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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 April 29, 2023
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/aefaaa6da18cb356ba9db9cd283a081c-Vera Bradley, Inc. Logo.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 30,915,493 shares of its common stock outstanding as of May 31, 2023.



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

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:
possible inability to successfully implement our long-term strategic plans, including Project Restoration;
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 political unrest, social unrest, acts of war and terrorism, and other related matters;
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 websites;
possible disruptions in our supply chain;
possible new or increased tariffs on our products and increases in inbound and outbound freight expense that could lead to increased product costs and lower profit margins; and
public health pandemics and actions by governmental or other actors regarding containment.
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 28, 2023, 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.

3

Table of Contents
PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

Vera Bradley, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
April 29,
2023
January 28,
2023
Assets
Current assets:
Cash and cash equivalents$25,338 $46,595 
Accounts receivable, net20,241 22,105 
Inventories142,742 142,275 
Income taxes receivable4,167 1,311 
Prepaid expenses and other current assets15,108 14,276 
Total current assets207,596 226,562 
Operating right-of-use assets75,148 77,954 
Property, plant, and equipment, net57,791 58,674 
Intangible assets, net15,189 15,918 
Deferred income taxes21,089 21,542 
Other assets3,117 3,851 
Total assets$379,930 $404,501 
Liabilities, Redeemable Noncontrolling Interest, and Shareholders’ Equity
Current liabilities:
Accounts payable$16,536 $20,350 
Accrued employment costs10,356 14,312 
Short-term operating lease liabilities20,280 19,714 
Other accrued liabilities13,425 12,723 
Income taxes payable390 558 
Total current liabilities60,987 67,657 
Long-term operating lease liabilities71,870 74,664 
Other long-term liabilities81 90 
Total liabilities132,938 142,411 
Commitments and contingencies
Redeemable noncontrolling interest 10,712 
Shareholders’ equity:
Preferred stock; 5,000 shares authorized, no shares issued or outstanding
  
Common stock, without par value; 200,000 shares authorized, 43,176 and 42,846 shares issued and 30,968 and 30,766 shares outstanding, respectively
  
Additional paid-in-capital110,753 109,718 
Retained earnings269,950 274,629 
Accumulated other comprehensive loss(115)(105)
Treasury stock(133,596)(132,864)
Total shareholders’ equity of Vera Bradley, Inc.246,992 251,378 
Total liabilities, redeemable noncontrolling interest, and shareholders’ equity$379,930 $404,501 

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 Ended
 April 29,
2023
April 30,
2022
Net revenues$94,362 $98,459 
Cost of sales42,613 45,945 
Gross profit51,749 52,514 
Selling, general, and administrative expenses58,506 60,914 
Other income, net371 167 
Operating loss(6,386)(8,233)
Interest expense, net32 40 
Loss before income taxes(6,418)(8,273)
Income tax benefit(1,739)(1,563)
Net loss(4,679)(6,710)
Less: Net income attributable to redeemable noncontrolling interest 264 
Net loss attributable to Vera Bradley, Inc.$(4,679)$(6,974)
Basic weighted-average shares outstanding30,794 32,672 
Diluted weighted-average shares outstanding30,794 32,672 
Basic net loss per share available to Vera Bradley, Inc. common shareholders$(0.15)$(0.21)
Diluted net loss per share available to Vera Bradley, Inc. common shareholders$(0.15)$(0.21)
The accompanying notes are an integral part of these financial statements.
5

Table of Contents
Vera Bradley, Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
 
 Thirteen Weeks Ended
 April 29,
2023
April 30,
2022
Net loss$(4,679)$(6,710)
Cumulative translation adjustment(10)(31)
Comprehensive loss, net of tax(4,689)(6,741)
Less: Comprehensive income attributable to redeemable noncontrolling interest 264 
Comprehensive loss attributable to Vera Bradley, Inc.$(4,689)$(7,005)
The accompanying notes are an integral part of these financial statements.
6

Table of Contents
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 Loss
Treasury
Stock
Total Shareholders’
Equity of Vera Bradley, Inc.
Balance at January 28, 202330,766,024 12,079,690 $109,718 $274,629 $(105)$(132,864)$251,378 
Net loss attributable to Vera Bradley, Inc.— — — (4,679)— — (4,679)
Translation adjustments— — — — (10)— (10)
Restricted shares vested, net of repurchase for taxes330,500 — (942)— — — (942)
Stock-based compensation— — 691 — — — 691 
Treasury stock purchased(128,100)128,100    (732)(732)
Purchase of noncontrolling interest equity adjustment— — 1,286 — — — 1,286 
Balance at April 29, 202330,968,424 12,207,790 $110,753 $269,950 $(115)$(133,596)$246,992 
Number of Shares
Common
Stock
Treasury
Stock
Additional
Paid-in
Capital
Retained EarningsAccumulated
Other
Comprehensive Loss
Treasury
Stock
Total Shareholders’
Equity of Vera Bradley, Inc.
Balance at January 29, 202233,170,430 9,258,741 $107,907 $334,364 $(29)$(114,802)$327,440 
Net loss attributable to Vera Bradley, Inc.— — — (6,974)— — (6,974)
Translation adjustments— — — — (31)— (31)
Restricted shares vested, net of repurchase for taxes404,469 — (1,410)— — — (1,410)
Stock-based compensation— — 543 — — — 543 
Treasury stock purchased(1,423,096)1,423,096    (10,454)(10,454)
Balance at April 30, 202232,151,803 10,681,837 $107,040 $327,390 $(60)$(125,256)$309,114 
The accompanying notes are an integral part of these financial statements.
7

Table of Contents
Vera Bradley, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 Thirteen Weeks Ended
 April 29,
2023
April 30,
2022
Cash flows from operating activities
Net loss$(4,679)$(6,710)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property, plant, and equipment2,086 2,192 
Amortization of operating right-of-use assets5,341 5,260 
Impairment charges 592 
Amortization of intangible assets729 769 
Provision for doubtful accounts38 (143)
Stock-based compensation691 543 
Deferred income taxes1,027 (123)
Other non-cash gain, net26  
Changes in assets and liabilities:
Accounts receivable1,826 709 
Inventories(467)(16,906)
Prepaid expenses and other assets(98)(786)
Accounts payable(3,794)8,165 
Income taxes (3,024)5,925 
Operating lease liabilities, net(4,763)(6,565)
Accrued and other liabilities(3,694)(4,004)
Net cash used in operating activities(8,755)(11,082)
Cash flows from investing activities
Purchases of property, plant, and equipment(818)(1,745)
Cash paid for business acquisition(10,000) 
Net cash used in investing activities(10,818)(1,745)
Cash flows from financing activities
Tax withholdings for equity compensation(942)(1,410)
Repurchase of common stock(732)(10,035)
Distributions to redeemable noncontrolling interest (146)
Net cash used in financing activities(1,674)(11,591)
Effect of exchange rate changes on cash and cash equivalents(10)(31)
Net decrease in cash and cash equivalents(21,257)(24,449)
Cash and cash equivalents, beginning of period46,595 88,436 
Cash and cash equivalents, end of period$25,338 $63,987 














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Vera Bradley, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(continued)
(unaudited)
 Thirteen Weeks Ended
 April 29,
2023
April 30,
2022
Supplemental disclosure of cash flow information
Cash paid (received) for income taxes, net$256 $(7,359)
Supplemental disclosure of non-cash activity
Non-cash operating, investing, and financing activities
Repurchase of common stock
Expenditures incurred but not yet paid as of April 29, 2023 and April 30, 2022$ $419 
Expenditures incurred but not yet paid as of January 28, 2023 and January 29, 2022$ $ 
Purchases of property, plant, and equipment
Expenditures incurred but not yet paid as of April 29, 2023 and April 30, 2022$774 $788 
Expenditures incurred but not yet paid as of January 28, 2023 and January 29, 2022$363 $250 
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”). On January 30, 2023, the Company purchased the remaining 25% interest in Pura Vida. Pura Vida, based in La Jolla, California, is a 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 and verabradley.ca; the Vera Bradley online outlet site; and typically the Vera Bradley annual outlet sale in Fort Wayne, Indiana. As of April 29, 2023, the Company operated 48 full-line stores and 80 factory outlet stores. In light of the COVID-19 pandemic, the Company cancelled its calendar year 2022 annual outlet sale. The sale will resume in June 2023.
The VB Indirect business consists of sales of Vera Bradley products to approximately 1,700 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; through the distribution of Pura Vida-branded products to wholesale retailers, substantially all of which are located in the United States; and through its five retail stores.
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 28, 2023, 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 weeks ended April 29, 2023, are not necessarily indicative of the results to be expected for the full fiscal year due to, in part, the uncertainty of macroeconomic factors on future periods, including inflation and supply chain challenges, among other related matters.



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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 and its wholly owned subsidiaries, including Pura Vida. The Company has eliminated intercompany balances and transactions in consolidation. In the prior year, Pura Vida was a majority owned subsidiary and was included in the consolidated financial statements of the Company. Refer to Notes 4 and 12 herein for additional information.
Fiscal Periods
The Company’s fiscal year ends on the Saturday closest to January 31. References to the fiscal quarters ended April 29, 2023 and April 30, 2022 refer to the thirteen week periods ended on those dates.
Recently Issued Accounting Pronouncements
There were no new accounting pronouncements issued or which became effective during the thirteen weeks ended April 29, 2023, which had, or are expected to have, a significant 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 weeks ended April 29, 2023 and April 30, 2022 (in thousands):
Thirteen Weeks Ended
April 29, 2023
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$22,901 $8,328 $61 $31,290 
Travel15,406 3,179  18,585 
Accessories10,494 1,958 19,011 31,463 
Home5,928 588  6,516 
Apparel/Footwear2,947 461 290 3,698 
Other1,229 (1)859 (2)722 (3)2,810 
Total net revenues$58,905 (4)$15,373 (5)$20,084 (4)$94,362 
(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) $14.7 million of net revenues related to product sales recognized at a point in time and $0.7 million of net revenues related to sales-based royalties recognized over time.
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Thirteen Weeks Ended
April 30, 2022
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$26,132 $9,451 $63 $35,646 
Travel15,088 3,073  18,161 
Accessories11,499 1,768 18,860 32,127 
Home5,722 1,126  6,848 
Apparel/Footwear(6)
1,903 500 436 2,839 
Other1,292 (1)1,059 (2)487 (3)2,838 
Total net revenues$61,636 (4)$16,977 (5)$19,846 (4)$98,459 
(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) $16.2 million of net revenues related to product sales recognized at a point in time and $0.8 million of net revenues related to sales-based royalties recognized over time.
(6) Includes mask sales.

Contract Balances
Contract liabilities as of April 29, 2023 and January 28, 2023, were $2.9 million and $3.2 million, respectively. The balance as of April 29, 2023 and January 28, 2023 consisted of unredeemed gift cards, unearned revenue related to the monthly bracelet and jewelry clubs of the Pura Vida segment, Pura Vida loyalty club points, and Pura Vida customer deposits and payments collected before shipment. 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 April 29, 2023 and January 28, 2023.
The balance for accounts receivable from contracts with customers, net of allowances, as of April 29, 2023 and January 28, 2023, was $18.8 million and $20.7 million, respectively, which is recognized within accounts receivable, net, on the Company’s Condensed Consolidated Balance Sheets. The provision for doubtful accounts was $0.8 million as of April 29, 2023 and January 28, 2023. 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 April 29, 2023.

3.Leases
Discount Rate
The weighted-average discount rate as of April 29, 2023, and April 30, 2022 was 4.7% and 4.9%, respectively. The discount rate is not readily determinable in the lease; therefore, the Company estimated the incremental borrowing
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
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 April 29, 2023, the Company had one Vera Bradley retail store lease which was executed, but it did not have control of the underlying asset; therefore, the lease liability and right-of-use asset are not recorded on the Condensed Consolidated Balance Sheet. This lease contains undiscounted lease payments, which will be included in the determination of the lease liability, totaling approximately $2.4 million and has a term of approximately 10 years commencing in fiscal year 2024.

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 weeks ended April 29, 2023 and April 30, 2022 (in thousands):
Thirteen Weeks Ended
April 29, 2023April 30, 2022
Operating lease cost$6,565 $6,250 
Variable lease cost1,356 1,418 
Short-term lease cost122 214 
Less: Sublease income (1)
(105) 
Total net lease cost$7,938 $7,882 
(1) Related to the sublease of a former Company location.

The weighted-average remaining lease term as of April 29, 2023 and April 30, 2022 was 5.4 years and 5.5 years, respectively.

Supplemental operating cash flow information was as follows (in thousands):
Thirteen Weeks Ended
April 29, 2023April 30, 2022
Cash paid for amounts included in the measurement of operating lease liabilities (1)
$7,377 $4,989 
Right-of-use assets increase as a result of new and modified operating lease liabilities, net$2,548 $5,788 
(1) $2.5 million of lease liabilities were recorded within accounts payable on the Company's Condensed Consolidated Balance Sheets as of April 30, 2022.

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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
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.
As a result of the redemption feature related to the Put/Call Agreement in the prior year, the Company recorded the prior year 25% 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 was adjusted each reporting period for income (or loss) attributable to the noncontrolling interest. A measurement period adjustment, if any, was then made to adjust the noncontrolling interest to the higher of the redemption value or carrying value each reporting period. These adjustments were recognized through retained earnings and were not reflected in net income or net income attributable to Vera Bradley, Inc. When calculating earnings per share attributable to Vera Bradley, Inc., the Company adjusted 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. Refer to Note 12 for additional information regarding the purchase of the remaining 25% interest on January 30, 2023.
The components of basic and diluted earnings per share were as follows (in thousands, except per share data):
 
 Thirteen Weeks Ended
 April 29,
2023
April 30,
2022
Numerator:
Net loss$(4,679)$(6,710)
Less: Net income attributable to redeemable noncontrolling interest 264 
Net loss attributable to Vera Bradley, Inc.$(4,679)$(6,974)
Denominator:
Weighted-average number of common shares (basic)30,794 32,672 
Dilutive effect of stock-based awards  
Weighted-average number of common shares (diluted)30,794 32,672 
Net loss per share available to Vera Bradley, Inc. common shareholders:
Basic$(0.15)$(0.21)
Diluted$(0.15)$(0.21)
For the thirteen weeks ended April 29, 2023 and April 30, 2022, all potential common shares were excluded from the diluted share calculation because they were anti-dilutive due to the net loss in the period.


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.
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
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 April 29, 2023 and January 28, 2023, approximated their fair values.
The following table details the fair value measurements of the Company's investments as of April 29, 2023 and January 28, 2023 (in thousands):
Level 1Level 2Level 3
April 29, 2023January 28, 2023April 29, 2023January 28, 2023April 29, 2023January 28, 2023
Cash equivalents(1)
$363 $360 $ $ $ $ 
(1) Cash equivalents primarily represent a money market fund that has a maturity of three months or less at the date of purchase. Due to the short maturity, the Company believes the carrying value approximates fair value.
The Company assesses potential impairments to its long-lived assets, which includes property, plant, and equipment and lease right-of-use assets, on a quarterly basis or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Store-level assets and right-of-use assets are grouped at the individual store-level for the purpose of the impairment assessment. Recoverability of an asset group is measured by a comparison of the carrying amount of an asset group to its estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of the asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized as the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. The fair value of the store assets is determined using the discounted future cash flow method of anticipated cash flows through the store’s lease-end date using fair value measurement inputs classified as Level 3. The fair value of right-of-use assets is estimated using market comparative information for similar properties. Level 3 inputs are derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. There were no long-lived asset impairment charges for the thirteen weeks ended April 29, 2023. The Company recorded a lease right-of-use asset impairment charge of $0.6 million during the thirteen weeks ended April 30, 2022.
The discounted cash flow models used to estimate the applicable fair values involve numerous estimates and assumptions that are highly subjective. Changes to these estimates and assumptions could materially impact the fair value estimates. The estimates and assumptions critical to the overall fair value estimates include: (1) estimated future cash flow generated at the store level; (2) discount rates used to derive the present value factors used in determining the fair values; and (3) market rentals at the retail store. These and other estimates and assumptions are impacted by economic conditions and our expectations and may change in the future based on period-specific facts and circumstances. If economic conditions were to deteriorate, future impairment charges may be required which may be material.
On a nonrecurring basis, assets recognized or disclosed at fair value on the consolidated financial statements include items such as property, plant, and equipment, including leasehold improvements, and operating lease assets, as well as assets related to the Pura Vida acquisition including goodwill (in the prior year) and intangible assets. These assets are measured at fair value if determined to be impaired. There were no goodwill or intangible asset impairment charges recorded during the thirteen weeks ended April 29, 2023 or April 30, 2022.

6.Debt
On September 7, 2018, Vera Bradley Designs, Inc. (“VBD”), a wholly-owned subsidiary of the Company, entered into an asset-based revolving Credit Agreement (the “Credit Agreement”) among VBD, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto. The Credit Agreement provides for certain credit facilities to VBD in an aggregate principal amount not to initially exceed the lesser of $75.0 million or the amount of borrowing availability determined in accordance with a borrowing base of certain assets. Any proceeds of the credit facilities will be used to finance general corporate purposes of VBD and its subsidiaries, including but not limited to Vera Bradley International, LLC and Vera Bradley Sales, LLC (collectively, the “Named Subsidiaries”). The Credit Agreement also contains an option for VBD to arrange with lenders to increase the aggregate principal amount by up to $25.0 million.
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Amounts outstanding under the Credit Agreement bear interest at a per annum rate equal to either (i) for CBFR borrowings (including swingline loans), the CB Floating Rate, where the CB Floating Rate is the prime rate which shall never be less than the adjusted one month LIBOR rate on such day, plus the Applicable Rate, where the Applicable Rate is a percentage spread ranging from -1.00% to -1.50% or (ii) for each eurodollar borrowing, the Adjusted LIBO Rate, where the Adjusted LIBO Rate is the LIBO rate for such interest period multiplied by the statutory reserve rate, for the interest period in effect for such borrowing, plus the Applicable Rate, where the Applicable Rate is a percentage ranging from 1.00% to 1.30%. The applicable CB Floating Rate, Adjusted LIBO Rate, or LIBO Rate shall be determined by the administrative agent. The Credit Agreement also requires VBD to pay a commitment fee for the unused portion of the revolving facility of up to 0.20% per annum.
VBD’s obligations under the Credit Agreement are guaranteed by the Company and the Named Subsidiaries. The obligations of VBD under the Credit Agreement are secured by substantially all of the respective assets of VBD, the Company, and the Named Subsidiaries and are further secured by the equity interests in VBD and the Named Subsidiaries.
The Credit Agreement contains various affirmative and negative covenants, including restrictions on the Company's ability to incur debt or liens; engage in mergers or consolidations; make certain investments, acquisitions, loans, and advances; sell assets; enter into certain swap agreements; pay dividends or make distributions or make other restricted payments; engage in certain transactions with affiliates; and amend, modify, or waive any of its rights related to subordinated indebtedness and certain charter and other organizational, governing, and material agreements. The Company may avoid certain of such restrictions by meeting payment conditions defined in the Credit Agreement.
The Credit Agreement also requires the Loan Parties to maintain a minimum fixed charge coverage ratio of 1.00 during periods when borrowing availability is less than the greater of (A) $7.5 million, and (B) 10% of the lesser of (i) the aggregate revolving commitment, and (ii) the borrowing base. The fixed charge coverage ratio, availability, aggregate revolving commitment, and the borrowing base are further defined in the Credit Agreement.
The Credit Agreement contains customary events of default, including, among other things: (i) the failure to pay any principal, interest, or other fees under the Credit Agreement; (ii) the making of any materially incorrect representation or warranty; (iii) the failure to observe or perform any covenant, condition, or agreement in the Credit Agreement or related agreements; (iv) a cross default with respect to other material indebtedness; (v) bankruptcy and insolvency events; (vi) unsatisfied material final judgments; (vii) Employee Retirement Income Security Act of 1974 (“ERISA”) events that could reasonably be expected to have a material adverse effect; and (viii) a change in control (as defined in the Credit Agreement).
Any commitments made under the Credit Agreement mature on September 7, 2023.
As of April 29, 2023 and January 28, 2023, the Company had no borrowings outstanding and availability of $75.0 million under the Credit Agreement.

7.Income Taxes
The provision for income taxes for interim periods is based on an estimate of the annual effective tax rate adjusted to reflect the impact of discrete items. Management judgment is required in projecting ordinary income to estimate the Company’s annual effective tax rate.
The effective tax rate for the thirteen weeks ended April 29, 2023, was 27.1%, compared to 18.9% for the thirteen weeks ended April 30, 2022. The year-over-year effective tax rate increase was primarily due to the relative impact of permanent and discrete items in the current-year period compared to the prior-year period, primarily as a result of stock-based compensation, noncontrolling interest in the prior-year period, and non-deductible executive compensation.
Refer to Note 12 herein for information regarding the deferred income tax adjustment associated with the purchase of the remaining 25% interest in Pura Vida on January 30, 2023.

8.Stock-Based Compensation
The Company recognizes stock-based compensation expense, for its awards of restricted stock units, in an amount equal to the fair market value of the underlying stock on the grant date of the respective award.
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
The Company reserved 3,000,000 shares of common stock for issuance or transfer under the 2020 Equity and Incentive Plan, which allows for grants of restricted stock units, as well as other equity awards. The Company maintains the 2010 Equity and Incentive Plan for awards granted prior to the effectiveness of the 2020 Equity and Incentive Plan.
At the Company's annual meeting on May 25, 2023, subsequent to the end of the first quarter, the Company's shareholders approved an amendment to the 2020 Equity and Incentive Plan to add an additional 3,000,000 shares of common stock to the plan.
Awards of Restricted Stock Units
During the thirteen weeks ended April 29, 2023, the Company granted 542,570 time-based and performance-based restricted stock units with an aggregate fair value of $3.2 million to certain employees and non-employee directors under the 2020 Equity and Incentive Plan compared to 841,369 time-based and performance-based restricted stock units with an aggregate fair value of $6.3 million in the same period of the prior year. On May 8, 2023, subsequent to the end of the first quarter, the Company granted 168,854 time-based and performance-based restricted stock units with an aggregate fair value of $0.9 million to Michael Schwindle, Chief Financial Officer of Vera Bradley, Inc.
The majority of the time-based restricted stock units vest and settle in shares of the Company’s common stock, on a one-for-one basis, in equal installments on each of the first three anniversaries of the grant date. Restricted stock units issued to non-employee directors vest after a one-year period from the grant date. The Company recognizes the expense relating to these units, net of estimated forfeitures, on a straight-line basis over the vesting period.
Performance-based restricted stock units vest upon the completion of a three-year period of time (cliff vesting), subject to the employee’s continuing employment throughout and the Company’s achievement of annual earnings per share targets, or other Company performance targets, during the three-year performance period. The Company recognizes the expense relating to these units, net of estimated forfeitures, based on the probable outcome of achievement of the financial targets, on a straight-line basis over three years.
The following table sets forth a summary of restricted stock unit activity for the thirteen weeks ended April 29, 2023 (units in thousands):
 
 Time-based
Restricted Stock Units
Performance-based
Restricted Stock Units
 Number of
Units
Weighted-
Average
Grant
Date Fair
Value
(per unit)
Number of
Units
Weighted-
Average
Grant
Date Fair
Value
(per unit)
Nonvested units outstanding at January 28, 2023
965 $5.74 523 $4.71 
Granted321 5.99 222 5.99 
Vested(396)6.93 (94)4.08 
Forfeited(40)6.82 (40)6.82 
Nonvested units outstanding at April 29, 2023
850 $5.23 611 $5.14 
As of April 29, 2023, there was $5.2 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested restricted stock units. That cost is expected to be recognized over a weighted-average period of 2.4 years, subject to meeting performance conditions.

9.Commitments and Contingencies
The Company is subject to various claims and contingencies arising in the normal course of business, including those relating to product liability, legal claims, employee benefits, environmental issues, and other matters. Management believes that at this time it is not probable that any of these claims will have a material adverse effect on the Company’s financial condition, results of operations, or cash flows. However, the outcomes of legal proceedings and
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
claims brought against the Company are subject to uncertainty, and future developments could cause these actions or claims, individually or in aggregate, to have a material adverse effect on the Company’s financial condition, results of operations, or cash flows of a particular reporting period.
In August of 2019, Vesi Incorporated (“Vesi”) filed suit against the Company in the U.S. District Court for the Southern District of Ohio related to the Company’s licensing business and alleging breach of fiduciary duty, unfair competition, defamation, and tortious interference with prospective business relationships. The complaint seeks damages in an amount not less than $10.0 million for punitive damages, attorney fees, prejudgment interest, and any other additional relief. The Company has denied any liability and intends to vigorously defend itself in the case. In November 2019, the Company filed a counterclaim against the principals of Vesi as personal guarantors for monies owed to the Company by Vesi. The Company filed a motion for summary judgement asking the Court to dismiss all claims with prejudice and grant judgement on its counterclaim. On January 4, 2023, the Court granted the Company’s motion for summary judgment dismissing Vesi’s claims and also granted judgment on the Company’s counterclaims against the principals of Vesi for an immaterial amount. Vesi has appealed this decision. At this time, we are not able to estimate a possible loss or range of loss that may result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition or results of operations due to the fact that the Company is vigorously defending itself and management believes that the Company has a number of meritorious legal defenses.
    
10.Common Stock
In December 2021, the Company's board of directors approved a share repurchase plan (the “2021 Share Repurchase Program”) which authorized Company management to utilize up to $50.0 million of available cash for repurchases of shares of the Company's common stock. The 2021 Share Repurchase Program went into effect beginning December 13, 2021 and expires in December 2024.
The Company purchased 128,100 shares at an average price of $5.71 per share, excluding commissions, for an aggregate amount of $0.7 million during the thirteen weeks ended April 29, 2023 under the 2021 Share Repurchase Program. There was $27.0 million remaining available to repurchase shares of the Company's common stock under the 2021 Share Repurchase Program as of April 29, 2023.
As of April 29, 2023, the Company held as treasury shares 12,207,790 shares of its common stock at an average price of $10.94 per share, excluding commissions, for an aggregate carrying amount of $133.6 million. The Company’s treasury shares may be issued under the 2010 Equity and Incentive Plan (with respect to outstanding awards under that plan), under the 2020 Equity and Incentive Plan, or for other corporate purposes.

11.Cloud Computing Arrangements
The Company capitalizes implementation costs associated with its Cloud Computing Arrangements (“CCA”) consistent with costs capitalized for internal-use software. The CCA costs are amortized over the term of the related hosting agreement, taking into consideration renewal options, if any. The renewal period is included in the amortization period if determined that the option is reasonably certain to be exercised. The amortization expense is recorded within selling, general, and administrative expenses in the Company's Condensed Consolidated Statements of Operations, which is within the same line item as the related hosting fees. The balance of the unamortized CCA implementation costs totaled $5.7 million and $6.4 million as of April 29, 2023 and January 28, 2023, respectively. Of this total, $2.9 million and $3.0 million was recorded within prepaid expenses and other current assets and $2.8 million and $3.4 million was recorded within other assets on the Company's Condensed Consolidated Balance Sheets as of April 29, 2023 and January 28, 2023, respectively. The CCA implementation costs are recorded within operating activities in the Company's Condensed Consolidated Statements of Cash Flows.

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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
12.Redeemable Noncontrolling Interest
Redeemable noncontrolling interest represents the remaining twenty-five percent (25%) interest in Pura Vida not acquired by the Company until January 30, 2023.
On July 16, 2019, the Company purchased 75% of Pura Vida's outstanding equity interest and entered into a Put/Call Agreement with the Sellers (the “Put/Call Agreement”) providing for certain rights with respect to the purchase by the Company and sale by the Sellers of the Remaining Pura Vida Interests. On January 23, 2023, the Company and certain of its subsidiaries entered into an Interest Purchase Agreement (the “Interest Purchase Agreement”) with Creative Genius Holdings, Inc. a California corporation, Creative Genius Investments, Inc., a California corporation, Griffin Thall, and Paul Goodman (collectively “Sellers”) to purchase the remaining 25% of the outstanding membership interests (the “Remaining Pura Vida Interests”) of Creative Genius, LLC, a California limited liability company (“Pura Vida”).
Pursuant to the Interest Purchase Agreement, and subject to the terms and conditions thereof, on the closing date (January 30, 2023), the Company acquired the Remaining Pura Vida Interests (the “Transaction”) in exchange for cash consideration consisting of $10.0 million paid at closing, subject to certain adjustments. The Transaction was not subject to financing conditions. The Company’s existing available cash and cash equivalents funded the purchase price. Following completion of the Transaction, the Company owns 100% of the ownership interests in Pura Vida.
The Interest Purchase Agreement provides that, as of the closing of the Transaction, all rights and obligations of the Company and the Sellers under any agreements among the parties, including the Put/Call Agreement, were terminated.
As a result of the Transaction, the Company recorded a decrease to redeemable noncontrolling interest of $10.7 million. The difference between the fair value of the consideration paid and the balance of the redeemable noncontrolling interest resulted in $0.7 million recognized in additional paid-in capital (“APIC”) during the thirteen weeks ended April 29, 2023. In addition, there was an APIC adjustment of $0.6 million related to deferred income taxes for the purchase of the redeemable noncontrolling interest. The total APIC adjustment for this matter during the thirteen weeks ended April 29, 2023, was $1.3 million.
Changes in redeemable noncontrolling interest for the thirteen weeks ended April 29, 2023, were as follows (in thousands):    
Balance at January 28, 2023
$10,712 
Adjustment for purchase of noncontrolling interest(10,712)
Balance at April 29, 2023$ 
Changes in redeemable noncontrolling interest for the thirteen weeks ended April 30, 2022, were as follows (in thousands):
Balance at January 29, 2022$30,974 
Net income attributable to redeemable noncontrolling interest264 
Distributions to redeemable noncontrolling interest(146)
Balance at April 30, 2022$31,092 
    
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
13.Intangible Assets and Goodwill
The following tables detail the carrying value of the Company's intangible assets other than goodwill related to the acquisition of a majority interest in Pura Vida. On January 30, 2023, the Company purchased the remaining 25% interest in Pura Vida.
April 29, 2023
in thousandsGross Basis
Accumulated Amortization(1)
Carrying Amount
Definite-lived intangible assets
Customer Relationships$24,208 $(20,685)$3,523 
Non-competition Agreements788 (788) 
Total definite-lived intangible assets24,996 (21,473)3,523 
Indefinite-lived intangible asset
Pura Vida Brand (2)
11,666 — 11,666 
Total intangible assets, excluding goodwill$36,662 $(21,473)$15,189 
(1) Amortization expense is recorded within the Pura Vida segment.
(2) Impairment charges of $9.9 million and $15.1 million were recorded within the Pura Vida segment during the second and fourth quarters of fiscal 2023.
January 28, 2023
in thousandsGross Basis
Accumulated Amortization(1)
Carrying Amount
Definite-lived intangible assets
Customer Relationships$24,208 $(19,956)$4,252 
Non-competition Agreements788 (788) 
Total definite-lived intangible assets24,996 (20,744)4,252 
Indefinite-lived intangible asset
Pura Vida Brand (2)
11,666 — 11,666 
Total intangible assets, excluding goodwill$36,662 $(20,744)$15,918 
(1) Amortization expense is recorded within the Pura Vida segment.
(2) Impairment charges of $9.9 million and $15.1 million were recorded within the Pura Vida segment during the second and fourth quarters of fiscal 2023.
Amortization expense is recorded within selling, general, and administrative expenses in the Company's Condensed Consolidated Statement of Operations. The future amortization expense for intangible assets is as follows (in thousands):
Amortization Expense
Fiscal 2024 (remaining nine months)2,187 
Fiscal 20251,336 
Total$3,523 
There was no goodwill balance as of April 29, 2023 and January 28, 2023 due to impairment charges recorded during fiscal 2023.
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
14.Cost Savings Initiatives and Other Charges
Cost Savings Initiatives and Severance Charges
During fiscal 2023, the Company began implementation of its targeted cost reductions, which are expected to be fully realized in fiscal 2025. Expense savings are being derived across various areas of the Company, including retail store efficiencies, marketing expenses, information technology contracts, professional services, logistics and operational costs, and corporate payroll.

The Company has incurred the following charges during the thirteen weeks ended April 29, 2023 (in thousands):

Reportable Segment
VB DirectVB IndirectPura VidaUnallocated Corporate ExpensesTotal Expense
Severance charges (1)
$342 $ $ $1,647 $1,989 
Consulting fees and other costs (2)
   105 105 
Total (3)
$342 $ $ $1,752 $2,094 
(1) Includes former CFO severance
(2) Related to professional fees
(3) Recorded within selling, general, and administrative ("SG&A") expenses

A summary of charges and related liabilities associated with the cost savings initiatives and severance charges are as follows (in thousands):

Severance Charges and Cash Retention Payment Acceleration Charges (1)
Consulting Fees and Other Costs
Liability as of January 28, 2023$3,083 $60 
Fiscal 2024 charges1,989 105 
Cash payments(2,913)(165)
Liability as of April 29, 2023$2,159 $ 
(1) Remaining liability is recorded within accrued employment costs

During the thirteen weeks ended April 30, 2022, the Company incurred $0.2 million for consulting costs associated with cost savings initiatives recognized within SG&A and corporate unallocated expenses.

15.Segment Reporting
The Company has three operating segments, which are also its reportable segments: VB Direct, VB Indirect, and Pura Vida. These operating segments are components of the Company for which separate financial information is available and for which operating results are evaluated on a regular basis by the chief operating decision maker in deciding how to allocate resources and in assessing the performance of the segments.
The VB Direct segment includes Vera Bradley full-line and factory outlet stores; the Vera Bradley websites, verabradley.com and verabradley.ca; the Vera Bradley online outlet site; and typically the Vera Bradley annual outlet sale. Revenues generated from this segment are driven through the sale of Vera Bradley-branded products from Vera Bradley to end consumers.
The VB Indirect segment represents revenues generated through the distribution of Vera Bradley-branded products to specialty retailers representing approximately 1,700 locations, substantially all of which are located in the United States; key accounts, which include department stores, national accounts, third-party e-commerce sites, and third-party inventory liquidators; and royalties recognized through licensing agreements related to the Vera Bradley brand.
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
The Pura Vida segment represents revenues generated through the Pura Vida websites, www.puravidabracelets.com, www.puravidabracelets.eu, and www.puravidabracelets.ca; through the distribution of Pura Vida-branded products to wholesale retailers, substantially all of which are located in the United States; and through the Pura Vida retail stores.
Corporate costs represent the Company’s administrative expenses, which include, but are not limited to: human resources, legal, finance, information technology, design, product development, merchandising, corporate-level marketing and advertising, and various other corporate-level-activity-related expenses not directly attributable to a reportable segment. All intercompany-related activities are eliminated in consolidation and are excluded from the segment reporting.
Company management evaluates segment operating results based on several indicators. The primary or key performance indicators for each segment are net revenues and operating income. Net revenues and operating income information for the Company’s reportable segments during the thirteen weeks ended April 29, 2023 and April 30, 2022, respectively, consisted of the following (in thousands):
 Thirteen Weeks Ended
 April 29,
2023
April 30,
2022
Segment net revenues:
VB Direct$58,905 $61,636 
VB Indirect15,373 16,977 
Pura Vida20,084 19,846 
Total$94,362 $98,459 
Segment operating income:
VB Direct$7,340 $5,503 
VB Indirect4,706 5,479 
Pura Vida1,562 1,056 
Total$13,608 $12,038 
Reconciliation:
Segment operating income$13,608 $12,038 
Less:
Unallocated corporate expenses(19,994)(20,271)
Operating loss$(6,386)$(8,233)


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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion summarizes the significant factors affecting the condensed consolidated operating results, financial condition, liquidity, and cash flows of the Company as of and for the thirteen weeks ended April 29, 2023 and April 30, 2022. The following discussion should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended January 28, 2023, and our unaudited condensed consolidated financial statements and the related notes included in Item 1 of this Quarterly Report. The results of operations for the thirteen weeks ended April 29, 2023, are not necessarily indicative of the results to be expected for the full fiscal year.
Strategic Progress, Macroeconomic Factors, and Other Factors Impacting our Financial Condition and Results of Operations
Strategic Progress. In the first quarter of fiscal 2024, we began work on Project Restoration, which is focused on four key pillars of the business for each brand to help drive long-term profitable growth. These pillars are: Consumer, Brand, Product, and Channel. To support Project Restoration, and to lay the groundwork for our success, we made additional corporate changes, including the elimination of approximately 25 corporate positions. We also announced additional cost reductions as part of our overall plan to right-size the expense structure of our Company.
These expense savings are expected to be fully realized in fiscal 2025. Savings are being derived across various areas of the Company, including retail store efficiencies, marketing expenses, information technology contracts, professional services, logistics and operational costs, and corporate payroll. We will continue to review our expense structure for additional cost reduction opportunities.
To assist in driving profitable growth and supporting the execution of Project Restoration, Michael Schwindle joined the Company as Chief Financial Officer on May 8, 2023, subsequent to the end of the first quarter.
As a result of these cost savings initiatives, as well as a result of our CFO transition, we recorded severance charges of approximately $2.0 million within SG&A expenses during the thirteen weeks ended April 29, 2023. Refer to Note 14 to the Notes to the Condensed Consolidated Financial Statements herein for additional information.
Macroeconomic and Other Factors. We have been impacted by higher tariffs from previously duty-free countries, where we source products, as a result of the expiration of the Generalized System of Preferences (“GSP”) duty-free status at the end of calendar year 2020. In addition, the macroeconomic environment has been further challenged by inflationary pressures, including high gas prices, and other related factors that have impacted consumer discretionary spending. We continued to see weakness in the Vera Bradley factory store business in the first quarter. However, we have seen improving trends in our Pura Vida e-commerce and wholesale channels.
Within our supply chain, the COVID-19 pandemic caused disruptions that have resulted in delivery delays and increased inbound and outbound shipping costs. However, these supply chain disruptions began to stabilize towards the end of fiscal 2023. We began to see favorability in our operating results associated with the reduction in these costs in the first quarter of fiscal 2024 compared to the prior-year period.
We also implemented strategic price increases across both of our brands to mitigate some of these inflationary and supply chain pressures in late fiscal 2022 and early fiscal 2023. We will continue to monitor our pricing as it relates to the current macroeconomic trends.
While we continue to actively monitor this rapidly evolving macroeconomic environment and are working to mitigate the situation, these matters could have a material adverse effect on our liquidity, operating results, and financial condition.
How We Assess the Performance of Our Business
In assessing the performance of our business, we consider a variety of performance and financial measures.
Net Revenues
Net revenues reflect sales of our merchandise and revenue from distribution and shipping and handling fees, less returns and discounts. Revenues for the VB Direct segment reflect sales through Vera Bradley full-line and factory outlet stores; the Vera Bradley websites verabradley.com and verabradley.ca; and our Vera Bradley online outlet site. The Vera Bradley annual outlet sale was cancelled in the prior year but will resume in June 2023. Revenues for the VB Indirect segment reflect sales of Vera Bradley-branded products to specialty retail partners; 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. Revenues for the Pura Vida segment reflect revenues generated through the Pura Vida websites, www.puravidabracelets.com, www.puravidabracelets.eu, and www.puravidabracelets.ca; through the distribution of Pura Vida-branded products to wholesale retailers; and through Pura Vida retail stores.
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Comparable Sales
Comparable sales are calculated based upon our stores that have been open for at least 12 full fiscal months and net revenues from our Vera Bradley e-commerce operations. Comparable store sales are calculated based solely upon stores that have been open for at least 12 full fiscal months. Remodeled stores are included in both comparable sales and comparable store sales unless the store was closed for more than one week of the current or comparable prior period, in which case the non-comparable temporary closure periods are not included, or the remodel resulted in a significant change in square footage. Some of our competitors and other retailers calculate comparable or “same store” sales differently than we do. As a result, data in this report regarding our comparable sales and comparable store sales may not be comparable to similar data made available by other companies. Non-comparable sales include sales from stores not included in comparable sales or comparable store sales.
Measuring the change in year-over-year comparable sales allows us and our investors to evaluate how our store base and e-commerce operations are performing. Various factors affect our comparable sales, including:
Overall economic trends;
Consumer preferences and fashion trends;
Competition;
The timing of our releases of new patterns and collections;
Changes in our product mix;
Pricing and level of promotions;
Amount of store, mall, and e-commerce traffic;
The level of customer service that we provide in stores and to our on-line customers;
Our ability to source and distribute products efficiently;
The number of stores we open and close in any period; and
The timing and success of promotional and marketing efforts.
Gross Profit
Gross profit is equal to our net revenues less our cost of sales. Cost of sales includes the direct cost of purchased merchandise, distribution center costs, operations overhead, duty, all inbound freight costs incurred, and inventory adjustments, if any. The components of our reported cost of sales may not be comparable to those of other retail and wholesale companies.
Gross profit can be impacted by changes in volume; fluctuations in sales price; inbound freight and other logistical costs; operational efficiencies, such as leveraging of fixed costs; promotional activities, including free shipping; commodity prices, such as for cotton; tariffs; and labor costs.
Selling, General, and Administrative Expenses (“SG&A”)
SG&A expenses include selling; advertising, marketing, and product development; and administrative expenses. Selling expenses include: