Vera Bradley, Inc.

Welcome to Vera Bradley's second quarter fiscal 2027 earnings conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll turn the conference over to Dan Ross, General Counsel. Thank you, Dan. You may begin.

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 and the company's most recent Form 10-K, Good morning, everyone, and thank you for joining us for Vera Bradley's second quarter fiscal 2027 earnings call.

This was another strong quarter for us. We continued to build operational excellence across the business while making significant progress on our Project Sunshine transformation journey. This marked our second consecutive quarter of overall growth, with total revenue up 1.1% versus the prior year, an important continuation of the trajectory we discussed last quarter. While the pace of growth was more modest than the nearly 8% we delivered last quarter, the underlying health of the business continued to strengthen across our direct channels, our margin structure, and our balance sheet. That combination of continued top-line progress alongside real improvement in the fundamentals of the business is exactly what we set out to build when we launched this transformation. and I want to walk you through why we remain confident in the path forward. Like the first quarter, our second quarter performance was not solely a top line story. Gross margin expanded more than 40 basis points year over year, improvement that excludes refunds recognized in the quarter, which Marty will cover in more detail. That margin expansion was driven by several factors, continued success in our product assortment work and intensified marketing strategy anchored on cohesive social first brand storytelling and enhanced planning and inventory management and disciplined pricing and promotion governance. Together, these enabled us to further work down non-go-forward project restoration inventory while still improving our overall gross margin rate. We continued to manage our balance sheet and liquidity, with discipline. Inventory ended the quarter down 28% compared to the second quarter last year, and we generated $23 million of operating cash flow in the period of $28 million from the last year.