Vera Bradley, Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Viva Bradley fourth quarter and fiscal year-end conference call. At this time, all participants are in the listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. As a reminder, today's conference is being recorded. I would now like to turn the call over to Mark Delay, Vera Bradley's Chief Administrative Officer. Please go ahead, sir.

Good morning and welcome, everyone. We'd like to thank you for joining us for Vera Bradley's earnings call. Some of the statements made during our prepared remarks and in response to your questions may constitute forward-looking statements made pursuant to and within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risk and uncertainties that could cause actual results to differ materially from those that we expect. Please refer to today's press release in the company's most recent form 10-K filed with the SEC for a discussion of known risks and uncertainties. Investors should not assume that the statements made during the call will remain operative at a later time. We undertake no obligation to update any information discussed on the call. I will now turn it over to Vera Bradley's CEO, Rob Wallstrom. Rob? Thank you, Mark.

Good morning, everyone, and thank you for joining us on today's call. John Enright, our CFO, also joins me today. I am proud of how our organization navigated through the last year. Our extraordinary culture and our loyal customers allowed our two lifestyle brands to not only persevere through the crisis, but the changes we made to respond to rapidly changing consumer needs during the pandemic made us stronger as we look to the future. Our brands were able to bring brightness to our customers during a very challenging year. Despite an extremely challenging overall retail environment and a very difficult handbag and accessory market in particular, we delivered some best in class operating results. On a non-GAAP basis, our fiscal year operating income was nearly 90% of last year's results, which was a strong performance in light of the unprecedented pandemic-related headwinds. This performance was due to the strength of our two lifestyle brands and strong execution. Despite significant sales disruption, we had several financial successes during the year. Our e-commerce sales comprised nearly half of our total company revenues for the fiscal year, and our Vera Bradley brand e-commerce sales grew by nearly 50%. We expanded our annual consolidated gross margin rate primarily through product innovation, cotton masks, and product collaborations, and more full-price selling. We diligently managed our expenses, and we ended the fiscal year with a solid balance sheet with ample cash and no debt. We are in a strong position to drive growth by continuing to invest in our two brands and to take advantage of additional acquisition opportunities over time. Let me make a couple of comments on our fourth quarter performance. Our Vera Bradley segment fourth quarter revenue trends were similar to the third quarter, excluding our mass business, which declined over six percentage points in the quarter to just over 5% of total sales. and the fact that our stores were closed on Thanksgiving Day this year, which negatively impacted our sales performance by an estimated $3 million. Additionally, our Vera Bradley e-commerce business grew over 30% for the quarter. Our Pura Vida segment non-GAAP operating income grew over last year's fourth quarter, while revenues were just below last year's fourth quarter. We made the strategic decision to reduce discounting during the Black Friday period, which we estimate negatively impacted sales by about 6 million, but substantially improved gross margin performance and profitability and established a much healthier foundation for the future. And outside of the five-day period, Pura Vida's e-commerce sales grew well over 40% for the quarter. In fiscal 2021, we concluded the final year of Vision 2020, our aggressive three-year plan to restore the business to a healthy foundation, and we completed the first full year of consolidated operations at Pura Vida. Despite the pandemic challenges, we strengthened our infrastructure and better positioned both the Pura Vida and Vera Bradley brands for the future. Let me highlight some of our major achievements for the year. For Pura Vida, PureVita's e-commerce revenues increased nearly 15% for the fiscal year despite the pandemic and significant supply chain disruptions during the lockdown. Without these disruptions, we are confident we would have exceeded our 20% plus revenue growth target. Average order values and conversion rates continue to grow year over year. Fiscal 2021 was focused on building a strong foundation of growth for PureVita. Using Vera Bradley's global sourcing expertise, we significantly strengthened Pura Vida's supply chain, diversifying raw material sourcing, and adding three additional production facilities in countries outside of El Salvador. We reexamined promotional activity and eliminated deep discounting, particularly around Black Friday, which led to gross margin rate improvement. We laid the groundwork for growth initiatives beyond jewelry to further expand Pura Vida's lifestyle brand reach. In the product area, Pura Vida continued to show strength as a lifestyle brand by successfully expanding into new product categories. Nearly 50% of our e-commerce business is now comprised of jewelry categories other than the traditional string bracelets, such as metal, semi-precious stones, charms, and the engravable collection, underscoring the brand's lifestyle appeal, which will continue to be a key driver of growth. Charity bracelets continue to be an important element of the Pura Vida lifestyle and a big draw for our cause-minded customers. To date, Pura Vida has donated over $3 million to more than 200 charities. On the distribution front, we expanded on the distribution front by launching fulfillment capabilities in Canada and entering into a third-party agreement for the wholesale distribution of our products in Europe to complement our existing e-commerce business and fulfillment operations there. We added Pura Vida Shop and Shops to six full-line Vera Bradley stores and expanded our presence in wholesale partners with larger in-store presentations. In the marketing area, our social media engagement is exceptional, remaining one of the most highly engaged brands in the accessory space and social media with over 2 million Instagram followers. We are consistently listed as one of the most, if not the most, engaged jewelry brands on Instagram. TikTok has taken off with well over 200,000 followers and a team of brand ambassadors and close to 150,000 micro influencers are an active part of the brand and a key part of our marketing strategy. We entered into an exciting agreement with Charlie D'Amelio, the reigning queen of TikTok, which I will update you on in a few minutes. Earned media was strong with healthy returns on spend, and we doubled our SMS list from fiscal 2020 to well over a million active subscribers, which drove meaningful revenue. Now for Vera Bradley. In the product area, we accelerated our robots fabric innovation pipeline to develop new offerings and build on our platform with sustainable fabrics. We quickly reacted to the consumer demand for personal protective equipment, producing and selling millions of cotton-faced masks, generating meaningful revenue and gross margin dollars. We continued another year of collaborations with several iconic brands, including Crocs, Disney, and Gillette Venus, introduced our signature masks and 1982 backpacks with Target, and entered into a collaboration with Warner Brothers Consumer Products for the creation of our extremely successful Harry Potter plus Vera Bradley collection. On the distribution front, we continue to strengthen and rationalize our store base. We opened six new factory stores and closed 13 underperforming full-line stores ending the fiscal year with 75 full-line and 69 factory locations. We expanded and strengthened our partnerships with key online retailers such as Amazon. In the marketing area, our loyal customer retention improved year over year, which was a testament to our customers' loyalty and our enhanced digital and data analytics programs. Our customer service model and voice of customer program continued to drive industry-leading customer satisfaction scores despite pandemic-related disruptions. We successfully launched our new VeraBradley.com site, which allowed us to improve our customers' online buying experience and offer enhanced content to guide purchasing. We added a number of key site capabilities to support customers who shifted to online purchasing during the pandemic. Our well-timed investments in customer data science and business analytics positioned us well as we navigated through the pandemic, allowing us to collect and analyze data and respond to customer changes and adjust marketing spend in an agile way. Our targeted digital media efforts drove increased brand awareness and improved earned media with total media impressions up more than 170% to almost 10 billion for the year. We reinforced our commitment to be an ESG-driven organization, We continue to strengthen our community support and charitable efforts for the umbrella of VB Cares, particularly through the organizations that can profoundly improve the lives of women and children, including $1.4 million to the Vera Bradley Foundation Center for Breast Cancer Research, over $630,000 to the Coronavirus Response Fund for nurses, and donations to New Hope Girls, Blessings in a Backpack, and other causes. Another aspect of our VB Cares focus is caring for our associates. And we were able to pay over $800,000 in bonuses to those serving on the frontline during the pandemic. Our associate engagement scores also continue to be best in class, underscoring the engagement and commitment from our talented teams. We launched our company-wide diversity and inclusion initiative, Project Quilt, to continue to enhance diversity, equality, and inclusion, focusing on three key areas, the associate experience, the customer experience, and the community experience. In the information technology area, we completed Project Novus, our information technology platform conversion, migrating our e-commerce site to a best-in-class cloud-based solution and replacing our existing ERP, POS, business intelligence, and order management systems with a cloud-based Microsoft T365. This conversion not only lessened the complexity of our IT systems, but also provided us with a more efficient technology platform enabling our entire enterprise to make quick, database-informed decisions, further enhance our customer experience, and achieve our long-term growth objectives. Today, we are also announcing changes to the leadership structure of our company and the Vera Bradley brand to position us for an exciting future. As we conclude Vision 2020, we are embarking on the next important phase of our company's growth by enhancing our multi-brand portfolio, further expanding our ESG initiatives, and drive an additional value for all of our stakeholders. In order to strengthen our position and strategic vision as a purpose-driven, multi-brand, high-growth company, we are realigning our organizational and leadership structure. Vera Bradley and Pura Vida are the two lifestyle brands currently under the Vera Bradley Inc. umbrella. We intend to nurture and grow both of these brands and also look for other lifestyle brands that could strengthen our capabilities and diversify our revenue streams. While I will continue as CEO of Vera Bradley Inc., each brand will have their own leadership team that will focus on building customer engagement and expanding revenue while protecting and cultivating the distinct ethos and entrepreneurial spirit of each brand. With the retail industry continuing its rapid transformation into a customer-centric, data-driven, technology-enabled, and digitally-driven industry, Vera Bradley will double down on these focus areas. Serving as Vera Bradley's chief customer officer for the past two and a half years, Darren Hall and his team have already radically strengthened the way we engage with our customers. With that, I'm excited to announce that Darren has been appointed as the Vera Bradley brand president. In his new role, Darren is being supported by a new streamlined leadership structure focused on three critical areas. What we bring to market, how we sell to market, and how we raise customer engagement and interest in the brand. On the corporate level, we will offer consolidated back office support and efficient and lean corporate platform to enhance the growth of each brand, and we will continue our technology and customer insights evolution to build an integrated ecosystem of capabilities for the enterprise that will allow our brands to respond more quickly to our customer wants and needs. These changes will better prepare us to adapt to the ever-changing retail landscape, allow us to better react to customer needs, strengthen our positioning, and propel us towards more profitable growth. Looking ahead, our enterprise's vision is to be a purpose-driven, multi-brand, high-growth company, and we are just beginning the journey. As I noted, we will focus on enhancing our purpose-driven efforts while seeking out appropriate acquisitions of other comfortable, affordable, purpose-driven brands similar to our successful Pura Vida acquisition over time. Our strong cash position, debt-free balance sheet, and the ability to generate free cash flow will allow us to pursue these acquisitions. We will also expand our reach by adding adjacent product categories and geographies. For fiscal 2022, our company's four key growth drivers are, one, driving our digital purse strategy. By evolving the digital distribution of our products and further refining and utilizing digital experiences to serve our customers, this will be supported by continuously refining our technology, developing business processes and technology platforms to improve agility, database decision making, customer centricity, and speed to market. Number two, enhancing our product innovation pipeline collaborations and category extensions to attract new customers and increase share of wallet with existing customers. Number three, expanding our community through marketing and by creating an impactful positive brand movement that not only changes lives but deepens your brand loyalty. Number four, evolving our distribution channels. by focusing on future growth opportunities and addressing the drastically changing retail environment and the consumer marketplace. We have a long-term vision for the future of our company and a clear path to achieve our goals. We are excited about the possibilities for Vera Bradley, Inc., and I am so proud of all that the teams have accomplished over the past year. And I am confident that we have an exciting future ahead as we are poised to take advantage of additional acquisition opportunities and to evolve into an even more modern and relevant multi-brand retailer. Now let me turn the call over to John to review the financial results. John?