What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-03-29 compared with 2023-03-28 · 291 added, 281 removed, 802 unchanged (42% of the section changed)

3 unchanged sentences

Reports of Independent Registered Public Accounting Firm (PCAOB ID 34 )

Consolidated Balance Sheets as of January 2 8 , 202 3 , and January 29, 2022

Consolidated Statements of Operations for the fiscal years ended January 2 8 , 202 3 , January 29, 2022, and January 30, 2021

Consolidated Statements of Comprehensive Income for the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021

Consolidated Statements of Shareholders’ Equity for the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021

Consolidated Statements of Cash Flows for the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021

Consolidated Balance Sheets as of Febr uary 3 , 2 024 , and January 28, 2023

Consolidated Statements of Operations for the fiscal years ended February 3, 202 4, January 28, 2023, and January 29, 2022

Consolidated Statements of Comprehensive Income (Loss) for the fiscal years ended February 3, 2024, January 28, 2023, and January 29, 2022

Consolidated Statements of Shareholders’ Equity for the fiscal years ended February 3, 2024, January 28, 2023, and January 29, 2022

Consolidated Statements of Cash Flows for the fiscal years ended February 3, 2024, January 28, 2023, and January 29, 2022

Notes to Consolidated Financial Statements

3 unchanged sentences

We have audited the accompanying consolidated balance sheets of Vera Bradley, Inc.

and subsidiaries (the "Company") as of January 28, 2023 and January 29, 2022, the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended January 28, 2023, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 28, 2023 and January 29, 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 28, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 28, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.

and subsidiaries (the "Company") as of February 3, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, for each of the three years in the period ended February 3, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 3, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 3, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 3, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 29, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

10 unchanged sentences

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current‐period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill and Indefinite-Lived Intangible Assets – Refer to Notes 2 and 15 to the financial statements

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or was required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Indefinite-Lived Intangible Assets – Refer to Notes 2 and 15 to the financial statements

Critical Audit Matter Description

The Company’s quantitative analysis of the Pura Vida reporting unit of goodwill (“goodwill”) and the indefinite‐lived Pura Vida brand asset (“Pura Vida brand”) for impairment involves the comparison of the fair value of the goodwill or Pura Vida brand asset to its respective carrying value.

The fair value of goodwill was determined using an income‐based approach and a market‐based approach, which required management to make significant estimates and assumptions including the projected revenue growth, operating profit growth, and discount rate.

The Company’s quantitative analysis of the indefinite‐lived Pura Vida brand asset (“Pura Vida brand”) for impairment involves the comparison of the fair value of the Pura Vida brand asset to its carrying value.

The Company used the relief‐from‐royalty method to estimate the fair value of the Pura Vida brand, which required management to make significant estimates and assumptions related to the projected revenue growth, royalty rate and discount rate.

The goodwill balance was $0 as of January 28, 2023.

The carrying value of the Pura Vida brand was $11.7 million as of January 28, 2023.

The carrying values of goodwill and the Pura Vida brand exceeded their fair values during fiscal 2023 and, therefore, impairment of $44.3 million and $25.0 million, respectively, was recognized during the year ended January 28, 2023.

We identified the impairment analysis of goodwill and the Pura Vida brand as a critical audit matter because of the significant judgments made by management to estimate the fair value of these indefinite‐lived assets.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions particularly related to the projected revenue growth, operating profit growth and discount rate for the goodwill impairment analysis and the projected revenue growth, royalty rate, and discount rate for the Pura Vida brand impairment analysis.

The carrying value of the Pura Vida brand was $6.2 million as of February 3, 2024.

The carrying value of the Pura Vida brand exceeded the fair value during fiscal 2024 and, therefore, impairment of $5.4 million was recognized during the year ended February 3, 2024.

We identified the impairment analysis of the Pura Vida brand as a critical audit matter because of the significant judgments made by management to estimate the fair value of this indefinite‐lived asset.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the projected revenue growth, operating profit growth and discount rate for goodwill and Pura Vida brand as well as the royalty rate for the Pura Vida brand included the following, among others:

We tested the effectiveness of controls over management’s goodwill and brand impairment analyses, including those over the determination of the fair value, such as controls related to management’s forecasts of projected revenue growth, operating profit growth, and selection of royalty rate and discount rates.

Our audit procedures related to the projected revenue growth, royalty rate, and discount rate for the Pura Vida brand included the following, among others:

We tested the effectiveness of controls over management’s brand impairment analysis, including those over the determination of the fair value, such as controls related to management’s forecasts of projected revenue growth, selection of royalty rate, and selection of discount rates.

We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.

We evaluated the reasonableness of management’s projected revenue growth and operating profit growth by comparing the forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in industry reports.

With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, and (2) discount rates and royalty rate by:

Assessing the appropriateness of the valuation methodology used to determine the discount rates and royalty rate.

We evaluated the reasonableness of management’s projected revenue growth by comparing the forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in industry reports.

With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, and (2) discount rate and royalty rate by:

Assessing the appropriateness of the valuation methodology used to determine the discount rate and royalty rate.

Testing the underlying source information and the mathematical accuracy of the calculations.

Developing a range of independent estimates and comparing those to the discount rates and royalty rate selected by management.

Developing a range of independent estimates and comparing those to the discount rate and royalty rate selected by management.

/s/ Deloitte & Touche LLP

6 unchanged sentences

We have audited the internal control over financial reporting of Vera Bradley, Inc.

and subsidiaries (the “Company”) as of January 28, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 28, 2023, of the Company and our report dated March 28, 2023, expressed an unqualified opinion on those financial statements.

and subsidiaries (the “Company”) as of February 3, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 3, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended February 3, 2024, of the Company and our report dated March 29, 2024, expressed an unqualified opinion on those financial statements.

Basis for Opinion

31 unchanged sentences

Intangible assets, net 7,573 15,918

Goodwill — 44,254

Deferred income taxes 20,355 21,542

18 unchanged sentences

Common stock, without par value;

200,000 shares authorized, 42,846 and 42,429 shares issued and 30,766 and 33,170 outstanding, respectively

200,000 share s authorized, 43,253 and 42,846 shares issued and 30,814 and 30,766 outstanding, respectively

Additional paid-in capital 112,590 109,718

18 unchanged sentences

Other income, net 915 457 961

Operating (loss) income ( 94,871 ) 26,911 13,065

Interest expense, net 153 263 1,203

(Loss) income before income taxes ( 95,024 ) 26,648 11,862

Income tax (benefit) expense ( 15,640 ) 6,430 1,173

Net (loss) income ( 79,384 ) 20,218 10,689

Operating income (loss) 10,442 ( 94,871 ) 26,911

Interest income (expense), net 890 ( 153 ) ( 263 )

Income (loss) before income taxes 11,332 ( 95,024 ) 26,648

Income tax expense (benefit) 3,494 ( 15,640 ) 6,430

Net income (loss) 7,838 ( 79,384 ) 20,218

Net (loss) income attributable to redeemable noncontrolling interest — ( 19,649 ) 2,380

Net (loss) income attributable to Vera Bradley, Inc.

Net income (loss) attributable to Vera Bradley, Inc.

$ 7,838 $ ( 59,735 ) $ 17,838

1 unchanged sentence

Diluted weighted-average shares outstanding 31,314 31,503 34,437

Basic net (loss) income per share attributable to Vera Bradley, Inc.

Basic net income (loss) per share attributable to Vera Bradley, Inc.

common shareholders $ 0.25 $ ( 1.90 ) $ 0.53

Diluted net (loss) income per share attributable to Vera Bradley, Inc.

Diluted net income (loss) per share attributable to Vera Bradley, Inc.

common shareholders $ 0.25 $ ( 1.90 ) $ 0.52

1 unchanged sentence

Vera Bradley, Inc.

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

2 unchanged sentences

2023 January 29,

Net (loss) income $ ( 79,384 ) $ 20,218 $ 10,689

Net income (loss) $ 7,838 $ ( 79,384 ) $ 20,218

Unrealized loss on available for sale debt investments — — ( 4 )

Cumulative translation adjustment 33 ( 76 ) ( 33 )

Comprehensive (loss) income, net of tax ( 79,460 ) 20,181 10,539

Comprehensive income (loss), net of tax 7,871 ( 79,460 ) 20,181

Comprehensive (loss) income attributable to redeemable noncontrolling interest — ( 19,649 ) 2,380

Comprehensive (loss) income attributable to Vera Bradley, Inc.

Comprehensive income (loss) attributable to Vera Bradley, Inc.

$ 7,871 $ ( 59,811 ) $ 17,801

10 unchanged sentences

Equity of Vera Bradley, Inc.

Balance at February 1, 2020 33,503,249 8,011,372 $ 100,357 $ 307,414 $ 158 $ ( 104,159 ) $ 303,770

Balance at January 30, 2021 33,414,490 8,393,207 $ 105,433 $ 316,526 $ 8 $ ( 107,060 ) $ 314,907

Net income attributable to Vera Bradley, Inc.

5 unchanged sentences

Treasury stock purchased ( 865,534 ) 865,534 — — — ( 7,742 ) ( 7,742 )

Redeemable noncontrolling interest redemption value adjustment — — — 431 — — 431

Balance at January 29, 2022 33,170,430 9,258,741 $ 107,907 $ 334,364 $ ( 29 ) $ ( 114,802 ) $ 327,440

Net income attributable to Vera Bradley, Inc.

Net loss attributable to Vera Bradley, Inc.

— — — ( 59,735 ) — — ( 59,735 )

Translation adjustments — — — — ( 76 ) — ( 76 )

Unrealized loss on available for sale investments — — — — ( 4 ) — ( 4 )

Restricted shares vested, net of repurchase for taxes 416,543 — ( 1,430 ) — — — ( 1,430 )

2 unchanged sentences

Balance at January 28, 2023 30,766,024 12,079,690 $ 109,718 $ 274,629 $ ( 105 ) $ ( 132,864 ) $ 251,378

Net loss attributable to Vera Bradley, Inc.

Net income attributable to Vera Bradley, Inc.

— — — 7,838 — — 7,838

3 unchanged sentences

Treasury stock purchased ( 359,554 ) 359,554 — — — ( 2,192 ) ( 2,192 )

Balance at January 28, 2023 30,766,024 12,079,690 $ 109,718 $ 274,629 $ ( 105 ) $ ( 132,864 ) $ 251,378

Purchase of noncontrolling interest equity adjustment — — 1,286 — — — 1,286

Balance at February 3, 2024 30,813,616 12,439,244 $ 112,590 $ 282,467 $ ( 72 ) $ ( 135,056 ) $ 259,929

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

6 unchanged sentences

Cash flows from operating activities

Net (loss) income $ ( 79,384 ) $ 20,218 $ 10,689

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Net income (loss) $ 7,838 $ ( 79,384 ) $ 20,218

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation of property, plant, and equipment 7,968 8,854 9,315

6 unchanged sentences

Deferred income taxes 1,761 ( 17,685 ) ( 327 )

Gain on investments — — 13

Adjustment of earn-out liability — — 229

Other non-cash charges (gain), net 6 ( 37 ) ( 1 )

Other non-cash charges, net 7 6 ( 37 )

Changes in assets and liabilities:

6 unchanged sentences

Accrued and other liabilities ( 2,060 ) ( 1,987 ) 1,562

Net cash (used in) provided by operating activities ( 13,421 ) 39,861 20,702

Net cash provided by (used in) operating activities 47,993 ( 13,421 ) 39,861

Cash flows from investing activities

Purchases of property, plant, and equipment ( 3,770 ) ( 8,239 ) ( 5,489 )

Purchases of investments — — ( 851 )

Proceeds from maturities and sales of investments — — 1,290

Cash received for business acquisition, net of cash acquired — — 993

Cash paid for business acquisition ( 10,000 ) — —

Proceeds from disposal of property, plant, and equipment — — 45

Net cash (used in) provided by investing activities ( 8,239 ) ( 4,154 ) 17,680

Net cash used in investing activities ( 13,770 ) ( 8,239 ) ( 4,154 )

Cash flows from financing activities

2 unchanged sentences

Distributions to redeemable noncontrolling interest — ( 613 ) ( 1,215 )

Borrowings under asset-based revolving credit agreement — — 60,000

Repayment of borrowings under asset-based revolving credit agreement — — ( 60,000 )

Payment of contingent consideration for business acquisition — — ( 18,677 )

Net cash used in financing activities ( 3,548 ) ( 20,105 ) ( 11,413 )

Effect of exchange rate changes on cash and cash equivalents 33 ( 76 ) ( 33 )

Net (decrease) increase in cash and cash equivalents ( 41,841 ) 24,261 14,258

Net increase (decrease) in cash and cash equivalents 30,708 ( 41,841 ) 24,261

Cash and cash equivalents, beginning of period 46,595 88,436 64,175

7 unchanged sentences

Supplemental disclosure of cash-flow information

Cash (received) paid for income taxes, net $ ( 6,573 ) $ 9,083 $ 5,079

Cash paid (received) for income taxes, net $ 837 $ ( 6,573 ) $ 9,083

Cash paid for interest $ 145 $ 88 $ 293

Supplemental disclosure of non-cash activity

Non-cash operating, investing, and financing activities

Repurchase of common stock incurred but not yet paid

As of January 28 2023, January 29, 2022, and January 30, 2021 $ — $ — $ —

As of January 29, 2022, January 30, 2021, and February 1, 2020 $ — $ — $ 176

Non-cash investing activities

Purchases of property, plant, and equipment incurred but not yet paid $ 150 $ 363 $ 250

As of January 28 2023, January 29, 2022, and January 30, 2021 $ 363 $ 250 $ 343

As of January 29, 2022, January 30, 2021, and February 1, 2020 $ 250 $ 343 $ 559

Refer to Note 4 herein for supplemental cash flow information regarding the Company’s leases.

19 unchanged sentences

acquired a 75 % interest in Creative Genius, Inc., which also operates under the name Pura Vida Bracelets (“Pura Vida”).

On January 30, 2023, subsequent to the end of fiscal 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.

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 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 business consists of sales of Vera Bradley products through Vera Bradley full-line and factory outlet stores in the United States;

verabradley.com and verabradley.ca;

the Vera Bradley online outlet site;

• The VB Direct business consists of sales of Vera Bradley products through Vera Bradley full-line and outlet stores in the United States;

verabradley.com;

outlet.verabradley.com;

and typically the Vera Bradley annual outlet sale in Fort Wayne, Indiana.

As of January 28, 2023, the Company operated 51 full-line stores and 79 factory outlet stores.

As of February 3, 2024, the Company operated 43 full-line stores and 81 outlet stores.

In light of the COVID-19 pandemic, the Company cancelled its calendar year 2022 and 2021 annual outlet sales.

The sale will resume in calendar year 2023.

The sale resumed in calendar year 2023.

• The VB Indirect business consists of sales of Vera Bradley products to approximately 1,600 specialty retail locations, substantially all of which are located in the United States, as well as department stores, national accounts, third-party e-commerce sites, 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, www.puravidabracelets.eu, and www.puravidabracelets.ca, the distribution of Pura Vida-branded products to wholesale retailers, substantially all of which are located in the United States, as well as through its five retail stores.

• The Pura Vida segment represents revenues generated through the Pura Vida websites (www.puravidabracelets.com, www.puravidabracelets.ca, and www.puravidabracelets.eu);

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.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, and its majority owned subsidiary, Pura Vida beginning on July 17, 2019.

The 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.

1 unchanged sentence

The Company utilizes a 52-53 week fiscal year ended on the Saturday closest to January 31.

As such, fiscal years 2023, 2022, and 2021, ending on January 28, 2023, January 29, 2022, and January 30, 2021 respectively, each reflected a 52-week period.

As such, fiscal year 2024, ending on February 3, 2024 reflected a 53-week period.

Fiscal years 2023 and 2022, ending on January 28, 2023 and January 29, 2022 respectively, each reflected a 52-week period.

Summary of Significant Accounting Policies

1 unchanged sentence

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of the Company’s assets, liabilities, revenues, and expenses, as well as the disclosures relating to contingent assets and liabilities at the date of the consolidated financial statements.

Significant areas requiring the use of management estimates include the

Significant areas requiring the use of management estimates include the valuation of inventories, valuation of long-lived assets, including operating right-of-use assets, valuation of goodwill and indefinite-lived intangible assets, accounts receivable valuation allowances, and sales return allowances.

Actual results

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

valuation of inventories, valuation of long-lived assets, including operating right-of-use assets, valuation of goodwill and indefinite-lived intangible assets, accounts receivable valuation allowances, and sales return allowances.

Actual results could differ from these estimates.

could differ from these estimates.

The Company revises its estimates and assumptions as new information becomes available.

28 unchanged sentences

Costs related to shipping of product are classified in cost of sales in the Consolidated Statements of Operations.

The Company has elected to treat shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill

The Company has elected to treat shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the product rather than as an additional promised service.

Net revenues exclude sales taxes collected from customers and remitted to governmental authorities from the transaction price.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

the promise to transfer the product rather than as an additional promised service.

Net revenues exclude sales taxes collected from customers and remitted to governmental authorities from the transaction price.

Revenue from the sale of the Company’s products is recognized when control of the promised goods or services is transferred to customers, in the amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

6 unchanged sentences

and (v) recognize revenue as the performance obligations are satisfied.

The Company collects payment at the point of sale for Vera Bradley and Pura Vida full-line and factory outlet store transactions, upon shipment for Vera Bradley e-commerce transactions, and upon purchase for Pura Vida e-commerce transactions.

The Company collects payment at the point of sale for Vera Bradley and Pura Vida full-line and outlet store transactions, upon shipment for Vera Bradley e-commerce transactions, and upon purchase for Pura Vida e-commerce transactions.

The Company generally collects payment in arrears in accordance with established payment terms for each customer within the VB Indirect segment and for Pura Vida wholesale retailers.

6 unchanged sentences

Taken / Written Off Balance at End

Fiscal year ended January 28, 2023 $ 1,582 $ 12,320 $ ( 12,101 ) $ 1,801

Fiscal year ended February 3, 2024 $ 1,801 $ 9,697 $ ( 10,076 ) $ 1,422

Fiscal year ended January 28, 2023 1,582 12,320 ( 12,101 ) 1,801

1 unchanged sentence

The Company establishes an allowance for doubtful accounts based on historical experience and customer-specific identification and believes that collections of receivables, net of the allowance for doubtful accounts, are reasonably assured.

The allowance for doubtful accounts was approximately $ 0.8 million and $ 1.2 million as of January 28, 2023 and January 29, 2022, respectively.

The allowance for doubtful accounts was approxima tely $ 1.1 million and $ 0.8 million as of February 3, 2024 and January 28, 2023, respectively.

The provision for doubtful accounts is based upon the likelihood of default expected during the life of the receivable.

21 unchanged sentences

Goodwill is measured indirectly as the excess of the sum of (1) the consideration transferred (including contingent consideration, if any) and (2) the fair value of any noncontrolling interest in the acquiree over the net assets acquired and liabilities assumed.

Refer to Note 14 herein for additional information regarding the noncontrolling interest in Pura Vida as of January 28, 2023.

Refer to Note 14 herein for additional information regarding the noncontrolling interest in Pura Vida as of February 3, 2024.

These fair value assessments require management judgment and include the use of significant estimates and assumptions including future cash flows, discount and other market rates, and asset lives, among other items.

Goodwill and Other Intangible Assets

Upon an acquisition, the Company records the fair value of goodwill and the identifiable intangible assets.

As of January 28, 2023 the identifiable intangible assets consisted of the Pura Vida brand and customer relationships.

As of January 29, 2022 the balance also included non-competition agreements.

Assets that are determined to have an indefinite life, including goodwill and the Pura Vida brand, are not amortized but are assessed for impairment at least annually or whenever events or circumstances indicate that the goodwill may be impaired .

Definite-lived intangible assets, including customer relationships and non-competition agreements, are amortized over their estimated useful lives and are also subject to impairment testing, similar to the Company’s long-lived assets.

The Company performs its annual goodwill and Pura Vida brand impairment test during the second quarter.

The Company may first use a qualitative analysis to determine whether it is more-likely-than-not that the fair value of the reporting unit (including goodwill) is less than its carrying value.

If it is determined that it is more-likely-than-not that the fair value is less than the carrying value after this analysis, a quantitative impairment test is performed.

If the Company elects to bypass the qualitative analysis, or if it is determined through the qualitative analysis that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying value, a quantitative analysis is performed.

Under the quantitative test, the fair value of the reporting unit is compared with its carrying value (including goodwill).

If the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the amount of total goodwill allocated to the reporting unit.

The fair value of the reporting unit is determined using an income-based approach and a market-based approach.

The Company's critical estimates for the goodwill test include the revenue growth rate, operating profit, and discount rate.

The fair value of the Pura Vida brand is estimated using the relief-from-royalty method.

The critical estimates for the Pura Vida brand impairment test include the projected revenue growth, long-term growth rate, the royalty rate, and the discount rate.

As of January 28, 2023, the carrying value of the Pura Vida brand was $ 11.7 million.

Goodwill was fully impaired during fiscal 2023 leaving no balance.

As of February 3, 2024 identifiable intangible assets consisted of the Pura Vida brand and customer relationships.

Goodwill was fully impaired during fiscal 2023, leavi ng no balance.

Our Pura Vida brand, an indefinite-lived asset, is not amortized but assessed for impairment at least annually or whenever events or circumstances indicate that the brand may be impaired .

The Pura Vida customer relationship, a definite-lived intangible asset, is amortized over its estimated useful life and is also subject to impairment testing, similar to the Company’s other long-lived assets.

We test the Pura Vida brand for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired.

Our annual impairment test may be completed through a qualitative assessment to determine if the fair value of the Pura Vida brand is more likely than not greater than the carrying amount.

If we elect to bypass the qualitative assessment, or if a qualitative assessment indicates it is more likely than not that the estimated carrying value exceeds the fair value, we test for impairment using a quantitative process.

Our quantitative process includes comparing the carrying value to the fair value of the Pura Vida brand, with any excess recognized as an impairment loss.

Fair value is estimated using a relief-from-royalty method.

The estimates and assumptions used in the determination of the fair value of the Pura Vida brand include the projected revenue growth, long-term growth rate, the royalty rate, and discount rate.

Prior to fiscal 2024, the Company performed an annual impairment test for its goodwill.

As of February 3, 2024, the carrying value of the Pura Vida brand was $ 6.2 million.

For the annual impairment analysis performed in the second quarter of fiscal 2024, the Company performed a quantitative analysis and no impairment was recorded.

Subsequent to the annual impairment test, the Company performed an additional quantitative analysis of the carrying value of the Pura Vida brand due to triggering events and recorded an impairment charge of $ 5.4 million during the fourth quarter of fiscal 2024, further described in Note 15 herein.

For the annual impairment analysis performed during fiscal 2023, the Company performed a quantitative analysis, as well as subsequent analyses due to triggering events, further described in Note 15 herein.

There were impairment charges recorded of $ 44.3 million and $ 25.0 million during fiscal 2023 for goodwill and the Pura Vida brand, respectively.

Impairment charges of $ 44.3 million and $ 25.0 million were recorded during fiscal 2023 for goodwill and the Pura Vida brand, respectively.

The estimated fair value of the Pura Vida brand is subject to change as a result of many factors, including changing economic conditions.

Should actual cash flows and our future estimates deteriorate from the estimates we used, impairment charges may be necessary in future years.

Should actual and estimated cash flows change from the estimates we used in our fiscal 2024 impairment analysis, we may record additional impairment charges in future years.

Redeemable Noncontrolling Interest

On July 16, 2019, as contemplated by the Interest Purchase Agreement, the Company and certain of its subsidiaries and the owners of the remaining twenty-five percent ( 25 %) ownership interest in Pura Vida (the “Sellers”) which was not acquired by the Company (the “Remaining Pura Vida Interest”) entered into a Put/Call Agreement (the “Put/Call Agreement”).

Pursuant to the Put/Call Agreement, and subject to the terms and conditions thereof, the Sellers have the right to sell all of the Remaining Pura Vida Interest to the Company, and the Company has the right to purchase all of the Remaining Pura

Pursuant to the Put/Call Agreement, and subject to the terms and conditions thereof, the Sellers had the right to sell all of the Remaining Pura Vida Interest to the Company, and the Company had the right to purchase all of the Remaining Pura Vida Interests from Sellers, in each case generally at any time following the fifth anniversary of the closing date of the transaction until the tenth anniversary thereof.

The purchase price for any Remaining Pura Vida Interest put to, or called

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Vida Interests from Sellers, in each case generally at any time following the fifth anniversary of the closing date of the transaction until the tenth anniversary thereof.

The purchase price for any Remaining Pura Vida Interest put to, or called by, the Company will be determined based on the arithmetic average of a multiple of adjusted EBITDA of Pura Vida and a multiple of adjusted EBITDA of the Company, as defined in the Put/Call Agreement, over the twelve-month period ending on the last day of the month immediately preceding the month in which an exercise notice is delivered by a relevant party.

In the event of a change in control of the Company, the parties may exercise a portion of their put and call rights prior to the fifth anniversary of the closing date (as defined in the Put/Call Agreement).

by, the Company was determined based on the arithmetic average of a multiple of adjusted EBITDA of Pura Vida and a multiple of adjusted EBITDA of the Company, as defined in the Put/Call Agreement, over the twelve-month period ending on the last day of the month immediately preceding the month in which an exercise notice was delivered by a relevant party.

In the event of a change in control of the Company, the parties had the right to exercise a portion of their put and call rights prior to the fifth anniversary of the closing date (as defined in the Put/Call Agreement).

As a result of this redemption feature, the Company recorded the noncontrolling interest as redeemable and classified it in temporary equity within its Consolidated Balance Sheets initially at its acquisition-date fair value.

The noncontrolling interest is adjusted each reporting period for income (or loss) attributable to the noncontrolling interest.

A measurement period adjustment, if any, is then made to adjust the noncontrolling interest to the higher of the redemption value or carrying value each reporting period.

These adjustments are recognized through retained earnings and are not reflected in net income or net income attributable to Vera Bradley, Inc.

When calculating earnings per share attributable to Vera Bradley, Inc., the Company adjusts net income attributable to Vera Bradley, Inc.

The noncontrolling interest was adjusted each reporting period for income (or loss) attributable to the noncontrolling interest.

A measurement period adjustment, if any, was then made to adjust the noncontrolling interest to the higher of the redemption value or carrying value each reporting period.

These adjustments were recognized through retained earnings and were not reflected in net income or net income attributable to Vera Bradley, Inc.

When calculating earnings per share attributable to Vera Bradley, Inc., the Company adjusted net income attributable to Vera Bradley, Inc.

for the measurement period adjustment to the extent the redemption value exceeds the fair value of the noncontrolling interest on a cumulative basis.

The fair value of the noncontrolling interest is estimated using a combination of the income approach, a discounted cash flow analysis, and the market approach, utilizing the guideline company method.

The reporting unit’s discounted cash flow analysis requires significant management judgment with respect to revenue, total direct costs, selling, general, and administrative expenses, capital expenditures, and the selection and use of an appropriate discount rate.

The projected revenue and expense assumptions and capital expenditures are based on our annual and long-term business plans.

Discount rates reflect market-based estimates of the risks associated with the projected cash flows directly resulting from the use of those assets in operations.

Subsequent Event

The fair value of the noncontrolling interest was estimated using a combination of the income approach, a discounted cash flow analysis, and the market approach, utilizing the guideline company method.

The reporting unit’s discounted cash flow analysis required significant management judgment with respect to revenue, total direct costs, selling, general, and administrative expenses, capital expenditures, and the selection and use of an appropriate discount rate.

The projected revenue and expense assumptions and capital expenditures were based on our annual and long-term business plans.

Discount rates reflected market-based estimates of the risks associated with the projected cash flows directly resulting from the use of those assets in operations.

On January 23, 2023, the Company and certain of its subsidiaries entered into an Interest Purchase Agreement (the “Interest Purchase Agreement”) with Creative Genius Holdings, Inc.

a California corporation, Creative Genius Investments, Inc., a California corporation, Griffin Thall and Paul Goodman (collectively “Sellers”) to purchase the remaining 25 % of the outstanding membership interests (the "Remaining Pura Vida Interests") of Pura Vida.

The closing date of the Transaction was January 30, 2023 (fiscal 2024).

The closing date of the Transaction was January 30, 2023.

Pursuant to the Interest Purchase Agreement, and subject to the terms and conditions thereof, on the closing date, the Company indirectly acquired the Remaining Pura Vida Interests (the “Transaction”) in exchange for cash consideration consisting of approximately $ 10 million payable at closing, subject to certain adjustments.

1 unchanged sentence

The Company’s existing available cash and cash equivalents funded the purchase price.

Following completion of the Transaction, the Company owns one hundred percent ( 100 %) of the ownership interests in Pura Vida.

The Interest Purchase Agreement also includes certain non-competition and customer, supplier and employee non-solicitation and non-interference covenants from the Sellers in favor of the Company during the four-year period beginning on the closing date of the Transaction.

Following completion of the Transaction, the Company owned one hundred percent ( 100 %) of the ownership interests in Pura Vida.

The Interest Purchase Agreement also included certain non-competition and customer, supplier and employee non-solicitation and non-interference covenants from the Sellers in favor of the Company during the four-year period beginning on the closing date of the Transaction.

The Interest Purchase Agreement provides that, as of the closing of the Transaction, all rights and obligations of the Company and the Sellers under any agreements among the parties, including the Put/Call Agreement, were terminated.

As a result of the Transaction, the Company recorded a decrease to redeemable noncontrolling interest of $ 10.7 million.

The difference between the fair value of the consideration paid and the balance of the redeemable noncontrolling interest resulted in $ 0.7 million recognized in additional paid-in capital (“APIC”) during fiscal 2024.

In addition, there was an APIC adjustment of $ 0.6 million related to deferred income taxes for the purchase of the redeemable noncontrolling interest.

The total APIC adjustment for this matter during fiscal 2024 was $ 1.3 million.

Stock-Based Compensation

7 unchanged sentences

Total advertising expense was as follows (in thousands):

Fiscal year ended January 28, 2023

Fiscal year ended February 3, 2024

Fiscal year ended January 28, 2023

7 unchanged sentences

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 Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, and accounts payable as of January 28, 2023 and January 29, 2022, approximated their fair values.

The following table details the fair value measurements of the Company’s investments as of January 28, 2023 and January 29, 2022 (in thousands):

The carrying amounts reflected on the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, and accounts payable as of February 3, 2024 and January 28, 2023, approximated their fair values.

The following table details the fair value measurements of the Company’s investments as of February 3, 2024 and January 28, 2023 (in thousands):

Level 1 Level 2 Level 3

January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022

February 3, 2024 January 28, 2023 February 3, 2024 January 28, 2023 February 3, 2024 January 28, 2023

Cash equivalents (1)

$ 55,262 $ 360 $ — $ — $ — $ —

(1) Cash equivalents relate to a money market fund that has a maturity of three months or less at the date of purchase.

(1) Cash equivalents primarily represent money market funds that have a maturity of three months or less at the date of purchase.

Due to its short maturity, the Company believes the carrying value approximates fair value.

6 unchanged sentences

Level 3 inputs are derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The Company recorded $ 1.4 million , $ 0.1 million , and $ 7.4 million in impairment charges primarily related to store assets including property, plant, and equipment and lease right-of-use assets during the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively.

The Company recorded $ 1.4 million and $ 0.1 million in impairment charges primarily related to store assets including property, plant, and equipment and lease right-of-use assets during the fiscal years ended January 28, 2023, and January 29, 2022, respectively.

No impairment charges were recorded in fiscal 2024 for long-lived assets.

Assets recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant, and equipment, including leasehold improvements, and operating lease assets, as well as assets related to the Pura Vida acquisition including goodwill and intangible assets.

These assets are measured at fair value if determined to be impaired.

Refer to Note 15 herein regarding the Pura Vida brand and goodwill impairment test and fiscal 2023 impairment charges.

Refer to Note 15 herein regarding the Pura Vida Brand impairment test and fiscal 2024 impairments charges and the 2023 Pura Vida Brand and goodwill impairment test and fiscal 2023 impairment charges.

The discounted cash flow models used to estimate the applicable fair values involve numerous estimates and assumptions that are highly subjective.

19 unchanged sentences

The renewal period is included in the amortization period if determined that the option is reasonably certain to be exercised.

The amortization expense is recorded in the same line item within the Company's Consolidated Statements of Operations as the related hosting fees.

The balance of the unamortized CCA implementation costs totaled $ 6.4 million and $ 8.0 million as of January 28, 2023 and January 29, 2022, respectively.

Of this total, $ 3.0 million and $ 2.8 million was recorded within prepaid expenses and other current assets and $ 3.4 million and $ 5.2 million was recorded within other assets on the Company's Consolidated Balance Sheets as of January 28, 2023 and January 29, 2022, respectively.

The amortization expense is recorded within selling, general, and administrative expenses in the Company's Consolidated Statements of Operations, which is within the same line item as the related hosting fees.

The balance of the unamortized CCA implementation costs totaled $ 3.8 million and $ 6.4 million as of February 3, 2024 and January 28, 2023, respectively.

Of this total, $ 2.8 million and $ 3.0 million was recorded within prepaid expenses and other current assets and $ 1.0 million and $ 3.4 million was recorded within other assets on the Company's Consolidated Balance Sheets as of February 3, 2024 and January 28, 2023, respectively.

The CCA implementation costs are recorded within operating activities in the Company's Consolidated Statements of Cash Flows.

Recently Issued Accounting Pronouncements

There were no new accounting pronouncements issued or which became effective during fiscal 2023 which had, or are expected to have, a significant impact on the Company's Consolidated Financial Statements.

In October 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-06, "Disclosure Improvements." The amendments in this update modify the disclosure or presentation requirements of a variety of topics in the codification.

Certain of the amendments represent clarifications to or technical corrections of the current requirements.

The amendments in this ASU are effective for public business entities for interim periods beginning after June 30, 2027.

The Company is currently evaluating the impacts of the provisions of ASU 2023-06.

In November 2023, the FASB issued ASU 2023-07, "Improvements to Reportable Segment Disclosures".

This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss.

This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements.

Early adoption is also permitted.

This ASU will likely result in additional required disclosures when adopted.

The Company is currently evaluating this guidance to determine the impact on its disclosures;

however, adoption will not impact our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures".

This ASU establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements.

Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation.

They must also further disaggregate income taxes paid.

The new standard is effective for fiscal years

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

beginning after December 15, 2024, with retrospective application permitted.

The Company is currently evaluating this guidance to determine the impact on its disclosures;

however, adoption will not impact our consolidated financial statements.

Revenue from Contracts with Customers

Disaggregation of Revenue

The following presents the Company's net revenues disaggregated by product category for the fifty-two weeks ended January 28, 2023, January 29, 2022, and January 30, 2021 (in thousands):

Fifty-Two Weeks Ended

January 28, 2023

The following presents the Company's net revenues disaggregated by product category for the fifty-three weeks ended February 3, 2024, and fifty-two weeks ended January 28, 2023 and January 29, 2022 (in thousands):

Fifty-Three Weeks Ended

February 3, 2024

VB Direct Segment VB Indirect Segment Pura Vida Segment Total

5 unchanged sentences

Apparel/Footwear 16,526 2,461 1,450 20,437

12,701 2,236 3,844 18,781

Other 7,235 (1) 3,242 (2) 2,485 (3) 12,962

5 unchanged sentences

(5) $ 71.4 million of net revenues related to product sales recognized at a point in time and $ 2.4 million of net revenues related to sales-based royalties recognized over time.

(6) Includes mask sales.

Fifty-Two Weeks Ended

37 unchanged sentences

Contract Balances

Contract liabilities as of January 28, 2023 and January 29, 2022, were $ 3.2 million and $ 3.9 million, respectively.

Contract liabilities as of February 3, 2024 and January 28, 2023, were $ 2.6 million and $ 3.2 million , respectively.

The balance 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.

1 unchanged sentence

Substantially all contract liabilities are recognized within one year.

The Company did no t have contract assets as of January 28, 2023 and January 29, 2022.

The balance for accounts receivable from contracts with customers, net of allowances, as of January 28, 2023 and January 29, 2022 was $ 20.7 million and $ 18.1 million, respectively, which is recognized within accounts receivable, net, on the Company’s Consolidated Balance Sheets.

The provision for doubtful accounts was $ 0.8 million and $ 1.2 million as of January 28, 2023 and January 29, 2022, respectively.

The Company did no t have contract assets as of February 3, 2024 and January 28, 2023.

The balance for accounts receivable from contracts with customers, net of allowances, as of February 3, 2024 and January 28, 2023 was $ 16.4 million and $ 20.7 million , respectively, which is recognized within accounts receivable, net, on the Company’s Consolidated Balance Sheets.

The provision for doubtful accounts was $ 1.1 million and $ 0.8 million as of February 3, 2024 and January 28, 2023, respectively.

The provision for doubtful accounts is based upon the likelihood of default expected during the life of the receivable.

3 unchanged sentences

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 January 28, 2023.

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 February 3, 2024.

Significant Judgments

1 unchanged sentence

In the Vera Bradley and Pura Vida retail stores (recognized within the VB Direct segment and the Pura Vida segments), control is transferred and net revenue is recognized at the point of sale.

Product shipments for the Company’s e-commerce channels (recognized within the VB Direct and Pura Vida segments) and shipments to its wholesale retailers (recognized within the VB Indirect segment and Pura Vida segment) are generally shipped Free on Board (“FOB”) shipping point typically from its distribution center in Roanoke, Indiana, for Vera Bradley products and primarily from its third-party fulfillment center in Tijuana, Mexico for Pura Vida products.

Net revenue is recognized upon shipment consistent with

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

when control is transferred to the customer.

typically from its distribution center in Roanoke, Indiana, for Vera Bradley products and primarily from its third-party fulfillment center in Tijuana, Mexico for Pura Vida products.

Net revenue is recognized upon shipment consistent with when control is transferred to the customer.

Upon shipment, the customer has the right to direct the use of, and obtain substantially all of the benefits from, the product.

17 unchanged sentences

Concentration of Credit Risk

Five customers represented nearly 50.0 % of the balance of accounts receivable, net as of January 28, 2023.

Five customers represented approximately 54.0 % o f the balance of accounts receivable, net as of February 3, 2024.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Nature of Leases

The Company has operating leases at all of its Vera Bradley and Pura Vida retail stores, as well as for its New York office, the California Pura Vida office, Asia sourcing office, and showrooms.

The Company also has operating leases for storage spaces.

The Company has operating leases at all of its Vera Bradley and Pura Vida retail stores (including storage spaces), as well as for its New York office, the California Pura Vida office, Asia sourcing office, and showrooms.

The Company does not have residual value guarantees, restrictions, or covenants imposed by leases.

Determination of Lease Terms

Retail store leases have remaining terms of up to 10 years as of January 28, 2023.

Retail store leases have remaining terms of up to 10 years as of February 3, 2024.

These leases generally have early termination rights when certain sales thresholds are not met for a specified measurement period.

The Company's other leases have remaining terms of up to approximately four years as of January 28, 2023.

The Company's other leases generally have remaining terms of up to approximately three years as of February 3, 2024.

If the lease contains a renewal period at the Company's option, the renewal period is included in the lease term if determined the option is reasonably certain to be exercised at lease commencement.

The Company's lease options generally do not include termination rights other than those mentioned.

The Company did not have financing leases as of January 28, 2023.

The Company did not have financing leases as of February 3, 2024.

Variable Rental Payments

All of the Company's retail store leases contain variable rental payments when the retail store's sales exceed a specified breakpoint.

The Company's retail store leases contain variable rental payments based on each location's monthly gross sales, the majority of which have specified sales breakpoints.

In addition, the majority of the Company's leases contain real estate taxes, common area maintenance, and similar items that are billed as pass-through charges from its landlords.

These rental payments are not included in the measurement of the lease liability, but are recognized as variable lease cost in the period incurred.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Certain of the Company's leases also contain lease components with increases based upon an index or rate.

7 unchanged sentences

Discount Rate

The weighted-average discount rate as of January 28, 2023 and January 29, 2022, was 4.6 % and 4.7 %, respectively.

The weighted-average discount rate as of February 3, 2024 and January 28, 2023, was 4.8 % and 4.6 %, respectively.

The discount rate is not readily determinable in the lease;

1 unchanged sentence

Leases Not Yet Commenced

As of January 28, 2023, the Company had two leases which were executed but did it not have control of the underlying assets;

As of February 3, 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.

These leases contain undiscounted lease payments, which will be included in the determination of the lease liability, totaling approximately $ 5.1 million and have terms of approximately 10 years commencing in fiscal year 2024.

This lease contain 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.

Practical Expedients (Policy Elections)

2 unchanged sentences

Not Separating Lease and Nonlease Components The Company elected to combine lease and nonlease components and recognize as a single lease component for all leases.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Amounts Recognized in the 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 Consolidated Statements of Operations for the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021 (in thousands):

Fifty-Two Weeks Ended

January 28, 2023 January 29, 2022 January 30, 2021

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 Consolidated Statements of Operations for the fiscal years ended February 3, 2024, January 28, 2023, and January 29, 2022 (in thousands):

Fifty-Three Weeks Ended Fifty-Two Weeks Ended

February 3, 2024 January 28, 2023 January 29, 2022

Operating lease cost $ 25,826 $ 25,118 $ 25,200

2 unchanged sentences

Sublease income (1)

( 420 ) ( 234 ) —

Total lease cost $ 31,279 $ 31,335 $ 33,275

(1) Related to the sublease of a former Company location.

The weighted-average remaining lease term as of January 28, 2023 and January 29, 2022 was 5.4 years and 5.3 years, respectively.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The weighted-average remaining lease term as of February 3, 2024 and January 28, 2023 was 5.3 years and 5.4 years, respectively.

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

Fifty-Two Weeks Ended

January 28, 2023 January 29, 2022 January 30, 2021

Fifty-Three Weeks Ended Fifty-Two Weeks Ended

February 3, 2024 January 28, 2023 January 29, 2022

Cash paid for amounts included in the measurement of operating lease liabilities $ 29,554 $ 30,014 $ 33,517

$ 30,014 $ 33,517 $ 27,180

Right-of-use assets increase as a result of new and modified operating lease liabilities, net $ 9,859 $ 20,379 $ 11,584

(1) $ 2.5 million of lease liabilities were recorded within accounts payable on the Company's Consolidated Balance Sheets as of January 30, 2021, and were paid in the first quarter of fiscal 2022.

Maturity Analysis of Operating Lease Liabilities

Maturities of the Company's operating lease liabilities (undiscounted) reconciled to its lease liability as of January 28, 2023 were as follows (in thousands):

Maturities of the Company's operating lease liabilities (undiscounted) reconciled to its lease liability as of February 3, 2024 were as follows (in thousands):

Operating Leases

8 unchanged sentences

Present value of lease liabilities $ 81,005

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Property, Plant, and Equipment

10 unchanged sentences

Depreciation and amortization expense associated with property, plant, and equipment, excluding impairment charges (in thousands):

Fiscal year ended January 28, 2023 $ 8,854

Fiscal year ended February 3, 2024 $ 7,968

Fiscal year ended January 28, 2023 8,854

Fiscal year ended January 29, 2022 9,315

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

As of January 28, 2023 and January 29, 2022, the Company had no borrowings outstanding and availability of $ 75.0 million under its Credit Agreement.

As of February 3, 2024 and January 28, 2023, the Company had no borrowings outstanding and availability of $ 75.0 million under its Credit Agreement.

Credit Agreement

1 unchanged sentence

(“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 and Vera Bradley Sales, LLC (collectively, the “Named Subsidiaries”).

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 either (i) for CBFR borrowings (including swingline loans), the CB Floating Rate, where the CB Floating Rate is the prime rate which shall never be less than the adjusted one month LIBOR rate on such day, plus the Applicable Rate, where the Applicable Rate is a percentage spread ranging from - 1.00 % to - 1.50 % or (ii) for each eurodollar borrowing, the Adjusted LIBO Rate, where the Adjusted LIBO Rate is the LIBO rate for such interest period multiplied by the statutory reserve rate, for the interest period in effect for such borrowing, plus the Applicable Rate, where the Applicable Rate is a percentage ranging from 1.00 % to 1.30 %.

The applicable CB Floating Rate, Adjusted LIBO Rate, or LIBO Rate shall be determined by the administrative agent.

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 1.25 % to 1.50 %, or (iii) for RFR Loans, the Adjusted Daily Simple SOFR Rate, where the adjusted Daily Simple SOFR Rate is equal to the Daily Simple SOFR plus 0.10 %, plus the Applicable Rate, where the Applicable Rate is a percentage ranging from 1.25 % to 1.50 % The applicable CB Floating Rate, Adjusted Term SOFR Rate, Term SOFR Rate, Daily Simple SOFR, and Adjusted Daily Simple SOFR shall be determined by the administrative agent.

The Credit Agreement also requires VBD to pay a commitment fee for the unused portion of the revolving facility of up to 0.30 % per annum.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

VBD’s obligations under the Credit Agreement are guaranteed by the Company and the Named Subsidiaries.

19 unchanged sentences

and (viii) a change in control (as defined in the Credit Agreement).

Any commitments made under the Credit Agreement mature on September 7, 2023.

There were no material fees or expenses associated with the Credit Agreement.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The components of the income tax (benefit) expense were as follows (in thousands):

The Credit Agreement matures in May 2028.

The components of the income tax expense (benefit) were as follows (in thousands):

2024 January 28,

7 unchanged sentences

1,761 ( 17,685 ) ( 327 )

Total income tax (benefit) expense $ ( 15,640 ) $ 6,430 $ 1,173

A breakdown of the Company’s (loss) income before income taxes is as follows (in thousands):

Total income tax expense (benefit) $ 3,494 $ ( 15,640 ) $ 6,430

A breakdown of the Company’ s income (loss) b efore income taxes is as follows (in thousands):

2024 January 28,

2 unchanged sentences

Foreign 2,173 3,515 1,767

Total (loss) income before income taxes $ ( 95,024 ) $ 26,648 $ 11,862

A reconciliation of the income tax (benefit) expense to the amount computed at the federal statutory rate is as follows (in thousands):

Total income (loss) before income taxes $ 11,332 $ ( 95,024 ) $ 26,648

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

A reconciliation of the income tax expense (benefit) t o the amount computed at the federal statutory rate is as follows (in thousands):

2024 January 28,

3 unchanged sentences

Impact related to redeemable noncontrolling interest — — 4,126 ( 4.3 ) ( 508 ) ( 1.9 )

Shortfall from stock-based compensation 271 ( 0.3 ) ( 472 ) ( 1.8 ) 597 5.0

(Windfall) shortfall from stock-based compensation ( 47 ) ( 0.4 ) 271 ( 0.3 ) ( 472 ) ( 1.8 )

Impact of foreign rate differential ( 109 ) ( 1.0 ) ( 167 ) 0.2 ( 82 ) ( 0.3 )

Change in uncertain tax positions ( 30 ) ( 0.3 ) ( 15 ) — 32 0.1

Benefits provided by the CARES Act — — — — ( 2,793 ) ( 23.5 )

Non-deductible executive compensation 487 4.3 1,150 ( 1.2 ) 471 1.8

Other 59 0.5 13 — 218 0.8

Total income tax (benefit) expense $ ( 15,640 ) 16.5 % $ 6,430 24.1 % $ 1,173 9.9 %

For the tax year ending January 30, 2021, the effective tax rate reflects the favorable impact of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, enacted on March 27, 2020.

The Company realized a $ 2.8 million tax benefit related to the net operating loss carryback provisions of the CARES Act.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Total income tax expense (benefit) $ 3,494 30.8 % $ ( 15,640 ) 16.5 % $ 6,430 24.1 %

Deferred income taxes reflect the net tax effects of temporary differences between the book and tax bases of assets and liabilities.

17 unchanged sentences

The Company considered both positive and negative evidence to determine whether it was more likely than not that some, or all, of the deferred tax assets would not be realized in its valuation allowance assessment.

Based on this assessment, t he Company recorded immaterial valuation allowances as of January 28, 2023 and January 29, 2022

Based on this assessment, t he Company recorded immaterial valuation allowances as of February 3, 2024 and January 28, 2023

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Uncertain Tax Positions

6 unchanged sentences

Ending balance $ 39 $ 73 $ 92

As of January 28, 2023, $ 0.1 million of total unrecognized tax benefits, net of federal benefit, would, if recognized, favorably affect the effective tax rate in future periods.

As of February 3, 2024, the Company had an immaterial amount of total unrecognized tax benefits, net of federal benefit, that would, if recognized, favorably affect the effective tax rate in future periods.

Total unrecognized tax benefits are currently not expected to decrease by a significant amount in the next twelve months.

The Company recognized an immaterial amount of interest only, no penalties, related to unrecognized tax benefits in the fiscal years ended January 29, 2022, February 1, 2020, and February 2, 2019.

The Company recognized an immaterial amount of interest only, no penalties, related to unrecognized tax benefits in the fiscal years ended January 28, 2023 and January 29, 2022.

Unrecognized tax benefits are included within other long-term liabilities in the Company's Consolidated Balance Sheets.

4 unchanged sentences

federal income tax examinations for fiscal years 2021 and forward.

With a few exceptions, the Company is subject to audit by various state and foreign taxing authorities for fiscal 2019 through the current fiscal year.

With a few exceptions, the Company is subject to audit by various state and foreign taxing authorities for fisc al 2020 thro ugh the current fiscal year.

Stock-Based Compensation

The Company’s stock-based compensation consists of awards of restricted stock and restricted stock units.

The Company recognized stock-based compensation expense of $ 3.2 million, $ 4.9 million, and $ 5.7 million in the fiscal years ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The Company recognized stock-based compensation expense of $ 2.9 million, $ 3.2 million, and $ 4.9 million in the fiscal years ended February 3, 2024, January 28, 2023, and January 29, 2022, respectively.

Awards of Restricted-Stock Units

The Company reserved 3,000,000 shares of common stock for issuance or transfer under the 2020 Equity and Incentive Plan, which allows for grants of restricted stock units, as well as other equity awards.

The Company maintains the 2010 Equity and Incentive Plan for awards granted prior to the effectiveness of the 2020 Equity and Incentive Plan.

During the fiscal year ended January 28, 2023, the Company granted a total of 1,652,898 time-based and performance-based restricted stock units to certain employees and non-employee directors under the 2020 Equity and Incentive Plan with an aggregate fair value of $ 9.3 million.

During the fiscal year ended February 3, 2024, the Company granted a total of 753,454 time -based and performance-based restricted stock units to certain employees and non-employee directors under the 2020 Equity and Incentive Plan with an aggregate fair value o f $ 4.4 million.

The Company determined the fair value of the units based on the closing price of the Company’s common stock on the grant date.

4 unchanged sentences

The Company recognizes the expense relating to these units, net of estimated forfeitures and based on the probable outcome of achievement of the financial targets, on a straight-line basis over the vesting period.

The following table summarizes information about restricted-stock units as of and for the year ended January 28, 2023 (units in thousands):

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The following table summarizes information about restricted-stock units as of and for the year ended February 3, 2024 (units in thousands):

Restricted Stock Units Performance-based

9 unchanged sentences

Forfeited ( 191 ) 9.02 ( 133 ) 10.79

Nonvested units outstanding at January 28, 2023

Nonvested units outstanding at February 3, 2024

683 $ 4.58 840 $ 4.42

As of January 28, 2023, there was $ 4.4 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested restricted stock units.

As of February 3, 2024, there w as $ 4.0 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested restricted stock units.

That cost is expected to be recognized over a weighted average period of 1.8 years, subject to meeting performance conditions.

8 unchanged sentences

The Company has denied any liability and intends to vigorously defend itself in the case.

In November 2019, the Company filed

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

a counterclaim against the principals of Vesi as personal guarantors for monies owed to the Company by Vesi.

In November 2019, the Company filed a counterclaim against the principals of Vesi as personal guarantors for monies owed to the Company by Vesi.

The Company filed a motion for summary judgement asking the Court to dismiss all claims with prejudice and grant judgement on its counterclaim.

On January 4, 2023, the Court granted the Company’s motion for summary judgment dismissing Vesi’s claims and also granted judgment on the Company’s counterclaims against the principals of Vesi for an immaterial amount.

Vesi has appealed this decision.

At this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition or results of operations due to the fact that the Company is vigorously defending itself and management believes that the Company has a number of meritorious legal defenses.

Vesi appealed this decision.

On November 9, 2023 the United States Court of Appeals for the Sixth Circuit issued an opinion affirming the District Court’s judgment in favor of the Company dismissing Vesi’s claims and granting the Company’s counterclaims.

The Company is subject to other legal proceedings from time to time in the ordinary course of business but does not believe any of these such claims would have a material adverse impact on the Company at this time.

Vera Bradley, Inc.

3 unchanged sentences

Additionally, the Company has the option of making discretionary profit sharing payments to the plan as approved by the board of directors.

As of January 28, 2023, January 29, 2022, and January 30, 2021, no discretionary profit sharing payments had been approved.

The 401(k) contribution match was temporarily suspended beginning in March 2020 as a result of the COVID-19 pandemic and resumed in January 2021.

As of February 3, 2024, January 28, 2023, and January 29, 2022 , no discret ionary profit sharing payments had been approved.

The Company recognizes 401(k) Company contributions within cost of sales for employees related to distribution center, sourcing, and other related functions and selling, general, and administrative expenses for all other employees.

Total Company contributions to the plan were as follows (in thousands):

Fiscal year ended January 28, 2023 $ 1,854

Fiscal year ended February 3, 2024 $ 1,897

Fiscal year ended January 28, 2023 1,854

3 unchanged sentences

The Vera Bradley Foundation for Breast Cancer (the “Foundation”) was founded by one of the Company’s directors, who is also on the board of directors of the Foundation.

The liability associated with commitments to the Foundation was approximately $ 0.1 million as of January 28, 2023 and January 29, 2022.

The liability associated with commitments to the Foundation was approximately $ 0.1 million as of February 3, 2024 and January 28, 2023.

The liability consisted of pass-through donations from customers and is included in other accrued liabilities in the Consolidated Balance Sheets.

The associated expense for contributions to the Foundation, which is included in selling, general, and administrative expenses, was as follows (in thousands):

Fiscal year ended January 28, 2023 $ 191

Fiscal year ended February 3, 2024 $ 139

Fiscal year ended January 28, 2023 191

3 unchanged sentences

Earnings Per Share

Basic net (loss) income per share is computed based on the weighted-average number of shares of common stock outstanding during the period.

Basic net income (loss) per share is computed based on the weighted-average number of shares of common stock outstanding during the period.

Diluted net income per share is computed based on the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.

Dilutive potential common shares include outstanding restricted stock and restricted-stock units.

The components of basic and diluted net (loss) income per share are as follows (in thousands, except per share data):

The components of basic and diluted net income (loss) per share are as follows (in thousands, except per share data):

Fiscal Year Ended

1 unchanged sentence

2023 January 29,

Net (loss) income $ ( 79,384 ) $ 20,218 $ 10,689

Net income (loss) $ 7,838 $ ( 79,384 ) $ 20,218

Net (loss) income attributable to redeemable noncontrolling interest — ( 19,649 ) 2,380

Net (loss) income attributable to Vera Bradley, Inc.

Net income (loss) attributable to Vera Bradley, Inc.

$ 7,838 $ ( 59,735 ) $ 17,838

2 unchanged sentences

Weighted-average number of common shares (diluted) 31,314 31,503 34,437

Net (loss) income per share attributable to Vera Bradley, Inc.:

Net income (loss) per share attributable to Vera Bradley, Inc.:

Basic $ 0.25 $ ( 1.90 ) $ 0.53

Diluted $ 0.25 $ ( 1.90 ) $ 0.52

As of February 3, 2024, there were an immaterial number of additional shares issuable upon the vesting of restricted stock units that were excluded from the diluted share calculations because they were anti-dilutive.

The diluted share calculations include performance-based restricted stock units for completed performance periods.

As of January 28, 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.

As of January 29, 2022 and January 30, 2021, there were an immaterial number of additional shares issuable upon the vesting of restricted stock units that were excluded from the diluted share calculations because they were anti-dilutive.

As of January 29, 2022, there were an immaterial number of additional shares issuable upon the vesting of restricted stock units that were excluded from the diluted share calculations because they were anti-dilutive.

The diluted share calculations include performance-based restricted stock units for completed performance periods.

1 unchanged sentence

On December 3, 2020, the 2018 Share Repurchase Program was extended through December 11, 2021.

On March 20, 2020, the Company temporarily suspended the share repurchase program to conserve cash as a result of the COVID-19 pandemic.

The board of directors authorized the resumption of the share repurchase program beginning on March 11, 2021.

In December 2021, the Company's board of directors approved a new share repurchase plan (the “2021 Share Repurchase Program”) which authorized Company management to utilize up to $ 50.0 million of available cash for repurchases of shares of the Company's common stock.

The 2021 Share Repurchase Program went into effect beginning December 13, 2021 and expires in December 2024.

During the fiscal year ended January 28, 2023, the Company purchased and held 2,820,949 shares at an average price of $ 6.40 per share, excluding commissions, for an aggregate amount of $ 18.1 million, under the 2021 Share Repurchase Programs.

During the fiscal year ended January 29, 2022, the Company purchased and held 865,534 shares at an average price of $ 8.94 per share, excluding commissions, for an aggregate amount of $ 7.7 million, under the 2018 and 2021 Share Repurchase Programs.

During the fiscal year ended February 3, 2024, the Company purchased and held 359,554 shares at an average price of $ 6.10 per share, excluding commissions, for an aggregate amount o f $ 2.2 million , under the 2021 Share Repurchase Program.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

During the fiscal year ended January 30, 2021, the Company purchased and held 381,835 shares at an average price of $ 7.60 per share, excluding commissions, for an aggregate amount of $ 2.9 million, under the 2018 Share Repurchase Program.

As of January 28, 2023, there was $ 27.7 million remaining available to repurchase shares of the Company’s common stock under the 2021 Share Repurchase Program.

As of January 28, 2023, the Company held as treasury shares 12,079,690 shares of its common stock at an average price of $ 11.00 per share, excluding commissions, for an aggregate carrying amount of $ 132.9 million.

The Company’s treasury shares may be issued under the 2010 Equity and Incentive Plan (with respect to outstanding awards under that plan), under the 2020 Equity and Incentive Plan, or for other corporate purposes.

As of February 3, 2024, there w as $ 25.5 million remain ing available to repurchase shares of the Company’s common stock under the 2021 Share Repurchase Program.

As of February 3, 2024, the Company held as treasury share s 12,439,244 s hares of its common stock at an average price of $ 10.86 p er share, excluding commissions, for an aggregate carrying amount o f $ 135.1 million.

The Company’s treasury shares may be issued under the 2020 Equity and Incentive Plan, or for other corporate purposes.

Redeemable Noncontrolling Interest

Redeemable noncontrolling interest represents the remaining twenty-five percent ( 25 %) interest in Pura Vida not acquired by the Company.

On January 30, 2023, subsequent to the end of fiscal 2023, the Company purchased the remaining 25 % interest in Pura Vida.

On January 30, 2023, the Company purchased the remaining 25 % interest in Pura Vida.

Refer to Note 2 herein for additional information.

Changes in redeemable noncontrolling interest for the fifty-two weeks ended January 28, 2023, January 29, 2022, and January 30, 2021 were as follows (in thousands):

Balance at February 1, 2020 $ 30,049

Net income attributable to redeemable noncontrolling interest 2,008

Distributions to redeemable noncontrolling interest ( 1,817 )

Adjustment to redemption value ( 431 )

Changes in redeemable noncontrolling interest for the fifty-three weeks ended February 3, 2024, and fifty-two weeks ended January 28, 2023 and January 29, 2022 were as follows (in thousan ds):

Balance at January 30, 2021 $ 29,809

5 unchanged sentences

Balance at January 28, 2023 $ 10,712

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Intangible Assets and Goodwill

The following tables detail the carrying value of the Company’s intangible assets other than goodwill related to the acquisition of a majority interest in Pura Vida.

January 28, 2023

Adjustment for purchase of noncontrolling interest ( 10,712 )

Balance at February 3, 2024 $ —

Intangible Assets

The following tables detail the carrying value of the Company’s intangible assets related to the acquisition of a majority interest in Pura Vida.

February 3, 2024

in thousands Gross Basis Accumulated Amortization (1)

Carrying Amount

Definite-lived intangible assets

Definite-lived intangible asset

Customer Relationships $ 24,208 $ ( 22,872 ) $ 1,336

Non-competition Agreements 788 ( 788 ) —

Total definite-lived intangible assets 24,208 ( 22,872 ) 1,336

2 unchanged sentences

6,237 — 6,237

Total intangible assets, excluding goodwill $ 36,662 $ ( 20,744 ) $ 15,918

Total intangible assets $ 30,445 $ ( 22,872 ) $ 7,573

(1) Amortization expense is recorded within the Pura Vida segment.

(2) Impairment charges of $ 9.9 million and $ 15.1 million were recorded within the Pura Vida segment during the second and fourth quarters of fiscal 2023.

(2) An impairment charge of $5.4 million was recorded within the Pura Vida segment during fourth quarter of fiscal 2024.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

January 28, 2023

7 unchanged sentences

Pura Vida Brand (2)

Total intangible assets, excluding goodwill $ 61,664 $ ( 17,441 ) $ 44,223

11,666 — 11,666

Total intangible assets $ 36,662 $ ( 20,744 ) $ 15,918

(1) Amortization expense is recorded within the Pura Vida segment.

(2) Impairment charges of $ 9.9 million and $ 15.1 million were recorded within the Pura Vida segment during the second and fourth quarters of fiscal 2023.

The amortization expense for intangible assets is as fo llows (in thousands):

1 unchanged sentence

Fiscal 2025 1,336

Total $ 1,336

The total amount of the goodwill as of January 29, 2022, was $ 44.3 million which was recorded within the Pura Vida segment upon acquisition.

There was no goodwill balance as of January 28, 2023 due to impairment charges recorded during the year.

Goodwill is deductible for tax purposes, limited to the Company's 75 % majority ownership interest.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

to Note 2 herein for addition information regarding goodwill.

Changes to goodwill for the fiscal year ended January 28, 2023 are as follows (in thousands):

Balance at January 29, 2022 $ 44,254

Goodwill impairment (1)

Balance at January 28, 2023 $ —

(1) Goodwill impairment charges of $ 19.4 million and $ 24.9 million were recorded within the Pura Vida segment during the second and fourth quarters of fiscal 2023.

There were no changes in goodwill for the fiscal year ended January 29, 2022.

The Company performs its annual impairment test over goodwill and the indefinite-lived Pura Vida brand during the second quarter of each fiscal year.

The Company has experienced significantly lower sales from its Pura Vida e-commerce channel due to a decline in social and digital media effectiveness, as well as lower sales from the wholesale channel.

Fiscal 2024 Impairment

The Company pe rformed its fiscal 2024 annual impairment test over the indefinite-lived Pura Vida brand during the second quarter of fiscal 2024 and no impairment was recorded.

In the fourth quarter of fiscal 2024, the Company identified triggering events and determined that the fair value of the Pura Vida brand was less than its carrying value, recording an impairment charge of $ 5.4 million .

The Company continued to experience lower sales from its Pura Vida e-commerce channel due to a continued decline in social and digital media effectiveness, as well as continued lower sales from the wholesale channel.

These lower sales volumes had a negative impact on the fair value determination of the aforementioned assets.

The fair value of the Pura Vida brand was estimated using a relief-from-royalty method.

The estimates and assumptions used in the determination of the fair value of the Pura Vida brand included the projected revenue growth, long-term growth rate, the royalty rate, and discount rate.

While we consider our assumptions in the determination of the fair value of these assets to be reasonable, they are complex and highly subjective.

Adverse changes in key assumptions in future periods may result in further declines in the fair value estimates of the Pura Vida brand below its carrying value resulting in additional impairment charges, which could be material.

Our key assumptions (as described above in the valuation methodologies used in the determination of fair value) may be impacted by macroeconomic conditions, including inflationary pressures and the impact on consumer discretionary spending, supply chain challenges, as well as a sustained decline in stock price and potential changes in business strategy.

Refer to Note 2 herein for additional information regarding fair value measurement.

Fiscal 2023 Impairments

The Company performed its fiscal 2023 annual impairment test over goodwill and the indefinite-lived Pura Vida brand during the second quarter of fiscal 2023.

The fair value of the Pura Vida reporting unit was determined using a combination of an income-based approach (discounted cash flows) and a market-based approach (guideline transaction method).

1 unchanged sentence

The guideline transaction method involved transaction multiples derived from the acquisition of controlling interests in stocks of companies that are engaged in the same or similar lines of business as the reporting unit.

The fair value of the Pura Vida brand was estimated using a relief-from-royalty method.

The estimates and assumptions used in the determination of the fair value of the Pura Vida brand included the projected revenue growth, long-term growth rate, the royalty rate, and discount rate.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

During the assessment for the fiscal 2023 annual test, it was determined that the fair values of the Pura Vida reporting unit and the Pura Vida brand were less than their carrying values.

4 unchanged sentences

Collectively, impairment charges for the Pura Vida brand and goodwill during fiscal 2023 totaled $ 69.3 million.

While we consider our assumptions in the determination of the fair value of these assets to be reasonable, they are complex and highly subjective.

Refer to Note 2 herein for additional information regarding the fair value measurement.

Cost Savings Initiatives and Other Charges

2 unchanged sentences

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.

The Company incurred the following charges during t he 53-w eeks ended February 3, 2024 (in thousands):

Reportable Segment

VB Direct VB Indirect Pura Vida Unallocated Corporate Expenses Total Expense

Severance charges (1)

$ 574 $ 309 $ 79 $ 1,951 $ 2,913

Consulting fees and other costs (2)

— — — 105 105

$ 574 $ 309 $ 79 $ 2,056 $ 3,018

(1) Includes former CFO severance

(2) Related to professional fees

(3) Charges are recorded within selling, general, and administrative expenses

A summary of charges and related liabilities associated with the cost savings initiatives and severance charges are as follows (in thousands):

Severance Charges (1)

Consulting Fees and Other Costs

Liability as of January 28, 2023 $ 3,083 $ 60

Fiscal 2024 charges $ 2,913 $ 105

Cash payments ( 5,455 ) ( 165 )

Liability as of February 3, 2024 $ 541 $ —

(1) Remaining liability is recorded within accrued employment costs

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The Company has incurred the following charges during the fifty-two weeks ended January 28, 2023 (in thousands):

The Company incurred the following charges during the 52-weeks ended January 28, 2023:

Reportable Segment

10 unchanged sentences

(3) $ 13.4 million of the charges are recorded within selling, general, and administrative expenses and $ 0.2 million are recorded within cost of sales

A summary of charges and related liabilities associated with the cost savings initiatives and severance charges are as follows (in thousands):

Severance Charges and Cash Retention Payment Acceleration Charges (1)

6 unchanged sentences

(2) Remaining liability is recorded within accounts payable

There were no similar charges during fiscal years 2022 and 2021.

There were no similar charges during fiscal year 2022.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Other Charges

During the fifty-three weeks ended February 3, 2024, the Company recorded within selling, general, and administrative expenses $ 0.8 million of professional fees associated with strategic initiatives and other costs.

Collectively, $ 0.2 million was recorded within the Pura Vida segment and $ 0.6 million was recorded within corporate unallocated expenses.

Fiscal 2023 .

9 unchanged sentences

Collectively, $ 6.2 million was recorded within the Direct segment, $ 1.7 million was recorded within the Indirect segment,$ 10.2 million was recorded within the Pura Vida segment, and $ 1.6 million was recorded within corporate unallocated expenses.

There were no similar charges during fiscal years 2022 and 2021.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

There we re no simila r charges during fiscal year 2022.

Segment Reporting

2 unchanged sentences

These operating segments are components of the Company for which separate financial information is available and for which operating results are evaluated on a regular basis by the chief operating decision maker in deciding how to allocate resources and in assessing the performance of the segments.

The VB Direct segment includes Vera Bradley full-line and factory outlet stores, the Vera Bradley websites, verabradley.com and verabradley.ca, the Vera Bradley online outlet site, and the Vera Bradley annual outlet sale.

The VB Direct segment includes Vera Bradley full-line and outlet stores, the Vera Bradley websites (verabradley.com, outlet.verabradley.com), and the Vera Bradley annual outlet sale.

Revenues generated through this segment are driven through the sale of Vera Bradley-branded products from Vera Bradley to end consumers.

The VB Indirect segment represents revenues generated through the distribution of Company-branded products to specialty retailers representing approximately 1,700 locations, substantially all of which are located in the United States, as well as select department stores, national accounts, third-party e-commerce sites, third-party inventory liquidators, and licensing agreements related to the Vera Bradley brand.

The VB Indirect segment represents revenues generated through the distribution of Company-branded products to specialty retailers representing approximate ly 1,600 locatio ns, substantially all of which are located in the United States, as well as select department stores, national accounts, third-party e-commerce sites, third-party inventory liquidators, and licensing agreements related to the Vera Bradley bran d.

No customer accounted for 10% or more of the Company’s net revenues during fiscal years 2024, 2023, and 2022.

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

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

Corporate costs represent the Company’s administrative expenses, which include, but are not limited to:

9 unchanged sentences

Notes to Consolidated Financial Statements

Net revenues and operating (loss) income information for the Company’s reportable segments consisted of the following (in thousands):

Net revenues and operating income (loss) information for the Company’s reportable segments consisted of the following (in thousands):

Fiscal Year Ended

6 unchanged sentences

Total $ 470,786 $ 499,961 $ 540,453

Segment operating (loss) income:

Segment operating income (loss):

VB Direct $ 61,873 $ 51,097 $ 73,506

3 unchanged sentences

Reconciliation:

Segment operating (loss) income $ ( 4,529 ) $ 103,348 $ 81,057

Segment operating income (loss):

$ 83,831 $ ( 4,529 ) $ 103,348

Unallocated corporate expenses ( 73,389 ) ( 90,342 ) ( 76,437 )

Operating (loss) income $ ( 94,871 ) $ 26,911 $ 13,065

Operating income (loss) $ 10,442 $ ( 94,871 ) $ 26,911

Sales outside of the United States were immaterial for all periods presented.

4 unchanged sentences

Refer to Note 3 herein for disaggregation of net revenues by reportable segment.

As of January 28, 2023 and January 29, 2022, substantially all of the Company’s long-lived assets were located in the United States.

As of February 3, 2024 and January 28, 2023, substantially all of the Company’s long-lived assets were located in the United States.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data