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Table of Contents


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 October 31, 2020
OR
 
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/50ea50b32fad78e92d755fc681dba5b2-vra-20201031_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 ClassTrading Symbol(s)Name of each exchange on which registered
Common Stock, without par valueVRANASDAQ 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 x
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 33,414,490 shares of its common stock outstanding as of December 2, 2020.



Table of Contents
TABLE OF CONTENTS
 
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

2

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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)
 
October 31,
2020
February 1,
2020
Assets
Current assets:
Cash and cash equivalents$75,765 $49,917 
Short-term investments1,068 8,977 
Accounts receivable, net36,027 24,290 
Inventories141,588 123,606 
Income taxes receivable3,545 1,043 
Prepaid expenses and other current assets13,859 10,956 
Total current assets271,852 218,789 
Operating right-of-use assets97,534 114,790 
Property, plant, and equipment, net66,376 73,027 
Intangible assets, net49,318 56,305 
Goodwill44,254 44,254 
Long-term investments478 14,912 
Deferred income taxes4,972 7,656 
Other assets6,390 5,328 
Total assets$541,174 $535,061 
Liabilities, Redeemable Noncontrolling Interest, and Shareholders’ Equity
Current liabilities:
Accounts payable$27,136 $20,235 
Accrued employment costs12,970 11,412 
Short-term operating lease liabilities24,543 21,347 
Earn-out liability 18,448 
Other accrued liabilities14,297 13,850 
Income taxes payable251 2,113 
Total current liabilities79,197 87,405 
Long-term operating lease liabilities97,849 113,775 
Long-term debt30,000  
Other long-term liabilities154 62 
Total liabilities207,200 201,242 
Commitments and contingencies
Redeemable noncontrolling interest29,146 30,049 
Shareholders’ equity:
Preferred stock; 5,000 shares authorized, no shares issued or outstanding
  
Common stock, without par value; 200,000 shares authorized, 41,808 and 41,515 shares issued and 33,414 and 33,503 shares outstanding, respectively
  
Additional paid-in-capital103,282 100,357 
Retained earnings308,598 307,414 
Accumulated other comprehensive income8 158 
Treasury stock(107,060)(104,159)
Total shareholders’ equity of Vera Bradley, Inc.304,828 303,770 
Total liabilities, redeemable noncontrolling interest, and shareholders’ equity$541,174 $535,061 

The accompanying notes are an integral part of these financial statements.
4

Table of Contents
Vera Bradley, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 October 31,
2020
November 2,
2019
October 31,
2020
November 2,
2019
Net revenues$124,849 $127,501 $325,903 $338,289 
Cost of sales51,018 59,631 138,263 152,618 
Gross profit73,831 67,870 187,640 185,671 
Selling, general, and administrative expenses61,703 69,423 183,640 184,465 
Other income36 77 89 1,021 
Operating income (loss)12,164 (1,476)4,089 2,227 
Interest expense (income), net298 (133)855 (955)
Income (loss) before income taxes11,866 (1,343)3,234 3,182 
Income tax expense (benefit)2,892 (361)1,470 851 
Net income (loss)8,974 (982)1,764 2,331 
Less: Net income (loss) attributable to redeemable noncontrolling interest100 (1,121)1,011 (1,257)
Net income attributable to Vera Bradley, Inc.$8,874 $139 $753 $3,588 
Basic weighted-average shares outstanding33,411 33,907 33,382 34,104 
Diluted weighted-average shares outstanding33,977 34,114 33,789 34,355 
Basic net income per share available to Vera Bradley, Inc. common shareholders$0.27 $0.00 $0.02 $0.11 
Diluted net income per share available to Vera Bradley, Inc. common shareholders$0.26 $0.00 $0.02 $0.10 
The accompanying notes are an integral part of these financial statements.
5

Table of Contents
Vera Bradley, Inc.
Condensed Consolidated Statements of Comprehensive Income
(in thousands)
(unaudited)
 
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 October 31,
2020
November 2,
2019
October 31,
2020
November 2,
2019
Net income (loss)$8,974 $(982)$1,764 $2,331 
Unrealized (loss) gain on available-for-sale debt investments(1)(3)(172)121 
Cumulative translation adjustment11 (22)22 (1)
Comprehensive income (loss), net of tax8,984 (1,007)1,614 2,451 
Less: Comprehensive income (loss) attributable to redeemable noncontrolling interest100 (1,121)1,011 (1,257)
Comprehensive income attributable to Vera Bradley, Inc.$8,884 $114 $603 $3,708 
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 EarningsAccumulated
Other
Comprehensive Income (Loss)
Treasury
Stock
Total Permanent
Equity
Balance at February 1, 202033,503,249 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 taxes277,687 — (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, 202033,399,101 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 taxes10,225 — (18)— — — (18)
Stock-based compensation— — 1,251 — — — 1,251 
Redeemable noncontrolling interest redemption value adjustment— — — 9,736 — — 9,736 
Balance at August 1, 202033,409,326 8,393,207 $101,112 $299,724 $(2)$(107,060)$293,774 
Net income attributable to Vera Bradley, Inc.— — — 8,874 — — 8,874 
Translation adjustments— — — — 11 — 11 
Unrealized loss on available-for-sale debt investments— — — — (1)— (1)
Restricted shares vested, net of repurchase for taxes5,164 — (7)— — — (7)
Stock-based compensation— — 2,177 — — — 2,177 
Balance at October 31, 202033,414,490 8,393,207 $103,282 $308,598 $8 $(107,060)$304,828 





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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 EarningsAccumulated
Other
Comprehensive (Loss) Income
Treasury
Stock
Total Permanent
Equity
Balance at February 2, 201934,347,420 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 taxes183,346 — (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, 201934,246,678 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 taxes40,297 — (316)— — — (316)
Stock-based compensation  1,255 — — — 1,255 
Treasury stock purchased(196,507)196,507 — — — (2,228)(2,228)
Balance at August 3, 201934,090,468 7,416,218 $96,958 $295,247 $121 $(97,975)$294,351 
Net income attributable to Vera Bradley, Inc.  — 139 — — 139 
Translation adjustments  — — (22)— (22)
Unrealized loss on available-for-sale debt investments  — — (3)— (3)
Restricted shares vested, net of repurchase for taxes7,935  (47)— — — (47)
Stock-based compensation  1,539 — — — 1,539 
Treasury stock purchased(388,833)388,833 — — — (3,909)(3,909)
Balance at November 2, 201933,709,570 7,805,051 $98,450 $295,386 $96 $(101,884)$292,048 

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)
 
 Thirty-Nine Weeks Ended
 October 31,
2020
November 2,
2019
Cash flows from operating activities
Net income$1,764 $2,331 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation of property, plant, and equipment10,808 13,856 
Amortization of operating right-of-use assets16,051 16,359 
Impairment charges 3,806  
Amortization of intangible assets6,987 2,884 
Provision for doubtful accounts1,559 97 
Stock-based compensation3,487 4,032 
Deferred income taxes2,684 (1,113)
Loss (gain) on investments13 (178)
Adjustment of earn-out liability229 1,803 
Amortization of step-up in inventory basis 7,230 
Other non-cash (gain) charges, net(22)157 
Changes in assets and liabilities:
Accounts receivable(14,289)(3,620)
Inventories(17,982)(21,970)
Prepaid expenses and other assets(3,965)(3,331)
Accounts payable7,222 4,146 
Income taxes (4,364)(4,175)
Operating lease liabilities, net(14,331)(18,727)
Accrued and other liabilities1,973 (9,016)
Net cash provided by (used in) operating activities1,630 (9,235)
Cash flows from investing activities
Purchases of property, plant, and equipment(5,178)(11,425)
Purchases of investments(851)(13,762)
Proceeds from maturities and sales of investments23,031 34,209 
Cash received (paid) for business acquisition, net of cash acquired993 (76,032)
Net cash provided by (used in) investing activities17,995 (67,010)
Cash flows from financing activities
Tax withholdings for equity compensation(562)(1,154)
Repurchase of common stock(3,077)(9,143)
Distributions to redeemable noncontrolling interest(1,483)(951)
Borrowings under asset-based revolving credit agreement60,000  
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 activities6,201 (11,248)
Effect of exchange rate changes on cash and cash equivalents22 (1)
Net increase (decrease) in cash and cash equivalents25,848 (87,494)
Cash and cash equivalents, beginning of period49,917 113,493 
Cash and cash equivalents, end of period$75,765 $25,999 





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Vera Bradley, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(continued)
(unaudited)
 Thirty-Nine Weeks Ended
 October 31,
2020
November 2,
2019
Supplemental disclosure of cash flow information
Cash paid for income taxes, net$3,152 $6,166 
Supplemental disclosure of non-cash activity
Non-cash operating, investing, and financing activities
Repurchase of common stock
Expenditures incurred but not yet paid as of October 31, 2020 and November 2, 2019$ $99 
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 October 31, 2020 and November 2, 2019$538 $391 
Expenditures incurred but not yet paid as of February 1, 2020 and February 2, 2019$559 $1,065 
Contingent consideration related to business acquisition$ $20,098 
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 October 31, 2020, the Company operated 81 full-line stores and 69 factory outlet stores. In light of the COVID-19 pandemic, the Company cancelled its 2020 annual outlet sale.
The VB Indirect business consists of sales of Vera Bradley products to approximately 2,000 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 thirty-nine weeks ended October 31, 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 nine months 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.
The Company has brought back substantially all associates from furlough; reinstated a majority of the base compensation reductions; reinstated the cash compensation to the Board of Directors; and paid back $30.0 million of the $60.0 million borrowing under the Credit Agreement. The Company continued to manage operating expenses and inventory levels, and work with landlords on rent abatements and payment terms. All factory stores and all but two full line stores were opened as of the end of the third quarter.
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 CARES Act tax provisions include retention credits and the deferral of the employer portion of certain payroll taxes.
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 October 31, 2020 and November 2, 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
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
adoption of this standard in the first quarter of fiscal 2021 did not have a material impact on the Company's consolidated financial statements.
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 thirty-nine weeks ended October 31, 2020 and November 2, 2019 (in thousands):
Thirteen Weeks Ended
October 31, 2020
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$28,536 $8,453 $ $36,989 
Apparel/Footwear(6)
11,055 4,406 744 16,205 
Travel14,400 4,758  19,158 
Accessories14,352 2,607 22,676 39,635 
Home8,067 839  8,906 
Other1,767 (1)1,281 (2)908 (3)3,956 
Total net revenues$78,177 (4)$22,344 (5)$24,328 (4)$124,849 
(1) Primarily includes net revenues from freight and stationery.
(2) Primarily includes net revenues from licensing agreements, freight, and merchandising.
(3) Related to freight.
(4) Net revenues were related to product sales recognized at a point in time.
(5) $21.2 million of net revenues related to product sales recognized at a point in time and $1.1 million of net revenues related to sales-based royalties recognized over time.
(6) Includes mask sales.

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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Thirteen Weeks Ended
November 2, 2019
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$33,178 $10,565 $ $43,743 
Travel19,191 5,789  24,980 
Accessories17,575 4,785 24,469 46,829 
Home6,255 1,171  7,426 
Apparel/Footwear696 375  1,071 
Other1,502 (1)1,402 (2)548 (3)3,452 
Total net revenues$78,397 (4)$24,087 (5)$25,017 (4)$127,501 
(1) Primarily includes net revenues from stationery, freight, and gift card breakage.
(2) Primarily includes net revenues from licensing agreements, freight, and merchandising.
(3) Related to freight.
(4) Net revenues were related to product sales recognized at a point in time.
(5) $23.1 million of net revenues related to product sales recognized at a point in time and $1.0 million of net revenues related to sales-based royalties recognized over time.


Thirty-Nine Weeks Ended
October 31, 2020
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$74,087 $20,236 $ $94,323 
Travel37,594 9,529  47,123 
Accessories34,626 6,167 74,295 115,088 
Apparel/Footwear(6)
27,778 10,986 982 39,746 
Home17,970 1,492  19,462 
Other4,192 (1)2,893 (2)3,076 (3)10,161 
Total net revenues$196,247 (4)$51,303 (5)$78,353 (4)$325,903 
(1) Primarily includes net revenues from stationery, freight, and gift card breakage.
(2) Primarily includes net revenues from licensing agreements, freight, and merchandising.
(3) Related to freight.
(4) Net revenues were related to product sales recognized at a point in time.
(5) $49.1 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.
(6) Includes mask sales.

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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Thirty-Nine Weeks Ended
November 2, 2019
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$100,527 $31,549 $ $132,076 
Travel62,402 13,091  75,493 
Accessories54,622 12,952 29,689 97,263 
Home19,769 1,995  21,764 
Apparel/Footwear2,443 484  2,927 
Other4,150 (1)3,900 (2)716 (3)8,766 
Total net revenues$243,913 (4)$63,971 (5)$30,405 (4)$338,289 
(1) Primarily includes net revenues from stationery, freight. and gift card breakage.
(2) Primarily includes net revenues from licensing agreements, freight, and merchandising.
(3) Related to freight.
(4) Net revenues were related to product sales recognized at a point in time.
(5) $61.1 million of net revenues related to product sales recognized at a point in time and $2.9 million of net revenues related to sales-based royalties recognized over time.

Contract Balances
Contract liabilities as of October 31, 2020 and February 1, 2020, were $3.7 million and $3.9 million, respectively. The balance as of October 31, 2020 consisted of unearned revenue related to the monthly bracelet and jewelry clubs of the Pura Vida segment, unredeemed gift cards, Pura Vida loyalty club points, Pura Vida customer deposits and payments collected before shipment, and an immaterial amount of unearned revenue for pre-payments of royalties in certain of the Company’s licensing arrangements. The balance as of February 1, 2020 consisted of unearned revenue related to the monthly bracelet and jewelry clubs of the Pura Vida segment, unredeemed gift cards, Pura Vida payments collected before shipment, and an immaterial amount of unearned revenue for pre-payments of royalties in certain of the Company’s licensing arrangements. These contract liabilities are recognized within other accrued liabilities on the Company’s Condensed Consolidated Balance Sheets. The Company did not have contract assets as of October 31, 2020 and February 1, 2020.
The balance for accounts receivable from contracts with customers, net of allowances, as of October 31, 2020 and February 1, 2020, was $31.6 million and $16.3 million, respectively, which is recognized within accounts receivable, net, on the Company’s Condensed Consolidated Balance Sheets. The provision for doubtful accounts was $1.8 million and $0.5 million as of October 31, 2020 and February 1, 2020, 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, VB Indirect, and Pura Vida 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.