UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM SD
Specialized Disclosure Report
___________________________
VERA BRADLEY, INC.
(Exact name of registrant as specified in its charter)
___________________________
Indiana | 001-34918 | 27-2935063 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS 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)
___________________________
Check the appropriate box to indicate the rule pursuant to which this form is being filed, and provide the period to which the information in this form applies:
x | Rule 13p-1 under the Securities Exchange Act (17 CFR 240.13p-1) for the reporting period from January 1 to December 31, 2018. | |||
Section 1 - Conflict Minerals Disclosure
Item 1.01 Conflict Minerals Disclosure and Report
Company Overview
The terms “Company” and “Vera Bradley” refer to Vera Bradley, Inc. and its 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 inspire and connect women.
Vera Bradley offers a unique multi-channel sales model, as well as a focus on service and a high level of customer engagement. The Company sells its products through two reportable segments: Direct and Indirect. The Direct business consists of sales of Vera Bradley products through the Company’s full-line and factory outlet stores in the United States; verabradley.com; the Company’s online outlet site; and the Company’s annual outlet sale in Fort Wayne, Indiana. As of February 2, 2019, the Company operated 99 full-line stores and 57 factory outlet stores. The Indirect business consists of sales of Vera Bradley products to approximately 2,300 specialty retail locations, substantially all of which are located in the United States, as well as department stores, national accounts, third party e-commerce sites, third-party inventory liquidators, and royalties recognized through licensing agreements.
Vera Bradley contracts to manufacture products that may contain gold, tantalum, tin and tungsten (“3TG”), such as handbags, accessories, and luggage and travel items. The Company determined that certain of its products may have zippers, fasteners or other components and materials, which are necessary to the production or functionality of its products, that may contain 3TG.
As these materials are necessary to Vera Bradley’s products, the Company is dedicated to tracing the origin of these metals to ensure our sourcing practices do not support conflict or human rights abuses in the Democratic Republic of Congo and adjoining countries.
Conflict Minerals Disclosures
In accordance with the execution of this policy, Vera Bradley has concluded in good faith that during calendar year 2018,
a) | Vera Bradley contracted to manufacture products for which “conflict minerals” (as defined in Section 1502(e)(4) of the Dodd-Frank Wall Street Reform and Consumer Protection Act) are necessary to the functionality or production. |
b) | Based on a Reasonable Country of Origin Inquiry (“RCOI”) and subsequent due diligence, Vera Bradley does not have concrete findings on whether its sourcing practices directly or indirectly fund armed groups in the Covered Countries. Vera Bradley has, however, found no reasonable basis for concluding that its suppliers sourced 3TG that directly or indirectly finance or benefit armed groups. |
In accord with Rule 13p-1 under the Securities Exchange Act of 1934, Vera Bradley, Inc. has filed this Specialized Disclosure Form (“Form SD”) and the associated Conflict Minerals Report, and both reports are posted in the “Customer Service” section, under “Supply Chain,” of the Company’s website at www.verabradley.com.
Reasonable Country of Origin Inquiry (“RCOI”) Description
To complete the RCOI required by the Securities & Exchange Commission’s rules, Vera Bradley's suppliers were engaged, by a third party provider, to collect information about the presence and sourcing of 3TG used in the products and components supplied to Vera Bradley. The program utilized the Conflict-Free Sourcing Initiative's Conflict Minerals Reporting Template (“CMRT”). Only CMRT's version 4.0 or higher was accepted. Suppliers were offered two options to submit the required information, either by uploading the CMRT in MS Excel format or by completing an online survey version of this template on a third party provider's platform.
Supplier Engagement
The RCOI began with an introduction email from Vera Bradley to suppliers describing the Conflict Minerals Compliance Program (“CMCP”) requirements. Following that introduction email, a subsequent email was sent to suppliers containing a registration and survey request link for the online data collection platform.
In an effort to increase awareness of the CMCP, supporting regulation, and frequently asked questions concerning 3TG mineral tracing, Vera Bradley's suppliers were introduced to the third party provider's Conflict Minerals Supplier Resource Center in the initial registration email. The Supplier Resource Center was provided as an educational tool to facilitate a deeper understanding of the program and education as to why information is being requested.
Following the initial introductions to the program and information request, up to three reminder emails were sent to each non-responsive supplier requesting survey completion. Suppliers who remained non-responsive to these email reminders were contacted by telephone and offered assistance. This assistance included, but was not limited to, further information about the CMCP, an explanation of why the information was being collected, a review of how the information would be used and clarification regarding how the necessary information could be provided by the supplier.
New Information Cut-off
In recognition of the amount of time it can take to collect and aggregate the requested information, suppliers were given a final deadline of April 30, 2019 to provide information about the metal processors present in their supply chains for the 2018 reporting year.
Information Requested
Suppliers were asked to provide information regarding the sourcing of their materials with the ultimate goal of identifying the 3TG smelters or refiners (“SORs”) and associated mine countries of origin. Suppliers who had already performed a RCOI through the use of the CMRT were asked to upload this document into the third party provider's platform or to provide this information in the online survey version.
Where a supplier was unable to provide a CMRT, information was requested on its suppliers of products or components which may require 3TG for their production or functionality. These Tier 2 suppliers, and subsequent tiers of suppliers as needed, were then engaged following the contact procedures explained above. When contact information was provided, Tier 2 and beyond suppliers were contacted via email or phone in order to build a chain-of-custody back to the 3TG SOR. Every effort was made to address and meet the concerns of suppliers regarding their need to maintain the confidentiality of their data. In order to address this concern, non-disclosure agreements were executed with suppliers when requested.
Suppliers had the ability to share information at a level with which they were most comfortable, i.e. company, product or user-defined, but the declaration scope had to be specified.
Suppliers were requested to provide an electronic signature before submitting their data to verify that all answers submitted were accurate to the best of the supplier’s knowledge but the suppliers were not required to provide an electronic signature to submit their data.
Quality Assurance
Supplier responses were evaluated for plausibility, consistency and gaps. If any of the following quality control flags were raised, suppliers were automatically contacted by the third party platform on a bi-weekly basis up to three contacts.
• | One or more SORs were listed for an unused metal; |
• | SOR information was not provided for a used metal, or SOR information provided was not a verified metal processor; |
• | Supplier answered “yes” to sourcing from the Democratic Republic of the Congo or adjoining countries, but none of the SORs listed are known to source from the region; |
• | Supplier indicated that they have not received conflict minerals data for each metal from all relevant suppliers; |
• | Supplier indicated they have not identified all of the SORs used for the products included in the declaration scope; |
• | Supplier indicated they have not provided all applicable SOR information received; and |
• | Supplier indicated 100% of the 3TG for products covered by the declaration originate from scrap/recycled sources, but one or more SORs listed are not known to be exclusive recyclers. |
RCOI Results
A total of 29 Tier 1 suppliers were identified as in-scope for conflict mineral regulatory purposes and contacted as part of the RCOI process. The response rate among these suppliers was 76%. Of these responding suppliers, one supplier indicated one or more of the regulated metals (3TG) as necessary to the functionality or production of the products they supply to Vera Bradley. Based on the declarations submitted by suppliers, there were no smelters/refiners reported which may have processed 3TG used in our products.
Due Diligence
A description of the measures Vera Bradley took to exercise due diligence on the source and chain of custody of its conflict minerals for which Vera Bradley knew or had reason to believe were sourced from the Covered Countries based on the RCOI described above, is provided in the Conflict Minerals Report attached hereto as Exhibit 1.01.
Item 1.02 Exhibit
See Exhibit 1.01 to this specialized disclosure report, incorporated herein by reference.
Section 2 - Exhibits
Item 2.01 Exhibits
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the duly authorized undersigned.
Vera Bradley, Inc. | ||||
Date: May 31, 2019 | By: | /s/ John Enwright | ||
John Enwright Chief Financial Officer | ||||
Exhibit 1.01
Conflict Minerals Report of Vera Bradley, Inc.
In accord with Rule 13p-1 under the Securities Exchange Act of 1934
This is the Conflict Mineral Report of Vera Bradley, Inc. for calendar year 2018 (excepting conflict minerals that, prior to January 31, 2013, were located outside of the supply chain) in accord with Rule 13p-1 under the Securities Exchange Act of 1934 (“Rule 13p-1”). The terms “Company” and “Vera Bradley” refer to Vera Bradley, Inc. and its subsidiaries, except where the context requires otherwise or where otherwise indicated.
1. | Introduction |
The intent of this Conflict Minerals Report (“CMR”) is to describe Vera Bradley, Inc.’s due diligence process following Rule 13p-1 requirements. Per Rule 13p-1, due diligence is used to support a company’s determination whether or not there is evidence that the smelters or refiners within its supply chain are sourcing minerals that are considered “DRC Conflict Free,” that have “not been found to be DRC Conflict Free,” or that are “DRC Conflict Undeterminable.”
2. | Product Description |
Vera Bradley, Inc. contracts to manufacture products that may contain gold, tantalum, tin and tungsten (“3TG”), such as handbags, accessories and luggage and travel items. The Company determined that certain of its products may have zippers, fasteners or other components and materials, which are necessary to the production or functionality of its products, that may contain 3TG. As these materials are necessary to Vera Bradley’s products, the Company is dedicated to tracing the origin of these metals to ensure our sourcing practices do not support conflict or human rights abuses in the Democratic Republic of Congo (“DRC”) and adjoining countries.
3. | Design of Due Diligence Measures |
Vera Bradley, Inc.’s due diligence process is based on the OECD’s Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas and accompanying Supplements1. It is important to note that the OECD Guidance was written for both upstream2 and downstream3 companies in the supply chain. As Vera Bradley, Inc. is a downstream company in the supply chain, our due diligence practices were tailored accordingly.
4. | Due Diligence Measures Implemented |
Due Diligence measures undertaken by Vera Bradley, Inc. include the following:
• | Adopted a conflict minerals policy. Our conflict minerals policy is publicly available in the “Customer Service” section, under “Supply Chain,” of the Company’s website at www.verabradley.com; |
• | Implemented internal measures taken to strengthen Company engagement with suppliers; |
• | Engaged with suppliers to identify the smelters or refiners (“SORs”) in the supply chain; |
• | Engaged with SORs to obtain mine of origin and transit routes and assess whether SORs have carried out all elements of due diligence for responsible supply chains of minerals from conflict-affected and high-risk areas; |
• | Reported risk management findings to senior management; and |
• | Reported Annually on Supply Chain Due Diligence. The Form SD and CMR contained herein are publicly available in the “Customer Service” section, under “Supply Chain,” of the Company’s website at www.verabradley.com. |
5. | Identified SORs |
Based on the declarations submitted by suppliers, there were no smelters or refiners reported which may have processed 3TG used in our products.
6. | Steps to Improve Due Diligence |
Vera Bradley, Inc. will endeavor to continuously improve upon its supply chain due diligence efforts via the following measures (including those taken since the end of the period covered by Vera Bradley, Inc.’s most recent prior Conflict Mineral Report to mitigate the risk that necessary conflict minerals benefit armed groups):
• | Continue to assess the presence of 3TG in its supply chain; |
1OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, Supplement on Tin, Tantalum and Tungsten and Supplement on Gold, 2013; http://www.oecd.org/daf/inv/mne/GuidanceEdition2.pdf.
2Upstream companies refer to those between the mine and SOR. As such, the companies typically include miners, local traders, or exporters from the country of mineral origin, international concentrate traders and SORs.
3Downstream companies refer to those entities between the SOR and retailer. As such, the companies typically include metal traders and exchanges, component manufacturers, product manufacturers, original equipment manufacturers (OEMs) and retailers.
• | Clearly communicate expectations with regard to supplier performance, transparency and sourcing; |
• | Increase the response rate for Reasonable Country of Origin Inquiry (“RCOI”) process; |
• | Continue to compare RCOI results to information collected via independent conflict free smelter validation programs such as the EICC/GeSI Conflict Free Smelter program; |
• | Design and implement a strategy to respond to supply chain risks; |
• | Devise and adopt a risk management plan; and |
• | Contact smelters identified as a result of the RCOI process and request their participation in obtaining a “conflict free” designation from an industry program such as the EICC/GeSI Conflict Free Smelter program. |
7. | Independent Private Sector Audit |
A private sector audit is not required with this Conflict Mineral Report.
8. | Forward Looking Statements |
This CMR 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 refer to our current expectations and projections. 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 events. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected. The Company undertakes no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances.