Executive Summary

Q1 FY26 was weak: revenue fell 24% YoY to $51.7M and non-GAAP diluted EPS was ($0.36), missing consensus on both revenue and EPS; guidance was suspended amid leadership transitions, adding uncertainty to the near-term outlook . EPS and revenue estimates from S&P Global were -$0.12 and $53.5M, respectively, versus actuals of -$0.36 and $51.7M (misses on both)*.
Mix shift from stores to e-commerce pressured gross margin (GAAP 44.1%; non-GAAP 47.5%) via higher outbound freight and elevated clearance penetration; SG&A dollars fell on cost actions but deleveraged significantly on lower sales .
Strategic pivots continued: heritage product re-introductions, quality/functionality fixes, and “be where she shops” channel strategy delivered “green shoots” in wholesale/marketplaces (Target Marketplace standout; first Costco shipment; launch on Urban Outfitters Marketplace; Anthro exclusives ahead) .
Corporate changes: CEO Jackie Ardrey to depart end of July; incoming Executive Chairman Ian Bickley to lead during CEO search; new CFO Martin Layding; new Strategy & Transformation Committee—guidance withdrawn to reset expectations under new leadership .
Post quarter context: Pura Vida was sold on 3/31/25 and is now classified as discontinued operations; continuing ops results exclude Pura Vida, which clarifies the core brand’s trajectory .

What Went Well and What Went Wrong

What Went Well

Early traction in diversified wholesale/marketplaces: first Costco order shipped; Urban Outfitters Marketplace launched; Target Marketplace delivered “exceptional results,” prompting expansion discussions .
Indirect segment over-delivered plan by double digits despite smaller YoY base; GAAP operating income of $2.0M (26.1% non-GAAP margin) underscores profitability of the channel .
Customer file mix improved: newly acquired customers rose to 45% of active 12-month file (vs 30% prior year), skewing younger with different product affinities; Social First campaign targeted at 18–34 launches in July to build on this trend .

What Went Wrong

Traffic and conversion declines in full-line and outlet stores drove a 25% comp decline and 24% revenue drop; mix shift to online increased outbound freight and clearance activity, compressing GAAP gross margin to 44.1% (47.5% non-GAAP) .
Direct segment swung to a loss: GAAP operating loss ($5.5M) and non-GAAP ($2.8M) vs GAAP profit last year; deleverage pushed non-GAAP SG&A to 74.2% of sales despite absolute cost reductions .
Guidance suspended due to leadership transition and consumer uncertainty, removing an anchor for near-term expectations; management also plans to close 10 unprofitable full-line stores, signaling continued brick-and-mortar pressure .

Financial Results

Quarterly trend (sequential: Q3 FY25 → Q4 FY25 → Q1 FY26)

Metric	Q3 2025	Q4 2025	Q1 2026
Revenue ($M)	$80.578	$99.964	$51.652
Gross Profit ($M)	$43.609	$44.960	$22.767
Gross Margin (%)	54.1%	45.0%	44.1%
SG&A ($M)	$54.220	$62.180	$40.804
Operating Income (Loss) ($M)	($10.474)	($23.324)	($17.857)
Net Income (Loss) – Cont. Ops ($M)	($12.800)	($46.973)	($18.260)
Diluted EPS – Cont. Ops ($)	($0.46)	($1.69)	($0.66)
Non-GAAP Gross Profit ($M)	—	$45.7	$24.6
Non-GAAP SG&A ($M)	$51.0	$57.9	$38.3
Non-GAAP Operating Income (Loss) ($M)	($7.212)	($11.995)	($13.586)
Non-GAAP Diluted EPS – Cont. Ops ($)	($0.27)	($0.30)	($0.36)

YoY comparison (same quarter)

Metric	Q1 2025	Q1 2026
Revenue ($M)	$67.948	$51.652
Gross Profit ($M)	$34.040	$22.767
Gross Margin (%)	50.1%	44.1%
SG&A ($M)	$45.095	$40.804
Operating Income (Loss) ($M)	($10.617)	($17.857)
Net Income (Loss) – Cont. Ops ($M)	($7.604)	($18.260)
Diluted EPS – Cont. Ops ($)	($0.25)	($0.66)
Non-GAAP Diluted EPS – Cont. Ops ($)	($0.22)	($0.36)

Segment performance

Segment Metric	Q1 2025	Q1 2026
Direct Revenue ($M)	$56.4	$43.1
Indirect Revenue ($M)	$11.5	$8.6
Direct Op Inc (Loss) – GAAP ($M)	$4.0	($5.5)
Direct Op Inc (Loss) – Non-GAAP ($M)	$4.9	($2.8)
Indirect Op Inc – GAAP ($M)	$3.8	$2.0
Indirect Op Inc – Non-GAAP ($M)	$3.8	$2.2

KPIs and balance sheet

KPI	Q3 2025	Q4 2025	Q1 2026
Comparable Sales (Direct)	(27.2%)	(17.5%)	(25.0%)
Cash & Equivalents ($M)	$13.711	$30.366	$11.281
Liquidity / Debt	~$89M liquidity; no debt	No debt (cash disclosed)	~$86M liquidity; no debt
Inventory ($M)	$131.314	$110.008	$99.151
Capex ($M)	$6.050 (YTD)	$10.373 (FY)	$1.871 (Q)
Store actions	Closed 5 FL; opened 5 outlets (LTM)	Opened 1 FL & 2 outlets	Opened 2 FL; closed 2 FL; plan to close 10 FL

Guidance Changes

Metric	Period	Previous Guidance (as of Q4 FY25)	Current (Q1 FY26)	Change
Revenue	FY2026	~$280M	Guidance suspended	Suspended
Gross Margin (%)	FY2026	~52.5%	Guidance suspended	Suspended
SG&A ($)	FY2026	~$155M	Guidance suspended	Suspended
Operating Loss ($)	FY2026	~($6)M	Guidance suspended	Suspended
Diluted EPS ($)	FY2026	~($0.15)	Guidance suspended	Suspended
Capex ($)	FY2026	~$4M	Guidance suspended	Suspended
Year-end Cash ($)	FY2026	~$40M	Guidance suspended	Suspended

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 → Q4)	Current Period (Q1 FY26)	Trend
Wholesale/Marketplace diversification	“Inbound interest” and broadening reach; holiday trendline improvement (Q3) ; pipeline building in Indirect (Q4)	Shipped first Costco order; launched UO Marketplace; Target Marketplace “exceptional”; Anthro exclusives ahead	Accelerating execution
Channel mix & margins	Mix and outbound freight pressured margins (Q3) ; shift to online plus freight and PV adjustments (Q4)	Mix shift to online and higher outbound freight; higher clearance penetration	Ongoing headwind
Product strategy (heritage/value)	Heritage/giftable/value emphasis (Q3)	Expand heritage, fix functionality (zippers/pockets/straps), relaunch favorites; baby/luggage launches; Social First campaign (Jul–Holiday)	Deeper pivot to heritage/value
Store footprint optimization	Closed 5 FL, opened 5 outlets (LTM) (Q3)	Plan to close 10 unprofitable FL; opened 2 FL, closed 2 FL in Q1	Rightsizing accelerating
Leadership & governance	Co-founder to Board Emeritus (Q4)	CEO departing; Executive Chairman interim leadership; new CFO; Strategy & Transformation Committee	Major transition
Guidance posture	FY25 guide maintained in Q3 ; FY26 guide issued in Q4	Guidance suspended due to leadership transition and consumer uncertainty	Visibility reduced
Macro/consumer	Value-focused consumer pressure (Q3)	Pricing sensitivity; divergence by income level	Persistent pressure

Management Commentary

CEO tone: “Our first quarter results were disappointing as top line and profitability trends from the previous several quarters continued,” while emphasizing “being where she shops” and diversifying wholesale partnerships .
Product/brand: “We need to offer a better balance of new and heritage product… brought back heritage styles… addressed customer feedback about zippers, pockets, and strap lengths” .
Channel strategy: “Target Marketplace was a notable standout… discussions on how best to maximize the partnership” .
Operations: Non-GAAP margin decline primarily from store-to-online channel shift and higher outbound freight; SG&A fell on cost actions but deleveraged on lower sales .
Leadership shift: Executive Chairman Ian Bickley: “I am approaching this role not merely as a caretaker… We must accelerate our transformation and improve our results,” announcing CFO Martin Layding and a Strategy & Transformation Committee .
Guidance posture: “Given these changes… and uncertainty… the company is suspending its prior guidance” .

Q&A Highlights

The published transcript contains prepared remarks only; no analyst Q&A was included in the transcript or was made available in the document set reviewed .

Estimates Context

Q1 FY26 vs S&P Global consensus: Revenue $51.652M vs $53.477M estimate (miss); EPS ($0.36) vs ($0.12) estimate (miss). Coverage is thin (1 estimate for both revenue and EPS in Q1), amplifying estimate volatility*.
Prior quarter context: Q4 FY25 revenue $99.964M vs $107.94M est (miss); EPS ($0.30) non-GAAP vs $0.065 est (large miss)*.
Outlook: With guidance withdrawn and leadership transitioning, street models are likely to reset lower for near-term revenue/margins until there’s improved visibility on traffic/conversion, promo cadence, and wholesale scale-up*.

Period	Revenue Actual ($M)	Revenue Consensus ($M)*	EPS Actual ($)	EPS Consensus ($)*	#Est (Rev/EPS)*
Q4 2025	99.964	107.94*	(0.30) (Non-GAAP)	0.065*	2 / 2*
Q1 2026	51.652	53.477*	(0.36) (Non-GAAP)	(0.12)*	1 / 1*
Q2 2026	70.858 (Actual to date)	78.520*	(0.02) (Actual to date)	(0.15)*	1 / 1*

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

Near-term reset: The combination of revenue/EPS misses, margin pressure from mix/clearance, and suspended guidance suggests estimates and multiples may compress until new leadership articulates a credible recovery plan .
Watch wholesale ramp: Execution in Target, Costco, UO Marketplace, and upcoming Anthro exclusives is the clearest lever to stabilize top-line and diversify beyond challenged stores—track order cadence and repeat reorders as KPIs .
Store rationalization: Closing 10 underperforming full-line stores should help profitability over time; monitor lease exits and associated charges vs. realized SG&A savings .
Product/brand fix: Heritage-led assortments and functionality improvements address core customer feedback; Social First campaign targeting 18–34-year-olds is a key H2 catalyst—watch conversion and AOV by cohort .
Margin roadmap: Freight and clearance headwinds need relief; improvements hinge on channel mix normalization, promo discipline, and supply chain cost reductions previously contemplated in FY26 guidance .
Balance sheet flexibility: No debt, ~$86M liquidity provides runway to execute the transformation without immediate external capital needs .
Leadership as catalyst: Executive Chairman oversight, incoming CFO, and a new CEO search introduce potential strategic shifts; a credible 12–24 month plan could be a stock re-rating catalyst once provided .

Supplementary details and reconciliations

Discontinued operations: Pura Vida sale closed 3/31/25; continuing ops exclude Pura Vida to provide clearer view of Vera Bradley core . Post-quarter PR confirms buyer and separation .
Non-GAAP adjustments Q1: PPE impairment ($1.0M), PO cancellations ($1.0M), fees tied to Pura Vida sale ($1.0M), consulting/professional fees ($0.7M), severance ($0.3M), inventory write-off ($0.3M), and tax adjustments ($3.9M); non-GAAP net loss from continuing ops ($10.1M), non-GAAP EPS ($0.36) .

Bolded surprises:

Revenue and EPS both missed consensus in Q1; guidance suspended—significant negative surprise and visibility reduction* .

All document-based figures are cited. Consensus figures marked with * are from S&P Global.

Vera Bradley, Inc. (VRA)·Q1 2026 Earnings Summary