Vera Bradley Inc.

09/11/2025 | Press release | Distributed by Public on 09/11/2025 12:28

Quarterly Report for Quarter Ending August 2, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion summarizes the significant factors affecting the condensed consolidated operating results, financial condition, liquidity, and cash flows of the Company as of and for the thirteen and twenty-six weeks ended August 2, 2025 and August 3, 2024. The following discussion should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 1, 2025, and our unaudited condensed consolidated financial statements and the related notes included in Item 1 of this Quarterly Report. The results of operations for the thirteen and twenty-six weeks ended August 2, 2025, are not necessarily indicative of the results to be expected for the full fiscal year.
Strategic Progress, Macroeconomic Factors, and Other Factors Impacting our Financial Condition and Results of Operations
Strategic Progress. We are executing a comprehensive strategy to strengthen our market position by tapping into our brand's strong emotional connection with consumers. We are simplifying decision-making, removing organizational complexity, and focusing resources on high-impact initiatives. This operational focus, paired with prudent cost management, will allow us to invest in the brand, innovation, and customer experiences, all while driving shareholder value. These improvements are about agility-building a responsive organization to fully leverage our unique brand position.
The newly formed Strategy and Transformation Committee has identified five key initiatives:
Sharpening Brand Focus: We are refining our brand strategy to ensure consistent, resonant messaging across all consumer touchpoints. Led by new merchandising leadership, we are revisiting product assortment and style, reintroducing innovation to our core DNA, and emphasizing our heritage in occasion-based bags.
Omnichannel Strategy: We are aligning all consumer touchpoints with a cohesive omnichannel experience. This includes a comprehensive go-to-market approach to improve brand engagement and the customer journey across platforms.
Outlet 2.0: We are redefining our outlet strategy by enhancing the customer experience with curated assortments, optimized visuals, and labor efficiency. This transformation will elevate brand engagement and drive profitability, positioning outlets as key drivers of our brand evolution.
Optimizing the Operating Model: We are scrutinizing every aspect of our operating processes including product development, store labor, promotional strategies, and more to improve efficiency. This holistic review will sharpen focus on high-impact initiatives and retail KPIs across all channels.
Reimagining How We Work: We are restructuring our organization to foster collaboration, creativity, and efficiency. As we align our talent and leadership with key growth areas, we are redesigning our structure to drive transformation and streamline costs.
Macroeconomic and Other Factors.We continue to closely monitor the dynamic economic landscape and are actively managing the impact of elevated tariff costs. Ongoing inflationary pressures and related macroeconomic factors have continued to affect consumer discretionary spending. As a result, our Vera Bradley outlet and full-line stores continue to experience softer performance through the first six months of fiscal 2026. We remain focused on executing our strategic initiatives and adapting to current market conditions to position the business for long-term growth.
Management Transition
On June 11, 2025, the Company announced the departure of its former Chief Executive Officer, Jacqueline Ardrey, and that the Board of Directors had initiated a national search for a successor. Effective July 7, 2025, Board member, Ian Bickley, assumed the newly created role of Executive Chairman. In this interim executive capacity, Mr. Bickley will provide leadership and strategic guidance during the CEO transition period and will also serve as Chairman of the Company's Board of Directors. The Executive Chairman role is expected to be temporary and limited to the duration of the CEO transition.
Additionally, the Company announced the appointment of Martin Layding as Chief Financial Officer, effective June 12, 2025.
Recent Transactions
We completed the sale of Pura Vida on March 31, 2025. See Note 14 to the Notes to the Condensed Consolidated Financial Statements herein for additional information. The loss on sale was presented as part of results of the discontinued operations. We have reflected the results of operations of the Pura Vida business as discontinued operations in the Consolidated Statement of Operations. This business was historically presented as its own reporting unit.
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. Revenues for the VB Direct segment reflect sales through Vera Bradley full-line and outlet stores; e-commerce sites (verabradley.com, outlet.verabradley.com, and international.verabradley.com); and the Vera Bradley annual outlet sale. Revenues for the VB Indirect segment reflect sales of Vera Bradley-branded products to specialty retail partners; key accounts consisting of 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.
Comparable Sales
Comparable sales are calculated based upon our stores that have been open for at least 12 full fiscal months and net revenues from our Vera Bradley e-commerce operations. Remodeled stores are included in both comparable sales and comparable store sales unless the store was closed for more than one week of the current or comparable prior period, in which case the non-comparable temporary closure periods are not included, or the remodel resulted in a significant change in square footage. 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.
Measuring the change in year-over-year comparable sales allows us and our investors to evaluate how our store base and e-commerce operations are performing. 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, as well as timing 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.
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, duties, all inbound freight costs incurred, and inventory adjustments, if any. 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; inbound freight and other logistical costs; outbound freight; 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. Selling expenses include:
•VB Direct business expenses, such as store expenses, employee compensation, and store occupancy and supply costs;
•VB Indirect business expenses consisting primarily of employee compensation and other expenses associated with sales to Indirect retailers; and
Advertising, marketing, and product development expenses include employee compensation, media costs, creative production expenses, marketing agency fees, new product design costs, public relations expenses, and market research expenses. 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 12 to the Notes to the Condensed Consolidated Financial Statements herein.
Results of Operations
The following tables summarize key components of our condensed consolidated results of operations for the periods indicated, both in dollars and as a percentage of our net revenues ($ in thousands):
Thirteen Weeks Ended Twenty-Six Weeks Ended
August 2,
2025 		August 3,
2024 		August 2,
2025 		August 3,
2024
Statement of Operations Data:
Net revenues $ 70,858 $ 94,003 $ 122,510 $ 161,951
Cost of sales 35,361 47,294 64,246 81,202
Gross profit 35,497 46,709 58,264 80,749
Selling, general, and administrative expenses 40,442 44,449 81,246 89,544
Other income, net 353 133 533 571
Operating (loss) income from continuing operations (4,592) 2,393 (22,449) (8,224)
Interest (expense) income, net (134) 219 (130) 689
(Loss) income from continuing operations before income taxes (4,726) 2,612 (22,579) (7,535)
Income tax (benefit) expense (17) (4,915) 390 (7,458)
Net (loss) income from continuing operations $ (4,709) $ 7,527 $ (22,969) $ (77)
Percentage of Net Revenues:
Net revenues 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 49.9 % 50.3 % 52.4 % 50.1 %
Gross profit 50.1 % 49.7 % 47.6 % 49.9 %
Selling, general, and administrative expenses 57.1 % 47.3 % 66.3 % 55.3 %
Other income, net 0.5 % 0.1 % 0.4 % 0.4 %
Operating (loss) income from continuing operations (6.5) % 2.5 % (18.3) % (5.0) %
Interest (expense) income, net (0.2) % 0.2 % (0.1) % 0.4 %
(Loss) income from continuing operations before income taxes (6.7) % 2.7 % (18.4) % (4.6) %
Income tax (benefit) expense - % (5.2) % 0.3 % (4.6) %
Net (loss) income from continuing operations (6.7) % 7.9 % (18.7) % - %
The following tables present net revenues and operating income (loss) by operating segment, both in dollars and as a percentage of associated net revenues, and store data for the periods indicated ($ in thousands, except as otherwise indicated):
Thirteen Weeks Ended Twenty-Six Weeks Ended
August 2,
2025 		August 3,
2024 		August 2,
2025 		August 3,
2024
Net Revenues by Segment:
VB Direct $ 60,514 $ 72,241 $ 103,597 $ 128,665
VB Indirect 10,344 21,762 18,913 33,286
Total $ 70,858 $ 94,003 $ 122,510 $ 161,951
Percentage of Net Revenues by Segment:
VB Direct 85.4 % 76.8 % 84.6 % 79.4 %
VB Indirect 14.6 % 23.2 % 15.4 % 20.6 %
Total 100.0 % 100.0 % 100.0 % 100.0 %
Thirteen Weeks Ended Twenty-Six Weeks Ended
August 2,
2025 		August 3,
2024 		August 2,
2025 		August 3,
2024
Operating Income (Loss) by Segment:
VB Direct $ 9,335 $ 13,433 $ 3,799 $ 17,426
VB Indirect 2,190 4,743 4,170 8,569
Less: Corporate unallocated (16,117) (15,783) (30,418) (34,219)
Total $ (4,592) $ 2,393 $ (22,449) $ (8,224)
Operating Income (Loss) as a Percentage of Net Revenues by Segment:
VB Direct 15.4 % 18.6 % 3.7 % 13.5 %
VB Indirect 21.2 % 21.8 % 22.0 % 25.7 %
Vera Bradley Store Data (1):
Total stores opened during period - - 2 -
Total stores closed during period (8) (2) (10) (3)
Total stores open at end of period 118 121 118 121
Total gross square footage at end of period 365,512 370,349 365,512 370,349
Average net revenues per gross square foot (2)
$ 98 $ 129 $ 158 $ 215
Comparable sales (including e-commerce) decrease (3)
(17.3) % (11.2) % (20.5) % (10.5) %
(1)Includes Vera Bradley full-line and outlet stores.
(2)Dollars not in thousands. Average net revenues per gross square foot are calculated by dividing total net revenues for our stores that have been open at least 12 full fiscal months as of the end of the period by total gross square footage for those stores. Remodeled stores are included in average net revenues per gross square foot unless the store was closed for a portion of the period.
(3)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. Comparable sales decreaseis reported as a percentage of the comparable sales for the same period in the prior fiscal year. Remodeled stores are included in comparable sales unless the store was closed for a portion of the current or comparable prior period, in which case the non-comparable temporary closure periods are not included, or the remodel resulted in a significant change in square footage.
Thirteen Weeks Ended August 2, 2025, Compared to Thirteen Weeks Ended August 3, 2024
Net Revenues
For the thirteen weeks ended August 2, 2025, net revenues decreased $23.1 million, or 24.6%, to $70.9 million, from $94.0 million in the comparable prior-year period.
VB Direct. For the thirteen weeks ended August 2, 2025, net revenues in the VB Direct segment decreased $11.7 million, or 16.2%, to $60.5 million, from $72.2 million in the comparable prior-year period. Vera Bradley comparable sales decreased
17.3%, which includes a 27.4% decrease in comparable store sales, partially offset by an increase in e-commerce sales of 1.3%. In addition, non-comparable revenue increased $0.3 million. The decrease in comparable sales and comparable store sales was primarily due to reduced conversion in the full-line, outlet, and e-commerce channels.
VB Indirect. For the thirteen weeks ended August 2, 2025, net revenues in the VB Indirect segment decreased $11.5 million, or 52.5%, to $10.3 million, from $21.8 million in the comparable prior-year period. The decrease was primarily due to a decrease in key account orders and liquidation sales.
Gross Profit
For the thirteen weeks ended August 2, 2025, gross profit decreased $11.2 million, or 24.0%, to $35.5 million, from $46.7 million in the comparable prior-year period. As a percentage of net revenues, gross profit increased to 50.1% for the thirteen weeks ended August 2, 2025 from 49.7% in the comparable prior-year period. Current year gross margin was positively impacted by a decrease in liquidation sales, partially offset by channel shifts that resulted in increased incremental shipping costs.
Selling, General, and Administrative Expenses
For the thirteen weeks ended August 2, 2025, SG&A expenses decreased $4.0 million, or 9.0%, to $40.4 million, from $44.4 million in the comparable prior-year period. As a percentage of net revenues, SG&A expenses increased to 57.1% for the thirteen weeks ended August 2, 2025, from 47.3% in the comparable prior-year period. For the thirteen weeks ended August 2, 2025, consolidated SG&A expenses decreased primarily due to a $2.5 million reduction in advertising costs and selling expenses resulting from sales decreases as described above; a $1.0 million decrease in employee-related costs attributable to reduced headcount; and $0.5 million reduction in net other expenses.
Other Income, Net
For the thirteen weeks ended August 2, 2025, net other income increased $0.3 million to $0.4 million, from $0.1 million in the comparable prior-year period. The increase in net other income was primarily due to income from the Transition Services Agreement ("TSA") resulting from the sale of Creative Genius.
Operating (Loss) Income from Continuing Operations
For the thirteen weeks ended August 2, 2025, there was an operating loss from continuing operations of $(4.6) million, a $7.0 million increase, or 291.9%, from operating income from continuing operations of $2.4 million in the comparable prior-year period. As a percentage of net revenues, operating (loss) income from continuing operations was (6.5)% and 2.5% for the thirteen weeks ended August 2, 2025 and August 3, 2024, respectively. Operating (loss) income from continuing operations increased due to the factors described in the captions above.
VB Direct. For the thirteen weeks ended August 2, 2025, operating income in the VB Direct segment decreased $4.1 million, 30.5%, to $9.3 million, from $13.4 million in the comparable prior-year period. As a percentage of VB Direct segment net revenues, operating income in the VB Direct segment was 15.4% and 18.6% for the thirteen weeks ended August 2, 2025 and August 3, 2024, respectively. The decrease in operating income as a percentage of VB Direct segment net revenues was primarily due to a decrease in gross margin as a percentage of net revenues and SG&A expense deleverage associated with decreased sales.
VB Indirect. For the thirteen weeks ended August 2, 2025, operating income in the VB Indirect segment decreased $2.5 million, or 53.8%, to $2.2 million from $4.7 million in the comparable prior-year period. As a percentage of VB Indirect segment net revenues, operating income in the VB Indirect segment was 21.2% and 21.8% for the thirteen weeks ended August 2, 2025 and August 3, 2024, respectively. The decrease in operating income as a percentage of VB Indirect segment net revenues was due to SG&A expense deleverage associated with decreased sales.
Corporate Unallocated. For the thirteen weeks ended August 2, 2025, unallocated expenses increased $0.3 million, or 2.1%, to $16.1 million from $15.8 million in the comparable prior-year period. The increase in unallocated expenses was primarily due to $2.0 million for severance charges for former CEO; partially offset by a $0.6 million reduction in advertising spend; $0.5 million reduction in employee-related costs, including reduced headcount and lower variable compensation; $0.4 million reduction in net other expenses; and an increase in other income of $0.2 million from the TSA resulting from the sale of Creative Genius.
Interest (Expense) Income, Net
For the thirteen weeks ended August 2, 2025, interest expense was $(0.1) million, a $0.3 million increase, from interest income of $0.2 million, in the comparable prior-year period.
Income Tax Benefit
The effective tax rate for the thirteen weeks ended August 2, 2025, was 0.4%, compared to (188.2)% for the thirteen weeks ended August 3, 2024. The change in year-over-year effective tax rate was primarily attributable to a full valuation allowance recorded against the Company's net deferred tax assets. See Note 7 "Income Taxes" of the Notes to the Condensed Consolidated Financial Statements for additional information about the Company's interim provision for income taxes.
Net (Loss) Income from Continuing Operations
For the thirteen weeks ended August 2, 2025, there was a net loss from continuing operations of $(4.7) million, a $12.2 million increase, from net income from continuing operations of $7.5 million in the comparable prior-year period due to the factors described in the captions above.
Net Income (Loss) from Discontinued Operations
For the thirteen weeks ended August 2, 2025, net income from discontinued operations totaled $37.0 thousand, a $1.9 million increase, from a net loss from discontinued operations of $(1.8) million in the comparable prior-year period. The increase in income from discontinued operations was primarily due to the completion of the sale of Creative Genius completed during the first quarter of fiscal 2026.
Net (Loss) Income
For the thirteen weeks ended August 2, 2025, there was a net loss of $(4.7) million, a $10.4 million increase, from net income of $5.7 million in the comparable prior-year period due to the factors described in the captions above.
Twenty-Six Weeks Ended August 2, 2025, Compared to Twenty-Six Weeks Ended August 3, 2024
Net Revenues
For the twenty-six weeks ended August 2, 2025, net revenues decreased $39.5 million, or 24.4%, to $122.5 million, from $162.0 million in the comparable prior-year period.
VB Direct. For the twenty-six weeks ended August 2, 2025, net revenues in the VB Direct segment decreased $25.1 million, or 19.5%, to $103.6 million, from $128.7 million in the comparable prior-year period. Vera Bradley comparable sales decreased 20.5%, which includes a 30.2% decrease in comparable store sales as well as a decrease in e-commerce sales of 4.8%. In addition, non-comparable revenue increased $0.3 million. The decrease in comparable sales and comparable store sales was primarily due to reduced traffic, conversion, and units sold in the full-line, outlet, and e-commerce channels.
VB Indirect. For the twenty-six weeks ended August 2, 2025, net revenues in the VB Indirect segment decreased $14.4 million, or 43.2%, to $18.9 million, from $33.3 million in the comparable prior-year period. The decrease was primarily due to a decrease in key account orders and liquidation sales.
Gross Profit
For the twenty-six weeks ended August 2, 2025, gross profit decreased $22.4 million, or 27.8%, to $58.3 million, from $80.7 million in the comparable prior-year period. As a percentage of net revenues, gross profit decreased to 47.6% for the twenty-six weeks ended August 2, 2025, from 49.9% in the comparable prior-year period. Current year gross margin was negatively impacted by channel shifts that resulted in increased incremental shipping costs.
Selling, General, and Administrative Expenses
For the twenty-six weeks ended August 2, 2025, SG&A expenses decreased $8.3 million, or 9.3%, to $81.2 million, from $89.5 million in the comparable prior-year period. As a percentage of net revenues, SG&A expenses increased to 66.3% for the twenty-six weeks ended August 2, 2025, from 55.3% in the comparable prior-year period. For the twenty-six weeks ended August 2, 2025, consolidated SG&A expenses decreased primarily due to a $4.7 million reduction in employee-related costs, including reduced headcount and lower variable compensation; a $4.2 million reduction in advertising costs and selling expenses resulting from sales decreases as described above; and $0.4 million reduction in net other expenses. These decreases were partially offset by $1.0 million of property, plant, and equipment impairment charges in the current year period.
Other Income, Net
For the twenty-six weeks ended August 2, 2025, net other income decreased $0.1 million to $0.5 million, from $0.6 million in the comparable prior-year period. The decrease in net other income was primarily due to a legal settlement that occurred in the prior year period, partially offset by income from the TSA resulting from the sale of Creative Genius.
Operating Loss from Continuing Operations
For the twenty-six weeks ended August 2, 2025, operating loss from continuing operations increased $14.2 million, or 173.0%, to $(22.4) million, from $(8.2) million in the comparable prior-year period. As a percentage of net revenues, operating loss from continuing operations was (18.4)% and (5.0)% for the twenty-six weeks ended August 2, 2025 and August 3, 2024, respectively. Operating loss from continuing operations increased due to the factors described in the captions above.
VB Direct. For the twenty-six weeks ended August 2, 2025, operating income in the VB Direct segment decreased $13.6 million, or 78.2%, to $3.8 million, from $17.4 million in the comparable prior-year period. As a percentage of VB Direct segment net revenues, operating income in the VB Direct segment was 3.7% and 13.5% for the twenty-six weeks ended August 2, 2025 and August 3, 2024, respectively. The decrease in operating income as a percentage of VB Direct segment net revenues was primarily due to a decrease in gross margin as a percentage of net revenues as described above, SG&A expense deleverage associated with decreased sales, as well as property, plant, and equipment impairment charges of $1.0 million in the current year period.
VB Indirect. For the twenty-six weeks ended August 2, 2025, operating income in the VB Indirect segment decreased $4.4 million, or 51.3%, to $4.2 million from $8.6 million in the comparable prior-year period. As a percentage of VB Indirect segment net revenues, operating income in the VB Indirect segment was 22.0% and 25.7% for the twenty-six weeks ended August 2, 2025 and August 3, 2024, respectively. The decrease in operating income as a percentage of VB Indirect segment net revenues was due to a decrease in gross margin as a percentage of net revenues as well as SG&A expense deleverage associated with decreased sales.
Corporate Unallocated. For the twenty-six weeks ended August 2, 2025, unallocated expenses decreased $3.8 million, or 11.1%, to $30.4 million from $34.2 million in the comparable prior-year period. The decrease in unallocated expenses was primarily due to a $2.5 million reduction in employee-related costs, including reduced headcount and lower variable compensation; $2.4 million reduction in advertising spend; $0.5 million reduction in building expenses; and $0.4 million reduction in net other expenses. These expense reductions were partially offset by $2.0 million for severance charges for former CEO in the current year period.
Interest (Expense) Income, Net
For the twenty-six weeks ended August 2, 2025, interest expense increased $0.8 million, to $(0.1) million from interest income of $0.7 million in the comparable prior-year period.
Income Tax Expense (Benefit)
The effective tax rate for the twenty-six weeks ended August 2, 2025, was (1.7)%, compared to 99.0% for the twenty-six weeks ended August 3, 2024. The change in year-over-year effective tax rate was primarily attributable to a full valuation allowance recorded against the Company's net deferred tax assets. See Note 7 "Income Taxes" of the Notes to the Condensed Consolidated Financial Statements for additional information about the Company's interim provision for income taxes.
Net Loss from Continuing Operations
For the twenty-six weeks ended August 2, 2025, there was a net loss from continuing operations of $(23.0) million, a $22.9 million increase, from $(0.1) million in the comparable prior-year period due to the factors described in the captions above.
Net Loss from Discontinued Operations
For the twenty-six weeks ended August 2, 2025, there was a net loss from discontinued operations of $(15.2) million, a $12.8 million increase, from $(2.3) million in the comparable prior-year period. The increase in loss from discontinued operations was primarily due to the loss on sale of business recorded in the current year period.
Net Loss
For the twenty-six weeks ended August 2, 2025, there was a net loss of $(38.1) million, a $35.7 million increase, from $(2.4) million in the comparable prior-year period due to the factors described in the captions above.
Liquidity and Capital Resources
General
Our primary sources of liquidity are cash on hand and cash equivalents, as well as cash flow from operations. We also have access to additional liquidity, if needed, through borrowings under our $75.0 million asset-based revolving credit agreement (the "Credit Agreement"). Borrowings under the credit agreement totaled $10.0 million and $15.0 million during the thirteen and twenty-six weeks ended August 2, 2025. There was $10.0 million in debt outstanding as of August 2, 2025. Historically, our primary cash needs have been for merchandise inventories; payroll; store rent; capital expenditures associated with operational equipment, buildings, information technology, and opening new stores; and share repurchases. The most significant components of our working capital are cash and cash equivalents, merchandise inventories, accounts receivable, accounts payable, and other current liabilities.
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.
Cash Flow Analysis
A summary of operating, investing, and financing activities is shown in the following table (in thousands):
Twenty-Six Weeks Ended
August 2,
2025 		August 3,
2024
Net cash used in operating activities $ (23,298) $ (13,151)
Net cash used in investing activities (1,576) (3,649)
Net cash provided by (used in) financing activities 9,800 (16,356)
Net Cash Used in Operating Activities
Net cash used in operating activities consists primarily of net loss 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.
Net cash used in operating activities for the twenty-six weeks ended August 2, 2025 was $23.3 million compared to $13.2 million for the twenty-six weeks ended August 3, 2024. The increase in cash used in operating activities was primarily related to a net loss of $(38.1) million, a $35.7 million increase, from the comparable prior-year period, partially offset by a loss on sale of business of $15.2 million, as well as the change in inventories and accounts payable primarily resulting from decreased purchasing in the current year period.
Net Cash Used in Investing Activities
Investing activities consist 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 $1.6 million for the twenty-six weeks ended August 2, 2025 compared to $3.6 million for the twenty-six weeks ended August 3, 2024. The decrease in cash used in investing activities was primarily due to $1.0 million proceeds from the sale of Pura Vida as well as a decrease in property, plant, and equipment spending of $1.0 million.
Net Cash Provided by (Used in) Financing Activities
Net cash provided by financing activities was $9.8 million for the twenty-six weeks ended August 2, 2025 compared to net cash used in financing activities of $16.4 million for the twenty-six weeks ended August 3, 2024. The increase in cash provided by financing activities was primarily due to $15.9 million of common stock repurchases in the prior-year period compared to no common stock repurchases in the current-year period, and net borrowings of $10.0 million from the credit facility in the current-year period.
Credit Agreement
On September 7, 2018, Vera Bradley Designs, Inc. ("VBD"), a wholly-owned subsidiary of the Company, entered into an asset-based revolving Credit Agreement (the "Credit Agreement") among VBD, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto. On March 11, 2025, certain subsidiaries of the Company, JP Morgan Chase Bank, N.A., as the administrative agent, and lenders from time to time party thereto, entered into a Fourth Amendment (the "Fourth Amendment") to the Credit Agreement. The Credit Agreement provides for certain credit facilities to VBD in an aggregate principal amount not to initially exceed the lesser of $75.0 million or the amount of borrowing availability determined in accordance with a borrowing base of certain assets. 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. 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.
As of August 2, 2025, the Company had $10.0 million borrowings outstanding and availability of $65.0 million under the Credit Agreement, compared to no borrowings outstanding and availability of $75.0 million as of February 1, 2025 under the Credit Agreement.
For further information regarding the Credit Agreement, please see Note 6 of the Notes to Condensed Consolidated Financial Statements herein.
Material Cash Requirements
As of August 2, 2025, there were no material changes outside the ordinary course of business to material cash requirements, as disclosed in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025.
Off-Balance-Sheet Arrangements
We do not have any off-balance-sheet financing or unconsolidated special-purpose entities.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as the related disclosures of contingent assets and liabilities at the date of the financial statements. A summary of the Company's significant accounting policies is included in Note 2 to the Company's consolidated financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2025.
Certain accounting policies and estimates of the Company are considered critical, as these policies and estimates are the most important to the depiction of the Company's consolidated financial statements and require significant, difficult, or complex judgments, often about the effect of matters that are inherently uncertain. Such policies are summarized in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2025. There were no significant changes to any of the critical accounting policies and estimates described in the Annual Report as of August 2, 2025.
Recently Issued Accounting Pronouncements
Refer to Note 1 "Description of the Company and Basis of Presentation" within Item 1 "Financial Statements" of this Quarterly Report on Form 10-Q for a discussion of recently issued accounting pronouncements.
Vera Bradley Inc. published this content on September 11, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on September 11, 2025 at 18:28 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]