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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 July 31, 2021
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/f99b9de35b4037fb65dd1efacf5f1345-vra-20210731_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 34,021,330 shares of its common stock outstanding as of September 1, 2021.



Table of Contents
TABLE OF CONTENTS
 
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2

Table of Contents
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 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)
 
July 31,
2021
January 30,
2021
Assets
Current assets:
Cash and cash equivalents$75,753 $64,175 
Short-term investments727 1,295 
Accounts receivable, net29,897 27,543 
Inventories148,048 141,416 
Income taxes receivable6,289 7,372 
Prepaid expenses and other current assets15,627 17,882 
Total current assets276,341 259,683 
Operating right-of-use assets86,617 88,730 
Property, plant, and equipment, net62,350 63,952 
Intangible assets, net45,759 47,296 
Goodwill44,254 44,254 
Deferred income taxes3,294 3,530 
Other assets6,444 6,342 
Total assets$525,059 $513,787 
Liabilities, Redeemable Noncontrolling Interest, and Shareholders’ Equity
Current liabilities:
Accounts payable$30,247 $27,093 
Accrued employment costs15,465 13,648 
Short-term operating lease liabilities20,584 22,321 
Other accrued liabilities17,522 14,043 
Income taxes payable 321 
Total current liabilities83,818 77,426 
Long-term operating lease liabilities87,984 91,536 
Other long-term liabilities71 109 
Total liabilities171,873 169,071 
Commitments and contingencies
Redeemable noncontrolling interest30,364 29,809 
Shareholders’ equity:
Preferred stock; 5,000 shares authorized, no shares issued or outstanding
  
Common stock, without par value; 200,000 shares authorized, 42,415 and 41,808 shares issued and 34,021 and 33,414 shares outstanding, respectively
  
Additional paid-in-capital106,455 105,433 
Retained earnings323,431 316,526 
Accumulated other comprehensive (loss) income(4)8 
Treasury stock(107,060)(107,060)
Total shareholders’ equity of Vera Bradley, Inc.322,822 314,907 
Total liabilities, redeemable noncontrolling interest, and shareholders’ equity$525,059 $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 EndedTwenty-Six Weeks Ended
 July 31,
2021
August 1,
2020
July 31,
2021
August 1,
2020
Net revenues$147,048 $131,770 $256,142 $201,054 
Cost of sales66,687 52,149 116,617 87,245 
Gross profit80,361 79,621 139,525 113,809 
Selling, general, and administrative expenses68,729 62,155 129,625 121,937 
Other income, net1,016 33 789 53 
Operating income (loss)12,648 17,499 10,689 (8,075)
Interest expense, net119 485 209 557 
Income (loss) before income taxes12,529 17,014 10,480 (8,632)
Income tax expense (benefit)2,672 8,687 2,141 (1,422)
Net income (loss)9,857 8,327 8,339 (7,210)
Less: Net income attributable to redeemable noncontrolling interest807 1,111 1,434 911 
Net income (loss) attributable to Vera Bradley, Inc.$9,050 $7,216 $6,905 $(8,121)
Basic weighted-average shares outstanding34,001 33,403 33,795 33,367 
Diluted weighted-average shares outstanding34,500 33,693 34,502 33,367 
Basic net income (loss) per share available to Vera Bradley, Inc. common shareholders$0.27 $0.42 $0.20 $(0.24)
Diluted net income (loss) per share available to Vera Bradley, Inc. common shareholders$0.26 $0.42 $0.20 $(0.24)
Reconciliation of net income (loss) available to Vera Bradley, Inc. common shareholders
Net income (loss) attributable to Vera Bradley, Inc.$9,050 $7,216 $6,905 $(8,121)
Excess portion of redeemable noncontrolling interest redemption value adjustment 6,800   
Net income (loss) available to Vera Bradley, Inc. common shareholders$9,050 $14,016 $6,905 $(8,121)
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 EndedTwenty-Six Weeks Ended
 July 31,
2021
August 1,
2020
July 31,
2021
August 1,
2020
Net income (loss)$9,857 $8,327 $8,339 $(7,210)
Unrealized (loss) gain on available-for-sale debt investments(1)14 (3)(171)
Cumulative translation adjustment(3)1 (9)11 
Comprehensive income (loss), net of tax9,853 8,342 8,327 (7,370)
Less: Comprehensive income attributable to redeemable noncontrolling interest807 1,111 1,434 911 
Comprehensive income (loss) attributable to Vera Bradley, Inc.$9,046 $7,231 $6,893 $(8,281)
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 Shareholders’
Equity of Vera Bradley, Inc.
Balance at January 30, 202133,414,490 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 taxes570,562 — (2,171)— — — (2,171)
Stock-based compensation— — 1,814 — — — 1,814 
Balance at May 1, 202133,985,052 8,393,207 $105,076 $314,381 $ $(107,060)$312,397 
Net income attributable to Vera Bradley, Inc.— — — 9,050 — — 9,050 
Translation adjustments— — — — (3)— (3)
Unrealized loss on available-for-sale debt investments— — — — (1)— (1)
Restricted shares vested, net of repurchase for taxes36,278 — (179)— — — (179)
Stock-based compensation— — 1,558 — — — 1,558 
Balance at July 31, 202134,021,330 8,393,207 $106,455 $323,431 $(4)$(107,060)$322,822 










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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 Income (Loss)
Treasury
Stock
Total Shareholders’
Equity of Vera Bradley, Inc.
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 

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
 July 31,
2021
August 1,
2020
Cash flows from operating activities
Net income (loss)$8,339 $(7,210)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation of property, plant, and equipment4,514 8,380 
Amortization of operating right-of-use assets10,026 10,843 
Impairment charges  3,806 
Amortization of intangible assets1,537 4,714 
Provision for doubtful accounts26 1,622 
Stock-based compensation3,372 1,310 
Deferred income taxes236 1,760 
Loss on investments 13 
Adjustment of earn-out liability 229 
Other non-cash gain, net(45)(22)
Changes in assets and liabilities:
Accounts receivable(2,380)(6,631)
Inventories(6,632)(12,613)
Prepaid expenses and other assets2,153 (4,703)
Accounts payable2,696 7,070 
Income taxes 762 (6,193)
Operating lease liabilities, net(13,202)(7,726)
Accrued and other liabilities5,085 5,274 
Net cash provided by (used in) operating activities16,487 (77)
Cash flows from investing activities
Purchases of property, plant, and equipment(2,281)(4,272)
Purchases of investments (851)
Proceeds from maturities and sales of investments565 23,031 
Cash received for business acquisition 993 
Proceeds from disposal of property, plant, and equipment45  
Net cash (used in) provided by investing activities(1,671)18,901 
Cash flows from financing activities
Tax withholdings for equity compensation(2,350)(555)
Repurchase of common stock (3,077)
Distributions to redeemable noncontrolling interest(879)(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 (used in) provided by financing activities(3,229)6,816 
Effect of exchange rate changes on cash and cash equivalents(9)11 
Net increase in cash and cash equivalents11,578 25,651 
Cash and cash equivalents, beginning of period64,175 49,917 
Cash and cash equivalents, end of period$75,753 $75,568 





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Vera Bradley, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(continued)
(unaudited)
 Twenty-Six Weeks Ended
 July 31,
2021
August 1,
2020
Supplemental disclosure of cash flow information
Cash paid for income taxes, net$1,157 $3,009 
Supplemental disclosure of non-cash activity
Non-cash operating, investing, and financing activities
Repurchase of common stock
Expenditures incurred but not yet paid as of July 31, 2021 and August 1, 2020$ $ 
Expenditures incurred but not yet paid as of January 30, 2021 and February 1, 2020$ $176 
Purchases of property, plant, and equipment
Expenditures incurred but not yet paid as of July 31, 2021 and August 1, 2020$974 $618 
Expenditures incurred but not yet paid as of January 30, 2021 and February 1, 2020$343 $559 
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, Inc. operates two unique lifestyle brands – Vera Bradley and Pura Vida. We believe Vera Bradley and Pura Vida are complementary businesses, both with devoted, emotionally-connected, and multi-generational female customer bases; alignment as causal, comfortable, affordable, and fun brands; positioning as “gifting” and socially-connected brands; strong, entrepreneurial cultures; a keen focus on community, charity, and social consciousness; multi-channel distribution strategies; and talented leadership teams aligned and committed to the long-term success of their brands.
Vera Bradley is a leading designer of women’s handbags, luggage and travel items, fashion and home accessories, and unique gifts. Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand’s innovative designs, iconic patterns, and brilliant colors continue to inspire and connect women.
In July 2019, Vera Bradley, Inc. acquired a 75% interest in Creative Genius, Inc., which also operates under the name Pura Vida Bracelets (“Pura Vida”). 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.
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 typically the Vera Bradley annual outlet sale in Fort Wayne, Indiana. As of July 31, 2021, the Company operated 72 full-line stores and 73 factory outlet stores. In light of the COVID-19 pandemic, the Company cancelled its calendar year 2021 and 2020 annual outlet sales.
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 January 30, 2021, 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 July 31, 2021, are not necessarily indicative of the results to be expected for the full fiscal year. Further, the Company cannot predict the future impact that the COVID-19 pandemic and related matters could have on its future liquidity, operating results, and financial condition, but it could have a significant adverse affect on these metrics.



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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
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. 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 July 31, 2021 and August 1, 2020 refer to the thirteen week periods ended on those dates.
Recently Adopted Accounting Pronouncements
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 adoption of this standard in the first quarter of fiscal 2022 did not have a material impact on the Company's 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 July 31, 2021 and August 1, 2020 (in thousands):
Thirteen Weeks Ended
July 31, 2021
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$41,250 $8,883 $574 $50,707 
Travel23,837 3,325  27,162 
Accessories18,298 2,597 30,448 51,343 
Home9,348 718  10,066 
Apparel/Footwear(6)
2,494 180 1,156 3,830 
Other1,911 (1)1,129 (2)900 (3)3,940 
Total net revenues$97,138 (4)$16,832 (5)$33,078 (4)$147,048 
(1) Primarily includes net revenues from stationery, freight, and gift card breakage.
(2) Primarily includes net revenues from licensing agreements and freight.
(3) Related to freight.
(4) Net revenues were related to product sales recognized at a point in time.
(5) $15.9 million of net revenues related to product sales recognized at a point in time and $0.9 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
August 1, 2020
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$29,060 $7,183 $ $36,243 
Travel13,753 2,374  16,127 
Accessories13,027 2,238 31,080 46,345 
Home7,554 422  7,976 
Apparel/Footwear(6)
15,901 4,680 238 20,819 
Other1,938 (1)833 (2)1,489 (3)4,260 
Total net revenues$81,233 (4)$17,730 (5)$32,807 (4)$131,770 
(1) Primarily includes net revenues from freight, stationery, 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) $17.2 million of net revenues related to product sales recognized at a point in time and $0.5 million of net revenues related to sales-based royalties recognized over time.
(6) Includes mask sales.
Twenty-Six Weeks Ended
July 31, 2021
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$67,688 $16,933 $574 $85,195 
Travel39,016 5,892  44,908 
Accessories30,159 4,824 55,959 90,942 
Home15,886 1,455  17,341 
Apparel/Footwear(6)
7,855 851 1,784 10,490 
Other3,266 (1)2,141 (2)1,859 (3)7,266 
Total net revenues$163,870 (4)$32,096 (5)$60,176 (4)$256,142 
(1) Primarily includes net revenues from stationery, freight, and gift card breakage.
(2) Primarily includes net revenues from licensing agreements and freight.
(3) Related to freight.
(4) Net revenues were related to product sales recognized at a point in time.
(5) $30.4 million of net revenues related to product sales recognized at a point in time and $1.7 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)
Twenty-Six Weeks Ended
August 1, 2020
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$45,551 $11,783 $ $57,334 
Travel23,194 4,771  27,965 
Accessories20,274 3,560 51,619 75,453 
Home9,903 653  10,556 
Apparel/Footwear(6)
16,723 6,580 238 23,541 
Other2,425 (1)1,612 (2)2,168 (3)6,205 
Total net revenues$118,070 (4)$28,959 (5)$54,025 (4)$201,054 
(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) $27.9 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.

Contract Balances
Contract liabilities as of July 31, 2021 and January 30, 2021, were $3.6 million and $4.1 million, respectively. The balance as of July 31, 2021 and January 30, 2021 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. These contract liabilities are recognized within other accrued liabilities on the Company’s Condensed Consolidated Balance Sheets. Substantially all contract liabilities are recognized within one year. The Company did not have contract assets as of July 31, 2021 and January 30, 2021.
The balance for accounts receivable from contracts with customers, net of allowances, as of July 31, 2021 and January 30, 2021, was $28.7 million and $26.0 million, respectively, which is recognized within accounts receivable, net, on the Company’s Condensed Consolidated Balance Sheets. The provision for doubtful accounts was $1.1 million as of July 31, 2021 and January 30, 2021. 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.
Remaining Performance Obligations
The Company does not have remaining performance obligations in excess of one year or contracts that it does not have the right to invoice as of July 31, 2021.

3.Leases
In the prior-year, the Company temporarily closed its full-line and factory outlet stores beginning on March 19, 2020, due to the COVID-19 pandemic, for various lengths of time (from several weeks to several months). The stores began to re-open on May 5, 2020, with substantially all stores open by the end of July 2020. All of the Company's stores were open during the first six months of the current-year. As a result of the temporary closures in the prior-year,
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
certain rent payments were deferred. An immaterial amount of rent abatements were received during the current and prior-year periods.
Discount Rate
The weighted-average discount rate as of July 31, 2021, and August 1, 2020 was 4.7% and 5.0%, respectively. The discount rate is not readily determinable in the lease; therefore, the Company estimated the incremental borrowing rate, at the commencement date of each lease, which is the rate of interest it would have to borrow on a collateralized basis over a similar term with similar payments.

Leases Not Yet Commenced
As of July 31, 2021, the Company had two retail store leases which were executed, but did not have control of the underlying assets; therefore, the lease liability and right-of-use asset are not recorded on the Condensed Consolidated Balance Sheet. These leases contain undiscounted lease payments, which will be included in the determination of the lease liability, totaling approximately $3.9 million and have terms of approximately 10 years commencing in fiscal years 2022 and 2023.

Amounts Recognized in the Condensed Consolidated Financial Statements
The following lease expense is recorded within cost of sales for the Asia sourcing office and certain equipment leases and within selling, general, and administrative expenses for all other leases, including retail store leases, in the Company's Condensed Consolidated Statement of Operations for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020 (in thousands):
Thirteen Weeks EndedTwenty-Six Weeks Ended
July 31, 2021August 1, 2020July 31, 2021August 1, 2020
Operating lease cost$6,303 $6,528 $12,173 $13,762 
Variable lease cost2,052 1,735 3,534 2,553 
Short-term lease cost49 76 242 145 
Total lease cost$8,404 $8,339 $15,949 $16,460 

The weighted-average remaining lease term as of July 31, 2021 and August 1, 2020 was 5.4 years and 5.7 years, respectively.

Supplemental operating cash flow information was as follows (in thousands):
Twenty-Six Weeks Ended
July 31, 2021August 1, 2020
Cash paid for amounts included in the measurement of operating lease liabilities (1)
$18,327 $11,791 
Right-of-use assets increase as a result of new and modified operating lease liabilities, net$7,961 $3,271 
(1) 2.5 million of lease liabilities were recorded within accounts payable on the Company's Consolidated Balance Sheets as of January 30, 2021, and were paid in the first quarter of fiscal 2022.

4.Earnings Per Share
Basic earnings per share is computed based on the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed based on the weighted-average number of common shares outstanding, plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares represent outstanding restricted stock units.
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
On July 16, 2019, as contemplated by the Interest Purchase Agreement, the Company and certain of its subsidiaries and the owners of the remaining twenty-five percent (25%) ownership interest in Pura Vida (the “Sellers”) which was not acquired by the Company (the “Remaining Pura Vida Interest”) entered into a Put/Call Agreement (the “Put/Call Agreement”). Pursuant to the Put/Call Agreement, and subject to the terms and conditions thereof, the Sellers have the right to sell all of the Remaining Pura Vida Interest to the Company, and the Company has the right to purchase all of the Remaining Pura Vida Interests from Sellers, in each case generally at any time following the fifth anniversary of the closing date of the transaction until the tenth anniversary thereof. The purchase price for any Remaining Pura Vida Interest put to, or called by, the Company will be determined based on the arithmetic average of a multiple of adjusted EBITDA of Pura Vida and a multiple of adjusted EBITDA of the Company, as defined in the Put/Call Agreement, over the twelve-month period ending on the last day of the month immediately preceding the month in which an exercise notice is delivered by a relevant party.
As a result of this redemption feature, the Company recorded the noncontrolling interest as redeemable and classified it in temporary equity within its Condensed Consolidated Balance Sheets initially at its acquisition-date fair value. The noncontrolling interest is adjusted each reporting period for income (or loss) attributable to the noncontrolling interest. A measurement period adjustment, if any, is then made to adjust the noncontrolling interest to the higher of the redemption value or carrying value each reporting period. These adjustments are recognized through retained earnings and are not reflected in net income (loss) or net income attributable to Vera Bradley, Inc. When calculating earnings per share attributable to Vera Bradley, Inc., the Company adjusts the net income attributable to Vera Bradley, Inc. for the measurement period adjustment to the extent the redemption value exceeds the fair value of the noncontrolling interest on a cumulative basis.
The components of basic and diluted earnings per share were as follows (in thousands, except per share data):
 
 Thirteen Weeks EndedTwenty-Six Weeks Ended
 July 31,
2021
August 1,
2020
July 31,
2021
August 1,
2020
Numerator:
Net income (loss)$9,857 $8,327 $8,339 $(7,210)
Less: Net income attributable to redeemable noncontrolling interest807 1,111 1,434 911 
Net income (loss) attributable to Vera Bradley, Inc.9,050 7,216 6,905 (8,121)
Plus: Excess portion of redeemable noncontrolling interest redemption value adjustment 6,800   
Net income (loss) available to Vera Bradley, Inc. common shareholders$9,050 $14,016 $6,905 $(8,121)
Denominator:
Weighted-average number of common shares (basic)34,001 33,403 33,795 33,367 
Dilutive effect of stock-based awards499 290 707  
Weighted-average number of common shares (diluted)34,500 33,693 34,502 33,367 
Net income (loss) per share available to Vera Bradley, Inc. common shareholders:
Basic$0.27 $0.42 $0.20 $(0.24)
Diluted$0.26 $0.42 $0.20 $(0.24)
For the thirteen weeks ended July 31, 2021 and August 1, 2020, and the twenty-six weeks ended July 31, 2021, there were an immaterial number of additional shares issuable upon the vesting of restricted stock units that were excluded from the diluted share calculations because they were anti-dilutive. For the twenty-six weeks ended August 1, 2020, all potential common shares were excluded from the diluted share calculation because they were anti-dilutive due to the net loss in the period.

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Table of Contents


Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
5.Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:
Level 1 – Quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly;
Level 3 – Unobservable inputs based on the Company’s own assumptions.
The classification of fair value measurements within the hierarchy is based upon the lowest level of input that is significant to the measurement.
The carrying amounts reflected on the Condensed Consolidated Balance Sheets for cash and cash equivalents, accounts receivable, other current assets, and accounts payable as of July 31, 2021 and January 30, 2021, approximated their fair values.
The following table details the fair value measurements of the Company's investments as of July 31, 2021 and January 30, 2021 (in thousands):
Level 1Level 2Level 3
July 31, 2021January 30, 2021July 31, 2021January 30, 2021July 31, 2021January 30, 2021
Cash equivalents(1)
$2,132 $1,565 $ $ $ $ 
Short-term investments:
U.S. corporate debt securities