Vera Bradley — Second Quarter Fiscal 2027 Earnings Summary

Financial Performance

• Consolidated net revenues totaled $71.6 million, an increase of 1.1% compared to $70.9 million in the prior year second quarter.
• Net income from continuing operations was $4.5 million ($0.15 per diluted share), compared to a net loss of $4.7 million ($0.17 per diluted share) in the prior year.
• Non-GAAP net income from continuing operations was $3.3 million ($0.11 per diluted share), compared to a non-GAAP net loss of $0.5 million ($0.02 per diluted share) in the prior year.
• Consolidated gross profit was $42.8 million (59.8% of net revenues), up from $35.5 million (50.1% of net revenues) in the prior year; excluding $7.7 million in tariff refunds, the gross margin rate improved more than 0.4% year-over-year.
• Consolidated SG&A expense was $38.7 million (54.1% of net revenues), down from $40.4 million (57.1% of net revenues) in the prior year; non-GAAP SG&A was $38.7 million (54.0% of net revenues) compared to $36.3 million (51.2% of net revenues) in the prior year.
• Operating income from continuing operations was $4.2 million (5.8% of net revenues), a 1,230 basis point improvement from an operating loss of $4.6 million (6.5% of net revenues) in the prior year; non-GAAP operating income was $4.3 million (5.9% of net revenues), a 670 basis point improvement from a non-GAAP operating loss of $0.6 million (0.8% of net revenues).
• Operating cash flow for the quarter was $23 million.
• Cash and cash equivalents ended the quarter at $34.2 million, up from $15.2 million in the prior year second quarter and $18.5 million at the fiscal year end.
• Inventory was $69.3 million, a 28.4% reduction compared to $96.7 million in the prior year second quarter.
• The company had no debt and no borrowings on its asset-based lending facility during the quarter.

Guidance and Future Outlook

• The Company reiterated its Fiscal 2027 sales guidance range of $255 million to $270 million.
• Management expects year-over-year non-GAAP operating loss improvement of at least 50% for the full year, compared to a prior year loss of $21.7 million.
• The guided sales range reflects rebuilding the wholesale business under new leadership and placing less emphasis on liquidation channels.
• Management anticipates continued improvements in gross profit and SG&A rates due to operational focus.

Business Segments and Product Lines

• Direct segment revenues were $65.4 million, an 8.0% increase from $60.5 million in the prior year, marking the fifth consecutive quarter of sequential improvement.
• Direct comparable sales increased 9.2%, the second consecutive quarter of positive comparable results, driven by improved ecommerce conversion and average transaction value.
• Indirect segment revenues were $6.3 million, a 39.4% decrease from $10.3 million in the prior year, driven by strategic shifts, timing related to marketplace strategy, and a reduction in liquidation sales.
• Direct operating income was $16.7 million (25.5% of Direct net revenues), up from $9.3 million (15.4% of Direct net revenues) in the prior year.
• Indirect operating income was $3.0 million (47.5% of Indirect net revenues), up from $2.2 million (21.2% of Indirect net revenues) in the prior year.
• Year-to-date net capital spending totaled $1.0 million, down from $2.6 million in the prior year, driven by store relocations in the prior period.

Market and Competitive Landscape

• The Direct segment showed strength across both full-price and outlet channels as the back-to-school season took hold.
• Specialty and department store improvements partially offset the decline in the Indirect segment.
• The Indirect segment decline was attributed to a reduction in liquidation sales and strategic shifts in the marketplace strategy.

Risks and Challenges

• Significant work remains to return the business to long-term sustainable growth, profitability, and cash flow generation.
• The Indirect segment continues to face challenges related to strategic shifts and timing in the marketplace strategy.
• Forward-looking statements note risks including adverse economic conditions, inability to predict consumer demand, loss of key management, inability to maintain brands, failure to implement strategic plans, store opening/closing execution, tariffs, raw material costs, distribution disruptions, and pandemics.

Management Commentary and Tone

• Chairman and CEO Ian Bickley expressed pleasure with the second consecutive quarter of overall revenue growth and continued momentum in the company's transformation.
• Management highlighted the strengthening underlying health of the business across direct channels, margin structure, and the balance sheet.
• Bickley noted that the company continues to manage its balance sheet and liquidity with discipline.
• Management remains committed to returning the business to long-term sustainable growth, profitability, and cash flow generation, citing progress across all five pillars of the transformation.

Analyst Questions and Answers

• No analyst questions and answers are included in the provided press release text.

Other Key Points

• The company received $7.7 million in tariff refunds relating to prior period customs entries during the quarter.
• Inventory reduction included a $5.3 million Project Restoration inventory reserve.
• The company sold its Pura Vida business in the prior year, with associated professional fees and inventory write-offs excluded from non-GAAP measures.
• A conference call to discuss results was held on September 15, 2026, at 8:30 a.m. Eastern Time.
• The company has two reportable segments: Direct (stores, websites, direct-to-consumer marketplaces) and Indirect (specialty retail, department stores, national accounts, liquidators, and licensing).