Vera Bradley, Inc.

Previous wording

The following discussion summarizes the significant factors affecting the condensed consolidated operating results, financial condition, liquidity, and cash flows of the Company as of and for the thirteen and thirty-nine weeks ended November 1, 2025 and November 2, 2024. The following discussion should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 1, 2025, and our unaudited condensed consolidated financial statements and the related notes included in Item 1 of this Quarterly Report. The results of operations for the thirteen and thirty-nine weeks ended November 1, 2025, are not necessarily indicative of the results to be expected for the full fiscal year.

Current wording

The following discussion summarizes the significant factors affecting the condensed consolidated operating results, financial condition, liquidity, and cash flows of the Company as of and for the thirteen weeks ended May 2, 2026 and May 3, 2025. The following discussion should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, and our unaudited condensed consolidated financial statements and the related notes included in Item 1 of this Quarterly Report. The results of operations for the thirteen weeks ended May 2, 2026, are not necessarily indicative of the results to be expected for the full fiscal year.

Previous wording

Strategic Progress. We are executing a comprehensive strategy to strengthen our market position by tapping into our brand’s strong emotional connection with consumers. We are simplifying decision-making, removing organizational complexity, and focusing resources on high-impact initiatives. This operational focus, paired with prudent cost management, will allow us to invest in the brand, innovation, and customer experiences, all while driving shareholder value. These improvements are about agility—building a responsive organization to fully leverage our unique brand position.

Current wording

Strategic Progress. We are continuing execution of Project Sunshine, a comprehensive strategy to strengthen our market position by tapping into our brand’s strong emotional connection with consumers. We are simplifying decision-making, removing organizational complexity, and focusing resources on high-impact initiatives. This operational focus, paired with prudent cost management, will allow us to invest in the brand, innovation, and customer experiences, all while driving shareholder value. These improvements are about agility — building a responsive organization to fully leverage our unique brand position.

Previous wording

Macroeconomic and Other Factors. We continue to closely monitor the dynamic economic landscape and are actively managing the impact of elevated tariff costs. Ongoing inflationary pressures and related macroeconomic factors have continued to affect consumer discretionary spending. As a result, our Vera Bradley outlet and full-line stores continue to experience softer performance through the first nine months of fiscal 2026 with an uptick in the later months. We remain focused on executing our strategic initiatives and adapting to current market conditions to position the business for long-term growth.

Current wording

Macroeconomic and Other Factors. We continue to closely monitor the dynamic economic landscape and are actively managing the impact of changing tariff costs. While ongoing inflationary pressures and related macroeconomic factors continue to influence consumer discretionary spending, our business has demonstrated resilience to start the fiscal year. We delivered a strong start to fiscal 2027 and remain focused on executing our strategic initiatives and adapting to current market conditions to support sustained long-term growth.

Previous wording

We completed the sale of Pura Vida on March 31, 2025. See Note 14 to the Notes to the Condensed Consolidated Financial Statements herein for additional information. The loss on sale was presented as part of results of the discontinued operations. We have reflected the results of operations of the Pura Vida business as discontinued operations in the Consolidated Statement of Operations. This business was historically presented as its own reporting unit.

Current wording

The sale of Pura Vida was completed on March 31, 2025. See Note 13 to the Notes to the Condensed Consolidated Financial Statements herein for additional information. The loss on sale was presented as part of results of the discontinued operations. We have reflected the results of operations of the Pura Vida business as discontinued operations in the Consolidated Statement of Operations. This business was historically presented as its own reporting unit.

Previous wording

Net revenues reflect sales of our merchandise and revenue from distribution and shipping and handling fees, less returns and discounts. Revenues for the VB Direct segment reflect sales through Vera Bradley full-line and outlet stores; e-commerce sites (verabradley.com, outlet.verabradley.com, and international.verabradley.com); and the Vera Bradley annual outlet sale. Revenues for the VB Indirect segment reflect sales of Vera Bradley-branded products to specialty retail partners; key accounts consisting of department stores, national accounts, third-party e-commerce sites, and third-party inventory liquidators; and royalties recognized through licensing agreements related to the Vera Bradley brand.

Current wording

Net revenues reflect sales of our merchandise and revenue from distribution and shipping and handling fees, less returns and discounts. Revenues for the Direct segment reflect sales through full-line and outlet stores; e-commerce sites (verabradley.com, verabradleyoutlet.com, and international.verabradley.com); direct to consumer marketplaces; and typically the Vera Bradley annual outlet sale. Revenues for the Indirect segment reflect sales of Vera Bradley-branded products to specialty retail partners; key accounts consisting of department stores, national accounts, and third-party inventory liquidators; and royalties recognized through licensing agreements related to the Vera Bradley brand.

Previous wording

Comparable sales are calculated based upon our stores that have been open for at least 12 full fiscal months and net revenues from our Vera Bradley e-commerce operations. Remodeled stores are included in both comparable sales and comparable store sales unless the store was closed for more than one week of the current or comparable prior period, in which case the non-comparable temporary closure periods are not included, or the remodel resulted in a significant change in square footage. Some of our competitors and other retailers calculate comparable or “same store” sales differently than we do. As a result, data in this report regarding our comparable sales and comparable store sales may not be comparable to similar data made available by other companies. Non-comparable sales include sales from stores not included in comparable sales or comparable store sales.

Current wording

Comparable sales are calculated based upon our stores that have been open for at least 12 full fiscal months and net revenues from our e-commerce operations. Remodeled stores are included in both comparable sales and comparable store sales unless the store was closed for more than one week of the current or comparable prior period, in which case the non-comparable temporary closure periods are not included, or the remodel resulted in a significant change in square footage. Some of our competitors and other retailers calculate comparable or “same store” sales differently than we do. As a result, data in this report regarding our comparable sales and comparable store sales may not be comparable to similar data made available by other companies. Non-comparable sales include sales from stores not included in comparable sales or comparable store sales.

Previous wording

•VB Direct business expenses, such as store expenses, employee compensation, and store occupancy and supply costs;

Current wording

•Direct business expenses, such as store expenses, employee compensation, and store occupancy and supply costs;

Previous wording

•VB Indirect business expenses consisting primarily of employee compensation and other expenses associated with sales to Indirect retailers; and

Current wording

•Indirect business expenses consisting primarily of employee compensation and other expenses associated with sales to Indirect retailers; and

Previous wording

(3)Comparable sales are calculated based upon stores that have been open for at least 12 full fiscal months and net revenues from e-commerce operations. Comparable sales decrease is reported as a percentage of the comparable sales for the same period in the prior fiscal year. Remodeled stores are included in comparable sales unless the store was closed for a portion of the current or comparable prior period, in which case the non-comparable temporary closure periods are not included, or the remodel resulted in a significant change in square footage.

Current wording

(3)Comparable sales are calculated based upon stores that have been open for at least 12 full fiscal months and net revenues from e-commerce operations. Comparable sales increase (decrease) is reported as a percentage of the comparable sales for the same period in the prior fiscal year. Remodeled stores are included in comparable sales unless the store was closed for a portion of the current or comparable prior period, in which case the non-comparable temporary closure periods are not included, or the remodel resulted in a significant change in square footage.

Previous wording

VB Direct. For the thirty-nine weeks ended November 1, 2025, net revenues in the VB Direct segment decreased $27.9 million, or 15.4%, to $153.3 million, from $181.1 million in the comparable prior-year period. Vera Bradley comparable sales decreased 16.1%, which includes a 24.9% decrease in comparable store sales as well as a decrease in e-commerce sales of 2.4%. In addition, non-comparable revenue increased $0.1 million. The decrease in comparable sales and comparable store sales was primarily due to reduced traffic, conversion, and units sold in the full-line, outlet, and e-commerce channels.

Current wording

Direct. For the thirteen weeks ended May 2, 2026, net revenues in the Direct segment increased $1.8 million, or 4.1%, to $44.9 million, from $43.1 million in the comparable prior-year period. Vera Bradley comparable sales increased 13.4%, which includes an 11.6% increase in comparable store sales as well as an increase in e-commerce sales of 15.5%. In addition, non- comparable revenue decreased $3.5 million, primarily attributable to not hosting the Vera Bradley annual outlet sale in the current year period. The increase in comparable sales and comparable store sales was primarily due to improved e-commerce conversion and average ticket price, as well as increased traffic in outlet and full-line stores.

Previous wording

For the thirteen weeks ended November 1, 2025, SG&A expenses decreased $8.0 million, or 17.2%, to $38.7 million, from $46.7 million in the comparable prior-year period. As a percentage of net revenues, SG&A expenses decreased to 62.1% for the thirteen weeks ended November 1, 2025, from 66.3% in the comparable prior-year period. For the thirteen weeks ended November 1, 2025, consolidated SG&A expenses decreased primarily due to a a $3.5 million decrease in employee-related costs attributable to reduced headcount and reduced variable compensation expense, $2.1 million reduction in property, plant and equipment impairment charge that occurred in the prior year, a $0.8 million reduction in advertising costs and selling expenses resulting from sales decreases as described above, net of the media credit write off; and a $1.6 million reduction in net other expenses.

Current wording

For the thirteen weeks ended May 2, 2026, SG&A expenses decreased $6.7 million, or 16.4%, to $34.1 million, from $40.8 million in the comparable prior-year period. As a percentage of net revenues, SG&A expenses decreased to 61.3% for the thirteen weeks ended May 2, 2026, from 79.0% in the comparable prior-year period. For the thirteen weeks ended May 2, 2026, consolidated SG&A expenses decreased primarily due to a $2.9 million reduction in advertising costs, driven by cost optimization efforts including reduction and phasing of advertising spend throughout the year; a $1.3 million reduction in building expenses resulting from store closures and favorable lease negotiations; $1.0 property, plant, & equipment charges in the prior-year period that did not recur in the current year period; a $0.7 million reduction in employee-related costs, including reduced headcount, partially offset by an increase in variable compensation; a $0.3 million reduction in professional fees; and a $0.5 million reduction in net other expenses.

Previous wording

For the thirteen weeks ended November 1, 2025, net other income increased $0.2 million to $0.3 million, from $0.1 million in the comparable prior-year period. The increase in net other income was primarily due to income from the Transition Services Agreement ("TSA") resulting from the sale of Creative Genius.

Current wording

For the thirteen weeks ended May 2, 2026, net other income increased $0.4 million to $0.6 million, from $0.2 million in the comparable prior-year period. The increase in net other income was primarily due to income from the TSA resulting from the sale of Creative Genius.

Previous wording

For the thirty-nine weeks ended November 1, 2025, operating loss from continuing operations increased $18.2 million, or 111.4%, to $(34.6) million, from $(16.4) million in the comparable prior-year period. As a percentage of net revenues, operating loss from continuing operations was (18.9)% and (6.9)% for the thirty-nine weeks ended November 1, 2025 and November 2, 2024, respectively. Operating loss from continuing operations increased due to the factors described in the captions above.

Current wording

For the thirteen weeks ended May 2, 2026, operating loss from continuing operations decreased $13.3 million, or 74.0%, to $(4.6) million, from $(17.9) million in the comparable prior-year period. As a percentage of net revenues, operating loss from continuing operations was (8.3)% and (34.6)% for the thirteen weeks ended May 2, 2026 and May 3, 2025, respectively. Operating loss from continuing operations decreased due to the factors described above.

Previous wording

VB Direct. For the thirteen weeks ended November 1, 2025, operating income in the VB Direct segment increased $0.6 million, or 27.6%, to $2.7 million, from $2.1 million in the comparable prior-year period. As a percentage of VB Direct segment net revenues, operating income in the VB Direct segment was 5.4% and 4.0% for the thirteen weeks ended November 1, 2025 and November 2, 2024, respectively. The increase in operating income as a percentage of VB Direct segment net revenues was primarily due to decreased SG&A expense, partially offset by decreased gross margin as a percentage of revenue.

Current wording

Direct. For the thirteen weeks ended May 2, 2026, operating income in the Direct segment increased $8.6 million, or 156.1%, to $3.1 million, from an operating loss of $(5.5) million in the comparable prior-year period. As a percentage of Direct segment net revenues, operating income (loss) in the Direct segment was 6.9% and (12.8)% for the thirteen weeks ended May 2, 2026 and May 3, 2025, respectively. The increase in operating income as a percentage of Direct segment net revenues was primarily due to an increase in gross margin as a percentage of net revenues as described above, expense reductions of $1.6 million in advertising costs and $1.1 million in building expenses resulting from store closures and favorable lease negotiations, the absence of $1.0 million of property, plant, and equipment impairment charges recognized in the prior-year period, as well as improved leverage of SG&A expenses.

Previous wording

VB Indirect. For the thirty-nine weeks ended November 1, 2025, operating income in the VB Indirect segment decreased $9.6 million, or 65.5%, to $5.1 million from $14.6 million in the comparable prior-year period. As a percentage of VB Indirect segment net revenues, operating income in the VB Indirect segment was 16.1% and 28.5% for the thirty-nine weeks ended November 1, 2025 and November 2, 2024, respectively. The decrease in operating income as a percentage of VB Indirect segment net revenues was due to a decrease in gross margin as a percentage of net revenues as well as SG&A expense deleverage associated with decreased sales.

Current wording

Indirect. For the thirteen weeks ended May 2, 2026, operating income in the Indirect segment increased $2.0 million, or 102.5%, to $4.0 million from $2.0 million in the comparable prior-year period. As a percentage of Indirect segment net revenues, operating income in the Indirect segment was 37.0% and 23.1% for the thirteen weeks ended May 2, 2026 and May 3, 2025, respectively. The increase in operating income as a percentage of Indirect segment net revenues was due to an increase in gross margin as a percentage of net revenues as well as improved leverage of SG&A expenses.

Previous wording

Corporate Unallocated. For the thirty-nine weeks ended November 1, 2025, unallocated expenses decreased $4.4 million, or 8.7%, to $46.2 million from $50.5 million in the comparable prior-year period. The decrease in unallocated expenses was primarily due to a $4.8 million reduction in employee-related costs, including reduced headcount and lower variable compensation and $1.6 million reduction in net other expenses. These expense reductions were partially offset by $2.0 million for severance charges for former CEO in the current year period.

Current wording

Unallocated. For the thirteen weeks ended May 2, 2026, unallocated expenses decreased $2.5 million, or 17.7%, to $11.8 million from $14.3 million in the comparable prior-year period. The decrease in unallocated expenses was primarily due to a $1.0 million decrease in advertising expenses, a $0.5 million reduction in professional fees, and a $0.4 million reduction in employee-related costs, partially offset by a $0.6 million increase in net other expenses.

Previous wording

For the thirteen weeks ended November 1, 2025, interest expense was $(0.1) million, a $0.1 million increase, from interest income of $15 thousand, in the comparable prior-year period.

Current wording

For the thirteen weeks ended May 2, 2026, interest expense increased $0.1 million, to $(0.1) million from interest income of $4.0 thousand in the comparable prior-year period.

Previous wording

The effective tax rate for the thirteen weeks ended November 1, 2025, was (0.5)%, compared to (63.8)% for the thirteen weeks ended November 2, 2024. The change in year-over-year effective tax rate was primarily attributable to a full valuation allowance recorded against the Company's net deferred tax assets. See Note 7 "Income Taxes" of the Notes to the Condensed Consolidated Financial Statements for additional information about the Company's interim provision for income taxes.

Current wording

The effective tax rate for the thirteen weeks ended May 2, 2026, was (2.4)%, compared to (2.3)% for the thirteen weeks ended May 3, 2025. See Note 7 "Income Taxes" of the Notes to the Condensed Consolidated Financial Statements for additional information about the Company's interim provision for income taxes.

Previous wording

For the thirty-nine weeks ended November 1, 2025, there was a net loss from continuing operations of $(35.3) million, a $21.9 million increase, from $(13.4) million in the comparable prior-year period due to the factors described in the captions above.

Current wording

For the thirteen weeks ended May 2, 2026, there was a net loss from continuing operations of $(4.8) million, a $13.5 million decrease, from $(18.3) million in the comparable prior-year period due to the factors described above.

Previous wording

Our primary sources of liquidity are cash on hand and cash equivalents, as well as cash flow from operations. We also have access to additional liquidity, if needed, through borrowings under our $75.0 million asset-based revolving credit agreement (the “Credit Agreement”). New borrowings under the credit agreement totaled $0.0 million and $15.0 million during the thirteen and thirty-nine weeks ended November 1, 2025. We had no borrowings under the credit agreement during the thirteen weeks ended November 2, 2024. There was $10.0 million in debt outstanding as of November 1, 2025. There was no debt outstanding as of November 2, 2024. Historically, our primary cash needs have been for merchandise inventories; payroll; store rent; capital expenditures associated with operational equipment, buildings, information technology, and opening new stores; and share repurchases. The most significant components of our working capital are cash and cash equivalents, merchandise inventories, accounts receivable, accounts payable, and other current liabilities.

Current wording

Our primary sources of liquidity are cash on hand and cash equivalents, as well as cash flow from operations. We also have access to additional liquidity, if needed, through borrowings under our $75.0 million asset-based revolving credit agreement (the “Credit Agreement”). Availability under the Credit Agreement is driven by a borrowing base comprised primarily of eligible accounts receivable and inventory, each subject to advance rates, eligibility criteria, and applicable reserves. As a result, borrowing capacity may fluctuate based on the level and quality of receivables and the composition and valuation of inventory. There was no debt outstanding under the Credit Agreement as of May 2, 2026. The Company also owns two real estate properties that are unencumbered, which provide additional financial flexibility and may serve as a potential source of liquidity or collateral if needed. Historically, our primary cash needs have been for merchandise inventories; payroll; store rent; capital expenditures associated with operational equipment, buildings, information technology, and opening new stores; and share repurchases. The most significant components of our working capital are cash and cash equivalents, merchandise inventories, accounts receivable, accounts payable, and other current liabilities.

Previous wording

Net cash used in investing activities was $2.0 million for the thirty-nine weeks ended November 1, 2025 compared to $6.1 million for the thirty-nine weeks ended November 2, 2024. The decrease in cash used in investing activities was primarily due to $1.0 million proceeds from the sale of Pura Vida as well as a decrease in property, plant, and equipment spending of $3.0 million.

Current wording

Net cash used in investing activities was $0.3 million for the thirteen weeks ended May 2, 2026, compared to $1.0 million for the thirteen weeks ended May 3, 2025. The decrease in cash used in investing activities was primarily attributable to a decrease in property, plant, and equipment spending of $1.6 million in the current year period, partially offset by $0.9 million proceeds from the sale of Pura Vida recognized in the prior-year period.

Previous wording

Net Cash Provided by (Used in) Financing Activities

Current wording

Net Cash Used in Financing Activities

Previous wording

On September 7, 2018, Vera Bradley Designs, Inc. (“VBD”), a wholly-owned subsidiary of the Company, entered into an asset-based revolving Credit Agreement (the “Credit Agreement”) among VBD, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto. On March 11, 2025, certain subsidiaries of the Company, JP Morgan Chase Bank, N.A., as the administrative agent, and lenders from time to time party thereto, entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement. The Credit Agreement provides for certain credit facilities to VBD in an aggregate principal amount not to initially exceed the lesser of $75.0 million or the amount of borrowing availability determined in accordance with a borrowing base of certain assets. Borrowings under the credit facilities are available to finance general corporate purposes of VBD and its subsidiaries, including but not limited to Vera Bradley International, LLC, and Vera Bradley Sales, LLC. The Credit Agreement also contains an option for VBD to arrange with lenders to increase the aggregate principal amount by up to $50.0 million.

Current wording

On September 7, 2018, Vera Bradley Designs, Inc. (“VBD”), a wholly-owned subsidiary of the Company, entered into an asset-based revolving Credit Agreement (the “Credit Agreement”) among VBD, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders from time to time party thereto. On March 11, 2025, certain subsidiaries of the Company, JPMorgan Chase Bank, N.A., as the administrative agent, and lenders from time to time party thereto, entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement. The Credit Agreement provides for certain credit facilities to VBD in an aggregate principal amount not to initially exceed the lesser of $75.0 million or the amount of borrowing availability determined in accordance with a borrowing base of certain assets. Borrowings under the credit facilities are available to finance general corporate purposes of VBD and its subsidiaries, including but not limited to Vera Bradley International, LLC, and Vera Bradley Sales, LLC. The Credit Agreement also contains an option for VBD to arrange with lenders to increase the aggregate principal amount by up to $50.0 million.

Previous wording

On October 21, 2025, VBD amended the agreement to include, among other things: (i) permit the sale of certain real property assets without requiring the application of the proceeds from such sale to be used to repay amounts outstanding under the Credit Agreement, (ii) remove the prohibition against sale and leaseback transactions and (iii) increase the amount of Company assets permitted to be disposed of in any fiscal year outside the ordinary course of business from $5,000,000 to $10,000,000.

Current wording

On October 21, 2025, VBD amended the agreement to include, among other things, to: (i) permit the sale of certain real property assets without requiring the application of the proceeds from such sale to be used to repay amounts outstanding under the Credit Agreement, (ii) remove the prohibition against sale and leaseback transactions and (iii) increase the amount of Company assets permitted to be disposed of in any fiscal year outside the ordinary course of business from $5,000,000 to $10,000,000.

Previous wording

As of November 1, 2025, the Company had $10.0 million borrowings outstanding and availability of $65.0 million under the Credit Agreement, compared to no borrowings outstanding and availability of $75.0 million as of February 1, 2025 under the Credit Agreement.

Current wording

As of May 2, 2026 and January 31, 2026, the Company had no borrowings outstanding and availability of $68.0 million and $58.6 million, respectively, under the Credit Agreement, subject to the borrowing base provisions of the facility.