Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Vera Bradley Fourth Quarter and Fiscal Year-end Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. 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. Please go ahead.

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 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 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 will now turn the call over to Vera Bradley’s CEO, Jacquie Ardrey. Jacquie?

Thank you, Mark. Good morning and thank you for joining us on today’s call. We focused on driving revenues in the fourth quarter through targeted strategic promotions on seasonal giftable and key items. As a result, total company fourth quarter revenues outperformed our guidance, although gross margins remained under pressure. Diligent expense control enabled us to deliver fourth quarter non-GAAP diluted earnings per share of $0.16, which was nearly flat with last year. In the fourth quarter, sales trends at both Vera Bradley and Pura Vida improved over prior quarters, with Vera Bradley total sales down just 1% and Pura Vida sales down less than 5% on a year-over-year basis. For the fourth consecutive quarter, the Vera Bradley Indirect Channel experienced year-over-year revenue growth. Targeted customer retention efforts led to increased Vera Bradley e-commerce revenues, while Full-Line and Factory store revenues continued to be negatively affected by traffic levels, although trends improved throughout the quarter. At Pura Vida, e-commerce trends improved over previous quarters due to strategic promotions; however, overall challenges continued to persist in our social and digital media effectiveness coupled with rising digital media costs. And, we experienced a year-over-year sales decline in our wholesale channel. On the plus side, Pura Vida Full-Line retail stores continued to perform ahead of our expectations, and they drove improved e-commerce traffic and revenues in their markets. We also took the opportunity in the fourth quarter to reset and appropriately position the Pura Vida business for the future, by recording goodwill and trade name impairments and necessary inventory write-offs. We ended the fiscal year with consolidated revenues of $500 million, which exceeded our guidance. During the year, we began to see stabilization in our supply chain, diligently controlled our expenses, and carefully managed our cash. During the fourth quarter, we meaningfully reduced…

Thanks, Jacquie -- excuse me, and good morning. Let me go over a few highlights for the fiscal year. The numbers I will discuss today are all non-GAAP and excluded charges outlined in today's release. For a complete detail of items excluded from the non-GAAP numbers, as well as a reconciliation of GAAP to non-GAAP numbers, please reference today's press release. Consolidated net revenues totaled $500 million for fiscal 2023 compared to $540.5 million for fiscal 2022. Consolidated net income totaled $7.6 million or $0.24 per diluted share, compared to $19.7 million or $0.57 per diluted share last year. Vera Bradley direct segment revenues totaled $328.2 million this year, a 7.5% decrease from $354.9 million in the prior year. Comparable sales declined 9.5%. Vera Bradley Indirect segment revenues totaled $73.3 million, up 11.1% over $66 million last year, reflecting an increase in certain key account orders. Pura Vida segment revenues totaled $98.4 million, a 17.7% decrease from $119.6 million in the prior year. Pure Vida's e-commerce revenues were negatively impacted by the shift in social and digital media effectiveness and rising digital media costs, as well as a decline in sales to wholesale accounts. This year's gross profit totaled $257.2 million or 51.4% of net revenues, compared to $287.9 million or 53.3% of net revenues last year. The current year gross margin rate was negatively affected by higher inbound and outbound frieght expense and increased promotional activity, partially offset by price increases. SG&A expenses totaled $245.3 million, or 49.1% of net revenues compared to $258.8 million or 47.9% of net revenues in the prior year. Current year expenses were lower than prior year primarily due to cost reduction initiatives and a reduction in variable related expenses due to lower sales volume. For the fiscal year, consolidated operating profit was $12.3…

Thanks, John. At both our Vera Bradley and Pura Vida brands, we are embarking on Project Restoration and will focus on four key pillars: consumer, brand, product, and channel, to drive long-term top and bottom-line growth. First, at Vera Bradley. Regarding the consumer, we will focus on restoring brand relevancy, targeting the casual and feminine 35 to 54-year old women who not only value fashion and style, but also function. With this strategy, we will also inspire and retain our loyal customers outside of this age group. As we think about our brand, we will strategically market our distinctive and unique positioning as a colorful, feminine fashionable brand that connect the customer on a deep emotional level. We will refocus on core product categories and items we are best at, by innovating and expanding within our core products. We will elevate our colorful feminine heritage, keeping it distinctive but more trend relevant through updated print and design. We will innovate into strategic adjacent lifestyle item introductions that make sense for our customers. And we will continue to pursue collaborations and partnerships that align with our target customers. From a channel perspective, we will accelerate our digital-first focus and online presence through a mix of brand storytelling and product messaging. We will build a balanced footprint that more clearly differentiates Full-Line from Factory stores through differentiated pattern and color, product functionality, sustainably sourced fabrics and pricing. And we will target new or strengthen existing relationships with strategically aligned wholesale partners. At Pura Vida, on the consumer front, we will sharpen our focus on the care-free 18 to 24-year old collegiate girl, who both those younger and older aspire to be. Our target customer is free spirited, a trendsetter and focus on living her best life. Pura Vida jewelry is a way…

Thank you so much. [Operator Instructions] While we wait, we'll go with our first question, Eric Beder from SCC Research. Please go ahead.

Good morning.

Hey, Eric.

Good morning.

Hey. Could you talk -- I guess in terms of the reduction in expenses, how far along are you on the $25 million? And how much of that should we incrementally see in this year?

So the majority of the initial $25 million we actually saw we pulled through in fiscal '23. As Jacquie kind of alluded to near the end of her prepared remarks, we are looking at kind of additional opportunities. So that's why we gave the expense range of the 241 to 251 to offset some of the incremental costs that were built into our budget associated with normalizing incentive compensation. But we think there's additional opportunities that we're going after we just haven't identify them fully and execute them. That's why we gave that range.

Okay. When you look -- I know you talked about a hold off on Pura Vida store openings, what should we be thinking about in terms of store opening and some closures for the Vera Bradley chain this year?

Yes, so we have three identified Factory stores that we're going to open in regards to closures for Full-Line. We're working towards minimizing this number, but right now we're probably close to about 10 that we're going to plan to close. It could be a little bit more or a little bit less than that. But we're working with landlords to see if we can work through some rent negotiations, and to continue to move those stores out from a closure perspective as we look at fixing some of the product or improving some of the product that we sell-through our full price brand. So we're actively having conversations with some of our major landlords to reduce that number. But you can probably think of it from a model perspective, Eric up about 10.

Okay. And in terms of, I guess, the Vera Bradley product, you mentioned adjacencies, you mentioned trying to kind of get it so be more focused, what should we be thinking as we go to the stores in terms of what the product mix and the category should be doing?

So Eric, I think in the short-term, you won't see too much change. As we kind of leverage our product development timeline, we're making adjustments based on sales data, customer data as quickly as we can. But in the short-term, you probably won't see too much. I think it's a little early right now, we want to make sure that we have the right data to drive the decisions around what those product adjacencies should be. What we have now, may not -- it may look a little bit different in the future. But we just want to make sure we have all the data to make those decisions. So it's a little early to speculate on what -- how things might be different. But I think you can count on seeing a more focused outlook from our product projection. So we really want to help people shop when they come into our stores and make clear what's important for the Vera Bradley brand.

Okay. What’s your thinking about in terms of collaborations for both Pura Vida and Vera Bradley. I know that you -- the Harry Potter collaboration of Pura Bradley is no longer there and you have continued to see collaborations of the pieces. What's going to be kind of the criteria going forward in terms of Pura Vida partner with, and how they can provide, I guess, increased relevance to your customer. Thank you.

Yes, that's a great question, Eric. And I think right now, we're looking for our future partnerships to really resonate with the customer that we want. So using -- again, using data to define how our customers interacted with the past collaborations, what the long-term value of those customers ended up to be, we're doing all that work right now to have input into what's our future IP lineup.

Okay. Congrats and good luck with the rest of the year.

Thanks, Eric.

Thank you.

Thank you. And our next question comes from Joe Gomes from Noble Capital.

Good morning, and thanks for taking the questions.

Good morning.

Thank you, Joe.

I wanted to kind of follow along here on the question about Vera Bradley and the store opening/closing. You guys have said in the past that the full line stores are the ones that attract the higher household income customers as opposed to the factory stores. But if you cut 10, that's 20%, this year alone on the full line stores. I mean, are you seeing those customer -- higher household income customers go to the Factory stores? Or how are you attract into the Factory stores? What are you doing not to lose that higher household income customer?

Yes, I think that's a great question. And I think the short answer to that is that we're really relying on e-commerce to help fill that gap and to identify the customers that we want at the demographic that's appealing for our brand and, again, that's how we'll be able to more effectively target those customers.

Okay. Pardon me. So you talked about the focus on core categories. One of the things that you had introduced the end -- towards the end of last year was your footwear line, wondering: one, is that something you would look at as a -- look as a core category and; two, how is the footwear line been doing in the -- how did it do in the fourth quarter?

So footwear was a product expansion that we were very excited about and continue to be excited about. Our spring footwear has started off very strong. So again, we're going to look at all of these programs and in relationship not only to sales, but to really identifying in a targeted way, what is happening with the customer and how it's driving her value over time. So those are -- that's analysis that's happening right now.

Okay. And maybe switch over to Pura Vida for a second. You mentioned there one of the challenges in the quarter was your wholesale account. Maybe you could just give us a little more color detail of what is happening on the wholesale side over Pura Vida and what we're looking to do to see that line, that segment turn back up for Pura Vida as opposed to going down.

Sure. I think in q4, we definitely saw some hesitancy in our retail partners just due to the macroeconomic environment and people just holding their open to buy dollars tightly. And that definitely had an impact on Pura Vida, much more than it did on Vera Bradley. But we did see early in the quarter that that was the case at Vera Bradley as well. What we've seen since then, is a little more positivity from our retail partners. So we've definitely seen that that pipeline increase since the beginning of the year.

That's good news. And one last one, for me. Great job on the inventory levels. Seeing what the projections are for fiscal '24, John, are you looking for additional leverage there on the inventory being able to reduce that even more from where you are? Do you think that where we are today is year-end is a good level?

No, I think we're going to continue to look for opportunities to reduce debt level to improve our turn. So as we built out the cash flow associated, the free cash flow associated with next year's guidance, we expect inventory levels to drop from where it is today.

Okay, great. Thanks for that. I'll get back in queue. Thank you.

Thank you.

With that, I'd like to turn the call over to Jacquie for any closing remarks.

Thank you. We are committed to returning Vera Bradley and Pura Vida to profitable growth and generating strong cash flow as a company, which I believe will deliver value to our shareholders over the long-term. Since joining the company in November, I'm more convinced than ever, that both brands have enormous potential. And I'm very excited about the future of Vera Bradley, Inc. We have a portfolio of two iconic lifestyle brands, multigenerational customers with remarkable loyalty and devotion, impressive brand recognition, a solid balance sheet and extraordinary culture. We have some heavy lifting to do in fiscal 2024, but I'm confident that we will emerge a stronger company. I want to thank our associates for their commitment to driving change in all they do to make our company a great place to work. We are proud to once again be recognized by Forbes as one of the best midsize employers in America. Thank you for joining us today and we look forward to sharing our progress with you in the quarters ahead.

Thank you. Ladies and gentlemen, that does conclude today's conference. We appreciate your participation. Have a wonderful day.