Vera Bradley, Inc.
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In this Form 10-K, references to “Vera Bradley, Inc.” or the “Company” refer to Vera Bradley, Inc. and its wholly-owned subsidiaries, including Vera Bradley Designs, Inc., except where the context requires otherwise or where otherwise indicated. The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to January 31. The fiscal years ending January 31, 2026 (“fiscal 2026”) and February 1, 2025 (“fiscal 2025”) were 52-week periods. The fiscal year ending February 3, 2024 (“fiscal 2024”) was a 53-week period. The fiscal year ending January 30, 2027 (“fiscal 2027”) will be a 52-week period.
Item 1. Business
Our Company
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 is known for its innovative designs, iconic patterns, and brilliant colors that inspire and connect women.
On March 11, 2025, the Company entered into an Interest Purchase Agreement (the “Agreement”) to sell one hundred percent (100%) of Creative Genius, Inc., (“Creative Genius”) which operates under the name Pura Vida Bracelets. The sale consummated on March 31, 2025. As a result, the operations of Pura Vida have been classified as discontinued operations in the consolidated financial statements in accordance with ASC 205-20, Discontinued Operations. Prior period amounts have been retrospectively adjusted to conform to the current period presentation. Unless otherwise specified, disclosures in these consolidated financial statements reflect continuing operations only. Certain prior period data, primarily related to discontinued operations, have been reclassified in the Consolidated Financial Statements and accompanying notes to conform to the current period presentation.
Following the sale, Pura Vida is no longer included in the Company’s consolidated financial results. Refer to Note 16 for additional information.
The Company has two reportable segments: Vera Bradley Direct (“VB Direct”) and Vera Bradley Indirect (“VB Indirect”). For financial information about our reportable segments, refer to Note 15 of the Notes to Consolidated Financial Statements set forth in Part II, “Item 8. Financial Statements and Supplementary Data,” of this report.
Our Brand
The reportable segments within the Vera Bradley brand are VB Direct and VB Indirect.
VB Direct. The VB Direct business 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); direct to consumer marketplaces; and typically the Vera Bradley annual outlet sale in Fort Wayne, Indiana. As of January 31, 2026, the Company operated 29 full-line stores and 86 outlet stores.
VB Indirect. The VB Indirect business consists of sales of Vera Bradley products to approximately 1,000 specialty retail locations, substantially all of which are located in the United States; sales to department stores, national accounts, and third-party inventory liquidators; and royalties recognized through licensing agreements related to the Vera Bradley brand.
Our History
When they were traveling together in 1982, Fort Wayne, Indiana friends Barbara Bradley Baekgaard and Patricia Miller realized there was a lack of stylish travel accessories in the market. Within weeks, the friends created Vera Bradley, named after Ms. Bradley Baekgaard’s mother, and began manufacturing and marketing their distinctive products. The founders, together with past and present members of the executive management team, have been instrumental in our growth and success.
The passion for design and customer service established by our founders has driven our Company for over 40 years and remains the cornerstone of Vera Bradley, Inc. today. Ms. Baekgaard retired from Vera Bradley operations in 2017 and retired from the Board of Directors in March 2025 but continues to serve in a Director Emeritus role and as a brand ambassador. Ms. Miller retired as our National Spokesperson in October 2012 and from the Board of Directors in August 2019.
Enterprise Vision and Growth Strategies
Over the long term, we are committed to driving long-term growth, generating strong cash flow, and returning capital to shareholders.
During fiscal 2026, we began execution of Project Sunshine, a comprehensive strategy to strengthen our market position by tapping into our brand’s strong emotional connection with consumers. We are simplifying decision-making, removing organizational complexity, and focusing resources on high-impact initiatives. This operational focus, paired with prudent cost management, will allow us to invest in the brand, innovation, and customer experiences, all while driving shareholder value. These improvements are about agility — building a responsive organization to fully leverage our unique brand position.
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Through the five pillars outlined below, Project Sunshine will reclaim Vera Bradley's joyful optimism while fueling operational success.
Sharpening Brand Focus: We are refining our brand strategy to ensure consistent, resonant messaging across all consumer touchpoints. We are revisiting product assortment and style, reintroducing innovation to our core DNA, and emphasizing our heritage in occasion-based bags. At the same time, we are leaning into our cotton heritage, increasing the penetration of cotton across the assortment and reinforcing the material authenticity that defines our brand.
Rewiring our digital ecosystem: We are aligning all consumer touchpoints with a cohesive omnichannel experience, ensuring clear brand identity and channel roles supported by cohesive storytelling for customer acquisition and retention.
Outlet 2.0: We are redefining our outlet strategy by enhancing the customer experience with curated assortments, optimized visuals, and labor efficiency. This transformation will elevate brand engagement and drive profitability, positioning outlets as key drivers of our brand evolution.
Resetting our go-to-market: We are scrutinizing every aspect of our operating processes including product development, store labor, promotional strategies, and more to improve efficiency. This holistic review will sharpen focus on high-impact initiatives and retail KPIs across all channels.
Reimagining How We Work: We are restructuring our organization to foster collaboration, creativity, and efficiency. As we align our talent and leadership with key growth areas, we are redesigning our structure to drive transformation and streamline costs.
Our Product Release Strategy
On average, we typically introduce new collections monthly. Each launch typically consists of one to three signature cotton-quilted prints, as well as other fabrications including Featherweight, Leather, Performance Twill, and nylon, some of which are also available in solid colors. These collections of prints and solids are incorporated into the designs of a wide range of products, including bags, accessories, and travel items. These collections typically include classic styles, updates to existing designs, and new product introductions.
To keep our assortment current and fresh, and to focus our inventory investments on our best performers, we discontinue prints and fabrications as necessary. We sell our remaining inventory of retired products primarily through our websites (including our online outlet site), outlet stores, third-party liquidators, and historically our annual outlet sale.
The following chart presents net revenues generated by each of the Company’s product categories and other revenues as a percentage of our total net revenues for fiscal years 2026, 2025, and 2024.
| Fiscal Year Ended | |||||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | |||||||||||||||||
| Bags | 45.2 | % | 44.0 | % | 41.5 | % | |||||||||||||
| Travel | 26.9 | % | 25.4 | % | 23.7 | % | |||||||||||||
| Accessories | 12.9 | % | 15.0 | % | 16.3 | % | |||||||||||||
| Home | 8.0 | % | 9.0 | % | 10.8 | % | |||||||||||||
| Apparel/Footwear | 3.2 | % | 3.7 | % | 5.0 | % | |||||||||||||
Other (1) | 3.8 | % | 2.9 | % | 2.7 | % | |||||||||||||
| Total | 100.0 | % | |||||||||||||||||
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion in conjunction with the consolidated financial statements and accompanying notes and the information contained in other sections of this report, particularly under the headings “Risk Factors” and “Business.” This discussion and analysis is based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. The statements in this discussion and analysis concerning expectations regarding our future performance, liquidity, and capital resources, as well as other non-historical statements in this discussion and analysis, are forward-looking statements. See “Forward-Looking Statements.” These forward-looking statements are subject to numerous risks and uncertainties, including those described under “Risk Factors.” Our actual results could differ materially from those suggested or implied by any forward-looking statements.
Executive Summary
Some of our major achievements for fiscal 2026 are as follows:
We began execution of Project Sunshine, a comprehensive strategy to strengthen our market position by tapping into our brand’s strong emotional connection with consumers. We are simplifying decision-making, removing organizational complexity, and focusing resources on high-impact initiatives. This operational focus, paired with prudent cost management, will allow us to invest in the brand, innovation, and customer experiences, all while driving shareholder value. These improvements are about agility — building a responsive organization to fully leverage our unique brand position.
•Our Direct segment has seen promising improvement throughout the fiscal year, giving us confidence that Project Sunshine is beginning to resonate with our customers
•We partnered with Anthropologie for exclusive product collaborations which align with our target customers and expand our customer reach.
•We continued another year of product collaborations with iconic brands such as Disney, Peanuts, Harry Potter, and Gilmore Girls which resonate with our customers.
•We implemented Outlet 2.0, one of our pillars of Project Sunshine, which will provide a more brand-enhancing retail experience for our customers.
•We are a Better CottonTM member and continue to increase our procurement of cotton from Better CottonTM supply chain partners.
•We continued to strengthen and rationalize our store base. We are continuing to look for opportunities to improve the full-line profitability of our full-line store portfolio by re-balancing our existing fleet through select closures along with identifying future market opportunities. In fiscal 2026, we closed twelve underperforming full-line stores and one outlet store, and opened two full-line stores, ending the fiscal year with 29 full-line and 86 outlet locations.
How We Assess the Performance of Our Business
In assessing the performance of our business, we consider a variety of performance and financial measures.
Net Revenues
Net revenues reflect sales of our merchandise and revenue from distribution and shipping and handling fees, less returns and discounts. Revenues for the VB Direct segment reflect sales through full-line and outlet stores, our websites (verabradley.com, international.verabradley.com, and outlet.verabradley.com), and direct to consumer marketplaces. Revenues for the VB Indirect segment reflect sales to specialty retail partners; department stores; national accounts; and third-party inventory liquidators, as well as royalties recognized through licensing agreements.
Comparable Sales
Typically, comparable sales are calculated based upon our stores that have been open for at least 12 full fiscal months and net revenues from our e-commerce operations. Comparable store sales are calculated based solely upon stores that have been open for at least 12 full fiscal months. Remodeled stores are included in both comparable sales and comparable store sales unless the store was closed for more than one week of the current or comparable prior period, in which case the non-comparable temporary closure periods are not included, or the remodel resulted in a significant change in square footage. Some of our competitors and other retailers calculate comparable or “same store” sales differently than we do. As a result, data in this report regarding our comparable sales and comparable store sales may not be comparable to similar data made available by other companies. Non-comparable sales include sales from stores not included in comparable sales or comparable store sales.
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Typically, measuring the change in year-over-year comparable sales allows us and our investors to evaluate how our store base and e-commerce operations are performing. Various factors affect our comparable sales, including:
•Overall economic trends;
•Consumer preferences and fashion trends;
•Competition;
•The timing of our releases of new patterns and collections;
•The timing of holidays;
•Changes in our product mix;
•Pricing and level of promotions;
•Amount of store, mall, and e-commerce traffic;
•The level of customer service that we provide in stores and to our on-line customers;
•Our ability to source and distribute products efficiently;
•The number of stores we open and close in any period; and
•The timing and success of promotional and marketing efforts.
Gross Profit
Gross profit is equal to our net revenues less our cost of sales. Cost of sales includes the direct cost of purchased merchandise, distribution center costs, operations overhead, duty, all inbound and outbound freight costs incurred, and inventory adjustments. The components of our reported cost of sales may not be comparable to those of other retail and wholesale companies.
Gross profit can be impacted by changes in volume; fluctuations in sales price; operational efficiencies, such as leveraging of fixed costs; promotional activities, including free shipping; commodity prices, such as for cotton; tariffs; and labor costs.
Selling, General, and Administrative Expenses (“SG&A”)
SG&A expenses include selling; advertising, marketing, and product development; and administrative expenses. Selling expenses include:
•VB Direct business expenses, such as store expenses, employee compensation, and store occupancy and supply costs;
•VB Indirect business expenses consisting primarily of employee compensation and other expenses associated with sales to Indirect retailers; and
Advertising, marketing, and product development expenses include employee compensation, media costs, creative production expenses, marketing agency fees, new product design costs, public relations expenses, and market research expenses. A portion of our advertising expenses may be reimbursed by Indirect retailers, and such amount is classified as other income. Administrative expenses include employee compensation for corporate functions, corporate headquarters occupancy costs, consulting and software expenses, and charitable donations, as well as severance charges and consulting fees associated with cost savings initiatives disclosed in Note 14 to the Notes to the Consolidated Financial Statements herein.
Cost Savings Initiatives and Other Charges
During fiscal 2026, the Company continued targeted cost reductions. Expense savings are being derived across various areas of the Company, including retail store efficiencies, marketing expenses, information technology contracts, professional services, logistics and operational costs, and corporate payroll. Refer to Note 14 to the Notes to the Consolidated Financial Statements herein for additional information regarding charges for cost savings initiatives and remaining liabilities, as well as other charges not comparable with the prior year.
Macroeconomic Environment
Our business is impacted by broader macroeconomic issues in the U.S. marketplace – and can be affected both positively and negatively over time.
The macroeconomic environment has been challenged by inflationary pressures, including high gas prices, interest rates, and other related factors that have impacted consumer discretionary spending. We have also seen a trend of steeply increasing digital media costs.
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To mitigate some of these inflationary and supply chain pressures, we implemented strategic price increases in late fiscal 2022 through fiscal 2024, as well as in fiscal 2026. We will continue to monitor our pricing as it relates to the current macroeconomic trends. In addition, in fiscal 2023 through fiscal 2026, we implemented targeted cost reductions across various areas of the Company, including retail store efficiencies, marketing expenses, information technology contracts, professional services, logistics and operational costs, and corporate payroll. We will continue to review our expense structure in future years for additional cost reduction opportunities.
We continue to actively monitor the changing macroeconomic circumstances and take mitigating actions where appropriate. Ongoing macroeconomic pressures could have a material adverse effect on our liquidity, operating results, and financial condition.
Results of Operations
The following tables summarize key components of our consolidated results of operations for the last three fiscal years, both in dollars and as a percentage of our net revenues.
Fiscal Year Ended (1) | |||||||||||||||||||
| ($ in thousands) | January 31, 2026 | February 1, 2025 | February 3, 2024 | ||||||||||||||||
| Statement of (Loss) Income Data: | |||||||||||||||||||
| Net revenues | $ | 269,651 | $ | 318,795 | $ | 383,713 | |||||||||||||
| Cost of sales | 144,614 | 159,957 | 179,748 | ||||||||||||||||
| Gross profit | 125,037 | 158,838 | 203,965 | ||||||||||||||||
Selling, general, and administrative expenses (2) | 158,142 | 188,462 | 193,247 | ||||||||||||||||
| Other income, net | 1,193 | 832 | 899 | ||||||||||||||||
| Operating (loss) income from continuing operations | (31,912) | (28,792) | 11,617 | ||||||||||||||||
| Interest (expense) income, net | (462) | 752 | 661 | ||||||||||||||||
| (Loss) income from continuing operations before income taxes | (32,374) | (28,040) | 12,278 | ||||||||||||||||
| Income tax expense | 303 | 5,339 | 3,682 | ||||||||||||||||
| Net (loss) income from continuing operations | (32,677) | (33,379) | 8,596 | ||||||||||||||||
| Loss from discontinued operations, net of income tax | (15,163) | (28,809) | (758) | ||||||||||||||||
| Net (loss) income | $ | (47,840) | $ | (62,188) | $ | 7,838 | |||||||||||||
| Percentage of Net Revenues: | |||||||||||||||||||
| Net revenues | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||
| Cost of sales | 53.6 | % | 50.2 | % | 46.8 | % | |||||||||||||
| Gross profit | 46.4 | % | 49.8 | % | 53.2 | % | |||||||||||||
| Selling, general, and administrative expenses | 58.6 | % | 59.1 | % | 50.4 | % | |||||||||||||
| Other income, net | 0.4 | % | 0.3 | % | 0.2 | % | |||||||||||||
| Operating (loss) income from continuing operations | (11.8) | % | (9.0) | % | 3.0 | % | |||||||||||||
| Interest (expense) income, net | (0.2) | % | 0.2 | % | 0.2 | % | |||||||||||||
| (Loss) income from continuing operations before income taxes | (12.0) | % | (8.8) | % | 3.2 | % | |||||||||||||
| Income tax expense | 0.1 | % | 1.7 | % | 1.0 | % | |||||||||||||
| Net (loss) income from continuing operations | (12.1) | % | (10.5) | % | 2.2 | % | |||||||||||||
| Loss from discontinued operations, net of income tax | (5.6) | % | (9.0) | % | (0.2) | % | |||||||||||||
| Net (loss) income | (17.7) | % | (19.5) | % | 2.0 | % | |||||||||||||
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The following tables present net revenues by operating segment, both in dollars and as a percentage of our net revenues, and Vera Bradley full-line and outlet store data for the last three fiscal years:
Fiscal Year Ended (1) | |||||||||||||||||||
| ($ in thousands, except as otherwise indicated) | January 31, 2026 | February 1, 2025 | February 3, 2024 | ||||||||||||||||
| Net Revenues by Segment: | |||||||||||||||||||
| VB Direct | $ | 227,791 | $ | 257,609 | $ | 309,910 | |||||||||||||
| VB Indirect | 41,860 | 61,186 | 73,803 | ||||||||||||||||
| Total | $ | 269,651 | $ | 318,795 | $ | 383,713 | |||||||||||||
| Percentage of Net Revenues by Segment: | |||||||||||||||||||
| VB Direct | 84.5 | % | 80.8 | % | 80.8 | % | |||||||||||||
| VB Indirect | 15.5 | % | 19.2 | % | 19.2 | % | |||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||
| Fiscal Year Ended | |||||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | |||||||||||||||||
Vera Bradley Store Data (3): | |||||||||||||||||||
| Total stores opened during period | 2 | 8 | 3 | ||||||||||||||||
| Total stores closed during period | (13) | (6) | (9) | ||||||||||||||||
| Total stores open at end of period | 115 | 126 | 124 | ||||||||||||||||
Comparable sales (including e-commerce) decrease (4) | (11.6) | % | (16.6) | % | (7.1) | % | |||||||||||||
| Total gross square footage at end of period | 360,629 | 387,510 | 375,198 | ||||||||||||||||
Average net revenues per gross square foot (5) | $ | 320 | $ | 403 | $ | 518 | |||||||||||||
(1)The Company utilizes a 52-53 week fiscal year ending on the Saturday closest to January 31. Fiscal years 2026 and 2025 consisted of 52 weeks. Fiscal year 2024 consisted of 53 weeks. The extra week in fiscal 2024 contributed approximately $4.9 million in net revenues and added an estimated $0.01 to diluted net income per share in fiscal 2024. By segment, the extra week contributed net revenues of approximately $2.8 million to Direct and $2.1 million to Indirect.
(2)Impairment charges, related primarily to underperforming stores, totaled $1.0 million, and $2.4 million during the fiscal years ended January 31, 2026, and February 1, 2025, respectively. There were no store impairment charges in fiscal 2024.
(3)Includes Vera Bradley full-line and outlet stores.
(4)Comparable sales are calculated based upon stores that have been open for at least 12 full fiscal months and net revenues from e-commerce operations. Decrease is reported as a percentage of the comparable sales for the same period in the prior fiscal year. Remodeled stores are included in comparable sales unless the store was closed for a portion of the current or comparable prior period, in which case the non-comparable temporary closure periods are not included, or the remodel resulted in a significant change in square footage. Calculation excludes sales for the fifty-third week in fiscal 2024.
(5)Dollars not in thousands. Average net revenues per gross square foot are calculated by dividing total net revenues for our stores that have been open at least 12 full fiscal months as of the end of the period by total gross square footage for those stores. Remodeled stores are included in average net revenues per gross square foot unless the store was closed for a portion of the period. Calculation excludes sales for the fifty-third week in fiscal 2024.
Fiscal 2026 Compared to Fiscal 2025
Net Revenues
For fiscal 2026, net revenues decreased $49.1 million, or 15.4%, to $269.7 million, from $318.8 million for fiscal 2025.
VB Direct. For fiscal 2026, net revenues decreased $29.8 million, or 11.6%, to $227.8 million, from $257.6 million for fiscal 2025. Vera Bradley comparable sales decreased $28.6 million, or 11.6%, which includes a 20.8% decrease in comparable store sales, partially offset by a 1.2% increase in e-commerce sales. The decrease in comparable sales and comparable store sales was impacted by reduced traffic and conversion primarily in the outlet channel.
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VB Indirect. For fiscal 2026, net revenues decreased $19.3 million, or 31.5%, to $41.9 million, from $61.2 million for fiscal 2025. The decrease was primarily related to a decline in specialty and key account orders as well as a decrease in liquidation sales.
Gross Profit
For fiscal 2026, gross profit decreased $33.8 million, or 21.3%, to $125.0 million, from $158.8 million for fiscal 2025. As a percentage of net revenues, gross profit decreased to 46.4% for fiscal 2026, from 49.8% for fiscal 2025. The decrease in consolidated gross profit as a percentage of net revenues for the fiscal year was driven by a $5.2 million inventory write-down related to the Brands' strategic product shift toward cotton and heritage prints, as well as lower margin sales associated with inventory originating from prior strategic initiatives, partially offset by improved product margins across channels driven by more favorable promotional activity and pricing.
Selling, General, and Administrative Expenses (“SG&A”)
For fiscal 2026, SG&A expenses decreased $30.4 million, or 16.1%, to $158.1 million, from $188.5 million for fiscal 2025. As a percentage of net revenues, SG&A expenses were 58.7% and 59.1% for fiscal 2026 and fiscal 2025, respectively. The decrease in consolidated SG&A expenses for fiscal 2026 was primarily due to a decrease in employee-related expenses of $13.4 million due to a reduction in headcount and incentive compensation; decreased advertising and selling expenses of $15.6 million due to decreased sales, partially offset by a $4.0 million write-off of media credits that were not expected to be fully utilized; a $1.9 million decrease building related expenses; lower impairment charges related to store assets of approximately $1.4 million compared to the prior year; $0.8 million reduction in corporate expenses; a decrease of $0.5 million for software maintenance costs; and $0.8 million in net other expense reductions.
Other Income, Net
For fiscal 2026, net other income increased $0.4 million, or 43.4%, to $1.2 million, from $0.8 million in the prior year. The increase in net other income was primarily attributable to income from the Transition Services Agreement ("TSA") resulting from the sale of Creative Genius.
Operating Loss from Continuing Operations
For fiscal 2026, operating loss from continuing operations increased $3.1 million, or 10.8%, to $(31.9) million, from $(28.8) million for fiscal 2025. As a percentage of net revenues, operating loss from continuing operations was (11.8)% and (9.0)% for fiscal 2026 and fiscal 2025, respectively. Operating loss from continuing operations decreased due to the factors described above.
The following table provides additional information about our operating loss from continuing operations (in thousands):
| Fiscal Year Ended | $ Change | % Change | |||||||||||||||||||||
| January 31, 2026 | February 1, 2025 | ||||||||||||||||||||||
| Operating Loss from continuing operations: | |||||||||||||||||||||||
| VB Direct | $ | 18,322 | $ | 25,240 | $ | (6,918) | (27.4) | % | |||||||||||||||
| VB Indirect | 8,582 | 15,414 | (6,832) | (44.3) | % | ||||||||||||||||||
| Less: Unallocated corporate expenses | (58,816) | (69,446) | 10,630 | 15.3 | % | ||||||||||||||||||
| Operating loss from continuing operations | $ | (31,912) | $ | (28,792) | $ | (3,120) | (10.8) | % | |||||||||||||||
VB Direct. For fiscal 2026, operating income decreased $6.9 million, or 27.4%. As a percentage of VB Direct segment net revenues, operating income in the VB Direct segment was 8.0% and 9.8% for fiscals 2026 and 2025, respectively. The decrease in operating income as a percentage of VB Direct segment net revenues was primarily due to decreased sales, a decrease in gross margin as a percent of net revenues driven by inventory reserve charges, and SG&A expense deleverage associated with decreased sales.
VB Indirect. For fiscal 2026, operating income decreased $6.8 million, or 44.3%. As a percentage of VB Indirect segment net revenues, operating income in the VB Indirect segment was 20.5% and 25.2% for fiscals 2026 and 2025, respectively. The decrease in operating income as a percentage of VB Indirect segment net revenues was primarily due to reduced margin for indirect liquidations sales and SG&A expense deleverage resulting from decreased sales.
Corporate Unallocated. For fiscal 2026, corporate unallocated expenses decreased $10.6 million, or 15.3% to $58.8 million from $69.4 million in the prior-year period. The decrease in corporate unallocated expenses was primarily due to a $5.5 million decrease in employee related expenses including incentive compensation and salaries resulting from headcount reductions; a decrease of $2.1 million for corporate expenses and professional fees; a reduction in advertising expenses of $5.4 million,
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partially offset by a $4.0 million write-off of media credits that were not expected to be fully utilized; decreased building expenses of $0.8 million; and $0.8 million in net other expense reductions.
Interest (Expense) Income, Net
For fiscal 2026, there was net interest expense of $(0.5) million, a $1.3 million increase from net interest income of $0.8 million in fiscal 2025.
Income Tax Expense
For fiscal 2026, we recorded income tax expense of $0.3 million at an effective tax rate of (0.9)%, compared to $5.3 million at an effective tax rate of (19.0)% for fiscal 2025. The effective tax rate change was primarily attributable to the full valuation allowance recorded in the prior year against the Company's net deferred tax assets, as well as the relative impact of permanent and discrete items in the current-year period compared to the prior-year period which largely relates to non-deductible executive compensation.
Net Loss from Continuing Operations
For fiscal 2026, net loss from continuing operations decreased $0.7 million, or 2.1%, to $(32.7) million, from $(33.4) million in fiscal 2025 due to the factors described in the captions above.
Loss from Discontinued Operations
For fiscal 2026, loss from discontinued operations decreased $13.6 million, or 47.4%, to $(15.2) million, from $(28.8) million in fiscal 2025.
Net Loss
For fiscal 2026, net loss decreased $14.3 million, or 23.1%, to $(47.8) million, from $(62.2) million in fiscal 2025 due to the factors described in the captions above.
Fiscal 2025 Compared to Fiscal 2024
Net Revenues
For fiscal 2025, net revenues decreased $64.9 million, or 16.9%, to $318.8 million, from $383.7 million for fiscal 2024.
VB Direct. For fiscal 2025, net revenues decreased $52.3 million, or 16.9%, to $257.6 million, from $309.9 million for fiscal 2024. Vera Bradley comparable sales decreased $49.6 million, or 16.6%, which includes a 22.2% decrease in comparable store sales as well as a 7.3% decrease in e-commerce sales. The decrease in comparable sales and comparable store sales was impacted by reduced traffic, conversion, and units sold primarily in the outlet channel as well as the full-line channel. Fiscal 2024 net revenues also include approximately $2.8 million attributed to the extra week in fiscal 2024.
VB Indirect. For fiscal 2025, net revenues decreased $12.6 million, or 17.1%, to $61.2 million, from $73.8 million for fiscal 2024. The decrease is primarily driven by decreased specialty and other indirect retailer sales resulting from reduced customer count and order volume, as well as a decrease in liquidation orders. These decreases were partially offset by an increase in certain key account orders. Fiscal 2024 net revenues also include approximately $2.1 million attributed to the extra week in fiscal 2024.
Gross Profit
For fiscal 2025, gross profit decreased $45.2 million, or 22.1%, to $158.8 million, from $204.0 million for fiscal 2024. As a percentage of net revenues, gross profit decreased to 49.8% for fiscal 2025, from 53.2% for fiscal 2024. The decrease in gross profit as a percentage of net revenues was driven by increased outbound freight costs, sales channel mix, and reduced margins for indirect liquidation sales.
Selling, General, and Administrative Expenses (“SG&A”)
For fiscal 2025, SG&A expenses decreased $4.8 million, or 2.5%, to $188.5 million, from $193.3 million for fiscal 2024. As a percentage of net revenues, SG&A expenses were 59.1% and 50.4% for fiscal 2025 and fiscal 2024, respectively. The decrease in SG&A expenses for fiscal 2025 was primarily due to a decrease in employee-related expenses of $12.1 million due to a reduction in headcount and incentive compensation and decreased selling expenses of $2.0 million due to decreased sales, partially offset by an increase of $6.8 million in advertising expenses, and $2.4 million of property, plant, and equipment charges recorded in fiscal 2025, and $0.1 million in net other expenses.
Other Income, Net
For fiscal 2025, net other income decreased $0.1 million, or 7.5%, to $0.8 million, from $0.9 million for fiscal 2024.
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Operating (Loss) Income from Continuing Operations
For fiscal 2025, there was an operating loss from continuing operations of $(28.8) million, a $40.4 million increase, or 347.8%, from operating income from continuing operations of $11.6 million for fiscal 2024. As a percentage of net revenues, operating (loss) income from continuing operations was (9.0)% and 3.0% for fiscal 2025 and fiscal 2024, respectively. Operating (loss) income from continuing operations increased due to the factors described above.
The following table provides additional information about our operating (loss) income from continuing operations (in thousands):
| Fiscal Year Ended | $ Change | % Change | |||||||||||||||||||||
| February 1, 2025 | February 3, 2024 | ||||||||||||||||||||||
| Operating (Loss) Income from continuing operations: | |||||||||||||||||||||||
| VB Direct | $ | 25,240 | $ | 61,873 | $ | (36,633) | (59.2) | % | |||||||||||||||
| VB Indirect | 15,414 | 24,279 | (8,865) | (36.5) | % | ||||||||||||||||||
| Less: Unallocated corporate expenses | (69,446) | (74,535) | 5,089 | 6.8 | % | ||||||||||||||||||
| Operating (loss) income from continuing operations | $ | (28,792) | $ | 11,617 | $ | (40,409) | 347.8 | % | |||||||||||||||
VB Direct. For fiscal 2025, operating income decreased $36.6 million, or 59.2%. As a percentage of VB Direct segment net revenues, operating income in the VB Direct segment was 9.8% and 20.0% for fiscals 2025 and 2024, respectively. The decrease in operating income as a percentage of VB Direct segment net revenues was primarily due to decreased sales, a decrease in gross margin as a percent of net revenues driven by a change in sales channel mix, and SG&A expense deleverage associated with decreased sales.
VB Indirect. For fiscal 2025, operating income decreased $8.9 million, or 36.5%. As a percentage of VB Indirect segment net revenues, operating income in the VB Indirect segment was 25.2% and 32.9% for fiscals 2025 and 2024, respectively. The decrease in operating income as a percentage of VB Indirect segment net revenues was primarily due to reduced margin for indirect liquidations sales, an increase in wholesale discounting, and SG&A expense deleverage resulting from decreased sales.
Corporate Unallocated. For fiscal 2025, corporate unallocated expenses decreased $5.1 million, or 6.8% to $69.4 million from $74.5 million for fiscal 2024. The decrease in corporate unallocated expenses was primarily due to a $5.9 million decrease in employee related expenses including incentive compensation and salaries resulting from headcount reductions and $0.1 million in net other expense reductions, partially offset by an increase of $0.6 million in advertising related to prior strategic initiatives and an increase in professional fees of $0.3 million.
Interest Income, Net
For fiscal 2025, there was net interest income of $0.8 million, a $0.1 million increase from $0.7 million in fiscal 2024.
Income Tax Expense
For fiscal 2025, we recorded income tax expense of $5.3 million at an effective tax rate of (19.0)%, compared to $3.7 million at an effective tax rate of 30.0% for fiscal 2024. The effective tax rate change was primarily attributable to the full valuation allowance recorded in fiscal 2025 against the Company's net deferred tax assets, as well as the relative impact of permanent and discrete items in fiscal 2025 compared to fiscal 2024 which largely relates to non-deductible executive compensation.
Net (Loss) Income from Continuing Operations
For fiscal 2025, there was a net loss from continuing operations of $(33.4) million, a $42.0 million increase, or 488.3%, from net income from continuing operations of $8.6 million in fiscal 2024 due to the factors described in the captions above.
Loss from Discontinued Operations
For fiscal 2025, loss from discontinued operations increased $28.0 million, or 3701.0%, to $(28.8) million, from $(0.8) million in fiscal 2024.
Net (Loss) Income
For fiscal 2025, there was a net loss of $(62.2) million, a $70.0 million increase, or 893.4%, from net income of $7.8 million in fiscal 2024 due to the factors described in the captions above.
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Liquidity and Capital Resources
General
Our primary sources of liquidity are cash and cash equivalents and cash flow from operations. We also have access to additional liquidity, if needed, through borrowings under our $75.0 million asset-based revolving credit agreement (the “Credit Agreement”). Availability under the Credit Agreement is driven by a borrowing base comprised primarily of eligible accounts receivable and inventory, each subject to advance rates, eligibility criteria, and applicable reserves. As a result, borrowing capacity may fluctuate based on the level and quality of receivables and the composition and valuation of inventory. There was no debt outstanding under the Credit Agreement as of January 31, 2026. The Company also owns two real estate properties that are unencumbered, which provide additional financial flexibility and may serve as a potential source of liquidity or collateral, if needed. Historically, our primary cash needs have been for merchandise inventories; payroll; store rent; capital expenditures associated with operational equipment, buildings, information technology, and opening new stores; and share repurchases. The most significant components of our working capital are cash and cash equivalents, merchandise inventories, accounts receivable, accounts payable, and other current liabilities.
We believe that cash and cash equivalents, cash flows from operating activities, and the availability of borrowings under our Credit Agreement or other financing arrangements will be sufficient to meet working capital requirements and anticipated capital expenditures, and other strategic uses of cash, if any, for the foreseeable future.
Cash Flow Analysis
A summary of operating, investing, and financing activities is shown in the following table (in thousands):
| Fiscal Year Ended | |||||||||||||||||||
| January 31, 2026 | February 1, 2025 | February 3, 2024 | |||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (9,971) | $ | (14,102) | $ | 47,993 | |||||||||||||
| Net cash used in investing activities | (1,536) | (10,373) | (13,770) | ||||||||||||||||
| Net cash used in financing activities | (233) | (22,515) | (3,548) | ||||||||||||||||
Net Cash (Used in) Provided by Operating Activities
Net cash (used in) provided by operating activities consists primarily of net (loss) income adjusted for non-cash items, including depreciation, amortization, impairment charges, and stock-based compensation; and the effect of changes in assets and liabilities.
Net cash used in operating activities was $10.0 million during fiscal 2026, as compared to $14.1 million during fiscal 2025. The decrease in cash used in operating activities was primarily driven by a $14.3 million decrease in net loss in the current year and the $20.4 million valuation allowance recorded in the prior year period against the Company's deferred tax assets, partially offset by a loss on sale of business of $15.2 million, as well as other non-cash adjustments and changes in working capital.
Net Cash Used in Investing Activities
Investing activities consisted primarily of investments and capital expenditures related to new store openings, buildings, operational equipment, and information technology investments.
Net cash used in investing activities was $1.5 million in fiscal 2026, compared to $10.4 million in fiscal 2025. The decrease in cash used in investing activities was primarily a result of decreased property, plant, and equipment spending of $7.1 million due to a reduction in store openings and remodels in fiscal 2026, compared to fiscal 2025, as well as $1.8 million in proceeds from the sale of Creative Genius in the current year.
Net Cash Used in Financing Activities
Net cash used in financing activities was $0.2 million in fiscal 2026 compared to $22.5 million in fiscal 2025. The decrease in cash used in financing activities was primarily due to a decrease in repurchases of common stock of $21.8 million.
Refer to the Company's Annual Report on Form 10-K filed with the SEC on March 28, 2025, for a comparison of fiscal 2025 to fiscal 2024 cash flow activity.
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Credit Agreement
On September 7, 2018, Vera Bradley Designs, Inc. (“VBD”), a wholly-owned subsidiary of the Company, entered into an asset-based revolving Credit Agreement (the “Credit Agreement”) among VBD, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto. On March 11, 2025, certain subsidiaries of the Company, JP Morgan Chase Bank, N.A., as the administrative agent, and lenders from time to time party thereto, entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement. The Credit Agreement provides for certain credit facilities to VBD in an aggregate principal amount not to initially exceed the lesser of $75.0 million or the amount of borrowing availability determined in accordance with a borrowing base of certain assets. Borrowings under the credit facilities are available to finance general corporate purposes of VBD and its subsidiaries, including but not limited to Vera Bradley International, LLC, and Vera Bradley Sales, LLC. The Credit Agreement also contains an option for VBD to arrange with lenders to increase the aggregate principal amount by up to $50.0 million.
On October 21, 2025, VBD amended the agreement to include, among other things: (i) permit the sale of certain real property assets without requiring the application of the proceeds from such sale to be used to repay amounts outstanding under the Credit Agreement, (ii) remove the prohibition against sale and leaseback transactions and (iii) increase the amount of Company assets permitted to be disposed of in any fiscal year outside the ordinary course of business from $5,000,000 to $10,000,000.
As of January 31, 2026, the Company had no borrowings outstanding under the Credit Agreement and had availability of $58.6 million, subject to the borrowing base provisions of the facility.
For further information regarding the Credit Agreement, please see Note 6 of the Notes to Consolidated Financial Statements set forth in Part II, “Item 8. Financial Statements and Supplementary Data,” of this report.
Material Cash Requirements
Our material cash requirements from known contractual and other obligations include the following:
•Operating lease obligations as disclosed further in Note 4 to the Notes to the Consolidated Financial Statements in Part II, Item 8 of this report;
•Purchase order commitments primarily related to inventory purchases;
•Salaries, cash incentives, benefits, and other employee-related costs;
•Commitments for capital expenditures;
•Income tax payments; and
•Other supply and service agreements entered into as part of our normal operations.
We may be subject to additional material cash requirements that are contingent upon certain events that have not yet occurred. We expect to fund these cash requirements using cash on hand, cash provided by our operations and, to the extent necessary, borrowings under our Credit Agreement.
Critical Accounting Policies and Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of our assets, liabilities, revenues, and expenses, as well as the disclosures relating to contingent assets and liabilities at the date of the consolidated financial statements. We evaluate our accounting policies, estimates, and judgments on an on-going basis. We base our estimates and judgments on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions and conditions.
We evaluate the development and selection of our critical accounting policies and estimates and believe that the following policies and estimates involve a higher degree of judgment or complexity and are most significant to reporting our results of operations and financial position, and are therefore discussed as critical. The following critical accounting policies reflect the significant estimates and judgments used in the preparation of our consolidated financial statements. With respect to critical accounting policies, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or unfavorable impact on subsequent results of operations. Our historical results for the periods presented in the consolidated financial statements, however, have not been materially impacted by such variances. More information on all of our significant accounting policies can be found in Note 2, “Summary of Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements.
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Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (“FIFO”) method. Appropriate consideration is given to obsolescence, excess quantities, and other factors, including the popularity of a pattern or product, in evaluating net realizable value. We record valuation adjustments to our inventories, which are reflected in cost of sales, if the cost of specific inventory items on hand exceeds the amount we expect to realize from the ultimate sale or disposal of the inventory. This adjustment calculation requires us to make assumptions and estimates, which are based on factors such as merchandise seasonality, historical trends, and estimated sales and inventory levels, including sell-through of remaining units. In addition, as part of inventory adjustments, we provide for inventory shrinkage based on historical trends from our physical inventory counts. We perform physical inventory counts throughout the year and adjust the shrinkage provision accordingly.
The balance of inventory adjustments was $6.0 million and $0.7 million for these matters as of the fiscal years ended January 31, 2026, and February 1, 2025, respectively.
We believe we have the ability to sell some of our retired finished goods through a number of channels, including our Vera Bradley websites, the Vera Bradley online outlet site, Vera Bradley outlet stores, the Vera Bradley Annual Outlet Sale, and through third-party liquidators as needed.
Valuation of Long-lived Assets
Property, plant, and equipment and operating right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. In evaluating an asset group for recoverability, we estimate the future cash flows expected to result from the use of the asset group at the store level, the lowest identifiable level of cash flow, if applicable. If the sum of the estimated undiscounted future cash flows related to the asset group is less than the carrying value, we recognize a loss equal to the difference between the carrying value and the fair value, usually determined by an estimated discounted cash flow analysis of the asset. Factors used in the valuation of long-lived assets include, but are not limited to, our plans for future operations, brand initiatives, recent operating results, and projected future cash flows. With respect to our stores, we analyze store economics, location within the shopping center, the size and shape of the space, and desirable co-tenancies in our selection process. Impairment charges are classified in SG&A expenses and were $1.0 million, and $2.4 million for the periods ended January 31, 2026, and February 1, 2025, respectively. No impairment charges were recorded in fiscal 2024.
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.
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Next expected filings
- ~2026-09-11 10-Q expected by 2026-09-12 (in 92 days)
- ~2026-12-11 10-Q expected by 2026-12-12 (in 183 days)
- ~2027-03-26 10-K expected by 2027-03-27 (in 288 days)
- ~2027-06-11 10-Q expected by 2027-06-12 (in 365 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-04-24 8-K Officer/Director Change
- 2026-04-24 DEF 14A Proxy Statement
- 2026-04-17 8-K Material Agreement Entered; Material Modification to Rights; Bylaws/Articles Amended; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-03-27 10-K Annual Report
- 2026-03-13 8-K Officer/Director Change
- 2026-03-12 8-K Earnings Release; Financial Statements and Exhibits
- 2025-12-11 10-Q Quarterly Report
- 2025-10-29 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-10-27 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2025-10-14 8-K Material Agreement Entered; Material Modification to Rights; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-10-01 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-09-11 10-Q Quarterly Report
- 2025-09-11 8-K Earnings Release; Financial Statements and Exhibits
- 2025-08-06 8-K Officer/Director Change; Financial Statements and Exhibits
- 2025-06-25 8-K Officer/Director Change; Financial Statements and Exhibits