Q4 2024 Vera Bradley Inc Earnings Call

Operator: www.thevenusproject.com Greetings. Welcome to Vera Bradley's 4th Quarter Fiscal 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode.

Greetings and welcome to Vera Bradleys fourth quarter fiscal 'twenty 'twenty four earnings conference call. At this time all participants are in a listen only mode. A question and answer session will follow the for my presentation.

Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to Mark Dely, Chief Administrative Officer. Thank you.

Anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to Mark do you like Chief administrative officer. Thank you you may begin.

Mark C. Dely: Good morning and welcome, everyone. We'd like to thank you for joining us on today's call. Some of the statements made during our prepared remarks and in response to your questions may constitute forward-looking statements made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from those that we expect. Please refer to today's press release and the company's most recent Form 10-K filed with the SEC for a discussion of known risks and uncertainties. Investors should not assume that the statements made during the call will remain operative at a later time. We undertake no obligation to update any information discussed on today's call. I will now turn over the call to Vera Bradley's CEO, Jackie Ardrey. Jackie?

Good morning, and welcome everyone, we'd like to thank you for joining us for today's call. Some of the statements made during our prepared remarks and in response to your questions may constitute forward looking statements made pursuant to and within the meaning of the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 as amended.

Such forward looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from those that we expect please refer to today's press release and the company's most recent Form 10-K filed with the SEC for a discussion of known risks and uncertainties investors should not assume that the statements made.

During the call remain operative at a later time, we undertake no obligation to update any information discussed on today's call I will now turn over the call to Vera Bradley's CEO Jackie Ardrey Jackie thank.

Jacqueline Ardrey: Thank you, Mark. Good morning, everyone. Thank you for joining us on today's call. I want to start with some comments on the quarter. We're pleased with the completion of the first full year of our turnaround story. We've successfully pivoted the organization towards a bright future and effectively managed both the existing business as well as the turnaround efforts through project restoration, which will begin to bear fruit in the coming year. Our teams continue to carefully manage both gross margin and expenses in the fourth quarter, consistent with efforts earlier in the year.

Thank you Mark good morning, everyone and thank you for joining us on today's call.

I want to start with some comments on the quarter.

We're pleased with the completion of the first full year of our turnaround story, we have successfully pivoted pivoted the organization towards a bright future and effectively manage both the existing business as well as the turnaround efforts through project restoration, which will begin to bear fruit in the coming year. Our teams continued to carefully manage both gross margin and expenses.

In the fourth quarter consistent with efforts earlier in the year we.

Jacqueline Ardrey: We've improved discipline around gross margin management and cost control, a part of our go-forward DNA. In addition to this discipline, our strategic efforts are focused on stabilizing and growing our sales base. Our recent sales results demonstrate the need for change in our branding, product assortments, and store environments, the exact areas that Project Restoration is addressing to position Vera Bradley Inc. for long-term profitable growth. After a year of foundational work, we're very excited about the customer-facing changes through Project Restoration that we will unveil this year. For the fourth quarter, Vera Bradley brand revenues fell 6.1% with soft sales and all direct channels. Sales were also negatively impacted by store closures.

We've improved discipline around gross margin management and cost control are part of our go forward DNA. In addition to this discipline are strategic efforts are focused on stabilizing and growing our sales base.

Our recent sales results demonstrate the need for change and our branding product assortments in store environments. The exact areas that project restoration is addressing to position Vera Bradley, Inc. For long term profitable growth.

After a year of foundational work or very excited about the customer facing changes through project restoration that we've unveiled this year.

For the fourth quarter Vera Bradley brand revenues fell six 1% with soft sales in all direct channels.

Sales were also negatively impacted by store closures customers responded to some of our latest product collaborations and to our newer product offerings like leather.

Jacqueline Ardrey: Customers responded to some of our latest product collaborations and to our newer product offerings, like leather, but overall, they continue to be more discriminating with their discretionary spending in light of the macroeconomic environment. A Bright Spot was the November transformation of our online outlet from a flash sale model to an everyday extension of our outlet stores. This brought new customers to the brand and helped offset weakness in the outlet store channel. On the indirect side, our wholesale partners were cautious with inventory buys in the fourth quarter. Pura Vida's year-over-year fourth quarter sales declined 21.6 percent, primarily due to decreases in e-commerce and wholesale revenues as external marketing costs continued to rise and marketing effectiveness remained challenging. Our holiday gifts, like our annual advent box and engraving categories, performed best for the quarter.

But overall they continue to be more discriminating with their discretionary spending in light of the macroeconomic environment are.

A bright spot was the November transformation of our online outlet from our flash sale model to an everyday extension of our outlet stores. This brought new customers to the brand and help offset weakness in the outlet store channel on.

On the indirect side, our wholesale partners were cautious with inventory buys in the fourth quarter.

PURA Vida it year over year fourth quarter sales declined 21, 6%, primarily due to decreases in e-commerce and wholesale revenues as external marketing costs continued to rise in marketing effectiveness remain challenging.

Our holiday gifts like our annual advent box and engraving categories performed best for the quarter.

Jacqueline Ardrey: While we are actively addressing revenue stabilization and marketing effectiveness at Pura Vida, our key focus is managing the business for profitability. As a result, we drove meaningful year-over-year operating margin improvement for the fourth quarter and full year. As I'm sure everyone listening understands, a strong balance sheet is incredibly important in retail and especially for Vera Bradley as project restoration enters the implementation stage. We continue to strengthen our already strong balance sheet, adding to our year-over-year cash position while strategically reducing our inventory levels. We ended the fiscal year with consolidated revenues of approximately $471 million.

Well, we are actively addressing revenue stabilization and marketing effectiveness at PURA Vida, our key focus is managing the business for profitability.

As a result, we drove meaningful year over year operating margin improvement for the fourth quarter and full year.

As I'm sure everyone listening understands our strong balance sheet is incredibly important in retail and especially for Vera Bradley as project restoration enters an implementation stage, we continued to strengthen our already strong balance sheet, adding to our year over year cash position, while strategically reducing our inventory levels.

We ended the fiscal year with consolidated revenues of approximately 471 million, we generated GAAP net income of $7 8 million or 25 cents per diluted share are returned to profitability from a sizable loss last year.

Jacqueline Ardrey: We generated GAAP net income of $7.8 million, or $0.25 per diluted share, a return to profitability from a sizable loss last year. Excluding charges on a non-GAAP basis, net income for the fiscal year totaled $17.2 million, or $0.55 per diluted share.

Excluding charges on a non-GAAP basis.

Net income for the fiscal year totaled $17 2 million or 55% 55 cents per diluted share. This improved profitability was primarily driven by gross margin performance and disciplined expense control.

Jacqueline Ardrey: This improved profitability was primarily driven by gross margin performance and disciplined expense control. Now, let me turn to project restoration. A little over a year ago, we began a comprehensive review of the consumer, brand, product, and channel components for both of our brands. This work culminated in our long-term strategic plan, Project Restoration, which addresses each of these four pillars. Through Project Restoration, we are taking targeted and prudent actions to stabilize revenues while remaining focused on strong financial discipline. We believe the execution of this company-wide, comprehensive initiative will drive long-term profitable growth and deliver value to our shareholders. At Vera Bradley, Project New Day launches in mid-July and is the first manifestation of our project restoration work and a full pivot from where we are today.

Now, let me turn to project restoration.

A little over a year ago, we began a comprehensive review of the consumer brand product and channel components for both of our brands. This work culminated in our long term strategic plan project restoration, which addresses each of these four pillars.

Through project restoration, we are taking targeted and prudent actions to stabilize revenues, while remaining focused on strong financial discipline. We believe execution of this companywide comprehensive initiative will drive long term profitable growth and deliver value to our shareholders.

At Vera Bradley project, New day launches in mid July and is the first manifestation of our project restoration work and a full pivot from where we are today. It includes among other things the reveal of our new and elevated full mine branding and marketing product store design and website.

Jacqueline Ardrey: It includes, among other things, the reveal of our new and elevated full line branding and marketing, product store design, and website. Our work on this initiative was informed by consumer research and current perceptions of the brand from both buyers and non-buyers. We believe we have the ability to attract new customers while keeping our current fans through product innovations and new marketing campaigns designed to inspire joy and connection. Our new assortment has broad appeal and uses new, higher quality, and softer fabrics and styles designed not only to look great but to feel great. I'd like to give you some more detail on the progress within each pillar.

Our work on this initiative was informed by consumer research and current perceptions of the brand from both buyers and non buyers. We believe we have the ability to attract new customers, while keeping our current fans through product innovations and new marketing campaigns designed to inspire joy in connection.

Our new assortment has broad appeal and uses new higher quality and softer fabrics and styles designed not only to look great but feel great.

I'd like to give you some more detail on the progress within each pillar.

Jacqueline Ardrey: For the consumer, we're focusing on restoring brand relevance, targeting casual and feminine 35 to 54-year-old women who value both fashion and function. Our focus on the 35- to 54-year-old led us to search for data to understand where and how she shopped. We are using this data to inform product design and development and will continue to use this data to target new customers and embark on new partnerships, licensing deals, and collaborations to extend our reach. We've created a multi-year customer file growth plan with a focus on this core consumer target, along with an appropriate level of marketing investment to acquire new customers as we launch new products and our refreshed brand vision mid-year. For the brand, we are strategically marketing our distinctive and unique position as a feminine, fashionable brand that connects with consumers on a deep emotional level. Vera Bradley is a strong brand with tremendous brand recognition, and we're going to make it even stronger by telling a new story about it.

For the consumer we're focusing on restoring brand relevance targeting casual on feminine 35 to 54 year old women, who value both fashion and function.

Our focus on the 35 to 54 year old, let us and purchase data to understand where and how she shops.

We are using this data to inform product design and development and we'll continue to use this data to target new customers and embark on new partnerships licensing deals and collaborations to extend our reach.

We've created a multi year customer file growth plan with a focus on this core consumer target along with an appropriate level of marketing investment to acquire new customers as we launched new product and our refresh brand vision mid year.

For the brand we are strategically marketing, our distinctive and unique position as a feminine and fashionable brand that connects with consumers on a deep emotional level.

Vera Bradley is a strong brand with tremendous brand recognition and we're going to make it even stronger by telling a new story about it.

Jacqueline Ardrey: We are refocusing our marketing efforts and shifting more marketing dollars to increase reach in a more precise way through the right media mix. Our initiatives will include more creative campaigns, enhanced digital reach, increased public relations, and innovative store efforts to drive interest and gain new customers. We're also very excited about our new celebrity partner or chief joy officer, who we will announce this summer.

We are refocusing, our marketing efforts and shifting more marketing dollars to increase reach and a more precise way through the right media mix. Our initiatives will include more creative campaigns enhance digital reach increased public relations and innovative store efforts to drive interest and gain new customers.

We're also very excited about our new celebrity partner, our Chief Joy Officer, who we will announce this summer.

Jacqueline Ardrey: And we are continuing to shift our focus from channel-specific customer acquisition to an omni-channel perspective for increased media effectiveness. For product, we're refocusing our core categories and items we are best at by innovating and expanding within our core products. We are elevating our colorful, feminine heritage, keeping it distinctive but more trend right and modern through updated prints, colors, styles, and designs. And we will continue to enter into strategic adjacent lifestyle item introductions that make sense for our customers. We have the benefit of a strong brand with high brand recognition and will be offering something new in the full line accessory space under a good, better, best halo model. These changes were derived carefully after extensive customer data analysis. There's more attention to key items like travel, bags, and the smaller items that fit inside bags, like wallets and pouches, that allow her to customize her look and personalize her organization.

And we're continuing to shift our focus from channel specific customer acquisition to an omnichannel perspective for increased media effectiveness.

For product, we're refocusing our core categories and items, we are best at by innovating and expanding within our core products.

We are elevating our colorful feminine heritage keeping it distinctive but more trend right and modern through updated prints colors styles and designs.

And we will continue to enter into strategic adjacent lifestyle item introductions that makes sense for our customers.

We had the benefit of a strong brand with high brand recognition and we will be offering something new in the full line accessories space under our good better best Halo model. These changes were derived carefully after extensive customer data analysis, there's more attention to key items like travel bags and these smaller items that fit inside bags like.

Wallets and pouches that allow her to customize her look and personalize her organization Prada.

Jacqueline Ardrey: Products are curated to meet the needs of our customers, offering superior quality in fabrication, components, and overall craftsmanship. We've improved the quality of most of our fabrics while keeping our commitment to the increased use of preferred fibers, and our retail price structure is unchanged. Although the assortment will look new, it is unmistakably Vera Bradley, and our existing customers will still recognize our favorite styles and our distinctive colors, patterns, and quilting. The reception from our wholesale customers who have seen our new products at the Dallas, Atlanta, and New York markets has been extremely positive. I just mentioned leather.

Products are curated to meet the needs of our customers offering superior quality and fabrication components and overall craftsmanship, we've improved the quality of most of our fabrics, while keeping our commitment to increase use of preferred fibers and our retail price structure is unchanged. Although the assortment will look new is unmistakably Vera.

And our existing customers will still recognize our favorite styles and our distinctive colors patterns and quilting.

The reception from our wholesale customers, who have seen our new products at the Dallas, Atlanta, and New York markets has been extremely positive.

I just mentioned leather a revamped leather collection of bags wallets and restless and other accessories debuted last fall leather performed well and the initial collection, mostly sold out we've built on the success and developed a major expansion as part of new day.

Jacqueline Ardrey: Our revamped leather collection of bags, wallets, and wristlets, and other accessories debuted last fall. The leather performed well, and the initial collection mostly sold out. We've built on this success and developed a major expansion as part of New Day. Our outlet stores and outlet website will get new styles, prints, and collaborations, as well as the benefit of select merchandise transferred from full line stores throughout the third quarter. Product collaborations will always be an important part of our brand expression. We continue to see a strong response from partnerships with Disney, Hello Kitty, and Peanuts, and those will continue in all channels.

Our outlet stores and outlet website will get new made for outlet style prints and collaborations as well as the benefit of select merchandise transferred from full line stores throughout third quarter.

Product collaborations will always be an important part of our brand expression. We continue to see strong response from partnerships with Disney Hello, Kitty and Peanuts, and those will continue in all channels.

And then finally for the channel we're building a balanced footprint than more clearly differentiates our full line and outlet Assortments and experience, we will accelerate our digital first focus on online reach while maintaining brand right wholesale relationships and exploring partnerships that will help us acquire new customers.

Jacqueline Ardrey: And then finally, for the channel, we're building a balanced footprint that more clearly differentiates our full line and outlet assortments and experience. We will accelerate our digital-first focus and online reach while maintaining brand-right wholesale relationships and exploring partnerships that will help us acquire new customers. Delivering growth in our e-commerce channels is a key priority. We will accelerate this digital-first focus and elevate our online presence to include more consumer-focused features, storytelling, and personalized experiences. We are improving our online shopping experience and elevating creativity while offering our outlet assortment online on verabradleyoutlet.com for the first time ever.

Delivering growth in our E. Commerce channels is a key priority we will accelerate this digital first focus and elevate our online presence to include more consumer focused features storytelling and personalized experiences we are improving our online shopping experience and elevating creative.

It's offering our outlet assortment online on Vera Bradley outlet Dot com for the first time ever.

We are doing a deep dive into our real estate strategy. Our full line fleet is 80% in malls and not all of them are a malls.

Traffic is declining in some locations and we need to adjust our strategy to optimize a fleet of both full line and outlet stores, we will explore opening new formats, entering new markets relocating stores, where needed and increasing penetration in existing markets.

Jacqueline Ardrey: We are doing a deep dive into our real estate strategy. Our full line fleet is 80% in malls, and not all of them are shopping malls. Traffic is declining in some locations, and we need to adjust our strategy to optimize the fleet of both full line and outlet stores. We will explore opening new formats, entering new markets, relocating stores where needed, and increasing penetration in existing markets. We have already taken several expense-disciplined steps to improve the profitability of our full-line stores. We will update our entire existing full-line store fleet with new branding and an improved shopping experience. The stores will reflect a more modern, less cluttered, and easier-to-shop experience with new fixtures and lighting, allowing the product to shine. Our current year capital budget of $12 to $14 million is triple last year's spending, and much of this is attributable to these remodels.

We've already taken several expense disciplined steps to improve the profitability of our full line stores.

We will update our entire existing full line store fleet with new branding and an improved shopping experience the stores will reflect a more modern less cluttered and easier to shop experience with new fixtures and lighting, allowing the product product to shine.

Our current year capital budget of $12 million to $14 million is triple last year's spending and much of this is attributable to these remodels. In addition, we plan to open two full line stores. This year and are in the process of identifying prudent modest store expansion plans for the future.

We are also exploring new full line formats with a focus on lifestyle centers.

We're also taking a comprehensive approach to addressing the trends in Vera Bradley's outlet channel. We are reviewing all aspects of the outlet operating model for changes and improvements keep in mind that the outlet channel remains highly profitable and we will open one new outlet store this year.

Jacqueline Ardrey: In addition, we plan to open two full-line stores this year and are in the process of identifying prudent, modest store expansion plans for the future. We are also exploring new full-line formats with a focus on lifestyle centers. We're also taking a comprehensive approach to addressing the trends in Vera Bradley's outlet channel. We are reviewing all aspects of the outlet operating model for changes and improvements.

Maintaining brand right wholesale relationships are important and we are actively working with new specialty retailers, where we know our customer is shopping.

As you can see there's a lot going on at Vera Bradley.

Now, let me turn to PURA Vida, where we are shifting our focus to delivering profitability and balancing the e-commerce business with wholesale and retail stores.

Peer viewed as revenues have declined the last few quarters largely as a result of increased digital media costs that led to new to lower customer acquisition.

Jacqueline Ardrey: Keep in mind that the outlet channel remains highly profitable, and we will open one new outlet store this year. Maintaining brand-right wholesale relationships is important, and we are actively working with new specialty retailers where we know our customers are shopping. As you can see, there's a lot going on at Vera Bradley. Now, let me turn to Pura Vida, where we are shifting our focus to delivering profitability and balancing the e-commerce business with wholesale and retail stores. Pura Vida's revenues declined in the last two quarters largely as a result of increased digital media costs that led to new, lower customer acquisition.

We diversified our marketing spend and are making additional efforts to retain customers while continuing to work on each pillar of project restoration.

For the consumer we're sharpening our focus on the 18 to 24 year old Collegiate girl, we will shift our marketing strategy to increase appeal to Jens <unk> based on our most recent research.

For the brand we're re centering our brand ethos on living life to the fullest sharing real moments places in phases in our marketing campaigns and sharpening our focus on Gen Z.

We are more analytical using our newly implemented comprehensive customer data platform to more strategically target customers and potential customers with a focus on acquisition, but especially on repeat purchases and retention.

Jacqueline Ardrey: We diversified our marketing spend and are making additional efforts to retain customers while continuing to work on each pillar of project restoration. For the consumer, we're sharpening our focus on the 18 to 24 year-old college girl. We will shift our marketing strategy to increase appeal to Gen Z based on our most recent research. And for the brand, we are refocusing our brand ethos on living life to the fullest, sharing real moments, places, and faces in our marketing campaigns, and sharpening our focus on Gen Z. We are more analytical, using our newly implemented comprehensive customer data platform to more strategically target customers and potential customers with a focus on acquisition, but especially on repeat purchases and retention. This significantly enhanced customer reporting and increased analytics have made us smarter in analyzing challenges, and we are investing in new tools to A-B test and improve the site experience and conversion.

This significantly enhanced customer reporting any increased analytics have made a smarter and analyzing challenges and we are investing in new tools to a b test and improve the site experience and conversion.

For product, we are focused on delivering unique fun playful designs that are affordable and accessible with a dominant emphasis on bracelets and jewelry as well as other strategic adjacent categories. We will continue to innovate around string bracelets and our other jewelry and accessory categories are custom bracelets from Harper charms to engrave.

Items two building your own bracelets are popular and continue to be a big growth opportunity.

We will continue to pursue high profile collaborations like Hello, Kitty Shark week, and Harry Potter, which are always fan favorites and bring new customers to the brand.

Social responsibility is important to the PURA vida customer and we back this through our charity program, which supports dozens of causes.

Jacqueline Ardrey: For product, we are focused on delivering unique, fun, playful designs that are affordable and accessible with a dominant emphasis on bracelets and jewelry, as well as other strategic adjacent categories. We will continue to innovate around string bracelets and our other jewelry and accessory categories. Our custom bracelets, from Harper charms to engraveable items to building your own bracelets, are popular and continue to be a big growth opportunity.

And finally for channel we continue to have strong focus on restoring ecommerce growth with a greater focus on our repeat purchases as well as strategic growth of wholesale. Additionally, our success in our retail stores has driven us to find new store locations for this year and beyond we expect to open at least two new additional stores this year.

Now, let me turn the call over to CFO, Michael Swindell to review the financial results Michael.

Thank you Jackie and good morning, everyone and thank you for joining US before we open for questions I have a few highlights for the fourth quarter and the full year to cover for the sake of clarity the numbers I am discussing today are all non-GAAP and nature and exclude the charges outlined in today's press release.

Michael Schwindle: We will continue to pursue high-profile collaborations like Hello Kitty, Shark Week, and Harry Potter, which are always fan favorites and bring new customers to the brand. Social responsibility is important to the Pura Vida customer, and we back this through our charity program, which supports dozens of causes. And finally, for Channel, we continue to have a strong focus on restoring e-commerce growth with a greater focus on repeat purchases as well as strategic growth of wholesale. Additionally, our success in retail stores has driven us to find new store locations for this year and beyond. We expect to open at least two new additional stores this year. Now, let me turn the call over to CFO Michael Schwindle to review the financial results. Thank you, Jackie. Good morning, everyone.

Complete detail of items excluded from our non-GAAP numbers as well as a reconciliation of GAAP to non-GAAP can also be found in the release.

Beginning with our fourth quarter consolidated net revenues totaled $133 $3 million compared to $147 $1 million in the prior year.

Consolidated net income totaled $3 $5 million or 11 cents per diluted share.

Compared to a net loss of $1 million or three cents per diluted share last year.

The current year fourth quarter consisted of 14 weeks compared to 13 weeks in the prior year fourth quarter. The full year of fiscal 'twenty. Four consisted of 53 weeks compared to 52 weeks in the prior fiscal year.

Michael Schwindle: And thank you for joining us. Before we open for questions, I have a few highlights for the fourth quarter and the full year to cover. For the sake of clarity, the numbers I am discussing today are all non-GAAP in nature and exclude the charges outlined in today's press release. A complete detail of items excluded from the non-GAAP numbers, as well as a reconciliation of GAAP to non-GAAP, can also be found in the release.

Comparable sales discussed for Jackie and myself. During this call were calculated based on 13 weeks in each of the fourth quarters and 52 weeks in each of the fiscal years.

The additional week contributed approximately $6 million in net revenues and increased earnings per share by approximately one penny for both the current year fourth quarter and the fiscal 'twenty 'twenty four year.

Current year fourth quarter, Vera Bradley direct segment revenues totaled $93 million or six 6% decrease from 90 $945 million in the prior year fourth quarter.

Michael Schwindle: Beginning with our fourth quarter, consolidated net revenues totaled $133.3 million compared to $147.1 million in the prior year. Consolidated net income totaled $3.5 million, or 11 cents per diluted share, compared to a net loss of $1 million or 3 cents per diluted share last year. The current year, fourth quarter, consisted of 14 weeks compared to 13 weeks in the prior year, fourth quarter. The full year, fiscal 24, consisted of 53 weeks compared to 52 weeks in the prior fiscal year.

Comparable sales decreased 10% from the prior year, largely driven by weakness in the outlet and full line channels.

Total revenues were also impacted by store closures over the last 12 months, including eight full line stores and one outlet store. While we also opened three outlet stores over the last 12 months.

Beer Bradley indirect segment revenues totaled $16 1 million or three 7% decrease over $16 7 million in the prior year fourth quarter. The decrease was primarily related to lower sales to certain specialty partners and key accounts.

Michael Schwindle: Comparable sales discussed by Jackie and myself during this call were calculated based on 13 weeks in each of the fourth quarters and 52 weeks in each of the fiscal years. The additional week contributed approximately $6 million in net revenues and increased earnings per share by approximately one penny for both the current year's fourth quarter and the fiscal 2024 year. Current year, fourth quarter, Vera Bradley direct segment revenues totaled $93 million, a 6.6% decrease from $99.5 million in the prior year, fourth quarter. Comparable sales decreased 10% from the prior year, largely driven by weakness in the outlet and full line channels.

Peer Vida segment revenues totaled $24 $2 million or 21, 6% decrease from $39 million in the prior year fourth quarter, primarily a result of declines in E Commerce and wholesale sales force.

Fourth quarter gross margin totaled $69.6 million or 52, 3% of net revenues compared to $67 million or 41, 3% of net revenues. The current year gross margin rate compared to the prior year rate was favorably impacted by lower year over year inventory reserve charges lower inbound.

And outbound freight expense lower supply chain cost and sell through of previously reserved inventory, partially offset by increased promotional activity.

Michael Schwindle: Total revenues were also impacted by store closures over the last 12 months, including eight full-line stores and one outlet store, while we also opened three outlet stores over the last 12 months. Direct Segment revenues totaled $16.1 million, a 3.7% decrease over $16.7 million in the prior year fourth quarter. The decrease was primarily related to lower sales to certain specialty partners and key accounts. Peer Vita segment revenues totaled $24.2 million, a 21.6% decrease from $30.9 million in the prior year fourth quarter, primarily a result of declines in e-commerce and wholesale sales.

Prior year gross margin was materially impacted by inventory reserve charges and high inbound and outbound freight expense as well as overhead cost.

SG&A expenses in the fourth quarter totaled $65 $7 million or 49, 3% of net revenues compared to $64.4 million or 43, 8% of net revenues in the prior year fourth quarter.

Fear Bradley's current year non-GAAP SG&A expenses were higher than the prior year quarter, primarily due to incremental marketing expenses in the quarter, partially offset by savings from companywide cost reduction initiatives.

Fourth quarter consolidated operating income totaled $4 $1 million or three 1% of net revenues compared to consolidated net operating loss of $3 $5 million or two 4% of net revenues in the prior year.

Now turning to the full year results, our consolidated net revenues for the year totaled $478 million compared to $500 million last year Consol.

Michael Schwindle: Fourth quarter gross margin totaled $69.6 million, or 52.3% of net revenues, compared to $60.7 million, or 41.3% of net revenues. The current year gross margin rate compared to the prior year rate was favorably impacted by lower year-over-year inventory reserve charges, lower inbound and outbound freight expense, lower supply chain costs, and selling through a previously reserved inventory, partially offset by increased promotional activity. Prior year gross margin was materially impacted by inventory reserve charges and high inbound and outbound freight expenses as well as overhead costs. SG&A expenses in the fourth quarter totaled $65.7 million, or 49.3% of net revenues, compared to $64.4 million or 43.8% of net revenues in the prior year fourth quarter. Vera Bradley's current year non-GAAP SG&A expenses were higher than the prior year, primarily due to incremental marketing expenses in the quarter, partially offset by savings from company-wide cost reduction initiatives.

Consolidated net income totaled $17 2 million or 55 cents per diluted share compared to a net loss of $3 $2 million or 10 cents per diluted share last year.

Fear Bradley direct segment revenues for the current your current fiscal year totaled $309 $9 million.

Five 6% decrease.

From $328 $2 million in the prior year.

Comparable sales.

For the year declined by seven 1%.

Vera Bradley indirect segment revenues for the fiscal year totaled $73 $8 million, a 0.7% increase over $73 3 million in prior year, primarily reflecting an increase in certain key account orders, partially offset by a decline in certain specialty partner revenues.

Current year PURA Vida segment revenues totaled $87 $1 million, an 11.5% decrease from $98 $4 million in the prior year, reflecting declines in e-commerce and wholesale sales, partially offset by growth in retail store sales.

Gross margin for the current fiscal year totaled $256 $4 million or 54.5% of net revenues compared to $245 million or 48, 1% of net revenues last year. The current year gross profit rate compared to the prior year was favorably impacted again by.

Michael Schwindle: The fourth quarter consolidated operating income totaled $4.1 million, or 3.1% of net revenues compared to a consolidated net operating loss of $3.5 million, or 2.4% of net revenues in the prior year. Now turning to the full year results, our consolidated net revenues for the year totaled $470.8 million compared to $500 million last year. Consolidated net income totaled $17.2 million, or $0.55 per diluted share, compared to a net loss of $3.2 million, or $0.10 per diluted share, last year.

Year over year inventory reserve charges lower year over year, inbound and outbound freight expense lower supply chain costs and sell through of previously reserved inventory, partially offset by an increase in promotional activity.

For the fiscal year, SG&A expense totaled $234 $7 million or 49, 9% of net revenues compared to $245 3 million or 49, 1% of net revenues in the prior year. The decline in the current year expenses was driven by company wide cost reduction initiatives.

For the fiscal year.

The company's consolidated operating income totaled $22 $6 million or full 0.8% of net revenues compared to consolidated operating loss of $4 $4 million or point to 9% of net revenues in the prior year.

Michael Schwindle: Vera Bradley direct segment revenues for the current fiscal year totaled $309.9 million, a 5.6% decrease from $328.2 million in the prior year; comparable sales for the year declined by 7.1%. Vera Bradley Indirect Segment revenues for the fiscal year totaled $73.8 million, a 0.7% increase over $73.3 million in the prior year, primarily reflecting an increase in certain key account orders, partially offset by a decline in certain specialty partner revenues Current year Pura Vida segment revenues totaled $87.1 million, an 11.5% decrease from $98.4 million in the prior year, reflecting declines in e-commerce and wholesale sales, partially offset by growth in retail store sales. Gross margin for the current fiscal year totaled $256.4 million, or 54.5 percent of net revenues compared to $240.5 million or 48.1 percent of net revenues last year.

Now turning to the balance sheet, our fiscal year end cash and cash equivalents totaled $77 $3 million compared to $46 6 million at the end of the last fiscal year.

We continue to have no borrowings on our $75 million ABL facility at year end.

Total fiscal year end inventory was $118 $3 million compared to $142 3 million last year.

We've taken strategic actions to reduce our inventory levels and believe we are appropriately positioned as we head into spring and prepare for our new product launches in July.

In fiscal 'twenty 'twenty four we purchased approximately 360000 shares of common stock at an average price of $6 10 per share for an aggregate of approximately $2 $2 million.

$25 $5 million remains under our $50 million repurchase authorization that expires in December of 2024.

Now looking forward to our guidance for fiscal 2025, our estimates for fiscal 'twenty twenty-five are based on current macroeconomic trends and expectations as we begin to unveil the results of project restoration and the launch of new day mid year.

Michael Schwindle: The current year gross profit rate compared to the prior year was favorably impacted again by year-over-year inventory reserve charges, lower year-over-year inbound and outbound freight expense, lower supply chain costs, and sell-through of previously reserved inventory partially offset by an increase in promotional activity. For the fiscal year, SG&A expense totaled $234.7 million, or 49.9% of net revenues, compared to $245.3 million, or 49 The decline in current year expenses was driven by company-wide cost reduction initiatives.

As a result of this timing we expect to continue to experience some revenue challenges in the first half of the fiscal year and see improving sales and profitability trends in the second half of the year.

We expect to continue to take advantage.

Of gross margin improvement opportunities and we'll manage our expense structure diligently.

As a reminder, all forward looking guidance numbers are on a non-GAAP basis.

For the full year fiscal 2025, we expect consolidated net revenues of $460 million to $480 million.

As a reminder, net revenues totaled $478 million in fiscal 2024.

Michael Schwindle: For the fiscal year, the company's consolidated operating income totaled $22.6 million, or 4.8 percent of net revenues, compared to a consolidated operating loss of $4.4 million, or 0.9 percent of net revenues in the prior year. Now turning to the balance sheet, our fiscal year-end cash and cash equivalents totaled $77.3 million, compared to $46.6 million at the end of the last fiscal year. We continue to have no borrowings in our $75 million ABL facility at year-end.

We expect beer Bradley brand sales to grow by low single digits for the year with accelerating sales in the second half as we launch new products branding and marketing.

We anticipate PURA Vida brand sales will decline in the mid teen range as we continue to manage the business for profitability by addressing marketing efficiencies impacting ecommerce sales, which were partially offset by increased retail sales.

We also expect consolidated gross margin of 54% to 55% compared to 54, 5% in fiscal 2024.

Michael Schwindle: Total fiscal year-end inventory was $118.3 million, compared to $142.3 million last year. We have taken strategic actions to reduce our inventory levels and believe we are appropriately positioned as we head into spring and prepare for our new product launches in July. In fiscal 2024, we purchased approximately 360,000 shares of common stock at an average price of $6.10 per share for an aggregate of approximately $2.2 million. $25.5 million remains under our $50 million repurchase authorization, and that expires in December 2024. Now looking forward to our guidance for fiscal 2025, our estimates for fiscal 2025 are based on current macroeconomic trends and expectations as we begin to unveil the results of project restoration and the launch of new day midyear. As a result of this timing, we expect to continue to experience some revenue challenges in the first half of the fiscal year and see improving sales and profitability trends in the second half of the year. We expect to continue to take advantage of Gross Margin Improvement Opportunities and will manage our expense structure diligently. As a reminder, all forward-looking guidance numbers are on a non-GAAP basis.

The fiscal 2025 gross profit rate is expected to be relatively flat to last year due to product margin improvements and lower supply chain costs offset by increased shipping costs.

Consolidated SG&A expense is expected to range from $229 million to $239 million compared to $234 $7 million last year.

Year over year SG&A expenses are expected to be relatively flat to last year, driven by incremental marketing investments associated with the new day launch offset by a companywide expense reductions and lower PURA Vida expenses.

This results in anticipated consolidated operating income of 21 to $24 5 million compared to $22 $6 million in fiscal 2024.

Along with diluted earnings per share of 54 cents to <unk> 62, compared to 55 cents last year.

We also expect net capital spending of approximately $12 million to $14 million versus $3 $8 million last year.

This spend reflects investments associated with new and remodeled stores as well as technology and logistics enhancements.

As a result, our free cash flow is anticipated to be approximately $10 million in fiscal 2025 compared to $44 $2 million in fiscal 2024.

And that concludes our formal remarks, so sherry, we'd like to open up the call for questions.

Michael Schwindle: For the full year fiscal 2025, we expect consolidated net revenues of $460 to $480 million. As a reminder, net revenues totaled $470.8 million in fiscal 2024. We expect Vera Bradley brand sales to grow by low single digits for the year, with accelerating sales in the second half as we launch new products, branding, and marketing. We anticipate Pura Vida brand sales to decline in the mid-teen range as we continue to manage the business for profitability by addressing marketing efficiencies impacting e-commerce sales, which will be partially offset by increased retail sales.

If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.

May press Star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star T. Our first question is from Joe Gomes with Noble capital markets. Please proceed.

Okay.

Good morning.

Good morning, Joe.

Michael Schwindle: We also expect consolidated gross margin of 54 to 55% compared to 54.5% in fiscal 2024. The fiscal 2025 gross profit rate is expected to be relatively flat to last year due to product margin improvements and lower supply chain costs offset by increased shipping costs. Consolidated SG&A expense is expected to range from $229 to $239 million compared to $234.7 million last year.

So.

Jack you talked about a lot of changes coming on both of the brands.

In.

Calendar year 2024.

You've been there for 18 months, Michael you've been there for about a year.

You talked about project restoration for roughly a year.

The challenge.

Turning around that just that much bigger than you originally anticipated or is there.

Just things that are occurring it's taken us.

A long relatively long period of time to get your hands around it in order to come up with the changes here that you've outlined today.

Michael Schwindle: Year over year, SG&A expenses are expected to be relatively flat to last year, driven by incremental marketing investments associated with the new day launch, offset by company-wide expense reductions and lower Pura Vida expenses. This results in anticipated consolidated operating income of $21 to $24.5 million compared to $22.6 million in fiscal 2024, along with diluted earnings per share of $0.54 to $0.62 compared to $0.55 last year. We also expect a net capital expenditure of approximately $12 to $14 million versus $3.8 million last year. This spend reflects investments associated with new and remodeled stores, as well as technology and logistics enhancements. As a result, our free cash flow is anticipated to be approximately $10 million in fiscal 2025 compared to $44.2 million in fiscal 2024.

That's a that's a great question, Joe and the short answer to that is is no. We are absolutely on track in terms of our.

Efforts to turn around the business are.

The first thing that we really had to deal with was our are very long product lifecycle.

So you know I've been here about 15 months and our product lifecycle is roughly 18 months. So you.

You don't kind of getting into seat and then hiring the team too to be able to do this level of transformation.

We were right really where we need to be in terms of launching all of this in the middle of the year and I would say further that to that that it is this.

This is a it's a big change and it's the one thing you know over the years.

Many people have followed the brand and Theres been a lot of things that Vera Bradley specifically that we've done.

This is a different effort. This is a very comprehensive effort that's really.

You outlined by project restoration, it's not just one part of the pillar its the entire pillar. So so this was a bigger effort and then expect to see that in the middle of the year. When we launch new day for Vera Bradley that we'll see we'll see some some really good results.

Operator: And that concludes our formal remarks. Now, Sherry, we'd like to open up the call for questions. Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Joseph Anthony Gomes: You may press star 2 if you would like to remove your question from the line. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. Our first question is from Joe Gomez with Noble Capital. Transcribed by https://otter.ai. Good morning. Morning Joe.

On the PURA vida side or different definitely different issues.

Seeing some other external issues that have really kind of caused us to say you know what this is a business that we're going to manage for profitability and we did that this year, we did that for the year, we did that for the quarter.

So I feel our plans are really on track.

Jacqueline Ardrey: So just Jackie, you've talked about a lot of changes coming to both of the brands and calendar year 2024. You know, you've been there for 18 months. Michael, you've been there for about a year. You know, talked about project restoration for roughly a year, of turning around that just that much bigger than you originally anticipated? Or are there, you know, just things that are happening that it's taken you a long, a relatively long period of time to get your hands around in order to come up with the changes here that you've outlined today? That's a great question, Joe.

Okay. Thanks for that appreciate that and.

In the.

The comments today you talked about.

Improving the quality, but fabrics with.

Changed retail price does that have any margin impact or have you got to the point where margins.

Won't.

Impact margins by improving the quality of your fabrics about maintaining price.

Yeah, that's a that's a great question too and we kind of expected that that one today, but we.

So it is definitely it did so the short answer to that is no. We are actually expecting our product margins to be about the same or a little bit better we have theirs and that's because of a mix shift for sure.

Jacqueline Ardrey: And the short answer to that is, no, we are absolutely on track in terms of our efforts to turn around the business. The first thing that we really had to deal with was our very long product life cycle. So, you know, I've been here about 15 months, and our product life cycle is roughly 18 months. So, you know, kind of getting in the seat and then hiring the team to be able to do this level of transformation.

Is one element and then another element is just the designs that we've we've just been able to design into.

Jacqueline Ardrey: You know, we're right really where we need to be in terms of launching all of this in the middle of the year. And I would say further to that that it is, it's a big change and it's the one thing, you know, over the years, many people have followed the brand, and there are a lot of things at Vera Bradley specifically that we've done. This is a different effort. This is a very comprehensive effort that's really, you know, outlined by project restoration. It's not just one part of the pillar; it's the entire pillar.

Into styles that can highlight the fabrics, the new and improved fabrics that we're using.

With less make.

Okay. Thank you.

You also talked about.

The new full wide format with a focus on lifestyle centers.

And I was wondering if you could just kind of give us what you meant by that or what you mean by that.

Sure. It it just it's really just the alternative to are in mall.

Jacqueline Ardrey: So this was a bigger effort, and then I expect to see that in the middle of the year when we launch a new day for Vera Bradley, we'll see some really good results. On the Pura Vida side, different, definitely different issues.

<unk>, which is currently the majority of our fleet, we would we would like to mix up that.

Ratio and be in a little more lifestyle center. So places that are shopping.

Jacqueline Ardrey: We're, you know, seeing some other external issues that have really kind of caused us to say, you know what? This is a business that we're going to manage for profitability. And we did that this year. We did that for the year. We did that for the quarter.

Shopping centers that are anchored with whole.

Whole foods and in places, where she's going all the time. So you know all of this is is really centered around for Vera Bradley centered around the customer and understanding where she shops.

Jacqueline Ardrey: So, you know, I feel our plans are really on track. Okay, thanks for that. I appreciate that. In the comments today, you talked about, you know, improving the quality of the fabrics with the unchanged retail price. Does that have any margin impact, or have you got to the point where, you know, margins won't impact margins by improving the quality of your fabrics but maintaining the price?

Not only from a specialty or a lifestyle retailer point of view, but where she's going every day and how do we just get in more in the front of her mind and consideration set.

Okay, and one more if I may.

So 25 fiscal 'twenty five is.

Based on your guidance today kind of going to be a replay of 24 from a financial point of view.

Jacqueline Ardrey: Yeah, that's a great question, too. And we kind of expected that one today, but we, so the short answer to that is no, we are actually expecting our product margins to be about the same or a little bit better. We have there, and that's because of mix shift, for sure.

I was just wondering what what do you think or what do you see could occur.

May 'twenty five a better outcome from a financial point of view than 'twenty four.

Jacqueline Ardrey: And then another element is just the designs that we've, we've just been able to design into styles that can highlight the fabrics, the new and improved fabrics that we're using with less make. Okay, thank you. And you also talked about the new full line format with a focus on the lifestyle center. And I was wondering if you could just kind of give us what you meant by that or what you meant by, Sure, it's just it's really just the alternative to our in mall formats, which is currently the majority of our fleet. We would we would like to mix up that, Racial, and be in a little more of a lifestyle center. So, you know, places that are shopping centers that are anchored by whole foods and places where she goes all the time. So, you know, all of this is really centered around, for Vera Bradley, the customer and understanding where she shops, not only from a specialty or lifestyle retailer point of view, but where she goes every day. And how do we just get in more at the front of her mind and consideration set?

Yeah, Michael you want take that.

Let me jump in first I think the first and the biggest of this would be.

Customer reaction on the other side of new day, we are being.

Pretty diligent and judicious in our expectations, making sure that we've got an organization that's focused on delivering so to the extent that consumer reaction is obviously better than what we had plans I would obviously be better results as well.

Additionally.

As I mentioned in my forward looking comments, we are anticipating some continued overhang economic macroeconomic overhang.

We saw over the course of 2024, and we talked about this on prior calls we saw sequential declines in traffic patterns across most of the year.

That continued through into the fourth quarter as well and that's reflected in a lot of other retailer results that have been released over the last week or two.

So we have continued to anticipate that some portion of that is going to continue to a hangover into 2025. So if that outlook gets better then of course, the rising tide lifts all boats on that as well.

Great I appreciate you guys, taking my questions and look forward to an interesting 2025.

Jacqueline Ardrey: For more information, visit www.fema.gov. And one more, if I may. So, fiscal 25. Based on your guidance today, it's kind of going to be a replay of 24 from a financial point of view. And I was just wondering, you know, what do you think or what do you see could occur that might make 25 a better outcome from a financial point of view than 24?

Thanks, Joe Thanks, Joe.

Our next question is from Eric Speeder with.

SCC research. Please proceed.

Good morning.

Eric.

Good morning, Steve.

So you've made tremendous progress in terms of reducing inventory levels.

I gather from what I'm reading your Guy that's going to start to level off how should we be thinking about the inventories going forward.

Michael Schwindle: Let me jump in first. I think the first and biggest concern would be customer reaction on the other side of New Day. We are being pretty diligent and judicious in our expectations, making sure that we've got an organization that's focused on delivering. So to the extent that consumer reaction is obviously better than what we had planned, that would obviously be better results as well. I think additionally, as I mentioned in my forward-looking comments, we are anticipating some continued overhang, economic macroeconomic overhang. We saw, over the course of 2024, and we talked about this on prior calls, sequential declines in traffic patterns across most of the year, that continued through into the fourth quarter as well.

Yes.

Broadly.

We guided to broadly we're expecting inventory to be relatively flat on a year end every year end basis in fiscal 'twenty. Five however, given what's going on underneath the surface that that will actually represent a bit of an improvement.

We are doing a fairly substantial.

Merchandise shift across our channels as part of launching new debt, which will happen mid year.

Additionally, there there might be some additional unit improved unit turnover improvements that I think will be under the surface beyond that as well.

And we'll see as we go forward broadly you should start to see sales and inventory patterns run similarly.

On the other side of that but.

We think that it'll actually a year and flat will be actually some structural improvement under the hood.

Okay.

<unk>.

You talked about looking at the.

Michael Schwindle: That's reflective of a lot of other retailer results that have been released over the last week or two. So we have continued to anticipate that some portion that's going to continue to hang over into 2025. So if that outlook gets better, then of course, the rising tide lifts all boats on that as well.

While youre hitting stores, you've also talked about looking at the composition of the stores you have what do you have in terms of lease explorations and flexibility.

Do that now and going forward.

That's a great question, we have Oh gosh every year, we have a body of stores come up for renewal as we are approaching landlords at this juncture. We are finding a lot of receptivity to renegotiating lease terms as we as we move forward.

Joseph Anthony Gomes: Great. I appreciate you guys taking my questions and look forward to an interesting 2025. Thanks, Joe. Thanks, Joe. Our next question is from Eric Beder with SCC Research, please. Good morning. Good morning, Eric.

Broadly there's a couple of closures that will happen. This year on the full line side, but broadly we're very happy with the fleet as it is.

And are looking to continue to extend our stays that as Jackie mentioned.

Michael Schwindle: We've made tremendous progress in terms of reducing inventory levels, and I gather from what I'm hearing in your guide, that's going to start to level off. How should we be thinking about inventories going forward? Broadly, as we guide it, we're expecting inventory to be relatively flat on a year-end over year-end basis in fiscal 25. However, given what's going on underneath the surface of that, that will actually represent a bit of an improvement. We are doing a fairly substantial merchandise shift across our channels as part of launching New Day, which will happen mid-year. Additionally, there might be some additional unit to turnover improvements that I think will be under the surface beyond that as well.

Theres a body of work that we will be doing in our stores this coming year.

As part of new day, so there'll be a lot of refreshing going on in our stores. So that's part of the conversation as well.

We have we started to have initial conversations with landlords and.

I think the landlords are excited about what we're doing and the outlook on both product and store refreshes.

Great is the goal to have the refresh is done at the start of new day or is that going to be an ongoing process, how should we be thinking about that.

I think the short answer to your question is yes.

No. This is one of those that with all of the different refreshes across all of the different stores.

Michael Schwindle: And we'll, we'll see as we go forward broadly, you should start to see sales and inventory patterns run similarly on the other side of that. But we think that it'll actually year end flat, there will actually be some structural improvement under the, Okay, um. You know, you talked about looking at the, while you're adding storage, you also talked about looking at the composition of the storage you have; what do you have in terms of lease expirations and flexibility to do that now and going forward? That's a great question.

Not all exactly synchronized to the day of product arriving in stores, but we're working very diligently as a team to make sure that everything is coordinated as tightly as possible.

Okay and when we look at you know you kind of hinted around this one.

What should we be thinking in terms of the categories that are going to be in the stores are they are you are we going to see less categories and a deeper focus I think you've kind of imply that but I'd like to get kind of a kind of from an beyond travel what are the key core categories that you wanted to begin.

Michael Schwindle: You know, we have, gosh, every year we have a body of stores come up for renewal. As we are approaching landlords at this juncture, we are finding a lot of receptivity to renegotiating lease terms as we move forward. Broadly, there's a couple of closures that will happen this year on the full line side.

Yeah. That's a that's a great question, Eric and I think it's going to it'll it'll vary a little bit from the outlet.

The outlet segment to the full line segment. So in outlet, you'll you'll largely see that the categories remain unchanged, where we're looking.

Michael Schwindle: But broadly, we're very happy with the fleet as it is and are looking to continue to extend our stays. As Jackie mentioned, there's a body of work that we will be doing in our stores this coming year as part of the new day. So there'll be a lot of refreshing going on in our stores. So that's part of the conversation as well.

Obviously, we have a lot of tests that are going on right now from a marketing store merchandising price points discounts everything a lot a lot of tests around the outlet fleet now, but largely you won't see a lot of difference in terms of product category.

Michael Schwindle: We've started to have initial conversations with landlords. And, you know, I think the landlords are excited about what we're doing. And I'll look at both product and store refreshes. Great. Is the goal to have the refreshes done at the start of New Day, or is that going to be an ongoing process? I should be thinking about that. I think the short answer to your question is yes.

You will likely see some difference in offer breadth and reduction there.

And then on the full line side.

Really in the stores.

There will be more of a focus on travel and bags really that's where we looked at the data.

Michael Schwindle: You know, this is one of those that with all of the different refreshes across all of the different stores, it will not all be exactly synchronized to the day of the product arriving in the stores, but we're working very diligently as a team to make sure that everything is coordinated as tightly as possible. And when we look at, you know, kind of hinted around, what should we be thinking in terms of the categories that are going to be in the stores? Are we going to see fewer categories and a deeper focus? I think you've kind of implied that, but I'd like to get kind of a confirmation.

That is the place where we're really owed businesses is bags not as much backpacks and backpacks, we've kind of maintain.

Maintained our business over the years, but but true handbags belt bag. Some of those there's little little more fashionable items, we have not been as strong so you'll definitely see a commitment to travel which is really the core of our brand, but then some extension.

Into bags and.

Potentially some unproductive.

Unproductive categories are moving out of the full line stores.

Okay and last one on PURA Vida.

Jacqueline Ardrey: Beyond travel, what are the key core categories that you want to be in? Yeah, that's a great question, Eric. And I think it's going to, it'll, it'll vary a little bit from the outlet, the outlet segment to the full line segment. So in an outlet, you'll largely see that the categories remain unchanged. Though we're looking, obviously, we have a lot of tests that are going on right now, from marketing, store merchandising, price points, discounts, everything, a lot of tests around the outlet fleet. But largely, you won't see a lot of difference in terms of product category breath. You will likely see some difference in offer breath and reduction there. And then on the full line side.

So you mentioned opening some more stores and PURA Vida, obviously, the sales have been tough.

Are you still seeing the strong results in the stores that you are open to mix and that gets the surrounding areas to justify more stores and what would be different on.

The stores are opening now and the ones who did the first two berth debris.

Yeah. That's a that's a great question I'll I'll take the first part and then I'll, let Michael add if there's anything.

So we still see that this is a the PURA vida performances is largely it said you can it's almost three different businesses in terms of the category results are there.

Jacqueline Ardrey: Really, in the stores, there will be more of a focus on travel and bags. Really, that's where we looked at the data. That is the place where we're really owed business for bags, not as much backpacks. I mean, backpacks, we've kind of maintained our business over the years. But true, you know, handbags, belt bags, some of those little more fashionable items, we have not been as strong.

The channel results.

And retail is still strong and very profitable and E. Commerce really is because so much of the business is in e-commerce and the.

The minute that we hit increased cost that that affect our new customer acquisition rate.

Jacqueline Ardrey: So you'll definitely see our commitment to travel, which is really the core of our brand, but then some extension into bags and, you know, potentially some unproductive categories moving out of the full-line stores. Okay, and last one on Pura Vida. So, you mentioned opening some more stores in Pura Vida. Obviously, the sales have been tough. You know, are you still seeing the strong results in the stores that you have opened and, I guess, the surrounding areas to justify more stores? And what would be different about the stores you're opening now than the ones you did the first two or three? Yeah, that's a great question. I'll take the first part, and then I'll let Michael add more if there's anything.

You definitely see challenges in the topline so but.

But we still feel strongly about the stores some of the stores that we opened last year are really good. So we're kind of looking at how do we take that specific model and find the places.

That are going to produce the same result, so.

So that's really what we're what we're doing right now anything to add I would add that.

Since I'm really good success in tourist oriented areas and as we look forward in our mapping out. The next couple of stores, that's been where our focus is I think the upside from that from a broader branding a business perspective is it gives you a much bigger footprint nationally than it does just on the local market because you're tapping people are.

Jacqueline Ardrey: So we we still see that this is a pure Vita performance, largely it's a you know, it's almost three different businesses in terms of the category results and the channel results. And retail is still strong and very profitable. And, you know, e-commerce really is because so many of the businesses in e-commerce are e-commerce businesses. And, you know, the minute that we hit increased costs that that affect our new customer acquisition rate, you definitely see challenges on the top line.

Coming into that area from all over the country.

Okay, Alright, guys look forward to seeing this all in July thank you.

Alright, Thanks, Aaron Thank you Eric.

As a reminder to star one on your telephone keypad, if he would like to ask a question. We will just pause for a brief moment to see if there's any final questions.

Jacqueline Ardrey: So, but we still feel strongly about the stores. Some of the stores that we opened last year are really good, so we're kind of looking at how we take that specific model and, you know, find the places where we are that are going to produce those same results.

With no further questions I would like to hand, the conference back over to Jacky for closing remarks.

Thank you Sherry our.

Our entire team is dedicated to returning the company to profitable growth and generating strong cash flow through project restoration, which should deliver value to our shareholders over the long term. We are on track with our project restoration initiatives. Thank you for joining us today, and we look forward to sharing our progress with you on our first quarter earnings call on June 12.

Michael Schwindle: So, that's really what we're doing right now. Anything to add? I would add that we've seen some really good success in tourist-oriented areas. And as we look forward and are mapping out the next couple of stores, that's a bit where our focus is. I think the upside from that from a broader branding and business perspective is it gives you a much bigger footprint nationally than it does just in the local market because you're tapping into people who are coming in and out of the country. And you're not just tapping into people who are coming into that area from all over the country.

Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Okay.

Yes.

Eric Martin Beder: Okay. All right, guys. Look forward to seeing this all in July.

[music].

Jacqueline Ardrey: Thank you. Thanks, Eric. As a reminder to press 1 on your telephone keypad if you would like to ask a question, we will just pause for a brief moment to see if there are any final questions. With no further questions, I would like to hand the conference back over to Jackie for closing remarks. Thank you, Sherry. Our entire team is dedicated to returning the company to profitable growth and generating strong cash flow through project restoration, which should deliver value to our shareholders over the long term. We are on track with our project restoration initiatives.

Yeah.

[music].

Yes.

Yes.

Yeah.

Jacqueline Ardrey: Thank you for joining us today, and we look forward to sharing our progress with you on our first quarter earnings call on June 12. Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Yes.

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