Vera Bradley, Inc.

Good day, and welcome to the Vera Bradley Third Quarter Fiscal 2024 Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mark DeLye, 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 our sponsored 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'll now turn the call over to Vera Bradley's CEO, Jackie Ardrey. Jackie?

Thank you, Mark. Good morning, and thank you for joining us on today's call. Our efforts continue on project restoration as our associates across the company work together to position Vera Bradley, Inc. for long-term profitable growth. We are very pleased with the meaningful progress we have made so far. Year over year, third quarter non-GAAP income was essentially flat as we delivered solid gross margin expansion and carefully managed our expenses despite sales challenges. Total third quarter revenues for the Vera Bradley brand decreased 5% from last year. Vera Bradley direct revenue declines primarily resulted from continued weakness in the outlet store channel and the impact of store closures. Year-over-year Vera Bradley indirect revenues were up to last year. Pura Vida year-over-year sales decreased 18.3%, with declines in both wholesale and e-commerce revenues, as prior year sales were driven by meaningfully higher levels of marketing spend, along with increased liquidation and clearance activity. Store sales remained strong. With our diligent expense management and focus on profitability, Pura Vida year-over-year third quarter operating income improved. At both brands, customers have responded to our latest iconic product collaborations and to our new innovative and on-trend product offerings, even as they have been more careful with their discretionary spending in the current macro environment. We continue to diligently manage our debt-free balance sheet, adding to our year-over-year cash position while strategically lowering our inventory levels. Strength in this area is important in navigating an uncertain retail environment as well as in supporting our project restoration initiatives. Presently, we are taking targeted and prudent actions to stabilize revenues, and we remain focused on strong financial discipline and controlling what we can control as we react both strategically and tactically to current market conditions. Simultaneously, We have made meaningful progress and are right on track with our long-term strategic plan project restoration, focusing on four key pillars of the business for each brand, consumer, brand, product, and channel. We believe execution of product restoration will drive long-term profitable growth and deliver value to our shareholders. Let me give you an update on some of the initiatives we have underway related to project restoration. We will have additional updates in conjunction with our year-end earnings call with more rollout details in June. At Vera Bradley, for the consumer, we are focusing on restoring brand relevancy, targeting casual and feminine 35- to 54-year-old women who place prime importance on both fashion and function. We've created a multi-year customer file growth plan with a focus on this core consumer target along with an appropriate level of marketing investment to acquire new customers as we launch new product and our refreshed brand vision next year. Our consumer research focused on this target audience, and we placed importance on her needs to inform product design and development. For the brand, we are working to strategically market our distinctive and unique position as a feminine, fashionable brand that connects with consumers on a deep emotional level. Our marketing efforts this year have increased the number of reactivated customers. We are continuing to shift our focus from channel-specific customer acquisition to an omni-channel perspective for increased media effectiveness. Our updated brand vision and marketing strategy will roll out in the middle of next year. For the product, we are refocusing on core categories and items we are best at by continually innovating and expanding within our core products like travel and back to campus. By mid-next year, you will see how we have elevated our colorful feminine heritage, keeping it distinctive but more trend relevant through updated print and design. And we will continue to enter into strategic adjacent lifestyle item introductions that make sense for our customers. Our performance fabrics, featherweight, performance twill, reactive, and ultralight continue to trend well, appealing to our younger core customer with a higher household income. We believe performance fabrics are a big opportunity for us. Patterns will always be our signature, but coordinating solids continue to be a key opportunity for us as well. We have and will continue to expand our solid offerings. As part of this, our revamped leather collection of bags, wallets, and wristlets and other accessories debuted in September. The simple clean lines, beautiful designs, and exceptional functionality have been well received by our customers. and we expect to expand our collection going forward. Customers purchasing leather spent seven times more than their full-price purchasing counterparts in the third quarter. Product collaborations will always be an important part of our brand expression. We continue to see strong response from Disney to Hello Kitty to Peanuts to our most recently launched Toy Story collection. Stay tuned for more exciting collaborations next year. We are especially thrilled about our NFL collection introduced in August. We will expand to all NFL teams in fiscal 2025. For the holidays, we have a great gift-giving lineup of products featuring fan favorites and uniquely giftable items, from bags to ornaments to our cozy collection, all at sharp price points. Holiday gifts also incorporate items from our favorite collaborations, including Hello Kitty, Peanuts, Disney, Toy Story, and Star Wars. For the channel, we are accelerating our digital first focus and online presence, building a more balanced store footprint, and clearly differentiating the full line assortment from our outlet assortment. We are also focused on improving full line store profitability and have future growth plans for this channel, including remodels for existing stores in the first half of next year, as well as the development of new formats. In addition, we are targeting relationships with strategically aligned wholesale partners. As part of this, our recent site rebranding and navigation changes have been successful in reducing bounce rate and driving conversion and sales. We will apply what we've learned from these changes to a full site rebrand in the middle of next year. We have taken steps via product marketing and expense discipline to improve the profitability of our full-line stores. We are in the process of identifying prudent, modest store expansion plans for next year and beyond. We also are taking a comprehensive approach to addressing the trends in Vera Bradley's outlet channel through a thorough, multi-pronged approach, including targeted marketing tactics designed to drive traffic and conversion, pricing adjustments and testing, and store contests. Now turning to Pura Vida. For the consumer, we are sharpening our focus on young women aged 18 to 24, the original target audience of the brand. For the brand, we have recentered our brand philosophy on living life to the fullest. We have pivoted our marketing to authentically share real moments, places, and faces of our customers and enthusiasts. We are more analytical, using our newly implemented comprehensive customer data platform to more strategically target customers and potential customers with a keen focus on both customer acquisition and retention. Our recent live-free and college mobile tours were huge successes for customer engagement. For the product, we are focusing on delivering unique, fun, playful designs that are affordable and accessible with a key emphasis on bracelets and jewelry, as well as other strategic adjacent categories. Innovation and newness are working. Our custom bracelets, from Harper charms to engravable items to building your own bracelets, are popular and continue to be a big growth opportunity. We will continue to pursue high profile collaborations like Hello Kitty, Shark Week, and Harry Potter, which are always fan favorites and bring new customers to the brand. We recently expanded our men's collection. This collection still targets our core customer who purchases these items for the men in her life. Holiday gifting is a huge opportunity for us, and our offerings include special holiday bracelet packs, collectible ornaments, holiday-themed Harper's Charms, and our very popular Advent boxes. Social responsibility is important to the Pura Vida customer, and we support this through our charity program, which supports a number of charities, including Mental Health Awareness, Homes for Our Troops, Best Friends Animal Society, and The Trevor Project. For the channel, we have a strong focus on driving e-commerce growth and strategic expansion of wholesale by pursuing bigger, more strategic partnerships and expanding larger existing accounts. Also, we are beginning to refine and develop an expansion plan for our existing store model. Based on the success of our existing Pura Vida stores, we are in the process of identifying a handful of new Pura Vida store locations for 2024. We will have firmer plans to announce in March on our year-end call. To gain both operational and strategic efficiency, We moved the Pura Vida store operations under the Vera Bradley team earlier this year. We are taking actions to stabilize and then steadily grow Pura Vida's revenues and to reverse the trends in Vera Bradley's outlet channel. Our team is focused on driving long-term revenue growth, improving gross margin, and ensuring strong financial discipline and cost control, all of which we expect will drive long-term profitable growth. Now, let me turn the call over to CFO Michael Schwindel to review the financial results. Michael?