Vera Bradley (VRA) 8 Jun 222023 Q1 Earnings call transcript

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Vera Bradley First Quarter Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the call over to Mark Dely, Vera Bradley's Chief Administrative Officer. ahead. go Please

welcome, joining and like thank to Good for everyone. today's for us call. you morning, We'd

undertake those Some of statements the press the and in Investors statements Please call of the as release of made known to statements results uncertainties not during and our Wallstrom. later provisions obligation that harbor your recent and over today's discussion the the discussed We of now may operative information the to will any I cause uncertainties. actual and safe of the in Rob a response the should Securities call turn Form prepared Litigation forward-looking are with questions constitute risks XX-K pursuant during forward-looking made filed today's Private within the meaning update to risks remarks CEO, Reform XXXX Rob? Act expect. remain on subject Bradley's at unknown a statements assume differ that most materially from to to for Such refer SEC amended. call. to we to both that Vera known will no could and company's time. made

and call. morning, also Good for Mark. on you today's you, Thank me today. us John joining CFO, our Enwright, thank joins

maintaining price and While while share balance expectations per innovation, controlled $X.XX diluted total million and which $XX.X loss million drive pressures, a completed product company our to certain first implementation $XX.X of continue helped and charges of sourcing share, debt-free our quarter fell resulted of net below increases, revenues expenses offset repurchases, of to sheet. continued before in strong logistics a we

engaged channel our year spent spending more remained last in bifurcation household Bradley, At a with year. than above last as seeing clearly were revenues Vera the incomes customer higher of and full-line base. customers are We Direct

in saw revenues. Indirect year-over-year also channel We healthy rebound a

factory below of household Bradley inflationary However, particularly customers impacted -- spending prices, incomes including our XX,XXX quarter. as Vera spending for traffic including gas and as Direct the the Vera in rate stores channel pressures, well with rising Bradley

Vida's addition, affected digital media e-commerce significantly be effectiveness the Pura in to and In shift revenues digital and rising media social continue costs. by

balance the and core to the decisive basis, On efficiency remain we a highly strengthen our and enterprise are we on actions the taking focused process. For comprehensive brands. midst a the are year, reduction cost of X company-wide of in

to we savings realize and expect the quarter, will complete of and implementation we range we will reductions continue in We annualized identification in the $XX anticipate million. $XX million the cost of second

to to evaluate increases and raw strategic execute both and We continuing cost for are brands appropriate. material price also freight offset as rising

including increasing fundamentally price is strong might customers, the in recall, we although brand prices we income increases quarter At macro through have our some of Vera core issues, and Bradley chain in began supply been strategy. last gas skyrocketing costs, you The from rapidly brand, in As recessionary spending fighting we marketing increases year. confident remain costs. taking household fourth the digital exponential lower

focus laser build are lifestyle by marketing. merchandising core targeted We on innovate a with protecting on to our and continuing the strategy amplified

category, strategic with are to product optimizing back assortment upcoming which We the travel our back-to-campus very maximizing levels is important season pre-pandemic enhancements. and nearly

Coleman collaborations course, iconic with like quarter, just like Tupperware. partnerships Target we continuing successful names with are product and we second introduced Of Wars, have Disney. the and And Star

this Untuckit Pura entire Griffin full marketing with we will channels to Pura and omnichannel to thinking a Vida is but marketing and base. most growth. Vida's developing boutique assortment potential the recently direct-to-consumer strengthen great consulting miles on business organization. Paul about marketing data slip she held lifestyle Vida's running develop Officer, as as Vera marketing, past our brand. key only more expansion marketing take not and that our platform. cloud team creative expanding is role, sales holiday focus and brand season. explore, e-commerce and analytics make firm a model deep drive She time, to ons from to return building analytics are and this one background largely will effective has Pura Thall retail, to home Working and strategy, expertise Lockie has diversified and years. This a who At footwear actions adding Lockie data distribution. Vida, and will will work digital franchise marketing, thrilled and performance she business one true our has over innovative, evolving the to the a responsibility fall initiatives, and our joined dependent channels Andrews taking Pura sales instrumental co-founder, category are primary technology with Bradley We are as Chief merchandising initiatives performance-based more and on bolstering transformation a for in City and digital Vida, talent In our and and with across Her XX addition Party newly internal Pura and be by a growth but created we and Growth time. post with unique in for the program well and these a and this all perspective, and at Goodman, will monitor the digital digital a she happen marketing e-commerce

San relative continues our sales, building we the Pura retail a driving of year, first Diego a country Diego of the Diego the success We X to San in are of opening the presence this about since power business spending. exceed excited Vida locations experience store store opened, differential has store demonstrating and and double-digit e-commerce summer. opening to omnichannel expectations, in in additional store our on rest retail loyalty our San the to continue digital very last The

So we store are very growth. excited about additional

in Orange Carolina July Beach, in and in Irvine County, market stores Phoenix We to even balance online Spectrum in will the we growth as acquisition growth new in of forward and in to key growth channels. driving customer look role California be a in Pura in will store diversify future. growth area physical Myrtle tourist We high play continue the will platforms. and in open our South Vida's September. more the distribution Pura a Stores of Vida marketing future

same also with Pura engagement Vida customer partnering Surfing Shark We to influencers Disney, will around collections upcoming World like continue and collaborations Week. centered build excitement Hello and key League, through events the Kitty like key offering and

financial turn me let the John? Now results. to call John to review the over

morning. good and Rob, Thanks,

I go for all are will Let highlights first a the non-GAAP. today few The me discuss over quarter. numbers

last segment million, revenues prior decrease $XX.X in of Indirect to $XX.X or complete non-GAAP the quarter. Pura a year quarter. $XX.X sales the to from million of XX.X% $X.X totaled first Consolidated from non-GAAP excluded a year. in segment segment $XX.X prior numbers, compared Bradley million consolidated per $XX.X the in year quarter. million loss as numbers today's $XX X.X% totaled as revenues totaled a a Vida XX.X% items reference $X.XX $XXX.X detail to Bradley last diluted reconciliation net Vera revenues million $XX.X from increase release. million decrease or totaled For compared first first of totaled please prior the press well from the million Vera GAAP loss year. million $X.X The Direct share diluted Comparable revenues over net million million declined or share per year. in XX.X% to $X.XX

by negatively last or rate million First The was gross current XX.X% Consolidated or $XX.X million year. of SG&A inbound current outbound XX.X% million to year the XX.X% year. quarter increases. revenues to consolidated compared totaled net profit offset and trade expense higher impacted partially $XX.X price or last compared or totaled XX.X% million expense, quarter for $XX.X $XX.X by

quarter first of X% or in to totaled or the of revenues loss compared prior consolidated operating The X.X% revenues net net $X.X million million $X.X year.

of position Cash, sheet. totaled strong balance quarter-end. XX, no debt-free our We facility on at equivalents XXXX, the to cash a year's compared sheet. We $XX April credit last as remain million cash to had of turn borrowings quarter. at let's the a with million in and million $XX.X end balance ABL $XX first investments Now

will was year. Total in challenging management, at We first to to million the $XXX.X a expense take and particularly disciplined inventory compared volatile of environment. approach quarter last continue million to end through cash $XXX.X the quarter-end conservative the

During an average approximately at million we $XX.X repurchase of price authorization. repurchased stock, representing quarter, million shares remains $XX.X the X.X of available million our $XX $X.XX. common million the under

fiscal Now let's outlook. shift to shift -- to let's our our XXXX

the e-commerce guidance business that will of balance to environment the turn As and numbers have non-GAAP. take it time for period discuss All the I year a the fiscal challenging are expect outlook lowered our year. continue growth, to we to we for forward-looking that macroeconomic will

million $XXX in of fiscal XXXX. $XXX.X we fiscal expect million revenues net consolidated compared For $XXX to million XXXX, to

from is primarily should from last consolidated to offset our increase We to initiatives SG&A XX% related price $XXX expected $XXX Consolidated increases, compensation expense. year. fiscal expect SG&A to XXXX. marketing range due reduction is partially from incremental in will year. The freight to to expense million expense compared sales expense, XX.X% being million million last gross range year-over-year The reduction related by cost margin potential decline a by variable compared $XXX.X expenses and to in and driven the reduction in other XX.X%

prior million total diluted consolidated compared $X.XX spending to $X.X questions. last million year. $X.XX in compared approximately will to the Net $X.XX to up open year. Operator, expect now the we should to EPS We $XX capital million to of $XX call

Chen from question Our will come Instructions] Oliver Cowen. [Operator with first

could on where better channel business Oliver areas health. others? on With And increases, are price some the of additional there category? for of you Tom are are regard occurring prices consumer on to taking that provide some across couple Nash both color than questions and these Chen. A

Yes.

be about it as all with accepting talk level but in And that consumers consumer. seeing we've had it unlimited acceptance. brand. the In the price it across we've increased price looking At those acceptance of not item really of at Vera targeted Pura we're first though the because Vida, that good they've seems increases been a price nearly terms what is of maybe to from And Bradley, by product of our of prices, At increases an more diversity by there. the assortment increases, are it, that categories.

overall, customer spending overall seem income more to activity, the and by what's promotional be the But at activity they is is necessary been move and we acceptance, the that having looking obviously, earlier, been high-income very even the not seen, about say, targeted to So very just we'll that at as different But to have evaluate I reaction, look necessarily be to But we continue disciplined by we it's accepting is we higher more found pullback increases. continue what not their for and from promotional and a would the really that customer. prices as interesting forward. talked channel. customer we're lower-income price

And Okay. possibilities here, the love chain inventory overall Great. I'd a peak business view does hear promotional summer. through on your across additionally, if to on we And thoughts management disruptions. inflation follow-up supply channel? the and categories reach how

I potentially delivered. We're better All going not -- kind inventory we guidance, being our year on -- chain. reduction, our the we can disruptions that margin position at gross chain, the question. our throughout extending inventory were a this level we be supply year. we that that should said, with expectation, are back given better of better to delivery, as during I’m our inventory to expectation be sales on expect In regards and year, good promotionality, is. product in be a will assess last summertime. to regards to we as than kind but year, the based we position to of our inventory inventory forward expect In not on-time we in of say, where with the change -- the in that and even -- continue looking throughout in some to promotionality the levels throughout about we'll our to think given continue supply later when original see the current take cutting And pre-pandemic summer to rest of purchases

Can detail and enhancements Vida. And any the regarding helpful. marketing very platform some Vera platform? the Bradley be available question from X Pura that strategies the final might provide you for additional synergies on That's

Yes. Great question.

step. First was of all, a critical bringing Lockie in

class. been Vida kind Vera really the an But acquisition bringing word as best brought platform the over going you've Vida has story is whole our become social we and brought few analytics in, path the years, at change, Lockie much really similar that What customer for obviously by rebuilt basically leveraging data Daren -- of a Pura that's who team media less if us platforms extraordinary forward. in, effective. down we're moved really done and this we're of If ago, years Pura of the kind the Bradley with job doing the of marketing following channel in whole a Hull is

acquisition so we're what marketing, doing avenue data in out and stores building but for thinking different out now but tribe, starting importance even stores Griff also from leading of the that out so companies of for will a a And to the of the is, the energy what also more the platform, performance is then just lot then really is lower . our it's initiative be using part heavier, the also channels, and both And critical. with underway not building Pura speak. we're direct-to-consumer of our thing And influencer the business looking releveraging Vida, expand that leveraging we're another other seeing influencer put influencer marketing data, really as really is and marketing kind the AOVs with at well about the time into to as because first-party in it's

next And Eric from will Research. SCC question Beder come with our

about How quite guess, the far and things them on with little you limit in collaborations Vida you've also has obviously I Vera both you collaboration. been expensive the being kind Could for Bradley? a do where and been innovative a little of how with want talk of is, take recent collaborations a for to forward going Pura you Tupperware very-- terms -- the like more bit

a we're really through partnerships, success discovers which Wars about Disney and customer our who expanding Star new inside that really customers it partnership partnerships, excitement new a Vera doing tribe customers, Bradley reaching that doing is And customer couple brings we in is really find Vida. our of years, that and and acquisition, our a through had of Harry Potter partnerships the we Pura lot to last collaboration recently out One, the think the new of over our great. brands, most we've

Coleman brand, It into the that new you're space it a business. kind in-cap gets But pattern a opportunity, the right, of some right think Target, I as to great in in it's about of being to a see customers outdoor brand thinking new Target. the people think join. we about as of a and see this moving like it's the might to things not be Tupperware customers well love that us as thinking about way way the that and new and from to bag get into brand lot love

to more think for So that balance be. And would keep don't exciting. around continue been continue we would have probably partnerships the keep and unique collaborations we look probably we think level I to is more. fresh of that, I to continue new, to we've it doing that want to we'll to do where say it and

in find to is we've had ones. with launched and very think brands good excited both more powerful very trick ones and been the the far we've responses. have customer But continuing I more so

about and of look little Pura opportunities you at a start X How like. year that that about back-to-campus in big that's season we doing -- supply didn't focused mentioned and weeks. going the were we news season, you to to materialize -- be that's for in should last there a what When sure great bit and for some chain forward going in I'm obviously, of Okay. terms season Vida, X you we thinking guys flows because

coming -- back-to-campus Yes. the season definitely on think No, very we're up. hopeful I back the

in to the say, last about we happening year, media. COVID, school, noise still of that lot going the was If all a was you out stuff back there around think people shall

having of chain between back a some year. disruptions, singular into with this maybe there's having school, to focus we lack think getting move So we some kids as supply opportunity

to than position have school. spend and back Our customer inventories are go will we're anticipating last in open that better year, overall were they the much as more they to

the TV, feel go. think Vera We up customers then doing -- new year we'll start we to ready to our like really we So and into kind back-to-campus is business. and that hopeful. this leveraging of a bring we're way we're streaming it's are Bradley what set now And to

And last Great. question.

mix, thinking outlets out than In Bradley are may and that more more store the kind you is the mix be full and with terms stores. that we in outlet stores amount full-price where should of been Vera there about the What where store of -- should and shrinking for the now you've side of store Vera mix obviously stores base, product be kind Bradley? the price correct of is of

Yes.

that to to believe pressure a factory Particularly, very channel for an and Obviously, think from forward, and both with I us, that At for estate standpoint. do think it's profitability an think both. X think our now, us. I you we channel. look experimentation we opportunities. the same going cyclical the formats channel about brick-and-mortar what a ways In business, is full-line approach, continue will e-commerce our our in that full terms plays about innovating and look that have we store omnichannel line think we role think line the term, it's important on acquisition to. right, We mix, channel customers there. business mix And gas things But long volume are, time, think within good stores, right we there's as prices, different between look portfolio mix, the continuing that an at important a of been important we to where new think of opportunities continue as full is at our we'll continue see you'll of at and see us I I real and

to strategy. full So continue the of kind on price the we balance that focus with our channel we'll factory expect e-commerce/brick-and-mortar

Joe question will from next Capital. Gomes Noble And with come our

how income been some that the Any on customers data time? over mentioned household overall makes percentage you of that what question, shifting $XX,XXX, first we're under And difficulty The group your seeing up? there. has

A started we've couple over been focusing things. customer of -- spend last is that years, group. to as on average was that XX-year-old of that when in customer, And X kind our the in Vera Yes. One, out traditional income coming to about Bradley customer, brand. new customer really XX- it's It of XX% bringing into the in of bring group than base. we the lower our in younger customers household continued we've the customer bringing

we've age. to but it's So grows the slightly, that really group due seen

customer to that acquiring brand. think health is So experiencing, long-term category The and that we brand we go having that our a our term. obviously, stronger that age that brand, attracted cyclical one it's of do database to and think is we're change the and really again, long the painful through. the But population will believe important cyclical the will pressure make in over to we

you Okay. about And initiatives. cost mentioned then reduction the

hope identify little $XX by see cost you'll you when a those I here do to savings you come million them start reductions when of end $XX to be more the color think think will of And implemented? said you this to million Maybe on quarter. think the you through?

more bringing income customer call recession. the for structure, the household It's down some a have cost lower overall we we're that out. And important. the really cost in a really is structure what we feel I'll figure is all, that with And what take while, structural to if to already cost great scrub this of question. doing a in a the of being top-to-bottom potentially continues already first out economy But begun

next kind a clarity time And both to work them have even to wanted been improvement to one short-term involved look the the a to the more bit as begin longer. push knew We're we of to take well cost was that lot of underway. might months implement begin we'll So of make take take more in I'll identifying doing process little that as of that call, of a as long-term, work we'll what call, but bit might that to we're on now. that those But all actions sure at everybody now little even reductions we've midst the the continue already. we'll

Yes.

structure that last million -- a that on million, $XX through all next to as I SG&A we'll million the to you $XX bit -- And get $XX will this think for the would we of will point range think the ultimately, to and fourth but of quarter want of second, able give of point about to benefit, that that be some this our to there, million the year, in about would But it, Rob's we year about more intent. number get less in $XX work not color be is an call. it, little of second year. call benefit that third some be that you annualized can quarter we'll if think

SG&A And underway variable then as actions acts cost we speak. we underway have other and

get SG&A And we've we the what embedded we'll of million. guidance $XXX million in benefit this believe year in to $XXX

last for one if And I Okay. may. one me,

One past talked another acquisition. doing about that type we've in of potential things of the Pura is Vida the the of

it today, be of a market the to in such challenges make the potentially a time opportunistic would seem type Given acquisition. to

Just trying feel a your the pipeline? on guys' given for what are today acquisition thoughts get to

pressure then be you're I environment And right, more which can a macro challenging the and downward, think between on can great put opportunistic. some it's valuations there's always that balance this being question.

our And we focus, expenses getting focusing M&A really keep out, businesses, but same believe in time, #X market. eyes working the so we to in those do the we at are short X watching the term on that on open getting is really continue that. core strong the our But the

So now, focus down, brands. really right head kind let's X these but on our -- of heads

can we through we short-term we the get -- the this recessionary the sure as move environment. and structure do Let's cost right make that best really best

question from Associates. CL King Marotta & next Steve with comes Our

and that offsetting feeling in you costing may and out play the price the talk how you're -- second, that quarter? about third can fourth the increases John, bit gross margin a increases little in

Yes.

outbound we'll seeing. under inbound the last year and So freight of continue points not we're that going the that lapping to that We're be second to expense of be from year. high is lapping next some the pressure quarter

quarter. have with saw expense So as some higher we should to back the second think of it, of the benefit the in the similar more will in lapping hopefully pressure the seeing half And be freight first environment. quarter definitely about in and we pressure we you to we're outbound freight year, all with being expect the some and see P&L, associated be if hitting macroeconomic also of But of incremental P&Ls change kind expense inbound a expense hitting that surcharges said, some lot fuel our we that's seeing right now. some

So that's this also we manage going way as headwind rest of the kind to be a our through year. of

a about get into of cost flow that year. If some question ahead with increase, think next next year, we're regards see mostly price you of will benefit to next in to year. will from will regards cotton some the help your -- cost be increases and kind increase, ultimately We'll in that this increases that to trying year input price

you're optimistic had and you travel Rob, back-to-campus, in are there why? categories half? if the relatively already And that besides so, that mentioned, And helpful. about other the That's second

Yes.

is I there. we're other we've nice terms our think building seeing home called out winning our doing we've things thing of category, intersections and the in what like growth been that

important launch the up. cloud will like have our that launches We be out coming coming footwear

expand move innovation pipeline, of the that brand lot The lot cyclical the excitement. is coming manage the pipeline what's a in forward. So in we but a of forward innovation for of then continue how pressure, feel really reason make will great we recessionary a the about to even real to through stronger and the good have and short-term as brand lot we balance

to closing And the conclude that turn the conference does over for Wallstrom I'll question-and-answer remarks. back session. Rob now

as been to who knowledge distinction Lead would Board Director tremendous I over close, has this service has and Directors of like important on I like Independent year. behalf of his him retailers, The and invaluable Philip Furniture In with XXXX Vera has Williams-Sonoma and he Gap. currently roles on for the experience, opportunity several John Pura is with platform the the to year's that Vista stepped and remixing for She Coats Board retired accounting Meeting and Shareholders is Chair to Merchandising Inc. And through business Fran the on a other the year this next will Chair, in my the strength building Vida Group a named despite served we last of XX Audit a and she with as Officer gratitude Committee. and Kyees, express and our the has into held institutional Fran the Cashman XXXX, Board role the and store Bean boards has growth, Director. including preparing and and traded Annual company, the on for month. years. know publicly program And holding for to business our serving the it having entire remain Committee of CPA years new on has the since Kristina Audit in remainder conjunction Chair return from Chief of the John X Board strong to of the the financial macro growth and background, roles industry with as into challenging I Audit are since as Independent served closing, publicly underway. of of the Bradley Bassett to and CFO e-commerce currently last would thank environment for we're companies served store we marketing Before the take time variety held Lead other Industries. marketing wealth L.L. counsel a of Outdoor.

successfully this taking brands period manage further us future. only are will core through but position actions strengthen We to and decisive a that both the for our not enterprise whole, as

cash strong. position our are teams and focused, Our balance remains and sheet

We returning we We again. will both forward managed and steady through before, brands have to difficult growth. look periods to

we today, quarter on forward and We on the Thank our posted you joining us you you August speaking with will XX second on keep look progress. for call. our to earnings

And excellent does day. for that participation. thank conclude today's We Have you do your conference. an