Vera Bradley, Inc.

Please stand by, we're about to begin. Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the VR Bradley fourth quarter and fiscal year end 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 up for questions. As a reminder, today's conference call is being recorded. I would now like to turn the call over to Mr. Mark Dillai, Vera Bradley's Chief Administrative Officer. Please go ahead.

Good morning and welcome, everyone. We would like to thank you for joining us for today's 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 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 today's call. I will now turn the call 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. At the beginning of the year, we set out to further enhance our two strong brand franchises, Vera Bradley and Pura Vida, and drive revenue and earnings growth through four key strategies. Executing our digital first strategy, enhancing our product innovation pipeline, and further engaging our communities through marketing, and continuing to evolve our distribution channels. During the year, we made headway on these fronts for both brands, generated strong cash flow, delivered a consolidated year-over-year revenue increase of over 15%, and essentially returned to pre-pandemic revenue levels. Our Vera Bradley brand had a solid year of revenue growth, with year-over-year total sales increasing over 18%, as customers responded to our product innovation and collaborations supported by data-driven and targeted marketing. Our customer base grew year over year, and our demographics are younger and more diverse. Our Pura Vida brand total sales grew just over 6% for the year. We saw double-digit growth in Pura Vida wholesale revenues and our first successful retail store opening during fiscal 2022. However, the significant shift in social and digital media effectiveness due to the Apple IDFA update affecting DTC companies resulted in e-commerce sales falling short of expectations. In addition to the Apple IDFA update, we faced a series of other unprecedented macro issues, including dramatic supply chain delays and freight cost increases, the delayed renewal of GSP tariff relief, and substantial digital advertising cost increases, all of which materially affected profitability during the year. The incremental freight cost and GSP impact combined affected our EPS by approximately 25 cents for the full year. Excluding these two items, we would have put the company in line with our original guidance of 80 to 90 cents. Even though our earnings results were below our expectations, much of what negatively affected our earnings, particularly the supply chain challenges and GSP, related to those two issues. In the fourth quarter, we began initiating strategic price increases across both of our brands to mitigate some of these inflationary and supply chain pressures. And we are continuing to implement price increases throughout 2022. In hindsight, we should have implemented price changes more quickly. The price increases should more than offset continuing rising freight costs to deliver year-over-year gross margin improvement in fiscal 2023. GSP, or generalized system of preferences, is more specific to the Vera Bradley brand. The lower gross margin rate throughout the year reflected higher tariffs from previously duty-free countries where we sourced products whose GSP or duty-free status expired at the beginning of 2021. Our expectation was that Congress would pass the GSP legislation early in 2021, but they are still working on the legislation as we head into 2022. In the past, Congress has retroactively reinstated the duty-free status of such tariffs to the beginning of the year. Although industry and government sources are still expecting it to be retroactive, we are not certain when or if this will happen. We continue to diligently manage our expenses, and we ended the fiscal year with a solid balance sheet with ample cash of over $88 million and no debt. Even facing the macro challenges of the last year, we generated $34 million of free cash flow slightly above our 10-year average, and returned $7.7 million to shareholders through stock repurchases. We remain in a strong position to continue to invest in our two lifestyle brands, take advantage of additional growth opportunities over time, and return capital to shareholders through continued share repurchases or future dividends. Our organization remained focused on the long term and achieved key strategic wins while navigating through the dramatically rising inflationary environment. Our extraordinary culture has allowed us to not only persevere through these challenges, but it has made us stronger and is even more critical during this tight labor market. Just last month, we were extremely honored to receive the number one ranking on the Forbes list of America's best midsize employers for 2022. Our culture is one of our key competitive advantages. As I noted in fiscal 2022, we were keenly focused on four strategies to strengthen our brands and propel the business forward. First, we continue to drive our digital first strategy. We made strategic organizational shifts and investments to pivot us to a digital first company, evolving into a customer-centric, data-driven, technology-enabled, and digitally-focused enterprise, which allows us to effectively engage with our customers and offer a seamless shopping experience. Over one-third of our consolidated revenues are now generated from e-commerce sales, and excluding our factory stores, over half of our total company sales are driven by e-commerce. Second, we further enhanced our product innovation pipeline, collaborations, and category extensions. We continue to build our Vera Bradley and Pura Vida lifestyle brands to attract new customers and increase share of wallet with existing customers. Third, We continue to build our community through marketing. Both brands are working to engage, diversify, and grow their customer bases through analytics, targeted marketing, and ESG efforts. We consistently rank at the top of the industry for our net promoter and customer satisfaction scores for both brands. And fourth, we further evolved our distribution channels. We are continually looking for new ways to reach our customers and to reinvent the shopping experience in the ever-changing retail environment. The future of both brands will be a powerful combination of digital and brick-and-mortar. At both of our brands, we accomplished a lot during the year. A more complete list is outlined in this morning's release, but allow me to mention just a few. At Vera Bradley, we continued another year of high-profile product collaborations with several iconic brands, including Disney, Harry Potter, and Peanuts. accelerated our robust fabric innovation process and launched our cotton reimagined collection, expanded our apparel collection, continued to strengthen and rationalize our store base, continued to expand options for customers to shop, including launching our Canadian website and adding distribution on Chewy.com, and continued to engage, diversify, and grow our customer base through analytics, targeted marketing, and BB Care's efforts. Our customer count grew by nearly 15% over last year, essentially bringing us back to pre-pandemic levels. And social media followers continue to grow, with Facebook at nearly 2 million, Instagram approaching 600,000, and TikTok climbing. At Pura Vida, we entered into several high-profile product collaborations, including Hello Kitty, Disney, and Harry Potter, bringing new customers to our brand. We continue to strengthen our position as a lifestyle brand by expanding into new product categories, including apparel. Launched our first jewelry collection with Outer Banks star and influencer Madison Bailey, which is appealing to a more diverse customer. Opened our first retail store in San Diego's Westfield UTC Mall in August, which is performing well ahead of expectations. Added over 400 new wholesale partnerships and Nordstrom's as a department store distributor. added Pura Vida Shop and Shops to 23 full-line Vera Bradley stores, and completed Pura Vida's ERP integration so that our entire enterprise is now on a unified technology platform. We also reinforced our commitment to be a purpose and ESG-driven organization. Pura Vida completed its B Corp impact assessment and just last month was awarded its B Corporation certifications. We amplified 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. We further strengthened and diversified our board of directors with the addition of Nancy Twine, founder and CEO of Briogeo Haircare, bringing our female board representation to 60%. making us one of only 8% of the Russell 3000 index companies with the Gender Balance Board. And we continue to strengthen our community support and charitable efforts under the umbrella of EB Cares and through our Pura Vida Charity Bracelet Program. Now let me turn the call over to John to review the financial results. John? Thanks, Rob, and good morning.