vra-20210501

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

FORM 10-Q

___________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended May 1, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From to

Commission File Number: 001-34918

___________________________

VERA BRADLEY, INC.

(Exact name of registrant as specified in its charter)

___________________________


Indiana						27-2935063
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

12420 Stonebridge Road, Roanoke, Indiana						46783
(Address of principal executive offices)						(Zip Code)

(877) 708-8372

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

___________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, without par value	VRA	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The registrant had 33,991,017 shares of its common stock outstanding as of June 2, 2021.

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TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets as of May 1, 2021, and January 30, 2021	4

	Condensed Consolidated Statements of Operations for the Thirteen Weeks Ended May 1, 2021, and May 2, 2020	5

	Condensed Consolidated Statements of Comprehensive Income for the Thirteen Weeks Ended May 1, 2021, and May 2, 2020	6

	Condensed Consolidated Statements of Shareholders' Equity for the Thirteen Weeks Ended May 1, 2021, and May 2, 2020	7

	Condensed Consolidated Statements of Cash Flows for the Thirteen Weeks Ended May 1, 2021, and May 2, 2020	8

	Notes to the Condensed Consolidated Financial Statements	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

Item 4.	Controls and Procedures	33

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	34

Item 1A.	Risk Factors	34

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

Item 6.	Exhibits	36

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FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements include references to our current expectations and projections relating to our financial condition, results of operations, plans, objectives, strategies, future performance, and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “plan,” “intend,” “believe,” “may,” “might,” “will,” “should,” “can have,” and “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected earnings, revenues, costs, expenditures, cash flows, growth rates, and financial results, our plans and objectives for future operations, growth, initiatives, or strategies, or the expected outcome or impact of pending or threatened litigation are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:

•public health pandemics, including the continued outbreak of the novel coronavirus (COVID-19) and actions to contain the spread of the virus by governmental or other actors;

•possible inability to successfully implement our long-term strategic plans;

•possible declines in our comparable sales;

•possible inability to maintain and enhance our brands;

•possible failure of our multi-channel distribution model;

•possible adverse changes in general economic conditions and their impact on consumer confidence and consumer spending, including as may be related to the continued outbreak of COVID-19;

•possible inability to predict and respond in a timely manner to changes in consumer demand;

•possible inability to successfully open new stores and/or operate current stores as planned;

•possible loss of key management or design associates or inability to attract and retain the talent required for our business;

•possible data security or privacy breaches or disruptions in our computer systems or website;

•possible disruptions in our supply chain;

•possible new or increased tariffs on our products that could lead to increased product costs and lower profit margins; and

•possible inability to successfully implement integration strategies related to the Pura Vida business and possible inability to derive expected benefits from or to successfully integrate any future business acquisition.

We derive many of our forward-looking statements from our operating plans and forecasts, which are based upon detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results.

For a discussion of the above described risks and uncertainties and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 30, 2021, as well as in Item 1A herein.

We caution you that the risks and uncertainties identified by us may not be all of the factors that are important to you. Furthermore, the forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events, or otherwise, except as required by law.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Vera Bradley, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)


	May 1, 2021		January 30, 2021
Assets
Current assets:
Cash and cash equivalents	$	51,371	$	64,175
Short-term investments	1,293		1,295
Accounts receivable, net	21,945		27,543
Inventories	150,335		141,416
Income taxes receivable	8,782		7,372
Prepaid expenses and other current assets	18,478		17,882

Total current assets	252,204		259,683
Operating right-of-use assets	86,181		88,730
Property, plant, and equipment, net	62,391		63,952
Intangible assets, net	46,527		47,296
Goodwill	44,254		44,254

Deferred income taxes	3,161		3,530
Other assets	6,525		6,342
Total assets	$	501,243	$	513,787
Liabilities, Redeemable Noncontrolling Interest, and Shareholders’ Equity
Current liabilities:
Accounts payable	$	23,160	$	27,093
Accrued employment costs	11,122		13,648
Short-term operating lease liabilities	21,210		22,321

Other accrued liabilities	14,736		14,043
Income taxes payable	—		321

Total current liabilities	70,228		77,426


Long-term operating lease liabilities	88,228		91,536

Other long-term liabilities	83		109
Total liabilities	158,539		169,071
Commitments and contingencies
Redeemable noncontrolling interest	30,307		29,809
Shareholders’ equity:
Preferred stock; 5,000 shares authorized, no shares issued or outstanding	—		—
Common stock, without par value; 200,000 shares authorized, 42,378 and 41,808 shares issued and 33,985 and 33,414 shares outstanding, respectively	—		—
Additional paid-in-capital	105,076		105,433
Retained earnings	314,381		316,526
Accumulated other comprehensive income	—		8
Treasury stock	(107,060)		(107,060)
Total shareholders’ equity of Vera Bradley, Inc.	312,397		314,907
Total liabilities, redeemable noncontrolling interest, and shareholders’ equity	$	501,243	$	513,787

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

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Vera Bradley, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	Thirteen Weeks Ended
	May 1, 2021		May 2, 2020
Net revenues	$	109,094	$	69,284
Cost of sales	49,930		35,096
Gross profit	59,164		34,188
Selling, general, and administrative expenses	60,896		59,782
Other (loss) income, net	(227)		20
Operating loss	(1,959)		(25,574)
Interest expense, net	90		72
Loss before income taxes	(2,049)		(25,646)
Income tax benefit	(531)		(10,109)
Net loss	(1,518)		(15,537)
Less: Net income (loss) attributable to redeemable noncontrolling interest	627		(200)
Net loss attributable to Vera Bradley, Inc.	$	(2,145)	$	(15,337)

Basic weighted-average shares outstanding	33,590		33,330
Diluted weighted-average shares outstanding	33,590		33,330

Basic net loss per share available to Vera Bradley, Inc. common shareholders	$	(0.06)	$	(0.66)
Diluted net loss per share available to Vera Bradley, Inc. common shareholders	$	(0.06)	$	(0.66)

Reconciliation of net loss available to Vera Bradley, Inc. common shareholders
Net loss attributable to Vera Bradley, Inc.	$	(2,145)	$	(15,337)
Excess portion of redeemable noncontrolling interest redemption value adjustment	—		(6,800)
Net loss available to Vera Bradley, Inc. common shareholders	$	(2,145)	$	(22,137)

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

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Vera Bradley, Inc.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)


	Thirteen Weeks Ended
	May 1, 2021		May 2, 2020
Net loss	$	(1,518)	$	(15,537)
Unrealized loss on available-for-sale debt investments	(2)		(185)
Cumulative translation adjustment	(6)		10
Comprehensive loss, net of tax	(1,526)		(15,712)
Less: Comprehensive income (loss) attributable to redeemable noncontrolling interest	627		(200)
Comprehensive loss attributable to Vera Bradley, Inc.	$	(2,153)	$	(15,512)

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

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Vera Bradley, Inc.

Condensed Consolidated Statements of Shareholders’ Equity

(in thousands, except share data)

(unaudited)


	Number of Shares
	Common Stock	Treasury Stock	Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Shareholders’ Equity of Vera Bradley, Inc.
Balance at January 30, 2021	33,414,490	8,393,207	$	105,433	$	316,526	$	8	$	(107,060)	$	314,907
Net loss attributable to Vera Bradley, Inc.	—	—	—		(2,145)		—		—		(2,145)
Translation adjustments	—	—	—		—		(6)		—		(6)
Unrealized loss on available-for-sale debt investments	—	—	—		—		(2)		—		(2)
Restricted shares vested, net of repurchase for taxes	570,562	—	(2,171)		—		—		—		(2,171)
Stock-based compensation	—	—	1,814		—		—		—		1,814


Balance at May 1, 2021	33,985,052	8,393,207	$	105,076	$	314,381	$	—	$	(107,060)	$	312,397

SEC Form 10-Q filed by Vera Bradley, Inc.