Vera Bradley, Inc. Q3 FY2025 earnings call

• Project Restoration is ongoing to transform the business model and brand positioning, with steady progress seen in late third and fourth quarters.
• Brand metrics improved, including a 700 basis point increase in awareness scores, and broader reach to younger and higher-income consumers.
• Adjusted promotional strategy for better value proposition, with strong response to holiday assortments, heritage prints, and giftable items.
• Intended reduction in non-go-forward clearance units from branded channels, with efforts to improve profitability through SKU reduction and disciplined buying.
• Pura Vida's store at Disney Springs opened successfully, but e-commerce faces high acquisition costs.
• Progress in inventory sourcing, procurement, and management to improve product flow and quality.

Vera Bradley Direct segment revenues for the third quarter totaled $52.5 million, a 27% decrease from $72.3 million in the prior year third quarter. Vera Bradley Indirect segment revenues totaled $18 million, a 28% decrease from $25 million in the prior year third quarter. Pura Vida segment revenues totaled $10.1 million, a 42.9% decrease from $17.7 million in the prior year third quarter. Vera Bradley Direct's decrease was due to challenges in the outlet channel and store closures, while Pura Vida's decrease was from e-commerce and wholesale declines.

• Consolidated net revenues expected to be approximately $385 million for fiscal 2025.
• Vera Bradley overall sales expected to decline in the mid-teen range, with sequential improvement in Q4 over Q3.
• Gross margin expected to be approximately 52.5% for the year, down from 54.5% in fiscal 2024.
• SG&A expenses expected to be approximately $213 million, a decrease from $234.7 million in fiscal 2024.
• Operating loss expected to be approximately $9 million, compared to operating income of $22.2 million in fiscal 2024.
• EPS loss expected to be approximately $0.25 per share, compared to $0.54 per share in fiscal 2024.
• Net capital spending expected to be approximately $13 million.

• Macro and consumer spending uncertainty could impact results.
• Clearance units not migrating to outlet channels as expected, causing sales impact in Q3.
• Lengthy time frame to realize the full benefits of Project Restoration poses risk.

Q: Talk about store openings and how they fit into Project Restoration.

A: Outlet store openings in Simon Premium outlet portfolio are seen as opportunities, and branded store in Natick is a cautious return.

Q: Discuss winning and losing pieces in Project Restoration, and collaborations.

A: Newer customers are younger and more affluent with lower discount acquisition, and collaborations like Wicked and Disney help with traffic and margin, with inbound interest from other brands being a green shoot.