. Mark C. Dely 48 Chief Administrative & Legal Officer and Corporate Secretary, Vera Bradley, Inc. Alison Hiatt 53 Chief Marketing Officer, Vera Bradley Jacqueline Ardrey has served as our Chief Executive Officer and Director since November 2022. Prior to joining Vera Bradley, Inc., Ms.
In calendar year 2022, we once again had outstanding participation, with over 80% of our associates sharing their candid feedback. Our calendar year 2022 overall engagement score was once again above average in all categories compared to peer companies with some categories in the upper quartile compared to peer companies.
In calendar year 2023, we once again had strong participation, with over 70% of our associates sharing their candid feedback. Our calendar year 2023 overall engagement score was once again above average ranking in the upper quartile compared to peer companies.
Our associates are our biggest asset and when they win, we all win. We recognize everyone in the Company has the ability to lead by example and influence others in a positive way that ultimately provides meaningful value and will make us stronger.
We recognize everyone in the Company has the ability to lead by example and influence others in a positive way that ultimately provides meaningful value and will make us stronger.
In fiscal 2021, we launched our Company-wide diversity and inclusion initiative, Project Quilt, to continue to enhance diversity, equality, and inclusion, focusing on three key areas – the Associate Experience, the Customer Experience, and the Community Experience. 13 Engagement .
Our Company-wide diversity and inclusion initiative, Project Quilt, continues to enhance diversity, equality, and inclusion, focusing on three key areas – the Associate Experience, the Customer Experience, and the Community Experience. Engagement .
Prior to that, she spent 14 years at multi-channel high-end children’s retailer Hanna Andersson in various roles of increasing responsibility, including Senior Vice President of Merchandising, Design, and Wholesale. Ms. Ardrey began her retail career with the May Company.
Prior to that, she spent 14 years at multi-channel high-end children’s retailer Hanna Andersson in various roles of increasing responsibility, including Senior Vice President of Merchandising, Design, and Wholesale. Ms. Ardrey began her retail career with the May Company. Michael Schwindle was named Chief Financial Officer in May 2023. P rior to joining Vera Bradley, Mr.
We put this standard into practice through our hiring, training, and an annual affirmative action program. As of January 28, 2023, we had approximately 2,180 employees.
We put this standard into practice through our hiring, training, and an annual affirmative action program. As of February 3, 2024, we had approximately 2,135 employees.
The VB Direct business consists of sales of Vera Bradley products through Vera Bradley full-line and factory outlet stores in the United States; e-commerce sites verabradley.com and verabradley.ca; the Vera Bradley online outlet site; and typically the Vera Bradley annual outlet sale in Fort Wayne, Indiana.
The reportable segments within the Vera Bradley brand are VB Direct and VB Indirect. VB Direct . The VB Direct business consists of sales of Vera Bradley products through Vera Bradley full-line and outlet stores in the United States; e-commerce sites (verabradley.com, outlet.verabradley.com, and international.verabradley.com); and typically the Vera Bradley annual outlet sale in Fort Wayne, Indiana.
The annual outlet sale is an important tradition for Vera Bradley, has many loyal followers, and is an opportunity for us to sell our retired merchandise at discounted prices in a brand-right fashion.
Our annual outlet sale is typically held in the Allen County War Memorial Coliseum Exposition Center in Fort Wayne, Indiana. The annual outlet sale is an important tradition for Vera Bradley, has many loyal followers, and is an opportunity for us to sell our retired merchandise at discounted prices in a brand-right fashion.
Pay and Benefits . The Company offers competitive pay packages that include market-competitive base and hourly compensation, healthcare, a 401(k) savings plan that typically includes a Company contribution match, paid time off (including for volunteer work), paid family leave, matching gifts program, and an Employee Assistance Program. Leadership Programs .
The Company offers competitive pay packages that include market-competitive base and hourly compensation, healthcare, a 401(k) savings plan that includes a Company contribution match, paid time off (including for volunteerism), paid family leave, matching gifts program, and an Employee Assistance Program. Leadership Programs . Our associates are our biggest asset and when they win, we all win.
Pura Vida Pura Vida, based in La Jolla, California, is a digitally native lifestyle brand that we believe resonates with its loyal consumer following. The Pura Vida brand has a differentiated and expanding offering of bracelets, jewelry, apparel, and other lifestyle accessories.
Pura Vida Pura Vida, based in La Jolla, California, is a digitally native lifestyle brand with a differentiated and expanding offering of bracelets, jewelry, apparel, and other lifestyle accessories.
Our store location decisions for both full-line and factory outlet stores are made based upon our comprehensive retail strategy that includes actual and planned penetration in both Indirect and Direct segments, as well as existing e-commerce demand.
As of February 3, 2024, we operated 81 outlet stores, all located in the United States. Store Location Selection Strategy. Our store location decisions for both full-line and outlet stores are made based upon our comprehensive retail strategy that includes actual and planned penetration in both Indirect and Direct segments, as well as existing e-commerce demand.
Charity Collaborations . W e actively partner with charities to donate to causes that are important to our customers. To date, we have donated nearly $5.0 million to var ious charities around the world. Events Marketing .
W e actively partner with charities to donate to causes that are important to our customers. To date, we have donated nearly $6.0 million to various ch arities around the world. Experiential Marketing .
We currently have licenses in place for eyewear; bedding; technology accessories; stationery/drinkware; sleepwear and loungewear; outdoor furniture, accessories, and décor; and wallpaper. We also have licensing agreements with Disney Consumer Products, Warner Brothers Consumer Products, Peanuts Worldwide, Crocs, Gillette, Totes, NCAA (collegiate), and certain U.S. Military forces.
We currently have licenses in place for eyewear; bedding; stationery/drinkware; and outdoor furniture, accessories, and décor. We also have licensing agreements with NFL, Disney Consumer Products, Peanuts Worldwide, Sanrio Inc. (Hello Kitty), Crocs, Tupperware, Tervis (drinkware), NCAA (collegiate), and certain U.S. Military forces.
In addition, we have expanded our public relations efforts to reach popular online influencers and content creators. Product placement of Vera Bradley products in feature-length films and on prime-time television shows remains strong with television placements in This is Us , All American , Call Me Kat , Grownish , How I Met Your Father , and The Neighborhood .
In addition, we have expanded our public relations efforts to reach popular online influencers and content creators. Product placement of Vera Bradley products in feature-length films and on prime-time television shows remains strong with television placements in All American, B Positive, Bob Hearts Abishola, Call Me Kat, Grownish, Elsbeth, The Neighborhood, Night Court, With Love, Lopez vs.
In fact, in fiscal 2022 we moved from internal factory audits to partnering with BetterWork to conduct the audits. BetterWork brings diverse groups toge ther (governments, global brands, factory owners, unions, and workers) to improve working conditions in the garment industry and make the sector more competitive. These audits encompass both the Vera Bradley and Pura Vida brands.
BetterWork brings diverse groups toge ther (governments, global brands, factory owners, unions, and workers) to improve working conditions in the garment industry and make the sector more competitive. These audits encompass both the Vera Bradley and Pura Vida brands as they relate to our purchases in Cambodia and Bangladesh.
As of January 28, 2023, the Company operated 51 full-line stores and 79 factory outlet stores. The annual outlet sale was cancelled in 2020, 2021, and 2022 as a result of the COVID-19 pandemic but will resume in calendar 2023. VB Indirect .
As of February 3, 2024, the Company operated 43 full-line stores and 81 outlet stores. The annual outlet sale was cancelled in 2021 and 2022 as a result of the COVID-19 pandemic but resumed in calendar 2023. VB Indirect .
Pura Vida remains one of the most highly-engaged brands in the accessories space, surpassing the 2.2 million mark of followers on Instagram and is consistently listed as one of the most engaged jewelry brands on Instagram. Pura Vida continued to rank among the top of the industry for our Net Promoter and Customer Satisfaction Scores.
Pura Vida remains one of the most highly-engaged brands in the accessories space, surpassing 2.2 million followers on Instagram and is consistently listed as one of the most engaged jewelry brands on Instagram.
In April 2016, we opened an office in Hong Kong to lead the global supply chain in As ia, including the oversight of sourcing and procurement. The majority of our Vera Bradley finished goods, not sourced through licenses or strategic partners, are manufactured by a variety of global manufacturers located primarily in Cambodia, Vietnam, Indonesia, China, and the Philippines.
The majority of our Vera Bradley finished goods, not sourced through licenses or strategic partners, are manufactured by a variety of global manufacturers located primarily in Cambodia, Vietnam, Indonesia, China, and the Philippines.
In fiscal 2021 at Vera Bradley, we 12 migrated our ERP, POS, Business Intelligence, and Order Management systems to cloud-based platforms streamlining and simplifying our work and providing for additional capabilities such as mobile POS and multi-company operations on the same platform.
At Vera Bradley, our ERP, POS, Business Intelligence, and Order Management systems are on cloud-based platforms, streamlining and simplifying our work and providing for additional capabilities such as mobile POS and multi-company operations on the same platform. We completed our ERP migration during fiscal 2022 for Pura Vida, so that our entire enterprise is on a unified technology platform.
Pura Vida Pura Vida products are sourced primarily from El Salvador, as well as China, India, Guatemala, Cambodia, and Indonesia. We have continued an active supply chain diversification process to ensure a focus on maintaining flexibility and to help mitigate the risk of concentrated production, similar to the Vera Bradley supply chain.
We have continued an active supply chain diversification process to ensure a focus on maintaining flexibility and to help mitigate the risk of concentrated production, similar to the Vera Bradley supply chain.
Public Relations and Product Placement. Vera Bradley has received considerable editorial exposure in the press, with mentions in Oprah Daily , In Style , Good Morning America , Today , Cosmopolitan , WWD , Seventeen , Travel and Leisure , Real Simple , and Good Housekeeping .
Public Relations and Product Placement. Vera Bradley has received considerable editorial exposure in the press, with mentions in Travel & Leisure, People, Real Simple, Today, US Weekly, Good Morning America, Refinery 29, Southern Living, Glamour, Seventeen, Elle, Women's Wear Daily, Pop Sugar, and Good Housekeeping.
We will refresh our brand image with a focus on showing what “living free” looks and feels like – showing real places, real moments, and real faces that are authentic, diverse, and inclusive. We will recenter our brand ethos on “living life to the fullest” as well as Pura Vida’s hallmark of supporting charities and social responsibility.
We have refreshed our brand image with a focus on showing what “living free” looks and feels like – showing real places, real moments, and real faces that are authentic, diverse, and inclusive. We are recentering our brand ethos on “living life to the fullest” and sharpening our focus on Gen Z.
Vera Bradley Indirect Segment As of January 28, 2023, we sold our products in approximately 1,700 specialty retail locations, as well as department stores, national accounts, third-party e-commerce sites, and third-party inventory liquidators, as well as through licensing agreements. 10 In fiscal 2012, we launched our products in the department store channel.
Vera Bradley Indirect Segment As of February 3, 2024, we sold our products in approximately 1,600 specialty retail locations, as well as department stores, national accounts, third-party e-commerce sites, and third-party inventory liquidators, as well as through licensing agreements. We currently sell our products in approximately 300 department store locations as well as Amazon.com and other marketplaces.
Our sourcing team also focuses on achieving the right balance of production sites and countries of origin to mitigate the risk of concentrated production, including potential incremental tariffs.
Our sourcing team leverages its expertise in negotiation, relationship management, flexibility, and change management to maintain a strong, diverse global supply chain. Our sourcing team also focuses on achieving the right balance of production sites and countries of origin to mitigate the risk of concentrated production, including potential incremental tariffs.
Competition For both Vera Bradley and Pura Vida, we face strong competition in each of the product lines and markets in which we compete. We believe that all of our products are in similar competitive positions with respect to the number of competitors they face and the level of competition within each product line.
We believe that all of our products are in similar competitive positions with respect to the number of competitors they face and the level of competition within each product line. Due to the number of different products we offer, it is not practicable for us to quantify the number of competitors we face.
We discontinued manufacturing in Myanmar in mid-2021. With the oversight of our office in Hong Kong and our independent contractors, we believe financial benefits have been realized without sacrificing the level of quality inherent in our products or service to our customers.
With the oversight of our office in Hong Kong and our independent contractors, we believe financial benefits have been realized without sacrificing the level of quality inherent in our products or service to our customers. Pura Vida Pura Vida products are sourced primarily from El Salvador, as well as China, India, Guatemala, Cambodia, and Indonesia.
Moreover, the general availability of contract manufacturing allows new entrants to relatively easily access the markets in which we compete, which may increase the number of competitors and adversely affect our competitive position and our business. We compete against other independent retailers, department stores, catalog retailers, gift retailers, and Internet businesses that engage in the retail sale of similar products.
Our products compete with other branded products within their product categories and with private label products sold by retailers. Moreover, the general availability of contract manufacturing allows new entrants to relatively easily access the markets in which we compete, which may increase the number of competitors and adversely affect our competitive position and our business.
The overall objective for our sourcing team is to build and sustain collaborative partnerships throughout our supply chain, with a focus on identifying appropriate countries and partners to manufacture our products while maintaining and focusing on flexibility. Our sourcing team leverages its expertise in negotiation, relationship management, flexibility, and change management to maintain a strong, diverse global supply chain.
Our manufacturing and sourcing strategy is part of the larger cross-functional product development process. The overall objective for our sourcing team is to build and sustain collaborative partnerships throughout our supply chain, with a focus on identifying appropriate countries and partners to manufacture our products while maintaining and focusing on flexibility.
No single Indirect retailer represented more than 10% of consolidated net revenues in fiscal 2023, with the top ten Indirect retailers, representing in the aggregate approximately 60% of total Indirect segment net revenues. The majority of our Indirect retailers have been customers for over five years.
The top 25% of our specialty retailers account for approximately 80% of total specialty retailer revenue. No single Indirect retailer represented more than 6% of consolidated net revenues in fiscal 2024, with the top ten Indirect retailers, representing in the aggregate approximately 65% of total Indirect segment net revenues.
We completed our ERP migration during fiscal 2022 for Pura Vida, so that our entire enterprise is on a unified technology platform. We continue to assess our on-premise and cloud-based technology solutions in an effort to ensure we have the optimal solutions for our business.
We continue to assess our on-premise and cloud-based technology solutions in an effort to ensure we have the optimal solutions for our business.
Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand is known for its innovative designs, iconic patterns, and brilliant colors that inspire and connect women. The reportable segments within the Vera Bradley brand are VB Direct and VB Indirect. VB Direct .
Our Brands Vera Bradley Vera Bradley is a leading designer of women’s handbags, luggage and travel items, fashion and home accessories, and unique gifts. Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand is known for its innovative designs, iconic patterns, and brilliant colors that inspire and connect women.
For financial information about our reportable segments, refer to Note 17 of the Notes to Consolidated Financial Statements set forth in Part II, “Item 8. Financial Statements and Supplementary Data,” of this report. Our Brands Vera Bradley Vera Bradley is a leading designer of women’s handbags, luggage and travel items, fashion and home accessories, and unique gifts.
The Company has three reportable segments: Vera Bradley Direct (“VB Direct”), Vera Bradley Indirect (“VB Indirect”), and Pura Vida. For financial information about our reportable segments, refer to Note 17 of the Notes to Consolidated Financial Statements set forth in Part II, “Item 8. Financial Statements and Supplementary Data,” of this report.
Channels of Distribution We distribute our Vera Bradley products through our VB Direct (including e-commerce and retail stores) and VB Indirect segments and Pura Vida products primarily through e-commerce, wholesale retailers, and retail stores. This multi-channel distribution model is designed to enable operational flexibility and maximizes the methods by which we can access potential customers.
This multi-channel distribution model is designed to enable operational flexibility and maximizes the methods by which we can access potential customers. Vera Bradley Direct Segment Full-Line Stores.
We have implemented a fully integrated and cross-functional product development process that aligns design, trend and market research, merchandising, planning, sales, marketing, and sourcing. We believe product development is a core capability that makes our products unique and that our designs and aesthetics set our products apart and drive customer loyalty.
We believe product development is a core capability that makes our products unique and that our designs and aesthetics set our products apart and drive customer loyalty.
Movie placements include: A Man Named Otto , Leave the World Behind , No Hard Feelings , My Big Fat Greek Wedding 3 , and Barbie . 8 Partnerships.
Lopez, Last Man Standing, Mom, and Curb Your Enthusiasm . Movie placements include: A Man Named Otto, No Hard Feelings, My Big Fat Greek Wedding 3, and Puppy Love. Partnerships.
To continue to assist in this risk m itigation, our sourcing team reduced our Vera Bradley production in China from over 50% in fiscal 2019 to approximately 15% in fiscal 2023. 11 We strive to maintain the appropriate balance of inventory to enable us to provide a high level of service to our customers, including prompt and accurate delivery of our products at a reasonable cost.
We strive to maintain the appropriate balance of inventory to enable us to provide a high level of service to our customers, including prompt and accurate delivery of our products at a reasonable cost.
We will focus on delivering unique, fun, playful product designs that are affordable and accessible. We will continue to deepen our expertise and innovate in our hero core category of string bracelets as well as other jewelry items, and we will opportunistically explore additional close-in, adjacent categories that make sense for our business and our customers.
We will continue to innovate in our hero core category of string bracelets as well as other jewelry items, and we will opportunistically explore additional close-in, adjacent categories that make sense for our business and our customers. Approximately a third of the total Pura Vida business is comprised of jewelry categories other than bracelets, such as rings, anklets, and necklaces.
We are continually looking for new ways to creatively engage our customers, grow brand awareness, and introduce new customers to our brands in a cost-effective manner, but that is becoming more challenging and expensive for both of our brands.
We are continually looking for new ways to creatively engage our customers, grow brand awareness, and introduce new customers to our brands in a cost-effective manner. Vera Bradley continues to rank among the top of the industry for our Net Promoter and Customer Satisfaction Scores. Product .
We work with macro influencers on product collaborations and campaigns, and foster organic relationships with them through photoshoots, trips, and events which we believe drives organic growth for the brand. We have also built a network of micro influencers through our gifted program who post for our brand in exchange for product and exposure on our social channels.
Our work with influencers includes collaborations on product and marketing campaigns that drives brand awareness with their audiences and our target demographic. We have also built a network of micro influencers and content creators who post for our brand in exchange for product and exposure on our social channels. Charity Collaborations .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeConsequently, the rate at which we have opened new stores has slowed and we do not currently plan to open any new full-line stores during fiscal 2024. We have closed a total of 63 underperforming full-line stores and two underperforming factory outlet stores since the beginning of fiscal 2018 and forecast that we will close additional full-line stores.
Biggest changeWe have closed a total o f 74 underperforming full-line stores and three underperforming outlet stores since the beginning of fiscal 2015 and forecast that we will close additional full-line stores . We plan to open additional Vera Bradley full line and outlet stores during fiscal 2025.
Our failure to effectively compete with other retailers for sales could have a material adverse effect on our financial condition, results of operations, and cash flows. The market for bags, accessories, travel items and our other products is increasingly competitive.
Failure to effectively compete with other retailers for sales could have a material adverse effect on our financial condition, results of operations, and cash flows. The market for bags, accessories, travel items and our other products is increasingly competitive.
These provisions include: • authorizing our board of directors to issue preferred stock and additional shares of our common stock without shareholder approval; • prohibiting shareholder action by written consent; • prohibiting our shareholders from calling a special meeting of shareholders; and • requiring advance notice for raising business matters or nominating directors at shareholders’ meetings.
These provisions include: • authorizing our Board to issue preferred stock and additional shares of our common stock without shareholder approval; • prohibiting shareholder action by written consent; • prohibiting our shareholders from calling a special meeting of shareholders; and • requiring advance notice for raising business matters or nominating directors at shareholders’ meetings.
As a result of the aforementioned restrictions, or other related factors, we have experienced and may experience in the future delayed shipments and increased shipping costs for some of our merchandise. We may also be adversely impacted should the pandemic compromise operations at our corporate headquarters and distribution center located in Roanoke, Indiana.
As a result of the aforementioned restrictions, or other related factors, we have experienced and may experience in the future delayed shipments and increased shipping costs for some of our merchandise. We may also be adversely impacted should a pandemic compromise operations at our corporate headquarters and distribution center located in Roanoke, Indiana.
The increasing inability of mall “anchor” tenants and other area attractions to generate consumer traffic around our 17 stores, the increasing inability of mall operators to attract “anchor” tenants and maintain viable operations, and the increasing departures of existing “anchor” and other mall tenants due to declines in the sales volume and in the popularity of certain malls as shopping destinations, have reduced and may continue to reduce our sales volume and, consequently, adversely affect our financial condition, results of operations, and cash flows.
The increasing inability of mall “anchor” tenants and other area attractions to generate consumer traffic around our stores, the increasing inability of mall operators to attract “anchor” tenants and maintain viable operations, and the increasing departures of existing “anchor” and other mall tenants due to declines in the sales volume and in the popularity of certain malls as shopping destinations, have reduced and may continue to reduce our sales volume and, consequently, adversely affect our financial condition, results of operations, and cash flows.
We generally do not enter into long-term formal written agreements with our manufacturers and instead transact business with each of them on an order-by-order basis. In the event of a disruption in our contract manufacturers’ systems, we may be unable to locate alternative manufacturers of comparable quality at an acceptable price or in a timely manner, or at all.
We generally do not enter into long-term formal written agreements with our manufacturers and instead transact business with each of them on an order-by-order basis. In the event of a disruption in our contract manufacturers’ production systems, we may be unable to locate alternative manufacturers of comparable quality at an acceptable price or in a timely manner, or at all.
In addition, if the terms of the collective bargaining agreement were significantly more favorable to union workers than our current pay-and-benefits arrangements, our costs would increase and our results of operations would suffer. We may suffer negative publicity and our business may be harmed if we need to recall any products we sell.
In addition, if the terms of a collective bargaining agreement were to be significantly more favorable to union workers than our current pay-and-benefits arrangements, our costs would increase and our results of operations would suffer. We may suffer negative publicity and our business may be harmed if we need to recall any products we sell.
From time to time, we provide guidance regarding our future performance that represents our management’s estimates as of the date of release. This guidance, which consists of forward-looking statements, is prepared by our management and is qualified by, and subject to, the assumptions and the other information contained or referred to in the release.
From time to time, we provide guidance regarding our future performance that represents our management’s estimates as of the date of release. This guidance, which consists of forward-looking statements, is prepared by our management and is qualified by, and subject to, the assumptions and the other information contained or referred to in such release.
In light of the foregoing, if investors, analysts, and others fail to review our guidance within the proper context or place undue reliance on our guidance, deviations from such guidance may result in incongruous fluctuation in our stock price. 25 Anti-takeover provisions in our organizational documents and Indiana law may discourage or prevent a change in control, even if a sale of the Company would be beneficial to our shareholders, which could cause our stock price to decline and prevent attempts by shareholders to replace or remove our current management.
In light of the foregoing, if investors, analysts, and others fail to review our guidance within the proper context or place undue reliance on our guidance, deviations from such guidance may result in incongruous fluctuation in our stock price. 25 Table of Contents Anti-takeover provisions in our organizational documents and Indiana law may discourage or prevent a change in control, even if a sale of the Company would be beneficial to our shareholders, which could cause our stock price to decline and prevent attempts by shareholders to replace or remove our current management.
Our quarterly results of operations may fluctuate significantly as a result of a variety of factors, including, among other things: • timing of new store openings and store closings; • net revenues and profits contributed by new stores; • increases or decreases in store traffic and comparable sales; • shifts in the timing of holidays, particularly in the United States and China; • changes in our merchandise mix; • timing of marketing campaigns or promotions; • timing of sales to Vera Bradley and Pura Vida wholesale retailers; and • timing of new pattern and collection releases and new product introductions.
Our quarterly results of operations may fluctuate significantly as a result of a variety of factors, including, among other things: • timing of new store openings and store closings; • net revenues and profits contributed by new stores; • changes in store traffic and comparable sales; • shifts in the timing of holidays, particularly in the United States and China; • changes in our merchandise mix; • timing of marketing campaigns or promotions; • timing of sales to Vera Bradley and Pura Vida wholesale retailers; and • timing of new pattern and collection releases and new product introductions.
Any harm to our reputation resulting from failure or perceived failure to meet ESG-related goals, metrics, or disclosures could adversely affect our business, financial performance, and growth.
Any harm to our reputation resulting from a failure or perceived failure to meet ESG-related goals, metrics, or disclosures could adversely affect our business, financial performance, and growth.
Our utilization of these delivery services, or those of any other shipping companies that we may elect to use, is subject to risks, including increases in fuel prices, which would increase our shipping costs, employee strikes, labor shortages, and inclement weather, which may impact the shipping company’s ability to provide delivery services sufficient to meet our shipping needs.
Our utilization of these delivery services, or those of any other shipping companies that we may elect to use, is subject to risks, including increases in fuel prices, which would increase our shipping costs, employee strikes, labor shortages, and inclement weather, which may impact a shipping company’s ability to provide delivery services sufficient to meet our shipping needs.
Additionally, disclosures about our ESG-related initiatives or goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions or third-party information that we believe to be reasonable but are subject to change in the future.
Additionally, disclosures about our ESG-related initiatives or goals, and progress towards those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions or third-party information that we believe to be reasonable but are subject to change in the future.
We used the purchase method of accounting to account for the acquisition of a majority interest in Pura Vida consummated on July 16, 2019. A portion of the purchase price for this business is allocated to identifiable tangible and intangible assets and assumed liabilities based on estimated fair values at the date of acquisition.
We used the purchase method of accounting to account for the acquisition of a majority interest in Pura Vida, which was consummated on July 16, 2019. A portion of the purchase price for this business is allocated to identifiable tangible and intangible assets and assumed liabilities based on estimated fair values at the date of acquisition.
In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were involved in 24 securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business. Our business could be negatively affected as a result of the actions of activist shareholders.
In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were involved in 24 Table of Contents securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business. Our business could be negatively affected as a result of the actions of activist shareholders.
As a result of the above-mentioned factors, the Company’s liquidity, results of operations, and financial condition could be adversely impacted. 26 General Risk Factors Our results of operations could suffer if we lose key management or design associates or are unable to attract and retain the talent required for our business.
As a result of the above-mentioned factors, the Company’s liquidity, results of operations, and financial condition could be adversely impacted. 26 Table of Contents General Risk Factors Our results of operations could suffer if we lose key management or design associates or are unable to attract and retain the talent required for our business.
Numerous factors influence comparable sales, including fashion trends, competition, national and regional economic conditions, pricing, inflation, the timing of the release of new merchandise and promotional events, changes in our merchandise mix, marketing programs, changes in consumer shopping trends, site selection strategy, public health matters, and weather conditions.
Numerous factors influence comparable sales, including fashion trends, competition, national and regional economic conditions, pricing, inflation, the timing of the release of new merchandise and promotional events, changes in our merchandise mix, marketing programs, changes in consumer shopping trends, site selection strategies, public health matters, and weather conditions.
Although we have not been inhibited from selling our products in connection with intellectual property disputes, intellectual property-related obstacles may arise as we expand our product lines and extend our 23 brands as well as the geographic scope of our sales and marketing.
Although we have not been inhibited from selling our products in connection with intellectual property disputes, intellectual property-related obstacles may arise as we expand our product lines and extend our 23 Table of Contents brands as well as the geographic scope of our sales and marketing.
The inability to protect our copyrights, trademarks, and other proprietary rights could adversely impact our results of operations. Any litigation regarding our proprietary rights could be time consuming and costly and could consume significant amounts of management time that would otherwise be spent operating and growing our business.
The inability to protect our copyrights, trademarks, and other proprietary rights could adversely impact our results of operations. Any litigation regarding our proprietary rights could be time consuming and costly and could consume significant amounts of management's time that would otherwise be spent operating and growing our business.
We generally state possible outcomes as high and low ranges which are intended to provide a sensitivity analysis as variables are changed, but are not intended to represent that actual results could not fall outside of the suggested ranges.
We generally state possible outcomes as high and low ranges which are intended to provide a sensitivity analysis as variables are changed, but such statements are not intended to represent that actual results could not fall outside of the suggested ranges.
The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including: • actions by other shopping mall or lifestyle center tenants; • weather conditions, particularly during the holiday shopping period; • unexpected departures of key executives; • financial projections that we may choose to provide to the public, any changes in these projections or our failure for any reason to meet these projections; • the public’s response to press releases or other public announcements by us or others, including our filings with the SEC and announcements relating to litigation and other matters; • speculation about our business in the press or the investment community; • future sales of our common stock by our significant shareholders, officers, and directors; • our entry into new markets; • the impact of wars, hostilities, riots, social unrest or acts of terrorism on trading markets; • changes in laws or regulations that impact the retail industry; • strategic actions by us or our competitors, such as acquisitions or restructurings; • the continued outbreak of COVID-19 and its adverse impact on the capital markets; and • changes in accounting principles.
The market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including: • actions by other shopping mall or lifestyle center tenants; • weather conditions, particularly during the holiday shopping period; • unexpected departures of key executives; • financial projections that we may choose to provide to the public, any changes in these projections or our failure for any reason to meet these projections; • the public’s response to press releases or other public announcements by us or others, including our filings with the SEC and announcements relating to litigation and other matters; • speculation about our business in the press or the investment community; • future sales of our common stock by our significant shareholders, officers, and directors; • our entry into new markets; • the impact of wars, hostilities, riots, social unrest or acts of terrorism on trading markets; • changes in laws or regulations that impact the retail industry; • strategic actions by us or our competitors, such as acquisitions or restructurings; • the outbreak of pandemics or other public health matters and the resulting adverse impact on the capital markets; and • changes in accounting principles.
Consumer confidence and consumer spending may be influenced by levels of inflation, fluctuating interest rates and credit availability (including possible exposure to bank failures), changing fuel and other energy costs, fluctuating commodity prices, levels of unemployment and consumer debt levels, changes in net worth based on market conditions, general uncertainty regarding the overall future economic environment, political turmoil, the COVID-19 pandemic or other public health matters, and weather and weather-related phenomena.
Consumer confidence and consumer spending may be influenced by levels of inflation, fluctuating interest rates and credit availability (including possible exposure to bank failures), changing fuel and other energy costs, fluctuating commodity prices, levels of unemployment and consumer debt levels, changes in net worth based on market conditions, general uncertainty regarding the overall future economic environment, political turmoil, pandemics or other public health matters, and weather and weather-related phenomena.
These factors may cause our comparable sales results to be lower in the future than in recent periods or lower than expectations, either of which could result in a decline in the price of our common stock. If our multi-channel distribution model is not successful, our business and results of operations may suffer.
These factors may cause our comparable sales results to be lower in the future than in recent periods or lower than expectations, either of which could result in a decline in the price of our common stock. 16 Table of Contents If our multi-channel distribution model is not successful, our business and results of operations may suffer.
In such a case, we could have difficulty meeting consumer demand and net revenues could be adversely impacted. We rely on a limited number of distribution facilities for the products we sell. Distribution operations for Vera Bradley-branded products are currently concentrated in a single, company-owned distribution center in Roanoke, Indiana.
In such a case, we could have difficulty meeting consumer demand and net revenues could be adversely impacted. 19 Table of Contents We rely on a limited number of distribution facilities for the products we sell. Distribution operations for Vera Bradley-branded products are currently concentrated in a single, company-owned distribution center in Roanoke, Indiana.
We are subject to the risks inherent in global sourcing and manufacturing, including, but not limited to: • exchange rate fluctuations and trends; • availability of raw materials; • c ompliance with labor laws and other foreign governmental regulations; • compliance with U.S. import and export laws and regulations including the Uyghur Forced Labor Prevention Act (“UFLPA”) as described below ; • disruption or delays in shipments; • loss or impairment of key manufacturing sites; • product quality issues; • political unrest; • natural disasters, acts of war and terrorism, changing macroeconomic trends, public health emergencies (such as COVID-19), and other external factors over which we have no control; and • quotas, duties, tariffs, or other trade restrictions or regulations.
We are subject to the risks inherent in global sourcing and manufacturing, including, but not limited to: • exchange rate fluctuations and trends; • availability of raw materials; • c ompliance with labor laws and other foreign governmental regulations; • compliance with U.S. import and export laws and regulations including the Uyghur Forced Labor Prevention Act (“UFLPA”) as described below ; • disruption or delays in shipments; • loss or impairment of key manufacturing sites; • product quality issues; • political unrest; • natural disasters, acts of war and terrorism, changing macroeconomic trends, pandemics or other public health matters, and other external factors over which we have no control; and • quotas, duties, tariffs, or other trade restrictions or regulations.
The UFLPA went into effect on June 21, 2022. The act establishes a rebuttable presumption that the importation of any goods manufactured in whole or partially in Xinjiang Uyghur Autonomous Region of the PRC, or produced by certain entities, is prohibited to entry to the United States. The Commissioner of U.S.
The UFLPA went into effect on June 21, 2022. The act establishes a rebuttable presumption that the importation into the United States of any goods manufactured in whole or partially in Xinjiang Uyghur Autonomous Region of China, or produced by certain entities, is prohibited entry. The Commissioner of U.S.
As permitted by our second amended and restated articles of incorporation and amended and restated bylaws, our board of directors also has the ability, should they so determine, to adopt a shareholder rights agreement, sometimes called a “poison pill,” providing for the issuance of a new series of preferred stock to holders of common stock.
As permitted by our second amended and restated articles of incorporation and amended and restated bylaws, our Board also has the ability, should it so determine, to adopt a shareholder rights agreement, sometimes called a “poison pill,” providing for the issuance of a new series of preferred stock to holders of common stock.
Any delay, interruption, or increased cost in the manufactured products that might occur for any reason, such as the lack of long-term contracts or regulatory requirements and the loss of certifications, power interruptions, fires, hurricanes, war, public health pandemics such as COVID-19, or threats of terrorism, could affect our ability to meet customer demand for our products, adversely affect our net revenues, increase our cost of sales, and hurt our results of operations.
Any delay, interruption, or increased cost in the manufactured products that might occur for any reason, such as the lack of long-term contracts or regulatory requirements and the loss of certifications, power interruptions, fires, hurricanes, war, pandemics or other public health matters, or threats of terrorism, could affect our ability to meet customer demand for our products, adversely affect our net revenues, increase our cost of sales, and hurt our results of operations.
Upward movement in the price of oil in the global oil markets would also likely result in rising fuel and freight prices, which could increase our shipping costs. In the future, we may not be able to pass all or a portion of higher costs on to our customers.
Upward movements in the price of oil in the global oil markets would also likely result in rising fuel and freight prices, which could increase our shipping costs. In the future, we may not be able to pass all or a portion of such higher costs on to our customers.
We currently sell our Vera Bradley-branded products into two segments: Direct to consumers through Vera Bradley full-line and factory outlet stores in the United States, verabradley.com and verabradley.ca, the Vera Bradley online outlet site, and typically the Vera Bradley annual outlet sale in Fort Wayne, Indiana; and through our Vera Bradley Indirect wholesale business 16 which consists of sales to specialty retail locations, department stores, national accounts, third-party e-commerce sites, third-party inventory liquidators, as well as royalties recognized through licensing agreements related to the Vera Bradley brand.
We currently sell our Vera Bradley-branded products into two segments: Direct to consumers through Vera Bradley full-line and outlet stores in the United States, verabradley.com and international.verabradley.com, outlet.verabradley.com, and typically the Vera Bradley annual outlet sale in Fort Wayne, Indiana; and through our Vera Bradley Indirect wholesale business which consists of sales to specialty retail locations, department stores, national accounts, third-party e-commerce sites, third-party inventory liquidators, as well as royalties recognized through licensing agreements related to the Vera Bradley brand.
If products we sell have safety problems of which we are not aware, or if we or the Consumer Product Safety Commission recall a product sold in our stores, we may suffer negative publicity and, potentially, product liability lawsuits, which could have a material adverse impact on our reputation, financial condition and results of operations or cash flows.
If products we sell have safety problems of which we are not aware, or if we or the Consumer Product Safety Commission recall a product sold in our stores, we may suffer negative publicity and, potentially, product liability lawsuits, which could have a material adverse impact on our reputation, financial condition and results of operations or cash flows. 27 Table of Contents Item 1B.
In the event that the U.S. economy worsens, or if there is a decline in consumer-spending levels or other unfavorable conditions, including inflation, we could experience lower than expected net revenues, which could force us to delay or slow the implementation of our growth strategies and adversely impact our results of operations.
In the event of a downturn in the U.S. economy, or if there is a decline in consumer-spending levels or other unfavorable conditions, including inflationary pressure, we could experience lower than expected net revenues, which could force us to delay or slow the implementation of our growth strategies and adversely impact our results of operations.
Goodwill is measured indirectly as the excess of the sum of (1) the consideration transferred (including contingent consideration, if any) and (2) the fair value of any noncontrolling interest in the acquiree over the net assets acquired and liabilities assumed.
Goodwill is measured indirectly as the excess of the sum of (i) the consideration transferred (including contingent consideration, if any) and (ii) the fair value of any noncontrolling interest in the acquiree over the net assets acquired and liabilities assumed.
We also recorded $0.6 million of a non-cash impairment charge relating to a corporate right-of-use asset in fiscal 2023. Our quarterly evaluation of store assets includes consideration of current and historical performance and projections of future profitability.
We also recorded $0.6 million of a non-cash impairment charge relating to a corporate right-of-use asset in fiscal 2023. We recorded no long-lived asset impairments in fiscal 2024. Our quarterly evaluation of store assets includes consideration of current and historical performance and projections of future profitability.
Risks Related to the COVID-19 Pandemic The outbreak of the novel coronavirus (COVID-19), or events related thereto, may cause significant disruptions in our revenue streams, operations, global supply chain and other facets of our business, which may continue to adversely impact our results of operations, financial condition, and share price.
Risks Related to Pandemics The outbreak of pandemics, or events related thereto, may cause significant disruptions in our revenue streams, operations, global supply chain and other facets of our business, which may continue to adversely impact our results of operations, financial condition, and share price.
Our inability to effectively address these risks and any other risks that we face in connection with our Internet operations could materially adversely affect our business, financial condition, results of operations, and/or cash flows. 22 Risks Related to Tax and Valuation Matters Fluctuations in our tax obligations and effective tax rate may result in volatility of our operating results and stock price.
If we are unable to effectively address these risks and any other risks that we face in connection with our Internet operations, our business, financial condition, results of operations, and/or cash flows could be materially adversely affected. 22 Table of Contents Risks Related to Tax and Valuation Matters Fluctuations in our tax obligations and effective tax rate may result in volatility of our operating results and stock price.
If we are unable to successfully execute our brand strategies, our results of operations could be adversely impacted. Closing stores could result in significant costs to us. We have closed a total of 63 underperforming full-line stores and two underperforming factory outlet stores since the beginning of fiscal 2018 and forecast that we will close additional full-line stores.
If we are unable to successfully execute our brand strategies, our results of operations could be adversely impacted. Closing stores could result in significant costs to us. We have closed a total of 74 underperforming full-line stores a nd three unde rperforming outlet stores since the beginning of fiscal 2015 and forecast that we will close additional full-line stores.
The extent of the pandemic’s impact on our results of operations, financial condition, and share price will likely depend on future developments including the potential for spikes in the number of COVID-19 cases in future periods, including as may be related to the spread of new virus variants; mitigation activities undertaken by governments and the general public; the overall economic impacts of quarantines and business closures; and current, and potentially long-term, changes in consumer behavior.
The extent of a pandemic’s impact on our results of operations, financial condition, and share price will likely depend on the nature and seventy of the pandemic, future developments, including as may be related to the spread of new virus variants; mitigation activities undertaken by governments and the general public; the overall economic impacts of quarantines and business closures; and current, and potentially long-term, changes in consumer behavior.
Our inability to predict and respond in a timely manner to changes in consumer demand could adversely affect our net revenues and results of operations. Our success depends on our ability to gauge the fashion tastes of our customers and to provide merchandise that satisfies consumer demand in a timely manner.
If we are unable to predict and respond in a timely manner to changes in consumer demand, our net revenues and results of operations could be adversely affected. Our success depends on our ability to gauge the fashion tastes of our customers and to provide merchandise that satisfies consumer demand in a timely manner.
Our long-term future growth prospects include our ability to successfully open new stores and operate new and current Vera Bradley and Pura Vida stores. In recent years, however, Vera Bradley comparable store sales have declined.
Our long-term future growth prospects include our ability to successfully open new stores and operate new and current Vera Bradley and Pura Vida stores. In recent years, however, Vera Bradley comparable store sales have declined. Consequently, the rate at which we have opened new stores has slowed.
We are exposed to business risks as a result of our e-commerce operations. We operate e-commerce stores at www.verabradley.com, which includes an online outlet site we created in fiscal 2018, www.verabradley.ca, www.puravidabracelets.com, www.puravidabracelets.eu, and www.puravidabracelets.ca. Expanding our e-commerce business is one of the key objectives of our business strategy.
We are exposed to business risks as a result of our e-commerce operations. We operate e-commerce stores at www.verabradley.com, outlet.verabradley.com, and international.verabradley.com, www.puravidabracelets.com, www.puravidabracelets.eu, and www.puravidabracelets.ca. Expanding our e-commerce business is one of the key objectives of our business strategy.
Changes in general economic conditions, and their impact on consumer confidence and consumer spending, could adversely impact our results of operations. Our performance is subject to general economic conditions and their impact on levels of consumer confidence and consumer spending.
Our performance is subject to general economic conditions and their impact on levels of consumer confidence and consumer spending.
In particular, fluctuations in the price of cotton, our primary raw material, could have an adverse impact on our cost of sales. In addition, because a key component of our products is petroleum-based, the cost of oil affects the cost of our products.
In particular, increases in the price of cotton, our primary raw material, could have an adverse impact on our cost of sales. In addition, because synthetic components of our products are petroleum-based, the cost of oil affects the cost of our products.
We expect that stakeholder expectations, as well as laws, rules and regulations, in these areas will continue to evolve quickly, which may result in the need for increased resources for ESG monitoring and reporting and adjustments to our operations may be necessary. We could face scrutiny with respect to the accuracy, adequacy, or completeness of our ESG-related disclosures.
We expect that stakeholder expectations, as well as laws, rules and regulations, in these areas will continue to evolve quickly, which may result in the need for increased resources for ESG monitoring and reporting and adjustments to our operations may be necessary as a result.
The purchase price allocation resulted in a goodwill value of $44.3 million and a value of $61.7 million related to other intangible assets. During fiscal 2023, we recorded a full impairment of goodwill totaling $44.3 million and an impairment charge for the Pura Vida brand intangible asset of $25.0 million.
The purchase price allocation resulted in a goodwill value of $44.3 million and a value of $61.7 million related to other intangible assets. During fiscal 2024, we recorded an impairment to the Pura Vida brand indefinite-lived intangible asset of $5.4 million.
Merchandise misjudgments could adversely impact our net revenues and results of operations. We may experience declines in comparable sales and there can be no guarantee that the strategic initiatives we are implementing to improve our results will be successful.
Merchandise misjudgments could adversely impact our net revenues and results of operations. We may experience declines in comparable sales and strategic initiatives we are implementing to improve our results, such as Project Restoration, may not be successful.
Our competitive challenges include: • attracting customer traffic; • sourcing and manufacturing merchandise efficiently; • competitively pricing our products and achieving customer perception of value; • maintaining favorable brand recognition and effectively marketing our products to consumers in diverse market segments; • developing designs that appeal to a broad range of demographic and age segments; • developing high-quality products; • offering attractive promotional incentives while maintaining profit margins; and • establishing and maintaining good working relationships with our wholesale retailers.
Our competitive challenges include: • attracting customer traffic; • sourcing and manufacturing merchandise efficiently; • competitively pricing our products and achieving customer perception of value; • maintaining favorable brand recognition and effectively marketing our products to consumers in diverse market segments; • developing designs that appeal to a broad range of demographic and age segments; • developing high-quality products; • offering attractive promotional incentives while maintaining profit margins; and • establishing and maintaining good working relationships with our wholesale retailers. 18 Table of Contents In our Vera Bradley Indirect business and Pura Vida wholesale business, we compete with numerous manufacturers, importers, and distributors of handbags, accessories, and other products for the limited space available for the display of such products to the consumer.
Further, new variants of the virus and new and evolving guidance and mandates from governments and public health officials, may necessitate additional closures to some, or all, of our retail stores, the stores of our Indirect segment partners and Pura Vida wholesale retailers, or otherwise detrimentally impact aspects of our operations.
Future pandemic-related mandates from governments and public health officials may necessitate additional closures to some, or all, of our retail stores, the stores of our Indirect segment partners and Pura Vida wholesale retailers, or otherwise detrimentally impact aspects of our operations, as COVID-19 did in the past.
Michael Miller, directly or indirectly, beneficially own and have the ability to exercise voting control over, in the aggregate, 19.0% of our outstanding shares of common stock as of January 28, 2023.
Michael Miller, directly or indirectly, beneficially own and have the ability to exercise voting control over, in the aggregat e, 19.0% of our outstan ding shares of common stock as of February 3, 2024.
Our results of operations could suffer if we are unable to attract and retain retail and distribution center employees required for our business. We must attract, motivate, and retain a sufficient number of qualified retail and distribution center employees.
Our results of operations could suffer if we are unable to attract and retain retail and distribution center employees required for our business. We must attract, motivate, and retain a sufficient number of qualified retail and distribution center employees. Historically, competition for talent in these positions has been intense and turnover is generally high.
Any significant disruption in the operation of these facilities due to natural disaster or severe weather, or events such as fire, accidents, power outages, system failures, or other unforeseen causes, could devalue or damage a significant portion of our inventory and could adversely affect our product distribution and sales until such time as we could secure alternative facilities. 19 In addition to the aforementioned events, public health emergencies (such as the COVID-19 pandemic) could cause disruptions in our distribution operations if we were to temporarily suspend operations, or if we are unable to obtain the staffing levels required to effectively operate the facilities.
Any significant disruption in the operation of these facilities due to natural disaster or severe weather, or events such as fire, accidents, power outages, system failures, or other unforeseen causes, could devalue or damage a significant portion of our inventory and could adversely affect our product distribution and sales until such time as we could secure alternative facilities.
There may also be events that are beyond our control that could cause delays in these functions, including but not limited to, changing macroeconomic trends, public health pandemics such as COVID-19 and other catastrophic events, and general disruptions or delays in shipping and receiving.
There may also be events that are beyond our control that could cause delays in these functions, including but not limited to, changing macroeconomic trends, pandemics or other public health matters, and general disruptions or delays in shipping and receiving. In addition, we rely on the flow of our goods through worldwide ports on a consistent basis.
A significant majority of our Vera Bradley and Pura Vida products are currently manufactured for us in Asia and Central America, respectively. The United States and the countries in which our products are produced have imposed and may impose additional quotas, duties, tariffs, or other restrictions or regulations or may adversely adjust prevailing quotas, duties, or tariffs.
The United States and the countries in which our products are produced have imposed and may impose additional quotas, duties, tariffs, or other restrictions or regulations or may adversely adjust prevailing quotas, duties, or tariffs.
Litigation and other claims may arise in the ordinary course of our business and include employee claims, custom and duty claims, commercial disputes, intellectual property issues, marketing and solicitation claims, product-oriented allegations, and slip and fall claims. Often these cases raise complex factual and legal issues, which are subject to risks and uncertainties and which could require significant management time.
Litigation and other claims may arise in the ordinary course of our business and include employee claims, custom and duty claims, commercial disputes, intellectual property issues, marketing and solicitation claims, product-oriented allegations, and slip and fall claims.
We believe that our registered copyrights, registered and common law trademarks, and other proprietary rights have significant value and are critical to our ability to create and sustain demand for our products.
Our inability or failure to protect our intellectual property or our infringement of other’s intellectual property could have a negative impact on our operating results. We believe that our registered copyrights, registered and common law trademarks, and other proprietary rights have significant value and are critical to our ability to create and sustain demand for our products.
Violation of labor or other laws by those manufacturers, or the divergence of a contract manufacturer’s labor or other practices from those generally accepted as ethical in the United States or in other markets in which we may in the future do business, could also draw negative publicity for us and our brands, diminishing the value of our brands and reducing demand for our products. 20 Our ability to source our products at favorable prices, or at all, could be harmed, with adverse effects on our results of operations, if new trade restrictions are imposed or if existing trade restrictions become more burdensome.
Violations of labor or other laws by those manufacturers, or the divergence of a contract manufacturer’s labor or other practices from those generally accepted as ethical in the United States or in other markets in 20 Table of Contents which we may in the future do business, could also draw negative publicity for us and our brands, diminishing the value of our brands and reducing demand for our products.
The COVID-19 pandemic has in the past and may again in the future result in travel restrictions both domestically and internationally, community and self-quarantines, certain factory closures or reduced operations, as well as mall closures and reduced mall operating hours.
A pandemic (COVID-19) in the past resulted in travel restrictions both domestically and internationally, community and self-quarantines, certain factory closures or reduced operations, as well as mall closures and reduced mall operating hours. This could happen in the future as well. Due to the past pandemic we experienced significantly reduced traffic, demand, and sales. This could recur in the future.
Once adjusted, there can be no assurance that there will not be further adjustments for impairment in future periods. 21 Risks Related to Information Technology and Security A data security or privacy breach could damage our reputation and our relationships with our customers, expose us to litigation risk and adversely affect our business.
Risks Related to Information Technology and Security A data security or privacy breach could damage our reputation and our relationships with our customers, expose us to litigation risk and adversely affect our business.
In recent fiscal years, COVID-19 has led to temporary factory closures and production and logistics constraints due to workforce availability, as well as global supply chain challenges such as vessel and container shortages and port congestion.
Pandemics may reduce consumers' willingness and ability to travel to major cities and vacation destinations in which some of our stores are located. In recent fiscal years, the COVID-19 pandemic led to temporary factory closures and production and logistics constraints due to workforce availability, as well as global supply chain challenges such as vessel and container shortages and port congestion.
Factors beyond our control impact mall traffic, including general economic conditions, consumer spending levels, and public health pandemics such as COVID-19. Consumer spending and mall traffic have been depressed in recent years. As a result, mall operators have faced increasing operational and financial difficulties.
Consumer spending and mall traffic have been depressed in recent years. As a result, mall operators have faced increasing operational and financial difficulties.
We plan to open additional Vera Bradley factory outlet stores during fiscal 2024. We will continue to evaluate our plans for store openings in future years in light of demand and store performance.
We will continue to evaluate our plans fo r store openings in future years in light of demand and store performance.
Moreover, the general availability of contract manufacturing allows new entrants easy access to the markets in which we compete, which may increase the number of competitors and adversely affect our competitive position and our business. 18 In addition, in light of a continued difficult consumer environment, pricing is a significant driver of consumer choice in our industry and we regularly engage in price competition, particularly through our promotional programs, which impacts our margins.
Moreover, the general availability of contract manufacturing allows new entrants easy access to the markets in which we compete, which may increase the number of competitors and adversely affect our competitive position and our business.
In addition, we rely on the flow of our goods through worldwide ports on a consistent basis. Disruption at the ports could create significant risks to our business, particularly if the occurrence is during a peak import time.
Disruption at the ports, such as labor work stoppages, could create significant risks to our business, particularly if the occurrence is during a peak import time.
We also may incur costs related to the employees at such stores, whether or not we terminate the leases early. Upon any such closure, the closing costs, including fixed assets and inventory write-downs, could adversely affect our results and could adversely affect our cash on hand.
We also may incur costs related to the employees at such stores, whether or not we terminate the leases early.
The carrying value of the intangible assets as of January 28, 2023, was $15.9 million. When the Company performs future impairment tests, it is possible that the carrying value of the remaining intangible assets could exceed their implied fair value and therefore would require adjustment. Such adjustment would result in a charge to operating income in that period.
During fiscal 2023, we recorded a full impairment of goodwill totaling $44.3 million and an impairment charge for the Pura Vida brand intangible asset of $25.0 million. 21 Table of Contents When the Company performs future impairment tests, it is possible that the carrying value of the remaining intangible assets could exceed their implied fair value and therefore would require adjustment.
In addition, growth could require us to further expand our current facilities, which could affect us adversely in ways that we cannot predict. The cost of raw materials could increase our cost of sales and cause our results of operations to suffer.
In addition, if our distribution facilities are unable to sufficiently meet the capacity needs for the future growth of our business and products, we could be required to further expand our current facilities, which could affect us adversely in ways that we cannot predict.
There is no assurance that we will be able to successfully implement our strategic plan and growth strategies. If we are unsuccessful in implementing some or all of our strategies or initiatives, our future operating results could be adversely impacted.
If we are unsuccessful in implementing some or all of our strategies or initiatives, our future operating results could be adversely impacted. Changes in general economic conditions, and their impact on consumer confidence and consumer spending, could adversely impact our results of operations.
Our ability to attract customers to our stores depends heavily on the success of the shopping centers in which many of our stores are located. Substantially all of our Vera Bradley Direct stores are located in regional mall shopping centers, and many of our Vera Bradley Indirect customers are also located in regional mall shopping centers.
Substantially all of our Vera Bradley Direct stores are located in regional mall shopping centers, and many of our Vera Bradley Indirect customers are also located in regional mall shopping centers. Factors beyond our control impact mall traffic, including general economic conditions, consumer spending levels, and pandemics or other public health matters.
Litigation and other claims against us could result in unexpected expenses and liability, as well as materially adversely affect our operations and our reputation. Our inability or failure to protect our intellectual property or our infringement of other’s intellectual property could have a negative impact on our operating results.
These cases often raise complex factual and legal issues, which are subject to risks and uncertainties and which could divert significant financial and management resources. Litigation and other claims against us could result in unexpected expenses and liability, as well as materially adversely affect our operations and our reputation.
Removed
In our Vera Bradley Indirect business and Pura Vida wholesale business, we compete with numerous manufacturers, importers, and distributors of handbags, accessories, and other products for the limited space available for the display of such products to the consumer.
Added
Project Restoration represents our business strategy to revitalize our consumer, brand, product, and channel components for both Vera Bradley and Pura Vida brands in order to serve our customers, grow our revenues, and increase our profitability. There is no assurance that we will be able to successfully implement our strategic plan and growth strategies.
Removed
We have experienced in the past due to the COVID-19 pandemic, and may experience in the future, significantly reduced traffic, demand, and sales.
Added
Upon any such closure, the closing costs, including fixed assets and inventory write-downs, could adversely affect our results of operations and our cash on hand. 17 Table of Contents Our ability to attract customers to our stores depends heavily on the success of the shopping centers in which many of our stores are located.
Removed
The pandemic has also and may reduce consumers' willingness and ability to travel to major cities and vacation destinations in which some of our stores are located.
Added
In addition, in light of a continued difficult consumer environment, pricing is a significant driver of consumer choice in our industry and we regularly engage in price competition, particularly through our promotional programs, which impacts our margins.
Removed
Historically, competition for talent in these positions has been intense and turnover is generally high, both of which have been amplified by the COVID-19 pandemic.
Added
In addition to the aforementioned events, pandemics or other public health matters could cause disruptions in our distribution operations if we were to temporarily suspend operations, or if we are unable to obtain the staffing levels required to effectively operate the facilities.
Removed
The phaseout of the London Interbank Offered Rate (LIBOR) and transition to the Secured Overnight Financing Rate (SOFR) may adversely affect interest rates. The Financial Conduct Authority (the authority that regulates LIBOR) began to phase out LIBOR by the end of 2021 and announced that it would completely phase out LIBOR by June 30, 2023.
Added
The cost of raw materials could increase our cost of sales and cause our results of operations to suffer.
Removed
SOFR is calculated differently from LIBOR and the differences in their calculations may give rise to uncertainties. The replacement of LIBOR with SOFR may adversely affect 27 interest rates and result in higher borrowing costs. This change could materially and adversely affect our results of operations, cash flows, and liquidity.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table shows the number of Vera Bradley full-line and factory outlet stores we operated in each state as of January 28, 2023: State Total Number of Vera Bradley Full-Line Stores Total Number of Vera Bradley Factory Outlet Stores State Total Number of Vera Bradley Full-Line Stores Total Number of Vera Bradley Factory Outlet Stores Alabama 1 1 Minnesota 1 1 Arizona — 1 Mississippi — 2 Colorado 1 1 Missouri 1 2 Connecticut 1 1 Nebraska — 1 Delaware 1 1 Nevada — 1 Florida 2 9 New Hampshire — 1 Georgia 1 3 New Jersey 3 3 Hawaii 1 1 New York 3 5 Illinois 3 2 North Carolina — 6 Indiana 2 2 Ohio 2 2 Iowa 1 1 Oklahoma 1 1 Kansas 1 1 Pennsylvania 4 6 Kentucky 1 1 South Carolina — 4 Louisiana 1 1 Tennessee 1 2 Maryland 3 1 Texas 9 7 Massachusetts — 1 Virginia 1 3 Michigan 4 2 Wisconsin 1 2 Totals 51 79 Pura Vida.
Biggest changeThe following table shows the number of Vera Bradley full-line and outlet stores we operated in each state as of February 3, 2024: State Total Number of Vera Bradley Full-Line Stores Total Number of Vera Bradley Outlet Stores State Total Number of Vera Bradley Full-Line Stores Total Number of Vera Bradley Outlet Stores Alabama 1 1 Minnesota 1 1 Arizona — 1 Mississippi — 2 Colorado 1 1 Missouri — 2 Connecticut 1 1 Nebraska — 1 Delaware 1 1 Nevada — 1 Florida 2 9 New Hampshire — 1 Georgia 1 4 New Jersey 2 3 Hawaii 1 1 New York 3 5 Illinois 3 2 North Carolina — 6 Indiana 2 2 Ohio 2 2 Iowa 1 1 Oklahoma — 1 Kansas 1 1 Pennsylvania 3 6 Kentucky 1 1 South Carolina — 4 Louisiana 1 1 Tennessee 1 3 Maryland 2 1 Texas 7 7 Massachusetts — 1 Virginia 1 3 Michigan 3 2 Wisconsin 1 2 Totals 43 81 Pura Vida.
Location Primary Use Approximate Square Footage Leased/Owned Roanoke, Indiana Vera Bradley corporate headquarters, design center, and showroom 188,000 Owned Roanoke, Indiana Vera Bradley warehouse and distribution 428,500 Owned New York, New York Vera Bradley office and showroom 3,700 Leased Hong Kong Vera Bradley Asia sourcing office 5,100 Leased Atlanta, Georgia Vera Bradley showroom 5,600 Leased Dallas, Texas Vera Bradley showroom 1,800 Leased La Jolla, California Pura Vida corporate headquarters 7,400 Leased As of January 28, 2023, we also leased 134 Vera Bradley store locations, including a former location, and five Pura Vida store locations in the United States.
Location Primary Use Approximate Square Footage Leased/Owned Roanoke, Indiana Vera Bradley corporate headquarters, design center, and showroom 188,000 Owned Roanoke, Indiana Vera Bradley warehouse and distribution 428,500 Owned New York, New York Vera Bradley office and showroom 3,700 Leased Hong Kong Vera Bradley Asia sourcing office 5,100 Leased Atlanta, Georgia Vera Bradley showroom 5,600 Leased Dallas, Texas Vera Bradley showroom 1,800 Leased La Jolla, California Pura Vida corporate headquarters 7,400 Leased As of February 3, 2024, we also leased 126 Vera Bradley store locations, including a former location, and five Pura Vida store locations in the United States.
The Vera Bradley properties in the above table are used by both the Vera Bradley Direct segment and Vera Bradley Indirect segment, excluding the two standalone showrooms which are used exclusively by the Vera Bradley Indirect segment. The Pura Vida headquarters is used by the Pura Vida segment. 29 Store Locations Vera Bradley .
The Vera Bradley properties in the above table are used by 28 Table of Contents both the Vera Bradley Direct segment and Vera Bradley Indirect segment, excluding the two standalone showrooms which are used exclusively by the Vera Bradley Indirect segment. The Pura Vida headquarters is used by the Pura Vida segment. Store Locations Vera Bradley .
Item 2. Properties The following table sets forth the location, use, and size of our distribution, corporate facilities, and showrooms as of January 28, 2023. The leases on the leased properties expire at various times through 2033, subject to renewal options.
Item 2. Properties The following table sets forth the location, use, and size of our distribution, corporate facilities, and showrooms as of February 3, 2024. The leases on the leased properties expire at various times through 2033, subject to renewal options.
As of January 28, 2023, Pura Vida had five retail store locations. Of the five locations, three were in California, one was in South Carolina, and one was in Arizona. We lease all of our stores. Lease terms for our retail s tores are generally ten y ears with options to renew for varying terms.
As of February 3, 2024, Pura Vida had five retail store locations. Of th e five lo cations, three were in California, one was in South Carolina, and one was in Arizona. We lease all of our stores. Lease terms for our retail s tores are generally ten y ears with options to renew for varying terms.
The Vera Bradley locations include three stores to be opened in fiscal 2024. See below for more information regarding the locations of our open stores as of January 28, 2023. We consider these properties to be in good condition generally and believe that our facilities are adequate for our operations and provide sufficient capacity to meet our anticipated requirements.
See below for more information regarding the locations of our open stores as of February 3, 2024. We consider these properties to be in good condition generally and believe that our facilities are adequate for our operations and provide sufficient capacity to meet our anticipated requirements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Company filed a motion for summary judgement asking the Court to dismiss all claims with prejudice and grant judgment on its counterclaim. On January 4, 2023, the Court granted the Company’s motion for summary judgment dismissing Vesi’s claims and also granted judgment on the Company’s counterclaims against the principals of Vesi for an immaterial amount.
Biggest changeThe Company filed a motion for summary judgement asking the Court to dismiss all claims with prejudice and grant judgment on its counterclaim. On January 4, 2023, the Court granted the Company’s motion for summary judgment dismissing Vesi’s claims and also granted judgment on the Company’s counterclaims against the principals of Vesi for an immaterial amount. Vesi appealed this decision.
Removed
At this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition or results of 30 operations due to the fact that the Company is vigorously defending itself and management believes that the Company has a number of meritorious legal defenses.
Added
On November 9, 2023 the United States Court of Appeals for the Sixth Circuit issued an opinion 29 Table of Contents affirming the District Court’s judgment in favor of the Company dismissing Vesi’s claims and granting the Company’s counterclaims.
Removed
Item 4. Mine Safety Disclosure Not Applicable 31 PART II
Added
The Company is subject to other legal proceedings from time to time in the ordinary course of business but does not believe any of these such claims would have a material adverse impact on the Company at this time. Item 4. Mine Safety Disclosure Not Applicable 30 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosure 31 PART II. 32 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 32 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 47 Item 8. Financial Statements and Supplementary Data 48
Biggest changeItem 4. Mine Safety Disclosure 30 PART II. 31 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 45 Item 8. Financial Statements and Supplementary Data 46

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDetails regarding the activity under the 2021 Share Repurchase Program during the thirteen weeks ended January 28, 2023 are as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs October 30, 2022 - November 26, 2022 66,500 $ 3.43 66,500 $ 28,285,779 November 27, 2022 - December 31, 2022 77,720 4.24 77,720 27,956,135 January 1, 2023 - January 28, 2023 42,600 5.31 42,600 27,729,991 186,820 $ 4.20 186,820 Dividends Our common stock began trading on October 21, 2010, following our initial public offering.
Biggest changeDetails regarding the activity under the 2021 Share Repurchase Program during the fourteen weeks ended February 3, 2024 are as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs October 29, 2023 - November 25, 2023 11,427 $ 7.38 11,427 $ 25,745,349 November 26, 2023 - December 30, 2023 14,300 7.40 14,300 25,639,477 December 31, 2023 - February 3, 2024 13,700 7.39 13,700 25,538,298 39,427 $ 7.39 39,427 Dividends Our common stock began trading on October 21, 2010, following our initial public offering.
This graph assumes an initial investment of $100 on February 3, 2018, in our common stock, the S&P 500 Index, and the S&P 500 Apparel, Accessories, and Luxury Goods Index and assumes the reinvestment of dividends, if any. The comparisons shown in the graph below are based on historical data.
This graph assumes an initial investment of $100 on February 2, 2019, in our common stock, the S&P 500 Index, and the S&P 500 Apparel, Accessories, and Luxury Goods Index and assumes the reinvestment of dividends, if any. The comparisons shown in the graph below are based on historical data.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the NASDAQ Global Select Market under the symbol “VRA”. As of March 27, 2023, we had approximately 25 registered sh areholders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the NASDAQ Global Select M arket under the symbol “VRA”. As of March 29, 2024, we had ap proximately 27 registered sh areholders of record.
The payment of dividends is evaluated on a periodic basis. 32 Stock Performance Graph The graph set forth below compares the cumulative shareholder return on our common stock between February 3, 2018, and January 28, 2023, to the cumulative return of (i) the S&P 500 Index and (ii) the S&P 500 Apparel, Accessories, and Luxury Goods Index over the same period.
The payment of dividends is evaluated on a periodic basis. 31 Table of Contents Stock Performance Graph The graph set forth below com pares the cumulative shareholder return on our common stock between February 2, 2019, and February 3, 2024, to the cumulative return of (i) the S&P 500 Index and (ii) the S&P 500 Apparel, Accessories, and Luxury Goods Index over the same period.
Unregistered Sales of Equity Securities and Use of Proceeds The following table details activity under the 2021 Share Repurchase Program during the thirteen weeks ended January 28, 2023.
Unregistered Sales of Equity Securities and Use of Proceeds The following table details activity under the 2021 Share Repurchase Program during the fourteen weeks ended February 3, 2024.
Company/Market/Peer Group 2/3/2018 2/2/2019 2/1/2020 1/30/2021 1/29/2022 1/28/2023 Vera Bradley, Inc. $ 100.00 $ 94.96 $ 102.68 $ 90.57 $ 84.78 $ 59.48 S&P 500 Index $ 100.00 $ 99.94 $ 121.49 $ 142.45 $ 172.36 $ 160.94 S&P 500 Apparel, Accessories, and Luxury Goods Index $ 100.00 $ 93.20 $ 85.87 $ 83.98 $ 82.72 $ 60.32 33
Company/Market/Peer Group 2/2/2019 2/1/2020 1/30/2021 1/29/2022 1/28/2023 2/3/2024 Vera Bradley, Inc. $ 100.00 $ 108.13 $ 95.37 $ 89.28 $ 62.63 $ 88.47 S&P 500 Index $ 100.00 $ 121.56 $ 142.53 $ 172.46 $ 161.03 $ 199.42 S&P 500 Apparel, Accessories, and Luxury Goods Index $ 100.00 $ 92.13 $ 90.11 $ 88.75 $ 64.72 $ 52.88 32 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest change(11.9) % 3.3 % 1.9 % 38 The following tables present net revenues by operating segment, both in dollars and as a percentage of our net revenues, and Vera Bradley full-line and factory outlet store data for the last three fiscal years: Fiscal Year Ended (1) ($ in thousands, except as otherwise indicated) January 28, 2023 January 29, 2022 January 30, 2021 Net Revenues by Segment: VB Direct $ 328,231 $ 354,875 $ 289,274 VB Indirect 73,316 66,001 66,517 Pura Vida 98,414 119,577 112,481 Total $ 499,961 $ 540,453 $ 468,272 Percentage of Net Revenues by Segment: VB Direct 65.6 % 65.7 % 61.8 % VB Indirect 14.7 % 12.2 % 14.2 % Pura Vida 19.7 % 22.1 % 24.0 % Total 100.0 % 100.0 % 100.0 % Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Vera Bradley Store Data (4) : Total stores opened during period 5 6 6 Total stores closed during period (20) (5) (13) Total stores open at end of period 130 145 144 Comparable sales (including e-commerce) decrease (5) (9.5) % NM NM Total gross square footage at end of period 381,664 397,037 380,100 Average net revenues per gross square foot (6) $ 555 $ 633 NM (1) The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to January 31.
Biggest changeFiscal Year Ended (1) ($ in thousands) February 3, 2024 January 28, 2023 January 29, 2022 Statement of Income (Loss) Data: Net revenues $ 470,786 $ 499,961 $ 540,453 Cost of sales 214,373 261,017 252,510 Gross profit 256,413 238,944 287,943 Selling, general, and administrative expenses (2) 241,457 265,016 261,993 Impairment of goodwill and intangible assets 5,429 69,256 — Other income, net 915 457 961 Operating income (loss) 10,442 (94,871) 26,911 Interest income (expense), net 890 (153) (263) Income (loss) before income taxes 11,332 (95,024) 26,648 Income tax expense (benefit) 3,494 (15,640) 6,430 Net income (loss) 7,838 (79,384) 20,218 Less: Net (loss) income attributable to redeemable noncontrolling interest — (19,649) 2,380 Net income (loss) attributable to Vera Bradley, Inc. $ 7,838 $ (59,735) $ 17,838 Percentage of Net Revenues: Net revenues 100.0 % 100.0 % 100.0 % Cost of sales 45.5 % 52.2 % 46.7 % Gross profit 54.5 % 47.8 % 53.3 % Selling, general, and administrative expenses 51.3 % 53.0 % 48.5 % Impairment of goodwill and intangible assets 1.2 % 13.9 % — % Other income, net 0.2 % 0.1 % 0.2 % Operating income (loss) 2.2 % (19.0) % 5.0 % Interest income (expense), net 0.2 % — % — % Income (loss) before income taxes 2.4 % (19.0) % 4.9 % Income tax expense (benefit) 0.7 % (3.1) % 1.2 % Net income (loss) 1.7 % (15.9) % 3.7 % Less: Net (loss) income attributable to redeemable noncontrolling interest — % (3.9) % 0.4 % Net income (loss) attributable to Vera Bradley, Inc. 1.7 % (11.9) % 3.3 % 37 Table of Contents The following tables present net revenues by operating segment, both in dollars and as a percentage of our net revenues, and Vera Bradley full-line and outlet store data for the last three fiscal years: Fiscal Year Ended (1) ($ in thousands, except as otherwise indicated) February 3, 2024 January 28, 2023 January 29, 2022 Net Revenues by Segment: VB Direct $ 309,910 $ 328,231 $ 354,875 VB Indirect 73,803 73,316 66,001 Pura Vida 87,073 98,414 119,577 Total $ 470,786 $ 499,961 $ 540,453 Percentage of Net Revenues by Segment: VB Direct 65.8 % 65.6 % 65.7 % VB Indirect 15.7 % 14.7 % 12.2 % Pura Vida 18.5 % 19.7 % 22.1 % Total 100.0 % 100.0 % 100.0 % Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Vera Bradley Store Data (3) : Total stores opened during period 3 5 6 Total stores closed during period (9) (20) (5) Total stores open at end of period 124 130 145 Comparable sales (including e-commerce) decrease (4) (7.1) % (9.5) % NM Total gross square footage at end of period 375,198 381,664 397,037 Average net revenues per gross square foot (5) $ 518 $ 555 $ 633 (1) The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to January 31.
We believe that cash on hand and cash equivalents, cash flows from operating activities, and the availability of borrowings under our Credit Agreement or other financing arrangements will be sufficient to meet working capital requirements and anticipated capital expenditures, and other strategic uses of cash, if any, for the foreseeable future.
We believe that cash and cash equivalents, cash flows from operating activities, and the availability of borrowings under our Credit Agreement or other financing arrangements will be sufficient to meet working capital requirements and anticipated capital expenditures, and other strategic uses of cash, if any, for the foreseeable future.
Administrative expenses include employee compensation for corporate functions, corporate headquarters occupancy costs, consulting and software expenses, and charitable donations, as well as severance charges and consulting fees associated with cost savings initiatives and the CEO search disclosed in Note 16 to the Notes to the Consolidated Financial Statements herein.
Administrative expenses include employee compensation for corporate functions, corporate headquarters occupancy costs, consulting and software expenses, and charitable donations, as well as severance charges and consulting fees associated with cost savings initiatives disclosed in Note 16 to the Notes to the Consolidated Financial Statements herein.
Revenues for the VB Indirect segment reflect sales of Vera Bradley-branded products to specialty retail partners; department stores; national accounts; third-party e-commerce sites; third-party inventory liquidators; and royalties recognized through licensing agreements related to the Vera Bradley brand.
Revenues for the VB Indirect segment reflect sales of Vera Bradley-branded products to specialty retail partners; department stores; national accounts; third-party e-commerce sites; and third-party inventory liquidators, as well as royalties recognized through licensing agreements related to the Vera Bradley brand.
We have also been impacted by higher tariffs from previously duty-free countries, where we source products, as a result of the expiration of the Generalized System of Preferences (“GSP”) duty-free status at the end of calendar year 2020.
We have been specifically impacted by higher tariffs from previously duty-free countries, where we source products, as a result of the expiration of the Generalized System of Preferences (“GSP”) duty-free status at the end of calendar year 2020.
We implemented strategic price increases across both of our brands to mitigate some of these inflationary and supply chain pressures in late fiscal 2022 and early fiscal 2023. We will continue to monitor our pricing as it relates to the current macroeconomic trends.
To mitigate some of these inflationary and supply chain pressures, we implemented strategic price increases across both of our brands in late fiscal 2022 through fiscal 2024. We will continue to monitor our pricing as it relates to the current macroeconomic trends.
Impairment charges of $1.4 million, $0.1 million, and $7.4 million were recognized in the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively, for property, plant, and equipment assets and lease right-of-use assets related to underperforming stores and a corporate right-of-use asset and are included in SG&A expenses in the Consolidated Statements of Operations and in impairment charges in the Consolidated Statements of Cash Flows.
Impairment charges of $1.4 million and $0.1 million w ere recognized in the fiscal years ended January 28, 2023 and January 29, 2022, respectively, for property, plant, and equipment assets and lease right-of-use assets related to underperforming stores and a corporate right-of-use asset and are included in SG&A expenses in the Consolidated Statements of Operations and in impairment charges in the Consolidated Statements of Cash Flows.
Some of our competitors and other retailers calculate comparable or “same store” sales differently than we do. As a result, data in this report regarding our comparable sales and comparable store sales may not be comparable to similar data made available by other companies.
Some of our competitors and other retailers calculate comparable or “same store” sales differently than we do. As a result, data in this report regarding our comparable sales and comparable store sales may not be comparable to similar data made available by other companies. Non-comparable sales include sales from stores not included in comparable sales or comparable store sales.
We have experienced significantly lower sales from our Pura Vida e-commerce channel due to a decline in social and digital media effectiveness, as well as lower wholesale sales. These lower sales volumes had a negative impact on the fair value determination of the aforementioned assets.
We have experienced significantly lower sales from our Pura Vida e-commerce channel due to a decline in social and digital media effectiveness, as well as lower wholesale sales. These lower sales volumes had a negative impact on the fair value determination of intangible assets in fiscal years 2024 and 2023.
Cost is determined using the first-in, first-out (“FIFO”) method. Appropriate consideration is given to obsolescence, excess quantities, and other factors, including the popularity of a pattern or product, in evaluating net realizable value.
Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (“FIFO”) method. Appropriate consideration is given to obsolescence, excess quantities, and other factors, including the popularity of a pattern or product, in evaluating net realizable value.
Impairment charges are classified in SG&A expenses and were $1.4 million, $0.1 million, and $7.4 million for the periods ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively. The discounted cash flow models used to estimate the applicable fair values involve numerous estimates and assumptions that are highly subjective.
Impairment charges are classified in SG&A expenses and were $1.4 million, and $0.1 million for the periods ended January 28, 2023, and January 29, 2022, respectively. No impairment charges were recorded in fiscal 2024. The discounted cash flow models used to estimate the applicable fair values involve numerous estimates and assumptions that are highly subjective.
Various factors affect our comparable sales, including: • Overall economic trends; • Consumer preferences and fashion trends; • Competition; • The timing of our releases of new patterns and collections; • Changes in our product mix; • Pricing and level of promotions; • Amount of store, mall, and e-commerce traffic; • The level of customer service that we provide in stores and to our on-line customers; • Our ability to source and distribute products efficiently; • The number of stores we open and close in any period; and • The timing and success of promotional and marketing efforts.
Various factors affect our comparable sales, including: • Overall economic trends; • Consumer preferences and fashion trends; • Competition; • The timing of our releases of new patterns and collections; • The timing of holidays; • Changes in our product mix; • Pricing and level of promotions; • Amount of store, mall, and e-commerce traffic; • The level of customer service that we provide in stores and to our on-line customers; • Our ability to source and distribute products efficiently; • The number of stores we open and close in any period; and • The timing and success of promotional and marketing efforts. 34 Table of Contents Gross Profit Gross profit is equal to our net revenues less our cost of sales.
Non-comparable sales include sales from stores not included in comparable sales or comparable store sales. 35 As a result of the temporary closure of all Vera Bradley stores due to COVID-19 during portions of the first and second quarters of fiscal 2021, the Company's fiscal 2022 and fiscal 2021 comparable store sales and comparable sales calculations are not meaningful and therefore are not provided.
As a result of the temporary closure of all Vera Bradley stores due to COVID-19 during portions of the first and second quarters of fiscal 2021, the Company's fiscal 2022 comparable store sales and comparable sales calculations are not meaningful and therefore are not provided.
Impairment of Goodwill and Intangible Assets Fiscal 2023 included a $69.3 million charge for impairment of goodwill and intangible assets related to Pura Vida goodwill and the indefinite-lived Pura Vida brand asset, which is reflected within the Pura Vida segment. For additional information, refer to Goodwill and Other Intangible Assets herein.
A $69.3 million impairment charge of goodwill and intangible assets related to Pura Vida goodwill and the indefinite-lived Pura Vida brand intangible asset was recorded in fiscal 2023 within the Pura Vida segment. For additional information, refer to Goodwill and Other Intangible Assets herein.
In addition, the macroeconomic environment has been further challenged by inflationary pressures, including high gas prices, and other related factors that have impacted consumer discretionary spending, primarily customers with lower household incomes. We have also seen a trend of increasing digital media costs.
In addition, the macroeconomic environment has been further challenged by inflationary pressures, including high gas prices, interest rates, and other related factors that have impacted consumer discretionary spending. We have also seen a trend of steeply increasing digital media costs.
Fiscal 2022 Compared to Fiscal 2021 Refer to the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2022, for a comparison of fiscal 2022 to fiscal 2021 operating results. Liquidity and Capital Resources General Our primary sources of liquidity are cash on hand and cash equivalents, investments, and cash flow from operations.
Fiscal 2023 Compared to Fiscal 2022 Refer to the Company's Annual Report on Form 10-K filed wit h the SEC on March 28, 2023, for a comparison of fiscal 2023 to fiscal 2022 operating results. Liquidity and Capital Resources General Our primary sources of liquidity are cash and cash equivalents and cash flow from operations.
We also continued the implementation of our targeted cost reductions, which are expected to be fully realized in fiscal 2024. Expense savings are being derived across various areas of the Company, including retail store efficiencies, marketing expenses, information technology contracts, professional services, logistics and operational costs, and corporate payroll.
Cost Savings Initiatives and Other Charges During fiscal 2024, the Company continued the implementation of targeted cost reductions, which are expected to be fully realized in fiscal 2025. Expense savings are being derived across various areas of the Company, including retail store efficiencies, marketing expenses, inf ormation technology contracts, professional services, logistics and operational costs, and corporate payroll.
For fiscal 2023, net loss attributable to Vera Bradley, Inc. increased $77.5 million to $(59.7) million from net income attributable to Vera Bradley, Inc. of $17.8 million in fiscal 2022 due to the factors described in the captions above.
For fiscal 2024, net income attributable to Vera Bradle y, Inc. increased $67.5 million to $7.8 million from net loss attributable to Vera Bradley, Inc. of $(59.7) million in fiscal 2023 due to the factors described in the captions above.
Our historical results for the periods presented in the consolidated financial statements, however, have not been materially impacted by such variances. More information on all of our significant accounting policies can be found in Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements. Inventories Inventories are stated at the lower of cost or net realizable value.
Our historical results for the periods presented in the consolidated financial statements, however, have not been materially impacted by such variances. More information on all of our significant accounting policies can be found in Note 2, “Summary of Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements.
As a result of Vera Bradley retail stores being temporarily closed for approximately half of the first and second quarters of fiscal 2021, comparable sales were not meaningful and were therefore not provided for fiscal years 2022 and 2021. (6) Dollars not in thousands.
As a result of Vera Bradley retail stores being temporarily closed for approximately half of the first and second quarters of fiscal 2021, comparable sales were not meaningful and were therefore not provided for fiscal year 2022. Calculation excludes sales for the fifty-third week in fiscal 2024. (5) Dollars not in thousands.
Impairment charges of $0.6 million were recorded within corporate unallocated during fiscal 2023. The remaining impairment charges were included in the VB Direct segment.
Impairment char ges of $0.6 million were re corded within corporate unallocated during fiscal 2023. The remaining impairment charges were included in the VB Direct segment. No such impairment charges were recorded in fiscal 2024.
We evaluate our accounting policies, estimates, and judgments on an on-going basis. We base our estimates and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions.
We evaluate our accounting policies, estimates, and judgments on an on-going basis. We base our estimates and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances.
These and other estimates and assumptions are impacted by economic conditions and our expectations and may change in the future based on period-specific facts and circumstances. If economic conditions were to deteriorate, future impairment charges may be required.
These and other estimates and assumptions are impacted by economic conditions and our expectations and may change in the future based on period-specific facts and circumstances.
Cash Flow Analysis A summary of operating, investing, and financing activities is shown in the following table (in thousands): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Net cash (used in) provided by operating activities $ (13,421) $ 39,861 $ 20,702 Net cash (used in) provided by investing activities (8,239) (4,154) 17,680 Net cash used in financing activities (20,105) (11,413) (24,146) 42 Net Cash (Used in) Provided by Operating Activities Net cash (used in) provided by operating activities consists primarily of net (loss) income adjusted for non-cash items, including depreciation, amortization, impairment charges, deferred taxes, and stock-based compensation; and the effect of changes in assets and liabilities.
Cash Flow Analysis A summary of operating, investing, and financing activities is shown in the following table (in thousands): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Net cash provided by (used in) operating activities $ 47,993 $ (13,421) $ 39,861 Net cash used in investing activities (13,770) (8,239) (4,154) Net cash used in financing activities (3,548) (20,105) (11,413) Net Ca sh Provided by (Used in) Opera ting Activities Net cash provided by (used in) operating activities consists primarily of net income (loss) adjusted for non-cash ite ms, including depreciation, amortization, impairment charges, deferred taxes, and stock-based compensation; and the effect of changes in assets and liabilities.
We evaluate the development and selection of our critical accounting policies and estimates and believe that the following policies and estimates involve a higher degree of judgment or complexity and are most significant to reporting our results of operations and financial position, and are therefore discussed as critical.
Actual results may differ from these estimates under different assumptions and conditions. 42 Table of Contents We evaluate the development and selection of our critical accounting policies and estimates and believe that the following policies and estimates involve a higher degree of judgment or complexity and are most significant to reporting our results of operations and financial position, and are therefore discussed as critical.
Remodeled stores are included in average net revenues per gross square foot unless the store was closed for a portion of the period.
Remodeled stores are included in average net revenues per gross square foot unless the store was closed for a portion of the period. Calculation excludes sales for the fifty-third week in fiscal 2024.
The estimated fair value of the Pura Vida brand is subject to change as a result of many factors including changing economic conditions. Should actual cash flows and our future estimates deteriorate from the estimates we used, impairment charges for the Pura Vida brand asset may be necessary in future years. 46
The estimated fair value of the Pura Vida brand is subject to change as a result of many factors, including changing economic conditions. Should actual and estimated cash flows change from the estimates we used in our fiscal 2024 impairment analysis, we may record additional impairment charges in future years. 44 Table of Contents
Income Tax (Benefit) Expense For fiscal 2023, we recorded an income tax benefit of $15.6 million at an effective tax rate of 16.5%, compared to income tax expense of $6.4 million at an effective tax rate of 24.1% for fiscal 2022.
Income Tax Expense (Benefit) For fiscal 2024, we recorded income tax expense of $3.5 million at an effective tax rate of 30.8%, compared to income tax benefit of $15.6 million at an effective tax rate of 16.5% for fiscal 2023.
This comparable sales decrease was partially offset by sales from 39 our stores with non-comparable periods, including our five factory outlet stores that opened in the current fiscal year, which contributed $6.5 million of revenue. The decrease in comparable sales and comparable store sales was impacted by reduced traffic, conversion, and units sold primarily in the factory outlet channel.
This comparable sales decrease was partially offset by sales from our stores with non-comparable periods, including three outlet stores that opened in the current fiscal year and the return of the Annual Outlet Sale. The decrease in comparable sales and comparable store sales was impacted by reduced traffic, conversion, and units sold primarily in the outlet channel.
The increase in the balance was primarily related to adjustments for excess Pura Vida inventory and excess mask inventory, the exit of certain technology products, and valuation adjustments to write discounted inventory down to its net realizable value.
The decrease in the balance was primarily related to the destruction of reserved product and the sell through of reserved inventory in fiscal 2024. The fiscal 2023 balance included adjustments for excess Pura Vida inventory and excess mask inventory, the exit of certain technology products, and valuation adjustments to write discounted inventory down to its net realizable value.
We also have access to additional liquidity, if needed, through borrowings under our $75.0 million asset-based revolving credit agreement (the “Credit Agreement”) which was entered into on September 7, 2018. There was no debt outstanding under the Credit Agreement as of January 28, 2023.
We also have access to additional liquidity, if needed, through borrowings under our $75.0 million asset-based revolving credit agreement (the “Credit Agreement”). There was no debt outstanding under the Credit Agreement as of February 3, 2024.
These decisions were made in order to right-size our leadership team and cost structure for the size of our business, to address the continuing challenging macroeconomic environment, and to best position us to achieve our long-term strategic plans.
We continued to strengthen and streamline our organizational structure and right-size our leadership team and cost structure for the size of our business, to address the continuing challenging macroeconomic environment and to best position us to achieve our long-term strategic plans.
The estimates and assumptions used in the determination of the fair value of the Pura Vida brand include the projected revenue growth, long-term growth rate, the royalty rate, and discount rate. 45 As of January 28, 2023, the carrying value of the Pura Vida brand was $11.7 million.
The estimates and assumptions used in the determination of the fair value of the Pura Vida brand include the projected revenue growth, long-term growth rate, the royalty rate, and discount rate. As of February 3, 2024, the carrying value of the Pura Vida brand was $6.2 million.
We test the Pura Vida brand for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. Our annual impairment test may be completed through a qualitative assessment to determine if the fair value of the Pura Vida brand is more likely than not greater than the carrying amount.
Our annual intangible asset impairment test may be completed through a qualitative assessment to determine if the fair value of the Pura Vida brand is more likely than not greater than the carrying amount.
See “Forward-Looking Statements.” These forward-looking statements are subject to numerous risks and uncertainties, including those described under “Risk Factors.” Our actual results could differ materially from those suggested or implied by any forward-looking statements. Macroeconomic Environment We continue to experience challenges associated with the unpredictable macroeconomic environment in which we operate our businesses.
See “Forward-Looking Statements.” These forward-looking statements are subject to numerous risks and uncertainties, including those described under “Risk Factors.” Our actual results could differ materially from those suggested or implied by any forward-looking statements.
SG&A expenses related to Vera Bradley and corporate unallocated were $211.6 million compared to $205.8 million in the comparable prior-year period. SG&A expenses related to Pura Vida were $53.4 million compared to $56.2 million in the comparable prior-year period.
SG&A expenses related to Vera Bradley and corporate unallocated w ere $192.1 million compared to $211.6 million i n the comparable prior-year period. SG&A expenses related to Pura Vida were $49.4 million compared to $53.4 million in the comparable prior-year period.
We perform physical inventory counts throughout the year and adjust the shrinkage provision accordingly. The balance of inventory adjustments was $16.5 million and $0.6 million for these matters as of the fiscal years ended January 28, 2023, and January 29, 2022, respectively.
We perform physical inventory counts throughout the year and adjust the shrinkage provision accordingly. The balance of inventory adjustments wa s $8.1 million an d $16.5 million for these matters as of the fiscal years ended February 3, 2024, and January 28, 2023, respectively.
Material Cash Requirements Our material cash requirements from known contractual and other obligations include the following: • The $10.0 million purchase of the remaining Pura Vida Interests paid subsequent to fiscal 2023 as further described in Note 2 to the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report; 43 • Approximately $3.1 million of severance liability associated with cost savings initiatives further described in Note 16 to the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report; • Operating lease obligations as disclosed further in Note 4 to the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report; • Purchase order commitments primarily related to inventory purchases; • Salaries, cash incentives, benefits, and other employee-related costs; • Planned capital expenditures; • Income tax payments; and • Other supply and service agreements entered into as part of our normal operations.
Material Cash Requirements Our material cash requirements from known contractual and other obligations include the following: • Operating lease obligations as disclosed further in Note 4 to the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report; • Purchase order commitments primarily related to inventory purchases; • Salaries, cash incentives, benefits, and other employee-related costs; • Commitments for capital expenditures; • Income tax payments; and • Other supply and service agreements entered into as part of our normal operations.
The increase in cash used in financing activities was primarily due to $18.1 million of common stock repurchases in the current-year period compared to $7.7 million in the comparable prior-year period. Refer to the Company's Annual Report on Form 10-K filed with the SEC on March 29, 2022, for a comparison of fiscal 2022 to fiscal 2021 cash flow activity.
The decrease in cash used in financing activities was primarily due to a decrease in repurchases of common stock of $15.9 million. Refer to the Company's Annual Report on Form 10-K filed with the SEC on March 28, 2023, for a comparison of fiscal 2023 to fiscal 2022 cash flow activity.
Gross Profit Gross profit is equal to our net revenues less our cost of sales. Cost of sales includes the direct cost of purchased merchandise, distribution center costs, operations overhead, duty, all inbound freight costs incurred, and inventory adjustments including adjustments described in Note 16 to the Notes to the Consolidated Financial Statements herein.
Cost of sales includes the direct cost of purchased merchandise, distribution center costs, operations overhead, duty, all inbound freight costs incurred, and inventory adjustments including adjustments described in Note 16 to the Notes to the Consolidated Financial Statements herein. The components of our reported cost of sales may not be comparable to those of other retail and wholesale companies.
For further information regarding the Credit Agreement, please see Note 6 of the Notes to Consolidated Financial Statements set forth in Part II, “Item 8. Financial Statements and Supplementary Data,” of this report.
The Credit Agreement also contains an option for VBD to arrange with lenders to increase the aggregate principal amount by up to $50.0 million. For further information regarding the Credit Agreement, please see Note 6 of the Notes to Consolidated Financial Statements set forth in Part II, “Item 8. Financial Statements and Supplementary Data,” of this report.
Pura Vida. For fiscal 2023, operating loss increased $88.1 million. As a percentage of Pura Vida segment net revenues, operating (loss) income in the Pura Vida segment was (79.9)% and 8.0% for fiscals 2023 and 2022, respectively.
As a percentage of Pura Vida segment net revenues, operating loss in the Pura Vida segment was (2.7)% and (79.9)% for fiscals 2024 and 2023, respectively.
We are unable to predict the extent of the impact that the inflationary environment, or other macroeconomic factors, will have on our operations, the economy, or other factors; therefore, it is possible additional impairments could be identified in future periods, and such amounts could be material. 37 Cost Savings Initiatives and Other Charges During fiscal 2023, the Company began implementation of its targeted cost reductions, which are expected to be fully realized in fiscal 2024.
We are unable to predict the extent of the impact that the inflationary 35 Table of Contents environment, or other macroeconomic factors, will have on our operations, the economy, or other factors; therefore, it is possible additional impairments could be identified in future periods, and such amounts could be material.
Selling, G eneral, and Administrative Expenses (“SG&A”) For fiscal 2023, SG&A expenses increased $3.0 million, or 1.2%, to $265.0 million, from $262.0 million for fiscal 2022. As a percentage of net revenues, SG&A expenses were 53.0% and 48.5% for fiscal 2023 and fiscal 2022, respectively.
Selling, G eneral, and Administrative Expenses (“SG&A”) For fiscal 2024, SG&A expenses decreased $23.5 million, or 8.9%, to $241.5 million, from $265.0 million for fi scal 2023. As a percentage of net revenues, SG&A expenses were 51.3% and 53.0% for fiscal 2024 an d fiscal 2023, respectively.
Results of Operations The following tables summarize key components of our consolidated results of operations for the last three fiscal years, both in dollars and as a percentage of our net revenues.
Ongoing macroeconomic pressures could have a material adverse effect on our liquidity, operating results, and financial condition. 36 Table of Contents Results of Operations The following tables summarize key components of our consolidated results of operations for the last three fiscal years, both in dollars and as a percentage of our net revenues.
For fiscal 2023, operating income decreased $22.4 million, or 30.5%. As a percentage of VB Direct segment net revenues, operating income in the VB Direct segment was 15.6% and 20.7% for fiscals 2023 and 2022, respectively.
For fiscal 2024, operating inc ome increased $10.8 million, or 21.1%. As a percentage of VB Direct segment net revenues, operating income in the VB Direct segment was 20.0% and 15.6% for fiscals 2024 and 2023, respectively.
For fiscal 2023, net revenues decreased $21.2 million, or 17.7%, to $98.4 million, from $119.6 million for fiscal 2022. The decrease was primarily due to a decline of $16.2 million in e-commerce sales due to a decline in social and digital media effectiveness and lower marketing spending, as well as a decline of $7.0 million in wholesale orders.
For fiscal 2024, net revenues decreased $11.3 million, or 11.5%, to $87.1 million, from $98.4 million for fiscal 2023. The decrease was primarily due to a decline of $10.4 million in e-commerce sales due to a continued decline in social and digital media effectiveness, as well as a decline of $3.5 million in wholesale sales.
Borrowings under the credit facilities are available to finance general corporate purposes of VBD and its subsidiaries, including but not limited to Vera Bradley International, LLC and Vera Bradley Sales, LLC (collectively, the “Named Subsidiaries”). The Credit Agreement also contains an option for VBD to arrange with lenders to increase the aggregate principal amount by up to $25.0 million.
Borrowings under the credit facilities are available to finance general corporate purposes of VBD and its subsidiaries, including but not limited to Vera Bradley International, LLC, Vera Bradley Sales, LLC, and Creative Genius, LLC (collectively, the “Named Subsidiaries”).
Net (Loss) Income Attributable to Redeemable Noncontrolling Interest For fiscal 2023, net loss attributable to redeemable noncontrolling interest was $(19.6) million compared to net income attributable to redeemable noncontrolling interest of $2.4 million in the prior-year period. This represents the allocation of the Pura Vida net (loss) income to the noncontrolling interest.
Net Loss Attributable to Redeemable Noncontrolling Interest For fiscal 2023, net loss attributable to redeemable noncontrolling interest was $(19.6) million. This represents the allocation of the Pura Vida net (loss) income to the noncontrolling interest. On January 30, 2023, we purchased the remaining 25% interest in Pura Vida resulting in 100% ownership.
There were no sales from our Vera Bradley annual outlet sale in Fort Wayne, Indiana for the past three years as it was cancelled due to the COVID-19 pandemic.
Revenues for the VB Direct segment reflect sales through Vera Bradley full-line and outlet stores and the Vera Bradley websites (verabradley.com, international.verabradley.com, and outlet.verabradley.com). There were no sales from our Vera Bradley annual outlet sale in Fort Wayne, Indiana for fiscal years 2022 and 2023 as it was cancelled due to the COVID-19 pandemic.
Capital expenditures for fiscal 2024 are expected to be approximately $5.0 million related to planned investments associated with new Vera Bradley factory store locations and technology and logistics enhancements. Net Cash Used in Financing Activities Net cash used in financing activities was $20.1 million in fiscal 2023 compared to $11.4 million in fiscal 2022.
Capital expenditures for fiscal 2025 are expected to be approximately $12 million to $14 million, related to planned investments associated with new and remodeled stores and technology and logistics enhancements. Net Cash Used in Financing Activities Net cash used in financing activities w as $3.5 million in fi scal 2024 comp ared to $20.1 million in fiscal 2023.
(3) Includes a $2.8 million tax benefit related to the net operating loss carryback provisions of the CARES Act in fiscal 2021. (4) Includes Vera Bradley full-line and factory outlet stores. (5) Comparable sales are calculated based upon stores that have been open for at least 12 full fiscal months and net revenues from e-commerce operations.
There were no store impairment charges in fiscal 2024. (3) Includes Vera Bradley full-line and outlet stores. (4) Comparable sales are calculated based upon stores that have been open for at least 12 full fiscal months and net revenues from e-commerce operations.
The increase in operating loss as a percentage of Pura Vida net revenues was primarily due to goodwill and indefinite-lived Pura Vida brand impairment charges in the current-year period of $44.3 million and $25.0 million, respectively.
The decrease in operating loss was primarily due to goodwill and indefinite-lived Pura Vida brand impairment charges in fiscal 2023 of $44.3 million and $25.0 million, respectively, compared to Pura Vida brand impairment charges of $5.4 million in fiscal 2024; a decrease in marketing and advertising expenses; a decrease in employee-related expenses due to headcount reductions and cost savings initiatives; and an increase in gross margin as a percentage of net revenues as described above.
The components of our reported cost of sales may not be comparable to those of other retail and wholesale companies. Gross profit can be impacted by changes in volume; fluctuations in sales price; operational efficiencies, such as leveraging of fixed costs; promotional activities, including free shipping; commodity prices, such as for cotton; tariffs; and labor costs.
Gross profit can be impacted by changes in volume; fluctuations in sales price; operational efficiencies, such as leveraging of fixed costs; promotional activities, including free shipping; commodity prices, such as for cotton; tariffs; and labor costs. Selling, General, and Administrative Expenses (“SG&A”) SG&A expenses include selling; advertising, marketing, and product development; and administrative expenses.
For the annual impairment analysis performed during fiscal 2023, we performed a quantitative analysis. Consistent with the goodwill analysis, we performed subsequent impairment tests during the third and fourth quarters of fiscal 2023 due to the aforementioned triggering events. We recorded $25.0 million in impairment charges for the Pura Vida brand during fiscal 2023.
For the annual impairment analysis performed during fiscal 2023, the Company performed a quantitative analysis, as well as subsequent analyses due to triggering events, further described in Note 15 to the Notes to the Consolidated Financial Statements herein. Impairment charges of $44.3 million and $25.0 million were recorded during fiscal 2023 for goodwill and the Pura Vida brand, respectively.
Operating (Loss) Income For fiscal 2023, operating loss increased $121.8 million, or 452.5%, to $(94.9) million from operating income of $26.9 million for fiscal 2022. As a percentage of net revenues, operating (loss) income was (19.0)% and 5.0% for fiscal 2023 and fiscal 2022, respectively. Operating loss increased due to the factors described above.
Operatin g Income (Loss) For fiscal 2024, operating inco me increased $105.3 million, or 111.0%, to $10.4 million from an operating loss of $(94.9) million for fiscal 2023. As a percentage of net revenues, operatin g income (loss) was 2.2% and (19.0)% f or fiscal 2024 and fiscal 2023, respectively.
Fiscal 2023 Compared to Fiscal 2022 Net Revenues For fiscal 2023, net revenues decreased $40.5 million, or 7.5%, to $500.0 million, from $540.5 million for fiscal 2022. VB Direct. For fiscal 2023, net revenues decreased $26.7 million, or 7.5%, to $328.2 million, from $354.9 million for fiscal 2022.
Fiscal 2024 Compared to Fiscal 2023 Net Revenues For fiscal 2024, net reve nues decreased $29.2 million, or 5.8%, to $470.8 million, from $500.0 million for fiscal 2023. VB Direct. For fiscal 2024, net rev enues decreased $18.3 million, o r 5.6%, to $309.9 million, from $328.2 million for fiscal 2023.
The increase in corporate unallocated expenses was primarily due to severance charges of $8.7 million, including CEO retirement severance and Vera Bradley brand executive severance; consulting fees of $4.2 million associated with cost savings, strategic initiatives, and CEO search; $2.4 million increase in corporate advertising expense; $1.0 million for new CEO sign-on bonus and relocation expenses; $0.7 million primarily related to legal settlements in the prior-year period that did not recur; $0.6 million related to a lease right-of-use asset impairment charge in the current-year period; and $0.4 million related to former CEO November and December salary payments and stock compensation expense associated with retirement.
The decrease in corporate unallocated expenses was primarily due to a decrease in severance charges of $6.8 million which includes severance related to our CFO transition in the current year more than offset by the retirement severance related to our former CEO in the prior year; a decrease of $4.3 million a portion of which were associated with cost savings initiatives and other professional fees that did not recur in the current year; a reduction in employee-related expenses of $2.9 million primarily related to lower headcount, partially offset by an increase in incentive compensation; $0.6 million for a lease right-of-use asset charge in the prior year that did not recur in the current year; and $2.4 million in other net corporate expense reductions including a reduction in information technology contracts, corporate advertising expense, and other corporate expenses.
Expense savings are being derived across various areas of the Company, including retail store efficiencies, marketing expenses, information technology contracts, professional services, logistics and operational costs, and corporate payroll.
In addition, in fiscal 2023 and 2024, we implemented targeted cost reductions across various areas of the Company, including retail store efficiencies, marketing expenses, information technology contracts, professional services, logistics and operational costs, and corporate payroll. We will continue to review our expense structure in future years for additional cost reduction opportunities.
The effective tax rate decreased primarily due to the relative impact of permanent and discrete items in the current-year period compared to the prior-year period, primarily as a result of non-deductible executive compensation and stock-based compensation.
The effective tax rate increase was primarily due to the relative impact of permanent and discrete items in the current-year period compared to the prior-year period, primarily as a result of stock-based compensation, noncontrolling interest in the prior-year period, and non-deductible executive compensation. 40 Table of Contents Ne t Income (Loss) For fiscal 2024, net inco me increased $87.2 million to $7.8 million from a net loss of $(79.4) million in fiscal 2023 due to the factors described in the captions above.
Vera Bradley comparable sales decreased $33.3 million, or 9.5%, which includes a 14.6% decrease in comparable store sales partially offset by a 1.5% increase in e-commerce sales.
Vera Bradley comparable sale s decreased $22.8 million, or 7.1%, which includes a 9.6% decrease in comparable store 38 Table of Contents sales as well as a 2.6% decrease in e-commerce sales.
Fiscal years 2023, 2022, and 2021 consisted of 52 weeks. (2) Impairment charges, related primarily to underperforming stores, totaled $1.4 million, $0.1 million, and $7.4 million during the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively.
By segment, the extra week contributed net revenues of approximately $2.8 million to Direct, $2.1 million to Indirect, and $1.1 million to Pura Vida in fiscal 2024. (2) Impairment charges, related primarily to underperforming stores, tot aled $1.4 million, and $0.1 million duri ng the fiscal years ended January 28, 2023, and January 29, 2022, respectively.
Net cash used in operating activities was $13.4 million during fiscal 2023, as compared to net cash provided by operating activities of $39.9 million during fiscal 2022. The increase in cash used in operating activities was primarily related to an increase in the net loss after non-cash charges of $47.5 million, as well as the change in assets and liabilities.
Net cash provided by operating activities was $48.0 million during fiscal 2024, as compared to net cash used in operating activities of $13.4 million during fiscal 2023 .
We believe we have the ability to move some of our retired finished goods through a number of channels, including our Vera Bradley and Pura Vida websites, the Vera Bradley online outlet site, Vera Bradley factory outlet stores, the Vera Bradley Annual Outlet Sale which is planned to resume in June 2023, and through third-party liquidators as needed. 44 Valuation of Long-lived Assets Property, plant, and equipment and operating right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
Valuation of Long-lived Assets Property, plant, and equipment and operating right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
These decreases in SG&A expenses were partially offset by $0.8 million in incremental store impairment charges. VB Indirect . For fiscal 2023, operating income increased $2.6 million, or 13.0%. As a percentage of VB Indirect segment net revenues, operating income in the VB Indirect segment was 31.3% and 30.8% for fiscals 2023 and 2022, respectively.
VB Indirect . For fiscal 2024, operating inc ome increased $1.3 million, or 5.7%. As a percentage of VB Indirect segment net revenues, operating income in the VB Indirect segm ent was 32.9% and 31.3% f or fiscals 2024 and 2023, respectively.
The increase in consolidated SG&A expenses for fiscal 2023 was primarily due to: • severance charges of $9.2 million including for CEO retirement severance and Vera Bradley brand executive severance; • $4.4 million of consulting fees related to our cost saving and strategic initiatives, CEO search, and other Pura Vida and Vera Bradley professional fees that did not occur in the prior year; • $1.3 million for incremental Vera Bradley store impairment charges and a corporate lease right-of-use asset impairment charge; • new CEO sign-on bonus and relocation expenses of $1.0 million; and • $0.4 million of former CEO November and December salary expense and stock-based compensation expense associated with retirement.
The decrease in consolidated SG&A expenses for fiscal 2024 was primarily due to a decrease in employee-related expenses of $6.4 million due to a reduction in headcount, partially offset by an increase in incentive compensation; a decrease in severance charges of $6.3 million, which includes severance related to our CFO transition in the current year more than offset by the retirement severance related to our former CEO in the prior year; a $4.2 million decrease in professional expenses, a portion of which were associated with cost savings initiatives and other professional fees that did not recur in the current year; $1.4 million related to store and lease right-of-use asset impairment charges in the prior year that did not recur in the current year; and $5.2 million in other net expense reductions which included spending reductions related to information technology contracts, visual merchandising, and other expenses.
These decreases were partially offset by price increases on certain merchandise in the current-year. VB Indirect. For fiscal 2023, net revenues increased $7.3 million, or 11.1%, to $73.3 million, from $66.0 million for fiscal 2022. The increase was primarily due to an increase in orders from certain key accounts. Pura Vida .
For fiscal 2024, net reven ues increased $0.5 million, or 0.7%, to $73.8 million, from $73.3 million for fiscal 2023, reflecting an increase in certain key account orders, partially offset by a decline in sales to certain specialty partners. Fiscal 2024 net revenues also include approximately $2.1 million attributed to the extra week in fiscal 2024. Pura Vida .
In addition, gross profit as a percentage of net revenues was negatively impacted by inbound and outbound freight and shipping costs, deleverage of overhead costs, channel mix changes, and increased promotional activity, partially offset by price increases on certain merchandise in the current-year.
Fiscal 2024 gross profit as a percentage of net revenues was favorably impacted by lower year-over-year inventory reserve charges, lower year-over-year inbound and outbound freight expense, lower supply chain costs, and the sell-through of previously-reserved inventory, partially offset by an increase in promotional activity.
Net Cash Used in Investing Activities Investing activities consisted primarily of investments and capital expenditures related to new store openings, buildings, operational equipment, and information technology investments. Net cash used in investing activities was $8.2 million in fiscal 2023, compared to $4.2 million in fiscal 2022.
Net cash used in investing activities was $13.8 million in fiscal 2024, compared to $8.2 million in fiscal 2023.
As a result, we recorded an impairment charge of $9.9 million and $19.4 million for the Pura Vida brand and goodwill, respectively, during the second quarter of fiscal 2023 within the Pura Vida segment.
Impairment of Goodwill and Intangible Assets Fiscal 2024 included a $5.4 million charge for impairment of the indefinite -lived Pura Vida brand intangible asset, which is reflected within the Pura Vida segment.
There were no similar charges in the comparable prior-year period. 40 Other Income, Net For fiscal 2023, net other income decreased $0.5 million to $0.5 million, from $1.0 million for fiscal 2022. The decrease in net other income was primarily due to legal settlements in the prior-year period that did not recur.
Other Income, Net For fiscal 2024, net other income increased $0.5 million to $0.9 million, from $0.5 million for fisca l 2023. The increase in net other income was primarily due to a legal settlement in the current year that did not occur in the prior year, ticket sales from the Vera Bradley annual outlet sale, and sublease income.
These decreases to operating income were partially offset by reductions in advertising expense compared to the prior-year period. Corporate Unallocated . For fiscal 2023, corporate unallocated expenses increased $13.9 million, or 18.2% to $90.3 million from $76.4 million in the prior-year period.
Corporate Unallocated . For fiscal 2024, corporate unallocated expens es decreased $17.0 million, or 18.8% to $73.4 million from $90.3 million in the prior-year period.
Net Revenues Net revenues reflect sales of our merchandise and revenue from distribution and shipping and handling fees, less returns and discounts. Revenues for the VB Direct segment reflect sales through Vera Bradley full-line and factory outlet stores; the Vera Bradley websites verabradley.com and verabradley.ca; and our Vera Bradley online outlet site.
How We Assess the Performance of Our Business In assessing the performance of our business, we consider a variety of performance and financial measures. Net Revenues Net revenues reflect sales of our merchandise and revenue from distribution and shipping and handling fees, less returns and discounts.
As of January 28, 2023, the Company had no goodwill recorded as it recorded a full goodwill impairment charge of $44.3 million within the Pura Vida reporting unit during fiscal 2023. For the annual goodwill impairment analysis performed during fiscal 2023, we performed a quantitative analysis.
For the annual impairment analysis performed during fiscal 2023, the Company performed a quantitative analysis, as well as subsequent analyses due to triggering events, further described in Note 15 of the Notes to the Consolidated Financial Statements herein. Impairment charges of $44.3 million and $25.0 million were recorded during fiscal 2023 for goodwill and the Pura Vida brand, respectively.
We opened five new factory outlet stores and closed 19 underperforming full-line stores and one factory outlet store, ending the fiscal year with 51 full-line and 79 factory outlet locations.
We have taken needed steps, via product, marketing, and expense discipline, to improve the profitability of our full-line stores and closed fewer locations than originally expected. In fiscal 2024, we closed eight underperforming full-line stores and one outlet store, and opened three outlet stores, ending the fiscal year with 43 full-line and 81 outlet locations.
Gross Profit For fiscal 2023, gross profit decreased $48.9 million, or 17.0%, to $239.0 million, from $287.9 million for fiscal 2022. As a percentage of net revenues, gross profit decreased to 47.8% for fiscal 2023, from 53.3% for fiscal 2022.
As a percentage of net revenues, gross prof it increased to 54.5% for fiscal 2024, fro m 47.8% fo r fiscal 2023.
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The COVID-19 pandemic caused supply chain disruptions that have resulted in delivery delays and increased inbound and outbound shipping costs; however, these s upply chain disruptions began to stabilize towards the end of fiscal 2023.
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Executive Summary Some of our major achievements for fiscal 2024 are as follows: We launched our long-term strategic plan, Project Restoration, and completed the first year of our turnaround. We thoughtfully outlined our plans in each of the four pillars – Consumer, Brand, Product, and Channel – and began implementation of key initiatives.
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We cannot predict the future impacts of the COVID-19 pandemic and its associated factors, which may necessitate temporary closures to some, or all, of our retail stores due to guidance and mandates from governments and public health officials, or require other Company action that may impact our operations.
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As a Company, we continued to carefully manage both gross margin and expenses and have instilled a culture of discipline around gross margin and expense control.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Credit Agreement allows for a revolving credit commitment of $75.0 million, bearing interest at a variable rate, based on a per annum rate equal to either (i) for CBFR borrowings (including swingline loans), the CB Floating Rate, where the CB Floating Rate is the prime rate which shall never be less than the adjusted one month LIBOR rate on such day, plus the Applicable Rate, where the Applicable Rate is a percentage spread ranging from -1.00% to -1.50% or (ii) for each eurodollar borrowing, the Adjusted LIBO Rate, where the Adjusted LIBO Rate is the LIBO rate for such interest period multiplied by the statutory reserve rate, for the interest period in effect for such borrowing, plus the Applicable Rate, where the Applicable Rate is a percentage ranging from 1.00% to 1.30%.
Biggest changeThe Credit Agreement allows for a revolving credit commitment of $75.0 million, bearing interest at a variable rate, based on a per annum rate equal to either i) for CBFR borrowings (including swingline loans), the CB Floating Rate, where the CB Floating Rate is the greater of the prime rate or 2.5%, plus the Applicable Rate, where the Applicable Rate is a percentage spread ranging from -1.25% to -1.50%, (ii) for each Term Benchmark Borrowing, the Adjusted Term SOFR Rate, where the Adjusted Term SOFR Rate is the Term SOFR rate for such interest period plus 0.10% for the interest period in effect for such borrowing, plus the Applicable Rate, where the Applicable Rate is a percentage ranging from 1.25% to 1.50%, or (iii) for RFR Loans, the Adjusted Daily Simple SOFR Rate, where the Adjusted Daily Simple SOFR Rate is equal to the Daily Simple SOFR plus 0.10%, plus the Applicable Rate, where the Applicable Rate is a percentage ranging from 1.25% to 1.50%.
The applicable CB Floating Rate, Adjusted LIBO Rate, or LIBO Rate shall be determined by the administrative agent. Assuming borrowings available under the Credit Agreement are fully extended at $75.0 million, each quarter point increase or decrease in the interest rate would change our annual interest expense by approximately $0.2 million.
The applicable CB Floating Rate, Adjusted Term SOFR Rate, Term SOFR Rate, Daily Simple SOFR, and Adjusted Daily Simple SOFR shall be determined by the administrative agent. Assuming borrowings available under the Credit Agreement are fully extended at $75.0 million, each quarter point increase or decrease in the interest rate would change our annual interest expense by approximately $0.2 million.
This may result in an increase to our interest expense. Foreign Exchange Rate Risk We source a majority of our finished goods from various suppliers primarily in Cambodia, Vietnam, Indonesia, El Salvador, China, and the Philippines. Substantially all purchases and sales involving foreign persons are denominated in U.S. dollars, and therefore we do not hedge using any derivative instruments.
Foreign Exchange Rate Risk We source a majority of our finished goods from various suppliers primarily in Cambodia, Vietnam, Indonesia, El Salvador, China, and the Philippines. Substantially all purchases and sales involving foreign persons are denominated in U.S. dollars, and therefore we do not hedge using any derivative instruments.
Historically, we have not been impacted materially by changes in exchange rates. 47
Historically, we have not been impacted materially by changes in exchange rates. 45 Table of Contents
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In addition, the Financial Conduct Authority (the authority that regulates LIBOR) began to phase out LIBOR by the end of 2021 and announced that it would completely phase out LIBOR by June 30, 2023 and transition to the Secured Overnight Financing Rate (“SOFR”). SOFR is calculated differently from LIBOR and the differences in their calculations may give rise to uncertainties.
Removed
The replacement of LIBOR with SOFR may adversely affect interest rates and result in higher borrowing costs. We cannot predict the effect of the termination of LIBOR or the establishment and use of SOFR.
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We may need to renegotiate our revolving credit facility or incur other indebtedness and the use of SOFR or another benchmark rate may negatively impact the terms of such indebtedness. As LIBOR ceases to exist, we may need to amend certain contracts and cannot predict whether SOFR or another benchmark rate would be negotiated.

Other VRA 10-K year-over-year comparisons