Vera Bradley, Inc.

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Vera Bradley third quarter conference call. At this time, all participants are in a 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 for questions. As a reminder, today's conference is being recorded. I would now like to turn the conference over to Mr. 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 risks and uncertainties that could cause actual results to differ materially from those that we expect. Please refer to today's press release and the company's most recent 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 today's call. I will now turn it over to Vera Bradley's CEO, Rob Wallstrom.

Rob? Thank you, Mark. Good morning and thank you for joining us on today's call. John Enright, our CFO, also joins me today. We posted a consolidated year-over-year third quarter revenue increase of 7.9% and a 5.7% increase over the pre-pandemic levels of fiscal 2020. Vera Bradley brand revenues have continued to gain momentum quarter after quarter as customers have responded to product innovation and collaborations supported by data-driven targeted marketing. Third quarter Vera Bradley brand comparable sales rose nearly 8% over last year and nearly 6% over fiscal 2020. Pura Vida sales returned to double-digit growth in the quarter, up 11.7% over last year. Pura Vida's e-commerce revenues were still suppressed by the Apple iOS 14.5 update put in place earlier this year that lessened the effectiveness of Facebook and Instagram advertising. These two platforms have been the primary marketing vehicles to drive Pura Vida sales, and shifting the marketing platform is underway. On the other hand, our Pura Vida first store in San Diego continued to run well ahead of expectations, and we expect to open three to five additional stores next year. Pura Vida's future growth will be expanded by balancing growth online and in physical distribution channels. Like much of the industry, we continue to experience supply chain challenges and significantly increased freight costs that put meaningful pressure on gross margins in the quarter. We estimate these incremental freight expenses, including air freighting product, negatively impacted diluted EPS by approximately $0.05 for the quarter and $0.10 for the nine months. We have begun to take strategic retail price increases across both our brands to mitigate some of these inflationary and supply chain pressures. Those price increases began in this year's fourth quarter and will continue over the next few quarters. In addition, more specific to Vera Bradley, the lower margin rates reflects higher tariffs from previously duty-free countries where we source products whose duty-free status under the generalized system of preferences, otherwise known as GSP, was not renewed at the beginning of the calendar year by Congress. In the past, Congress has retroactively reinstated the duty-free status of such tariffs to the beginning of the year. We anticipate that the GSP status will be renewed once again, but we cannot guarantee if and when this will occur. This delay in renewal of GSP negatively impacted diluted EPS by approximately three cents for the quarter and six cents for the nine months. Even with the current supply chain and GSP challenges, On a year-to-date basis, before certain items, non-GAAP EPS of 41 cents is ahead of last year and even ahead of where we were in fiscal 2020 pre-pandemic. We are confident that both the Vera Bradley and Pure Vida brands have meaningful long-term growth opportunities, well beyond their core product categories, even though headwinds and uncertainties lie ahead. Our four key growth drivers continue to be elevating our digital first strategy, enhancing our product innovation pipeline, collaborations, and category extensions, expanding our customer community through marketing and deepening our customers' brand loyalty, and number four, evolving our distribution channels. We have a healthy cash position, a debt-free balance sheet, and an ability to generate free cash flow that will allow us to continue to invest in both our lifestyle brands and seek out acquisitions of other comfortable, affordable, purpose-driven brands over time. Our team is driven, our brands are strong, and we are positioned for long-term growth. We remain focused on our vision to be a purpose-driven, multi-lifestyle brand, high-growth company. Now let me turn the call over to John to discuss our financial information.