VRA - Earnings call transcript Q2 2020

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Operator

Good day, and welcome to the Vera Bradley Second Quarter Fiscal 2020 Earnings Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Mark Dely, Chief Administrative Officer. Please go ahead, sir.

Mark Dely

everyone. welcome, and morning, Good We'd like Bradley's us Vera for thank quarter call. you second joining for to

Some statements questions amended. XXXX remarks the the and statements of Private our pursuant meaning in during the made Reform harbor response made of on Securities the to provisions and Litigation as your to may safe forward-looking call constitute within today's of prepared of Act

at materially unknown the actual press the to statements risks discussed the a and We forward-looking are differ call. those Such SEC undertake results assume update known and on cause filed that could the release that the recent both expect. and of statements subject not we XX-K, a uncertainties risks for uncertainties. known made today's any Investors to operative call information Please later no discussion time. company's from that obligation should during to remain with Form to will refer most and

it Bradley's to turn I'll Vera Wallstrom. CEO, Rob? now over Rob

Robert Wallstrom

Thank me us joins on you, John you for also call. CFO everyone, joining morning, Enwright, our Mark. today's thank today. and Good

Vera again the Bradley's customer selling price in quarter. all were comparable full count sales, up and

retail particular market the and challenging. remain overall handbag the However, environment in

our partners affected indirect in below have this We most been feel channel continue as the retail and expectations. the sales therefore, slightly indirect fell our environment, to difficult of pressure our total

and domestic continue be tariffs costs. to higher pressured shipping margins gross international increasing Additionally, by and

so recall, brand the continue upon might far. you stage to Vision we and made the we As first and restore have progress of health was XXXX the company to build

stores price verabradley.com sales we these XX%. of channels selling in by by once increasing During our again improved this full half quality year, the approximately two in comparable of and full-line first

we sales profitability. of This is and XX-plus two increasing three both expanding base of first-six a our of increase year. and year months percentage journey, keenly our on customer are focused and is the This last year on in top

reminder, number a fiscal our XXXX are As focus of for growth. one key areas

positive the Our line a this Vera half, with goal targeted year, and for improvement Bradley year-over-year. solid to product market. in Customer and up our are customer handbag with the comparable to being North X.X%, is This we innovative is start challenging compelling, in count first to sales growth despite supported return up sales brand is American driven by and marketing expectations a by engagement. also off

operational excellence. two, Number

Chinese We are in tariffs. business investing processes addressing technology, strengthening and

nimble process our become During resource the to second two-year quarter, in information our technology business planning and systems a more began and streamlined, enterprise of re-platforming other efficient key we and processes.

end the exposure from to fourth GSP quarter countries. fiscal will margin see Generalized moving gross China of year. XX% the approximately of we System of By this last than will drop Beginning our in XX% production of the production to benefit year, less to begin the year, this in Preferences

ownership. three, Number

and scores. We reinforce receive our during survey we once associate have ownership-based customer can continue culture value model, where And to to best-in-class will creation efforts. again, individual our annual their leading drive an and we scores industry team continue engagement to as service associates every

underscore a is key is plans. one Both how our long-term to our prime asset culture and growth that

second Bracelets. to a lifestyle Vida Pura position continue majority Vera unique brand of our also strengthen Bradley's a We in as with acquisition interest quarter

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

affordable, alignment and and gifting connected strong and casual, Vera cultures. including positioning and comfortable, as multi-generational customer brands; Bradley are complementary lifestyle Pura socially similarities, and have Vida entrepreneurial and fun highly as brands emotionally-connected, many base; businesses devoted,

knowledge and resources share will We grow together. to brands our

fit Pura to strategic as has and its in great their selling. robust a support in capabilities and already infrastructure strong And, well marketing due e-commerce us branding subscription-model strategies, nurture Vida competencies growth. Vera to Pura expertise Vida office back as started social for is utilize and Bradley's to

to turn Now John? and to review will outlook. the John I call the results over financial

John Enwright

Thanks, Rob and good morning.

Let systems me a exclude non-GAAP related financial over is the will re-platforming The Pura highlights current amortization, amortization, for July inventory the for asset in includes expenses intangible the the expenses, stub The go quarter. period, and end Vida well and for step-up the I quarter. discuss, through as costs, year six technology acquisition transaction our performance which second XX outlined release. of today's of as to quarter including few results and Vida related for months, Pura information performance the

totaled million net which revenues $XXX.X second the net million $X.X Vida. quarter consolidated included Pura for quarter, from year current revenues Second of

$XXX.X Vida, Excluding Bradley net million, $XXX.X a the in million quarter. Pura prior increase Vera revenues the totaled X.X% second over year

$X.X totaled diluted Excluding $X.XX $X.XX accretion quarter consolidated per to income charges approximately to included which million Vera attributable Pura attributable Vida. second share, Bradley of or Incorporated net

share. per prior posted or year we quarter, the $X.XX million For income diluted $X.X of second net

Direct Current over the second quarter. year in million, X.X% revenues Vera the prior quarter. sales for Comparable Bradley $XX.X million year segment totaled $XX second quarter increased increase a X.X%

primarily of approximately quarter, sales from of million e-commerce sales by expected, negatively year-over-year As comparable $X were the impacted affecting sales. clearance the reduction

prior and and decreased $XX orders delays. revenues in in million million accounts number inbound a shipping the store $XX.X as department well the in reflecting as reduction of to XX.X% year, Indirect from segment specialty

current Vida by of amortization, totaled million, gross quarter profit increase second basis points. year XX inventory net prior XX.X% the or compared Excluding XX.X% $XX.X revenues, the gross quarter. in the $XX.X to margin or year million step-up non-GAAP second Pura

offset sourcing shipping selling impact increased efficiencies by and the tariffs Chinese and and As in were of full-price improvement more operational expected, costs. than

quarter. technology $XX.X second charges, year million second Excluding amortization compared or net the quarter, million in the to the asset in or Pura revenues current was intangible transaction Vida costs, and information XX.X% expense SG&A XX.X% $XX.X prior of re-platforming year

of $X.X million contributed Vida SG&A expenses. Pura

to primarily new factory expenses $XX additional than prior Bradley $XX these store guidance expenses year million to variable the related and openings million. were but revenues, SG&A to Excluding drive Vera range the expenses due were higher of within

net revenues the totaled last $X.X net Vida, six million revenues $XXX.X months of from For million, which Pura million included year. compared $XXX.X to consolidated

company's for six charges attributable Excluding consolidated Incorporated per months $X.X net which the the $X.XX or accretion attributable total Pura $X.XX million, Bradley Vida. of approximately Vera income to share, included diluted to

year per six For $X.XX company of the income $X.X or prior months, share. posted net the diluted million

$XXX.X increased Direct months. Comparable in and stores in sales six segment Full-price X.X% the period. totaled million, over the increase for prior XX% X.X% full-line for million the six selling year. the the the revenues a $XXX.X for months approximately on verabradley.com increased

accounts certain revenues X.X% $XX.X $XX.X key reflecting decreased a as segment months well orders the shipping delays. both million and year, the for inbound six prior Indirect from in from to million specialty as accounts, in reduction

Excluding or the net million, XX.X XX.X% $XXX.X inventory inclusion to percentage totaled compared in current step-up the Pura amortization, margin non-GAAP Vida basis revenues, The of of $XXX.X XX gross by year profit benefited of net million, year. revenues, the gross the six % for months points. or prior approximately

more improvement Chinese operational costs. in the shipping efficiencies were and impact than tariffs full-price by As offset selling increased sourcing of and and expected,

XX.X% technology prior re-platforming year. million Excluding costs, the in expenses. $X.X year in amortization and of XX.X% months, or Vida the net current of compared of million, to or SG&A revenues, charges, net $XXX.X transaction million, Pura Pura six Vida asset revenues information contributed $XXX.X SG&A totaled expenses intangible

Now totaled sheet. quarter million let capital me months Net turn spending respectively. $X.X second to for million, and the balance the and six $X.X

the price an $X.X remaining repurchase stock During approximately average under at the or had XXX,XXX we million end, common second of share quarter, of approximately million $XX million we At authorization. quarter repurchased $XX.XX. $XX

cash second cash. from compared $XXX.X million approximately related prior and XXXX of quarter. XXXX Pura The reduction $XX of of Cash, Vida the year $XX.X million is totaled year's as to the the for August at end last equivalents, to investments in July X, acquisition million

quarter was included continue have Vida $XXX.X no end which Total We debt of million, inventory. Pura inventory outstanding. million $XX.X to

guidance $XX.X Excluding brand second to range $XXX.X year. receipts core our to impact end the to was inventory end at of of to million $XX of about primarily tariffs. minimize the Pura was the the the end last quarter at of quarter Vida in The $XXX due million acceleration high million our compared inventory order

Now, numbers let our full expected will outlook review Vida performance. Pura year. minutes Prior I guidance couple Pura and a quarter for that and All third exclude forward-looking numbers to the of Vida. me discuss include take are non-GAAP

as disclosed well purchase margin, previously as year Pura Full and charges, additional exclude gross technology the Vida. SG&A and Vida EPS charges information related any diluted related of re-platforming systems Pura to adjustments accounting acquisition numbers the to

expect third totaled $XX quarter, $XXX For sales which revenues million. revenues we of million, net estimated year Vida this includes $XXX $XX.X million. to million quarter of $XX to million Pura Prior third

segment Direct positive to Bradley's the including digit to sales. comparable digit mid-single quarter, For in expect Vera the we range, sales increase net low-single low

the digit range will quarter. We expect net indirect for low-single Bradley in be the Vera to sales flat up

We expect of XX.X% gross last our XX.X% quarter margin quarter will be rate third compared XX.X%. and third year's to between

operational gross a tariffs. offset impact China The should inclusion be the Vida of are Sourcing positive of efficiencies consolidated to more impact the expected by than have Pura margin. on

to Third quarter SG&A operations. $XX.X SG&A $XX expense store to with and new expense expenses $XX.X last related million million, approximate incremental range Pura million of $XX million estimated reflecting factory of year's to associated from locations expenses is compared expected to Vida

was of $X.XX approximately $X.XX, $X.XX diluted the in prior quarter quarter. third year to EPS from expect Pura We EPS accretion Diluted of third Vida. $X.XX reflecting

the approximate of to Included inventory. We third million of the million quarter be is expect compared third the $XX last in million of $XXX end to year's to $XXX this Pura range estimate quarter. Vida end inventory in at million at $XX.X

For expect million, $X million balance $X this Vida second includes the of $XX the additional of totaled million. million quarter. the Pura estimate quarter reflects and million year. revenues which sales of The Vera net sales $XXX.X Bradley the Net to in year, clearance $XX removal approximate $XXX to full sales $XXX million year, in million last estimated fourth revenues we of

mid-single guidance revenue a year compared sales low comparable assumes prior the increase will full range, including segment Vera the in net year, Bradley digit with in sales. digit to Our that increase low-single Direct

indirect that flat expect range in sales net full will digit down year. Bradley the to be the low-single for Vera We

margin be last expect to compared XX.X% year. gross our will for We fiscal to between XX.X%, XXXX XX.X%

impact efficiencies on offset positive Pura Sourcing impact fully have Chinese be to a should are expected margin. the tariffs. inclusion The consolidated and of of gross Vida by operational

offset to for incremental year. closures. We total store expenses expenses partially new million $XXX million expect locations, to the factory $XXX million store related to to between year, compared SG&A full-line last by Reflecting $XXX

operations. $XX Approximately Pura the million million Vida to to estimated expenses of relates $XX

expect to Diluted acquisition. Vida $X.XX EPS to $X.XX, Vera Bradley EPS will diluted $X.XX. of prior year guidance year the plus last full annual from Pura contains from which We range $X.XX $X.XX accretion totaled

points basis to XX estimate A note We affect share. per gross tariffs $X.XX margin approximately the tariffs. year, negatively for equating on would by about

total logistic million We to $XX capital reflecting compared factory new expenditures enhancements. expect approximately investments technology will stores million in $X.X and last and year,

$XX in We million million generate to XXXX, which expect $XX Vida. includes fiscal of cash operating Pura flow the of benefit to

Rob?

Robert Wallstrom

John. Thanks

this off sales comparable to X.X% year-to-date positive a to increase. are We start sales year, with our in solid returning growth

engaging our to We our innovative efforts customers are our and compelling bringing experience with marketing Vera Bradley supported by current and and customer customers product, new initiatives.

build XX franchise we beach as items. in On to travel, top well areas our campus, like the gifts, continue line, and key product as our dominance

back of the are bags and is lunch sales last period exceeding Our selling and year. to the school underway backpacks

the colorful smaller and backpacks fashion collection, and slings. season backpacks for our includes larger clearly school Newness

showcase newness this have We fall. of lot to a and innovation

rise Performance is The Twill of beautiful month by series of lightweight, performance has a the This Twill. Last our our water-repellent launched in durable, launch customers' innovative we made and a a solution. increasingly athleisure definition Performance fabrics. is performance. driven first decisions of purchasing newest movement

Also more in in Signature lay franchise enhanced our August, we by and duffel duffel flat November. will shoulder adding and straps, our innovative sizes debut

fall. will offer collections small this two We capsule

will Our collection launch month. fun and playful cats this meow capsule

And pink, cancer for capsule will October. pink in our month posies pretty awareness breast debut

for centered customers periods limited special a time novelty to add capsule seasonal Our sense or our collection urgency around shop. of excitement and

innovate add to to elements and continue will products. our sustainability We

up lighten collaborations made with collection is increases bottles in collections and to in momentum our sustainable reactive unique growth. our recycled introduced Our will to provides edition our XXXX. be and partners Offering brand limited exposure plastic of update

product collaborations We have several high profile entered year. this into

popular Plus a features The of The launched was wear collection Venus's collection Gillette, April special Target. on editions a core continues drink May, selection debut design and Bradley products. and Asia perform In Bradley we Starbucks above Pacific. shaving at in Vera Venus collection a expectations Vera to accessories collaborative

footwear on Bradley has Plus reach. collection Bradley collection, helping successful This limited which is Vera signature international Interestingly paisley customers sold very our and our us Crocs out were with immediately. that comfort. styles about been brand our of and combined bright brand. broaden edition florals July, sizes website debut expand In awareness our designs Vera and purchase almost and Crocs World renowned XX% Crocs, to the Most new our

we using Vera Coast weeks the Vera and co-branded Bradley of plus Campus ago, We backpack inspired Bradley's perfect selling West silhouette Pura vibes Vida partnered a Two iconic print back-to-school to distinctive Backpack Vera the Pura build together unique Campus our the to celebrate Vida debuted partnership. backpack backpack. by traditional the Vida a new that fabrication. cotton-linen way cotton Bradley our The instead quilted Bradley's Pura slub perfect Vera forgoes think lifestyle. yarn is iconic Plus and We Backpack collaboration features best

with This collaborations. Building partner collection. Disney we Bradley backpack, fit. the create edition and this a are Theme success of off last to merchandise of once purchase each With will another and receive limited extremely original perfect a Vera Vida again DISNEY Pura novelty Disney bracelet. the two Park customers fall, popular pattern complimentary

We experiences, that of to fun we our are Disney many creating huge both memorable are and and committed enthusiasts. also Bradley customer fans know Vera

another back-to-campus drinkwear, and launch Warner bedding, Consumer Bros. exciting Products Potter. to will Harry line featuring XXXX. bath plus stationery, announced collaborate Potter team design we June Vera and a dorm will Vera Bradley bags, collaboration, Harry which with in Bradley's create accessories, tech products, Today,

Potter blanket cozy for featuring will gifting. sheared robe, just time Harry Plus slippers XXXX, in in throw November Bradley and holiday Vera a launch A fleece capsule a

Products to with generations. collection magical We are Warner thrilled all a fun appeal Consumer create will to that Bros. partner to

that appreciate who our support these Vera the Bradley's Vera World the also devotees aligned and as know messages love fans throughout are we of Wizarding acceptance, diversity, will woven Harry Bradley works, closely products. Potter equality hope and many Additionally, and World Wizarding that are amazing these values. of with We

of Consumer partners is brand. amazing Disney a such Gillette truly attract Products to and appeal to our Starbucks, ability Bros. the Venus, strength and testament Crocs, Our like Warner wide

an also All goal of offer to collaborations these beautiful our our are to solutions extension of customers.

product are internationally future brands known We with collaborations. other working exciting iconic, other and

Let's now turn marketing. to

and our customer marketing digital Our teams focused accelerating and on digital are growth.

of our the science added the of platform. We customer team, data have customer analytics rollout our and our completed insourcing team business completed new to data

using actively gain our insights from robust to adjust a are mix We marketing basis. data we our on customer the real-time

directly in media. results have the we from media, are as are investments new revenue digital digital data derived year-over-year We and initiatives. seeing excited visits by improved from these customer In these customer has

increase at channels, brand. overall across impact Looking new year-over-year the the of investments these and for our we saw a double-digit customers

to continue results and marketing and optimize our in will of We collaborations significant customer the be continue data and quarter. saw important influencer the engagement year. we to the a Brand for our brand, for spend mine the half back

all buzz. than over relevance show brand second strength with and collaborations more and enormous quarter. Our XXX% Starbucks Gillette, last Crocs media a generated and impressions of increased year's heightened our Media

marketing plans are socially in social endeavor. total and this our a and media As stakeholder critical organization, conscious we position focused reinforce as engagement

under charitable cares. VB umbrella support of to continue and strengthen our the initiatives We community the

areas a are can on meaningful We identifying make of we particularly impact, women lives and the where children.

communities. children change a experiences invite a profit from taking for customers participate action. thousands supports Fresh we our towels York the are agency camp of calls income often to New Vera for summer, We with for low Fund, Bradley summer Air clear to to that beach City's stance not donated This and the

our second We partnership Backpack are for continuing a a in year. consecutive with Blessings

who backpacks hungry. communities, Backpack, provide a in the to a across throughout might school we Blessings in children Through are otherwise for donating of food Blessings children and resources need US. XX,XXX mobilizes Backpack individuals go millions elementary to America, in

packing giveaways, New Alaina, backpack several more. motorsports and in hosting NBC Each celebrity markets appearances, analyst, carnivals Jr., distribution backpack back-to-school American Dancer. events of including event Angeles, Misty Ballet Dale Principal Lauren Florida. singer Chicago, events, school in Sports will songwriter midst City, many events Theatre, and Los and the in some including annual York, and Charlotte Earnhardt, music Copeland, Panama also are and culminate The legend, select We racing country Nashville, and will feature

benefiting in Backpack, the awareness for donation October keychain since significant to helped received backpack Backpack their a is Blessings an minimum campaign this launched raise also Awareness organization. Breast mini customers fundraising $XX,XXX Through Cancer free the over Vera for customers Bradley for a in us we Blessings And to but stores of go $XX effort, is in on in a support it a the our our Vera year, show August, Cancer with the verabradley.com. and on month organization all Bradley In in Activities supporting Foundation Month. especially August. Breast

offering the fund the our Indiana expect special to be inception with Comprehensive year, million to events of research raised $XX and and we this cancer will over we raise million merchandise at We of Cancer breast foundation, the advanced customers, over have in-store $X support since University's Center.

distribution. to on Moving

is grow our assortments Our fiscal customer in display enhancing our the to XXXX. stores, on experience, highest in stores focusing and of our further In compelling potential are channels full-line we goal each more sales our windows. adding localizing

also our vehicles full-line launch are this to pop-up alternative which will including sell vending shops products, and fall. testing machines, We airport

our We store continue strengthen to rationalize base. and full-line

months the quarter, At to our end full-line potentially the year. will the underperforming year. about in five This beginning this to and the this to close following of five XX closed we total could additional XX more of bring the closings XXXX store expect full-line close year fiscal an XX up had since and We first-six of stores we stores. fiscal

are model maximize our which already refining six pricing have of five locations, by performance we year, factory to and new adding This opened. working

best expansion to relocation Branson, and The move Larger Missouri in store performing our and was complete factory are Florida and we in location -- space expanding Destin, Sevierville, Tennessee complete a addition, July. the larger of opened will be August of October. stores. three in In relocating The

factory end the we quarter, had At of the stores. XX

customer We on and both and factory in focus verabradley.com stores continue experience full-line and engaging our an our to on in fulfillment customer service operations department. creating our

out customer customer and Our once quarter. satisfaction rolled our again robust the in drove new service and model full-line our leading voice stores of customer initiative industry into scores

specialty we customers. lapsed the and are top reengaging focused our accounts on In channel,

our about We Vera productive in represented distribution arena to stores. store are the focus back locations. paring most department Bradley currently is department on XXX and

our and Our team brand is exciting. future resilient, and our is is creative, experienced

we have return year, last to growth. health our in begun the and to Over significant to have company made progress restoring

forward and We our focus beyond. looking excited Vision Vida the that are And completing the growth the to about of years to XX/XX acquisition very potential journey beginning brand. we on Pura are and

questions. Operator, to we call will now open the

Operator

[Operator hear Altschwager question, our Instructions] from And Baird. Mark first we'll with

Mark Altschwager

have if Rob, I'm a these more about you've curious, collaborations talk could so been what you really been learning far. interesting. bit little

anything does a the you you're think with you're particularly there of customer is attracting look respect to customer And to like she the do the expanding bit? Specifically, or surprising profile the brand? that the you're core tent

Robert Wallstrom

No, absolutely these we very are excited collaborations. by

one is as various in it's the the Gillette, exciting whether just own results these our channels been that probably seen it's consumer of through and thing in Target, has through fact response whether across has all Crocs, as we've that the channel, extra kind those well that I been of channel. both the collaborations, overwhelming Venus Starbucks, think it's whether

strong brand of think, the is. brand the we're how points really, to and So the vibrancy -- just it I

new we scores to seeing brand customer up up brand. we the really our awareness Our as awareness seeing attracting are brand -- the keep year-after-year. customer at right? And brand look it We going are show you're a aided in our also awareness, file,

what go for really excited we as this brand forward. so we're means And about the

Mark Altschwager

and nice strategies initiatives lot giving channel? product the clearly factory the these on have full-price you confidence there. factory in touching marketing the focused in growth been seeing business you're the And some success and are how then, the the and business really sustainability a Curious of what's and

Robert Wallstrom

part collaborations channel and clearance to really of XX/XX are full-price move our from and strategy We for Vision definitely our focus. was the full-price kind our the business, get focusing growth strong of on strong

performing And goes full factory that, also demand customers price. collaborations factory are that that pleased up, focused But believe in definitely half stores out on with factory do been stronger the of as how our the the the becomes have brand very our channel. I brand as year. in shopping we've first been to plays channel awareness So are

right approach environment key that focused believe seeing continuing growth and we in XX% Very We've is paying is making we items, stores fabrications strategy taken still promotional factory. that opportunity top our channel, in expand very more for exclusively it. made on we're the us for that a that to very have managing of we're product tightly focused sure and us, you're key And as off in factory. really the now

Mark Altschwager

switching the revenue year new that's And Vida. incorporates you outlook a Pura I back for the revenue about $XX discussed in million $XX then the June. about looks full in gears half. equal million to to for 'XX moment It to mean, back calendar like in

models, wondering, the years? can thinking I'm next Vida growth over you as anticipating trajectory the you're and how is update we about couple further there the from Pura of you're provide contribution So and our annualized any detail

John Enwright

This is John.

way not $XX and of expect yes, the this it year do growth half nice significant to anticipate giving over coming actually we're year to the associated for prior But brand. ultimately, which So in to guidance next and be about happened we we're it, growth we XXX% year. year. the years The three what thinking million basically would next two be with about we'd a million, $XX year-over-year anticipated back

can to growing average, and you XX% a close be I bit the brand out than of less expect little years. mean, on to So think kind do the we this year about

Operator

Cowen with and Chen move Company. we'll Next, to Oliver

Oliver Chen

are inventory Thank expect it indirect bit going forecast thoughts as footprint different? be channel what a you. the little distribution and are the that this your forward seeing and you in channel, about the channel challenging and Regarding is you what management can what a

Robert Wallstrom

of channel, at different look you pieces. When obviously there's indirect a lot our

indirect our of channel. is the that specialty So chunk biggest

first. So let that me about talk

department challenging them. a what pressure in just the same we're of bit been general feeling has little of that I think the seeing is they're retail First for environment stores, all,

that encouraged in we're hearing that profitability. much what terms in performance they're what actually of Vera they're seeing the feedback sell us positive them, we're channel, giving very by But their from in we're terms and through, of seeing full-price Bradley improvement

but positivity with definitely that, not with our we're the we're our there's our be every of just channel. just there lot particularly But through stores, in that important, coming there all sure obviously of in challenges channels going to a focus overall, our change but on so out And best with takes that of the so some focus accounts. lot of an working that's think new that, make we our the that smaller goes lot on partnership that from continues important is only ones team a past future, and feeling to a So facing. year, part it specialty channel, we

one. that's So

think The been all it's pressure. The world, as store we've seen I second it world. is the of department store under department piece

and handbags think has pressure quite the to often store department world a been I trend. in follow under particular seems

we're at making focused that looking So in very sure just we're there. that and

Our customer was department customer and behind about selling store strategy new pickup acquisition. always new

additional that to we to the fine-tune the continue as bring most the that can are so store customer stores and we're to counts. In sure make we're an new count going be word that, other might think really we brand. focusing store up tightening looking to on that appropriate And the at stores

piece. would that be second So the

the piece, And becomes the I of channel. rest third think then the

the very is business wholesale We're about happening performing the Amazon world. side well. of excited e-commerce in what's Our

market to and in going there's then smaller definitely to in area. of the lastly, the that of liquidation, And product that a we're So business lot piece continue but liquidation expand having today. our

on some of of side business availability liquidation. that in the And definitely so of there's terms pressure

us, is been also. that's down that for it, we've But been of okay, pulling less pressure some there because on side but the in clearance, focusing we've our business

Oliver Chen

the on for happening what's full and the in well about may outlet, thoughts in promotional and your traffic traffic across as industry liquidation. your versus price thoughts It's your merchandise think as What been expectations volatility trend? we the would Yes, margins love marketplace. on trends are how very

John Enwright

we're than forecasts full our put traffic together about roughly being factory plan, anticipated we X% ultimately, traffic's kind softer of year-over-year. price perspective, in a it’s From perspective we that our little the from a bit seeing our business. a been when down But

our the we're don't significant changes we of the merchandize of If year think forward, anticipate about to margins first going from in promotional half back in regards year. be we move to half as the how kind of I the

our activity, I built as we've we would for for well and third input look to guidance consideration the So think taken how and shipping some the we've any the quarter our costs forward-looking with then year, into at costs promotional as as associated of that.

GSP, in half we've the significantly most year, for of with kind the margins. in will see in back his in we kind think of comfortable, remarks the coming of kind fourth mentioned for ultimately I the And feel quarter the for our more So benefit Rob margin through second quarter. the the GSP of as impact

Robert Wallstrom

is data and we more add becoming I and our team thing would marketing only team more talked saying the to about think our I and science what analytical. John

analytical activity? we do in of really we're is lot tune take placing that fine effectiveness. How focus that How approach, a areas promotional definitely the the of targeted One do the the promotional we

which whether becoming much customer or it's promotional activity, through think micro-focused us we period more of help in store, will promotional this geography so our by move category activity. we're

Oliver Chen

should monitor as in there terms embrace well customer opportunity their as On What your that a of we huge really base. across expertise young large? digital to their Pura you'll Vida, leverage how is organization at

Robert Wallstrom

the think that there's what real pointing areas one Yes, we to Oliver, synergy. you're of definitely

has Vida from So particularly Pura our learn teams do our improve how to the on effectiveness, really what are customer. working younger together really done, focusing with we

Pura youth And has such been that has lot Vida really always brand. our a of customer, engaging so a great which job of part important has an done of what is done

Instagram So following on of this to if is on social really media side. great the and there's they've you media, is areas. think them from a there's we would done think key that say three learn about lot year their basically a One the what job doubling focus, social I

The marketing experience. of generated content/influencer much moving second generated content more is our to a user

coming So months. next to media the you're see through going our more over authenticity, XX

then our I different more is And and more the the innovation the on as being technology that different to we lot they're Plus Shopify those that a website being think, forward we're lastly, capabilities, And platform Shopify particularly also they're the and through the and at they're of happening of just in that's taking e-commerce importantly a of and using, tools move lot advantage them platform. leverage world. on the learnings join expecting looking program

Oliver Chen

regarding great lastly changes to your was and products, innovation? thoughts updates core newness customer your as managing made some what How response to your as And and balancing the then? risk on silhouettes. versus of Classic well layering are And some you

Robert Wallstrom

couple to see core traditionally can And innovation Great and our question, of those that I one a doubles things, fresh. and of strengthen those products is that we way through feeling using terms products fabrication, known Oliver hero just in continuing are so core our and keep for. items one things so we're driving are and backpacks things really were that even think our we like campus

more we that focused our it that and expectations our going. pattern focused. our bringing belief there brought just between our our newness And which sling that opposed big and market, call silhouette never we success becoming quarter, as silhouettes. line, balance newness, more example look we new was great what in I a right, are sling you're the definitely during A well But had functional heritage had we our exceeded as really as a and this keeping to reinforced far backpack second of trying as is in at to focused customers

So really I critical. think that becomes

heritage absolutely but tell with we put that we you're thing something in Performance week, bringing way Performance interesting launch and are us. launch, Flat all fan marketing is Flat out to it is seeing do August with great that talked the we’re we're on, website. Lay see, is, only one the as I for our so a great to then but updating Duffel we in iconic it's new design. other But well it other loved what's new new And is us big focusing about that this customers franchise the feel this both The items more of as great, trying fabrication, Lay really balance to talked about November XX. with design And going are our going Not is the it our using the am personally as that a of will in technology, I on really you we be which XX even a time.

not only XX one our winner. So to was in example, we listened other surprise campus our our customer some we was was the sellers. But asking to that that's of designed another for work backpack, for innovation the and best thing really Performance that been do and

to balance wants customer and both our us So innovation. heritage

Operator

we'll Next move with CLK Associates. Instructions] [Operator to Steve Marotta

Steven Marotta

Good morning, and John. Rob

bit far As as Vida little Pura talk goes, a you can about?

Robert Wallstrom

can’t really you Can we hear you. Steve, more? up speak

Steven Marotta

So is it little better? bit

Robert Wallstrom

little It’s better. bit

John Enwright

better. just Maybe

Steven Marotta

associated loss and be standpoint Vida’s year from words, Pura incorporated half you any that our that's an as about accretion a there we first year, $X.XX adding other earnings is with bit acquisition. might little Can that In next it's talk this of a sort numbers? seasonality about think

John Enwright

Steve, John. this is

say that just the to first think you we want right. make I should I year question, So sure heard about, loss

Steven Marotta

half? first the In

John Enwright

have similar the do kind Ultimately, answer as seasonality where it’s to nice question to close that business our back-to-school businesses, have business. they seasonality our as is So summer business, of fairly the season well to a in no. they some holiday their

But to expect as pointed will few this year, of close months kind of anticipate of anticipate first we the in wouldn't next a year model accretion year. reduction back guidance for out, next the of you be, half. kind any for $X.XX year. and the in what regards out was accretion I to you to as obviously, And first just about give more obviously it half the EPS we going So in half expect in from we in it

Robert Wallstrom

way with the model relative to sales And super their way low a and season. I works the into profitability think business it a think is about through to season of over and the different it’s flow marketing lot business. sales overhead is one the not that

you're maybe there's some out retail going see in that leveraging not to earnings quarter. than you bit So base fixed businesses smoother you're see little cost in big I fourth flow think because a a

business we'll accretive. next definitely So very very obviously a but and it's give year, healthy more guidance

Steven Marotta

exposure. And just your reiterating China

year, end You that's the run year, mentioned a rate the XX% correct. at about, it that of was XX% blended last spoke you the rate not entire That's for year? the

John Enwright

blended little when we're bit And less XX% roughly that to Now, we we’re year that. or than that had the of little next a purchases rate we about move going this total a bit of anticipate year. that down actually made the that's China out

Steven Marotta

And to XX% good. X% very tariffs incremental with upping Xst there any September associated to this XX%? that's Okay, were that to

John Enwright

of List the Yes, tariffs X. for there's with September associated incremental Xst kind

So being X. was when we had it was tariffs from excluded that product List

So the List the with and products will broken they XX, incremental December purchase as September X tariffs implement between that associated out now Xst China the have up all of of we tariffs December once XX.

of there have end no the of if the our purchases tariffs of by for out are incremental So will year, China. changes, XXX% we

Operator

And that would Rob like any at this additional turn to I closing conclude call to the time, question-and-answer Wallstrom session, will over remarks. for back or the

Robert Wallstrom

Thank much you joining on today's us for call. very

very are Vision launched We with we we have XXXX. progress the made since pleased

and American profit North handbag market challenging, is delivering are growth the Although revenue, we focused in value. future shareholder the steadfastly and on on current

our up on Goodman, team, Beatrice Officer. Customer in of management and Don't Vida’s Officer and X. Daren Chief Pura members along Analysts Vera forget Griffin the store with to our will Paul October sign Hull, including for there Creative Thall Cabe, SoHo Investor be our our Founders Bradley Mac Chief Day Thursday, and

interested are you President our jbentley@verabradley.com. time. contact you Investor your Thank Vice Bentley, of Julia Relations if for So at

Operator

today's for We conclude will participation. that thank And you your call.

Vera Bradley (VRA) 4 Sep 192020 Q2 Earnings call transcript