SEC Filing | Vera Bradley Designs Inc

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vra-20200801

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 August 1, 2020


☐			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

___________________________

https://cdn.kscope.io/6787db735c8b84d1039a963e4a9a15de-vra-20200801_g1.jpg

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 33,409,326 shares of its common stock outstanding as of September 2, 2020.

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TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets as of August 1, 2020, and February 1, 2020	4

	Condensed Consolidated Statements of Operations for the Thirteen and Twenty-Six Weeks Ended August 1, 2020, and August 3, 2019	5

	Condensed Consolidated Statements of Comprehensive Income for the Thirteen and Twenty-Six Weeks Ended August 1, 2020, and August 3, 2019	6

	Condensed Consolidated Statements of Shareholders' Equity for the Thirteen and Twenty-Six Weeks Ended August 1, 2020, and August 3, 2019	7

	Condensed Consolidated Statements of Cash Flows for the Twenty-Six Weeks Ended August 1, 2020, and August 3, 2019	9

	Notes to the Condensed Consolidated Financial Statements	11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43

Item 4.	Controls and Procedures	43

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 6.	Exhibits	46

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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 refer 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. 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 the measures taken by governmental authorities and other actors to address it, which may precipitate or exacerbate other risks and/or uncertainties;

•civil unrest and its impact on consumer behavior and potential damage or closures to our locations;

•possible inability to successfully implement our long-term strategic plan, including our Vision 20/20 initiatives;

•possible declines in our comparable sales;

•possible inability to maintain and enhance our brand;

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

•possible failure of Pura Vida acquisition benefits to materialize as expected, including the possibility that the business may not perform as anticipated; and

•possible inability to successfully implement integration strategies related to the Pura Vida business.

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 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 February 1, 2020, 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)


	August 1, 2020		February 1, 2020
Assets
Current assets:
Cash and cash equivalents	$	75,568	$	49,917
Short-term investments	818		8,977
Accounts receivable, net	28,306		24,290
Inventories	136,219		123,606
Income taxes receivable	5,326		1,043
Prepaid expenses and other current assets	14,742		10,956

Total current assets	260,979		218,789
Operating right-of-use assets	104,412		114,790
Property, plant, and equipment, net	67,978		73,027
Intangible assets, net	51,591		56,305
Goodwill	44,254		44,254
Long-term investments	729		14,912
Deferred income taxes	5,896		7,656
Other assets	6,245		5,328
Total assets	$	542,084	$	535,061
Liabilities, Redeemable Noncontrolling Interest, and Shareholders’ Equity
Current liabilities:
Accounts payable	$	26,994	$	20,235
Accrued employment costs	11,028		11,412
Short-term operating lease liabilities	25,504		21,347
Earn-out liability	—		18,448
Other accrued liabilities	18,511		13,850
Income taxes payable	203		2,113

Total current liabilities	82,240		87,405


Long-term operating lease liabilities	105,163		113,775
Long-term debt	30,000		—
Other long-term liabilities	1,253		62
Total liabilities	218,656		201,242
Commitments and contingencies
Redeemable noncontrolling interest	29,654		30,049
Shareholders’ equity:
Preferred stock; 5,000 shares authorized, no shares issued or outstanding	—		—
Common stock, without par value; 200,000 shares authorized, 41,803 and 41,515 shares issued and 33,409 and 33,503 shares outstanding, respectively	—		—
Additional paid-in-capital	101,112		100,357
Retained earnings	299,724		307,414
Accumulated other comprehensive (loss) income	(2)		158
Treasury stock	(107,060)		(104,159)
Total shareholders’ equity of Vera Bradley, Inc.	293,774		303,770
Total liabilities, redeemable noncontrolling interest, and shareholders’ equity	$	542,084	$	535,061

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						Twenty-Six Weeks Ended
	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
Net revenues	$	131,770	$	119,785	$	201,054	$	210,788
Cost of sales	52,149		52,452		87,245		92,987
Gross profit	79,621		67,333		113,809		117,801
Selling, general, and administrative expenses	62,155		60,745		121,937		115,042
Other income	33		760		53		944
Operating income (loss)	17,499		7,348		(8,075)		3,703
Interest expense (income), net	485		(375)		557		(822)
Income (loss) before income taxes	17,014		7,723		(8,632)		4,525
Income tax expense (benefit)	8,687		2,005		(1,422)		1,212
Net income (loss)	8,327		5,718		(7,210)		3,313
Less: Net income (loss) attributable to redeemable noncontrolling interest	1,111		(136)		911		(136)
Net income (loss) attributable to Vera Bradley, Inc.	$	7,216	$	5,854	$	(8,121)	$	3,449

Basic weighted-average shares outstanding	33,403		34,178		33,367		34,203
Diluted weighted-average shares outstanding	33,693		34,380		33,367		34,476

Basic net income (loss) per share available to Vera Bradley, Inc. common shareholders	$	0.42	$	0.17	$	(0.24)	$	0.10
Diluted net income (loss) per share available to Vera Bradley, Inc. common shareholders	$	0.42	$	0.17	$	(0.24)	$	0.10

Reconciliation of net income (loss) available to Vera Bradley, Inc. common shareholders
Net income (loss) attributable to Vera Bradley, Inc.	$	7,216	$	5,854	$	(8,121)	$	3,449
Excess portion of redeemable noncontrolling interest redemption value adjustment	6,800		—		—		—
Net income (loss) available to Vera Bradley, Inc. common shareholders	$	14,016	$	5,854	$	(8,121)	$	3,449

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						Twenty-Six Weeks Ended
	August 1, 2020		August 3, 2019		August 1, 2020		August 3, 2019
Net income (loss)	$	8,327	$	5,718	$	(7,210)	$	3,313
Unrealized gain (loss) on available-for-sale debt investments	14		(8)		(171)		124
Cumulative translation adjustment	1		20		11		21
Comprehensive income (loss), net of tax	8,342		5,730		(7,370)		3,458
Less: Comprehensive income (loss) attributable to redeemable noncontrolling interest	1,111		(136)		911		(136)
Comprehensive income (loss) attributable to Vera Bradley, Inc.	$	7,231	$	5,866	$	(8,281)	$	3,594

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 (Loss) Income		Treasury Stock		Total Permanent Equity
Balance at February 1, 2020	33,503,249	8,011,372	$	100,357	$	307,414	$	158	$	(104,159)	$	303,770
Net loss attributable to Vera Bradley, Inc.	—	—	—		(15,337)		—		—		(15,337)
Translation adjustments	—	—	—		—		10		—		10
Unrealized loss on available-for-sale debt investments	—	—	—		—		(185)		—		(185)
Restricted shares vested, net of repurchase for taxes	277,687	—	(537)		—		—		—		(537)
Stock-based compensation	—	—	59		—		—		—		59
Treasury stock purchased	(381,835)	381,835	—		—		—		(2,901)		(2,901)
Redeemable noncontrolling interest redemption value adjustment	—	—	—		(9,305)		—		—		(9,305)
Balance at May 2, 2020	33,399,101	8,393,207	$	99,879	$	282,772	$	(17)	$	(107,060)	$	275,574
Net income attributable to Vera Bradley, Inc.	—	—	—		7,216		—		—		7,216
Translation adjustments	—	—	—		—		1		—		1
Unrealized gain on available-for-sale debt investments	—	—	—		—		14		—		14
Restricted shares vested, net of repurchase for taxes	10,225	—	(18)		—		—		—		(18)
Stock-based compensation	—	—	1,251		—		—		—		1,251

Redeemable noncontrolling interest redemption value adjustment	—	—	—		9,736		—		—		9,736
Balance at August 1, 2020	33,409,326	8,393,207	$	101,112	$	299,724	$	(2)	$	(107,060)	$	293,774

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Vera Bradley, Inc.

Condensed Consolidated Statements of Shareholders’ Equity

(in thousands, except share data)

(continued)

(unaudited)


	Number of Shares
	Common Stock	Treasury Stock	Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Treasury Stock		Total Permanent Equity
Balance at February 2, 2019	34,347,420	6,935,623	$	95,572	$	291,994	$	(24)	$	(92,839)	$	294,703
Net loss	—	—	—		(2,405)		—		—		(2,405)
Translation adjustments	—	—	—		—		1		—		1
Unrealized gain on available-for-sale debt investments	—	—	—		—		132		—		132
Restricted shares vested, net of repurchase for taxes	183,346	—	(791)		—		—		—		(791)
Stock-based compensation	—	—	1,238		—		—		—		1,238
Treasury stock purchased	(284,088)	284,088	—		—		—		(2,908)		(2,908)
Cumulative adjustment for ASC 842 adoption	—	—	—		(196)		—		—		(196)
Balance at May 4, 2019	34,246,678	7,219,711	$	96,019	$	289,393	$	109	$	(95,747)	$	289,774
Net income attributable to Vera Bradley, Inc.	—	—	—		5,854		—		—		5,854
Translation adjustments	—	—	—		—		20		—		20
Unrealized loss on available-for-sale debt investments	—	—	—		—		(8)		—		(8)
Restricted shares vested, net of repurchase for taxes	40,297	—	(316)		—		—		—		(316)
Stock-based compensation	—	—	1,255		—		—		—		1,255
Treasury stock purchased	(196,507)	196,507	—		—		—		(2,228)		(2,228)
Balance at August 3, 2019	34,090,468	7,416,218	$	96,958	$	295,247	$	121	$	(97,975)	$	294,351

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

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Vera Bradley, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Twenty-Six Weeks Ended
	August 1, 2020		August 3, 2019
Cash flows from operating activities
Net (loss) income	$	(7,210)	$	3,313
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation of property, plant, and equipment	8,380		8,663
Amortization of operating right-of-use assets	10,843		10,813
Impairment charges	3,806		—
Amortization of intangible assets	4,714		415
Provision for doubtful accounts	1,622		61

Stock-based compensation	1,310		2,493
Deferred income taxes	1,760		(512)
Loss (gain) on investments	13		(178)
Adjustment of earn-out liability	229		—

Other non-cash (gain) charges, net	(22)		131
Changes in assets and liabilities:
Accounts receivable	(6,631)		(4,807)
Inventories	(12,613)		(11,494)
Prepaid expenses and other assets	(4,703)		(1,269)
Accounts payable	7,070		9,393
Income taxes	(6,193)		(1,652)
Operating lease liabilities, net	(7,726)		(12,917)
Accrued and other liabilities	5,274		(1,362)
Net cash (used in) provided by operating activities	(77)		1,091
Cash flows from investing activities
Purchases of property, plant, and equipment	(4,272)		(8,089)
Purchases of investments	(851)		(10,111)
Proceeds from maturities and sales of investments	23,031		29,798

Cash received (paid) for business acquisition, net of cash acquired	993		(73,010)
Net cash provided by (used in) investing activities	18,901		(61,412)
Cash flows from financing activities


Tax withholdings for equity compensation	(555)		(1,107)
Repurchase of common stock	(3,077)		(5,244)
Distributions to redeemable noncontrolling interest	(875)		—
Borrowings under asset-based revolving credit agreement	60,000		—
Repayment of borrowings under asset-based revolving credit agreement	(30,000)		—
Payment of contingent consideration for business acquisition	(18,677)		—


Net cash provided by (used in) financing activities	6,816		(6,351)
Effect of exchange rate changes on cash and cash equivalents	11		21
Net increase (decrease) in cash and cash equivalents	25,651		(66,651)
Cash and cash equivalents, beginning of period	49,917		113,493
Cash and cash equivalents, end of period	$	75,568	$	46,842

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Vera Bradley, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(continued)

(unaudited)


	Twenty-Six Weeks Ended
	August 1, 2020		August 3, 2019
Supplemental disclosure of cash flow information
Cash paid for income taxes, net	$	3,009	$	3,328
Supplemental disclosure of non-cash activity
Non-cash operating, investing, and financing activities
Repurchase of common stock
Expenditures incurred but not yet paid as of August 1, 2020 and August 3, 2019	$	—	$	89
Expenditures incurred but not yet paid as of February 1, 2020 and February 2, 2019	$	176	$	197
Purchases of property, plant, and equipment
Expenditures incurred but not yet paid as of August 1, 2020 and August 3, 2019	$	618	$	453
Expenditures incurred but not yet paid as of February 1, 2020 and February 2, 2019	$	559	$	1,065
Contingent consideration related to business acquisition	$	—	$	20,854

Refer to Note 3 herein for supplemental cash flow information regarding the Company’s leases.

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

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Vera Bradley, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1.Description of the Company and Basis of Presentation

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. Vera Bradley offers a unique, multi-channel sales model, as well as a focus on service and a high level of customer engagement.

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”). Pura Vida, based in La Jolla, California, is a rapidly growing, digitally native lifestyle brand that we believe deeply resonates with its loyal consumer following. The Pura Vida brand has a differentiated and expanding offering of bracelets, jewelry, and other lifestyle accessories.

Beginning in the second quarter of fiscal 2020, the Company included an additional segment for Pura Vida due to its acquisition. As a result, the Company has three reportable segments: Vera Bradley Direct (“VB Direct”), Vera Bradley Indirect (“VB Indirect”), and Pura Vida.

•The VB Direct business consists of sales of Vera Bradley products through Vera Bradley full-line and factory outlet stores in the United States; verabradley.com; the Vera Bradley online outlet site; and the Vera Bradley annual outlet sale in Fort Wayne, Indiana. As of August 1, 2020, the Company operated 82 full-line stores and 67 factory outlet stores. In light of the COVID-19 pandemic, the Company cancelled its 2020 annual outlet sale. The 2021 annual outlet sale is planned for April 2021.

•The VB Indirect business consists of sales of Vera Bradley products to approximately 2,100 specialty retail locations, substantially all of which are located in the United States, as well as department stores, national accounts, third-party e-commerce sites, third-party inventory liquidators, and royalties recognized through licensing agreements related to the Vera Bradley brand.

•The Pura Vida segment represents revenues generated through the Pura Vida websites, www.puravidabracelets.com, www.puravidabracelets.eu, and www.puravidabracelets.ca, and through the distribution of Pura Vida-branded products to wholesale retailers, substantially all of which are located in the United States.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as permitted by such rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020, filed with the SEC.

The interim financial statements reflect all adjustments that are, in the opinion of management, necessary to present fairly the results for the interim periods presented. All such adjustments are of a normal, recurring nature. The results of operations for the thirteen and twenty-six weeks ended August 1, 2020, are not necessarily indicative of the results to be expected for the full fiscal year. Further, the COVID-19 pandemic had a material impact on the Company's current-year period results.

The COVID-19 pandemic resulted in travel restrictions both domestically and internationally, community and self-quarantines, certain factory closures or reduced operations, as well as mall closures and reduced mall operating hours during the first and second quarters of fiscal 2021. Although the Vera Bradley and Pura Vida e-commerce operations remained open, the aforementioned items had a material adverse impact on overall consumer demand, traffic, and sales. Furthermore, the pandemic materially impacted the Company's operating results. Beginning in mid-March 2020, the Company began taking several actions to navigate the COVID-19 pandemic, protect its financial position, maximize its liquidity, and to position the Company for a strong reopening and future. These actions included:

•Temporarily closing all Vera Bradley store locations on March 19;

•Temporarily furloughing approximately 80% of its workforce mid first quarter;

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Vera Bradley, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

•Temporarily reducing base compensation for remaining salaried associates, with reductions on a graduated scale ranging from 15% to 30%, and 75% for the Company's Chief Executive Officer;

•Temporarily suspending cash compensation to the Company's Board of Directors;

•Temporarily suspending the share repurchase program;

•Drawing $60.0 million of its $75.0 million Credit Agreement;

•Temporarily eliminating the Company 401(k) and associate charitable contribution matches;

•Tightly managing inventory levels through the cancellation of purchase orders, delay of receipts, or seeking price concessions where possible;

•Actively working with landlords on addressing rent abatement, payment terms, accelerating store closures, and delaying or cancelling certain planned new store openings;

•Reducing non-payroll operating expenses, including but not limited to, marketing and travel; and

•Extending vendor payment terms.

During the second quarter albeit with reduced staffing, hours, and capacity limitations, the Company began to open its temporarily closed Vera Bradley retail stores; brought back the majority of associates from furlough; began to reinstate portions of the base compensation reductions; and paid back $30.0 million of the $60.0 million borrowing under the Credit Agreement. The Company continued to reduce operating expenses, work with landlords on rent abatements and payment terms, and carefully manage inventory levels and non-payroll operating expenses.

In addition, the Company is leveraging elements of the Coronavirus Aid Relief and Economic Security (CARES) Act to enhance the financial well-being of associates and to maximize the financial health of the Company.

The Company cannot currently predict the extent that COVID-19 will impact its future liquidity, operating results, and financial condition, but it could have a significant adverse effect on these metrics.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries, and its majority owned subsidiary, Pura Vida beginning on July 17, 2019. The Company has eliminated intercompany balances and transactions in consolidation.

Fiscal Periods

The Company’s fiscal year ends on the Saturday closest to January 31. References to the fiscal quarters ended August 1, 2020 and August 3, 2019 refer to the thirteen-week periods ended on those dates.

Recently Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurements. The amendments in this update remove, modify, and add certain disclosure requirements to ASC 820, Fair Value Measurement. This guidance is effective for interim and annual periods beginning on or after December 15, 2019 (fiscal 2021). Early adoption is permitted, and certain amendments are to be adopted prospectively for only the most recent annual or interim period presented in the initial year of adoption or retrospectively. The adoption of this standard in the first quarter of fiscal 2021 did not have a material impact on the Company's consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that uses a forward-looking approach to recording credit losses for certain financial instruments including debt securities, trade receivables, and other financial assets. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, for SEC filers, which is the Company's fiscal 2021. Early adoption is permitted. The adoption of this standard in the first quarter of fiscal 2021 did not have a material impact on the Company's consolidated financial statements.

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Vera Bradley, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this update remove certain exceptions to the general principals in Topic 740, as well as simplify GAAP for certain areas and improve consistency within the topic. This guidance is effective for interim and annual periods beginning on or after December 15, 2020 (fiscal 2022). Early adoption is permitted, with all amendments required to be adopted in the same period. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

2.Revenue from Contracts with Customers

Disaggregation of Revenue

The following presents the Company's net revenues disaggregated by product category for the thirteen and twenty-six weeks ended August 1, 2020 and August 3, 2019 (in thousands):


	Thirteen Weeks Ended
	August 1, 2020
	VB Direct Segment			VB Indirect Segment			Pura Vida Segment			Total
Product categories
Bags	$	29,060		$	7,183		$	—		$	36,243
Apparel/Footwear⁽⁶⁾	15,901			4,680			238			20,819
Travel	13,753			2,374			—			16,127
Accessories	13,027			2,238			31,080			46,345
Home	7,554			422			—			7,976
Other	1,938		(1)	833		(2)	1,489		(3)	4,260
Total net revenues	$	81,233	(4)	$	17,730	(5)	$	32,807	(4)	$