vra-20240504

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

FORM 10-Q

___________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended May 4, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission File Number: 001-34918

___________________________

VERA BRADLEY, INC.

(Exact name of registrant as specified in its charter)

___________________________


Indiana						27-2935063
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

12420 Stonebridge Road, Roanoke, Indiana						46783
(Address of principal executive offices)						(Zip Code)

(877) 708-8372

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

___________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, without par value	VRA	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The registrant had 29,487,786 shares of its common stock outstanding as of June 5, 2024.

Table of Contents

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets as of May 4, 2024, and February 3, 2024	4

	Condensed Consolidated Statements of Operations for the Thirteen Weeks Ended May 4, 2 024 , and April 29 , 202 3	5

	Condensed Consolidated Statements of Comprehensive Loss for the Thirteen Weeks Ended May 4, 2024, and April 29, 2023	6

	Condensed Consolidated Statements of Shareholders' Equity for the Thirteen Weeks Ended May 4, 2024, and April 29, 2023	7

	Condensed Consolidated Statements of Cash Flows for the T hirteen Weeks Ended May 4, 2024 , and April 29, 2023	8

	Notes to the Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29

Item 4.	Controls and Procedures	29

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 5.	Other Information	31

Item 6.	Exhibits	32

Table of Contents

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements include references to our current expectations and projections relating to our financial condition, results of operations, plans, objectives, strategies, future performance, and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “might,” “will,” “should,” “can have,” and “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected earnings, revenues, costs, expenditures, cash flows, growth rates, and financial results, our plans and objectives for future operations, growth, initiatives, or strategies, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:

•possible inability to successfully implement our long-term strategic plans, including Project Restoration;

•possible declines in our comparable sales;

•possible inability to maintain and enhance our brands;

•possible failure of our multi-channel distribution model;

•possible adverse changes in general economic conditions and their impact on consumer confidence and consumer spending, including political unrest, social unrest, acts of war and terrorism, and other related matters;

•possible inability to predict and respond in a timely manner to changes in consumer demand;

•possible inability to successfully open new stores and/or operate current stores as planned;

•possible loss of key management or design associates or inability to attract and retain the talent required for our business;

•possible data security or privacy breaches or disruptions in our computer systems or websites;

•possible disruptions in our supply chain;

•possible new or increased tariffs on our products and increases in inbound and outbound freight expense that could lead to increased product costs and lower profit margins; and

•public health pandemics and actions by governmental or other actors regarding containment.

We derive many of our forward-looking statements from our operating plans and forecasts, which are based upon detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results.

For a discussion of the above described risks and uncertainties and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 3, 2024, as well as in Item 1A herein.

We caution you that the risks and uncertainties identified by us may not be all of the factors that are important to you. Furthermore, the forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Vera Bradley, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


	May 4, 2024		February 3, 2024
Assets
Current assets:
Cash and cash equivalents	$	55,195	$	77,303

Accounts receivable, net	17,873		17,112
Inventories	125,180		118,278
Income taxes receivable	3,861		461
Prepaid expenses and other current assets	16,321		12,803

Total current assets	218,430		225,957
Operating right-of-use assets	64,434		66,488
Property, plant, and equipment, net	53,137		54,256
Intangible assets, net	6,844		7,573


Deferred income taxes	19,946		20,355
Other assets	5,898		6,157
Total assets	$	368,689	$	380,786
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	21,734	$	14,155
Accrued employment costs	9,069		12,944
Short-term operating lease liabilities	18,172		18,452

Other accrued liabilities	14,025		12,070
Income taxes payable	—		640

Total current liabilities	63,000		58,261


Long-term operating lease liabilities	59,731		62,552

Other long-term liabilities	42		44
Total liabilities	122,773		120,857
Commitments and contingencies

Shareholders’ equity:
Preferred stock; 5,000 shares authorized, no shares issued or outstanding	—		—
Common stock, without par value; 200,000 shares authorized, 43,447 and 43,253 shares issued and 30,048 and 30,814 shares outstanding, respectively	—		—
Additional paid-in-capital	113,038		112,590
Retained earnings	274,346		282,467
Accumulated other comprehensive loss	(64)		(72)
Treasury stock	(141,404)		(135,056)
Total shareholders’ equity	245,916		259,929
Total liabilities and shareholders’ equity	$	368,689	$	380,786

The accompanying notes are an integral part of these financial statements.

Table of Contents

Vera Bradley, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	Thirteen Weeks Ended
	May 4, 2024		April 29, 2023
Net revenues	$	80,603	$	94,362
Cost of sales	38,694		42,613
Gross profit	41,909		51,749
Selling, general, and administrative expenses	53,781		58,506

Other income, net	442		371
Operating loss	(11,430)		(6,386)
Interest income (expense), net	603		(32)
Loss before income taxes	(10,827)		(6,418)
Income tax benefit	(2,706)		(1,739)
Net loss	$	(8,121)	$	(4,679)



Basic weighted-average shares outstanding	30,660		30,794
Diluted weighted-average shares outstanding	30,660		30,794

Basic net loss per share	$	(0.26)	$	(0.15)
Diluted net loss per share	$	(0.26)	$	(0.15)

The accompanying notes are an integral part of these financial statements.

Table of Contents

Vera Bradley, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)


	Thirteen Weeks Ended
	May 4, 2024		April 29, 2023
Net loss	$	(8,121)	$	(4,679)

Cumulative translation adjustment	8		(10)
Comprehensive loss, net of tax	$	(8,113)	$	(4,689)

The accompanying notes are an integral part of these financial statements.

Table of Contents

Vera Bradley, Inc.

Condensed Consolidated Statements of Shareholders’ Equity

(in thousands, except share data)

(unaudited)


	Number of Shares
	Common Stock	Treasury Stock	Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity
Balance at February 3, 2024	30,813,616	12,439,244	$	112,590	$	282,467	$	(72)	$	(135,056)	$	259,929
Net loss	—	—	—		(8,121)		—		—		(8,121)
Translation adjustments	—	—	—		—		8		—		8

Restricted shares vested, net of repurchase for taxes	194,033	—	(356)		—		—		—		(356)
Stock-based compensation	—	—	804		—		—		—		804
Treasury stock purchased	(959,186)	959,186	—		—		—		(6,348)		(6,348)

Balance at May 4, 2024	30,048,463	13,398,430	$	113,038	$	274,346	$	(64)	$	(141,404)	$	245,916


	Number of Shares
	Common Stock	Treasury Stock	Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders’ Equity
Balance at January 28, 2023	30,766,024	12,079,690	$	109,718	$	274,629	$	(105)	$	(132,864)	$	251,378
Net loss	—	—	—		(4,679)		—		—		(4,679)
Translation adjustments	—	—	—		—		(10)		—		(10)

Restricted shares vested, net of repurchase for taxes	330,500	—	(942)		—		—		—		(942)
Stock-based compensation	—	—	691		—		—		—		691
Treasury stock purchased	(128,100)	128,100	—		—		—		(732)		(732)
Purchase of noncontrolling interest equity adjustment	—	—	1,286		—		—		—		1,286
Balance at April 29, 2023	30,968,424	12,207,790	$	110,753	$	269,950	$	(115)	$	(133,596)	$	246,992

The accompanying notes are an integral part of these financial statements.

Table of Contents

Vera Bradley, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Thirteen Weeks Ended
	May 4, 2024		April 29, 2023
Cash flows from operating activities
Net loss	$	(8,121)	$	(4,679)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant, and equipment	1,935		2,086
Amortization of operating right-of-use assets	4,689		5,341


Amortization of intangible assets	729		729
Provision for doubtful accounts	31		38

Stock-based compensation	804		691
Deferred income taxes	409		1,027



Other non-cash loss, net	14		26
Changes in assets and liabilities:
Accounts receivable	(792)		1,826
Inventories	(6,902)		(467)
Prepaid expenses and other assets	(3,259)		(98)
Accounts payable	7,589		(3,794)
Income taxes	(4,040)		(3,024)
Operating lease liabilities, net	(5,736)		(4,763)
Accrued and other liabilities	(1,899)		(3,694)
Net cash used in operating activities	(14,549)		(8,755)
Cash flows from investing activities
Purchases of property, plant, and equipment	(863)		(818)



Cash paid for business acquisition	—		(10,000)
Net cash used in investing activities	(863)		(10,818)
Cash flows from financing activities


Tax withholdings for equity compensation	(356)		(942)
Repurchase of common stock	(6,348)		(732)






Net cash used in financing activities	(6,704)		(1,674)
Effect of exchange rate changes on cash and cash equivalents	8		(10)
Net decrease in cash and cash equivalents	(22,108)		(21,257)
Cash and cash equivalents, beginning of period	77,303		46,595
Cash and cash equivalents, end of period	$	55,195	$	25,338

Table of Contents

Vera Bradley, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(continued)

(unaudited)


	Thirteen Weeks Ended
	May 4, 2024		April 29, 2023
Supplemental disclosure of cash flow information
Cash paid for income taxes, net	$	924	$	256
Supplemental disclosure of non-cash activity
Non-cash operating, investing, and financing activities

Purchases of property, plant, and equipment incurred but not yet paid	$	117	$	774

Refer to Note 3 herein for supplemental cash flow information regarding the Company’s leases.

The accompanying notes are an integral part of these financial statements.

Table of Contents

Vera Bradley, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1.Description of the Company and Basis of Presentation

The term “Company” refers to Vera Bradley, Inc. and its wholly owned subsidiaries, except where the context requires otherwise or where otherwise indicated.

Vera Bradley, Inc. operates two unique lifestyle brands – Vera Bradley and Pura Vida. We believe Vera Bradley and Pura Vida are complementary businesses, both with devoted, emotionally-connected, and multi-generational female customer bases; alignment as causal, comfortable, affordable, and fun brands; positioning as “gifting” and socially-connected brands; strong, entrepreneurial cultures; a keen focus on community, charity, and social consciousness; multi-channel distribution strategies; and talented leadership teams aligned and committed to the long-term success of their brands.

Vera Bradley is a leading designer of women’s handbags, luggage and travel items, fashion and home accessories, and unique gifts. Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand’s innovative designs, iconic patterns, and brilliant colors continue to inspire and connect women.

In July 2019, Vera Bradley, Inc. acquired a 75% interest in Creative Genius, Inc., which also operates under the name Pura Vida Bracelets (“Pura Vida”). On January 30, 2023, the Company purchased the remaining 25% interest in Pura Vida. Pura Vida, based in La Jolla, California, is a digitally native lifestyle brand that we believe deeply resonates with its loyal consumer following. The Pura Vida brand has a differentiated and expanding offering of bracelets, jewelry, and other lifestyle accessories.

The Company has three reportable segments: Vera Bradley Direct (“VB Direct”), Vera Bradley Indirect (“VB Indirect”), and Pura Vida.

•The VB Direct segment consists of sales of Vera Bradley products through Vera Bradley full-line and outlet stores in the United States; e-commerce sites (verabradley.com, outlet.verabradley.com, and international.verabradley.com); and the Vera Bradley annual outlet sale in Fort Wayne, Indiana. As of May 4, 2024, the Company operated 42 full-line stores and 81 outlet stores.

•The VB Indirect segment consists of revenues generated through the distribution of Vera Bradley-branded products to specialty retailers representing approximately 1,450 locations, substantially all of which are located in the United States; key accounts, which include department stores, national accounts, third-party e-commerce sites, and third-party inventory liquidators; and royalties recognized through licensing agreements related to the Vera Bradley brand.

•The Pura Vida segment represents revenues generated through the Pura Vida websites (www.puravidabracelets.com and www.puravidabracelets.eu); through the distribution of Pura Vida-branded products to wholesale retailers, substantially all of which are located in the United States; and through its five retail stores.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as permitted by such rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024, filed with the SEC.

The interim financial statements reflect all adjustments that are, in the opinion of management, necessary to present fairly the results for the interim periods presented. All such adjustments are of a normal, recurring nature. The results of operations for the thirteen weeks ended May 4, 2024, are not necessarily indicative of the results to be expected for the full fiscal year due to, in part, seasonal fluctuations in the business and the uncertainty of macroeconomic factors on future periods, including inflation and other related matters.

Table of Contents

Vera Bradley, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including Pura Vida. The Company has eliminated intercompany balances and transactions in consolidation.

Fiscal Periods

The Company’s fiscal year ends on the Saturday closest to January 31. References to the fiscal quarters ended May 4, 2024 and April 29, 2023 refer to the thirteen week periods ended on those dates.

Recently Issued Accounting Pronouncements

There were no new accounting pronouncements issued or which became effective during the thirteen weeks ended May 4, 2024, which had, or are expected to have, a significant impact on the Company's Consolidated Financial Statements.

2.Revenue from Contracts with Customers

Disaggregation of Revenue

The following presents the Company's net revenues disaggregated by product category for the thirteen weeks ended May 4, 2024 and April 29, 2023 (in thousands):


	Thirteen Weeks Ended
	May 4, 2024
	VB Direct Segment			VB Indirect Segment			Pura Vida Segment			Total
Product categories
Bags	$	23,292		$	6,781		$	9		$	30,082
Travel	14,096			1,972			—			16,068
Accessories	9,965			1,533			12,233			23,731
Home	5,216			433			—			5,649
Apparel/Footwear	2,563			216			111			2,890
Other	1,292		(1)	589		(2)	302		(3)	2,183
Total net revenues	$	56,424	(4)	$	11,524	(5)	$	12,655	(4)	$	80,603

(1) Primarily includes net revenues from stationery, freight, and gift card breakage.
(2) Primarily includes net revenues from licensing agreements, freight, and merchandising.
(3) Related to freight.
(4) Net revenues were related to product sales recognized at a point in time.
(5) $11.0 million of net revenues related to product sales recognized at a point in time and $0.5 million of net revenues related to sales-based royalties recognized over time.

Table of Contents

Vera Bradley, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)


	Thirteen Weeks Ended
	April 29, 2023
	VB Direct Segment			VB Indirect Segment			Pura Vida Segment			Total
Product categories
Bags	$	22,901		$	8,328		$	61		$	31,290
Travel	15,406			3,179			—			18,585
Accessories	10,494			1,958			19,011			31,463
Home	5,928			588			—			6,516
Apparel/Footwear	2,947			461			290			3,698
Other	1,229		(1)	859		(2)	722		(3)	2,810
Total net revenues	$	58,905	(4)	$	15,373	(5)	$	20,084	(4)	$	94,362

(1) Primarily includes net revenues from stationery, freight, and gift card breakage.
(2) Primarily includes net revenues from licensing agreements and freight.
(3) Related to freight.
(4) Net revenues were related to product sales recognized at a point in time.
(5) $14.7 million of net revenues related to product sales recognized at a point in time and $0.7 million of net revenues related to sales-based royalties recognized over time.

Contract Balances

Contract liabilities as of May 4, 2024 and February 3, 2024, were $2.2 million and $2.6 million, respectively. The balance as of May 4, 2024 and February 3, 2024 consisted of unredeemed gift cards, unearned revenue related to the monthly bracelet and jewelry clubs of the Pura Vida segment, Pura Vida loyalty club points, and Pura Vida customer deposits and payments collected before shipment. These contract liabilities are recognized within other accrued liabilities on the Company’s Condensed Consolidated Balance Sheets. Substantially all contract liabilities are recognized within one year. The Company did not have contract assets as of May 4, 2024 and February 3, 2024.

The balance for accounts receivable from contracts with customers, net of allowances, as of May 4, 2024 and February 3, 2024, was $17.2 million and $16.4 million, respectively, which is recognized within accounts receivable, net, on the Company’s Condensed Consolidated Balance Sheets. The provision for doubtful accounts was $1.1 million as of May 4, 2024 and February 3, 2024, respectively. The provision for doubtful accounts is based upon the likelihood of default expected during the life of the receivable.

Performance Obligations

The performance obligations for the VB Direct, VB Indirect, and Pura Vida segments include the promise to transfer distinct goods (or a bundle of distinct goods). The VB Indirect segment also includes the right to access intellectual property (“IP”) related to the Vera Bradley brand.

Remaining Performance Obligations

The Company does not have remaining performance obligations in excess of one year or contracts that it does not have the right to invoice as of May 4, 2024.

3.Leases

Discount Rate

The weighted-average discount rate as of May 4, 2024, and April 29, 2023 was 4.9% and 4.7%, respectively. The discount rate is not readily determinable in the lease; therefore, the Company estimated the incremental borrowing rate, at the commencement date of each lease, which is the rate of interest it would have to borrow on a collateralized basis over a similar term with similar payments.

Table of Contents

Vera Bradley, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Leases Not Yet Commenced

As of May 4, 2024, the Company had one lease which was executed but for which it did not have control of the underlying asset; therefore, the lease liability and right-of-use asset are not recorded on the Condensed Consolidated Balance Sheet. This lease contains undiscounted lease payments, which will be included in the determination of the lease liability, totaling approximately $0.8 million and has a term of approximately 5 years commencing in fiscal year 2025.

Amounts Recognized in the Condensed Consolidated Financial Statements

The following lease expense is recorded within cost of sales for the Asia sourcing office and certain equipment leases and within selling, general, and administrative expenses for all other leases, including retail store leases, in the Company's Condensed Consolidated Statement of Operations for the thirteen weeks ended May 4, 2024 and April 29, 2023 (in thousands):


	Thirteen Weeks Ended
	May 4, 2024		April 29, 2023
Operating lease cost	$	6,397	$	6,565
Variable lease cost	1,229		1,356
Short-term lease cost	240		122
Less: Sublease income (1)	(105)		(105)
Total net lease cost	$	7,761	$	7,938
(1) Related to the sublease of a former Company location.

The weighted-average remaining lease term as of May 4, 2024 and April 29, 2023 was 5.1 years and 5.4 years, respectively.

Supplemental operating cash flow information was as follows (in thousands):


	Thirteen Weeks Ended
	May 4, 2024		April 29, 2023
Cash paid for amounts included in the measurement of operating lease liabilities	$	7,465	$	7,377
Right-of-use assets increase as a result of new and modified operating lease liabilities, net	$	2,640	$	2,548

Table of Contents

Vera Bradley, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

4.Earnings Per Share

Basic earnings per share is computed based on the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed based on the weighted-average number of common shares outstanding, plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares represent outstanding restricted stock units.

The components of basic and diluted earnings per share were as follows (in thousands, except per share data):


	Thirteen Weeks Ended
	May 4, 2024		April 29, 2023
Numerator:
Net loss	$	(8,121)	$	(4,679)





Denominator:
Weighted-average number of common shares (basic)	30,660		30,794
Dilutive effect of stock-based awards	—		—
Weighted-average number of common shares (diluted)	30,660		30,794

Net loss per share:
Basic	$	(0.26)	$	(0.15)
Diluted	$	(0.26)	$	(0.15)

For the thirteen weeks ended May 4, 2024 and April 29, 2023, all potential common shares were excluded from the diluted share calculation because they were anti-dilutive due to the net loss in the period.

5.Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

•Level 1 – Quoted prices in active markets for identical assets or liabilities;

•Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;

•Level 3 – Unobservable inputs based on the Company’s own assumptions.

The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement.

The carrying amounts reflected on the Condensed Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, other current assets, and accounts payable as of May 4, 2024 and February 3, 2024, approximated their fair values.

The following table details the fair value measurements of the Company's investments as of May 4, 2024 and February 3, 2024 (in thousands):


	Level 1				Level 2				Level 3
	May 4, 2024		February 3, 2024		May 4, 2024		February 3, 2024		May 4, 2024		February 3, 2024
Cash equivalents(1)	$	37,562	$	55,262	$	—	$	—	$	—	$	—














(1) Cash equivalents primarily represent a money market fund that has a maturity of three months or less at the date of purchase. Due to the short maturity, the Company believes the carrying value approximates fair value.

Table of Contents

Vera Bradley, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

The Company assesses potential impairments to its long-lived assets, which includes property, plant, and equipment and lease right-of-use assets, on a quarterly basis or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Store-level assets and right-of-use assets are grouped at the individual store-level for the purpose of the impairment assessment. Recoverability of an asset group is measured by a comparison of the carrying amount of an asset group to its estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. The fair value of the store assets is determined using the discounted future cash flow method of anticipated cash flows through the store’s lease-end date using fair value measurement inputs classified as Level 3. The fair value of right-of-use assets is estimated using market comparative information for similar properties. Level 3 inputs are derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. There were no long-lived asset impairment charges for the thirteen weeks ended May 4, 2024 or April 29, 2023.

The discounted cash flow models used to estimate the applicable fair values involve numerous estimates and assumptions that are highly subjective. Changes to these estimates and assumptions could materially impact the fair value estimates. The estimates and assumptions critical to the overall fair value estimates include: (1) estimated future cash flow generated at the store level; (2) discount rates used to derive the present value factors used in determining the fair values; and (3) market rentals at the retail store. These and other estimates and assumptions are impacted by economic conditions and our expectations and may change in the future based on period-specific facts and circumstances. If economic conditions were to deteriorate, future impairment charges may be required which may be material.

On a nonrecurring basis, assets recognized or disclosed at fair value on the consolidated financial statements include items such as property, plant, and equipment, including leasehold improvements, and operating lease assets, as well as intangible assets related to the Pura Vida acquisition. These assets are measured at fair value if determined to be impaired. There were no intangible asset impairment charges recorded during the thirteen weeks ended May 4, 2024 or April 29, 2023. Refer to Note 13 herein for additional information.

6.Debt

On September 7, 2018, Vera Bradley Designs, Inc. (“VBD”), a wholly-owned subsidiary of the Company, entered into an asset-based revolving Credit Agreement (the “Credit Agreement”) among VBD, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto. On August 3, 2023, certain subsidiaries of the Company, JP Morgan Chase Bank, N.A., as the administrative agent, and lenders from time to time party thereto, entered into a Third Amendment (the “Third Amendment”) to the Credit Agreement dated September 7, 2018.

The Credit Agreement provides for certain credit facilities to VBD in an aggregate principal amount not to initially exceed the lesser of $75.0 million or the amount of borrowing availability determined in accordance with a borrowing base of certain assets. Any proceeds of the credit facilities will be used to finance general corporate purposes of VBD and its subsidiaries, including but not limited to Vera Bradley International, LLC, Vera Bradley Sales, LLC, and Creative Genius, LLC (collectively, the “Named Subsidiaries”). The Credit Agreement also contains an option for VBD to arrange with lenders to increase the aggregate principal amount by up to $50.0 million.

Amounts outstanding under the Credit Agreement bear interest at a per annum rate equal to (i) for CBFR borrowings (including swingline loans), the CB Floating Rate, where the CB Floating Rate is the greater of the prime rate or 2.5%, plus the Applicable Rate, where the Applicable Rate is a percentage spread ranging from -1.25% to -1.50%, (ii) for each Term Benchmark Borrowing, the Adjusted Term SOFR Rate, where the Adjusted Term SOFR Rate is the Term SOFR rate for such interest period plus 0.10% for the interest period in effect for such borrowing, plus the Applicable Rate, where the Applicable Rate is a percentage ranging from 1

SEC Form 10-Q filed by Vera Bradley Inc.