What changed in this filing

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Item 1A. Risk Factors

2026-03-27 compared with 2025-03-28 · 63 added, 49 removed, 351 unchanged (24% of the section changed)

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Risks Related to Our Business Operations and Industry

If we are unable to successfully implement our long-term strategic plans and growth strategies, including Project Restoration, our future operating results could suffer.

The success of our long-term strategic plan and growth strategies, including Project Restoration, alone or collectively, will depend on various factors, including the appeal of our product designs, retail presentation to consumers, effectiveness of our marketing initiatives, expense-saving initiatives, competitive conditions, and economic conditions.

Project Restoration represents our business strategy to revitalize our consumer, brand, product, and channel components for both Vera Bradley and Pura Vida brands in order to serve our customers, grow our revenues, and increase our profitability.

If we are unable to successfully implement our long-term strategic plans and growth strategies, including Project Sunshine, our future operating results could suffer.

The success of our long-term strategic plan and growth strategies, including Project Sunshine, alone or collectively, will depend on various factors, including the appeal of our product designs, retail presentation to consumers, effectiveness of our marketing initiatives, realignment of our digital platforms and strategies, expense-saving initiatives, competitive conditions, and economic conditions.

Project Sunshine represents our comprehensive strategy to strengthen our market position by tapping into our brand’s strong emotional connection with consumers.

There is no assurance that we will be able to successfully implement our strategic plan and growth strategies.

If we are unsuccessful in implementing some or all of our strategies or initiatives, our future operating results could be adversely impacted.

Changes in general economic conditions and political uncertainty, including policies related to global trade and

tariffs, and their impact on consumer confidence and consumer spending, could negatively impact our

profitability and net revenues, which could force us to delay or slow the implementation of our growth strategies

and adversely impact our results of operations.

Changes in general economic conditions and political uncertainty, including policies related to global trade and tariffs, and their impact on consumer confidence and consumer spending, could negatively impact our profitability and net revenues, which could force us to delay or slow the implementation of our growth strategies and adversely impact our results of operations.

Our performance is subject to general economic conditions and political uncertainty and their impact on levels of consumer confidence and consumer spending.

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Merchandise misjudgments could adversely impact our net revenues and results of operations.

If we are unable to effectively manage inventory levels, product assortment, and promotional activity across channels, our gross margins, brand perception, and results of operations could be adversely affected.

Our business requires us to forecast consumer demand and to manage inventory purchases, allocations, and replenishment decisions across Vera Bradley Direct, Vera Bradley Indirect, and our other channels, including sales through the Vera Bradley websites and marketplaces.

Forecasting errors, changes in consumer preferences, delays in product flow, or shifts in channel mix may result in excess or aged inventory, higher markdowns, increased product returns, the need to increase promotional activity, and the write-off of inventory that cannot be sold at or above cost.

Promotional activity by us or by our Vera Bradley Indirect partners or marketplace operators may also reduce realized pricing, compress gross margins, and adversely impact

brand positioning.

In addition, efforts to reduce promotions or optimize pricing may negatively impact traffic and conversion, and pricing inconsistencies across channels may harm customer trust or strain key Vera Bradley Indirect relationships.

We may experience declines in comparable sales which could negatively affect the price of our common stock.

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Also, the aggregate results of operations of our stores have fluctuated in the past and will fluctuate in the future.

Numerous factors influence comparable sales, including fashion trends, competition, national and regional economic conditions, pricing, inflation, the timing of the release of new merchandise and promotional events, changes in our merchandise mix, marketing programs, changes in consumer shopping trends, site selection strategies, public health matters, and weather

These factors may cause our comparable sales results to be lower in the future than in recent periods or lower than expectations, either of which could result in a decline in the price of our common stock.

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We currently sell our Vera Bradley-branded products into two segments:

Direct to consumers through Vera Bradley full-line and outlet stores in the United States, the Vera Bradley websites (verabradley.com, international.verabradley.com, and outlet.verabradley.com), the Vera Bradley annual outlet sale in Fort Wayne, Indiana as well as direct to consumer marketplaces;

and through our Vera Bradley Indirect wholesale business which consists of sales to specialty retail locations, department stores, national accounts, third-party e-commerce sites, third-party inventory liquidators, as well as royalties recognized through licensing agreements related to the Vera Bradley brand.

We currently sell Pura Vida-branded products direct to consumers through our e-commerce website (puravidabracelets.com), through wholesale retailers, and through our seven retail stores.

Direct to consumers through Vera Bradley full-line and outlet stores in the United States, the Vera Bradley websites (verabradley.com, international.verabradley.com, and outlet.verabradley.com), typically the Vera Bradley annual outlet sale in Fort Wayne, Indiana as well as direct to consumer marketplaces;

and through our Vera Bradley Indirect wholesale business which consists of sales to specialty retail locations, department stores, national accounts, third-party inventory liquidators, as well as royalties recognized through licensing agreements related to the Vera Bradley brand.

These channels are sometimes in direct competition and sales through these channels may not be incremental to total sales.

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We may not be able to successfully open new stores and/or operate new and current stores as planned, which could adversely impact our results of operations.

Our long-term future growth prospects include our ability to successfully open new stores and operate new and current Vera Bradley and Pura Vida stores.

Our long-term future growth prospects include our ability to successfully open new stores and operate new and current Vera Bradley stores.

In recent years, however, Vera Bradley comparable store sales have declined.

Consequently, the rate at which we have opened new stores has slowed.

We have closed a total of 79 underperforming full-line stores and four underperforming outlet stores since the beginning of fiscal 2015 and forecast that we will close additional full-line stores.

We plan to open two additional Vera Bradley stores during fiscal 2026.

We have closed a total of 91 underperforming full-line stores and five underperforming outlet stores since the beginning of fiscal 2015 and forecast that we will close additional underperforming full-line stores.

We will opportunistically evaluate new store locations if we can obtain favorable locations and rental agreements.

We will continue to evaluate our plans fo r store openings in future years in light of demand and store performance.

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Additionally, we will incur pre-opening costs and we may encounter initial losses while new stores commence operations, which could strain our resources and adversely impact our results of operations.

Our business depends on strong brands.

If we are unable to execute our marketing strategies, intended to enhance our brands, then revenues and our results of operations could be adversely impacted.

Our business depends on a strong brand.

If we are unable to execute our marketing strategies, intended to enhance our brand, then revenues and our results of operations could be adversely impacted.

We believe that the brand images that we have developed have contributed significantly to the success of our business.

We also believe that enhancing the Vera Bradley and Pura Vida brands through our marketing strategies is critical to maintaining and expanding our customer base.

Enhancing our brands and implementing our marketing strategies may require us to make substantial investments in areas such as product design, store operations, store design, community relations, and marketing.

We also believe that enhancing the Vera Bradley brand through our marketing strategies is critical to maintaining and expanding our customer base.

Enhancing our brand and implementing our marketing strategies may require us to make substantial investments in areas such as product design, store operations, store design, community relations, and marketing.

These investments might not succeed.

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Closing stores could result in significant costs to us.

We have closed a total of 79 underperforming full-line stores and four underperforming outlet stores since the beginning of fiscal 2015 and forecast that we will close additional stores.

We could, in the future, decide to close additional stores beyond those currently forecasted that are producing losses or that are not as profitable as we expect.

If we decide to close any stores before the expiration of their lease terms, we may incur payments to landlords to terminate or “buy out” the remaining term of the lease.

If we decide to close any stores before the expiration of their lease terms, we may incur payments to landlords to terminate or “buy out” the

remaining term of the lease.

We also may incur costs related to the employees at such stores, whether or not we terminate the leases early.

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• establishing and maintaining good working relationships with our wholesale retailers.

In our Vera Bradley Indirect business and Pura Vida wholesale business, we compete with numerous manufacturers, importers, and distributors of handbags, accessories, and other products for the limited space available for the display of such products to the consumer.

In our Vera Bradley Direct business and Pura Vida e-commerce and retail store business, we compete against other gift and specialty retailers, department stores, catalog retailers, and Internet businesses that engage in the retail sale of similar products.

In our Vera Bradley Indirect business, we compete with numerous manufacturers, importers, and distributors of handbags, accessories, and other products for the limited space available for the display of such products to the consumer.

In our Vera Bradley Direct business, we compete against other gift and specialty retailers, department stores, catalog retailers, and Internet businesses that engage in the retail sale of similar products.

Moreover, the general availability of contract manufacturing allows new entrants easy access to the markets in which we compete, which may increase the number of competitors and adversely affect our competitive position and our business.

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We rely on a limited number of distribution facilities for the products we sell.

Distribution operations for Vera Bradley-branded products are currently concentrated in a single, company-owned distribution center in Roanoke, Indiana.

Pura Vida-branded products are primarily distributed from one third-party distribution center in Tijuana, Mexico.

Distribution operations currently concentrated in a single, company-owned distribution center in Roanoke, Indiana.

Any significant disruption in the operation of these facilities due to natural disaster or severe weather, or events such as fire, accidents, power outages, system failures, or other unforeseen causes, could devalue or damage a significant portion of our inventory and could adversely affect our product distribution and sales until such time as we could secure alternative facilities.

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Our business is subject to the risks inherent in global sourcing and manufacturing activities.

We source our Vera Bradley raw materials primarily from various suppliers in Asia, with the majority of non-cotton based products coming from China and South Korea.

We source our raw materials primarily from various suppliers in Asia, with the majority of non-cotton based products coming from China and South Korea.

Our cotton-based products are sourced from areas outside of China.

For Vera Bradley, we outsource the production of a significant majority of our products to companies in Asia.

Pura Vida components are primarily sourced from Asia and outsource the production of products primarily to El Salvador.

We outsource the production of a significant majority of our products to companies in Asia.

We are subject to the risks inherent in global sourcing and manufacturing, including, but not limited to:

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Additionally, we do not have complete oversight over our contract manufacturers.

which we may in the future do business, could also draw negative publicity for us and our brands, diminishing the value of our brands and reducing demand for our products.

Violations of labor or other laws by those manufacturers, or the divergence of a contract manufacturer’s labor or other practices from those generally accepted as ethical in the United States or in other markets in which we may in the future do business, could also draw negative publicity for us and our brands, diminishing the value of our brands and reducing demand for our products.

Our ability to source our products at favorable prices, or at all, could be harmed, with adverse effects on our results of operations, if new trade restrictions are imposed, existing trade restrictions become more burdensome, or increased tariffs are implemented.

A significant majority of our Vera Bradley and Pura Vida products are currently manufactured for us in Asia and Central America, respectively.

A significant majority of our products are currently manufactured for us in Asia.

The United States and the countries in which our products are produced have imposed and may impose additional quotas, duties, tariffs, or other restrictions or regulations or may adversely adjust prevailing quotas, duties, or tariffs.

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We currently rely on independent transportation service providers for substantially all of our product shipments.

Our utilization of these delivery services, or those of any other shipping companies that we may elect to use, is subject to risks, including increases in fuel prices, which would increase our shipping costs, employee strikes, labor shortages, and inclement weather, which may impact a shipping company’s ability to provide delivery services sufficient to meet our shipping needs.

Our utilization of these delivery services, or those of any other shipping companies that we may elect to use, is subject to risks, including increases in fuel prices, which would increase our shipping costs, employee strikes, labor shortages, health emergencies, and inclement weather, which may impact a shipping company’s ability to provide delivery services sufficient to meet our shipping needs.

If for any reason we were to change shipping companies, we could face logistical difficulties that might adversely affect deliveries, and we would incur costs and expend resources in the course of making the change.

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Risks Related to Information Technology and Security

A data security or privacy breach could damage our reputation and our relationships with our customers, expose us to litigation risk and adversely affect our business.

We remain dependent on information technology systems and networks, including the Internet, for a significant portion of our sales, primarily through our e-commerce operations and credit card transaction authorization and processing.

A data security or privacy breach could damage our reputation and our relationships with our customers, expose us to litigation risk a nd adversely affect our business.

We remain de pendent on information technology systems and networks, including the Internet, for a significant portion of our sales, primarily through our e-commerce operations and credit card transaction authorization and processing.

We are also responsible for storing data relating to our customers and employees and rely on third parties for the operation of our e-commerce websites and for the various social media tools and websites we use as part of our marketing strategy.

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We may also incur significant costs in complying with the various applicable state, federal, and foreign laws regarding unauthorized disclosure of personal information.

Changes in privacy laws, regulations, and platform policies could increase our compliance costs and limit our ability to acquire customer s effectively, which could adversely affect our business.

We are subject to a rapidly evolving set of privacy, data protection, marketing, and consumer disclosure laws and regulations in the United States and internationally.

Compliance may require changes to our data practices, notices, consent mechanisms, vendor management, and recordkeeping, and may increase costs related to personnel, systems, monitoring, and audits.

In addition, changes in browser, mobile operating system, and advertising platform policies may limit the availability of data signals used for measurement and targeting, which could reduce the effectiveness of our marketing spend, increase customer acquisition costs, and adversely affect our ability to grow sales through the Vera Bradley websites and marketplaces.

Our business could suffer if our computer systems and websites are disrupted or cease to operate effectively.

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We are exposed to business risks as a result of our e-commerce operations.

We operate e-commerce stores at www.verabradley.com, outlet.verabradley.com, and international.verabradley.com, and www.puravidabracelets.com.

We operate e-commerce stores at www.verabradley.com, outlet.verabradley.com, and international.verabradley.com.

Expanding our e-commerce business is one of the key objectives of our business strategy.

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(v) credit card fraud;

and (vi) competition and general economic conditions specific to the Internet, e-commerce, and the accessories industry.

If we are unable to effectively address these risks and any other risks that we face in connection with our Internet operations, our business, financial condition, results of operations, and/or cash flows could be materially adversely affected.

(vi) adverse changes in the terms, policies, algorithms, fees, or service levels of marketplaces or other third-party digital platforms on which we sell or advertise;

and (vii) competition and general economic conditions specific to the Internet, e-commerce, and the accessories industry.

If we are unable to effectively address these risks and any other risks that we face in

connection with our Internet operations, our business, financial condition, results of operations, and/or cash flows could be materially adversely affected.

The use of or failure to adopt artificial intelligence technologies may impact our business

The use of artificial intelligence (“AI”) technologies could expose us to operational, legal, regulatory, cybersecurity, and reputational risks, and the use of AI by third parties could increase fraud, misinformation, data privacy concerns, and other risks to our business.

AI technologies may produce inaccurate, biased, or unreliable outputs, and our reliance on such technologies, whether internally developed or obtained from third parties, could result in errors in decision-making, regulatory scrutiny, customer dissatisfaction, or damage to our reputation.

In addition, our business increasingly depends on technology and digital capabilities, and the thoughtful development, integration, and oversight of AI technologies may be important to our long-term competitiveness.

Implementing or integrating AI technologies may require significant investments in infrastructure, data management, governance, and talent, and may involve complex implementation efforts and operational risks.

If we are unable to develop, acquire, implement, or manage AI technologies effectively, in a cost-efficient or timely manner, or if such technologies do not perform as intended, our operations, financial condition, and results of operations could be adversely affected.

Further, the competitive landscape may evolve rapidly as companies invest in and deploy AI-enabled products, services, and processes.

We may not be successful in identifying, developing, or adopting AI capabilities that meet the needs of our customers or keep pace with technological advances.

Competitors or new market entrants may develop or deploy AI technologies more effectively than we do, which could erode our competitive position.

Conversely, if we fail to adopt AI technologies thoughtfully and strategically, or fail to appropriately govern their use, we could miss opportunities to improve efficiency, innovation, and customer experience, which could materially adversely affect our business, results of operations, and long-term competitiveness.

Risks Related to Tax and Valuation Matters

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As such, we recorded non-cash charges of $1.0 million and $2.4 million during fiscal years 2026 and 2025, respectively, within selling, general, and administrative expenses in the consolidated statements of operations to write down the carrying values of these stores' long-lived asset groups to their estimated fair values.

We also recorded $0.6 million of a non-cash impairment charge relating to a corporate right-of-use asset in fiscal 2023.

We recorded no long-lived asset impairments in fiscal 2024.

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Litigation and other claims may arise in the ordinary course of our business and include employee claims, custom and duty claims, commercial disputes, intellectual property issues, marketing and solicitation claims, product-oriented allegations, and slip and fall claims.

These cases often raise complex factual and legal issues, which are subject to risks and uncertainties and which could divert significant financial and management resources.

These cases often raise complex factual

and legal issues, which are subject to risks and uncertainties and which could divert significant financial and management resources.

Litigation and other claims against us could result in unexpected expenses and liability, as well as materially adversely affect our operations and our reputation.

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We are also subject to the risk that claims will be brought against us for infringement of the intellectual property rights of third parties, seeking to block the sale of our products claimed to violate their intellectual property rights or to receive payment of monetary amounts related thereto.

Although we have not been inhibited from selling our products in connection with intellectual property disputes, intellectual property-related obstacles may arise as we expand our product lines and extend our

brands as well as the geographic scope of our sales and marketing.

In particular, we may be subject to copyright infringement claims for which we may not be entitled to indemnification from our suppliers.

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• future sales of our common stock by our significant shareholders, officers, and directors;

• future sales of the Company's treasury stock, or the issuance of new shares to raise capital for the business

• our entry into new markets;

• the impact of wars, hostilities, riots, social unrest or acts of terrorism on trading markets;

• general economic conditions and broader market volatility that may affect the trading price of our common stock regardless of our operating performance

• changes in laws or regulations that impact the retail industry, including the imposition or increase in the rate of tariffs or trade sanctions;

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In addition, the stock markets, including The NASDAQ Global Select Market, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many retail companies.

stockholders have instituted securities class action litigation following periods of market volatility.

In the past, stockholders have instituted securities class action litigation following periods of market volatility.

If we were involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.

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Miller, and P.

Michael Miller, directly or indirectly, beneficially own and have the ability to exercise voting control over, in the aggregate, 21.2% of our outstan ding shares of common stock as of February 1, 2025.

Fund 1 Investments, LLC beneficially owns and has the ability to exercise voting control over, in the aggregate, 10% of our outstanding shares of common stock as of February 1, 2025.

Michael Miller, directly or indirectly, beneficially own and have the ability to exercise voting control over, in the aggregate, 21.1% of our outstan ding shares of common stock as of January 31, 2026.

As a result, these shareholders are able to exercise significant influence over all matters requiring shareholder approval, including the election of directors, any amendments to our second amended and restated articles of incorporation, and significant corporate transactions.

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We have been subject to shareholder activism and may be subject to such activism in the future, which could result in substantial costs and divert management’s and our Board of Directors’ (“Board”) attention and resources from our business.

For example, on December 30, 2024, Fund 1 Investments, LLC delivered a letter to our Board calling for a the commencement of a strategic alternatives process.

In the future, we could become engaged in a consent solicitation, or proxy contest, or experience other shareholder activism.

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Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of release.

Actual results will vary from the guidance and the

variations may be material.

Actual results will vary from the guidance and the variations may be material.

Investors should also recognize that the reliability of any forecasted financial data diminishes the further into the future that the data are forecast.

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This could recur in the future.

Future pandemic-related mandates from governments and public health officials may necessitate additional closures to some, or all, of our retail stores, the stores of our Indirect segment partners and Pura Vida wholesale retailers, or otherwise detrimentally impact aspects of our operations, as COVID-19 did in the past.

Future pandemic-related mandates from governments and public health officials may necessitate additional closures to some, or all, of our retail stores, the stores of our Indirect segment partners, or otherwise detrimentally impact aspects of our operations, as COVID-19 did in the past.

Pandemics may reduce consumers' willingness and ability to travel to major cities and vacation destinations in which some of our stores are located.

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These executives and design associates have substantial experience in our business and have made significant contributions to our growth and success.

Although we have entered into an employment agreement with our Chief Executive Officer, we may not be able to retain her services or those of other key individuals in the future.

Although we have entered into an employment agreement with our Chief Executive Officer, we may not be able to retain his services or those of other key individuals in the future.

The unexpected loss of services of key employees could have adverse impacts on our business and results of operations.

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• timing of marketing campaigns or promotions;

• timing of sales to Vera Bradley and Pura Vida wholesale retailers;

• timing of sales to Vera Bradley wholesale retailers;

• timing of new pattern and collection releases and new product introductions.

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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 1A. Risk Factors