Q1 2025 Vera Bradley Inc Earnings Call

Speaker Change: [music].

Operator: Greetings! Welcome to the Vera Bradley First Quarter Fiscal 2025 Earnings Conference Call. At this time, all participants will be in listening mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. At this time, I'll now turn the conference over to Mark Dely, Chief Administrative Officer. Mr. Dely, you may begin.

Greetings and welcome to the Vera Bradley first quarter fiscal 2025 earnings conference call.

Speaker Change: At this time, all participants will be in listen only mode. A question and answer session will follow the formal presentation.

Speaker Change: If anyone today should require operator assistance during the conference. Please press star zero from your telephone keypad.

Please note this conference is being recorded.

Speaker Change: At this time I'll now turn the conference over to Mark <unk>, Chief administrative officer, Mr. <unk> you may begin.

Mark C. Dely: Good morning and welcome everyone. We'd like to thank you for joining us on today's call.

Speaker Change: 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 responses 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.

Mark C. Dely: Some of the statements made during our prepared remarks 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.

Speaker Change: 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.

Speaker Change: 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 the call over to Vera Bradley's CEO Jackie Ardrey.

Mark C. Dely: 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 the call over to Vera Bradley's CEO, Jackie Ardrey.

Speaker Change: Jackie.

Jacqueline Ardrey: Thank you, Mark. Good morning, everyone, and thank you for joining us on today's call. We have a lot to discuss today about the upcoming rollout of Project Restoration, but let me begin by making a few comments on the first quarter. Overall, our first quarter performance reflected the continuation of a number of trends from last year. Many of these were driven by the same economic challenges that several other specialty retailers noted in their earnings releases.

Jacqueline Ardrey: Thank you Mark good morning, everyone and thank you for joining us on today's call. We have a lot to discuss today about the upcoming rollout of project restoration, but let me begin by making a few comments on the first quarter.

Jacqueline Ardrey: Overall, our first quarter performance reflected the continuation of a number of trends from last year. Many of these were driven by the same economic challenges at several other specialty retailers have noted in their earnings releases.

Jacqueline Ardrey: We are also in a transitionary phase with the upcoming July public-facing rollout of Project Restoration, which includes the introduction of new Vera Bradley product assortments late in the second quarter. Not surprisingly, our first quarter performance was a bit choppy.

Jacqueline Ardrey: We are also in a transition phase with the upcoming July public facing rollout of project restoration, which includes the introduction of new Vera Bradley product Assortments late in the second quarter.

Jacqueline Ardrey: Not surprisingly our first quarter performance was a bit choppy.

Jacqueline Ardrey: I'd like to note that we expected much of this turbulence and that our guidance for this year, which Michael will discuss later in the call, is unchanged. I am especially proud of the entire Vera Bradley organization for running the ongoing business while simultaneously taking on the extraordinary amount of effort necessary to enter the launch phase of project restoration. While we have been working on this for well over a year, many pieces are now going into motion as we make this long-anticipated transition. We are very excited. In our first quarter, Vera Bradley direct revenues fell 4%, primarily related to continued traffic challenges in our outlet channel.

Speaker Change: I'd like to note that we expected much of this turbulence and then our guidance for this year, which Michael will discuss later on the call is unchanged.

Speaker Change: I'm, especially proud of the entire Vera Bradley organization running the ongoing business, while simultaneously, taking an extraordinary amount of effort necessary to enter the launch phase of project restoration, while we have been working on this for well over a year. Many pieces are now going into motion as we make this long anticipated transition we are very.

Speaker Change: Got it.

Speaker Change: And our first quarter Vera Bradley direct revenues fell 4% primarily related to continued traffic challenges in our outlet channel.

Jacqueline Ardrey: We are seeing the impact of reduced visits and spending across all household incomes and channels, but especially in the under $75,000 households where we have high penetration in our outlets. Full line store and e-commerce revenues were down modestly, boosted by the shift of our annual outlet sale in Fort Wayne to the first quarter this year from the second quarter last year, as well as our recently launched online outlet store, which has been successful, driving revenue and new customer acquisition.

Speaker Change: We are seeing the impact of reduced visits and spending across all household incomes and channels, but especially in the under $75000 households, where we have high penetration on our outlets.

Speaker Change: Full line store and ecommerce revenues were down modestly boosted by the shift of our annual outlet sale in Fort Wayne to the first quarter of this year from the second quarter last year as well as our recently launched online outlet store, which has been successful driving revenue and new customer acquisition.

Jacqueline Ardrey: Customers responded to several of our latest product collaborations and to our newer but limited-quantity product offerings like leather and beaded bags. Overall, however, consumers continue to be more discriminating with their discretionary spending in light of the macroeconomic environment. On the Vera Bradley Indirect side, revenues fell 25% as our hotel partners were cautious with inventory buys as they awaited our new launch products in the second quarter and as a large off-price order shifted into the second quarter this year from the first quarter last year. Pura Vida year-over-year first quarter sales declined 37 percent, an expected continuation of prior quarter trends primarily related to decreases in e-commerce and wholesale revenues.

Speaker Change: Customers responded to several of our latest product collaborations and to our newer but limited quantity product offerings like leather and beat it bags. Overall, however, consumers continued to be more discriminating with their discretionary spending in light of the macroeconomic environment.

Speaker Change: On the Vera Bradley indirect side revenues fell 25% as our wholesale partners were cautious with inventory buys as they are weighted our new launch products in the second quarter.

Speaker Change: And as a large off price orders shifted into the second quarter of this year from the first quarter last year.

Speaker Change: PURA Vida year over year first quarter sales declined 37% and expected continuation of prior quarter trends primarily related to decreases in e-commerce and wholesale revenues.

Jacqueline Ardrey: As anticipated, focus on marketing efficiency and a reduced marketing spend amidst a substantially higher cost environment decreased e-commerce performance. As a result, Pura Vida continues to focus on diversifying our marketing allocations to other channels. Wholesale revenues were also down against a strong performance last year and as our partners were more discriminating in their purchases.

Speaker Change: As anticipated focus on marketing efficiency, and a reduced marketing spend amidst a substantially higher cost environment decreased E Commerce performance.

Speaker Change: As a result, PURA Vida continues to focus on diversifying our marketing allocations to other channels.

Speaker Change: Wholesale revenues were also down against a strong performance last year and as our partners were more discriminating in their purchases.

Jacqueline Ardrey: The Pura Vida team also continues to diligently manage expenses. We continue to improve our already strong balance sheet, increasing our year-over-year cash position while continuing to strategically reduce our inventory levels. We believe in the value of a strong balance sheet as we support our project restoration initiatives while navigating an uncertain economic and retail environment. Now, let me turn to Project Restoration.

Speaker Change: The PURA Vida team also continues to diligently manage expenses.

Speaker Change: We continue to improve our already strong balance sheet, increasing our year over year cash position, while continuing to strategically reduce our inventory levels. We believe in the value of our strong balance sheet as we support our project restoration initiatives, while navigating an uncertain economic and retail environment.

Speaker Change: Now, let me turn to project restoration as a reminder, project restoration is our strategic plan to drive long term profitable growth by addressing the consumer brand product and channel components of both of our brands built upon a foundation of strong business discipline, a highly engaged team a strong balance sheet and a robust technology.

Jacqueline Ardrey: As a reminder, Project Restoration is our strategic plan to drive long-term profitable growth by addressing the consumer, brand, product, and channel components of both of our brands built upon a foundation of strong business discipline, a highly engaged team, a strong balance sheet, and a robust technology platform. Through Project Restoration, we are driving substantial change in nearly every aspect of the business, and we believe execution will deliver long-term value to our shareholders.

Speaker Change: Platform.

Speaker Change: Through project restoration, we are driving substantial change in nearly every aspect of the business and we believe execution will deliver long term value to our shareholders. Most of our work is focused on our largest brand Vera Bradley.

Jacqueline Ardrey: Most of our work is focused on our largest brand, Vera Bradley. After more than a year of foundational work on Project Restoration, we're very excited about the customer-facing changes that we will unveil in mid-July, particularly related to our elevated Vera Bradley brand marketing, product, store design, and website. As a result, we expect first-half results to continue to be challenging as we prepare for our July launch.

Jacqueline Ardrey: We expect Project Restoration to bear fruit in the second half. Through these turnaround efforts, we're pivoting the organization towards a bright future. At Vera Bradley, we're reintroducing our iconic brand to the market in mid-July. We are carefully coordinating the launch of new and elevated products, updated branding and marketing, renovated stores and modernized in-store displays, and our improved web experience. We are seeing several green shoots in the business, like a positive response to our new products by the Wholesale Channel and other partners and our customers' reaction to limited-quantity product introductions, like leather and beaded bags, which are byproducts of our new design work.

Speaker Change: After more than a year of foundational work on project restoration, we're very excited about the customer facing changes that we will unveil in mid July, particularly related to our elevated Vera Bradley brand marketing product to store design and web site. As a result, we expect first half results to continue to be challenging as we prepare for our July launch.

Speaker Change: We expect project frustration to bear the fruits in the second half.

Speaker Change: Through these turnaround efforts, we're pivoting the organization towards a bright future.

Speaker Change: At Vera Bradley, we're reintroducing our iconic brand to the market in mid July we are carefully coordinating the launch of new and elevated products updated branding and marketing renovated stores and modernized in store displays and our improved web experience. We are seeing several green shoots in the business like positive response to our new <unk>.

Speaker Change: Products by the wholesale channel and other partners.

Speaker Change: And our customers reaction to limited pardon me product introductions like leather and beat in bags, which are byproducts of our new design work.

Jacqueline Ardrey: For the consumer, we are focusing on restoring brand relevancy, targeting casual and feminine 35 to 54-year-old women who value both fashion and function. Our focus on this age group led us to search for data to understand where and how she shops, and our work on this initiative was informed by consumer research and current perceptions of the brand from both buyers and non-buyers.

Speaker Change: For the consumer we are focusing on restoring brand relevancy targeting casual and feminine and 35 to 54 year old women, who value both fashion and function.

Speaker Change: Our focus on this age group, let off in search of data to understand where and how she shops and our work on this initiative was informed by consumer research and current perceptions of the brand from both buyers and non virus.

Jacqueline Ardrey: We are using this data to target new customers and embark on new partnerships, licensing deals, and collaborations to extend our reach. 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. 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 in our refreshed brand vision in July.

Speaker Change: We are using this data to target new customers and embark on new partnerships licensing deals and collaborations to extend our reach 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.

Speaker Change: We've created a multiyear customer file growth coming out 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 in July.

Jacqueline Ardrey: 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 strong recognition, and we're going to make it even stronger by investing in more strategic marketing initiatives.

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

Speaker Change: Bob is a strong brand with strong recognition and we're going to make it even stronger by investing in tomorrow strategic marketing initiatives, what I want to emphasize is that we're not changing what's unique and distinctive about the brand that has been beloved by millions of customers for over 40 years.

Jacqueline Ardrey: What I want to emphasize is that we're not changing what's unique and distinctive about the brand that has been beloved by millions of customers for over 40 years. But we're just taking this competitive advantage and creating a new brand expression, making it more modern and appealing. We are taking a very sophisticated approach, fully supported by the customer data platform we invested in a few years ago.

Speaker Change: But we're just taking this a competitive advantage and creating a new brand expression, making it more modern and appealing.

We were taking a very sophisticated approach fully supported by the customer data platform, we invested in a few years ago.

Speaker Change: Specifically.

Jacqueline Ardrey: We are refocusing our marketing efforts and shifting more marketing dollars to increase reach in a more precise way through a comprehensive plan with 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 are continuing to shift our focus from channel-specific customer acquisition to a multi-channel perspective for increased media effectiveness. We're very excited about our partnership with a celebrity partner and other influencers that we will announce beginning in July.

Speaker Change: We are refocusing, our marketing efforts and shifting more marketing dollars to increase reach and a more precise way through a comprehensive plan with 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.

Speaker Change: We are continuing to shift our focus from channel specific customer acquisition to a multichannel perspective for increased media effectiveness.

Speaker Change: We're very excited about our partnership with a celebrity partner and other influencers that we will announce beginning in July.

Jacqueline Ardrey: And our strategy for promotional activity will shift from discounting being the primary story we have to tell to one of a well-orchestrated plan of brand amplification, category-level storytelling featuring key items, targeted customer-level acquisition offers, strategic incentives carefully architected as demand generators, and inventory management initiatives built to move through slow-moving SKUs. For the product, we've elegantly redesigned our product assortment for a more modern customer and her needs, while retaining the elements that have classically defined Vera Bradley, like our distinctive colors and quilting.

Speaker Change: And our strategy for promotional activity will shift from discounting being the primary story, we have to tell you one of a well orchestrated plan our brand amplification category level storytelling feature in key items targeted customer level acquisition offers strategic incentives carefully architected as demand generators and.

Speaker Change: Inventory management initiatives built to move through slow moving skus.

For the product, we've elegantly redesigned our product assortment for a more modern customer and her needs while retaining the elements that are classically defined Vera Bradley like our distinctive colors and quilting.

Jacqueline Ardrey: 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. Product changes have been derived carefully after extensive customer data analysis.

Speaker Change: We are elevating our colorful stem inherited keeping a distinctive but more trend right and modern through updated prints colors styles and designs.

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

Speaker Change: Product changes have been drive carefully after extensive customer data analysis.

Jacqueline Ardrey: Updated assortments will feature a sharper category focus. By innovating and expanding within our core products, we are refocusing on items that we are best at, such as bags, including hands-free cross-body bags and belt bags, backpacks, travel, and the smaller items that fit inside bags, like wallets and pouches, that allow her to customize her look and personalize her organization. We will be offering something distinctive and new in the full-line accessories space under a clear product architecture of good, better, and best.

Speaker Change: Updated Assortments will feature a sharper category focus by innovating and expanding within our core products. We are refocusing on items that we are best at such as bags, including hands free cross bodies and belt bags backpacks travel and the smaller items that fit inside bags like wallets and pouches that allow her to customer.

Speaker Change: Is her luck and personal lives her organization.

Speaker Change: We will be offering something distinctive and new in the full line accessories space under a clear product architecture of good better best we're committed to an increased use of preferred fibers performance materials and higher quality softer fabrics and to maintaining our current retail price structure.

Jacqueline Ardrey: We're committed to increasing the use of preferred fibers, performance materials, and higher quality, softer fabrics, and to maintaining our current retail price structure. Our products will feature more modern, relevant silhouettes and designs with a focus on artistry. And we are expanding our solid penetration, which is complementary to our updated prints and patterns. Solids have been outperforming and are expected to generate approximately half of our future sales volume.

Our products will feature a more modern relevant and silhouettes and designs with a focus on artistry.

Speaker Change: And we are expanding our solid penetration, which is complementary to our updated prints and patterns.

Speaker Change: Solids have been outperforming and are expected to generate approximately half of our future sales volume.

Jacqueline Ardrey: Leather sales and customer reviews have been strong since our reintroduction of leather last fall, and we're building on this success by expanding our offering of bags, wallets, wristlets, and other accessories. The collection will feature a broadened color palette, which dovetails into our strategy of offering more solids. The leather will have dedicated fixture space in our full line stores. The reception from our wholesale partners who have seen our new products in the Dallas, Atlanta, and New York markets has been positive.

Leather sales and customer reviews have been strong since our reintroduction of leather last fall and we're building on this success by expanding our offering of bags wallets Restless and other accessories. The collection will feature a broadened color palette, which dovetails into our strategy of offering more solids leather.

Speaker Change: Whether it will have dedicated fixture space in our full line stores.

Speaker Change: The reception from our wholesale partners have seen her new products at the Dallas, Atlanta, and New York markets has been positive.

Jacqueline Ardrey: We will offer a clearer differentiation between our full line and outlet channels in both product and experience. Our outlet stores and outlet website will have new made-for-outlets styles, prints, and collaborations, and we will introduce a collection of faux leather for the outlets this fall. 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.

Speaker Change: We will offer a clearer differentiation between our full line and outlet channels in both product and experience our outlet stores and outlet website will get new made for outlet styles trends and collaborations and we will introduce a collection of faux leather for the outlets. This fall.

Speaker Change: Product collaborations will always be an important part of our brand expression.

Speaker Change: We continue to see strong response from partnerships with Disney Hello, Kitty and Peanuts, and those will continue in all channels.

Jacqueline Ardrey: We will work with our partners to ensure that the products reflect our updated brand aesthetic and product elevation, including the good, better, and best product strategies within the collection. For the channel, we are building a balanced multi-channel structure that allows customers to shop when, where, and how they want to shop. 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. We will implement changes that will more clearly differentiate our full line and outlet assortments and experience. We're focused on optimizing our real estate.

Speaker Change: We will work with our partners to assure the products reflect our updated brand aesthetic and product elevation, including the good better best product strategy is within the collection.

Speaker Change: For the channel we are building a balanced multichannel structure that allows customers to shop, when where and how they want to shop.

Speaker Change: So accelerate our digital first focus and online reach.

Speaker Change: While maintaining brand right wholesale relationships exploring partnerships that will help us acquire new customers. We will implement changes that will more clearly differentiate our full line and outlet assortment and experience.

Speaker Change: We're focused on optimizing our real estate traffic is declining in some locations, but we've made significant inroads unimproved store profitability.

Jacqueline Ardrey: Traffic is declining in some locations, but we've made significant inroads to improving store profitability through a more streamlined management structure, adjusting our labor models, and rent negotiations, which has allowed us to reduce the number of planned store closings and be more opportunistic on new store openings. We see an opportunity to expand our full-line store footprint over time, beginning with the addition of three new stores this year. We are also exploring new full-line formats with a focus on the Lifestyle Center.

Speaker Change: This more streamlined management structure, adjusting our labor models and retina negotiations, which has allowed us to reduce the number of planned store closings and be more opportunistic on new store openings.

Speaker Change: We see an opportunity to expand our full line store print store footprint over time, beginning with the addition of three new stores this year.

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

Jacqueline Ardrey: We will update our entire existing full-line store fleet with new branding and an improved shopping experience. The stores will be more modern, less cluttered, and easy to shop. 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 our new stores as well as these remodels. Updates to our full-line stores with elevated products, new branding, and an improved shopping experience will also help further differentiate these stores from our outlet stores. On the outlet front, the vast majority of stores are very profitable.

Speaker Change: We will update our entire existing full line store fleet with new branding and an improved shopping experience the stores will be more modern less cluttered and easy to shop.

Speaker Change: With new fixtures and lighting, allowing the product to shine.

Speaker Change: Our current year capital budget of $12 million to $14 million is triple last year's spending and much of this is attributable to our new stores as well as these remodels.

Speaker Change: Updates to our full line stores with elevated products, new branding and an improved shopping experience will also help further differentiate these stores from our outlet stores.

Speaker Change: On the outlet front the mass majority the vast majority of stores are very profitable.

Jacqueline Ardrey: We are focused on assuring our stores are in high-traffic, productive locations and strategically repositioning those stores that are not. We expect to add approximately six new outlet locations this year, offset by the exit of four to six underperforming stores over the next 12 to 18 months. Delivering growth in our e-commerce channels is a key priority. We will accelerate our digital first focus, elevate our online presence, and meaningfully enhance the shopping experience through the July relaunch of verabradley.com.

Speaker Change: We are focused on ensuring our stores are in high traffic productive locations and strategically repositioning those stores that are not we expect to add approximately six new outlet locations. This year offset by the exit of four to six underperforming stores over the next 12 to 18 months.

Speaker Change: Delivering growth in our E. Commerce channels is a key priority, we will accelerate our digital first focus.

Speaker Change: Elevator online presence and meaningfully enhance the shopping experience through the July relaunch of Vera Bradley Dotcom.

Jacqueline Ardrey: We will offer more consumer-focused features, storytelling, and personalized experiences. Our online outlet continues to outperform, and we will launch new products throughout the year. Maintaining brand-right wholesale relationships is important, and we are actively targeting new specialty retailers where we know our customers are shopping. As I noted, existing wholesale partners have already demonstrated their excitement about our new product. At Pura Vida, we are shifting our long-term focus to delivering profitability through cost control and gross margin expansion while balancing the e-commerce business with wholesale partnerships and retail stores.

Speaker Change: We will offer more consumer focused features storytelling and personalized experiences are online outlet continues to outperform and we will launch new products throughout the year.

Speaker Change: Maintaining brand right wholesale relationships are important.

Speaker Change: And we are actively targeting new specialty retailers, where we know our customer is shopping as I noted existing wholesale partners have already demonstrated their excitement about our new products.

Speaker Change: Yeah.

Speaker Change: PURA Vida, we are shifting our long term focus to delivering profitability through cost control and gross margin expansion, while balancing the e-commerce business with wholesale partnerships and retail stores.

Jacqueline Ardrey: For the consumer, we are sharpening our focus on the 18 to 24-year-olds. Based on our research, we're shifting our marketing strategy to increase appeal to Gen Z. For the brand, we are focusing our brand ethos on living life to the fullest, sharing real moments, places, and faces in our marketing campaign.

Speaker Change: For the consumer we are sharpening our focus on the 18 to 24 year olds based on our research we're shifting our marketing strategy to increase our appeal to Gen Z.

Speaker Change: For the brand we are re centering our brand ethos I'm living life to the fullest sharing real moments places and faces in our marketing campaigns, we are continuing to diversify our marketing spend and are making additional efforts to retain customers.

Jacqueline Ardrey: We are continuing to diversify our marketing spend and are making additional efforts to retain customers. We are investing in new tools to improve the e-commerce site experience and conversion and make our promotions more strategic and targeted. We are more analytical, utilizing detailed customer data to target customers and potential customers with a focus on customer acquisition but especially on repeat purchases and retention. This significantly enhanced customer reporting and increased analytics have made us smarter in analyzing challenges.

Speaker Change: We are investing in new tools to improve the e-commerce site experience and conversion and make our promotions more strategic and targeted.

Speaker Change: We are more analytical utilizing detailed customer data to target customers and potential customers with a focus on customer acquisition, but especially on repeat purchases and retention. This significantly enhanced customer reporting an increase analytics have made us smarter and analyzing challenges.

Jacqueline Ardrey: For the product, we are focusing 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. One of our most exciting initiatives this year is our expansion of stretch bracelets and anklets, which are a growing trend, and we will be adding a DIY bead box to our assortment.

Speaker Change: For the product we are focusing 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 accessories categories. One of our most exciting initiatives. This year is our expansion of stretch.

Speaker Change: Bracelets, and anklets, which are a growing trend.

Speaker Change: And we will be adding a DIY it'd be back to our assortment.

Jacqueline Ardrey: Our custom jewelry, from our Harper charm bar, to engravable items, to our newly launched personalization, continues to be a big growth opportunity. As always, we will pursue high-profile collaborations like Hello Kitty, Shark Week, and Harry Potter, which are fan favorites and bring new customers to the brand. For the channel, we continue to have a strong focus on restoring profitable e-commerce growth, as well as strategic growth of wholesale. Additionally, our success in retail stores has driven us to open new store locations. We opened a new Pura Vida store in Destin, Florida, in May and expect to open an additional location later this year.

Speaker Change: Our custom jewelry from our Harper charm bar to engraving will items to our newly launched personalization continues to be a big growth opportunity.

Speaker Change: As always we'll pursue high profile collaborations like Hello, Kitty Shark week, and Harry Potter, which are fan favorites and bring new customers to the brand.

Speaker Change: For the channel we continue to have a strong focus on restoring profitable e-commerce growth as well as strategic growth of wholesale. Additionally, our success in retail stores has driven us to find new store locations. We opened a new PURA Vida store in Destin, Florida in May and expect to open an additional location later.

Speaker Change: This year.

Jacqueline Ardrey: Now, let me turn the call over to CFO Michael Schwindle to review the financial results. Michael. Thank you, Jacqueline.

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

Michael Schwindle: Thank you, Jackie. Good morning, everyone, and thank you for joining us.

Michael Schwindle: Thank you Jackie and good morning, everyone and thank you for joining us we.

Michael Schwindle: We will open up for questions in a few minutes, but I'd first like to cover a few highlights for the quarter and briefly update our guidance for the year. For the sake of clarity, the numbers I am discussing today are all non-GAAP numbers 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 numbers, can be found in that release.

We will open up for questions in a few minutes, but I first like to cover a few highlights for the quarter and briefly update our guidance for the year for the sake of clarity of the numbers I am discussing today are all non-GAAP numbers and exclude the charges outlined in today's press release, a complete detail of items excluded from the non-GAAP numbers as.

Michael Schwindle: As well as a reconciliation of GAAP to non-GAAP numbers can be found in that release.

Michael Schwindle: For the first quarter, our consolidated revenues totaled $80.6 million compared to $94.4 million in the prior year first quarter. The first quarter net loss totaled $6.5 million, or $0.21 per share, compared to a net loss of $2.6 million, or $0.09 per share, last year. Current year first quarter Vera Bradley direct segment revenues totaled $56.4 million, a 4% decrease from $58.9 million in the prior year first quarter. As Jackie noted a few minutes ago, we have continued to experience trends that began last year, although our direct segment revenue performance sequentially improved quarter over quarter. Comparable sales declined 9.6%, primarily driven by weakness in the outlet channel.

Michael Schwindle: For the first quarter, our consolidated revenues totaled $86 million compared to $94.4 million in the prior year first quarter first quarter net loss totaled $6 $5 million or 21 cents per share compared to a net loss of $2 $6 million or nine cents per share last year.

Michael Schwindle: Total revenues were also impacted by six previous full-line store closures over the last 12 months. We look forward to the future reversal of our sales trends as we roll out project restoration late in the second quarter. Indirect segment revenues totaled $11.5 million, a 25% decrease from $15.4 million in the prior year first quarter. The decrease was primarily related to lower sales from certain specialty partners and key accounts, as well as the timing of a large off-price order shifting to the second quarter this year from the first quarter last year. As Jackie noted earlier in her comments, our indirect partners are awaiting the new launch products, and our wholesale partner response to the new project restoration assortment is strong.

Kurt: Kurt Your first quarter Vera Bradley direct segment revenues totaled $56 4, million% to 4% decrease from $58 $9 million in the prior year first quarter.

Speaker Change: Jack you noted a few minutes ago, we have continued to experience trends that began last year, although our direct revenue our drug segment revenue performance sequentially improved quarter over quarter.

Speaker Change: Comparable sales declined nine 6%, primarily driven by weakness in the outlet channel.

Speaker Change: Revenues were also impacted by six previous full line store closures over the last 12 months, we look forward to the future reversal of our sales trends as we rollout project restoration late in the second quarter bear.

Speaker Change: Fair Bradley indirect segment revenues totaled $11 $5 million 25 per cent decrease from $15 $4 million in the prior year first quarter. The decrease was primarily related to lower sales from certain specialty partners and key accounts as well as the timing of a large off price order shifting from to the second quarter. This year from the first quarter last year.

Speaker Change: As Jack noted earlier in her comments, our indirect partners are waiting the new launch products and our wholesale partner response to the new project restoration of assortment is strong.

Michael Schwindle: Pura Vida segment revenues totaled $12.7 million, a 37% decrease from $20.1 million in the prior year first quarter, primarily due to declines in e-commerce and wholesale revenues. I remind everyone that our key focus with Pura Vida has been and continues to be managing the business for long-term profitability and not merely revenue growth. In an environment of rapidly rising digital marketing costs, the Pura Vida team is focused on marketing efficiency as well as digital marketing diversification.

PURA Vida segment revenues totaled $12 $7 million or 37% decrease from $20 1 million in the prior year first quarter.

Speaker Change: Primarily due to declines in e-commerce, and wholesale revenues I remind everyone that our key focus with PURA Vida has been and continues to be managing the business for long term profitability and not merely revenue growth.

Speaker Change: In an environment of rapidly rising digital marketing costs appear Vida team is focused on marketing efficiency as well as digital marketing diversification.

Michael Schwindle: Non-GAAP first quarter gross margin was $42.7 million, or 53% of net revenues compared to $51.7 million, or 54.8% of net revenues in the prior year. The current year rate was negatively impacted by the shift of our annual outlet sale to the first quarter from the second quarter last year, which was partially offset by lower shipping and freight costs. Non-GAAP SG&A expense totaled $52.4 million, or 65% of net revenues compared to $55.6 million, or 58.9% of net revenues for the prior year first quarter.

Speaker Change: non-GAAP first quarter gross margin totaled $42 $7 million or 53% of net revenues compared to $51 $7 million or 34, 8% of net revenues in the prior year. The current year rate was negatively impacted by the shift of our annual outlet sale to the first quarter from the second quarter of last year.

Speaker Change: Which was partially offset by lower shipping and freight costs.

Speaker Change: non-GAAP SG&A expense totaled $52 $4 million or 65% of net revenues compared to $55 $6 million or 58, 9% of net revenues for the prior year first quarter.

Michael Schwindle: Current quarter expenses were lower than the prior year, primarily due to cost reduction initiatives and a reduction in variable related expenses, including marketing, related to lower sales volume. Our teams are increasingly diligent and attentive to cost management.

Speaker Change: Current quarter expenses were lower than the prior year, primarily due to the cost reduction initiatives and a reduction in variable related expenses, including marketing related to lower sales volumes our.

Speaker Change: Our teams are increasingly intelligent and attentive to cost management.

Michael Schwindle: First quarter non-GAAP consolidated operating loss therefore totaled $9.3 million, or 11.5% of net revenues, compared to an operating loss of $3.5 million, or 3.7% of net revenues in the prior year. Now turning to the balance sheet, our quarter-end cash and cash equivalents totaled $55.2 million compared to $25.3 million at the end of last year's first quarter. We continue to have no borrowings on our $75 million ABL facility at quarter-end.

Speaker Change: First quarter non-GAAP consolidated operating loss, therefore totaled $9 $3 million or 11, 5% of net revenues compared to an operating loss of $3 5 million or three 7% of net revenues in the prior year.

Speaker Change: Now turning to the balance sheet, our quarter end cash and cash equivalents totaled $55 $2 million compared to $25 3 million at the end of last year's first quarter. We continued to have no borrowings on our $75 million ABL facility at quarter end.

Michael Schwindle: Total quarter-end inventory was $125.2 million, down 12% from $142.7 million at the end of last year's first quarter. We continue to take strategic actions to reduce our inventory levels, and we believe we are appropriately positioned as we prepare for our new product launch in July. During the first quarter, we also repurchased approximately $6.3 million of common stock, which equates to approximately 1 million shares at an average price of $6.62.

Speaker Change: Total quarter end inventory was $125 $2 million down 12% from $142 7 million at the end of last year's first quarter. We continue to take strategic actions to reduce our inventory levels and we believe we are appropriately appropriately positioned as we prepare for our new product launch in July.

Speaker Change: During the first quarter, we also repurchased approximately $6 $3 million of common stock, which equates to approximately 1 million shares at an average price of $6 62 subs, we have approximately $19 million remaining on our $50 million repurchase authorization and that authorization expires in December of 2024.

Michael Schwindle: We have approximately $19 million remaining on our $50 million repurchase authorization, and that authorization expires in December of 2024. So now, moving on to our guidance for fiscal 2025. As a reminder, all forward-looking guidance numbers are on the non-GAAP basis. As we discussed in our last earnings call, we expect fiscal 2025 to be very much a tale of two halves. We continue to operate in a turbulent environment, as a number of other retailers have already noted in their earnings releases. Fiscal 2025 for Vera Bradley is also a rebuilding year for the company, as project restoration enters its customer-facing phase midyear. As Jackie noted at the beginning of this call, we expected much of this turbulence.

Speaker Change: So now moving onto our guidance for fiscal 2025 as a reminder, all forward looking guidance numbers are on a non-GAAP basis as we discussed on our last earnings call. We expect fiscal 2025, it would be very much a tale of two halves. We continue to operate in a turbulent environment as a number of other retailers have already noted in their earnings releases physical.

Michael Schwindle: We expect to continue to experience some revenue challenges in the second quarter, followed by improving sales and profitability trends in the second half of the fiscal year. We also continue to diligently take advantage of both risk margin and expense structure improvement opportunities. As a result, we are reconfirming our guidance for fiscal 2025 based on current and expected macroeconomic trends, as well as the rollout of the customer-facing phase of project restoration. As a point of context, please also keep in mind that the current year represents a 52-week year while the prior year was comprised of 53 weeks.

Speaker Change: 20th twenty-five for Vera Bradley is also a rebuilding year for the company and project restaurant as project restoration enters its customer facing phase mid year.

Jack: Jack you noted at the beginning of this call we expected much of this turbulence, we expect to continue to experience some revenue challenges in the second quarter, although by improving sales and profitability trends in the second half of the fiscal year.

Jack: We also continue to diligently take advantage of both gross margin and expense structure improvement opportunities.

Jack: As a result, we are reconfirming our guidance for fiscal 2025 based on current unexpected macroeconomic trends as well as the rollout of the customer facing has a project restoration.

Jack: As a point of context police officers. Please also keep in mind that the current year represents a 52 week year, while the prior year was comprised of 53 weeks.

Michael Schwindle: Specifically, for our guidance for the full year of fiscal 2025, we expect consolidated net revenues of $460 to $480 million. As a reminder, net revenues in fiscal 2024 were $470.8 million, or $464.8 million on a 52-week basis. We expect Vera Bradley brand sales to grow by the low single digits for the year, with accelerating sales in the second half as we launch our new products, branding, and marketing. We anticipate Pure Vita brand sales to decline in the mid-teen range as we continue to manage the business for profitability by addressing marketing inefficiencies impacting e-commerce sales, partially offset by increased retail sales.

Jack: Specifically for our guidance for the full year of fiscal 2025, we expect consolidated net revenues of $460 million to $480 million.

Michael Schwindle: We also expect a consolidated gross margin of 54 to 55% compared to 54.5% in fiscal 2024. The fiscal 2025 gross margin is expected to be relatively flat to last year due to product margin improvements and a lower supply chain cost offset by increased shipping. Consolidated SG&A expense is expected to range from $229 to $239 million, compared to $234.7 million in fiscal 2024. However, year-over-year SG&A expenses are expected to be relatively flat to last year related to incremental marketing investment intended to drive sales and accelerate customer file growth.

Jack: As a reminder, net revenues in fiscal 2024 were $478 million or $464 $8 million on a 52 week basis we.

Jack: 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 our new products branding and marketing we anticipate the PURA Vida brand sales will decline in the mid teen range as we continue to manage the business for profitability by addressing marketing inefficiencies impacting ecommerce sales partially offset.

Jack: By increased retail sales.

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

Jack: The fiscal 'twenty to 'twenty five gross margin is expected to be relatively flat to last year due to project product margin improvements and a lower supply chain costs offset by increased shipping costs.

Jack: Consolidated SG&A expense is expected to range from $229 million to $239 million compared to $234 $7 million in fiscal 2024 year over year SG&A expenses are expected to be relatively flat to last year related to incremental marketing investment intended to drive sales accelerate customer for.

Jack: Our growth offset by a company wide expense reductions in lower PURA Vida expenses.

Michael Schwindle: Offset by company-wide expense reductions and lower periodic, 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 or $0.54 on a 52-week basis. As a result, our net cash flow is anticipated to be approximately $10 million, compared to $44.2 million in fiscal 2024. And we also expect, as Jackie noted earlier, net capital spending of approximately $12 to $14 million, compared to $3.8 million last year. This spending reflects investments associated with new and remodeled stores, as well as technology and logistics enhancements.

Jack: This results in an 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 to 62.

Jack: Compared to 55 cents last year or a 54 cents on a 52 week basis.

Speaker Change: As a result, our net cash flow is anticipated to be approximately $10 million compared to $44 2 million in fiscal 2024, and we also expect as Jacki am noted earlier net capital spending of approximately $12 million to $14 million compared to $3 $8 million last year.

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

Operator: So that concludes our formal remarks. Rob, can you please open up the line for questions? Thank you.

Speaker Change: So that concludes our formal remarks, Rob can you. Please open up the line for questions.

Speaker Change: Thank you.

Operator: At this time, we'll be conducting a question and answer session. If you'd like to ask a question today, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd 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 key.

Speaker Change: At this time, we'll be conducting a question and answer session.

Speaker Change: You'd like to ask a question. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press Star two if you like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: One moment, please, while we poll for questions. Thank you. Thank you, and our first question today is from the line of Daniel Harriman with Sidotium Company. I'm pleased to see you with your question.

Speaker Change: One moment please poll for questions. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you and our first question today is from the line of Daniel Herman with Sidoti and company. Please proceed with your questions.

Daniel Harriman: Good morning, Jackie. Good morning, Michael.

Speaker Change: Good morning, Jackie Good morning, Michael Thank you for the details I've just got it I'm wondering question, but I'm going to try to combine that that's okay, but.

Daniel Harriman: Thank you for the details. I've just got a couple of questions that I'm going to try to combine, if that's okay. Given the weakness you're currently experiencing, both from a macro perspective and also the timing of the initiatives and the headwinds that those bring, could you just, I guess, give us your level of confidence and how strong of a back half you are going to have? And then, with one first quarter sales and the weakness that you expect in the second quarter, obviously, it looks like you're expecting a year-over-year increase in the back half of the Do you see any opportunity for additional upside to what you've already guided and, along those lines, you know, what are the key risks that you see in the second half of the year?

Speaker Change: Given the weakness Youre currently experiencing both from a macro perspective and also the timing of the initiatives and the headwinds at those I mean could you just.

Speaker Change: I guess give us give us your level of confidence in and how strong of a back half you are going to have and then with one first quarter sales and the weakness that you expect in the second quarter, obviously, it looks like youre expecting a year over year increase in the back half of the year do you see any opportunity.

Speaker Change: For additional upside to what you've already got it and then along those lines you know what are the key risks that you see in the second half of the year.

Speaker Change: Yeah.

Speaker Change: Thanks for your question.

Jacqueline Ardrey: Thanks for your question. So I'll start, and then I'll let Michael take anything I've missed in my answer. But, so again, we certainly expected some of this weakness in this quarter. And you have the completeness of a transformation in Vera Bradley with product like we're doing next month. It's normal for wholesale partners to wind down their purchases in the old product and wait for the new. So we're not concerned about what's happened here.

Speaker Change: So I'll I'll start and then I'll, let Michael.

Speaker Change: Take anything I've missed in my answer but.

Speaker Change: So again, we certainly expected some of this weakness in in this quarter.

Speaker Change: And you have the.

Speaker Change:

Completeness of the of a transit transformation and in Vera Bradley with with product like we were doing next month.

Speaker Change: It's normal for wholesale partners to wind down their their purchases and in the old product and and wait for wait for the new So you know, we're we're not concerned about what's happened here.

Jacqueline Ardrey: And we know that there are periods of, you know, it really is kind of a month-to-month and week-to-week story where our ears are certainly to the ground, listening to our indirect partners and hearing what's going on in the stores. But we see that we certainly have orders booked, and we're very optimistic about what's going to happen in the back half of the year. What we don't know, of course, is just the consumer response.

Speaker Change: And and we know that there's there's periods of yeah. It really is kind of a month to month and a week to week story, where are our ears are certainly to the ground on listening to our indirect partners and hearing what's going on in the stores.

Speaker Change: But.

Speaker Change: We see that we we certainly have orders booked and we're very optimistic about what's going to happen in the back half of the year. What we don't know of course is just consumer response, we've done everything we possibly can to our with the data that we have and the outside research that.

Jacqueline Ardrey: We've done everything we possibly can with the data that we have and the outside research that we've done to match what we think our consumers want and the customers that we don't have to target them and create a very strong and compelling marketing plan to deliver the growth that we expect to see in the back half. What we don't know, of course, is just the macroeconomic trends. I mean, we certainly saw this quarter, as I mentioned, a real difference in the level of visits from our households that are under $75,000, which disproportionately affected the outlet business. So we're hoping that we start to see some more optimism in the consumer, but we think we're positioned in every possible way that we can be for the back half to present something that's very compelling.

Speaker Change: We've done to match, what what we think our consumers want and the customers that we don't have to target them and created a very strong and compelling marketing plan to deliver the growth that we expect to see in the back half and what we don't know of course as is.

Speaker Change: The the macroeconomic trends I mean, we've certainly seen this quarter as I mentioned, the a real difference in our level of ER visits from our households that are under $75000, which disproportionately affected the outlet business.

Speaker Change: So you know, we're we're hoping that we start to see some more optimism in the consumer but we think we're positioned and every possible way that we can be for the back half to to present, something that's very compelling.

Michael Schwindle: Yeah, to add a couple of additional finer points to this, I think if you look at the year-over-year for the first quarter, obviously, a big drag on this was the Pura Vida side. As we've talked about for a couple of quarters now, this is very intentional, it's very deliberate, this is about positioning that brand for long-term profitability, and as such, was not a surprise for us.

Speaker Change: Yeah, I'd add a couple of.

Vishal: Vishal finer points to this I think if you look at the year over year.

Vishal: First quarter.

Speaker Change: Obviously, a big drag on this was the PURA Vida side as we've talked about for a couple of quarters. Now. This is very intentional. It's very deliberate this is about positioning that brand for long term profitability.

Speaker Change: And and as such was very much anticipated that there was not a surprise for us I think on the wholesale side or on the Vera Bradley side. There is a bit of choppiness. There at a great deal of that is we're starting to get visibility to the oncoming book.

Michael Schwindle: I think on the wholesale side, on the Vera Bradley side, there is a bit of a choppiness there and a great deal of that as we're starting to give visibility to the oncoming book of new product, we'll call it product restoration assortments. Our visibility into that gives us a lot of confidence that we're looking at a large amount of timing distortion that we'll start to see pick up in the back half of the year.

Speaker Change: New product, we'll call it product restoration assortments.

Speaker Change: Our visibility to that gives us a lot of confidence that we're looking at a large amount of timing distortion.

Speaker Change: But we will start to see that pick up in the back half of the year almost just wanted to pick up again in second quarter, but most of the back half consistent with what we've decided to cause this tale of two halves.

Michael Schwindle: We'll see some of the pickup, I think in the second quarter, but mostly the back half, consistent with what we've said, kind of this tail of two halves. To your question, that leaves the rest of it to varying degrees of lesser challenges but certainly not to minimize them. It has been a challenging traffic environment, in particular in the outlet arena. And that's also, by the way, consistent with things that we have heard from some of our landlords as well about the nature of traffic that's going into outlets and the number of store visits at all times. So I think the final point on this is that, by virtue of us reaffirming our guidance, a great deal of this was expected. We were expecting the first half to be choppy.

Speaker Change: To your question that leaves the rest of it is you know varying degrees of.

Speaker Change: Lesser challenges, but that's certainly not not to minimize it hasnt been a challenging traffic environment in particular in the outlet arena.

Speaker Change: It's also by the way that's also consistent with things that we've heard from some of our landlords as well about the nature of traffic that's going into outlets and.

Speaker Change: Frequency the number of store visits as well as all times, So I think.

Speaker Change: The final point on this is by virtue of us reaffirming our guidance of a great deal of this was expected and we were expecting in the first half to be choppy, we were expecting a degree of macroeconomic challenges, we do see some upside in the business in the back half of the year.

Michael Schwindle: We were expecting a degree of macroeconomic challenges, but we do see some upside in the business in the back half of the year. In terms of your questions on relative risk and opportunity, I'd say we're trying to strike a somewhat conservative stance, which would imply there is upside, but there is always risk as well. So I'm not going to say there's no risk, and I'm not going to say there's no opportunity either

Speaker Change: In terms of your questions on the relative risk and opportunity.

Speaker Change: Trying to strike.

Speaker Change: Somewhat conservative stance, which would imply there's upside, but theres always risk as well so I'm not going to say there is no risk and I'm not going to say there is no opportunity either.

Daniel Harriman: Okay, I really appreciate it, Jackie and Michael, and best of luck with the rollout next month and the last three quarters of your fiscal year. I really appreciate it.

Speaker Change: Okay, I really appreciate it Jackie and Michael and best of luck with the rollout next month in the last three quarters of your fiscal year I really appreciate it.

Okay.

Dan: Thank you Dan.

Speaker Change: Yeah.

Eric Martin Beder: Our next question is from the line of Eric Beder with SCC Research. Please answer your question.

Speaker Change: Our next question is from the line of Eric <unk> with SCC Research. Please proceed with your questions.

Eric Martin Beder: Good morning. Thank you for the details on the project restoration. Thank you. Thank you. Good morning. When you look at it kind of, it's really exciting to see you decide to start growing the SOAR base on both sides. You know, what led you to decide that? And how do you think about the SOARs versus online as growth drivers going forward?

Eric: Good morning.

Speaker Change: For the details on project restoration.

Ed: Thank you Ed good morning, Eric.

Eric: Good morning, when you look at.

Speaker Change: It's really exciting to see you decide to start growing the store base on both sides.

Speaker Change: What kind of led you to decide that and how do you think about the stores versus online as growth drivers going forward.

Jacqueline Ardrey: I love that question, Eric. So the store base, especially, I believe this is the first time we've talked a little bit more in detail about the full line stores and the fact that we really want to stop closing them. So what I think has been very influential in that decision is really determining how we can make these stores more profitable. And we've done an amazing job outlining just the ways in which we are going to continue and have already addressed the profitability of those stores.

Eric: I Love that question Eric.

Speaker Change: So this the store base and especially you know just this is the I believe the first time, we've we've talked a little bit more in detail about the full line stores and the fact that we really want to stop closing them.

Eric: So.

Eric: What yeah, what I, what I think has been very influential in that decision is it is really determining how we can make these stores more profitable, so and and I and we've done an amazing job.

Outlining just the ways in which where we are going to continue and have already addressed the.

Eric: The profitability in those stores so as.

Jacqueline Ardrey: So as we are ramping up and planning to continue or begin driving revenue growth, we want to get that expense structure in line in those stores so that we're ready for a really nice result when the sales do come through. So it was really about evaluating profitability and looking at our labor models and rent renegotiations and determining really where we needed to be, which malls, which locations, and we're still working on that in pretty fine detail to ensure that we can grow this store fleet again. As it comes to online shopping, I think about online shopping in obviously two different ways.

Eric: As we are ramping up and and planning to continue or to begin driving revenue growth, we want to get that expense structure in line in those stores. So that's.

Eric: We that where we're ready for a.

Eric: Really nice result, when when those sales do come through so so it was really about evaluating the profitability and looking at our labor models and rent renegotiations.

Eric: Determining really where we needed to be which malls, which locations and we're still working on that.

Eric: With a pretty fine detail to ensure that we can grow. This this store fleet again.

Eric: Okay.

Speaker Change: Is it is it if it comes to online I E.

Speaker Change: There's I think about online in obviously two different ways. Our R. V D Dot com business, which will have a pretty significant resets next month with all new tools capability creative.

Jacqueline Ardrey: Our VB.com business, which will have a pretty significant reset next month with all new tools, capability, and creative; it will really be a great relaunch. And then our Always On VBOO site, which launched at the end of last year and has really exceeded our expectations in terms of revenue and new customer growth. So we really see that in two pieces, and both of those sites have a different job for the consumer and different assortments where perhaps they're a little bit too similar now.

Speaker Change: It's it's really it will it'll really be a great relaunch them and then our always on V. B O O sites. So that launched at the end of last year and has really exceeded our expectations in terms of revenue and new customer growth. So so we really see that in in <unk>.

Speaker Change: Pieces and both of those are both of those sites, having a different job for the consumer and different Assortments, where you know, perhaps there they're a little bit too similar now well, we'll definitely see with project frustration that I'm an elevation in the V b dot com assortment and and <unk>.

Jacqueline Ardrey: We'll definitely see an elevation in the VB.com assortment and kind of a continuation of our existing product assortment on the outlet site. So overall, if you take those things together, we're expecting growth in e-commerce. We've mentioned several times that we're digital first, and that's really reinforced here in the company. We're doing a lot to really look at what our online assortments should look like versus our store assortments. What does the customer want? How can we market to her? So there's a lot of work being done, and we'll begin to roll it out next month when we see the launch of project restoration.

Speaker Change: Kind of a continuation of our existing product assortment on the outlet sites. So overall, if you take those things together, we are where we're expecting growth in E. Commerce. You know we've mentioned several times that we're a digital first world.

Speaker Change: It's really reinforced here in the company, we're doing a lot to them to really look at what should our online assortments look like versus our store Assortments what does the customer want how can we market to her so so there's a lot of work being done and will begin to rollout next month, when we see the launch.

Speaker Change: Project frustration.

Eric Martin Beder: Great. And let's talk a little bit about the split between full price and outlet in some of the pieces here. So you mentioned leather. I know leather is done really well at the full price stores. So how are you going to take that to the outlet stores and offer, I guess, compelling value in leather at the same time?

Speaker Change: Great.

Speaker Change: A little bit about.

Speaker Change: The split between full price and outlets in some of the pieces here. So you mentioned leather I know that there is a really well for full price stores or how are you going to take that to the outlet stores and offer compelling value and whether at the same time and I want to clarify something you talked about collaborations.

Jacqueline Ardrey: And I want to clarify something. You talked about collaborations being in both the full price and the outlets, and historically, that hasn't happened at the same time. Is that a change in thought process that you'd want to have some of the collaborations at the same time in the outlet stores as they are in the mainline stores? Yeah.

Being in Brazil.

Speaker Change: Both price and the outlets.

Speaker Change: Storage that hasn't happened at the same time is that a change in thought process that you'd want to have some of the collaborations at the same time in the outlet stores.

Speaker Change: Main line stores.

Jacqueline Ardrey: Yeah, a very insightful question. Thanks, Eric.

Speaker Change: Yeah, very insightful question. Thanks, Eric.

Jacqueline Ardrey: So we will have product collaborations in both channels, perhaps not at the same time. So you won't necessarily see, or you may or may not see, I should say, a specific property in both the outlet and the full line assortment at the same time. But so we're really strategically looking at just our customer base and who's shopping where, and where those properties make the most sense, and what the timing of those launches will be.

Speaker Change: We will have product collaborations in both channels for.

Speaker Change: Perhaps not at the same time, so you won't necessarily see them you may or may not see I should say a specific property in both the outlet and the full line assortment at the same time, but so we're really strategically looking at what you know just our customer base in <unk>.

Speaker Change: Shopping where and.

Speaker Change: And where do those properties make the most sense and whether what's the timing.

Speaker Change: Of those launches.

Jacqueline Ardrey: And the size of them, everything's being really looked at. How do we have differentiation in price points, in styling, in look, so that both the outlet customer and the full line customer can enjoy those properties, no matter what price point they're shopping for or what look they're shopping for?

Speaker Change: And the size of them like everything is being really looked at how.

Speaker Change: How do we have differentiation in price points in styling and look so that both the outlet customer and the full line customer can enjoy those properties of matter what price point, they're shopping for or look they're shopping for.

Speaker Change: Okay.

Eric Martin Beder: A question for Michael. Inventory. He's done a great job with inventories. How are inventories going to shift now that product restoration is starting to go into the stores and go live?

Speaker Change: A question for Mike.

Speaker Change: Inventory you've done a great job with your inventories how our inventory is going to shift.

Speaker Change: Another product registration is starting to.

Speaker Change: Go into the stores and go lives.

Speaker Change: Yeah.

Michael Schwindle: Thank you. I appreciate the question as well.

Speaker Change: Thank you I appreciate.

Speaker Change: Great question as well.

Michael Schwindle: We have made a lot of progress on our inventory. I think as we look forward, there's a fairly substantial movement that's literally in front of us right now as we migrate the new assortments into the brand stores as well as online properties and start a larger migration of the existing assortments over into the outlet channels and the other value channels. I think as we look at our outlook for inventory through the end of the year, we expect it to be flat to slightly down by the end of the year.

Speaker Change: We have made a lot of progress on our inventory I think as we look forward there is a fairly substantial movement.

Speaker Change: Literally in front of US right now as we migrate.

Speaker Change: The new Assortments into the brand stores as well as online properties and start a larger migration of the existing assortments over until the outlet channels are near their value channels.

Speaker Change: I think as we look at our outlook for inventory through the end of the year, we expect it to be flat to slightly down by the end of the year.

Michael Schwindle: That will be inclusive of maybe a little bit of average cost creep as well as this movement that will still have a little bit of a hangover. So I do think we'll continue to see structural improvement in our inventory management through the end of the year as well as beyond.

Speaker Change: That will be inclusive of maybe a little bit of average cost creep as well as this movement will still will still have a little bit of hangover. So I do think we will continue to see structural improvement in our inventory management through the end of the year as well as beyond.

Eric Martin Beder: Great. Congratulations, and we look forward to seeing you in July.

Great.

Speaker Change: Congrats and we look forward to seeing the stores in July.

Speaker Change: Okay.

Jacqueline Ardrey: Fantastic. Thank you, Eric.

Speaker Change: Eric Thank you Rick.

Doug Lane: As a reminder, if you'd like to ask a question at this time, you may press star 1 on your telephone keypad. The next question is from the line of Doug Lane with Water Tower Research. Please proceed with your question.

Speaker Change: As a reminder, if you'd like to ask a question at this time you May press star one from your telephone keypad.

Speaker Change: The next question is from the line of Doug Lane with water Tower Research. Please proceed with your question.

Doug Lane: Good morning everybody. I want to stay on the channel mix here. You talk in terms of three broad channels, the wholesale, the bricks and mortar retail, and the digital retail. What is the approximate mix of those three as a percent of your business now, and where do you think it'll be after project restoration is fully implemented?

Doug Lane: Yes, hi, good morning, everybody I'm going to stay on the channel mix here you talk in terms of three broad channels, the wholesale bricks and mortar retail in the digital retail.

Speaker Change: What is the approximate mix of those three as a percent of your business now and where do you think it'll be after project restoration is fully implemented.

Speaker Change: Or wholesale business runs in the mid teens to 20% is obviously the shifts a little bit from time to time from period to period.

Michael Schwindle: Our wholesale business, you know, runs in the mid-teens to 20%. It obviously shifts a little bit from time to time, from period to period.

Michael Schwindle: The, you know, the digital side of the business runs closer to the quarter, a little bit higher than a quarter of the business. The balance is on the retail side. And so as we look forward, I'm going to articulate this more in a branded versus value kind of shift is, I think, the way we're looking at this because as we think about the consumer, we're not trying to legislate where the customer wants to purchase Vera Bradley products.

Speaker Change: The you know the digital side of the business runs closer in the quarter, a little bit higher than a quarter of the business and the balances in the retail side.

Speaker Change: And so as we look forward I'm articulate this I think more than a branded versus value kind of shift is.

Speaker Change: Think the way we're looking at this because we as we think about the consumer we're not trying to legislate where the customer wants to purchase Vera Bradley products. Our goal is to be more positioned where the customer is and where the customer would like to share products and purchase our products in terms of our value versus.

Michael Schwindle: Our goal is to be more positioned where the customer is and where the customer would like to see our products and purchase our products. In terms of a value versus branded perspective, we have been a little bit overweighted on the value side for a number of years. We see the opportunity here as a growth opportunity to grow our branded side of our business, the branded weight of our business, the full line, the full price side of the business, I should say, and to grow that side of the business.

Speaker Change: Branded perspective, we have been a little bit over weighted on the brand on the value side for a number of years, we see the opportunity here is a growth opportunity to grow our branded side of our business branded weight of our presence full line the whole price side of the business I shouldn't say.

Speaker Change: And to grow that side of the business, that's where a lot of the work in terms of customer marketing is coming from they're targeting the product, where we're exposing new product of how we're exposing your product. There's a lot of work on the value side as well, but clearly we've spend a great deal of time talking about.

Michael Schwindle: That's where a lot of the work in terms of customer marketing is coming from, the targeting, the product, where we're exposing the new product, and how we're exposing the new product. There's a lot of work on the value side as well, but clearly, we've spent a great deal of time talking about the branded assortments here. So we see a growth opportunity to get that weight shifted back to heavier on the full line, full price, branded side. Jackie, do you want to add anything to that?

Speaker Change: The branded Assortments here. So are we see a growth opportunity to get that wage shifting back to heavier on the full line full price branded side, Jack do you want to add anything to that.

Jacqueline Ardrey: I think, Doug, one of the other things that we really... I feel like we're going to have the ability to do is look at our assortment and determine which channels, which wholesale partners they should actually go into based on our kind of strategic thoughts about those product categories. So leather, for example, has specific distribution points. Obviously, it's in a full line.

Jack: One of the other things that where we really.

Jack: Feel like we're going to have the ability to do is is is.

Speaker Change: Look at our assortment and determine which channels, which wholesale partners are they should actually go into based on our kind of strategic thoughts about those product categories. So leather for example has specific distribution point.

Speaker Change: Obviously, it's been a full line part of that's in wholesale we will do some faux leather and outlet, but you know where we're thinking about this.

Jacqueline Ardrey: Part of that's in wholesale. We'll do some faux leather in the outlet. But we're thinking about this, not only just from a business unit point of view, but also from an assortment point of view, so that we can really be strategic about where we're matching the product assortment to the customer we want. And I think that that's a thought process that's really going to benefit us and help us to deliver on our goals.

Speaker Change: Not only just from a.

Speaker Change: Our business unit point of view, but also an assortment point of view so that we can really be strategic about.

Speaker Change: Where we're matching the product assortment to the customer we want so and I think that that is that's a that's a thought process, that's really going to benefit us and help us to deliver on our goals.

Doug Lane: Okay, that's a really good color. Thank you for that.

Speaker Change: Okay. That's really good color. Thank you for that and just shifting gears to capital here you mentioned the Capex of 12 to 14 million up from just under four last year, and even 8 million the year before so clearly elevated capital spending here. So as I'm looking out is this a one year thing with project restoration or do you expect elevated.

Michael Schwindle: And just switching gears to capital here, you mentioned the CapEx of $12 to $14 million, up from just under $4 million last year and even $8 million the year before. So clearly, elevated capital spending here. So as I'm looking out, is this a one-year thing with project restoration, or do you expect elevated spending to continue beyond fiscal 25?

Speaker Change: Spending to continue beyond fiscal 'twenty five.

Speaker Change: So I'll.

Speaker Change: I'll take the first part of it and then turn it over to Michael but one of the one of the key points in our research when when we started thinking about project restoration and and <unk>.

Michael Schwindle: Deciding what we wanted to do was that our store environments were not always places that provided the experience in the store, the amount of merchandise that was in the store, fixtures all of that, and so we said, you know, we really needed to make some changes to the environment of the stores in order to ensure that we can capture the new customers that are critical to our plan and our future growth.

Michael: Deciding what we wanted to do was that our store environments, where not.

Michael: Always places that the that's our new target customer of this 35 to 54 year old who who values both fashion and function, where she really wanted to shop, we were really looked at at the.

Michael: At the experience in the store.

Michael: The amount of merchandise that was in the store fixture and all of that and and so we said you know.

We really needed to make some changes to the environment of other stores in order to ensure we can capture the new customers that are critical to our plan and our future growth.

Michael Schwindle: Yeah, and I think that's the premise behind a lot of the refresher remodeling activity that we're doing across many of our stores. Each store is different.

Speaker Change: Yeah, and I think that's that's our premise behind a lot of the refreshes and remodels activity that we're doing and across many of our stores.

Michael Schwindle: Each store has a different story and has a different degree of needs depending on its current state, how long it's been in place, and some of the design standards that have been employed in each store. I'd say, Doug, back to the specifics of your question, I would say a great deal of the elevated capital is, I'm not going to say one time, but it is definitely not consistent with TRIN and other ongoing maintenance kinds of capital.

Speaker Change: Each store is different each store is a different story and has a different degree of needs depending on its current state how long it's been in place. Some of the design standards that were never been employed in each store I'd say, Doug back to your the specifics of your question I would say.

A great deal of the elevated capital is.

Speaker Change: Is that I'm going to say one time, but it is it is definitely not consistent trend another ongoing maintenance capital. We are addressing a lot of the shopping experience in our branded stores and to a lesser degree in our outlets as well.

Michael Schwindle: We are addressing a lot of this shopping experience in our branded stores and to a lesser degree in our outlets as well. A great deal of that is kind of one-time only or not every year in nature. I'll say it that way.

Speaker Change: A great deal of that is kind of one time ish or not every year in nature I'll say it that way.

Michael Schwindle: We also have some additional capital in there associated with the new stores we've talked about. And then we do have some other maintenance and other kind of ongoing kind of capital. That maintenance ongoing capital, you know, every year kind of stuff. Think about that as a five sub-five million dollar a year kind of volume. The rest of this is more specific to either growth or specific issues around project restoration.

Speaker Change: We also have some additional capital in there associated with the new stores, we've talked about and then we do have some other maintenance and other kind of ongoing kind of capital.

Speaker Change: That maintenance ongoing capital every year kind of stuff is think about that as a five sub $5 million a year kind of volume. The rest of this is more specific to either growth or specific issues around project restoration.

Doug Lane: Okay, that's very helpful. Thank you, Michael. And just lastly, it begs the question, what are the uses of free cash flow going forward?

Speaker Change: Okay. That's very helpful. Thank you Michael and just lastly, it begs the question what are the uses of free cash flow going forward.

Speaker Change: Yeah.

Michael Schwindle: That's a great question. Obviously, this year, our net cash flow for the year will be a lot lower than in most of the last several years. That is predominantly project restoration-related, as I just said. As we look forward, we are unabashedly conservative on the balance sheet. I think this is something that the company has been very consistent about. We have no intentions of changing that at this juncture, and we believe in the value of conservatism in this regard.

Speaker Change: That's a great question.

Speaker Change: And obviously this year, our cash our net cash flow for the year will be a lot lower than last year most of the last several years.

That is project restoration related predominantly as I, just said as we look forward.

Speaker Change: We are unabashedly conservative on the balance sheet.

Speaker Change: I think this is something that the company has been very consistent about.

Speaker Change: We have no intentions of changing that at this juncture and we believe in the value of conservatism in this regard as we look forward. There are a number of avenues and opportunities for growth as we look forward. Some of them are more capital consumptive than others, we're not providing guidance on specifically, which ones and to what degree is we're gonna be per.

Michael Schwindle: As we look forward, there are a number of avenues and opportunities for growth as we look forward. Some of them are more capital-consuming than others. We're not providing guidance on specifically which ones and to what degrees we're going to be pursuing those in future years, but we do see the opportunity for future investment and growth, as Jackie talked earlier, and we do see opportunities for other capital returns at some point in the future.

Speaker Change: <unk> those in future years, but we do see the opportunity for future investment and growth as Jacki talked earlier, and we do see opportunities for other capital returns at some point in the future.

Michael Schwindle: And Doug, just as a reminder, we bought back a million shares in the first quarter, and we still have $19.2 million remaining on our $50 million repurchase authorization that runs through the end of the year. So that's another significant place that we're looking at for capital allocation.

Speaker Change: And just as a reminder, I mean, we did we bought back a million shares in first quarter, and we still have $19 $2 million remaining on our $50 million repurchase authorization.

Speaker Change: That that runs through the end of the year. So that's another that's another significant place that we.

Speaker Change: We're looking at for capital allocation.

Doug Lane: Is there any talk of a dividend here?

Speaker Change: Is there any talk of the dividend here.

Michael Schwindle: We're not providing any guidance at this time. If and when we make a decision on that with our board, we'll announce that. Okay, fair enough.

Speaker Change: We're not providing any guidance at this time, if and when we make a decision to that with our board we will announce that.

Doug Lane: Okay, fair enough. Good luck this summer with the rollout. Thank you.

Speaker Change: Okay Fair enough. Good luck this summer with the rollout.

Speaker Change: Thank you. Thank you.

Jacqueline Ardrey: Thank you. We've reached the end of the question and answer session. I'll now turn the call over to Jacqueline Ardrey for her closing remarks.

Speaker Change: Thank you.

At the end of the question and answer session I will now turn the call over to Jackie Ardrey for closing remarks.

Jacqueline Ardrey: Thank you.

Jacqueline Ardrey: Our team is dedicated to returning the company to long-term profitable growth and creating value for our shareholders through project restoration. We are on track with our initiatives, and we're excited about our Vera Bradley brand relaunch in July. We have assembled a talented leadership team who are retail growth and turnaround experts, and they have been the foundational support of Project Restoration. I want to thank our entire team for working so diligently and collaboratively over the last year to position us to deliver. Thank you for joining us today, and we look forward to sharing our project restoration progress with you on our second quarter earnings call on September 11th.

Jacqueline Ardrey: Our team is dedicated to returning the company to long term profitable growth and creating value for our shareholders through project restoration. We are on track with our initiatives and we're excited about our Vera Bradley brand relaunch in July.

Jacqueline Ardrey: We have assembled a talented leadership team who are retail growth in turnaround experts and they have been the foundational support of project restoration I want to thank our entire team for working so diligently and collaboratively over the last year to position us to deliver.

Jacqueline Ardrey: Thank you for joining us today, and we look forward to sharing our project restoration progress with you on our second quarter earnings call on September 11th.

Jacqueline Ardrey: Thank you.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.