Vera Bradley, Inc.

Good day and welcome to the Vera Bradley Second Quarter Fiscal 2023 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Mark DeLay, Chief Administrative Officer. Please go ahead, sir.

Good morning and welcome, everyone. We'd 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 provide 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. While total company second quarter revenues of $130.4 million were modestly below our expectations, and we continue to experience gross margin pressures due to logistics costs. We drove product innovation at both Vera Bradley and Pura Vida, initiated meaningful cost reduction actions, and completed 6 million of share repurchases while maintaining a solid debt-free balance sheet. We are continuing to see bifurcation in the spending of our customer base. At Vera Bradley, direct full-price channel comparable revenues were nearly flat to last year and up double digits to fiscal 2020. Additionally, our Vera Bradley indirect channel continued to experience a healthy year-over-year rebound. However, inflationary pressures, especially higher gas prices, continue to negatively impact the traffic and spending in our Vera Bradley factory stores. However, as gas prices are easing, we have seen a recent improvement in our factory traffic and revenues. We are taking decisive actions to strengthen our core brands and the overall enterprise. we have begun implementation of targeted cost reductions of $25 million, which are expected to be fully realized in fiscal 2024. These cost reductions will help offset inflationary expense pressures and the recessionary spending behavior from lower-income households. Expense savings are being derived across various areas of the company, including retail store efficiencies, marketing expenses, information technology, contracts, professional services, logistics, and operational costs. and corporate payroll. In addition, we are continuing to evaluate and execute strategic price increases for both brands to offset rising raw material and freight costs. At our Vera Bradley brand, we remain confident in our core strategy by continuing to innovate and build on our lifestyle merchandising focus. We are continuing to optimize the travel category, which is nearly back to pre-pandemic levels, maximizing back to campus opportunities with strategic assortment enhancements, and continuing with powerful product collaborations like Disney and Harry Potter. And we are excited about expanding our home assortments this fall and adding cloud slip-ons and mules to our Vera Bradley footwear franchise next month. Pura Vida's e-commerce revenues continue to be affected by the shift in social and digital media effectiveness and escalating digital media costs. At Pura Vida, we are evolving our business model from one that is largely dependent on e-commerce and digital marketing to one that is a true omni-channel business with a more diversified marketing base. This will take time, but we are taking the actions to make this transformation happen and return the brand to long-term growth. Our number one priority is to build a more diverse, innovative, effective, and performance-based marketing program to drive e-commerce sales, and we are bolstering our internal marketing and data analytics talents. Most importantly, we are in the process of implementing a comprehensive customer data platform from PureVita to build a single, coherent, complete view of each customer so that we can better target and personalize marketing and become less reliant on third-party marketing. In the meantime, we are continuing to work with our micro-influencers, expanding our TikTok presence, launching impactful ads, on connected TV, optimizing SMS, and aggressively exploring other methods to effectively reach our customers day in and day out. PureVita's future growth will be a balance of online growth and growth in physical distribution channels. Stores will play a key role in driving new customer acquisition as we continue to diversify our marketing platforms. During the quarter, we opened a new Pura Vida store in the Irvine Spectrum Center in Irvine, California, and in August, we opened a third location at Broadway at the Beach in Myrtle Beach, South Carolina. Like our original location opened last year in San Diego's Westfield UTC Mall, both new locations are exceeding our expectations. We will open a fourth store at the Santan Village in Metro Phoenix in September. Stores can play a key role in driving new customer acquisition as we continue to diversify our marketing platforms, and they demonstrate the power a retail presence has in driving digital sales, omni-channel loyalty, and spending. For example, we continue to experience a double-digit differential in our San Diego e-commerce business relative to the rest of the country since that store opened. We look forward to the impact of more stores in the future. On the product front, we continue to build customer excitement and engagement through collaborations like Disney, Harry Potter, Hello Kitty, and the World Surf League, partnering with key influencers, offering themed collections centered around key events like Shark Week, and the launch of our Demi-Find collection featuring 18-karat gold plating, sterling silver, and natural stones. Looking to the balance of the year and even into next year, we are planning for the macro environment to remain challenging. And despite the strength in Pura Vida's store business and opportunity for new store openings, we expect it to take time to return Pura Vida's e-commerce business to growth as rebuilding and transforming the marketing program is underway. We are taking critical actions that will further strengthen both core brands and our company as a whole, not only to successfully manage through this period, but to position us for the future. Our teams are focused and our cash position and balance sheet remains strong. We have successfully managed through challenging business cycles before, and I am confident that we will manage through this period as well. We will look forward to returning both brands to steady growth. Now let me turn the call over to John to review the financial results. John?