Vera Bradley, Inc. 10-K Analysis & Summary – 2025-03-28

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Vera Bradley, Inc.

10-K

Annual report

Filing date:

03/28/2025

TLDR:

Vera Bradley, Inc. reports a decrease in net revenues and a net loss for fiscal year 2025, impacted by challenges in both Vera Bradley and Pura Vida brands. The company is focused on implementing its Project Restoration plan to stabilize revenues and improve profitability.

ELI5:

Vera Bradley, Inc., like many businesses, had a tough year with sales down. They’re working on a plan called Project Restoration to get back on track by making their products and marketing better, and focusing on what customers want.

Accession #:

0001495320-25-000019

Published on

April 9, 2025

Analyst Summary

Vera Bradley, Inc. reported net revenues of $371.967 million for fiscal 2025, a decrease of 21.0% compared to fiscal 2024.
The company experienced a net loss of $(62.188) million for fiscal 2025, compared to net income of $7.838 million in fiscal 2024.
Comparable sales for Vera Bradley decreased by 16.6%, including a 22.2% decrease in comparable store sales and a 7.3% decrease in e-commerce sales.
Pura Vida net revenues decreased by 38.9%, primarily due to a decrease in e-commerce and wholesale sales.
The company is implementing Project Restoration, a strategic plan to revitalize the Vera Bradley and Pura Vida brands.
The company is selling 100% of Pura Vida and entered into an Interest Purchase Agreement on March 11, 2025.
The company is focusing on cost management and expense control.
The company is focusing on restoring brand relevancy, targeting casual and feminine 35 to 54 year old women who value both fashion and function.
The company is building a balanced footprint that more clearly differentiates full-line and outlet assortments and expects to open two full-line stores in fiscal 2026.

Potential Implications

Company Performance

The company’s ability to successfully implement Project Restoration will be critical to improving future financial performance.
Continued challenges in the macroeconomic environment could negatively impact consumer spending and the company’s results.
The company’s ability to manage inventory levels and respond to changing consumer demand will be important for maintaining profitability.
The company’s ability to compete effectively with other retailers will be essential for maintaining sales levels.

Stock Price

Failure to meet market expectations for comparable sales and earnings could result in a decline in the company’s stock price.
The company’s ability to successfully execute its strategic plans and improve financial performance will be important for investor confidence.

Vera Bradley, Inc. (VRA) – Form 10-K Analysis for Fiscal Year 2025

Executive Summary

This report analyzes Vera Bradley, Inc.’s 10-K filing for the fiscal year ended February 1, 2025. The company faces significant challenges, including declining revenues, operating losses, and goodwill impairment. While Project Restoration shows promise, its success is uncertain. The sale of Pura Vida could provide needed capital, but the overall outlook remains cautious. Recommendation: Hold, pending further evidence of successful turnaround.

Company Overview

Vera Bradley, Inc. operates two lifestyle brands: Vera Bradley and Pura Vida. Vera Bradley designs handbags, travel items, and accessories. Pura Vida offers bracelets, jewelry, and accessories. The company operates through three segments: Vera Bradley Direct (VB Direct), Vera Bradley Indirect (VB Indirect), and Pura Vida.

Detailed Analysis

Financial Statement Analysis

Revenue Trends

Net revenues decreased significantly from $470.8 million in fiscal 2024 to $372.0 million in fiscal 2025, a 21.0% decline. This decline was observed across all segments: VB Direct, VB Indirect, and Pura Vida.

Profitability

The company reported an operating loss of $42.4 million in fiscal 2025, compared to an operating income of $10.4 million in fiscal 2024. Gross profit margin decreased from 54.5% to 50.2%. SG&A expenses, as a percentage of net revenues, increased from 51.3% to 60.2%.

Key Ratios

Gross Margin: 50.2% (FY2025) vs. 54.5% (FY2024)
Operating Margin: -11.4% (FY2025) vs. 2.2% (FY2024)

Cash Flow

The company experienced a shift from positive to negative cash flow from operations, with $14.1 million cash used in operations in fiscal 2025 compared to $48.0 million cash provided by operations in fiscal 2024.

Management’s Discussion and Analysis (MD&A) Insights

Management emphasizes Project Restoration as a key strategy to revitalize the business. The focus is on restoring brand relevancy, improving product offerings, and optimizing the channel footprint. The MD&A acknowledges challenges in consumer demand and the need for cost management.

Red Flags and Uncommon Metrics

Goodwill and Intangible Asset Impairment: A $6.2 million impairment charge was recorded for the Pura Vida brand in fiscal 2025, indicating a decline in its perceived value.
Comparable Sales Decline: Vera Bradley comparable sales decreased by 16.6%, reflecting reduced traffic and conversion rates.
Pura Vida Performance: Pura Vida’s net revenues decreased by 38.9%, driven by declining e-commerce and wholesale sales. The company has entered into an agreement to sell Pura Vida.

Risk and Opportunity Assessment

Risks

Strategic Plan Execution: The success of Project Restoration is uncertain and depends on various factors.
Economic Conditions: General economic conditions and political uncertainty could negatively impact consumer confidence and spending.
Competition: The market for bags, accessories, and travel items is highly competitive.
Global Sourcing: Risks associated with global sourcing and manufacturing activities, including tariffs and supply chain disruptions.
Cybersecurity: Data security breaches could damage the company’s reputation and customer relationships.

Opportunities

Brand Revitalization: Project Restoration aims to enhance brand relevancy and improve product offerings.
Multi-Channel Distribution: The company’s multi-channel distribution model provides operational flexibility.
Cost Management: Ongoing cost reduction initiatives could improve profitability.

Conclusion and Actionable Insights

Vera Bradley, Inc. faces significant headwinds, as evidenced by declining revenues, operating losses, and goodwill impairment. Project Restoration represents a comprehensive effort to address these challenges, but its success is not guaranteed. The sale of Pura Vida could provide needed capital and allow the company to focus on its core Vera Bradley brand. However, the overall outlook remains cautious.

Recommendation: Hold, pending further evidence of successful turnaround. Monitor the progress of Project Restoration, the financial performance of the Vera Bradley brand, and the impact of the Pura Vida sale.

Vera Bradley, Inc. Financial Analysis – Fiscal Year Ended February 1, 2025

1. Commentary

Vera Bradley’s financial performance in fiscal year 2025 reveals a challenging period marked by a significant net loss, primarily driven by declining revenues and operating losses. The company experienced a notable decrease in net revenues compared to the previous year, impacting profitability metrics across the board. While cost of sales decreased, it wasn’t enough to offset the revenue decline, leading to a lower gross profit. Strategic initiatives, including cost-saving measures and brand revitalization, will be crucial for Vera Bradley to regain profitability and drive future growth. The Pura Vida segment continues to struggle, contributing significantly to the overall operating loss.

2. Financial Ratio and Metric Analysis

Profitability

Ratio/Metric	2025	2024	Change	Industry Comparison
Gross Profit Margin	50.2%	54.5%	-8.0%	Apparel & Accessories Industry: ~50% – 60%. Vera Bradley is at the lower end of the range.
Operating Profit Margin	-11.4%	2.2%	-618.2%	Apparel & Accessories Industry: ~8% – 12%. Vera Bradley is significantly underperforming.
Net Profit Margin	-16.7%	1.7%	-1082.4%	Apparel & Accessories Industry: ~5% – 10%. Vera Bradley is significantly underperforming.
Return on Assets (ROA)	-20.3%	2.1%	-1066.7%	Apparel & Accessories Industry: ~5% – 8%. Vera Bradley is significantly underperforming.
Return on Equity (ROE)	-34.7%	3.0%	-1256.7%	Apparel & Accessories Industry: ~12% – 18%. Vera Bradley is significantly underperforming.
EPS (Basic)	$(2.15)	$0.25	-960.0%	Varies widely; positive EPS is generally expected.
EPS (Diluted)	$(2.15)	$0.25	-960.0%	Varies widely; positive EPS is generally expected.

Liquidity

Ratio/Metric	2025	2024	Change	Industry Comparison
Current Ratio	2.84	3.88	-26.8%	Apparel & Accessories Industry: ~1.5 – 2.5. Vera Bradley is above the typical range, but decreasing.
Quick Ratio	0.94	1.84	-48.9%	Apparel & Accessories Industry: ~0.8 – 1.2. Vera Bradley is within the typical range, but decreasing.
Cash Ratio	0.52	1.33	-60.9%	Apparel & Accessories Industry: ~0.2 – 0.5. Vera Bradley is above the typical range, but decreasing.

Solvency/Leverage

Ratio/Metric	2025	2024	Change	Industry Comparison
Debt-to-Equity Ratio	0.71	0.47	51.1%	Apparel & Accessories Industry: ~0.5 – 1.5. Vera Bradley is within the typical range.
Debt-to-Assets Ratio	0.42	0.32	31.3%	Apparel & Accessories Industry: ~0.2 – 0.5. Vera Bradley is within the typical range.
Interest Coverage Ratio	-37.89	12.85	-394.9%	Apparel & Accessories Industry: > 5. Vera Bradley is significantly underperforming. Negative value indicates inability to cover interest expense.

Activity/Efficiency

Ratio/Metric	2025	2024	Change	Industry Comparison
Inventory Turnover	1.68	1.81	-7.2%	Apparel & Accessories Industry: ~3-6. Vera Bradley is below the typical range.
Days Sales Outstanding (DSO)	14.5	13.3	9.0%	Apparel & Accessories Industry: ~30-60. Vera Bradley is performing well.
Days Payable Outstanding (DPO)	39.0	24.1	61.8%	Varies widely; depends on company strategy.
Asset Turnover	1.21	1.24	-2.4%	Apparel & Accessories Industry: ~1.0-1.5. Vera Bradley is within the typical range.

Valuation

Note: Market Cap data is needed to calculate P/E, P/B, P/S, and EV/EBITDA. Assuming a market cap of $100 million for illustrative purposes.

Ratio/Metric	2025	2024	Change	Industry Comparison
Price-to-Earnings Ratio (P/E)	Negative	40.0	N/A	Apparel & Accessories Industry: ~15-25. Negative P/E indicates losses.
Price-to-Book Ratio (P/B)	0.56	0.38	47.4%	Apparel & Accessories Industry: ~2-4. Vera Bradley is below the typical range.
Price-to-Sales Ratio (P/S)	0.27	0.21	28.6%	Apparel & Accessories Industry: ~1-3. Vera Bradley is below the typical range.
Enterprise Value to EBITDA (EV/EBITDA)	Negative	12.5	N/A	Apparel & Accessories Industry: ~10-15. Negative EV/EBITDA indicates financial distress.

Growth Rates

Ratio/Metric	2025	2024	Change
Revenue Growth	$371,967	$470,786	-20.99%
Net Income Growth	$(62,188)	$7,838	-893.57%
EPS Growth	$(2.15)	$0.25	-960.0%

Other Relevant Metrics

Pura Vida Brand Impairment: An impairment charge of $6.2 million was recorded within the Pura Vida segment during the fourth quarter of fiscal 2025. This indicates a decline in the perceived value of the Pura Vida brand, potentially due to underperformance or changes in market conditions. This follows a $5.4 million impairment charge in the prior year.

Severance Charges: The company incurred significant severance charges in fiscal 2025, totaling $3.871 million, primarily related to VB Direct and Unallocated Corporate Expenses. These charges suggest restructuring activities and executive departures, which can impact short-term profitability but may lead to long-term cost savings.

Interest Purchase Agreement Termination: The company terminated the Interest Purchase Agreement, dated March 11, 2025, by and among Project Aster Acquisition, LLC, Creative Genius, LLC, and Vera Bradley Holdings, LLC. This suggests a change in strategy regarding the Pura Vida brand, potentially indicating a divestiture or restructuring plan.