Vera Bradley, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Vera Bradley, Inc. Index to Consolidated Financial Statements Reports of Independent Registered Public Accounting Firm (PCAOB ID 34 ) 41 Consolidated Balance Sheets as of Jan uary 31, 202 6, and February 1, 2025 44 Consolidated Statements of Operations for the fiscal years ended January 31, 202 6, February 1, 2025, a nd February 3, 2024 45 Consolidated Statements of Comprehensive (Loss) Income for the fiscal years ended Janua ry 31, 202 6, February 1, 2025, and February 3, 2024 46 Consolidated Statements of Shareholders’ Equity for the fiscal years ended January 31, 202 6, February 1, 2025, and February 3, 2024 47 Consolidated Statements of Cash Flows for the fiscal years ended January 31, 202 6, February 1, 2025, and February 3, 2024 48 Notes to Consolidated Financial Statements 50 40 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Vera Bradley, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Vera Bradley, Inc. and subsidiaries (the "Company") as of January 31, 2026 and February 1, 2025, the related consolidated statements of operations, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended January 31, 2026, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2026 and February 1, 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2026, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2026, 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 27, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Valuation of Inventories - Refer to Note 2 to the financial statements Critical Audit Matter Description Inventories consist of purchased merchandise and are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out method. The Company considers obsolescence, excess quantities, and other factors, including the popularity of a pattern or product, in evaluating net realizable value. Valuation adjustments are recorded if the cost of specific inventory items on hand exceeds the amount the Company expects to realize from the ultimate sale or disposal of the inventory. This adjustment calculation requires the Company to make assumptions and estimates, which are based on factors such as merchandise seasonality, historical trends, and estimated sales and inventory levels, including sell-through of remaining units. Given the assumptions and estimates used by management to estimate the valuation adjustments, auditing the adjustments to inventory involved a higher degree of auditor judgment and involvement of more experienced senior members of the engagement to evaluate the reasonableness of management's estimates and assumptions. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to adjustments made to inventory for lower of cost or net realizable value and obsolescence included the following, among others: • We tested the effectiveness of controls over the inventory valuation process, including controls over the inputs that are used in management's estimate. 41 Table of Contents • We evaluated the appropriateness and consistency of management's method and assumptions used in developing their estimate of the inventory valuation adjustment, and inquired of management regarding current and expected future sales trends. • We tested the mathematical accuracy of the Company's inventory valuation adjustment calculation. • We evaluated the appropriateness of specific inputs supporting management's estimate, including historic inventory trends, the age of on-hand inventory levels, and current and subsequent sales of inventory. • We tested the recorded inventory reserve by developing an expectation for the amount of the inventory reserve and comparing our expectation to the amount recorded by management. /s/ Deloitte & Touche LLP Indianapolis, Indiana March 27, 2026 We have served as the Company's auditor since 2016. 42 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Vera Bradley, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Vera Bradley, Inc. and subsidiaries (the “Company”) as of January 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 31, 2026, of the Company and our report dated March 27, 2026, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Indianapolis, Indiana March 27, 2026 43 Table of Contents Vera Bradley, Inc. Consolidated Balance Sheets (in thousands) January 31, 2026 February 1, 2025 Assets Current assets: Cash and cash equivalents $ 18,513 $ 28,628 Accounts receivable, net 17,301 13,797 Inventories 75,951 91,430 Short-term contingent consideration 1,605 — Income taxes receivable 317 584 Prepaid expenses and other current assets 6,034 8,072 Current assets of discontinued operations — 22,361 Total current assets 119,721 164,872 Operating right-of-use assets 63,233 74,841 Property, plant, and equipment, net 46,358 52,555 Long-term contingent consideration 230 — Other assets 4,463 9,048 Long-term assets of discontinued operations — 5,374 Total assets $ 234,005 $ 306,690 Liabilities, Redeemable Noncontrolling Interest, and Shareholders’ Equity Current liabilities: Accounts payable $ 16,235 $ 17,198 Accrued employment costs 5,394 6,527 Short-term operating lease liabilities 18,620 19,024 Other accrued liabilities 10,185 9,221 Income taxes payable 16 — Current liabilities of discontinued operations — 6,023 Total current liabilities 50,450 57,993 Long-term operating lease liabilities 51,914 66,307 Other long-term liabilities 2 47 Long-term liabilities of discontinued operations — 3,388 Total liabilities 102,366 127,735 Commitments and contingencies Shareholders’ equity: Preferred stock; 5,000 shares authorized, no shares issued or outstanding — — Common stock, without par value; 200,000 shares authorized, 43,800 and 43,535 shares issued and 27,966 and 27,701 outstanding, respectively — — Additional paid-in capital 116,152 115,515 Retained earnings 172,439 220,279 Accumulated other comprehensive loss ( 132 ) ( 19 ) Treasury stock ( 156,820 ) ( 156,820 ) Total shareholders’ equity of Vera Bradley, Inc. 131,639 178,955 Total liabilities, redeemable noncontrolling interest, and shareholders’ equity $ 234,005 $ 306,690 The accompanying notes are an integral part of these consolidated financial statements. 44 Table of Contents Vera Bradley, Inc. Consolidated Statements of Operations (in thousands, except per share data) Fiscal Year Ended January 31, 2026 February 1, 2025 February 3, 2024 Net revenues $ 269,651 $ 318,795 $ 383,713 Cost of sales 144,614 159,957 179,748 Gross profit 125,037 158,838 203,965 Selling, general, and administrative expenses 158,142 188,462 193,247 Other income, net 1,193 832 899 Operating (loss) income from continuing operations ( 31,912 ) ( 28,792 ) 11,617 Interest (expense) income, net ( 462 ) 752 661 (Loss) income from continuing operations before income taxes ( 32,374 ) ( 28,040 ) 12,278 Income tax expense 303 5,339 3,682 Net (loss) income from continuing operations ( 32,677 ) ( 33,379 ) 8,596 Loss from discontinued operations, net of income tax ( 15,163 ) ( 28,809 ) ( 758 ) Net (loss) income $ ( 47,840 ) $ ( 62,188 ) $ 7,838 Basic weighted-average shares outstanding 27,902 28,935 30,833 Diluted weighted-average shares outstanding 27,902 28,935 31,314 Basic net (loss) income per share: Continuing operations $ ( 1.17 ) $ ( 1.15 ) $ 0.27 Discontinued operations $ ( 0.54 ) $ ( 1.00 ) $ ( 0.02 ) Basic net (loss) income per share $ ( 1.71 ) $ ( 2.15 ) $ 0.25 Diluted net (loss) income per share: Continuing operations $ ( 1.17 ) $ ( 1.15 ) $ 0.27 Discontinued operations $ ( 0.54 ) $ ( 1.00 ) $ ( 0.02 ) Diluted net (loss) income per share $ ( 1.71 ) $ ( 2.15 ) $ 0.25 The accompanying notes are an integral part of these consolidated financial statements. 45 Table of Contents Vera Bradley, Inc. Consolidated Statements of Comprehensive (Loss) Income (in thousands) Fiscal Year Ended January 31, 2026 February 1, 2025 February 3, 2024 Net (loss) income $ ( 47,840 ) $ ( 62,188 ) $ 7,838 Cumulative translation adjustment ( 113 ) 53 33 Comprehensive (loss) income, net of tax ( 47,953 ) ( 62,135 ) 7,871 The accompanying notes are an integral part of these consolidated financial statements. 46 Table of Contents Vera Bradley, Inc. Consolidated Statements of Shareholders’ Equity (in thousands, except share data) Number of Shares Accumulated Other Comprehensive Loss Common Stock Treasury Stock Additional Paid-in Capital Retained Earnings Treasury Stock Total Shareholders’ Equity of Vera Bradley, Inc. 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. — — — 7,838 — — 7,838 Translation adjustments — — — — 33 — 33 Restricted shares vested, net of repurchase for taxes 407,146 — ( 1,356 ) — — — ( 1,356 ) Stock-based compensation — — 2,942 — — — 2,942 Treasury stock purchased ( 359,554 ) 359,554 — — — ( 2,192 ) ( 2,192 ) 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 — — — ( 62,188 ) — — ( 62,188 ) Translation adjustments — — — — 53 — 53 Restricted shares vested, net of repurchase for taxes 282,619 — ( 751 ) — — — ( 751 ) Stock-based compensation — — 3,676 — — — 3,676 Treasury stock purchased ( 3,395,335 ) 3,395,335 — — — ( 21,764 ) ( 21,764 ) Balance at February 1, 2025 27,700,900 15,834,579 $ 115,515 $ 220,279 $ ( 19 ) $ ( 156,820 ) $ 178,955 Net loss — — — ( 47,840 ) — — ( 47,840 ) Translation adjustments — — — — ( 113 ) — ( 113 ) Restricted shares vested, net of repurchase for taxes 264,620 — ( 233 ) — — — ( 233 ) Stock-based compensation — — 870 — — — 870 Balance at January 31, 2026 27,965,520 15,834,579 $ 116,152 $ 172,439 $ ( 132 ) $ ( 156,820 ) $ 131,639 The accompanying notes are an integral part of these consolidated financial statements. 47 Table of Contents Vera Bradley, Inc. Consolidated Statements of Cash Flows (in thousands)` Fiscal Year Ended January 31, 2026 February 1, 2025 February 3, 2024 Cash flows from operating activities Net (loss) income $ ( 47,840 ) $ ( 62,188 ) $ 7,838 Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation of property, plant, and equipment 7,765 8,531 7,968 Amortization of operating right-of-use assets 20,228 20,430 21,021 Intangible asset impairment — 6,237 5,429 Other impairment charges 1,048 2,557 — Amortization of intangible assets — 1,336 2,916 Provision for doubtful accounts 128 31 322 Stock-based compensation 870 3,676 2,942 Deferred income taxes — 20,355 1,761 Loss on sale of business 15,163 — — Other non-cash charges, net 85 34 7 Changes in assets and liabilities: Accounts receivable ( 4,343 ) 2,289 4,671 Inventories 15,821 8,270 23,997 Prepaid expenses and other assets 6,386 773 ( 833 ) Accounts payable ( 2,119 ) 5,574 ( 5,989 ) Income taxes 283 ( 763 ) 932 Operating lease liabilities, net ( 23,336 ) ( 23,872 ) ( 22,929 ) Accrued and other liabilities ( 110 ) ( 7,372 ) ( 2,060 ) Net cash (used in) provided by operating activities ( 9,971 ) ( 14,102 ) 47,993 Cash flows from investing activities Purchases of property, plant, and equipment ( 3,290 ) ( 10,373 ) ( 3,770 ) Proceeds from sale of business, net of cash disposed 1,754 — — Cash paid for business acquisition — — ( 10,000 ) Net cash used in investing activities ( 1,536 ) ( 10,373 ) ( 13,770 ) Cash flows from financing activities Tax withholdings for equity compensation ( 233 ) ( 751 ) ( 1,356 ) Repurchase of common stock — ( 21,764 ) ( 2,192 ) Borrowings under asset-based revolving credit agreement 15,000 — — Repayment of borrowings under asset-based revolving credit agreement ( 15,000 ) — — Net cash used in financing activities ( 233 ) ( 22,515 ) ( 3,548 ) Effect of exchange rate changes on cash and cash equivalents ( 113 ) 53 33 Net (decrease) increase in cash and cash equivalents ( 11,853 ) ( 46,937 ) 30,708 Cash and cash equivalents, beginning of period 30,366 77,303 46,595 Cash and cash equivalents, end of period $ 18,513 $ 30,366 $ 77,303 The accompanying notes are an integral part of these consolidated financial statements. 48 Table of Contents Vera Bradley, Inc. Consolidated Statements of Cash Flows (in thousands) (continued) Fiscal Year Ended January 31, 2026 February 1, 2025 February 3, 2024 Supplemental disclosure of cash-flow information Cash paid for income taxes, net $ 65 $ 1,352 $ 837 Cash paid for interest $ 359 $ 140 $ 145 Supplemental disclosure of non-cash activity Non-cash investing activities Purchases of property, plant, and equipment incurred but not yet paid $ 149 $ 826 $ 150 Contingent consideration related to sale of business $ 1,835 $ — $ — Refer to Note 4 herein for supplemental cash flow information regarding the Company’s leases. The accompanying notes are an integral part of these financial statements. 49 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 1. Description of the Company The term “Company” refers to Vera Bradley, Inc. and its wholly and majority owned subsidiaries, except where the context requires otherwise or where otherwise indicated. Vera Bradley is a leading designer of women’s handbags, luggage and travel items, fashion and home accessories, and unique gifts. Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand’s innovative designs, iconic patterns, and brilliant colors continue to inspire and connect women. In July 2019, Vera Bradley, Inc. acquired a 75 % interest in Creative Genius, Inc., which also operates under the name Pura Vida Bracelets (“Pura Vida”). On January 30, 2023, the Company purchased the remaining 25 % interest in Pura Vida. On March 11, 2025, the Company entered into an Interest Purchase Agreement (the “Agreement”) to sell one hundred percent ( 100 %) of Creative Genius, Inc., (“Creative Genius”) which operates under the name Pura Vida Bracelets. The sale consummated on March 31, 2025. As a result, the operations of Pura Vida have been classified as discontinued operations in the consolidated financial statements in accordance with ASC 205-20, Discontinued Operations. Prior period amounts have been retrospectively adjusted to conform to the current period presentation. Unless otherwise specified, disclosures in these consolidated financial statements reflect continuing operations only. Certain prior period data, primarily related to discontinued operations, have been reclassified in the Consolidated Financial Statements and accompanying notes to conform to the current period presentation. Following the sale, Pura Vida is no longer included in the Company’s consolidated financial results. Refer to Note 16 for additional information. The Company has two reportable segments: Vera Bradley Direct (“VB Direct”) and Vera Bradley Indirect (“VB Indirect”). • The VB Direct business consists of sales of Vera Bradley products through Vera Bradley full-line and outlet stores in the United States; 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 January 31, 2026, the Company operated 29 full-line stores and 86 outlet stores. • The VB Indirect business consists of sales of Vera Bradley products to approximately 1,000 specialty retail locations, substantially all of which are located in the United States, as well as department stores, national accounts, third-party inventory liquidators, and royalties recognized through licensing agreements related to the Vera Bradley brand. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company has eliminated intercompany balances and transactions in consolidation. Fiscal Periods The Company utilizes a 52-53 week fiscal year ended on the Saturday closest to January 31. As such, fiscal years 2026 and 2025, ended January 31, 2026 and February 1, 2025 respectively, each reflected a 52-week period. Fiscal year 2024, ended February 3, 2024 reflected a 53-week period. 50 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 2. Summary of Significant Accounting Policies Use of Significant Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of the Company’s assets, liabilities, revenues, and expenses, as well as the disclosures relating to contingent assets and liabilities at the date of the consolidated financial statements. Significant areas requiring the use of management estimates include the valuation of inventories, valuation of long-lived assets, including operating right-of-use assets, accounts receivable valuation allowances, and sales return allowances. Actual results could differ from these estimates. The Company revises its estimates and assumptions as new information becomes available. Cash and Cash Equivalents Cash and cash equivalents represent cash on hand, deposits with financial institutions, and investments with an original maturity of three months or less. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (“FIFO”) method. Appropriate consideration is given to obsolescence, excess quantities, and other factors, including the popularity of a pattern or product, in evaluating net realizable value. Substantially all inventory relates to finished goods. Property, Plant, and Equipment Property, plant, and equipment are carried at cost and depreciated or amortized over the following estimated useful lives using the straight-line method: Buildings and building improvements .............................................. 39.5 years Land improvements ........................................................................... 5 – 15 years Furniture and fixtures, and leasehold improvements ........................ 3 – 10 years Equipment ......................................................................................... 7 years Vehicles ............................................................................................. 5 years Computer equipment and software ................................................... 3 – 5 years 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 . 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. At the time of disposal, the cost of assets sold or retired and the related accumulated depreciation or amortization are removed from the accounts and any resulting loss is included in the Consolidated Statements of Operations. Property, plant, and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset groups may not be recoverable. The reviews are conducted at the lowest identifiable level of cash flows, which is at the retail store level for store-related assets. If the estimated undiscounted future cash flows related to the property, plant, and equipment and operating right-of-use assets are less than the carrying value, the Company recognizes a loss equal to the difference between the carrying value and the fair value, as further defined below in “Fair Value of Financial Instruments.” Routine maintenance and repair costs are expensed as incurred. The Company capitalizes certain costs incurred in connection with acquiring, modifying, and installing internal-use software. Capitalized costs are included in property, plant, and equipment and are amortized over three to five years . Software costs that do not meet capitalization criteria are expensed as incurred. 51 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements Revenue Recognition and Accounts Receivable Vera Bradley product sales to customers, including amounts billed to customers for shipping fees, as well as royalties from licensing arrangements related to the Vera Bradley brand, are included in net revenues. Costs related to shipping of product are classified in cost of sales in the Consolidated Statements of Operations. The Company has elected to treat shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the product rather than as an additional promised service. Net revenues exclude sales taxes collected from customers and remitted to governmental authorities from the transaction price. Revenue from the sale of the Company’s products is recognized when control of the promised goods or services is transferred to customers, in the amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Revenue is recognized using the five-step model. These steps are: (i) identify the contract with the customer; (ii) identify the performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to each performance obligation; and (v) recognize revenue as the performance obligations are satisfied. The Company collects payment at the point of sale for Vera Bradley full-line and outlet store transactions and upon shipment for Vera Bradley e-commerce transactions. The Company generally collects payment in arrears in accordance with established payment terms for each customer within the VB Indirect segment. Historical experience provides the Company the ability to reasonably estimate the amount of product sales that customers will return. Product returns are often resalable through multiple channels. Additionally, the Company reserves for customer allowances for certain VB Indirect retailers based upon various contract terms and other potential product credits granted to VB Indirect retailers. The returns and credits reserve and the related activity for each fiscal year presented were as follows (in thousands): Balance at Beginning of Year Provision Charged to Net Revenues Allowances Taken / Written Off Balance at End of Year Fiscal year ended January 31, 2026 $ 1,220 $ 3,786 $ ( 3,978 ) $ 1,028 Fiscal year ended February 1, 2025 1,338 8,180 ( 8,298 ) 1,220 Fiscal year ended February 3, 2024 1,700 9,376 ( 9,738 ) 1,338 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 tel y $ 0.5 million and $ 0.8 million as of January 31, 2026 and February 1, 2025, respectively. The provision for doubtful accounts is based upon the likelihood of default expected during the life of the receivable. Cost of Sales Cost of sales includes material and labor costs, freight, inventory shrinkage, operating lease costs, duty, and other operating expenses, including depreciation of the Vera Bradley distribution center and equipment. Costs and related expenses to purchase and distribute the products are recorded as cost of sales when the related revenues are recognized. Operating Leases The Company recognizes lease liabilities at the lease commencement date based upon the present value of the remaining lease payments. 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. Operating lease liabilities are amortized based upon the effective interest method. Operating right-of-use assets are amortized based upon the straight-line lease expense less interest on the lease liability. Operating lease expense is recognized on a straight-line basis over the lease term. Variable rent expense is recognized in the period incurred. 52 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements Operating right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. The reviews are conducted at the lowest identifiable level of cash flows, which is at the retail store level for store-related assets. If the estimated undiscounted future cash flows related to the operating right-of-use assets are less than the carrying value, the Company recognizes a loss equal to the difference between the carrying value and the fair value, as further defined below in “Fair Value of Financial Instruments.” Refer to Note 4 herein for additional information regarding the Company's leases. Store Pre-Opening, Occupancy, and Operating Costs The Company charges costs associated with the opening of new stores to selling, general, and administrative expenses as incurred. Selling, general, and administrative expenses also include store operating costs, store employee compensation, and store occupancy and supply costs. Stock-Based Compensation The Company accounts for stock-based compensation using the fair-value recognition provisions of ASC 718, Stock Compensation . Under these provisions, for its awards of restricted stock and restricted-stock units, the Company recognizes stock-based compensation expense in an amount equal to the fair market value of the underlying stock on the grant date of the respective award. The Company recognizes this expense, net of estimated forfeitures, on a straight-line basis over the requisite service period. 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. Total advertising expense was as follows (in thousands): Fiscal year ended January 31, 2026 $ 26,766 Fiscal year ended February 1, 2025 37,057 Fiscal year ended February 3, 2024 30,523 Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date: • Level 1 – Quoted prices in active markets for identical assets or liabilities; • Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; • Level 3 – Unobservable inputs based on the Company’s own assumptions. The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement. The carrying amounts reflected on the Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, and accounts payable as of January 31, 2026 and February 1, 2025, approximated their fair values. 53 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements The following table details the fair value measurements of the Company’s investments as of January 31, 2026 and February 1, 2025 (in thousands): Level 1 Level 2 Level 3 January 31, 2026 February 1, 2025 January 31, 2026 February 1, 2025 January 31, 2026 February 1, 2025 Cash equivalents (1) $ — $ 15,000 $ — $ — $ — $ — Contingent consideration related to sale of business (2) — — — — 1,835 — (1) Cash equivalents primarily represent money market funds that have a maturity of three months or less at the date of purchase. Due to its short maturity, the Company believes the carrying value approximates fair value. (2) Recorded with the sale of Creative Genius. Refer to Note 16 herein for additional information. The Company assesses potential impairments to its long-lived assets, which includes property, plant, and equipment and lease right-of-use assets, on a quarterly basis or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Store-level assets and right-of-use assets are grouped at the individual store-level for the purpose of the impairment assessment. Recoverability of an asset group is measured by a comparison of the carrying amount of an asset group to its estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. The fair value of the store assets is determined using the discounted future cash flow method of anticipated cash flows through the store’s lease-end date using fair value measurement inputs classified as Level 3. The fair value of right-of-use assets is estimated using market comparative information for similar properties. Level 3 inputs are derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The Company recorded $ 1.0 million and $ 2.4 million in impairment charges primarily related to store assets including property, plant, and equipment and lease right-of-use assets during the fiscal years ended January 31, 2026, and February 1, 2025, respectively. No impairment charges were recorded in fiscal 2024 for long-lived assets. Assets recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant, and equipment, including leasehold improvements, and operating lease assets. These assets are measured at fair value if determined to be impaired. The discounted cash flow models used to estimate the applicable fair values involve numerous estimates and assumptions that are highly subjective. Changes to these estimates and assumptions could materially impact the fair value estimates. The estimates and assumptions critical to the overall fair value estimates include: (1) estimated future cash flow generated at the store level; (2) discount rates used to derive the present value factors used in determining the fair values; and (3) market rentals at the retail store. These and other estimates and assumptions are impacted by economic conditions and our expectations and may change in the future based on period-specific facts and circumstances. If economic conditions were to deteriorate, future impairment charges may be required which may be material. Income Taxes The Company accrues income taxes payable or refundable and recognizes deferred tax assets and liabilities based on differences between the book and tax bases of assets and liabilities. The Company measures deferred tax assets and liabilities using enacted rates in effect for the years in which the differences are expected to reverse, and recognizes the effect of a change in enacted rates in the period of enactment. When measuring deferred tax assets, the Company considers both positive and negative evidence to determine whether it is more likely than not that the deferred tax assets will be realized. This evidence includes recent operating results, projected future taxable income, the reversal of existing taxable differences, tax planning strategies, among other factors. 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, and continues to maintain a full valuation allowance against its net deferred tax assets as of the end of fiscal 2026 based on the weight of available evidence. 54 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 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. The Company includes in income tax expense any interest and penalties related to uncertain tax positions. Cloud Computing Arrangements The Company capitalizes implementation costs associated with its Cloud Computing Arrangements (“CCA”) consistent with costs capitalized for internal-use software. The CCA costs are amortized over the term of the related hosting agreement, taking into consideration renewal options, if any. The renewal period is included in the amortization period if determined that the option is reasonably certain to be exercised. The amortization expense is recorded 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 $ 0.4 million and $ 0.6 million as of January 31, 2026 and February 1, 2025, respectively. Of this total, $ 0.2 million and $ 0.4 million was recorded within prepaid expenses and other current assets and $ 0.2 million and $ 0.2 million was recorded within other assets on the Company's Consolidated Balance Sheets as of January 31, 2026 and February 1, 2025, 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 December 2023, the FASB issued ASU 2023-09, "Improvements to Income Tax Disclosures". This ASU establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation. They must also further disaggregate income taxes paid. The new standard is effective for fiscal years beginning after December 15, 2024 (the Company's fiscal year 2026), with retrospective application permitted. The Company adopted the ASU retrospectively during the year ended January 31, 2026. The adoption expanded the Company's income tax disclosure and did not impact the Company's consolidated financial statements. Refer to Note 7 herein. 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. 55 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 3. Revenue from Contracts with Customers Disaggregation of Revenue The following presents the Company's net revenues disaggregated by product category for the fifty-two weeks ended January 31, 2026 and February 1, 2025, and fifty-three weeks ended February 3, 2024 (in thousands): Fifty-Two Weeks Ended January 31, 2026 VB Direct Segment VB Indirect Segment Total Product categories Bags $ 96,749 $ 25,206 $ 121,955 Travel 63,077 9,505 72,582 Accessories 31,817 3,045 34,862 Home 20,124 1,390 21,514 Apparel/Footwear 8,302 324 8,626 Other 7,722 (1) 2,390 (2) 10,112 Total net revenues $ 227,791 (3) $ 41,860 (4) $ 269,651 (1) Primarily includes net revenues from stationery, freight, and gift card breakage. (2) Primarily includes net revenues from licensing agreements, freight, and merchandising. (3) Net revenues were related to product sales recognized at a point in time. (4) $ 39.7 million of net revenues related to product sales recognized at a point in time and $ 2.2 million of net revenues related to sales-based royalties recognized over time. Fifty-Two Weeks Ended February 1, 2025 VB Direct Segment VB Indirect Segment Total Product categories Bags $ 105,071 $ 35,077 $ 140,148 Travel 67,911 13,090 81,001 Accessories 40,993 6,920 47,913 Home 25,899 2,738 28,637 Apparel/Footwear 10,554 1,216 11,770 Other 7,181 (1) 2,145 (2) 9,326 Total net revenues $ 257,609 (3) $ 61,186 (4) $ 318,795 (1) Primarily includes net revenues from stationery, freight, and gift card breakage. (2) Primarily includes net revenues from licensing agreements, freight, and merchandising. (3) Net revenues were related to product sales recognized at a point in time. (4) $ 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. 56 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements Fifty-Three Weeks Ended February 3, 2024 VB Direct Segment VB Indirect Segment Total Product categories Bags $ 119,705 $ 39,609 $ 159,314 Travel 75,927 14,922 90,849 Accessories 52,930 9,547 62,477 Home 37,587 4,022 41,609 Apparel/Footwear 16,526 2,461 18,987 Other 7,235 (1) 3,242 (2) 10,477 Total net revenues $ 309,910 (3) $ 73,803 (4) $ 383,713 (1) Primarily includes net revenues from stationery, freight, and gift card breakage. (2) Primarily includes net revenues from licensing agreements, freight, and merchandising. (3) Net revenues were related to product sales recognized at a point in time. (4) $ 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. Contract Balances Contract liabilities as of January 31, 2026 and February 1, 2025, were $ 1.6 million and $ 1.7 million, respectively. The balance consisted of unredeemed gift cards. 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 January 31, 2026 and February 1, 2025. The balance for accounts receivable from contracts with customers, net of allowances, as of January 31, 2026 and February 1, 2025 was $ 16.4 million and $ 13.3 million, respectively, which is recognized within accounts receivable, net, on the Company’s Consolidated Balance Sheets. The provision for doubtful accounts was $ 0.5 million and $ 0.8 million as of January 31, 2026 and February 1, 2025, respectively. The provision for doubtful accounts is based upon the likelihood of default expected during the life of the receivable. Performance Obligations The performance obligations for the VB Direct and VB Indirect segments include the promise to transfer distinct goods (or a bundle of distinct goods). The VB Indirect segment also includes the right to access intellectual property (“IP”) related to the Vera Bradley brand. Remaining Performance Obligations The Company does not have remaining performance obligations in excess of one year or contracts that it does not have the right to invoice as of January 31, 2026. Significant Judgments Product Sales In the Vera Bradley retail stores (recognized within the VB Direct segment), control is transferred and net revenue is recognized at the point of sale. Product shipments for the Company’s e-commerce channels (recognized within the VB Direct segment) and shipments to its wholesale retailers (recognized within the VB Indirect segment) are generally shipped Free on Board (“FOB”) shipping point typically from its distribution center in Roanoke, Indiana. Net revenue is recognized upon shipment consistent with when control is transferred to the customer. Upon shipment, the customer has the right to direct the use of, and obtain substantially all of the benefits from, the product. 57 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements Licensing Royalties The Company grants rights to access its Vera Bradley IP and accounts for any resulting sales-based royalty revenue over time, as the subsequent sales occur. The Company has contractually guaranteed minimum royalties in certain of its sales-based royalty arrangements which are recognized straight-line over the remaining license period once determined that the minimum sales level will not be achieved. Licensing royalties are recognized within VB Indirect segment net revenues. Transaction Price and Amounts Allocated to Performance Obligations The transaction price is the amount of consideration the Company expects to be entitled to in a sales transaction. The transaction price is net of discounts, estimated variable consideration (if any), and any customer allowances offered or estimated, including those offered to certain Indirect retailers based on various contract terms. The transaction price also is net of allowances for product returns, which the Company is able to reasonably estimate based upon historical experience. The transaction price is allocated to each performance obligation in the contract based upon the standalone selling price. Contract Costs Sales commissions are paid to certain employees based upon specific sales achieved during a time period. As the Company’s contracts related to these sales commissions do not exceed one year, these incentive payments are expensed as incurred. Other Practical Expedients Significant Financing Components The Company does not adjust for the time value of money as the majority of its contracts have an original expected duration of one year or less; contracts that are greater than one year are related to net revenues that are constrained until the subsequent sales occur. The net revenues associated with these contracts are immaterial, and the Company does not adjust for the time value of money. Concentration of Credit Risk Five customers represente d approximately 64.0 % of the balance of accounts receivable, net as of January 31, 2026. 58 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 4. Leases Nature of Leases The Company has operating leases at all of its retail stores (including storage spaces), as well as for its New York office, Asia sourcing office, and showrooms. The Company does not have residual value guarantees, restrictions, or covenants imposed by leases. Determination of Lease Terms Retail store leases have remaining terms of up to 9 years as of January 31, 2026. 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 one year as of January 31, 2026. If the lease contains a renewal period at the Company's option, the renewal period is included in the lease term if determined the option is reasonably certain to be exercised at lease commencement. The Company's lease options generally do not include termination rights other than those mentioned. The Company did not have financing leases as of January 31, 2026. Variable Rental Payments The Company's retail store leases contain variable rental payments based on each location's monthly gross sales, the majority of which have specified sales breakpoints. In addition, the majority of the Company's leases contain real estate taxes, common area maintenance, and similar items that are billed as pass-through charges from its landlords. These rental payments are not included in the measurement of the lease liability, but are recognized as variable lease cost in the period incurred. Certain of the Company's leases also contain lease components with increases based upon an index or rate. These lease components are included on the Company's balance sheet at the rate as of lease commencement. Future changes in the index or rate will generally be included as variable lease cost. Significant Judgments and Assumptions Determination of Whether a Contract Contains a Lease The Company determines whether a contract is or contains a lease at the inception of the contract. The contract is, or contains, a lease if the contract conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from use of the property, plant, and equipment and have the right to direct its use. Discount Rate The weighted-average discount rate as of January 31, 2026 and February 1, 2025, was 5.1 % and 5.0 %, respectively. The discount rate is not readily determinable in the lease; therefore, the Company estimated the incremental borrowing rate, at the commencement or remeasurement date of each lease, which is the rate of interest it would have to borrow on a collateralized basis over a similar term with similar payments. Leases Not Yet Commenced As of January 31, 2026, there were no executed leases in which the Company did not have control of the underlying asset. Practical Expedients (Policy Elections) The Company has elected the following practical expedients as policy elections upon the adoption of ASC Topic 842. Short-Term Leases The Company elected to exclude leases with a term of 12 months or less from recognition on the balance sheet for all leases. Not Separating Lease and Nonlease Components The Company elected to combine lease and nonlease components and recognize as a single lease component for all leases. 59 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements Amounts Recognized in the Consolidated Financial Statements The following lease expense is recorded within cost of sales for the Asia sourcing office and within selling, general, and administrative expenses for all other leases, including retail store leases, in the Company's Consolidated Statements of Operations for the fiscal years ended January 31, 2026, February 1, 2025, and February 3, 2024 (in thousands): Fifty-Two Weeks Ended Fifty-Two Weeks Ended Fifty-Three Weeks Ended January 31, 2026 February 1, 2025 February 3, 2024 Operating lease cost $ 24,660 $ 25,635 $ 24,926 Variable lease cost 4,186 4,185 5,117 Short-term lease cost 291 511 562 Less: Sublease income (1) ( 412 ) ( 420 ) ( 420 ) Total lease cost $ 28,725 $ 29,911 $ 30,185 (1) Related to the sublease of a former Company location. The weighted-average remaining lease term as of January 31, 2026 and February 1, 2025 was 4.0 years and 4.7 years, respectively. Supplemental operating cash flow information was as follows (in thousands): Fifty-Two Weeks Ended Fifty-Two Weeks Ended Fifty-Three Weeks Ended January 31, 2026 February 1, 2025 February 3, 2024 Cash paid for amounts included in the measurement of operating lease liabilities $ 27,707 $ 29,090 $ 28,565 Right-of-use assets increase as a result of new and modified operating lease liabilities, net (1) $ 8,470 $ 31,771 $ 9,858 (1) $ 2.2 million of lease liabilities were recorded within accounts payable on the Company's Consolidated Balance Sheets as of January 31, 2026, and were subsequently paid in the first quarter of fiscal 2027. Maturity Analysis of Operating Lease Liabilities Maturities of the Company's operating lease liabilities (undiscounted) reconciled to its lease liability as of January 31, 2026 were as follows (in thousands): Operating Leases Fiscal 2027 $ 21,735 Fiscal 2028 20,403 Fiscal 2029 16,205 Fiscal 2030 9,665 Fiscal 2031 4,487 Thereafter 5,727 Total remaining obligations 78,222 Less: Interest ( 7,689 ) Present value of lease liabilities $ 70,533 60 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 5. Property, Plant, and Equipment Property, plant, and equipment consisted of the following (in thousands): January 31, 2026 February 1, 2025 Land and land improvements $ 5,981 $ 5,981 Building and building improvements 46,203 46,203 Furniture, fixtures, leasehold improvements, computer equipment and software 81,473 83,436 Equipment and vehicles 29,206 29,040 Construction in progress 208 708 163,071 165,368 Less: Accumulated depreciation and amortization ( 116,713 ) ( 112,813 ) Property, plant, and equipment, net $ 46,358 $ 52,555 Depreciation and amortization expense associated with property, plant, and equipment, excluding impairment charges (in thousands): Fiscal year ended January 31, 2026 $ 7,679 Fiscal year ended February 1, 2025 7,995 Fiscal year ended February 3, 2024 7,445 6. Debt As of January 31, 2026 and February 1, 2025, the Company had no borrowings outstanding under its Credit Agreement and availability of $ 58.6 million and $ 75.0 million, respectively. Availability under the Credit Agreement is driven by a borrowing base comprised primarily of eligible accounts receivable and inventory, each subject to advance rates, eligibility criteria, and applicable reserves. As a result, borrowing capacity may fluctuate based on the level and quality of receivables and the composition and valuation of inventory. Credit Agreement On September 7, 2018, Vera Bradley Designs, Inc. (“VBD”), a wholly-owned subsidiary of the Company, entered into an asset-based revolving Credit Agreement (the “Credit Agreement”) among VBD, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto. On August 3, 2023, certain subsidiaries of the Company, JP Morgan Chase Bank, N.A., as the administrative agent, and lenders from time to time party thereto, entered into a Third Amendment (the “Third Amendment”) to the Credit Agreement dated September 7, 2018. The Credit Agreement provides for certain credit facilities to VBD in an aggregate principal amount not to initially exceed the lesser of $ 75.0 million or the amount of borrowing availability determined in accordance with a borrowing base of certain assets. Any proceeds of the credit facilities will be used to finance general corporate purposes of VBD and its subsidiaries, including but not limited to Vera Bradley International, LLC, Vera Bradley Sales, LLC, and Creative Genius, LLC (collectively, the “Named Subsidiaries”). The Credit Agreement also contains an option for VBD to arrange with lenders to increase the aggregate principal amount by up to $ 50.0 million. Amounts outstanding under the Credit Agreement bear interest at a per annum rate equal to (i) for CBFR borrowings (including swingline loans), the CB Floating Rate, where the CB Floating Rate is the greater of the prime rate or 2.5 %, plus the Applicable Rate, where the Applicable Rate is a percentage spread ranging from - 1.25 % to - 1.50 %, (ii) for each Term Benchmark Borrowing, the Adjusted Term SOFR Rate, where the Adjusted Term SOFR Rate is the Term SOFR rate for such interest period plus 0.10 % for the interest period in effect for such borrowing, plus the Applicable Rate, where the Applicable Rate is a percentage ranging from 1.25 % to 1.50 %, or (iii) for RFR Loans, the Adjusted Daily Simple SOFR Rate, where the adjusted Daily Simple SOFR Rate is equal to the Daily Simple SOFR plus 0.10 %, plus the Applicable Rate, where the Applicable Rate is a percentage ranging from 1.25 % to 1.50 % The applicable CB Floating Rate, Adjusted Term SOFR Rate, Term SOFR Rate, Daily Simple SOFR, and Adjusted Daily Simple SOFR shall be determined by the 61 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements administrative agent. The Credit Agreement also requires VBD to pay a commitment fee for the unused portion of the revolving facility of up to 0.30 % per annum. VBD’s obligations under the Credit Agreement are guaranteed by the Company and the Named Subsidiaries. The obligations of VBD under the Credit Agreement are secured by substantially all of the respective assets of VBD, the Company, and the Named Subsidiaries and are further secured by the equity interests in VBD and the Named Subsidiaries. The Credit Agreement contains various affirmative and negative covenants, including restrictions on the Company's ability to incur debt or liens; engage in mergers or consolidations; make certain investments, acquisitions, loans, and advances; sell assets; enter into certain swap agreements; pay dividends or make distributions or make other restricted payments; engage in certain transactions with affiliates; and amend, modify, or waive any of its rights related to subordinated indebtedness and certain charter and other organizational, governing, and material agreements. The Company may avoid certain of such restrictions by meeting payment conditions defined in the Credit Agreement. The Credit Agreement also requires the loan parties, as defined in the Credit Agreement, to maintain a minimum fixed charge coverage ratio of 1.0 0 to 1.00 during periods when borrowing availability is less than the greater of (A) $ 9.4 million, and (B) 12.5 % of the lesser of (i) the aggregate revolving commitment, and (ii) the borrowing base. The fixed charge coverage ratio, availability, aggregate revolving commitment, and the borrowing base are further defined in the Credit Agreement. The Credit Agreement contains customary events of default, including, among other things: (i) the failure to pay any principal, interest, or other fees under the Credit Agreement; (ii) the making of any materially incorrect representation or warranty; (iii) the failure to observe or perform any covenant, condition, or agreement in the Credit Agreement or related agreements; (iv) a cross default with respect to other material indebtedness; (v) bankruptcy and insolvency events; (vi) unsatisfied material final judgments; (vii) Employee Retirement Income Security Act of 1974 (“ERISA”) events that could reasonably be expected to have a material adverse effect; and (viii) a change in control (as defined in the Credit Agreement). On October 21, 2025, VBD amended the agreement to include, among other things: (i) permit the sale of certain real property assets without requiring the application of the proceeds from such sale to be used to repay amounts outstanding under the Credit Agreement, (ii) remove the prohibition against sale and leaseback transactions and (iii) increase the amount of Company assets permitted to be disposed of in any fiscal year outside the ordinary course of business from $ 5,000,000 to $ 10,000,000 . The Credit Agreement matures in May 2028. 7. Income Taxes The components of the income tax expense were as follows (in thousands): January 31, 2026 February 1, 2025 February 3, 2024 Current: Federal $ — $ 52 $ 522 State 285 373 457 Foreign 18 19 337 303 444 1,316 Deferred: Federal — 2,533 1,893 State — 2,362 473 — 4,895 2,366 Total income tax expense $ 303 $ 5,339 $ 3,682 A breakdown of the Company’s (loss) income from continuing operations before income taxes is as follows (in thousands): 62 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements January 31, 2026 February 1, 2025 February 3, 2024 Domestic $ ( 32,545 ) $ ( 28,215 ) $ 10,105 Foreign 171 175 2,173 Total (loss) income from continuing operations before income taxes $ ( 32,374 ) $ ( 28,040 ) $ 12,278 A reconciliation of the income tax expense to the amount computed at the federal statutory rate is as follows (in thousands): January 31, 2026 February 1, 2025 February 3, 2024 Federal taxes at statutory rate $ ( 6,798 ) 21.0 % $ ( 5,888 ) 21.0 % $ 2,578 21.0 % State and local income taxes, net of federal benefit (1) 260 ( 0.8 ) 290 ( 1.0 ) 765 6.2 Changes in valuation allowances 6,070 ( 18.8 ) 10,508 ( 37.5 ) — — Foreign tax effects 18 ( 0.1 ) 19 ( 0.1 ) ( 109 ) ( 0.9 ) Non-taxable and non-deductible items (2) 763 ( 2.4 ) 297 ( 1.1 ) 442 3.6 Changes in unrecognized tax benefits ( 35 ) 0.1 3 — ( 30 ) ( 0.2 ) Other permanent items 25 ( 0.1 ) 110 ( 0.4 ) 36 0.3 Total income tax expense $ 303 ( 1.1 ) % $ 5,339 ( 19.1 ) % $ 3,682 30.0 % (1) The state and local jurisdictions that make up the majority (greater than 50%) of the tax effect in this category are North Carolina, Massachusetts, and Texas. (2) Non-taxable and non-deductible items primarily relate to non-deductible executive compensation and stock-based compensation. Cash income taxes paid, net of refunds, were as follows for the fiscal year ended January 31, 2026 (in thousands): January 31, 2026 Jurisdiction: Federal $ — State ( 20 ) Foreign 85 Total cash income taxes paid $ 65 63 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements Cash income taxes paid to individual jurisdictions that represent more than 5% of total cash income taxes paid are disclosed separately below: January 31, 2026 State: Alabama $ 15 California ( 100 ) Florida 7 Louisiana 14 New York 5 North Carolina 23 Pennsylvania ( 73 ) Tennessee 13 Texas 71 Total $ ( 25 ) Foreign: Hong Kong 85 Total $ 60 Deferred income taxes reflect the net tax effects of temporary differences between the book and tax bases of assets and liabilities. Significant components of deferred tax assets and liabilities were as follows (in thousands): January 31, 2026 February 1, 2025 Deferred tax assets: Operating lease liabilities $ 19,800 $ 23,790 Compensation and benefits 1,113 1,166 Inventories 2,239 1,087 Net operating loss carryforwards 35,281 7,211 Other 1,379 1,733 Subtotal deferred tax assets 59,812 34,987 Less: valuation allowance ( 39,677 ) ( 11,108 ) Total deferred tax assets 20,135 23,879 Deferred tax liabilities: Operating lease assets ( 17,104 ) ( 20,187 ) Property, plant, and equipment ( 1,127 ) ( 2,133 ) Other ( 1,904 ) ( 1,559 ) Total deferred tax liabilities ( 20,135 ) ( 23,879 ) Net deferred tax assets $ — $ — 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 a full valuation allowance against its net deferred tax assets as of February 1, 2025. The Company continues to maintain a full valuation allowance as of January 31, 2026, based on the weight of available evidence. 64 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements Uncertain Tax Positions There was an immaterial amount of total unrecognized tax benefits, net of federal benefit, for the fiscal years ended January 31, 2026, February 1, 2025, and February 3, 2024, respectively. Unrecognized tax benefits are included within other long-term liabilities in the Company's Consolidated Balance Sheets. The Company files income tax returns in the U.S. federal jurisdiction and various U.S. state and foreign jurisdictions. The Company is subject to U.S. federal income tax examinations for fiscal years 2023 and forward. With a few exceptions, the Company is subject to audit by various state and foreign taxing authorities for fiscal 2022 th ro ugh the current fiscal year. 8. 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 $ 0.9 million, $ 3.7 million, and $ 2.9 million in the fiscal years ended January 31, 2026, February 1, 2025, and February 3, 2024, 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 January 31, 2026, the Company granted a total of 3,516,746 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 $ 7.4 million. The Company determined the fair value of the units based on the closing price of the Company’s common stock on the grant date. The majority of time-based restricted stock units vest and settle in shares of the Company’s common stock, on a one -for-one basis, in equal installments on each of the first three anniversaries of the grant date. Restricted stock unit awards issued to non-employee directors vest after a one-year period from the grant date. The Company recognizes the expense relating to these awards, net of estimated forfeitures, on a straight-line basis over the vesting period. The majority of performance-based restricted stock units vest upon the completion of a three-year period of time (cliff vesting), subject to the employee’s continuing employment throughout the three-year performance period and the Company’s achievement of annual earnings per share targets, or other Company performance targets, during the three-year performance period. The Company recognizes the expense relating to these units, net of estimated forfeitures and based on the probable outcome of achievement of the financial targets, on a straight-line basis over the vesting period. The following table summarizes information about restricted-stock units as of and for the year ended January 31, 2026 (units in thousands): Time-based Restricted Stock Units Performance-based Restricted Stock Units Number of Units Weighted- Average Grant Date Fair Value (per unit) Number of Units Weighted- Average Grant Date Fair Value (per unit) Nonvested units outstanding at February 1, 2025 699 $ 5.99 769 $ 5.19 Granted 2,771 2.11 746 2.08 Change due to performance condition achievement — — ( 352 ) ( 2.22 ) Vested ( 325 ) 6.17 ( 47 ) 7.47 Forfeited ( 762 ) 3.44 ( 901 ) 3.64 Nonvested units outstanding at January 31, 2026 2,383 $ 2.28 215 $ 5.26 As of January 31, 2026, there was $ 3.6 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 2.1 years, subject to meeting performance conditions. The total fair value of restricted stock units for which restrictions lapsed (vested) during fiscal 2026 was $ 2.4 million. 65 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 9. Commitments and Contingencies The Company is subject to various claims and contingencies arising in the normal course of business, including those relating to product liability, legal claims, employee benefits, environmental issues, and other matters. Management believes that at this time it is not probable that any of these claims will have a material adverse effect on the Company’s financial condition, results of operations, or cash flows. 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 June of 2025, the Company received a notice from the buyer of Creative Genius requesting a purchase price adjustment of approximately $ 4.6 million related to the sale of Creative Genius. The demand was based on certain working capital adjustments. The Company has disputed this purchase price adjustment request. On August 27, 2025, the Company filed an action in the Chancery Court of Delaware seeking a judgment declaring that the buyer’s claim for a purchase price adjustment is improper and barred by the purchase Agreement. The Company has filed for summary judgment in that action and is awaiting decision from the Court. At this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition or results of operations due to the fact that the Company believes the purchase price adjustment is improper, and is seeking to have it declared as such by a Delaware Court. The Company believes that it has a number of meritorious legal approaches in defending itself against these claims. 66 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 10. 401(k) Profit Sharing Plan and Trust The Company has a 401(k) profit sharing plan and trust for all qualified employees and provides a 100 % match for the first 3 % of employee contributions and a 50 % match for the next 2 % of employee contributions, for a maximum Company match of 4 % of employee contributions, limited to the annual legal allowable limit. Additionally, the Company has the option of making discretionary profit sharing payments to the plan as approved by the board of directors. As of January 31, 2026, February 1, 2025, and February 3, 2024 , no discret ionary profit sharing payments had been approved. The Company recognizes 401(k) Company contributions within cost of sales for employees related to distribution center, sourcing, and other related functions and selling, general, and administrative expenses for all other employees. Total Company contributions to the plan were as follows (in thousands): Fiscal year ended January 31, 2026 $ 1,023 Fiscal year ended February 1, 2025 1,394 Fiscal year ended February 3, 2024 1,770 11. Related-Party Transactions Charitable Contributions . The Vera Bradley Foundation for Breast Cancer (the “Foundation”) was founded by one of the Company’s directors, who is also on the board of directors of the Foundation. The liability associated with commitments to the Foundation was approximately $ 0.1 million as of January 31, 2026 and $ 0.2 million as of February 1, 2025. The liability consisted of pass-through donations from customers and is included in other accrued liabilities in the Consolidated Balance Sheets. The associated expense for contributions to the Foundation, which is included in selling, general, and administrative expenses, was as follows (in thousands): Fiscal year ended January 31, 2026 $ 133 Fiscal year ended February 1, 2025 167 Fiscal year ended February 3, 2024 139 67 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 12. Earnings Per Share Basic net (loss) income per share is computed based on the weighted-average number of shares of common stock outstanding during the period. Diluted net (loss) income per share is computed based on the weighted-average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding restricted stock and restricted-stock units. The components of basic and diluted net (loss) income per share are as follows (in thousands, except per share data): Fiscal Year Ended January 31, 2026 February 1, 2025 February 3, 2024 Numerator: Net (loss) income from continuing operations $ ( 32,677 ) $ ( 33,379 ) $ 8,596 Loss from discontinued operations, net of income tax ( 15,163 ) ( 28,809 ) ( 758 ) Net (loss) income ( 47,840 ) ( 62,188 ) 7,838 Denominator: Weighted-average number of common shares (basic) 27,902 28,935 30,833 Dilutive effect of stock-based awards — — 481 Weighted-average number of common shares (diluted) 27,902 28,935 31,314 Basic net (loss) income per share: Continuing operations $ ( 1.17 ) $ ( 1.15 ) $ 0.27 Discontinued operations $ ( 0.54 ) $ ( 1.00 ) $ ( 0.02 ) Basic net (loss) income per share $ ( 1.71 ) $ ( 2.15 ) $ 0.25 Diluted net (loss) income per share: Continuing operations $ ( 1.17 ) $ ( 1.15 ) $ 0.27 Discontinued operations $ ( 0.54 ) $ ( 1.00 ) $ ( 0.02 ) Diluted net (loss) income per share $ ( 1.71 ) $ ( 2.15 ) $ 0.25 As of January 31, 2026 and February 1, 2025, 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. 13. Common Stock 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 expired in December 2024. In December 2024, 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. 68 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements During the fiscal year ended January 31, 2026, the Company did not purchase any shares under the 2024 Share Repurchase Program. 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 of $ 21.8 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. As of January 31, 2026, there was $ 30.0 million remaining available to repurchase shares of the Company's common stock under the 2024 Share Repurchase Program. As of January 31, 2026, the Company held as treasury shares 15,834,579 shares of its common stock at an average price of $ 9.90 per share, excluding commissions, for an aggregate carrying amount of $ 156.8 million. The Company’s treasury shares may be issued under the 2020 Equity and Incentive Plan, or for other corporate purposes. 14. Cost Savings Initiatives and Other Charges Cost Savings Initiatives and Severance Charges During fiscal 2023, the Company began implementation of its targeted cost reductions, which were expected to be fully realized in fiscal 2025. In late fiscal 2025, additional cost reduction initiatives were identified and were fully realized in fiscal 2026. During fiscal 2026, additional cost reduction initiatives were identified and are expected to be fully realized in fiscal 2027. 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 fifty-two w eeks ended January 31, 2026 (in thousands): Reportable Segment VB Direct VB Indirect Unallocated Corporate Expenses Total Expense Severance charges (1) $ 17 $ — $ 4,463 $ 4,480 Total $ 17 $ — $ 4,463 $ 4,480 (1) Includes former Chief Executive Officer and Chief Financial Officer severance and is recorded in selling, general, and administrative expenses. A summary of charges and related liabilities associated with the cost savings initiatives and severance charges are as follows (in thousands): Severance Charges (1) Liability as of February 1, 2025 $ 2,525 Fiscal 2026 charges 4,480 Cash payments ( 6,261 ) Liability as of January 31, 2026 $ 744 (1) Remaining liability is recorded within accrued employment costs 69 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements The Company incurred the following charges during the fifty-two weeks ended February 1, 2025: Reportable Segment VB Direct VB Indirect Unallocated Corporate Expenses Total Expense Severance charges (1) $ 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 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 Unallocated Corporate Expenses Total Expense Severance charges (1) $ 574 $ 309 $ 1,951 $ 2,834 Consulting fees and other costs (2) — — 105 105 Total (3) $ 574 $ 309 $ 2,056 $ 2,939 (1) Includes former CFO severance (2) Related to professional fees (3) Charges are recorded within selling, general, and administrative expenses Severance Charges (1) Consulting Fees and Other Costs Liability as of January 28, 2023 $ 3,083 $ 53 Fiscal 2024 charges 2,834 105 Cash payments ( 5,376 ) ( 158 ) Liability as of February 3, 2024 $ 541 $ — (1) Remaining liability is recorded within accrued employment costs Other Charges Fiscal 2026 and Fiscal 2025. There were no additional charges recorded during the fifty-two weeks ended January 31, 2026 and February 1, 2025 associated with strategic initiatives and other costs. Fiscal 2024. During the fifty-three weeks ended February 3, 2024, the Company recorded within selling, general, and administrative expenses $ 0.6 million of professional fees associated with strategic initiatives and other costs, which were recorded within corporate unallocated expenses. 70 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 15. Segment Reporting The Company has two operating segments, which are also its reportable segments: VB Direct and VB Indirect. 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), typically, the Vera Bradley annual outlet sale, and direct to consumer marketplaces. 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 1,000 locatio ns, substantially all of which are located in the United States, as well as select department stores, national accounts, third-party inventory liquidators, and licensing agreements related to the Vera Bradley bran d. Corporate costs represent the Company’s administrative expenses, which include, but are not limited to: human resources, legal, finance, information technology, design, product development, merchandising, corporate-level marketing and advertising, and various other corporate-level-activity-related expenses not directly attributable to a reportable segment. Income earned under the Transition Services Agreement ("TSA") resulting from the sale of Creative Genius is netted against these unallocated corporate expenses. All intercompany-related activities are eliminated in consolidation and are excluded from the segment reporting. 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. The Company does not report depreciation or amortization expense, total assets, or capital expenditures by segment as such information is neither used by management nor accounted for at the segment level. 71 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements Net revenues, cost of sales, other segment expenses, and operating income information for the Company’s reportable segments, as well as a reconciliation to (loss) income from continuing operations before income taxes, consisted of the following (in thousands): Fiscal Year Ended January 31, 2026 February 1, 2025 February 3, 2024 Segment net revenues: VB Direct $ 227,791 $ 257,609 $ 309,910 VB Indirect 41,860 61,186 73,803 Total $ 269,651 $ 318,795 $ 383,713 Segment cost of sales: VB Direct $ 117,860 $ 125,467 $ 141,933 VB Indirect 26,754 34,490 37,815 Total $ 144,614 $ 159,957 $ 179,748 Other segment expenses, net (1) VB Direct $ 91,609 $ 106,902 $ 106,104 VB Indirect 6,524 11,282 11,709 Total $ 98,133 $ 118,184 $ 117,813 Segment operating income: VB Direct $ 18,322 $ 25,240 $ 61,873 VB Indirect 8,582 15,414 24,279 Total $ 26,904 $ 40,654 $ 86,152 Reconciliation: Segment operating income: $ 26,904 $ 40,654 $ 86,152 Unallocated corporate expenses ( 58,816 ) ( 69,446 ) ( 74,535 ) Interest (expense) income ( 462 ) 752 661 (Loss) income from continuing operations before income taxes $ ( 32,374 ) $ ( 28,040 ) $ 12,278 (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 2026, 2025, and 2024. Refer to Note 3 herein for disaggregation of net revenues by reportable segment. As of January 31, 2026 and February 1, 2025, substantially all of the Company’s long-lived assets were located in the United States. 72 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 16. Discontinued Operations On March 11, 2025, the Company completed the sale of Creative Genius pursuant to an Interest Purchase Agreement (the “Agreement”) to sell one hundred percent ( 100 %) of Creative Genius, which operates under the name Pura Vida Bracelets. The sale consummated on March 31, 2025. In connection with the transaction, the Company received total consideration of $ 3.5 million, consisting of a combination of cash consideration, subject to net working capital and net cash adjustments as well as contingent consideration. At closing, the Company received cash proceeds of $ 0.9 million, in addition, the Company is entitled to receive contingent consideration with an estimated fair value of $ 2.5 million, based on the present value of expected future payments. Cash proceeds totaled $ 1.8 million for the fifty-two weeks ended January 31, 2026. The remaining contingent consideration receivable was $ 1.8 million as of January 31, 2026. The contingent consideration is calculated as 5% of total sales generated by the divested business, as operated by the buyer, net of customary shipping costs, during the earn-out period specified in the agreement. The earn-out period and related terms are consistent with customary provisions for transactions of this nature. The fair value of the contingent consideration was determined using a probability-weighted discounted cash flow analysis based on internal projections of the buyer’s expected future sales. The fair value measurement is classified as Level 3 within the fair value hierarchy due to the use of unobservable inputs. The Company will assess changes in the fair value of the contingent consideration at each reporting date, with any adjustments recognized in earnings in the period in which such changes are identified. The Company recorded a net loss on disposal of $ 15.2 million for the fifty-two weeks ended January 31, 2026. The loss on sale is presented as part of results of the discontinued operations. The results of operations for the Pura Vida business is reported as discontinued operations in the Consolidated Statements of Operations for all periods presented. This business was historically presented as its own reportable segment. Results of discontinued operations were as follows for the fifty-two weeks ended January 31, 2026 and February 1, 2025, and fifty-three weeks ended February 3, 2024: Fifty-Two Weeks Ended Fifty-Three Weeks Ended January 31, 2026 February 1, 2025 February 3, 2024 Net revenues $ 5,553 $ 53,172 $ 87,073 Cost of sales 2,167 25,171 34,625 Gross profit 3,386 28,001 52,448 Selling, general, and administrative expenses 3,244 35,346 48,210 Impairment of intangible assets — 6,237 5,429 Other (expense) income, net (1) ( 15,305 ) 18 16 Operating loss from discontinued operations ( 15,163 ) ( 13,564 ) ( 1,175 ) Interest income, net — 366 229 Loss from discontinued operations before income taxes ( 15,163 ) ( 13,198 ) ( 946 ) Income tax expense (benefit) — 15,611 ( 188 ) Loss from discontinued operations ( 15,163 ) ( 28,809 ) ( 758 ) (1) Includes $ 15.2 million loss on sale of discontinued operations recorded during the fifty-two weeks ended January 31, 2026. The Company provides certain transition services to support the divested business in accordance with the Interest Purchase Agreement. 73 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements The assets and liabilities of the Pura Vida operations have been reflected as assets and liabilities of discontinued operations in the Consolidated Balance Sheet as of February 1, 2025. The assets and liabilities were as follows: January 31, 2026 February 1, 2025 Assets of discontinued operations Cash and cash equivalents $ — $ 1,738 Accounts receivable, net — 995 Inventories — 18,578 Prepaid expenses and other current assets — 1,050 Total current assets of discontinued operations $ — $ 22,361 Operating right-of-use assets — 3,729 Property, plant, and equipment, net — 1,628 Other assets — 17 Total long-term assets of discontinued operations $ — $ 5,374 Liabilities of discontinued operations Accounts payable $ — $ 2,584 Accrued employment costs — 562 Short-term operating lease liabilities — 925 Other accrued liabilities — 1,952 Total current liabilities of discontinued operations $ — $ 6,023 Long-term operating lease liabilities — 3,388 Total long-term liabilities of discontinued operations $ — $ 3,388 The following table presents cash flows from operating and investing activities for discontinued operations for the fifty-two weeks ended January 31, 2026 and February 1, 2025, and fifty-three weeks ended February 3, 2024: Fifty-Two Weeks Ended Fifty-Two Weeks Ended Fifty-Three Weeks Ended January 31, 2026 February 1, 2025 February 3, 2024 Cash (used in) provided by operating activities - discontinued operations $ ( 2,115 ) $ ( 226 ) $ 6,017 Cash provided by (used in) investing activities - discontinued operations 2 ( 548 ) ( 13 ) 74 Table of Contents Vera Bradley, Inc. Notes to Consolidated Financial Statements 17. Quarterly Financial Data (Unaudited) The following table presents selected unaudited quarterly financial information for each quarter of fiscal 2026 and fiscal 2025. Prior year quarterly amounts have been recast to reflect the presentation of the disposed business as discontinued operations related to the sale described in Note 16. Thirteen Weeks Ended May 3, 2025 August 2, 2025 November 1, 2025 January 31, 2026 Fiscal 2026 Net revenues $ 51,652 $ 70,858 $ 62,253 $ 84,888 Gross Profit 22,767 35,497 26,186 40,587 Net (loss) income from continuing operations ( 18,260 ) ( 4,709 ) ( 12,365 ) 2,657 Net (loss) income ( 33,460 ) ( 4,672 ) ( 12,365 ) 2,657 Basic net (loss) income from continuing operations per share $ ( 0.66 ) $ ( 0.17 ) $ ( 0.44 ) $ 0.10 Basic net (loss) income per share ( 1.20 ) ( 0.17 ) ( 0.44 ) 0.10 Diluted net (loss) income from continuing operations per share ( 0.66 ) ( 0.17 ) ( 0.44 ) 0.09 Diluted net (loss) income per share ( 1.20 ) ( 0.17 ) ( 0.44 ) 0.09 Thirteen Weeks Ended May 4, 2024 August 3, 2024 November 2, 2024 February 1, 2025 Fiscal 2025 Net revenues $ 67,948 $ 94,003 $ 70,483 $ 86,361 Gross Profit 34,040 46,709 38,417 39,672 Net (loss) income from continuing operations ( 7,604 ) 7,527 ( 13,332 ) ( 19,970 ) Net (loss) income ( 8,121 ) 5,706 ( 12,800 ) ( 46,973 ) Basic net (loss) income from continuing operations per share $ ( 0.25 ) $ 0.26 $ ( 0.47 ) $ ( 0.72 ) Basic net (loss) income per share ( 0.26 ) 0.19 ( 0.46 ) ( 1.69 ) Diluted net (loss) income from continuing operations per share ( 0.25 ) 0.25 ( 0.47 ) ( 0.72 ) Diluted net (loss) income per share ( 0.26 ) 0.19 ( 0.46 ) ( 1.69 ) 75 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.