Bulletin
Investor Alert

March 30, 2021, 5:47 p.m. EDT

10-K: VERA BRADLEY, INC.

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

(EDGAR Online via COMTEX) -- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion in conjunction with the consolidated financial statements and accompanying notes and the information contained in other sections of this report, particularly under the headings "Risk Factors," "Selected Financial Data" and "Business." This discussion and analysis is based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. The statements in this discussion and analysis concerning expectations regarding our future performance, liquidity, and capital resources, as well as other non-historical statements in this discussion and analysis, are forward-looking statements. See "Forward-Looking Statements." These forward-looking statements are subject to numerous risks and uncertainties, including those described under "Risk Factors." Our actual results could differ materially from those suggested or implied by any forward-looking statements. The COVID-19 Pandemic The COVID-19 pandemic resulted in travel restrictions both domestically and internationally, community and self-quarantines, certain factory closures or reduced operations, as well as mall closures and reduced mall operating hours during fiscal 2021. Although e-commerce operations remained open for both of our brands, the aforementioned items had a material adverse impact on overall consumer demand, traffic, and sales. We cannot currently predict the extent that COVID-19 will impact our future liquidity, operating results, and financial condition, but it could have a significant adverse effect on these metrics. Beginning in mid-March 2020, we began taking several actions to navigate the COVID-19 pandemic, protect our financial position, maximize our liquidity, and to position the Company for a strong reopening and future. These actions included: Temporarily closing all Vera Bradley store locations on March 19; Temporarily furloughing approximately 80% of our workforce mid first quarter; Temporarily reducing base compensation for remaining salaried associates, with reductions on a graduated scale ranging from 15% to 30%, and 75% for our Chief Executive Officer; Temporarily suspending cash compensation to our Board of Directors; Temporarily suspending our share repurchase program; Drawing $60.0 million of our $75.0 million Credit Agreement; Temporarily eliminating the Company 401(k) and associate charitable contribution matches; Tightly managing inventory levels through the cancellation of purchase orders, delay of receipts, or seeking price concessions where possible; Actively working with landlords on addressing rent abatement, payment terms, accelerating store closures, and delaying or cancelling certain planned new store openings; Reducing non-payroll operating expenses, including but not limited to, marketing and travel; and Extending vendor payment terms. Update on COVID-19 Actions as of January 30, 2021 On May 5, 2020, we began to open our Vera Bradley retail stores in a phased approach. All factory and full line stores were opened as of the end of the fiscal year, although with reduced hours, lower staffing levels, reduced foot traffic, and greatly enhanced safety protocols. The sales of cotton face masks, coupled with a full year of Pura Vida operations, helped to offset sales declines otherwise associated with Vera Bradley. Net revenues from masks represented approximately 10% of consolidated net revenues for fiscal 2021. We have brought back substantially all of our associates from furlough; reinstated the base compensation reductions; reinstated the cash compensation to our Board of Directors; paid back $60.0 million of borrowings under our Credit Agreement, leaving us with no debt as of the end of the fiscal year; and reinstated the 401(k) match in January 2021. We continued to manage operating expenses and inventory levels, and work with landlords on rent abatement and payment terms, which helped in the achievement of expense leverage. In addition, the Company is leveraging elements of the Coronavirus Aid Relief and Economic Security (CARES) Act. The CARES Act tax provisions include retention credits, the deferral of the employer portion of certain payroll taxes, and tax benefits related to a net operating loss carryback.

Table of Contents

Strategic Progress Highlights

Table of Contents







                                                                                         Fiscal Year Ended (1)
                                                                          January 30,         February 1,         February 2,
        ($ in thousands)                                                     2021                2020                2019
        Statement of Income Data:
        Net revenues                                                     $  468,272          $  495,212          $  416,097
        Cost of sales                                                       202,754             223,411             177,510
        Gross profit                                                        265,518             271,801             238,587
        Selling, general, and administrative expenses (2)                   252,588             253,425             211,984
        Other income                                                            135               1,098                 498
        Operating income                                                     13,065              19,474              27,101
        Interest expense (income), net                                        1,203              (1,085)             (1,125)
        Income before income taxes                                           11,862              20,559              28,226
        Income tax expense (3)                                                1,173               5,315               7,469
        Net income                                                           10,689              15,244              20,757
        Less: Net income (loss) attributable to redeemable
        noncontrolling interest                                               2,008                (803)                  -
        Net income attributable to Vera Bradley, Inc.                    $    8,681          $   16,047          $   20,757
        Percentage of Net Revenues:
        Net revenues                                                          100.0  %            100.0  %            100.0  %
        Cost of sales                                                          43.3  %             45.1  %             42.7  %
        Gross profit                                                           56.7  %             54.9  %             57.3  %
        Selling, general, and administrative expenses                          53.9  %             51.2  %             50.9  %
        Other income                                                              -  %              0.2  %              0.1  %
        Operating income                                                        2.8  %              3.9  %              6.5  %
        Interest expense (income), net                                          0.3  %             (0.2) %             (0.3) %
        Income before income taxes                                              2.5  %              4.2  %              6.8  %
        Income tax expense                                                      0.3  %              1.1  %              1.8  %
        Net income                                                              2.3  %              3.1  %              5.0  %
        Less: Net income (loss) attributable to redeemable
        noncontrolling interest                                                 0.4  %             (0.2) %                -  %
        Net income attributable to Vera Bradley, Inc.                           1.9  %              3.2  %              5.0  %
        


Table of Contents . . .

Mar 30, 2021

COMTEX_383653150/2041/2021-03-30T17:46:46

Is there a problem with this press release? Contact the source provider Comtex at editorial@comtex.com. You can also contact MarketWatch Customer Service via our Customer Center.

(c) 1995-2021 Cybernet Data Systems, Inc. All Rights Reserved

This Story has 0 Comments
Be the first to comment

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.