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Vera Bradley, Inc. (VRA)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 net revenues were $0.100B, down 25% year over year (14-week prior year: $0.133B), with GAAP diluted EPS of $(1.69) and non-GAAP EPS of $(0.30) as transformation headwinds and channel mix weighed on margins .
  • Management announced the sale of Pura Vida to focus resources on Vera Bradley’s long-term transformation and reiterated a minimum $20M cost-savings plan for FY2026, aiming to end FY2026 with ~$40M cash and no debt .
  • FY2026 guidance (ex-Pura Vida) points to revenue of ~$0.280B, gross margin ~52.5%, SG&A ~$0.155B, and diluted EPS of approximately $(0.15); this implies stabilization with improved margin structure vs FY2025 ex-Pura Vida, but continued demand headwinds in H1 .
  • Sequential improvement in e-commerce contrasted with outlet traffic and conversion weakness; management is expanding heritage/licensed products, refining pricing/promo architecture, and advancing marketplace/retail partnerships (Target marketplace, Urban Outfitters) to drive brand heat and customer acquisition .

What Went Well and What Went Wrong

What Went Well

  • Target marketplace delivered “exceptional results,” informing the “be where she shops” initiative and indirect-channel strategy acceleration .
  • Early product adjustments (longer/wider straps, zipper closures) “outselling” previous styles; management acknowledged missteps and moved quickly to address feedback .
  • New customer acquisition accelerated; 18–34 age band with household income >$100K grew ~10%, supporting a broadened demographic reach amid macro pressure on lower-income outlet cohorts .

What Went Wrong

  • Q4 gross margin fell to 45.0% GAAP (45.7% non-GAAP) from 52.3% YoY due to channel shift to online, higher outbound freight, and Pura Vida inventory adjustments; SG&A deleveraged to 62.2% GAAP (57.9% non-GAAP) on lower revenue .
  • Outlet stores saw declines in both traffic and conversion, driving a 17.5% comparable sales decline in Direct; Indirect revenues fell 38.5% on specialty/key account softness and reduced liquidation .
  • FY2025 results missed prior FY2025 guidance issued in Q3 on revenue, margin, operating loss, EPS, and year-end cash, reflecting tougher macro and transformation timing .

Financial Results

MetricQ4 2024Q2 2025Q3 2025Q4 2025
Net Revenues ($USD Millions)$133.265 $110.822 $80.578 $99.964
Gross Profit ($USD Millions)$69.641 $56.361 $43.609 $44.960
Gross Margin % (GAAP)52.3% 50.9% 54.1% 45.0%
SG&A ($USD Millions, GAAP)$67.183 $53.627 $54.220 $62.180
SG&A % of Revenue (GAAP)50.4% 48.4% 67.3% 62.2%
Operating Income (Loss) ($USD Millions, GAAP)$(2.829) $2.872 $(10.474) $(23.324)
Diluted EPS (GAAP) ($USD)$(0.06) $0.19 $(0.46) $(1.69)
Diluted EPS (Non-GAAP) ($USD)$0.11 $0.13 $(0.27) $(0.30)

Segment Revenues ($USD Millions)

SegmentQ4 2024Q2 2025Q3 2025Q4 2025
Vera Bradley Direct$93.0 $72.2 $52.5 $76.5
Vera Bradley Indirect$16.1 $21.8 $18.0 $9.9
Pura Vida$24.2 $16.8 $10.1 $13.6

Segment Operating Income ($USD Millions, GAAP)

SegmentQ4 2024Q2 2025Q3 2025Q4 2025
Vera Bradley Direct$18.204 $13.433 $2.104 $5.710
Vera Bradley Indirect$4.402 $4.743 $6.068 $0.777
Pura Vida$(7.303) $0.089 $(2.711) $(11.297)

KPIs and Balance Sheet (selected)

KPIQ4 2024Q2 2025Q3 2025Q4 2025
Comparable Sales (Direct) YoYN/A(11.2%) (27.2%) (17.5%)
Inventory ($USD Millions)$118.278 $133.047 $131.314 $110.008
Cash & Equivalents ($USD Millions)$77.303 $44.147 $13.711 $30.366
Share Repurchases in Quarter ($USD Millions)N/A$9.5 $5.3 $0.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenues ($USD Millions)FY2026 (ex-Pura Vida)N/A~$280 Initiated
Gross Profit Margin % (non-GAAP)FY2026 (ex-Pura Vida)N/A~52.5% Initiated
SG&A ($USD Millions, non-GAAP)FY2026 (ex-Pura Vida)N/A~$155 Initiated
Operating Loss ($USD Millions, non-GAAP)FY2026 (ex-Pura Vida)N/A~$(6) Initiated
Diluted EPS (non-GAAP) ($USD)FY2026 (ex-Pura Vida)N/A~$(0.15) Initiated
Net Capital Spending ($USD Millions)FY2026N/A~$4 Initiated
Year-End Cash ($USD Millions)FY2026N/A~$40 Initiated

Comparison: FY2025 Guidance (Q3) vs Actual FY2025 (non-GAAP where applicable)

MetricPeriodPrevious Guidance (Q3 2025)Actual FY2025Change
Net Revenues ($USD Millions)FY2025~$385 $371.967 (GAAP) Lower
Gross Profit Margin % (non-GAAP)FY2025~52.5% 50.7% Lower
SG&A ($USD Millions, non-GAAP)FY2025~$213 $213.4 Maintained (slightly higher)
Operating (Loss) ($USD Millions, non-GAAP)FY2025~$(9) $(24.1) Lower (worse)
Diluted EPS (non-GAAP) ($USD)FY2025~$(0.25) $(0.64) Lower
Net Capital Spending ($USD Millions)FY2025~$13 $10.4 Lower
Year-End Cash ($USD Millions)FY2025~$35 $30.366 Lower

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2025)Previous Mentions (Q3 2025)Current Period (Q4 2025)Trend
Project Restoration / Brand RepositioningLaunch in Brand stores and site; new leather franchise; macro headwinds Early-stage, very challenging; adjustments to assortment/value; green shoots Transformation taking longer; refining product/pricing; expanding heritage/licensed products Continued optimization
Channel Mix & Marketplace StrategyIndirect up YoY on liquidation; Direct weakness Sequential improvement expected into Q4 Target marketplace “extremely successful”; indirect pipeline; Urban Outfitters collab Strategic shift to marketplace/partners
Customer Demographics & DemandMacro headwinds masked successes; pursuit of fashion/function customer Broaden reach to younger/higher-income customers 10% growth among 18–34 with >$100K HH income; outlet customers under $75K pressured Mixed: higher-income growth, value cohort pressured
Pricing/Promo & MarginIncreased promotional cadence; gross margin down Gross margin 54.1% in Q3; freight headwinds Q4 gross margin 45.0% GAAP; testing promo/pricing framework to balance engagement/margins Margin rebuilding efforts underway
Inventory & LiquidationYOY inventory down ~5%; focus on efficiency Inventory $131.3M; reduce reliance on liquidation YE inventory $110.0M; target further ~10% reduction in FY26; structurally smaller clearance/liquidation Improving discipline
Cost Efficiency & SG&APlanning conservatively; strong cash position Business discipline emphasized $20M annual cost savings initiative; SG&A met internal expectations; FY26 SG&A guide ~$155M Structural cost reduction
Pura VidaElevated media costs; wholesale down Marketing diversification; retail stores flat Business sale signed; Q4 PV op loss $(11.3)M, full impairment of indefinite-lived intangibles Exit to refocus on core

Management Commentary

  • “The fourth quarter remained challenging as we continue to navigate the early stages of Project Restoration…migration of business from stores, particularly in our outlet locations, to e-commerce represented an unexpected shift, creating near-term profitability challenges…” .
  • “We will be expanding our heritage products, reducing assortment in higher price points…bringing back regular deliveries of licensed product and some styles our customers are asking for…strong pipeline of new business development in our Indirect channel…” .
  • “We signed a purchase agreement to sell the Pura Vida business…a significant step in our strategic evolution…we expect to deliver cost savings at a minimum of $20 million this year” .
  • “We entered the new fiscal year at a strong financial position with no debt, $30 million in cash and liquidity of $75 million…” .
  • “Our Q4 rollout of Adjusted Styles has showcased encouraging results…longer and wider straps and zipper closures…are outselling…we made a mistake…some of the styling that we replaced was just not something that she wanted” .

Q&A Highlights

  • Marketplace strategy: Target marketplace significantly outperformed expectations; management emphasized meeting the customer “where she is,” supporting a more diversified indirect strategy .
  • Collaborations/licensing: Strong “Wicked” IP performance; pipeline of collaborations (e.g., Urban Outfitters) to drive brand heat and new customer acquisition across channels .
  • Product adjustments/customer balance: New adjustments (straps/zippers/pockets) addressing feedback are outselling prior versions; management acknowledged missteps and rapid correction to serve both legacy and new customers .
  • FY2026 outlook and agility: Guidance reflects conservative lens given macro pressures, especially in outlets; management confident in ability to pivot and execute despite continued headwinds .

Estimates Context

  • S&P Global Wall Street consensus for Q4 FY2025 (EPS and revenue) was unavailable due to data access limitations at the time of this analysis. As a result, we cannot assess beat/miss versus consensus for Q4 FY2025 [GetEstimates errors].
  • Given FY2026 guidance (ex-Pura Vida) for ~$0.280B revenue and ~52.5% gross margin, sell-side estimates may need to align with management’s expectation of H1 demand headwinds and margin improvement through cost and mix actions .

Key Takeaways for Investors

  • Transformation taking longer: Channel mix shift to online and outlet traffic pressure compressed margins in Q4; management is refining pricing/promo and product strategy to stabilize performance .
  • Strategic focus: Sale of Pura Vida and $20M annual cost-savings initiative should simplify the model and improve Vera Bradley core margin trajectory in FY2026 .
  • Margin rebuild: FY2026 guide to ~52.5% gross margin (ex-Pura Vida) vs FY2025 non-GAAP ~50.7% indicates structural improvement from product margins and lower supply chain costs .
  • Demand bifurcation: Higher-income, younger customer cohorts are growing, but value-oriented outlet traffic remains pressured; marketplace and collaborations aim to drive brand heat and new customer acquisition .
  • Inventory discipline: YE inventory down to $110.0M with ~10% further reduction targeted in FY2026, enabling lower clearance/liquidation reliance and better margin profile over time .
  • FY2025 miss vs guidance underscores conservative FY2026 stance: Actuals fell short of Q3 guide on revenue, margins, EPS, and YE cash, reinforcing cautious near-term expectations .
  • Trading lens: Near-term catalysts include closing of Pura Vida sale, execution on marketplace/collab pipeline, and evidence of margin improvements; watch H1 demand cadence and outlet traffic to gauge stabilization trajectory .