Good day everyone and welcome to today’s Vera Bradley Fourth Quarter and Year-End 2017 Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mark Dely, Vera Bradley’s Vice President and Chief Legal Officer. Please go ahead.

Good morning and welcome, everyone. We’d like to thank you for joining us for Vera Bradley’s fourth quarter and fiscal year-end earnings call. Some of the statements made on today’s call 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 Form 10-K for the fiscal year ended January 30, 2016, 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. The company undertakes no obligation to update any information discussed on the call. I will now turn it over to Vera Bradley’s Chief Executive Officer, Rob Wallstrom. Rob?

Thank you, Mark. Good morning, everyone, and thank you for joining us on today’s call. I’m joined today by Kevin Sierks, our CFO; Sue Fuller, our Chief Merchant and Theresa Palermo, our Chief Marketing Officer are also here to respond to questions following our prepared remarks. I want to take a minute to thank Kevin for his five years of service to Vera Bradley and for all that he has done for our company. Kevin will be leaving the company at the end of this month and we have appointed John Enwright, our VP of Financial Planning and Analysis as interim CFO. We wish Kevin all the best. The retail environment became even more challenging in the fourth quarter. Consequently both total revenues and our gross profit percentage were modestly below our expectations. However, we exceeded our fourth quarter EPS guidance, primarily due to diligent expense management in the lower than expected tax rate. Even though fiscal 2017 was a challenging year, we made meaningful progress against key elements of our long-term strategic plan. In product, we continue to create beautiful solutions for our target customer through functionality and innovation in our core classifications of fashion bags and accessories, travel and campus and continue to add product categories to enhance our lifestyle, such as in home and beauty. Expanded our collegiate initiative to represent over 70 schools and announced six licensing agreements in the areas of bedding, hosiery, swim, tech, stationery and publishing for products that will debut throughout 2017. These products should increase our brand exposure, allow us to attract new customers, provide additional distribution and drive traffic to our digital flagship. In distribution, we opened four full-line stores, all in our new modern store design, including our flagship store in SoHo and our highest traffic and volume store…

Thanks Rob and good morning. Let me go over a few highlights for the quarter. Current and prior year fourth quarter income statement numbers that I will reference exclude the previously mentioned store impairment charges outlined in today’s release. Current year fourth quarter net revenues of $134.8 million or modestly below our guidance range of $135 million to $140 million. Prior year fourth quarter revenues totaled $154.1 million. Excluding impairment charges fourth quarter net income totaled $10.1 million or $0.28 per diluted share, better than our guidance range of $0.23 to $0.25 per diluted share. This compares to $17.5 million or $0.46 per diluted share last year. In our Direct segment, fourth quarter revenues totaled $108.9 million, a 3.6% decrease from $112.9 million in the prior year fourth quarter. Comparable sales including e-commerce decreased 9.5% for the quarter, which was partially offset by new store growth. Sales were negatively impacted by year-over-year declines in store and e-commerce traffic. As expected, Indirect segment revenues decreased 36.9% to $26 million from $41.2 million in the prior year fourth quarter, reflecting a meaningful reduction in orders from specialty retailers, as well as, smaller orders from department stores and other key accounts. Gross profit for the quarter totaled $75.1 million or 55.7% of net revenues, compared to $89.6 million or 58.2% of net revenues in the prior year. The 250 basis point gross profit percentage decline primarily related to increased promotional activity at our Company's factory outlet stores, which also caused the gross profit percentage to fall modestly below the low-end of our guidance range of 55.9% to 56.2%. Excluding store impairment charges, SG&A expense totaled $60.2 million or 44.6% of net revenues, in the current year fourth quarter, compared to $62.1 million, or 40.3% of net revenues last year. SG&A dollars decreased over…

Thanks, Kevin. As I noted earlier, our number one priority for fiscal 2018, is to grow our customer counts. We simply must drive more traffic into our stores and into verabradley.com. We will achieve that by one; increasing our brand desirability, two, increasing our product desirability and three, strengthening our distribution platform. Let me go into a bit of detail in each of these. First, let's talk about driving branded desirability, which largely revolves around our holistic marketing efforts. We believe our brand is in a solid position to move forward. Our initial brand reboot including the logo change and our fall 2016 marketing campaign began to positively shift purchase intent and brands intent. We are building a robust innovative and multifaceted marketing program, expanding upon our successful “It's Good to be a Girl” campaign introduced last fall. The spring campaign reinforcing our brand messaging and beautiful solutions and offering stories of optimism and female empowerment will launch at the end of this quarter. Our marketing campaign in brand positioning are modern and fresh, that are still authentic continue to reinforce our main inheritage. We are reinforcing and building our brand clarity to assure that our target customer is at the heart of everything we do. We will continue to partner with key influencers and to leverage their social media channels to increase our brand awareness. We will broaden influence to reach by extending engagement beyond fashion to musicians, industry experts and sports figures. We will increase partnerships that create content, promoting the woman who practices the art of empowering other woman. We will continue to work with other high profile partners to enhance our image and expand our reach. For example, as continuation of “It's Good to be a Girl” we are excited to be participating in a new…

[Operator Instructions] We’ll go first to Oliver Chen with Cowen and Company. Q –Stiller Dennis: Hi, this is Stiller Dennis [ph] for Oliver. Thank you for taking our question. Could you just share your thoughts on which channel you feel faces the biggest challenge or hurdles to overcome? First is which channel likely presents the greatest opportunity to drive improvements sooner or issues are likely more within your control and easier to address? Then on that note, could you also just highlight some of the key positive catalyst that you expect to drive better performance in the back half of the year?

Yeah, absolutely, let me jump in. Our number one focus for channel in future growth, we really believe is the digital space. So, the re-launch of our verabradley.com, we really are very, very focused on improving our full price positioning, improving our brand story and really using that as a catalyst for future growth, so we believe that that is the number one area and the number one area where we know the customer's experience our brand. In terms of as we look at the back half of the year, we have a lot of strategies in place between getting the marketing campaign kicked off in first quarter and continuing to build throughout the year. We believe that the e-commerce business will continue to strengthen as we get the new platform in place and consumers take advantage of all of the new functionality that we’ve built in. In addition just as we look at the back half of the year we also have the new cotton collection that is launching, which really is bringing increased functionality, some fresh design and really increased focus on our core product assortment, which we believe all of those things will help us lift our sales as we move through the year. Q – Stiller Dennis : Thank you.

We’ll go next to Drew North with Robert W. Baird.

Good morning. Thanks for taking the question. Regarding your store closures or relocation plan, it sounded like that is mostly focused on the full price business, which would push the overall mix toward the factory stores. How are you thinking about the right mix of the full price business and factory overtime? And then how do you plan to balance that higher factory mix with your efforts to drive greater brand and product desirability moving forward?

Yeah, thank you for the question Drew. A couple of things, you are right that the store closure is focused more on our full-line mix right now. In terms of our factory channel, we continue to have very positive contribution from our factory stores. As we look going forward, we definitely continue to look at the balance between the two and that is something that we are constantly evaluating because we’ve stated that we want to make sure that the ratio in terms of full line to factory ideally is at least two to one. Then we believe with the digital focus moving more to full price, but that's really the key. We believe that the digital space focusing on brand and product as opposed to price is the primary driver is really key to driving our brand desirability and product desirability as we go forward.

Great. Thank you. And then if I could squeeze one more in. Just on a 53rd week. Can you quantify the revenue and the EPS impact related to that period?

Sure, Drew. It's really only a few million dollars and it's less than $0.01 to EPS, so it's not a big impact for us this year, but it is in our guidance.

Okay. Thank you.

Our next question comes from Eric Beder with Wunderlich.

Good morning. Could you talk a little bit about the new advertising campaign and the new rebranding and what kind of it showed you in the stores and logos, how the consumer was responding to it?

Sure, I’d be happy to. We've been very pleased with overall consumer response to our new advertising campaign, as well as, to our new logos. So we’ve heard some consumers that they liked the rebranding, they feel like it’s a really new look for the brand and then that they find it very relatable, so we’re excited.

We also found in third quarter as we put our marketing campaign out there and really led with “It's Good to be a Girl” and really put the brand first, that we had a very positive response from consumers and we saw increased engagement across social channels, influencers, as well as, traffic in our stores. We’re really leveraging that focus as we go into this year, which is part of what gives us the confidence in the marketing impact as we go to this year because we feel that we found the right place to really focus our energies and we think that the Girl Starter partnership is a great example of doing that.

Okay. And just one more. In terms of the impact on the stores, what was kind of where the new rebranded stores doing better in holiday season than the non-rebranded and kind of how should we think about the pace that the rebranding for this year?

Yeah, what we were hearing from consumers we did a lot of customer research and listening to consumers in terms of the new store format and really continue to receive very positive feedback that they felt it was kind of updated and more modern, still keeping within the heritage, still celebrating the heritage of Vera Bradley. So, we received very positive consumer response. In terms of the dramatic performance difference, we didn't see a huge difference in the overall sales of our new branded stores, but we did see a lot of positive customer feedback. So that's one reason why we're continuing to go through with the rebranding effort and we will have over half of our stores that will be in the new brand. But at the same time we're making sure that we pace it appropriately.

Okay. Thank you and good luck for the year.

Thank you.

[Operator Instructions] We’ll go to Bill Dezellem with Tieton Capital Management.

Thank you. Did I hear correctly that Disney Springs store is your number one selling store? If that is correct, are there other opportunities where you can create a unique design for another entity that really ties similarly to the way that the Disney design is working for you?

Bill, you did hear correctly our Disney Springs store is our number one volume store. It is our highest traffic store, it’s a great partnership between who are the core Disney customers, as well as, the core Vera Bradley customer. B, product that we design in partnership with Disney is part of that and is part of that success. But the vast majority of the stores volume is still coming out of our core product. So, I think the lessons that we’re taking from that is looking for one of those really unique entertainment shopping opportunities that are high traffic. We've always talked about for us we are a traffic brand, getting people through our stores is really critical to what we do and so finding the right type of opportunities where you’re seeing high traffic becomes very critical for us. Obviously out there in the retail landscape right now, finding destinations with high traffic is definitely not as easy as it once was, but it’s definitely something that we're very focused on as we look at real estate going forward.

Thanks for the clarification Rob.

We’ll go next to Ed Yruma with KeyBanc Capital Markets.

Hi, this is Matt Douglas on for Ed. I’m wondering about the relationship between physical and online retail. So after the rebrand the store, did you see a meaningful uptick e-commerce sales in that geographic area? Also how much do you believe if you do end up closing a full price this year, how much do you believe of those sales you can recapture from e-commerce or potentially other channels. Thank you.

Matt, thank you for the question. In terms of significant major uplift in e-commerce business in the markets that we've rebranded the stores. We’re not seeing dramatic change in the e-commerce business. In terms of as we’re closing in stores, we are working to definitely migrate our consumer into our other locations, we're starting out with that Fibs in Atlanta to really make sure that we're managing customer-by-customer and whether that's moving into another one of our full-line stores, whether its inventory e-commerce business or one of our specialty or department store partners. We’re working through that process and we know that will be important. As we look at closing kind of the 15 stores over the next two years, we’re obviously working through that process. We expect that the majority of that closing will happen more towards the end of this year going into next year, just to kind of put that in perspective.

Thank you.

With no further questions in the queue, I’d like to turn the conference back to our presenters for any additional or closing remarks.

Thank you. We know we still have a lot of work to do, but we’re confident we are on the right path and have the financial strength to transform Vera Bradley into a stronger company. We will continue to work diligently to improve our performance and enhance shareholder value. Thank you for joining us today, we look forward to speaking to you on our first quarter call on May 31st.

Ladies and gentlemen that does concludes today’s conference. Thank you all for joining.