Vera Bradley, Inc.

Greetings. Welcome to Vera Bradley's third quarter fiscal 2026 earnings conference call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone today should require operator assistance, please press star zero from your telephone keypad. Please note that today's conference is being recorded. At this time, I'll turn the conference over to Mark Delay, Chief Administrative Officer. Mark, you may now begin.

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 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 Form 10-K filed with the SEC for 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 Executive Chairman, Ian Bickley. Ian?

Ian Bickley Good morning, everyone. And thank you for joining us for Vera Bradley's third quarter fiscal 2026 earnings call. It has now been five months since I took on the executive chairman role. And I want to update you on our continued progress in reinvigorating and reimagining this iconic brand. I remain confident that with the right focus, effort, and execution, we have a tremendous opportunity to increase market share and return the business to growth. by reengaging our loyal customer base while also expanding our reach and relevance to new customer segments. Over the past quarter, we have remained focused on refining and implementing the five strategic pillars and actions that are fundamental to our transformation. As shared previously, we have been addressing past missteps with urgency and implementing comprehensive changes across the business and organization. On today's call, I will first provide an update on our continued progress across these five strategic transformation initiatives. I will then briefly discuss our third quarter results. I will then ask Marty to provide a more detailed financial review of our third quarter performance, and we will wrap up with time to answer any questions you might have. Before I begin, I want to take a moment to recognize and personally thank the entire Vera Bradley team for their exceptional commitment and resilience. during this pivotal transformation. Through their adaptability, creativity and relentless focus on excellence, I am confident that as we continue this journey together, our collective expertise and passion will deliver the results our customers, shareholders and communities expect from Vera Bradley. And we are off to a promising start. Importantly, We have now branded the work of our Strategy and Transformation Committee and our five strategic pillars as Project Sunshine, anchoring on reclaiming Vera Bradley's joyful optimism while fueling operational excellence. Project Sunshine has been successfully cascaded to our entire organization, and we are galvanized as a team around these mission critical objectives at every level. First, we are sharpening our brand focus leveraging our joyful and authentic brand DNA through innovative product relevance and storytelling to reconnect with our loyal customers while engaging new audiences, ensuring consistent messaging across all consumer touchpoints. Second, we are resetting our go-to-market approach by transforming our product, planning, promotional, and inventory decisions through data-led insights to create more productive assortments supported by integrated marketing. Third, we are rewiring our digital ecosystem to optimize performance across all digital touchpoints, from social media and VB.com to our outlet online presence and emerging social commerce platforms, ensuring clear brand identity and channel roles supported by cohesive storytelling for customer acquisition and retention. Fourth, implementing Outlet 2.0 under the umbrella of a broader reinvention of our physical retail to develop a more brand-enhancing and productive outlet experience, given the importance of this channel to our business. This aligns with our efforts to create cohesive customer experiences across all digital and brick-and-mortar channels. And finally, we are reimagining how we work, by building critical new capabilities and aligning our organizational structure, operating model, and culture for sustainable future growth. Before diving into our progress on each of these five transformation initiatives, I would like to briefly discuss our results. For the third quarter, we registered revenues of $62.3 million, 11.7% below prior year. This compared to a 24.6% decline during the second quarter. Revenues in our direct business segment were $49.7 million, 5.3% below prior year, compared to a decline of 16.2% in the second quarter. Importantly, we achieved sequential improvement in our key metrics in nearly all direct segment channels, highlighted by positive comparable channel sales in our brand channels, that have been product-led and have continued for five months, extending from back to school through the Black Friday weekend. Additionally, we are making progress on improving profitability and cash management through more disciplined pricing and promotional strategies. In summary, while we recognize there's still significant work ahead, these early wins in our direct segment give us confidence that our focused approach to product innovation, brand storytelling and operational excellence is moving Vera Bradley in the right direction. We remain committed to building upon this foundation as we continue executing our transformation strategy. Now, let me dive a little deeper into each of these five transformation initiatives, the progress we have made and the impact it is already having on our business. Strategic initiative number one, sharpening our brand focus. As we continue our Project Sunshine transformation, we are fundamentally reshaping how Vera Bradley operates. We lost track of what made Vera Bradley special and unique and what customers loved about us. We became indistinguishable from other brands and over-reliant on promotions with an aging customer base. We are now moving to recapture our joyful, authentic DNA that our customers love while attracting new generations through innovative products and compelling storytelling. As we continue to sharpen our brand focus, we've developed new brand guidelines that are both modern and authentic to who we are. We are being intentional about what Vera Bradley represents. We are feminine, creative, cheerful, whimsical, Joyful, fun, colorful, approachable, high quality, and smart value. Equally important is what we are not. We are not trying to be luxury, high fashion, or sophisticated in ways that make us seem exclusive, intimidating, or too expensive to our customers. This clarity in our brand identity is helping us reinforce the unique and differentiated positioning that made us successful to begin with. and sharpen how we show up and communicate with consumers. We need to stay true to the joyful, functional, and accessible brand that our customers fell in love with, while ensuring we remain relevant and compelling to new generations. This brand clarity has already been informing our product development, marketing campaigns, and customer experience across all touchpoints. And we believe this authentic approach will help us reconnect with our core customers while attracting new ones who are seeking the joy and optimism that only Vera Bradley can deliver. This is the market white space that only Vera Bradley can own. As we continue to execute our Project Sunshine strategy, we remain focused on what our customers truly value about Vera Bradley. Our research confirms that customers are drawn to three core pillars. that define our brand promise. First is joyful functionality, the thoughtful organization, lightweight materials, and practical designs that make daily life and travel easier for our customers. Second is our distinctive patterns and color palette, those signature prints and border iconography that allow our customers to express their individuality and optimism in ways that no other brand can deliver. And third is smart value, providing high perceived quality at an attainable price point. This is not just about promotional pricing, but about making our customers feel smart about the investment they are making. As we continue our transformation journey through Project Sunshine, I want to emphasize how our approach differs fundamentally from our previous project restoration initiative. We are building from our DNA, not rebranding. leaning into Vera Bradley's distinctive heritage in cotton, color, prints, joy, and craft rather than trying to emulate other brands. This time, we are focusing on both new and existing customers, engaging them through lifestyle and needs rather than trying to grow only with new customers and moving loyal shoppers to outlet channels. Our strategy is focused on a realistic, disciplined, and sustainable build rather than an overnight turnaround. Most importantly, we are carefully integrating data and insights into every decision, from product development and pricing to storytelling, using results and customer understanding to drive our decisions. We are also fundamentally changing how we work, with clearer roles, cross-functional alignment, and shared incentive designed for peak performance. This disciplined, customer-centric approach gives us confidence that we are building the foundation for sustainable, profitable growth while staying true to what makes Vera Bradley special. Beginning with product, which has been our primary focus to date, I'm pleased to report that we continue to see momentum in several areas that give us confidence that Project Sunshine is moving in the right direction. Building on the success of our back to school business, highlighted by product wins across iconic backpacks and lunch bags, Q3 results were positively impacted by the return of additional iconic styles and proven heritage-inspired prints and border iconography, including the Vera tote and Glenna satchel, the original 100 bag, and our patchwork Rachel ditzy and mistletoe lattice prints. Our refocused investment in cotton was also a key driver of performance during Q3. Our shift to a social-first marketing approach is also delivering measurable results. driving new customer acquisition on VB.com while significantly expanding our social media reach. We're thrilled that our initial orders of the original 100 bag sold through across the majority of SKUs. At the same time, our social campaign, including the New York City Rockettes, drove new consumers to purchase on VB.com. The 100 bag is also attracting a younger customer, achieving more than twice the penetration of Gen Z customers than we currently have across the business on other products. Our collaboration with Anthropologie also garnered significant social media impressions and the customer response to the product demonstrates our ability to reach new customer segments and has fueled additional collaboration plans for spring summer and fall winter of 26. For spring summer 26, We have made a larger commitment on the original hundred bag with more depth and exciting new prints and colors. In addition to relaunching the iconic Hathaway tote that can be reversed inside out, bringing joy to our customer with value added design and delightful function. It comes in three sizes, including a cross body. These products will be supported by strong integrated marketing. So far, the feedback from our teams and key wholesale accounts has been very encouraging. Next up, resetting our go-to-market approach. As part of our comprehensive Project Sunshine transformation, we are fundamentally updating our go-to-market approach to deliver what our customers truly need and value. We are taking action across six critical areas. First, we're rationalizing our SKU count and making bigger commitments focused on hero styles that resonate with our consumers. Second, we're clarifying our go-to-market process and channel assortment strategy to ensure the right products reach the right customers through the right channels. Third, we're implementing integrated social first marketing to support our hero styles, building on the success we've seen with campaigns like our back-to-school initiative with a joyful and nostalgic tone. Fourth, we're revamping our inventory management and planning capabilities to improve turns and reduce excess stock. Fifth, we're driving pricing and promotion governance to protect margins while delivering smart value to our customers. And finally, we're building robust analytics and business intelligence capabilities to inform data-driven decisions. This represents a complete rebuilding of the engine that turns our creativity into commercial results. And we are already seeing early positive indicators from these efforts in our sequential quarterly improvements and enhanced operational discipline. Next, rewiring our digital ecosystem. We are aligning our digital ecosystem to drive growth and meet our customers where they shop. While digital is already a significant part of Vera Bradley's revenue and profitability, it should operate as an interconnected flywheel, with each channel fueling momentum for the next, while also helping to create a seamless customer experience. A well-connected ecosystem builds exponential value, and each campaign interaction and conversion adds to the flywheel. The goal is to create a connected experience powered by shared data, unified storytelling, and coordinated execution. We see this as mission critical for our transformation and are investing the necessary capabilities and resources to bring this to light. Now, Outlet 2.0. As part of our comprehensive Project Sunshine transformation, we are making considerable progress on our Outlet 2.0 initiative, which represents a fundamental shift in how we approach our outlet channel strategy. Building on the pilot program we launched during the holiday season, Outlet 2.0 is designed to elevate customer experience while maintaining our smart value proposition. The enhancements include a curated, more focused assortment with an initial 35% SKU reduction, strategically adding new brand product from our heritage and select IP collections. We have introduced elevated visual merchandising elements, including mannequins, light boxes, and brand fixtures that hero our signature color, pattern, and lifestyle stories. Additionally, we have refreshed our marketing elements, with lifestyle imagery and product storytelling infused with the color and femininity that defines Vera Bradley. Our enhanced selling experience incorporates updated training, improved in-store tools, and personalized selling spaces designed to add on sales. We are taking a disciplined test and learn approach with ongoing results tracking from our Q4 learnings, informing our future rollout strategy. This transformation moves us from a discount-focused model to a smart value curated experience that reinforces brand equity while driving conversion and profitability. Reimagining how we work. As part of our fifth strategic initiative under Project Sunshine, we are fundamentally reimagining how we work to build the agile, responsive organization needed to capitalize on Vera Bradley's iconic brand positioning. We're shifting from what I call a relay race mentality, where work is passed between functional silos, to operating like a crew team, where every function moves in rhythm toward the same goal. This transformation involves reimagining our organizational design and operating model, evaluating key processes to unlock efficiencies and simplify work, and ensuring we have the right skills, capabilities, and roles in place to support our key growth initiatives and new processes. We're not just talking about efficiency improvements. We're building the foundational capabilities that will enable us to move faster, make better decisions, and execute with the precision that our customers and shareholders expect. This organizational evolution is critical to our success, and through Project Sunshine, we're actively engaging our entire organization along this journey. to ensure we have the collective expertise and passion needed to deliver sustainable results. We are pleased with the progress we are making with Project Sunshine and expect the cumulative impact of these initiatives to continue to positively impact the momentum of our business going forward. To sum up, we're refocusing the brand on our heritage of joy, color, and authentic connection through innovative products and compelling storytelling that resonates with both our loyal customers and new generations of consumers. We've deepened our customer understanding through enhanced research, segmentation, and our new customer intimacy program, which is already informing our product development and marketing strategies. Our commitment to reducing discounts while protecting margin continues to show progress as we've improved inventory terms, streamlined our SKU count, and enhanced our planning and forecasting capabilities all while shifting to a smart value positioning anchored in quality rather than constant promotions. We are removing organizational silos by redesigning our processes and leveraging data to drive actionable insights for decision-making across all functions. Additionally, we're driving a more sustainable business model by leveraging technology to improve efficiency, reduce manual tasks, and increase our agility to address the changing market landscapes. Throughout this transformation, our unwavering focus remains on profitability, cash generation, and building a sustainable cost structure that supports our long-term growth objectives. These foundational improvements are already contributing to sequential improvements we've seen across our channels, and we remain confident these five strategic pillars represent a holistic transformation that builds on our distinctive brand heritage while positioning Vera Bradley for long-term success in an evolving retail landscape. And finally, I would like to update you on our CEO search. We continue to be focused on finding the right future leader for Vera Bradley. It's a critical decision for the business that we want to get right. While we do not have any updates currently, we are moving forward rapidly with Project Sunshine and shoring up key leadership positions across the business including the recent appointment of our Chief Brand Officer. With that, I will turn the call over to Marty for a detailed financial review, and then we'll be happy to take your questions.