VRA - Earnings call transcript Q4 2020

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Operator

Good morning ladies and gentlemen. Thank you for standing-by. Welcome to the Vera Bradley Fourth Quarter and Fiscal Year-End Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, today’s conference is being recorded.

to Chief conference Administrative like Dely, to now Bradley’s Vera Officer. would turn over the Mark I Please go ahead, sir.

Mark Dely

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

during made may XXXX Securities the Litigation the questions statements meaning statements the the forward-looking amended. of our remarks Harbor to constitute and and to pursuant of Private Safe Reform as prepared made of Act your response within of Some provisions

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

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

Rob Wallstrom

joining Mark. for and gross SG&A me year margin Consolidated were for our guidance and Good below everyone, with expectations. today's the the our line on also our thank in morning, the today. revenue John you quarter fourth joins and performance you, CFO although call. Thank Enwright, us fiscal rate fell

with line periods customers our brands. but was focused during year, across cadence in resulted which clearance last reduced promotional spend promotional and in gross Our both their margin

costs shipping expected. were addition, higher In than

fourth our fell our annual EPS below As non-GAAP quarter consolidated and a diluted guidance. result

on liked, foundation during as would building not were progress we growth our quarter year improved for and return. future path significant made strong shareholder to have Although fourth a the we as earnings strong

Vera to to Over the and Bradley two growth a Bradley a Vida. business solid years to Vera and headway, restore plan the XX% on our on strengthening for were three-year we healthy ago, revenues business foundation our growth. able a made XXXX, Two have the return generate XX% company into to We Pura in years and improvement plan, brand our meaningful year. acquiring Vision aggressive to EPS embarked we non-GAAP

In first and price XXXX company was cost operations. delivered generated reduced of SG&A from clearance and restored We help. restore the and to brand fiscal revenues cash stage company's selling retention the maximize goods of base customer XXXX, full and of reductions,

quality in of We continue on to progress verabradley.com of top at approximately once channels prior in build full-line and XX% through our these which XXXX, the two again X%, is the selling year. fiscal full-price comparable that in by on on stores improving sales increased the increase of

key three-year three base, of customer As completed our our sales And to our as focus areas commitment number off. growth. fiscal for journey a of year we XXXX were; reminder, growing and fiscal XXXX, two paid profitability one, our in

lifestyle It Pura customer Pura growth. our addition constant is on fiscal element important unique Vida great The Vida a focus the a engagement an company. of XXXX Bradley position experience. marketing Our consumer to this driven This main growth generated despite and a objective year, by supported the Bradley handbag environment. positive comparable sales driven growth by of improvement X.X% was product and to Vera return we accessories innovative was challenging data at and strategic was Vera portfolio bolstered of Inc. comp and and fit. our as to has

from And in and approximately moving diversification and rapid increased countries, tariffs number the sourcing XX% in fiscal of of our production re-platforming impact in through operational of XXXX. China XXXX excellence. approximately our XX% mitigated XX% two, to We

information in systems streamlined, to platform Mid-year, and nimble re-platforming we also ERP of efficient more and processes. and began a our two-year technology key our process business become other

significant Every both value associate reinforced ownership. team model. efforts. to drive an ownership continually three; the based creation our culture individual We through as number unique and ability And has

Our and our XXXX at of NPS fiscal and customer XXXX XX generated were engagement satisfaction XX engagement score survey associate our once best-in-class were scores again also best-in-class.

Let other about me fiscal some specific talk XXXX accomplishments. of our

area, our campus, is the travel of Bradley key first engagement top in to for higher to year and lightweight, to XX repellent. continued We product of love brand. Vera drive modernization and the and water especially day, durable XX, of called fabrics launched as dominance urban to youth which XX We XX it, areas olds in performance developed our the customers, income we franchise is build and series well it Customers fabrications as Performance in appealing customers. innovative a and items. pipeline For our every customer

of introduced We made plastic bags. recycled from our fabric environmentally-friendly Re-Active collection,

fabric. nearly and fact, Re-Active X this year the coverage. engagement strong generating Re-Active for recycled customer million In bottles media is be will

We in easy Awards a also winner Design with the its category. introduced our collection, versatile as for Flat Flat We Council on drove The sides Excellence for accessibility. that silhouette the sling pieces three Lay Lay selected Vera travel Bradley's Duffel innovation. unzip Travel/Luggage along Accessory

introduced collaborations Starbucks, iconic and Magazine’s with sell Bradley People to New Products Beauty “Best The product razor and XXXX Gillette collections. Crocs, recognized successfully We + Disney, Awards.” in brands, of limited-edition Vera several Venus create including Venus collaboration was

+ among These Warner Harry another visibility and and summer our provide back-to-campus in groups collaborations line, momentum customer launch for Consumer which new XXXX. increase Vera of brand announced We collaboration Products exciting to Potter create will growth. with Brothers a dorm Bradley

can where both solids mixing creating and expanded We personalization with customers our embroidered by out. patterns design and along customization own inside their bag programs,

top stores three closed in eleven distribution with factory XX fiscal and Bradley strengthen full-line XX our of rationalize stores stores, year Vera we and our to store locations. continued six full-line ending opened the and underperforming the On stores We relocated base. factory factory front, expanded new

implemented model scores. service industry newly drive and continued satisfaction to customer Our of customer customer voice initiative leading

brand five-day $X Our over strong the highlighting annual outlet during gathered loyalists and our sales customer XX,XXX generated nearly million sale event, of community.

the over two XX discreet years. of million activity on full-line removing allowed flash from outlets manner, vb.com merchandise sales a sell online in our Our us to clearance last over more stores

insights area completed our of insourcing marketing science we analytics new added completed platform. the customer customer data data Vera team, marketing rollout real now of group, the Consequently, over in to data basis. the a experienced of time and allow our year-over-year Bradley, adjust us new gained we customers from our The mix business XX%. increase our to of robust In a approach our and on

with billion buzz. tremendous Our and the brand on of strategy, engagement to $X strength increased targeted awareness, the focused influencer brand XXX% The relevance efforts, Digital First digital collaborations increased show media and more over impressions year. than generated and up for brand our total

Retail International Council of awards. won Award Center Program the XX Chain Bradley won programs influencer Bradley prestigious Deal nominated Vera award. among at Marketing several chains Our industry for Best industry Conference. Shopping outlet this Vera XXXX Making the Outlet was

Cares, of women we and meaningful charitable initiatives that and and as customers our reinforced that our need, organization on umbrella are the those total strengthen children. and a socially-conscious position a stakeholder-focused and continued impact Under significant VB to support make community our particularly to in

Efforts national included the of Vera “Blessings a and Hope New Cancer. in for raising program Backpack” $X.X Bradley Breast our Girls, supporting Foundation million for

charitable have in XXXX. XX We different nearly fiscal supported are proud to organizations

introduced trends designs year. the including and enameled had Pura and up the and a than revenue ring and The as signature new over more charms mood well semi-precious bracelet, Pura and and experiment At hoops. with stone sales bracelets, Vida daisy Vida, team stone year prior introducing with new collection jewelry to continued terrific XX% as

the Charity a They surpassing charitable space, over of X.X media Vida most draw, accessories one the X bracelets the one of followers the in big with engagement social million on consistently most, strong. continued brands jewelry and lifetime brands highly-engaged the mark Pura to million be are if Pura in engaged on Vida’s reaching contributions. Instagram. most, not Instagram is listed as of

customer club their Pura likes satisfaction Vida Facebook monthly during to subscribers followers, industry continued rose at promoter year. the the scores. and net for top all Instagram rank of the and

Last year engagement, year a Looking ahead, XXXX, with our and successes and improved enhanced the culture filled future. for we an both our our the strengthened results, year Vision customer growth challenges. important In financial end, established was plan three.

challenging we Fiscal our as year exciting, be three-year complete journey. XXXX to promises but an

will Our health. progress to growth the and years, robust build a last areas, as of goal on key company two sustainable focus is upon we the and two

more initiatives for about fiscal talk our a XXXX. minutes will I few in

chain And ramifications which as predict. However, the particularly coronavirus its supply we surrounding potential to make and result, environment does implications revenue future our difficult only the and global the uncertainties a reflect providing in full-year, any COVID-XX. from performance financial for are XXXX fiscal guidance not

situation. we more strategy have providing will the will on this do clarity long not term affect We not We our and believe, guidance initiatives. quarterly until be

turn to financial let over results Now outlook. and the the me John to review call

John Enwright

Rob, Thanks good morning. and

the following include financial XXth, been Pura have full restated. have July reminder, day numbers acquisition. first results a to XXXX Vida Prior consolidated As not the beginning period been

year and other that non-GAAP below release. income IT fiscal umbers statement net outlined in previously fourth The today's current charges year quarter referenced Vida, disclosed and Pura exclude

Fourth quarter million range. to totaled million $XXX consolidated million $XXX revenues guidance within net our $XXX.X

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

Bradley last consolidated totaled increase $X.X income per per or net income or XX% net year’s than of million charges, of Excluding Vera net fourth Incorporated $X.XX million diluted from quarter share. an $XX.X more share, $X.XX

included number attributable Vida. to year current $X.XX The Pura

a Direct last our below X.X% $X.XX Vera Current $XXX.X over year. results totaled year of million noted, fourth since segment fell Rob to $X.XX. Bradley As our guidance fourth million, $XX quarter, increase quarter revenues

increased number The in the sales $XX.X X.X% in a segment department primarily for revenues an in $XX.X reduction million of totaled year the store XX.X% fourth Comparable prior decline a was indirect accounts. Bradley decrease Vera to related quarter. and from orders million, quarter.

revenues, totaled the Pura revenues -- a compared or net Pura Vida gross revenues, Vida in prior the of basis, step-up Pura XX.X% margin million, to XX.X% On year net of $XX.X segment totaled $XX.X inventory amortization, Vida excluding $XX.X or quarter. fourth non-GAAP million, million.

customer Pura shipping of non-GAAP fourth our primarily due incremental the non-GAAP no clearance higher below to on range and promotional margin. quarter gross current XX.X% was periods XX.X% to year spending guidance gross during costs. and Vida had impact The

net fourth within asset excludes million range the SG&A $XX of the net the to or net aforementioned which of revenues, excluding XX.X% the or XX.X% year $XX.X million, basis, of of of quarter, expenses, to intangible These compared prior for expense Pura consolidated totaled a quarter. charges, total in expenses SG&A $XX.X $XX.X million, non-GAAP a On non-GAAP guidance revenues were amortization. million. Vida added $XX.X

than Vida Total SG&A prior these primarily Pura due expenses. year the higher were to expenses

consolidated $XX.X million On of fourth in revenues $XX.X net to the a charges net totalled net basis, income of XX.X% year’s X.X% compared million or fourth quarter. excluding non-GAAP prior quarter or operating revenues

revenues for the million totalled $XXX.X net fiscal Consolidated current year.

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

Pura Vida. $XX.X income Bradley net the diluted $X.XX year net fiscal per consolidated included for to Excluding share. $X.XX Vera Incorporated performance charges, or totaled attributable This million

income We $XXX $XX.X the net per current prior the Bradley direct totaled year. year. in million, $XXX.X prior share million or $X.XX revenues posted in increase Vera year of segment a million for diluted from fiscal X.X%

year. sales in year. increased X.X% for the on million, selling million by fiscal the X.X% the Indirect verabradley.com stores reflecting decrease the Comparable prior number Full-price totaled Company’s from approximately department for in a in Vera segment year revenues and Bradley accounts. X% reduction year, $XX.X in for the and store increased a of the full-line $XX.X orders

Pura Vida $XX.X partial million for totaled segment year. revenues the

non-GAAP by approximately XX.X% gross clearance range during costs. margin or inventory of non-GAAP or The net basis step-up $XXX.X due customer XX the benefited the shipping for incremental totaled year. in inclusion revenues, net the million, gross The to margin to spending was higher XX.X% of gross guidance amortization, of periods revenues, Pura margin below and of points. $XXX.X compared Vida the promotional XX.X% fiscal Excluding in non-GAAP prior year current million, to our year XX.X%

revenues basis, in million, aforementioned charges, a or of the asset On net Pura $XXX.X year. excludes were non-GAAP XX.X% the excluding $XXX in which the Vida within current prior compared totaled SG&A $XXX guidance non-GAAP of or to expenses expenses, These million range of of net expense the revenues, to amortization. $XX.X million, year, million. intangible SG&A net XX% $XXX added

Pura these expenses. SG&A Vida prior higher primarily the than Total year to expenses were due

consolidated net income million, million revenues, or the to compared operating prior Excluding year. $XX.X totaled net fiscal Operating of $XX.X current net was the year. in for charges, of cash X.X% revenues or million X.X% year flow $XX.X

fiscal in with to sheet. $XX.X for totaled expectations. Now let our the me spending Net turn the million balance line capital year

$XX $X.X of During approximately year-end, approximate At the under repurchased million fiscal our million quarter, fourth had repurchase common authorization. we we $XX.X share stock. remaining million

year-end equivalents cash totaled the Cash, the fiscal $XXX.X at year. The year and primarily Vida million acquisition. $XX.X compared million investments Pura reduction last relates to to prior from

debt. outstanding no have to continued We

inventory of than $XXX last at to was of inventory fiscal $XX.X includes year related lower end. which inventory million $XXX Total was million. $XXX.X million year modestly The our guidance was to $XX.X level million Pura million, range Vida. Inventory fiscal

me review let to XXXX. take minutes fiscal of Now outlook a our couple for

based we environment, only noted, Rob guidance first the providing on guidance. annual As uncertain are now quarter

not coronavirus. The Vida guidance earnings annual performance. All date. prior Pura numbers XXth, guidance margin will impact any Vida guidance charges. SG&A net disclosed include and forward-looking XXXX are previously non-GAAP Our share numbers discuss in year I expected gross does the charges. after include exclude any Pura per July excludes Prior year similar from acquisition numbers diluted that Current include

compared we $XX.X net $XXX to to of $XXX revenues million year to Vida revenues million This for $XXX million, $XXX expect of includes year, partial a last estimated full year. full sales For year the million million. Pura

year. last million $XXX.X totaled revenues Net

increase Bradley compared low-to-mid-single guidance Our assumed year. in will the full year with the prior sales direct segment range net digit revenue Vera

include back flat-to-mid-single half in the are direct-to-consumer Total be sales, digit which comparable year, the will to increase. results Pura of expected Vida

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

rate our should expect XX.X% as as be and Vida. be XX.X% the sourcing fiscal driven of margin year. XX.X% operational The consolidated increase Pura well We inclusion gross compared efficiencies to XXXX will with last by for

$XX between for $XXX of year of million We expense the million the estimate $XXX.X last to $XX.X for compared year. This expenses expect year totaled million full to Pura the partial million and includes SG&A SG&A expenses million last million Vida year. $XX for year to $XXX compared

year $X.XX estimate $X.XX This includes to year Pura full partially full to Vida to attributable Vida of EPS $X.XX. from $X.XX. diluted Pura to the $X.XX will last range accretion compared expect EPS year for We

compared $XX million reflecting capital last We $XX.X expect logistics in new and factories to million million and year between expenditures will enhancements. technology total $X stores to investments

million flow We million $XX fiscal of to XXXX. cash in expect to operating $XX consolidated Rob? generate

Rob Wallstrom

XXXX XXXX final phase of be a promises Fiscal year Vision complete we challenging exciting to John. Thanks, our as but third and the journey.

in We with across strong and plan have marketing a distribution. pipeline, innovation robust a place, product,

external is last other hand, focus internal and the COVID-XX. risks; upon On most progress of there building the on the will two some are Nonetheless, years. we notably

Vera center health. strategic around our sustainable fiscal will both, growth Pura Vida and XXXX priorities robust Bradley For and

Let Vera driven growth me as Bradley. as continued well by be customer product Vera start with innovation, Bradley's will branding engagement. enhanced

is true and product to assortment. more our and authentic, becoming critical but remain will brand, innovation our more products Our to

innovation relevance and brand. new cotton We have developed updates by to retain to both offering marketing an existing on-going cotton pipeline and of alternatives ensure fabric customers, attract the customers to

and to will Twill more continue grow launch Re-Active to will fabric We the of our over months. and offerings innovation XX XX newest Performance next

continue market of new We customer’s meet facets silhouettes bring to the styles will our and all to also to lifestyles. differentiated

investments In engagement upon the VB everyday. year in Our data. our campus, business capitalize including and dominance franchise science, customer customer build analytics, and data we profitability. of key focus is and facets, areas travel building youth on store initiatives, In branded will made collaborations ESG and and marketing area, has the we on several last marketing Cares

advanced will more use further a and refine engagement to customer driven be real data Additional spend time of on mix medium basis. by

user utilize drive will we engagement social ambassador journey VB our more and our addition, centered our content, on activations, strengthen more media, messaging. improve Cares extend brand amplify storytelling In customer program, generated

product work tune our strategies. segmentation will customer Our development, and fine go-to-market

underrepresented to customer also acquisition allocate groups. customer funding to efforts We will expand

ultimately and test We opportunities alliances brand and Vera customers, buzz product increase are awareness, strategically strategic continuing enter new our reach, and provide engage with and generate that categories. Bradley for new and our existing, excite collaborations to media brand expand

brand. profile of collaborations another product will year Crocs. This the Gillette are wide like with partnerships and enter we Venus, Disney year, high These testament to truly of and brands our into strength appeal a

gifting. cozy new to but for only with will This also with Vera iconic customers and several Vera capsule thrilled we fans, dorm Harry Potter our back-to-campus are Harry + Vera Bradley internationally products line exciting We brand. and notably, Warner on product working holiday known other Bradley will not collaboration a Brother’s create about to brands the to future collaboration Bradley Vera Potter consumer our are Bradley Most a attract + appeal collaborations. XXXX

our Cares, that delivers customers Under and are for of strengthening all our the value driven impact our our the shareholders purpose and sustainable, umbrella VB we social stakeholders, our company meaningful, communities. associates,

history, focus posting been company the our our our report which our initiatives detail. enhancing area. website, it in and has driven and This Although comprehensive purpose accomplishments to our are the throughout and we ESG visibility publishing spring, will with to will our we this our outline in increasing activities be proxy

real and where calls community with to can to strengthen will participate support a positive invite impact, charitable often areas action. and we initiatives, We create women our particularly to We our make and want continue change for children. customers to identifying

Girls, refuge The second hobo vulnerable New non-profit and Hope tote, girls last provides for we organization artists. a mini and was features jobs -- -- edition Republic. Republic and Just in that for pouch designed Dominican by limited announced annual bag collaboration with week, travel our and Dominican by collection sewn the a and women education women

on Hope year, its last happier and Women's continue our X We of and celebration attention. the support Like to March Girls launched organization collection. bring generated in of enormous couldn't their collection with to awareness International media New Day be

honor support of a speaks In Autism April, Plush blanket custom will proudly we autism Awareness with throw in Month.

an activities partnership go the children communities, are who Vera school food forward mobilizes looking go of Foundation breast Bradley to third individuals that a in elementary provide year. with and of We for course, Backpack, Blessings otherwise the for our hungry. on And America, supporting to across annual organization back-to-school resources all millions might cancer

amateur cancer Classic million X the cancer breast for country in typically in research. June, golfing for Foundation largest Bradley over event breast Vera women's annual raises Our the

strengthening full health. our restoring on will stores in channel On on performance particularly our line the and storefront, we focus to

We through brand of performance long the the know improving term are sustainability portfolio. line store line our that the fleet the by line improving the future identifying opportunities. market our select existing improve closures, portfolio of will of full We channel profitability bottom with along and rebalancing top full

We further to will and highest continue focus stores, customer our potential assortments. experience localizing our on the enhancing

to new formats. will develop, We continue contest,

factory stores XXXX. maximize continue adding XX XX expanding which six closings fiscal of year, to Beach, Carolina. would expect performance during full-line total bring approximately to close high in Myrtle full-line one additional our will our South by we beginning since year store the locations new We additional This performance and the to

We and by enhancing excellence through will continue culture. unique already to sustain health and and our strengthen strong operational our

the are and The We efficient. will XXXX, implementing XXXX or of fiscal midst flexible, complexity project our also in the objectives both reduce new that the only short of project expenses in of complete in [ph] will by company be Novus IT will technology should be our early end and the our to and systems, but the streamlined lessen fiscal long and achieve on-going not enable term. future platform,

At opportunities evaluating in improvements or time, the our the discipline, timeline in enhancing calendar. we reduction of for same go-to-market are process in efficiency

to with than continuing to our production our to China, reliance on decrease year. are We less in drop China this XX% expected

creation our moving gives team being Our individual by and framework every customer drive into innovative, centric significant more value associate we ownership the and Overall, obsessed which culture a are data through efforts. organization. enhanced agile, to is model, their based

rapidly market to really be a driven We strategy growth marketing robust and business. of excited combined, by brand, expansion future engagement program. It sustainable Pura the and growing its continues innovation a Vida's customer with remain health. the Pura about talk leading let's Now of about and product distribution Vida

and and new Pura jewelry. jewelry, year's to stone the semi-precious signature successes and and core the and mood experiment last bracelet with introduce play ring, upon launches and charms like Vida continues designs bracelets of their

well to signature area to continue a to will Vida’s Pura increased back This big the we business. enable with bracelets which Vida as believe will This specific Pura continue popular signature cause-minding increase charities, grow Vida’s price bracelets in year, we be customers. cherry be total of as very charm draw. also donations. will to and Pura tie us to innovate will the points

leaning open first engravables, to are feedback. products San and New in product Pura will well and categories store also bags personalization hair trend, fashion direct will as also The Vera jewelry create accessories, the host Vida for of for its into year. Diego will lab showcase fiscal the XXXX include differed Bradley hair distinctly This which fall moments influencer store innovations as us to events. existing allow Instagramable to by product new and this get bags. customer

the store's performance future evaluate We expansion. possible will for

marketing is plus media Vida a the unboarded, this On key social Pura been have influencers of our engagement strong. and army strategy. part micro of An thousand is one hundred front,

invigorate program, In followers. Goodman tours. popular those customer influencer focusing fiscal grassroots, XXXX, on upon their events with of this up focussing and impactful we will greatest number continue their in particularly Griffin meet build on Paul to Thall a outreach will events, very college Co-founders, also

ensure profit health, To gross solid Pura sustainable primarily on optimizing in management performance. generating Vida margin and focus will marketing spend

will higher the business, base core review for product potential We new the categories carefully with scale and product of in margins. build introduce pricing

On those expansion. the some we the will and accounts And Pura we continue drive the talented brand. will will build distribution Pura the to as and larger grows, organization to build retain Vida front, want that ongoing Vida that target

Vision throughout company teamwork Their talent over the so thus proud each of both our accomplishments associates In far the of tenacity brands. I course in of closing, am their XXXX. and

but the and forward growth are our company ahead, restored healthy and and the foundation, momentum revenue our significant to to looking further still have we return culture. to XXXX our strengthen work future. We journey completing into have a Vision EPS We special continuing

for will up questions. the call we Operator, now open

Operator

take Thank We'll Instructions]. ahead. Oliver now you. go Please first Cowen. our question Chen [Operator from from

Oliver Chen

Pura well love you. regarding expectations during margin, why? just the and as are shipping and little their your visibility trending Vida modeled. promotional elaborate to would we softer to love your happened than costs Also response had were as I would and relative Thank bit on those thoughts Rob The Thank gross revenues John. what you. Hi, and Indirect a quarter? and how the you on

Rob Wallstrom

Yes.

of couple a thing. So

the terms that so was Vida, and in But promotional so we we the saw consumer that the shorten we I business period, had they that in the December through going Black the we promotion. planned of through our think strong actually we as and cadence had much at sales January quarter were Friday exceptionally shorten one, and as Pura timing then we shipments back had outages quarter. of But we our and in impacted terms availability volume of the the there impacted with some some feel wholesale. Pura growth that rate half Vida in and just inventory the overall, And still good was go had forward.

Indirect, pressure forecasting In on some worth period. pressure a to tighter in we expect see continue the stores in departments It continue small bit had than the the get shortened was in as is There levels. some contraction this Indirect year, little channel anticipated. we terms of we more still to Indirect space, was in It a inventory channel. holiday Indirect

Black two customer around just the of a the which concentrated One timeframe, periods. kind lot margin into performed of And On rollout strong -- in both spend factors. around gross we across the performance after on were brands. with January then a two strong very period really line, really primary One, Christmas saw Christmas. Friday key going was there very

saw which customer promotional of to just nature. those periods happened gravitate the be towards we So more spend, in

where to spend year, distorted. the was overall very last but customer little was cadence to a similar promotional chose Our

about was of that margin So challenge. half gross the

the gross half shipping shipping were the going to and The costs as was pressure. margin other of half costs that was due it other just up of

John Enwright

thought And you a little being our quarter distorted more the a a estimate of perspective had business just add missed thought. our slightly nearer little on trending bit it the bit costs, expectation I from we how Vera more we increases, would into more and brands, it a day quarter we for for based costs. little to little -- a at both the use the increases gross impactful next on obviously look fourth I year, than shipping estimated expensive. and when estimate think bit The had Bradley, was Vida we about bit been on to end as we And third Pura those margin. then we shipping at Can say just

Oliver Chen

basis. Coronavirus manifest And all are degree, Thank hourly with your control. you're what of -- seeing out you. is of may your traffic and how consumer a on What or something to may trends thoughts out a monitoring not the on in that's we're large

about thinking your have what and kind And Another you the look scenarios? concern control consumer may we possible will of the you have business at fare? how may recession. various your is And strategies as within

Rob Wallstrom

Thanks this the Oliver. Yes. The Coronavirus big obviously unknown year. is

And think been I chain sign think the China we're relates very reacted the watch will kind we just chain But of we've with lack can a the first team it chain, seeing that challenges we through did break particularly going hopefully far. really manage big that. little last obviously through flow. is the because But supply started chain the and China continuing well timing, we're to And think not like in at team I China logistics to to so as and of year navigating as majority bit and to quickly. the able tariffs, it supply the mitigate in vast the of stabilized that problem. supply a be as supply disrupting of supply at logistics logistics it

The the we're real totally how we're to all not watching on activity, with But impact. demand. going and what have with quite not the that's clarity And be U.S. coming travel we're big spring break's it. just And consumer happens consumers clear question the why to is responding. up travel sure

oriented. seen terms travel spring have our in impact businesses We break of some which to already our really beach is categories,

they will in some locally. spring break But decisions, they shop their don't those businesses. will seen early see consumers softness we make have yet. home, We know stay travel, will as We they will

particularly So the couple seeing over of some we are last traffic days.

line impact what kind So there. But seen this close. to some I've out market we're numbers with just watching in of the traffic on

of get our the If point, due into past. navigate been we a fairly of able one people more as trade we've to you mentioned brands We've a that had a into. down price recessionary we've been history And well brand to the seen in environment.

hope type focused we So upon we're The closely. we've that that but obviously repeat performance, it's teams given. that daily make we would a very And based the that we'll on. decisions something of would watching information

Oliver Chen

traffic what channel to hypothesis the large. may in well your Coronavirus? outlet the interplay digital as the relative behavior From for What's happen with as customer at physical between

Rob Wallstrom

of more we do on channel. digital Well, to expect channel than our physical see our impact the

to see So respond. time to just But spending the I term. out generally does of seeing. and how cautious taking more really what again shift again, the think lot market consumer the that's to or we've merely Is we're the heard consumer what be in it's we're short -- approach going a it a in just

have over I think next how that develops to we months. few just the this watch

Oliver Chen

Thank much. regards. you very Best

Rob Wallstrom

Thank Oliver. you,

Operator

We next from take our go Baird. Please from ahead. now Mark Altschwager question will

Mark Altschwager

question. Good morning. my Thanks taking for

that you to price of to you. on driven how positive Just can by of comp out traffic aggregate, tariffs last the in took Vera Bradley. you X.X% comp lines, looking increases various the those your XXXX speak along start fiscal Can that versus channels? offset Vera was speak Thank AUR Bradley some to tactical to at QX, then, And in at in much you year?

John Enwright

a from quarter. within store Mark, John. relatively is network. was flat Traffic in fourth the our traffic This Sure. perspective

to think by our I was that say single that low increases you saw perspective, good full likely to So both total we close our the a from price as between digit portion performance. ultimately, a drove increase. some year would price we the comp driven of and Ultimately, increase drove performance, proportion increase. that AUR of took channels a And about

business business. our customer We on as we well some increased count ADS online. also saw in online some improvement overall And saw our in as

Rob Wallstrom

of the customer through into us gives think work gives as continue go look One there's business, double at couple this this larger opportunity. in drivers the this for Vera comp we've that digit that customer really customer, as we And that much our us with next do We that. year. year, way performance when an year the going customer year file you Bradley projected to stimulating growth growth this a big seen a of you into best is

to our innovation, key our as our specifically just we at marketing, this really and look around innovation As next products, drivers those around are the innovation well as year.

Mark Altschwager

it just maybe Vida guidance. the think reconcile you said the So ex imply that down guess, health, sustainable to help fiscal looking I'm what correctly? And and you to? if I included operating is that If I slightly Bigger think And that's of on understanding year-over-year. -- up in outlook? there. am that maybe helpful. at growth, I really today, on I Pura correctly, not speaking picture It's COVID-XX things doing I me outlook the the with a were following math some commentary I other there's appears of am, income of lot innovative just you mean, that robust uncertainty focusing XXXX

Rob Wallstrom

No.

performance in is including not COVID-XX included The really the outlook So that outlook. is from thing that's February. only

digit probably increase just to So don't a low if last but we ultimately don't look Vera than They single operating decline. not perspective income expect lower -- brand at expect Bradley we operating Bradley we from be from the be Vera they'll brand, profit, an might year.

Mark Altschwager

That's helpful. you of and luck. Thank best

Rob Wallstrom

Thanks.

Operator

Research. go next Beder now will Please SCC take from ahead. from We question our Eric

Eric Beder

Good morning.

Rob Wallstrom

morning. Good

Eric Beder

talk the last and little a a base out in six to are base bit? rolled in of and Performance little customer terms months that seeing becoming you you How your about broadening Re-Active. basically bit -- Twill changing the a in rolled you out Can customer you so --

Rob Wallstrom

has areas, question. we as XX-year kind which not strength encouraging Yes, bit that to definitely see Eric. thing are urban been little a base, of been strengthening our that is more for us. old seeing an historically Great with Twill XX of has area Performance strong to One really really in customer a

platform, as as environmental very of of Re-Active we product which more Re-Active long beginning and as that important friendly environmentally well just customer an term to signs. partners different positively And our also it's customer store. very more the and their So attracted a will reacted into is little think but same has been the move the few that's attraction getting We're years. early an good similar, great has from over to who focused new some important design, type with feedback next to that those And a of the excited, us happen for collection. not type really we are customer, very bit

but to not customer, able also that is who's We just also feel customer we'll Mom. attract it, finding XX-year influencing follow only to young younger continue we're we're focused be on old a that very customer her

in environmentally reacting old is customer positively. only seeing XX-year young seeing it So in we're we're very a attraction not also focused customer, but of also XX kind that

both we're So, on sides. a of having kind benefit

Eric Beder

like is then same initially. your to same in of impact the And older hands-free the that it? sling the younger the designs customers, some driving seeing way customer with you it customers Are

Rob Wallstrom

Yes, absolutely.

line, that about that incremental through introduction the to purchase We in. And to also. we different great been purchasing. silhouette as different for design continue what's It's the what at are it's it's those driving the we become forward not we'll and found really until seeing an assortment function. go also that what something we're those are incremental the sling is And meeting in opportunities very look

Eric Beder

The a something makes for flash to out sense products? Is going ton you're flash to your How that in sales, strategically? continue what has think expand? the we been of clearing of something that that? should to terms response the Is sales about that

Rob Wallstrom

we The and means. Yes. We us do a online as is liquidation we But there number channels us And important just We of what it see see is go sales, really major purpose on channel. more outlet do discretely. allows pure are see just as clear forward. business. a inventory clean by for other an engine not that we the any online our do as -- it keep trying and we driver see as one as to full to channel. The more focused price growth liquidation outlet growth it a to not that

Eric Beder

Congrats guys. good with right XXXX. All and luck Okay.

Rob Wallstrom

Eric. you, Thank

Operator

[Operator We'll Telsey Please question Instructions]. now Advisory from go ahead. take the Dana next Telsey from Group.

Dana Telsey

everyone. morning Good

a the on for what business more As thinking which Direct business? plan then about think How of XXXX? think the long-term can And unpack you're components the you of bit How margin, merchandise for do for Indirect you bit the QX? about Thank And little margin. them challenging. you. game gross you a has been

John Enwright

Yes.

for year. QX for I'll talk the next year for and full So margins about

that around saw merchandise clearance that consumer more So, our margins shop how periods. fact they we in saw the on down were promotional year-over-year the centered we quarter given more based and

end brought the And also the saw of our saw at day merchandise costs So will down. back margins it we we obviously some shipping -- down.

about costs. margins based on being and guidance year-over-year XX% can basically you was think and the miss XX% it shipping on be So about merchandise being that's -- to

year, could As at not we're at on about Obviously, promotional next there. that point, see change in any seeing we not -- this significant see plays expecting But cadence. change. we're depending point any out to think expecting to we're not our coronavirus differences this how

to our would So fiscal we compared be we where expect saw margins, to maintained merchandise able to XXXX. be

Rob Wallstrom

is And then in terms of couple a things. Indirect. Indirect

us. consolidation of you who's that now. need we're big business distribution. But we doing think strong and see elements focus the a a been we're and reap and a as But new to Indirect first focusing points growth with partners. we the right think all, in know still growth in mode for the continue next a like process We're our in grow I to in Indirect our to but on find been that contraction Amazon, begin We more across opposed partners partner we of business platform and there's will business. are strong to channel, of year, really partners that mode, distort how to our some definitely our that on we of know various seeing partners

Dana Telsey

And you supply terms know you. in on chain you up of the China, it Thank you've and with been chain? in How then diversifying. think disruption about when given chain And the supply where you for status? supply I are happened what sum would opportunities

John Enwright

three we perspective, we'll near-term I get those be of believe we a we XX%. outside But finished a over portion everyone, using China ultimately raw -- a as we're progress And our XX% of ultimately, goods below material should of probably countries the kind we some believe years have duty we've Yes. supply believe would not total FOB where other into that in travels from lower cost that I a we the can we're say everyone In outside last to. much think countries. chain China production, From because and our from still from going from as diversified partners countries. we don't of into the have probably made paying what move remind to our significant significant we China. below

production from next outside going inside I of So, don't significant call any XX changes between high teens to the for China. area year see

Rob Wallstrom

that would that and supply is the supply thing continuing think that a in we're morph way change I the the to that definitely Just I develop. is chain chain, add and viewing it's

flexibility think one I the our is of assets. strategic

seen most important to to talented the early where in the issues impact partners, coronavirus nimble terms the global team and them the we've continue and to market react just China team they're in to seen the of to flexibility. are I with in And opportunities them faced is maintain able keep eye we continually our year think reinvest react a have that to on but stay last to China. quickly. continue an we've quickly We've here react And quickly tariffs. to

strategic of definitely it's our assets. one So

Dana Telsey

Thank you.

Rob Wallstrom

Thank you, Dana.

Operator

Rick Accretive go question from the now Please next will We ahead. Capital take [ph] Partners. Fearon from

Unidentified Analyst

what's Rob, been forecasts, not fair to too of things And taking certainly wonderful -- Thank you not with through side at that having say? business the call much and the to Pura impacted Hey, assimilating diversification by hey, a Vida on Is the and coronavirus. at to assuming going It for of like I'm that your company. does John. the you're nice the here as contributor looking Coronavirus. the Pura acquisition. Vida provides job part navigating it respect look

Rob Wallstrom

to Yes. compared Coronavirus We to Vida the impact Bradley definitely of the as believe that less absolutely. Pura exposed is brand Vera

Unidentified Analyst

Bradley what kind including forecast I'm out forecasting you're Coronavirus. the impact for its year of -- I'm like own? for also you've Nevertheless, on sorry modeled sound does on sure potential profitable Vida Pura a It Vera as

John Enwright

If Yes. brands expecting deliver brands independent earnings we're at profitable we look those next to both year.

Rob Wallstrom

Yes.

like. that to is the rapidly hard our what Coronavirus of obviously right looks get hands around now changing. impact the Its world's Excluding

Unidentified Analyst

Right.

of have gets what the very by of that shouldn't Vida Is impact to with I'm flowing say? similar some fair a a impact. potential business Coronavirus, offset cash is Pura nicely assuming And that

Rob Wallstrom

against a and as get Pura Yes, challenging, we and that as it one things we a coronavirus really us more some I incredibly that. environment said, very the to you through Vida less a to much helps balance position And flow strong have gives lot us of cash gets hedge the strong mean, sheet exposed. And through absolutely. of diversification it. resources think do is

those two as So Coronavirus business. the impact focused term impact strategy really we our assets to mid-term But long as and long-term really us believe period. more opposed of that is short a we execution help on a we're of this through get the for

Unidentified Analyst

of I some couldn't read is the agree the I of there. to Rob. I'm balance equivalents, dire sheet be you, Well, -- more going debt? cash in the is that imagining investments And your with less the out right? predictions with no impact $XX And far cash did million cash than is and fact,

Rob Wallstrom

year-end were At debt. we million $XX.X Yes. with no

Unidentified Analyst

Okay.

and share So at count, $X what fully John? per is that, share the share now diluted -- the right

Rob Wallstrom

million call XX.X shares. It's

Unidentified Analyst

Okay.

and total a equity $XXX I million the of about million. of numbers right? So cash and Do around value have value $XXX less enterprise we're looking those at sort of

Rob Wallstrom

Yes. I it believe does.

Unidentified Analyst

is acquisition? is it some backed that, income, that is there that operating there is out million -- went towards the $XX.X was of of you kind operating mean that it adjust Vida So seem even of that like of that was million higher I have the you And and once -- operating but things And that to Pura did there because that somewhat the a after were bonuses Pura very these Vida. things income that, was number some if year. very, healthy related sort that for $XX.X last

Rob Wallstrom

Yes.

of some basis ultimately a that of accounting some into the associated that purchase your are well adjustments So include incentive ultimately some amortization comp there a you non-cash non-cash acquisition Vida as as which forward that on the add go Pura model. events can with

Unidentified Analyst

have kind to? can you that I on look a number that rough of Do

Rob Wallstrom

what? Last to regards In year…

Unidentified Analyst

Yes. Last year.

to non-cash up get that operating sort prior of be to what adjusted of income would million adjustment? it to that $XX.X Just

Rob Wallstrom

Yes.

So we took a non-GAAP charges of XX…

John Enwright

operating Into income.

Rob Wallstrom

the adjustments $XX income of non-GAAP million. excluding Operating

Unidentified Analyst

XX operating of operating depreciation. do of million Is then in $XX.X XX the income. is to I that have that $XX So or right? -- XX income addition that Is million. And -- million

John Enwright

you be higher to sounds depreciation, of a that That amortizing be about the charges mean, would it's going bit through given be can through. Ultimately, I be right. to little off -- after some more -- amortization we'll we we'll out. if the if call to happy this to kind you'd walk detail like call, want one-time call, go we through the go we of

Unidentified Analyst

like I market business that a ascribing about $XXX I sort of trying the together the depreciation appreciate the seems I'm Yes. just million. And million. And John. that, of $XX napkin. the to the I valuation it mean, it income you. to Thank operating get today back is you're an EBITDA talking and of adjusted around

I and cash small flow. half a companies, investing XX there's see run the XXbX-X underway been, that And of shares, two that's times been the guess, across of sure I'm the So stock not a and running I'm In back years in public And in and to been some micro-cap I've discounted managing to like is retirement treasury market. partners buybacks? the plan capital by accretive buying shares investments has that increased. business encouraged terms you've and of share

Rob Wallstrom

Yes.

John Enwright

business see would is, where market company XXX. valuing if be shareholders, intrinsic just extraordinary. a is Discount that's its somehow on could the this for Well, probably this truly a such -- opportunity at opportunity value discount it is extraordinary wonderful capitalize XX,XX, a to maybe to

can this, like that given that business multiple XX like as you ought the that think times to you're a it's growing it cash an enjoy, of business flow like -- eight actually business. the So to

have profitable pointing a or stock. things to made margins here, anomaly and very exacerbated Very in healthy. which of created are blip very terms wonderful true Every short term You've valuation of The acquisition. a towards future. a positive seems

right here we, we and think growing back time it the just you've really million. company. I its the for is better Capital but buying terrific company, because going Partners shareholder sheet as and cash $XX all the out at equivalents own volatile other can't it’s I cap with of aggressively. And opportunity around back over stock imagine opportunity your balance a a it's now. mean, market more are and that a of say investment ways I into I just million stock, Accretive a an There's now of the very very when seen the stock, $XXX and buying seen the bounce stock market there substantial years, a But is itself you've low company on than

thought. be some which serious aggressive like blocks like into here real you the large its constrained very it tender And long, won't say Dutch that by this out modified just a some allows stock, management go rules. something and opportunity, and without terrific And plan, for buy as the tender really too food I something but it's board And think, being very would offer XXbX-X shareholders. and a XXb-XX if a thought would probably stock just be for some put to I Dutch auction repurchase tender, benefit which auction perhaps

thoughts you I don't know have if anyway, any or.. So

Rob Wallstrom

continue right to an will at And I understanding board low the have types a talk about have all be with to perspective, No. that perspective. stock your we're those definitely time of conversations. time And of we all utilization appreciate the would we those what conversations now, from best our cash.

Unidentified Analyst

the opportunity successful environment spectacular We it's larger the of know I was level is the real doing. who techniques utilizing underway And a is Rob, old But this wonderful Vera benefit job, at Nice through impressive you've portion plus here. year is I really Vida that. working mall and that than ago today is at truly folks here. some there to what a Pura difficult really, management Bradley appreciate at shift that there's real over Well, a a team. e-commerce very you're And got those with the in mean, retail brands, year it’s e-commerce e-commerce and a certainly channels. of -- XX were like a

a strong nice prudent a that we serious such you us will of there's opportunity just thought back re-buying And some give stock. sheet. in out with hope nice You've going press our It's capitals. terms balance very in here and been

Rob Wallstrom

to all definitely your confidence us. and your said we appreciate we Now, consider everything and you've will definitely that comments

Operator

I'll to no back turn further Ron are call there As questions, [ph]. the

Rob Wallstrom

joining Thank XXXX since made for you thank and launched call. years very following we you us much the two ago. on journey for today's we've over progress Vision our And

in have We XXXX an the remain -- your June you profit fiscal fiscal and future you first our tackle years confident exciting to and time growth value for tackle our hope call to shareholder join for are the on we quarter deliver us and ready Xrd. Thank and can and beyond. ability We revenue, of ahead. enterprise

Operator

That will today's participation. conclude for your call. Thank you

disconnect. may You now

Vera Bradley (VRA) 11 Mar 202020 Q4 Earnings call transcript