What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-28 compared with 2024-03-29 · 235 added, 214 removed, 879 unchanged (34% of the section changed)

2 unchanged sentences

Index to Consolidated Financial Statements

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

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

Reports of Independent Registered Public Accounting Firm (PCA O B I D 34 )

Consolidated Balance Sheets as of February 1 , 202 5 , and February 3, 2024

Consolidated Statements of Operations for the fiscal years ended February 1 , 202 5 , February 3, 2024, and January 28, 2023

Consolidated Statements of Comprehensive (Loss) Income for the fiscal years ended February 1 , 202 5 , February 3, 2024, and January 28, 2023

Consolidated Statements of Shareholders’ Equity for the fiscal years ended February 1 , 202 5 , February 3, 2024, and January 28, 2023

Consolidated Statements of Cash Flows for the fiscal years ended February 1, 202 5, February 3, 2024, and January 28, 2023

Notes to Consolidated Financial Statements

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

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.

and subsidiaries (the "Company") as of February 1, 2025 and February 3, 2024, 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 1, 2025, 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 1, 2025 and February 3, 2024, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2025, 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 1, 2025, 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, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

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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.

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.

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 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’s annual 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 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.

The carrying value of the Pura Vida brand was $6.2 million as of the second quarter.

Due to subsequent triggering events, the Company performed a second quantitative analysis of the carrying value of the Pura Vida brand in the fourth quarter of fiscal 2025 and recorded a full impairment charge of $6.2 million.

We identified the annual 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.

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, royalty rate, and discount rate.

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(in thousands)

2024 January 28,

2025 February 3,

Current assets:

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Commitments and contingencies

Redeemable noncontrolling interest — 10,712

Shareholders’ equity:

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Common stock, without par value;

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

200,000 shares authorized, 43,535 and 43,253 shares issued and 27,701 and 30,814 outstanding, respectively

Additional paid-in capital 115,515 112,590

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Fiscal Year Ended

2024 January 28,

2025 February 3,

2024 January 28,

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Other income, net 850 915 457

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

Operating (loss) income ( 42,356 ) 10,442 ( 94,871 )

Interest income (expense), net 1,118 890 ( 153 )

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

(Loss) income before income taxes ( 41,238 ) 11,332 ( 95,024 )

Income tax expense (benefit) 20,950 3,494 ( 15,640 )

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

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

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

Net (loss) income ( 62,188 ) 7,838 ( 79,384 )

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

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

$ ( 62,188 ) $ 7,838 $ ( 59,735 )

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Diluted weighted-average shares outstanding 28,935 31,314 31,503

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

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

common shareholders $ ( 2.15 ) $ 0.25 $ ( 1.90 )

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

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

common shareholders $ ( 2.15 ) $ 0.25 $ ( 1.90 )

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Vera Bradley, Inc.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive (Loss) Income

(in thousands)

Fiscal Year Ended

2024 January 28,

2025 February 3,

2024 January 28,

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

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

Net (loss) income $ ( 62,188 ) $ 7,838 $ ( 79,384 )

Cumulative translation adjustment 53 33 ( 76 )

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 income (loss) attributable to Vera Bradley, Inc.

Comprehensive (loss) income, net of tax ( 62,135 ) 7,871 ( 79,460 )

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

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

$ ( 62,135 ) $ 7,871 $ ( 59,811 )

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Number of Shares Accumulated

Comprehensive Income (Loss)

Comprehensive Loss

Stock Treasury

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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 )

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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

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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

Net income attributable to Vera Bradley, Inc.

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

Net loss attributable to Vera Bradley, Inc.

— — — ( 62,188 ) — — ( 62,188 )

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Treasury stock purchased ( 3,395,335 ) 3,395,335 — — — ( 21,764 ) ( 21,764 )

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

Balance at February 1, 2025 27,700,900 15,834,579 $ 115,515 $ 220,279 $ ( 19 ) $ ( 156,820 ) $ 178,955

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Fiscal Year Ended

2024 January 28,

2025 February 3,

2024 January 28,

Cash flows from 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:

Net (loss) income $ ( 62,188 ) $ 7,838 $ ( 79,384 )

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

Depreciation of property, plant, and equipment 8,531 7,968 8,854

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Accrued and other liabilities ( 7,372 ) ( 2,060 ) ( 1,987 )

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

Net cash (used in) provided by operating activities ( 14,102 ) 47,993 ( 13,421 )

Cash flows from investing activities

Purchases of property, plant, and equipment ( 10,373 ) ( 3,770 ) ( 8,239 )

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

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

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

Net cash used in investing activities ( 10,373 ) ( 13,770 ) ( 8,239 )

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Effect of exchange rate changes on cash and cash equivalents 53 33 ( 76 )

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

Net (decrease) increase in cash and cash equivalents ( 46,937 ) 30,708 ( 41,841 )

Cash and cash equivalents, beginning of period 77,303 46,595 88,436

Cash and cash equivalents, end of period $ 30,366 $ 77,303 $ 46,595

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

Vera Bradley, Inc.

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Fiscal Year Ended

2024 January 28,

2025 February 3,

2024 January 28,

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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.

On March 11, 2025 the Company entered into an Interest Purchase Agreement (the “Agreement”) to sell 100 % of Pura Vida.

The transaction is expected to close by the end of the first quarter of fiscal 2026.

A copy of the Agreement is included as an exhibit to this Form 10-K.

Refer to Note 18 herein for additional information.

The Company has three reportable segments:

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• 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.

the Vera Bradley websites (verabradley.com, outlet.verabradley.com, and international.verabradley.com);

the Vera Bradley annual outlet sale in Fort Wayne, Indiana;

and direct to consumer marketplaces.

As of February 1, 2025, the Company operated 39 full-line stores and 87 outlet stores.

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

The sale resumed in calendar year 2023.

• The VB Indirect business consists of sales of Vera Bradley products to approximately 1,200 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.ca, and www.puravidabracelets.eu);

• The Pura Vida segment represents revenues generated through the Pura Vida website (www.puravidabracelets.com);

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.

and through its seven retail stores.

Principles of Consolidation

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

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.

As such, fiscal years 2025 and 2023, ended February 1, 2025 and January 28, 2023 respectively, each reflected a 52-week period.

Fiscal year 2024, ended February 3, 2024 reflected a 53-week period.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies

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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

could differ from these estimates.

Actual results could differ from these estimates.

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

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Computer equipment and software ...................................................

The Company recognizes depreciation and amortization expense within cost of sales for expenditures related to distribution center, sourcing, and other related functions and selling, general, and administrative expenses for all other expenditures.

The Company recognizes depreciation and amortization expense within cost of sales for capital expenditures related to distribution center, sourcing, and other related functions and selling, general, and administrative expenses for all other capital expenditures.

Leas ehold improvements are amortized over the shorter of the life of the asset or the lease term.

Lease terms typically range from three to ten years .

Lease terms typically range f rom three to ten years .

When a decision is made to abandon property, plant, and equipment prior to the end of the previously estimated useful life, depreciation or amortization estimates are revised to reflect the use of the asset over the shortened estimated useful life.

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Routine maintenance and repair costs are expensed as incurred.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

The Company capitalizes certain costs incurred in connection with acquiring, modifying, and installing internal-use software.

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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

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.

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Fiscal year ended February 1, 2025 $ 1,422 $ 8,401 $ ( 8,584 ) $ 1,239

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

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 approxima tely $ 1.1 million and $ 0.8 million as of February 3, 2024 and January 28, 2023, respectively.

The allowance for doubtful accounts was approxima tel y $ 1.1 million as of February 1, 2025 and February 3, 2024, respectively.

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

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Operating right-of-use assets are based on the lease liability adjusted for prepaid rent, deferred rent, and tenant allowances received from certain of the Company’s landlords, primarily for its retail store locations.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Operating lease liabilities are amortized based upon the effective interest method.

6 unchanged sentences

Refer to Note 4 herein for additional information regarding the Company's leases.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Store Pre-Opening, Occupancy, and Operating Costs

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Selling, general, and administrative expenses also include store operating costs, store employee compensation, and store occupancy and supply costs.

Business Combination

In connection with a business combination, the Company records the identifiable assets acquired, liabilities assumed, contingent consideration liabilities, if any, and any noncontrolling interest in the acquiree at their acquisition-date fair values.

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 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

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.

Identifiable intangible assets consisted of the Pura Vida brand and customer relationships.

Goodwill was fully impaired during fiscal 2023, leaving 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.

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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.

The Pura Vida brand was fully impaired during fiscal 2025, leaving no balance.

For the annual impairment analysis performed in the second quarter of fiscal 2025, 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 $ 6.2 million during the fourth quarter of fiscal 2025, further described in Note 15 herein.

For the annual impairment analysis performed during fiscal 2024, the Company performed a quantitative analysis, as well as subsequent analyses due to triggering events, further described in Note 15 of the Notes to the Consolidated Financial Statements herein.

An impairment charge of $ 5.4 million was recorded during fiscal 2024 for the Pura Vida brand.

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.

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 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 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

Pursuant to the Put/Call Agreement, and subject to the terms and conditions thereof, the Sellers had the

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

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.

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 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).

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Advertising Costs

The Company expenses advertising costs at the time the promotion first appears in media, in stores, or on its websites, and includes those costs in selling, general, and administrative expenses in the Consolidated Statements of Operations.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Total advertising expense was as follows (in thousands):

Fiscal year ended February 1, 2025

Fiscal year ended January 28, 2023

Fiscal year ended February 3, 2024

Fiscal year ended January 28, 2023

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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 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):

The carrying amounts reflected on the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, and accounts payable as of February 1, 2025 and February 3, 2024, approximated their fair values.

The following table details the fair value measurements of the Company’s investments as of February 1, 2025 and February 3, 2024 (in thousands):

Level 1 Level 2 Level 3

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

February 1, 2025 February 3, 2024 February 1, 2025 February 3, 2024 February 1, 2025 February 3, 2024

Cash equivalents (1)

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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 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.

The Company recorded $ 2.6 million and $ 1.4 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 February 1, 2025, and January 28, 2023, respectively.

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

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

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.

Refer to Note 15 herein regarding the Pura Vida Brand impairment test and related

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

impairment charges for fiscal 2025 and fiscal 2024, as well as the Pura Vida Brand and goodwill impairment test and impairment charges for fiscal 2023.

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

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The estimates and assumptions critical to the overall fair value estimates include:

(1) estimated future cash flow generated at the

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

(1) estimated future cash flow generated at the store level;

(2) discount rates used to derive the present value factors used in determining the fair values;

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When necessary, a valuation allowance is recorded to reduce the deferred tax assets to their anticipated realizable value.

In fiscal 2025, the Company recorded a full valuation allowance against its net deferred tax assets.

The Company establishes liabilities for uncertain positions taken or expected to be taken in income tax returns, using a more-likely-than-not recognition threshold.

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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 balance of the unamortized CCA implementation costs totaled $ 0.6 million and $ 3.8 million as of February 1, 2025 and February 3, 2024, respectively.

Of this total, $ 0.4 million and $ 2.8 million was recorded within prepaid expenses and other current assets and $ 0.2 million and $ 1.0 million was recorded within other assets on the Company's Consolidated Balance Sheets as of February 1, 2025 and February 3, 2024, respectively.

In the fourth quarter of fiscal 2025, the Company recorded a software abandonment charge of $ 1.1 million.

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

Recently Issued Accounting Pronouncements

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".

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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.

The Company adopted the ASU during the year ended February 1, 2025 and the impact of the ASU was limited to financial statement footnote disclosures.

Refer to Note 17 herein.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

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

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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 new standard is effective for fiscal years beginning after December 15, 2024 (the Company's fiscal year 2026), 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.

In November 2024, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2024-03, "Disaggregation of Income Statement Expenses".

The ASU requires financial statement footnote disclosure of specified information about certain costs and expenses, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization.

The ASU is effective for fiscal years beginning after December 15, 2026 (the Company’s fiscal year 2028) and interim reporting periods beginning after December 15, 2027 (interim periods for the Company’s fiscal year 2029).

Public business entities are required to apply the guidance prospectively, however, retrospective application is permitted.

The Company is currently evaluating the impact of this ASU, but expects the impact to be limited to financial statement footnote disclosures.

Vera Bradley, Inc.

Notes to 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-three weeks ended February 3, 2024, and fifty-two weeks ended January 28, 2023 and January 29, 2022 (in thousands):

Fifty-Three Weeks Ended

The following presents the Company's net revenues disaggregated by product category for the fifty-two weeks ended February 1, 2025 and January 28, 2023, and fifty-three weeks ended February 3, 2024 (in thousands):

Fifty-Two Weeks Ended

February 1, 2025

13 unchanged sentences

(5) $ 59.4 million of net revenues related to product sales recognized at a point in time and $ 1.8 million of net revenues related to sales-based royalties recognized over time.

Fifty-Two Weeks Ended

January 28, 2023

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.

Vera Bradley, Inc.

19 unchanged sentences

Contract Balances

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.

Contract liabilities as of February 1, 2025 and February 3, 2024, were $ 2.4 million and $ 2.6 million, respectively.

The balance consisted of unredeemed gift cards, unearned revenue related to the monthly bracelet subscription of the Pura Vida segment, Pura Vida loyalty club points, and Pura Vida customer deposits and payments collected before shipment.

These contract liabilities are recognized within other accrued liabilities on the Company’s Consolidated Balance Sheets.

Substantially all contract liabilities are recognized within one year.

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 Company did no t have contract assets as of February 1, 2025 and February 3, 2024.

The balance for accounts receivable from contracts with customers, net of allowances, as of February 1, 2025 and February 3, 2024 was $ 14.2 million and $ 16.4 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 as of February 1, 2025 and February 3, 2024, respectively.

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

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Concentration of Credit Risk

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

Five customers represente d approximately 66.0 % of the balance of accounts receivable, net as of February 1, 2025.

Vera Bradley, Inc.

6 unchanged sentences

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

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

The Company's other leases generally have remaining terms of up to approximately two years as of February 1, 2025.

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.

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Discount Rate

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

The weighted-average discount rate as of February 1, 2025 and February 3, 2024, was 5.0 % and 4.8 %, respectively.

The discount rate is not readily determinable in the lease;

1 unchanged sentence

Leases Not Yet Commenced

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.

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.

As of February 1, 2025, there were no executed leases in which the Company did not have control of the underlying asset.

Practical Expedients (Policy Elections)

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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 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

The following lease expense is recorded within cost of sales for the Asia sourcing office 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 1, 2025, February 3, 2024, and January 28, 2023 (in thousands):

Fifty-Two Weeks Ended Fifty-Three Weeks Ended Fifty-Two Weeks Ended

February 1, 2025 February 3, 2024 January 28, 2023

Operating lease cost $ 26,658 $ 25,826 $ 25,118

5 unchanged sentences

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

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

The weighted-average remaining lease term as of February 1, 2025 and February 3, 2024 was 4.8 years and 5.3 years , respectively.

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

Fifty-Three Weeks Ended Fifty-Two Weeks Ended

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

Fifty-Two Weeks Ended Fifty-Three Weeks Ended Fifty-Two Weeks Ended

February 1, 2025 February 3, 2024 January 28, 2023

Cash paid for amounts included in the measurement of operating lease liabilities $ 30,234 $ 29,554 $ 30,014

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Property, plant, and equipment consisted of the following (in thousands):

2024 January 28,

2025 February 3,

Land and land improvements $ 5,981 $ 5,981

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Fiscal year ended February 1, 2025 $ 8,531

Fiscal year ended January 28, 2023 8,854

Fiscal year ended February 3, 2024 7,968

Fiscal year ended January 28, 2023 8,854

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.

As of February 1, 2025 and February 3, 2024, the Company had no borrowings outstanding and availability of $ 75.0 million under its Credit Agreement.

Credit Agreement

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The Credit Agreement matures in May 2028.

Refer to Note 18 herein for information related to the Fourth Amendment to the Credit Agreement, occurring subsequent to the Company's fiscal year 2025.

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

2024 January 28,

2025 February 3,

2024 January 28,

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Total income tax expense (benefit) $ 20,950 $ 3,494 $ ( 15,640 )

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

2024 January 28,

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

2025 February 3,

2024 January 28,

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Foreign 175 2,173 3,515

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

Total (loss) income before income taxes $ ( 41,238 ) $ 11,332 $ ( 95,024 )

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,

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

2025 February 3,

2024 January 28,

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

Change in valuation allowance 29,751 ( 72.1 ) — — — —

(Windfall) shortfall from stock-based compensation ( 18 ) — ( 47 ) ( 0.4 ) 271 ( 0.3 )

6 unchanged sentences

Significant components of deferred tax assets and liabilities were as follows (in thousands):

2024 January 28,

2025 February 3,

Deferred tax assets:

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Investment in subsidiary 13,304 12,904

Net operating loss carryforwards 10,148 289

Other 2,165 1,365

Subtotal deferred tax assets 55,404 44,006

valuation allowances ( 48 ) ( 48 )

valuation allowance ( 29,799 ) ( 48 )

Total deferred tax assets 25,605 43,958

6 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 February 3, 2024 and January 28, 2023

Based on this assessment, t he Company recorded a full valuation allowance against its net deferred tax assets as of February 1, 2025.

As of February 3, 2024, there were an immaterial amount of valuation allowances recorded.

Vera Bradley, Inc.

2 unchanged sentences

A reconciliation of the beginning and ending gross amount of unrecognized tax benefits (excluding interest and penalties) is as follows (in thousands):

2024 January 28,

2025 February 3,

2024 January 28,

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As of February 1, 2025, 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.

Total unrecognized tax benefits are currently expected to decrease by approximately $ 37.0 thousand 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 28, 2023 and January 29, 2022.

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federal income tax examinations for fiscal years 2022 and forward.

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.

With a few exceptions, the Company is subject to audit by various state and foreign taxing authorities for fiscal 2021 th ro 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 $ 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.

The Company recognized stock-based compensation expense of $ 3.7 million, $ 2.9 million, and $ 3.2 million in the fiscal years ended February 1, 2025, February 3, 2024, and January 28, 2023, respectively.

Awards of Restricted-Stock Units

The Company reserved 6,000,000 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.

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.

During the fiscal year ended February 1, 2025, the Company granted a total of 755,647 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 $ 5.1 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.

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Units Weighted-

Nonvested units outstanding at January 28, 2023

Nonvested units outstanding at February 3, 2024

683 $ 4.58 840 $ 4.42

5 unchanged sentences

699 $ 5.99 769 $ 5.19

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.

As of February 1, 2025, there was $ 4.7 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 1.4 years, subject to meeting performance conditions.

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However, the outcomes of legal proceedings and claims brought against the Company are subject to uncertainty and future developments could cause these actions or claims, individually or in the aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.

In August of 2019, Vesi Incorporated (“Vesi”) filed suit against the Company in the U.S.

District Court for the Southern District of Ohio related to the Company’s licensing business and alleging breach of fiduciary duty, unfair competition, defamation, and tortious interference with prospective business relationships.

The complaint seeks damages in an amount not less than $ 10.0 million for punitive damages, attorney fees, prejudgment interest, and any other additional relief.

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

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 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.

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

As of February 1, 2025, February 3, 2024, and January 28, 2023 , 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.

1 unchanged sentence

Fiscal year ended February 1, 2025 $ 1,538

Fiscal year ended January 28, 2023 1,854

Fiscal year ended February 3, 2024 1,897

Fiscal year ended January 28, 2023 1,854

2 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 February 3, 2024 and January 28, 2023.

The liability associated with commitments to the Foundation was approximately $ 0.2 million as of February 1, 2025 and $ 0.1 million as of February 3, 2024.

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

1 unchanged sentence

Fiscal year ended February 1, 2025 $ 167

Fiscal year ended January 28, 2023 191

Fiscal year ended February 3, 2024 139

Fiscal year ended January 28, 2023 191

2 unchanged sentences

Earnings Per Share

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

Basic net (loss) income 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 income (loss) per share are as follows (in thousands, except per share data):

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

Fiscal Year Ended

2024 January 28,

2025 February 3,

2024 January 28,

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

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

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

Net (loss) income $ ( 62,188 ) $ 7,838 $ ( 79,384 )

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

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

$ ( 62,188 ) $ 7,838 $ ( 59,735 )

2 unchanged sentences

Weighted-average number of common shares (diluted) 28,935 31,314 31,503

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

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

Basic $ ( 2.15 ) $ 0.25 $ ( 1.90 )

Diluted $ ( 2.15 ) $ 0.25 $ ( 1.90 )

As of February 1, 2025 and 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 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, 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.

On November 29, 2018, the Company's board of directors approved a share repurchase plan (the “2018 Share Repurchase Program”) authorizing up to $ 50.0 million of repurchases of shares of the Company's common stock.

1 unchanged sentence

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.

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

During the fiscal year ended February 1, 2025, the Company purchased and held 3,395,335 shares at an average price of $ 6.41 per share, excluding commissions, for an aggregate amount o f $ 21.8 million, under the 2021 Share Repurchase Program.

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 Program.

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 of $ 2.2 million, under the 2021 Share Repurchase Program.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

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.

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.

During the fourth quarter of fiscal 2025, the Company's board of directors approved a new share repurchase plan (the “2024 Share Repurchase Program”) which authorized Company management to utilize up to $ 30.0 million of available cash for repurchases of shares of the Company's common stock.

The 2024 Share Repurchase Program went into effect beginning December 14, 2024 and expires in December 2027.

The Company does not currently plan to purchase under the 2024 Share Repurchase Program, but anticipates utilizing it in the future depending on the Company's cash position.

As of February 1, 2025, there was $ 30.0 million remaining available to repurchase shares of the Company's common stock under the 2024 Share Repurchase Program.

As of February 1, 2025, the Company held as treasury share s 15,834,579 s hares of its common stock at an average price of $ 9.90 p er share, excluding commissions, for an aggregate carrying amount o f $ 156.8 million .

4 unchanged sentences

Refer to Note 2 herein for additional information.

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

Net income attributable to redeemable noncontrolling interest 2,380

Distributions to redeemable noncontrolling interest ( 1,215 )

Changes in redeemable noncontrolling interest for the fifty-two weeks ended February 1, 2025, fifty-three weeks ended February 3, 2024,and fifty-two weeks ended January 28, 2023 were as follows (in thousan ds):

Balance at January 29, 2022 $ 30,974

3 unchanged sentences

Adjustment for purchase of noncontrolling interest ( 10,712 )

Balance at February 3, 2024 $ —

Balance at February 3, 2024 and February 1, 2025 $ —

Intangible Assets

5 unchanged sentences

Customer Relationships $ 24,208 $ ( 24,208 ) $ —

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

Indefinite-lived intangible asset

Pura Vida Brand (2)

6,237 — 6,237

Total intangible assets $ 24,208 $ ( 24,208 ) $ —

3 unchanged sentences

Notes to Consolidated Financial Statements

January 28, 2023

February 3, 2024

in thousands Gross Basis Accumulated Amortization (1)

2 unchanged sentences

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

Non-competition Agreements 788 ( 788 ) —

Total definite-lived intangible assets 24,996 ( 20,744 ) 4,252

Indefinite-lived intangible asset

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(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):

Amortization Expense

Fiscal 2025 1,336

Total $ 1,336

(2) Impairment charges of $ 5.4 million were recorded within the Pura Vida segment during the fourth quarter of fiscal 2024.

Fiscal 2025 Impairment

The Company pe rformed its fiscal 2025 annual impairment test over the indefinite-lived Pura Vida brand during the second quarter of fiscal 2025 and no impairment was recorded.

In the fourth quarter of fiscal 2025, the Company identified triggering events and determined that the fair value of the Pura Vida brand was less than its carrying value, recording a full impairment charge of $ 6.2 million.

In consideration of offers received for the sale of Pura Vida (see Note 18 herein for further information), the Company performed a quantitative analysis of the Pura Vida brand.

Based on this quantitative assessment, the Company determined that the relative fair value of the Pura Vida brand indicated no fair value and that the Pura Vida brand was not recoverable.

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 .

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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.

5 unchanged sentences

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.

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.

As a result, the Company recorded an impairment charge of $ 9.9 million and $ 19.4 million for the Pura Vida brand and goodwill, respectively, during the second quarter of fiscal 2023 within the Pura Vida segment.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

We identified triggering events during the subsequent quarters of fiscal 2023, due to lower operating profit compared to previous forecasts, as well as changes in the long-range plan such as a pause on the opening of new Pura Vida retail stores.

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Cost Savings Initiatives and Severance Charges

During fiscal 2023, the Company began implementation of its targeted cost reductions, which are expected to be fully realized in fiscal 2025.

During fiscal 2023, the Company began implementation of its targeted cost reductions, which were expected to be fully realized in fiscal 2025.

In l ate fiscal 2025, additional cost reduction initiatives were identified and are expected to be fully realized in fiscal 2026.

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):

The Company incurred the following charges during t he fifty-two w eeks ended February 1, 2025 (in thousands):

Reportable Segment

2 unchanged sentences

$ 534 $ 1,166 $ — $ 2,171 $ 3,871

Total $ 534 $ 1,166 $ — $ 2,171 $ 3,871

(1) $ 3.1 million recorded in selling, general, and administrative expenses and $ 0.8 million recorded in cost of goods sold

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

Severance Charges (1)

Liability as of February 3, 2024 $ 541

Fiscal 2025 charges 3,871

Cash payments ( 1,887 )

Liability as of February 1, 2025 $ 2,525

(1) Remaining liability is recorded within accrued employment costs

The Company incurred the following charges during the fifty-three weeks ended February 3, 2024:

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)

4 unchanged sentences

(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):

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Severance Charges (1)

5 unchanged sentences

(1) Remaining liability is recorded within accrued employment costs

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

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

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

Reportable Segment

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(2) Remaining liability is recorded within accounts payable

There were no similar charges during fiscal year 2022.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Other Charges

There were no additional charges recorded during the fifty-two weeks ended February 1, 2025 associated with strategic initiatives and other costs.

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.

4 unchanged sentences

$ 6.4 million related to the exit of certain technology products and excess mask products recognized in the second and fourth quarters;

$ 1.2 million of valuation adjustments to write discounted inventory down to its net realizable value recognized in the fourth quarter;

$ 1.2 million of valuation

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

adjustments to write discounted inventory down to its net realizable value recognized in the fourth quarter;

and $ 1.6 million for purchase order cancellation fees related to spring 2023 product and certain raw materials.

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

Segment Reporting

1 unchanged sentence

VB Direct, VB Indirect, and Pura Vida.

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 outlet stores, the Vera Bradley websites (verabradley.com, outlet.verabradley.com), and the Vera Bradley annual outlet sale.

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 ("CODM") in deciding how to allocate resources and in assessing the performance of the segments.

The Company's CODM is our Chief Executive Officer.

The VB Direct segment includes Vera Bradley full-line and outlet stores, the Vera Bradley websites (verabradley.com, outlet.verabradley.com, and international.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 approximate ly 1,200 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.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.

The Pura Vida segment represents revenues generated through the Pura Vida website (www.puravidabracelets.com), 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:

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All intercompany-related activities are eliminated in consolidation and are excluded from the segment reporting.

Company management evaluates segment operating results based on several indicators.

The primary or key performance indicators for each segment are net revenues and operating income.

The table below represents key financial information for each of the Company’s operating and reportable segments:

VB Direct, VB Indirect, and Pura Vida.

The CODM’s primary or key performance indicator for evaluating segment operating results is operating income.

The CODM uses operating income for each segment predominantly in the annual budget and forecasting process.

The CODM considers budget-to-actual variances on a quarterly basis for this key performance operating measure when making decisions about the allocation of operating and capital resources to each segment.

The CODM also uses segment operating income to assess the performance of each segment by comparing the results of each segment with one another and in determining the compensation of certain employees.

The CODM reviews cost of sales and SG&A expense on a consolidated basis.

The accounting policies of the segments are the same as those described in Note 2.

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Notes to Consolidated Financial Statements

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

Net revenues, cost of sales, other segment expenses, and operating income (loss) information for the Company’s reportable segments, as well as a reconciliation to (loss) income before income taxes, consisted of the following (in thousands):

Fiscal Year Ended

2024 January 28,

2025 February 3,

2024 January 28,

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Total $ 371,967 $ 470,786 $ 499,961

Segment cost of sales:

VB Direct $ 125,467 $ 141,933 $ 167,701

VB Indirect 34,490 37,815 38,942

Pura Vida 25,171 34,625 54,374

Total $ 185,128 $ 214,373 $ 261,017

Other segment expenses, net (1)

VB Direct $ 106,902 $ 106,104 $ 109,433

VB Indirect 11,282 11,709 11,409

Pura Vida 43,122 54,769 122,631

Total $ 161,306 $ 172,582 $ 243,473

Segment operating income (loss):

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Unallocated corporate expenses ( 67,889 ) ( 73,389 ) ( 90,342 )

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

Interest income (expense) 1,118 890 ( 153 )

(Loss) income before income taxes $ ( 41,238 ) $ 11,332 $ ( 95,024 )

(1) Other segment expenses, net include selling, general and administrative expenses and are net of other income.

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

No customer accounted for 8% or m ore of the Company’s net revenues during fiscal years 2025, 2024, and 2023.

Revenues from external customers for Vera Bradley brand products are attributable to sales of bags, accessories, travel, apparel/footwear, and home items.

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

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

As of February 1, 2025 and February 3, 2024, substantially all of the Company’s long-lived assets were located in the United States.

Vera Bradley, Inc.

Notes to Consolidated Financial Statements

Subsequent Event

On March 11, 2025, Vera Bradley Holdings, LLC (“Seller”), Creative Genius, LLC (“Creative Genius”) and Project Aster Acquisition, LLC (“Buyer”) entered into an Interest Purchase Agreement (the “Agreement”) pursuant to which, among other things, Seller will sell to Buyer and Buyer will purchase from Seller one hundred percent ( 100 %) of Creative Genius, which operates under the name Pura Vida Bracelets (the “Transaction”).

The consideration paid by Buyer under the Agreement will consist of cash consideration of $ 1.0 million as well as contingent consideration payable over a two-year period.

Total consideration is subject to customary adjustments for cash, transaction expenses and working capital.

Seller has also agreed to provide certain services to Buyer for a transitional period of 12 months.

In conjunction with the Agreement, on March 11, 2025, Vera Bradley Designs, Inc., a wholly-owned subsidiary of the Seller, JP Morgan Chase Bank, N.A., as the administrative agent, and lenders from time to time party thereto, entered into a Fourth Amendment (the “Fourth Amendment”) to the asset based revolving Credit Agreement (as amended, the “Credit Agreement”) dated September 7, 2018.

The Fourth Amendment amended the Credit Agreement to, among other things:

allow for the sale of Creative Genius;

remove Creative Genius as a borrower;

modify an additional reporting period based on certain conditions of credit availability;

and change certain applications of the fixed charge coverage ratio.

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