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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ___________________________ 
FORM 10-Q
___________________________ 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended October 28, 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/420655fd04966c6e23cc283c488ff435-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 30,827,003 shares of its common stock outstanding as of November 29, 2023.



Table of Contents
TABLE OF CONTENTS
 
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.

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FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical or current fact included in this report are forward-looking statements. Forward-looking statements 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.

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PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

Vera Bradley, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
October 28,
2023
January 28,
2023
Assets
Current assets:
Cash and cash equivalents$52,266 $46,595 
Accounts receivable, net25,599 22,105 
Inventories129,140 142,275 
Income taxes receivable1,376 1,311 
Prepaid expenses and other current assets13,025 14,276 
Total current assets221,406 226,562 
Operating right-of-use assets67,037 77,954 
Property, plant, and equipment, net55,909 58,674 
Intangible assets, net13,731 15,918 
Deferred income taxes18,961 21,542 
Other assets5,790 3,851 
Total assets$382,834 $404,501 
Liabilities, Redeemable Noncontrolling Interest, and Shareholders’ Equity
Current liabilities:
Accounts payable$12,297 $20,350 
Accrued employment costs11,756 14,312 
Short-term operating lease liabilities18,673 19,714 
Other accrued liabilities13,671 12,723 
Income taxes payable570 558 
Total current liabilities56,967 67,657 
Long-term operating lease liabilities63,915 74,664 
Other long-term liabilities71 90 
Total liabilities120,953 142,411 
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, 43,185 and 42,846 shares issued and 30,785 and 30,766 shares outstanding, respectively
  
Additional paid-in-capital112,397 109,718 
Retained earnings284,322 274,629 
Accumulated other comprehensive loss(74)(105)
Treasury stock(134,764)(132,864)
Total shareholders’ equity of Vera Bradley, Inc.261,881 251,378 
Total liabilities, redeemable noncontrolling interest, and shareholders’ equity$382,834 $404,501 

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 EndedThirty-Nine Weeks Ended
 October 28,
2023
October 29,
2022
October 28,
2023
October 29,
2022
Net revenues$114,987 $124,040 $337,521 $352,870 
Cost of sales51,980 58,164 150,749 173,963 
Gross profit63,007 65,876 186,772 178,907 
Selling, general, and administrative expenses56,363 60,059 174,274 195,015 
Impairment of goodwill and intangible assets   29,338 
Other income, net142 141 773 350 
Operating income (loss)6,786 5,958 13,271 (45,096)
Interest (income) expense, net(285)39 (241)115 
Income (loss) before income taxes7,071 5,919 13,512 (45,211)
Income tax expense (benefit)1,953 1,090 3,819 (6,429)
Net income (loss)5,118 4,829 9,693 (38,782)
Less: Net loss attributable to redeemable noncontrolling interest (338) (7,208)
Net income (loss) attributable to Vera Bradley, Inc.$5,118 $5,167 $9,693 $(31,574)
Basic weighted-average shares outstanding30,814 31,061 30,836 31,721 
Diluted weighted-average shares outstanding31,322 31,229 31,246 31,721 
Basic net income (loss) per share available to Vera Bradley, Inc. common shareholders$0.17 $0.17 $0.31 $(1.00)
Diluted net income (loss) per share available to Vera Bradley, Inc. common shareholders$0.16 $0.17 $0.31 $(1.00)
The accompanying notes are an integral part of these financial statements.
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Vera Bradley, Inc.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
(unaudited)
 
 Thirteen Weeks EndedThirty-Nine Weeks Ended
 October 28,
2023
October 29,
2022
October 28,
2023
October 29,
2022
Net income (loss)$5,118 $4,829 $9,693 $(38,782)
Cumulative translation adjustment(5)(46)31 (152)
Comprehensive income (loss), net of tax5,113 4,783 9,724 (38,934)
Less: Comprehensive loss attributable to redeemable noncontrolling interest (338) (7,208)
Comprehensive income (loss) attributable to Vera Bradley, Inc.$5,113 $5,121 $9,724 $(31,726)
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 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 
Net income attributable to Vera Bradley, Inc.— — — 9,254 — — 9,254 
Translation adjustments— — — — 46 — 46 
Restricted shares vested, net of repurchase for taxes89 — — — — — — 
Stock-based compensation— — 910 — — — 910 
Treasury stock purchased(120,220)120,220 — — — (683)(683)
Balance at July 29, 202330,848,293 12,328,010 $111,663 $279,204 $(69)$(134,279)$256,519 
Net income attributable to Vera Bradley, Inc.— — — 5,118 — $— 5,118 
Translation adjustments— — — — (5)$— (5)
Restricted shares vested, net of repurchase for taxes8,653 — (30)— — $— (30)
Stock-based compensation— — 764 — — $— 764 
Treasury stock purchased(71,807)71,807 — — — $(485)(485)
Balance at October 28, 202330,785,139 12,399,817 $112,397 $284,322 $(74)$(134,764)$261,881 





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Vera Bradley, Inc.
Condensed Consolidated Statements of Shareholders’ Equity
(in thousands, except share data)
(continued)
(unaudited)
Number of Shares
Common
Stock
Treasury
Stock
Additional
Paid-in
Capital
Retained EarningsAccumulated
Other
Comprehensive Loss
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 
Net loss attributable to Vera Bradley, Inc.  — (29,767)— — (29,767)
Translation adjustments  — — (75)— (75)
Restricted shares vested, net of repurchase for taxes89   — — —  
Stock-based compensation— — 901 — — — 901 
Treasury stock purchased(986,023)986,023 — — — (6,023)(6,023)
Balance at July 30, 202231,165,869 11,667,860 $107,941 $297,623 $(135)$(131,279)$274,150 
Net income attributable to Vera Bradley, Inc.— — — $5,167 — — 5,167 
Translation adjustments— — — — (46)— (46)
Restricted shares vested, net of repurchase for taxes11,985 — (20)— — — (20)
Stock-based compensation— — 1,149 — — — 1,149 
Treasury stock purchased(225,010)225,010 — — — (801)(801)
Balance at October 29, 202230,952,844 11,892,870 $109,070 $302,790 $(181)$(132,080)$279,599 
The accompanying notes are an integral part of these financial statements.
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Vera Bradley, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
 Thirty-Nine Weeks Ended
 October 28,
2023
October 29,
2022
Cash flows from operating activities
Net income (loss)$9,693 $(38,782)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation of property, plant, and equipment5,988 6,685 
Amortization of operating right-of-use assets15,622 16,151 
Goodwill and intangible asset impairment 29,338 
Other impairment charges 1,351 
Amortization of intangible assets2,187 2,305 
Provision for doubtful accounts87 (80)
Stock-based compensation2,365 2,593 
Deferred income taxes3,155 (5,524)
Other non-cash loss, net50  
Changes in assets and liabilities:
Accounts receivable(3,581)(4,354)
Inventories13,135 (33,453)
Prepaid expenses and other assets(688)2,764 
Accounts payable(8,134)49 
Income taxes (53)5,772 
Operating lease liabilities, net(16,495)(19,262)
Accrued and other liabilities(2,273)(2,311)
Net cash provided by (used in) operating activities21,058 (36,758)
Cash flows from investing activities
Purchases of property, plant, and equipment(2,546)(6,968)
Cash paid for business acquisition(10,000) 
Net cash used in investing activities(12,546)(6,968)
Cash flows from financing activities
Tax withholdings for equity compensation(972)(1,430)
Repurchase of common stock(1,900)(17,278)
Distributions to redeemable noncontrolling interest (613)
Net cash used in financing activities(2,872)(19,321)
Effect of exchange rate changes on cash and cash equivalents31 (152)
Net increase (decrease) in cash and cash equivalents5,671 (63,199)
Cash and cash equivalents, beginning of period46,595 88,436 
Cash and cash equivalents, end of period$52,266 $25,237 













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Vera Bradley, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(continued)
(unaudited)
 Thirty-Nine Weeks Ended
 October 28,
2023
October 29,
2022
Supplemental disclosure of cash flow information
Cash paid (received) for income taxes, net$748 $(6,637)
Supplemental disclosure of non-cash activity
Non-cash operating, investing, and financing activities
Purchases of property, plant, and equipment
Expenditures incurred but not yet paid as of October 28, 2023 and October 29, 2022$1,090 $1,174 
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 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 segment consists of sales of Vera Bradley products through Vera Bradley full-line and outlet stores in the United States; verabradley.com; the Vera Bradley online outlet site; and the Vera Bradley annual outlet sale in Fort Wayne, Indiana. As of October 28, 2023, the Company operated 45 full-line stores and 81 outlet stores. In light of the COVID-19 pandemic, the Company cancelled its calendar year 2022 annual outlet sale. The sale resumed in June 2023.
The VB Indirect segment consists of revenues generated through the distribution of Vera Bradley-branded products to specialty retailers representing approximately 1,600 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.
The Pura Vida segment represents revenues generated through the Pura Vida websites, www.puravidabracelets.com, www.puravidabracelets.ca, and www.puravidabracelets.eu; 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 and thirty-nine weeks ended October 28, 2023, are not necessarily indicative of the results to be expected for the full fiscal year due to, in part, seasonal fluctuations in the business and the uncertainty of macroeconomic factors on future periods, including inflation and 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 October 28, 2023 and October 29, 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 and thirty-nine weeks ended October 28, 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 and thirty-nine weeks ended October 28, 2023 and October 29, 2022 (in thousands):
Thirteen Weeks Ended
October 28, 2023
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$30,970 $13,167 $111 $44,248 
Travel15,374 5,038  20,412 
Accessories12,782 3,566 16,757 33,105 
Home7,824 1,415  9,239 
Apparel/Footwear3,601 1,081 357 5,039 
Other1,758 (1)719 (2)467 (3)2,944 
Total net revenues$72,309 (4)$24,986 (5)$17,692 (4)$114,987 
(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) $24.5 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.
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Thirteen Weeks Ended
October 29, 2022
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$34,492 $11,561 $231 $46,284 
Travel17,744 4,106  21,850 
Accessories14,901 3,554 19,498 37,953 
Home8,197 1,258  9,455 
Apparel/Footwear(6)
2,932 888 1,267 5,087 
Other1,795 (1)947 (2)669 (3)3,411 
Total net revenues$80,061 (4)$22,314 (5)$21,665 (4)$124,040 
(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) $21.7 million of net revenues related to product sales recognized at a point in time and $0.6 million of net revenues related to sales-based royalties recognized over time.
(6) Includes mask sales.
Thirty-Nine Weeks Ended
October 28, 2023
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$89,267 $31,123 $348 $120,738 
Travel50,740 11,696  62,436 
Accessories38,416 7,511 59,440 105,367 
Home22,890 2,956  25,846 
Apparel/Footwear10,591 1,865 1,117 13,573 
Other5,012 (1)2,571 (2)1,978 (3)9,561 
Total net revenues$216,916 (4)$57,722 (5)$62,883 (4)$337,521 
(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) $55.8 million of net revenues related to product sales recognized at a point in time and $1.9 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)
Thirty-Nine Weeks Ended
October 29, 2022
VB Direct SegmentVB Indirect SegmentPura Vida SegmentTotal
Product categories
Bags$98,997 $30,615 $1,073 $130,685 
Travel52,903 10,212  63,115 
Accessories42,157 7,958 61,627 111,742 
Home22,645 3,116  25,761 
Apparel/Footwear(6)
6,996 1,748 3,062 11,806 
Other5,012 (1)2,967 (2)1,782 (3)9,761 
Total net revenues$228,710 (4)$56,616 (5)$67,544 (4)$352,870 
(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) $54.5 million of net revenues related to product sales recognized at a point in time and $2.1 million of net revenues related to sales-based royalties recognized over time.
(6) Includes mask sales.

Contract Balances
Contract liabilities as of October 28, 2023 and January 28, 2023, were $2.5 million and $3.2 million, respectively. The balance as of October 28, 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 October 28, 2023 and January 28, 2023.
The balance for accounts receivable from contracts with customers, net of allowances, as of October 28, 2023 and January 28, 2023, was $25.0 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 $0.9 million and $0.8 million as of October 28, 2023 and January 28, 2023, respectively. The provision for doubtful accounts is based upon the likelihood of default expected during the life of the receivable.
    
Performance Obligations
The performance obligations for the VB Direct, VB Indirect, and Pura Vida segments include the promise to transfer distinct goods (or a bundle of distinct goods). The VB Indirect segment also includes the right to access intellectual property (“IP”) related to the Vera Bradley brand.
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 October 28, 2023.

3.Leases
Discount Rate
The weighted-average discount rate as of October 28, 2023, and October 29, 2022 was 4.8% and 4.6%, 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 October 28, 2023, there were no executed leases in which the Company did not have control of the underlying asset.

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 thirty-nine weeks ended October 28, 2023 and October 29, 2022 (in thousands):
Thirteen Weeks EndedThirty-Nine Weeks Ended
October 28, 2023October 29, 2022October 28, 2023October 29, 2022
Operating lease cost$6,439 $6,357 $19,506 $18,721 
Variable lease cost1,321 1,408 4,078 4,390 
Short-term lease cost100 43 455 359 
Less: Sublease income (1)
(105)(105)(315)(129)
Total net lease cost$7,755 $7,703 $23,724 $23,341 
(1) Related to the sublease of a former Company location.

The weighted-average remaining lease term as of October 28, 2023 and October 29, 2022 was 5.4 years.

Supplemental operating cash flow information was as follows (in thousands):
Thirty-Nine Weeks Ended
October 28, 2023October 29, 2022
Cash paid for amounts included in the measurement of operating lease liabilities (1)
$22,111 $19,883 
Right-of-use assets increase as a result of new and modified operating lease liabilities, net$4,819 $19,666 
(1) $2.5 million of lease liabilities were recorded within accounts payable on the Company's Consolidated Balance Sheets as of October 29, 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 EndedThirty-Nine Weeks Ended
 October 28,
2023
October 29,
2022
October 28,
2023
October 29,
2022
Numerator:
Net income (loss)$5,118 $4,829 $9,693 $(38,782)
Less: Net loss attributable to redeemable noncontrolling interest (338) (7,208)
Net income (loss) attributable to Vera Bradley, Inc.$5,118 $5,167 $9,693 $(31,574)
Denominator:
Weighted-average number of common shares (basic)30,814 31,061 30,836 31,721 
Dilutive effect of stock-based awards508 168 410  
Weighted-average number of common shares (diluted)31,322 31,229 31,246 31,721 
Net income (loss) per share available to Vera Bradley, Inc. common shareholders:
Basic$0.17 $0.17 $0.31 $(1.00)
Diluted$0.16 $0.17 $0.31 $(1.00)
For the thirteen and thirty-nine weeks ended October 28, 2023 and thirteen weeks ended October 29, 2022 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 thirty-nine weeks ended October 29, 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.


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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 October 28, 2023 and January 28, 2023, approximated their fair values.
The following table details the fair value measurements of the Company's investments as of October 28, 2023 and January 28, 2023 (in thousands):
Level 1Level 2Level 3
October 28, 2023January 28, 2023October 28, 2023January 28, 2023October 28, 2023January 28, 2023
Cash equivalents(1)
$34,882 $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 and thirty-nine weeks ended October 28, 2023. The Company recorded $1.4 million for store property, plant, and equipment impairment charges and a corporate lease right-of-use asset impairment charge for the thirty-nine weeks ended October 29, 2022, respectively.
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 and thirty-nine weeks ended October 28, 2023. During the thirty-nine weeks ended
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
October 29, 2022, the Company recorded a $29.3 million impairment charge related to goodwill and the indefinite-lived Pura Vida brand asset in conjunction with its second quarter annual quantitative test. There were no goodwill or indefinite-lived assets impairment charges recorded during the thirteen weeks ended October 29, 2022. Refer to Note 13 herein for additional information.

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.
Amounts outstanding under the Credit Agreement bear interest at a per annum rate equal to either (i) for Commercial LIBank Floating Rate (“CBFR") borrowings (including swingline loans), where the CBR is the prime rate which shall never be less than the adjusted one month London Interbank Offered Rate ("LIBOR") 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 LIBOR, where the Adjusted LIBOR 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 LIBOR, or LIBOR 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) approximately $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).
On August 3, 2023, certain subsidiaries of the Company, JP Morgan Chase Bank, N.A., as the administrative agent, and lenders from time to time party thereto, entered into a Third Amendment (the “Third Amendment”) to the Credit Agreement dated September 7, 2018.
The Third Amendment amended the Credit Agreement to, among other things: extend the maturity date to May 2028; add Creative Genius, LLC as a borrower; increase an option for the borrowers to arrange with lenders to increase the aggregate principal amount by up to $50.0 million; update the commitment fee rate to 0.20% or 0.30% depending on
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
the average quarterly utilization; update the interest rate per annum for the CBFR to the greater of the prime rate or 2.5% and remove references to LIBOR (in the case of a CBFR borrowings including swingline loans); remove references to eurodollar borrowings and replace with term benchmark borrowings where the interest rate per annum is the adjusted term Secured Overnight Financing Rate (“SOFR”), as defined in the Third Amendment to the Credit Agreement; and add Risk-free Rate (RFR) borrowings where the interest rate per annum is the adjusted daily simple SOFR, as defined in the Third Amendment to the Credit Agreement.
The Third Amendment also modified the periods that the fixed charge coverage ratio is not permitted to be less than 1.00. The borrowers are required to maintain the fixed charge coverage ratio for periods when borrowing availability is less than the greater of (A) approximately $9.4 million, and (B) 12.5% 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.
As of October 28, 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 October 28, 2023, was 27.6%, compared to 18.4% for the thirteen weeks ended October 29, 2022. The year-over-year effective tax rate increase was primarily due to the relative impact of permanent items in the current-year period compared to the prior-year period, primarily as a result of noncontrolling interest in the prior-year period and non-deductible executive compensation.
The effective tax rate for the thirty-nine weeks ended October 28, 2023, was 28.3%, compared to 14.2% for the thirty-nine weeks ended October 29, 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.
The Company reserved 6,000,000 shares of common stock for issuance or transfer under the 2020 Equity and Incentive Plan, as amended, 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.
Awards of Restricted Stock Units

During the thirteen weeks ended October 28, 2023, the Company granted 15,267 time-based and performance-based restricted stock units with an aggregate fair value of $0.1 million to certain employees under the 2020 Equity and Incentive Plan. The company did not grant restricted stock units during the thirteen weeks ended October 29, 2022.
During the thirty-nine weeks ended October 28, 2023, the Company granted 753,454 time-based and performance-based restricted stock units with an aggregate fair value of $4.4 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.
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
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 thirty-nine weeks ended October 28, 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 
Granted438 5.89 315 5.82 
Vested(409)6.95 (94)4.08 
Forfeited(161)6.20 (103)6.85 
Nonvested units outstanding at October 28, 2023
833 $5.14 641 $5.01 
As of October 28, 2023, there was $5.1 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 2.0 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 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 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 sought damages in an amount not less than $10.0 million for punitive damages, attorney fees, prejudgment interest, and any other additional relief. 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 District 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 appealed this decision. On November 9, 2023 the United States Court of Appeals for the Sixth Circuit issued an opinion affirming the District Court’s judgment in favor of the Company dismissing Vesi’s claims and granting the Company’s counterclaims.
    
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
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 320,127 shares at an average price of $5.94 per share, excluding commissions, for an aggregate amount of $1.9 million during the thirty-nine weeks ended October 28, 2023 under the 2021 Share Repurchase Program. There was $25.8 million remaining available to repurchase shares of the Company's common stock under the 2021 Share Repurchase Program as of October 28, 2023.
As of October 28, 2023, the Company held as treasury shares 12,399,817 shares of its common stock at an average price of $10.87 per share, excluding commissions, for an aggregate carrying amount of $134.8 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 $4.3 million and $6.4 million as of October 28, 2023 and January 28, 2023, respectively. Of this total, $2.7 million and $3.0 million was recorded within prepaid expenses and other current assets and $1.6 million and $3.4 million was recorded within other assets on the Company's Condensed Consolidated Balance Sheets as of October 28, 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.
12.Redeemable Noncontrolling Interest
Redeemable noncontrolling interest represented 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
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
thirteen weeks ended April 29, 2023, was $1.3 million. Changes in redeemable noncontrolling interest for the thirty-nine weeks ended October 28, 2023, were as follows (in thousands):    
Balance at January 28, 2023
$10,712 
Adjustment for purchase of noncontrolling interest(10,712)
Balance at April 29, 2023, July 29, 2023, and October 28, 2023$ 
Changes in redeemable noncontrolling interest for the thirteen and thirty-nine weeks ended October 29, 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 
Net loss attributable to redeemable noncontrolling interest(7,134)
Distributions to redeemable noncontrolling interest(467)
Balance at July 30, 2022$23,491 
Net loss attributable to redeemable noncontrolling interest(338)
Balance at October 29, 2022$23,153 
    
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.
October 28, 2023
in thousandsGross Basis
Accumulated Amortization(1)
Carrying Amount
Definite-lived intangible assets
Customer Relationships$24,208 $(22,143)$2,065 
Non-competition Agreements788 (788) 
Total definite-lived intangible assets24,996 (22,931)2,065 
Indefinite-lived intangible asset
Pura Vida Brand (2)
11,666 — 11,666 
Total intangible assets, excluding goodwill$36,662 $(22,931)$13,731 
(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.
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
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 three months)729 
Fiscal 20251,336 
Total$2,065 
There was no goodwill balance as of October 28, 2023 and January 28, 2023 due to impairment charges recorded during fiscal 2023.
The Company performs its annual impairment test of the indefinite-lived Pura Vida brand during the second quarter of each fiscal year. The annual test included goodwill in prior years.
The fair value of the Pura Vida brand was estimated using a relief-from-royalty method. The estimates and assumptions used in the determination of the fair value of the Pura Vida brand included the projected revenue growth, long-term growth rate, the royalty rate, and discount rate.
For the prior year test, the fair value of the Pura Vida reporting unit was determined using a combination of an income-based approach (discounted cash flows) and a market-based approach (guideline transaction method). The discounted cash flow method involved subjective estimates and assumptions such as projected revenue growth, operating profit, and the discount rate. The guideline transaction method involved transaction multiples derived from the acquisition of controlling interests in stocks of companies that are engaged in the same or similar lines of business as the reporting unit.
During the assessment for the fiscal 2024 test which was performed during the second quarter, it was determined that the fair value of the Pura Vida brand exceeded its carrying value and no impairment charge was recorded. During the prior year test, the Company recorded an impairment charge of $9.9 million and $19.4 million for the Pura Vida brand and goodwill, respectively, during the second quarter of fiscal 2023 within the Pura Vida segment.
Due to the operating loss incurred by the Pura Vida segment during the third quarter, the Company determined there was a triggering event and performed additional analysis on the valuation of the Pura Vida brand as of October 28, 2023. As of October 28, 2023, the Company determined that the fair value of the Pura Vida brand exceeded its carrying value by a nominal amount and concluded that no additional impairment existed for the brand asset. There were no impairment charges recorded for the thirteen and thirty-nine weeks ended October 28, 2023.
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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
The Company recognizes that any changes to actual fourth quarter results within the Pura Vida segment for fiscal 2024 or projected fiscal 2025 results could potentially have a material impact on our assessment of the Pura Vida brand impairment. The Company will continue to monitor actual performance against expectations. Should any indicators of impairment arise in subsequent periods, the Company will be required to perform additional analysis to determine whether additional impairment of the brand asset exists.
While we consider our assumptions in the determination of the fair value of these assets to be reasonable, they are complex and highly subjective. Adverse changes in key assumptions in future periods may result in further declines in the fair value estimates of the Pura Vida brand below its carrying value resulting in additional impairment charges, which could be material. Our key assumptions (as described above in the valuation methodologies used in the determination of fair value) may be impacted by macroeconomic conditions, including inflationary pressures and the impact on consumer discretionary spending, as well as a sustained decline in stock price and potential changes in business strategy. Refer to Note 5 herein for additional information regarding the fair value measurement.
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 incurred the following charges during the thirteen weeks ended October 28, 2023 (in thousands):
Reportable Segment
VB DirectVB IndirectPura VidaUnallocated Corporate ExpensesTotal Expense
Severance charges$ $ $ $304 $304 
Consulting fees and other costs      
Total (1)
$ $ $ $304 $304 
(1) Recorded within selling, general, and administrative ("SG&A") expenses

The Company incurred the following charges during the thirteen weeks ended October 29, 2022 (in thousands):
Reportable Segment
VB DirectVB IndirectPura VidaUnallocated Corporate ExpensesTotal Expense
Severance charges$ $ $406 $ $406 
Consulting fees and other costs (1)
  115 1,018 1,133 
Total (2)
$ $ $521 $1,018 $1,539 
(1) Includes $1.0 million for fees related to cost savings initiatives and CEO search and $0.1 million for concept brand exit costs
(2) Recorded within SG&A expenses








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Vera Bradley, Inc.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
The Company incurred the following charges during the thirty-nine weeks ended October 28, 2023 (in thousands):

Reportable Segment
VB DirectVB IndirectPura VidaUnallocated Corporate ExpensesTotal Expense
Severance charges (1)
$342 $