Executive Summary
Vera Bradley reported a mixed QQ2 2025 performance as the company advances its Project Restoration program but faces meaningful topline headwinds. Quarterly revenue totaled $110.8 million, a 13.5% year-over-year decline, driven by softer consumer demand and outlet channel weakness. Non-GAAP gross margins were solid at 50.9% (versus 56.2% in the year-ago quarter), with non-GAAP operating income of $4.3 million (3.9% of net revenues) and non-GAAP net income of $3.9 million, or $0.13 per diluted share. GAAP metrics show operating income of $2.9 million and net income of $5.7 million, reflecting standard GAAP-to-non-GAAP adjustments discussed in the press release. The company ended the quarter with $44 million in cash and no borrowings on its ABL facility, but with total debt of roughly $75.97 million and a net debt position of about $31.8 million. Management emphasized the brand restoration initiative, including the Zooey Deschanel creative campaign, expanded collaborations (notably Urban Outfitters) and a prioritized balance of full-price selling versus promotions, while remaining prudent about the pace of improvement in the second half of 2025. Full-year guidance remains anchored in a low-to-mid single-digit revenue decline for the Vera Bradley brand, a mid-teens decline for Pure Vida, a gross margin around 53%, and a 5% year-end inventory reduction, with an expected end-year cash balance near $50 million and $13 million of capex. The exec team highlighted cost discipline, inventory management improvements, and selective marketing investments as the levers to return Vera Bradley to sustainable, profitable growth over the next few years, albeit with a slower-than-anticipated ramp. This report synthesizes the QQ2 results with management commentary, benchmarks against peers, and an explicit investment thesis for investors.
Key Performance Indicators
QoQ: 37.49% | YoY:-13.54%
QoQ: 36.86% | YoY:-21.74%
QoQ: 125.11% | YoY:-77.69%
QoQ: 170.26% | YoY:-38.34%
QoQ: 173.08% | YoY:-36.67%
Key Insights
Revenue: $110.8 million in Q2 2025, down 13.5% year over year; QoQ growth of +37.5% (from Q2 2024). Gross margin: Non-GAAP 50.9% vs 56.2% in the prior-year quarter (decline of ~5.3 percentage points). Operating income (non-GAAP): $4.3 million (3.9% of net revenues); GAAP operating income: $2.87 million (2.59% of net revenues). Net income (non-GAAP): $3.9 million or $0.13 per diluted share; GAAP net income: $5.71 million with $0.19 per share. Shares: Weighted average diluted shares ~29.8 million....
Financial Highlights
Revenue: $110.8 million in Q2 2025, down 13.5% year over year; QoQ growth of +37.5% (from Q2 2024). Gross margin: Non-GAAP 50.9% vs 56.2% in the prior-year quarter (decline of ~5.3 percentage points). Operating income (non-GAAP): $4.3 million (3.9% of net revenues); GAAP operating income: $2.87 million (2.59% of net revenues). Net income (non-GAAP): $3.9 million or $0.13 per diluted share; GAAP net income: $5.71 million with $0.19 per share. Shares: Weighted average diluted shares ~29.8 million. Inventory: $133.0 million, down ~5% YoY. Cash and liquidity: Cash $44.1 million; no borrowings on the ABL facility; total debt approximately $75.97 million; net debt around $31.82 million. Capex: $2.79 million; Free cash flow: -$1.39 million. Balance sheet: Total assets $379.214 million; total liabilities $136.68 million; stockholders’ equity $242.53 million. Outlook: FY2025 net revenues around $410 million; gross margin ~53%; SG&A about $215 million; diluted EPS ~ $0.10; capex ~ $13 million; year-end inventory ~5% lower versus last year; year-end cash around $50 million.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
110.82M |
-13.54% |
37.49% |
| Gross Profit |
56.36M |
-21.74% |
36.86% |
| Operating Income |
2.87M |
-77.69% |
125.11% |
| Net Income |
5.71M |
-38.34% |
170.26% |
| EPS |
0.19 |
-36.67% |
173.08% |
Key Financial Ratios
operatingProfitMargin
2.59%
operatingCashFlowPerShare
$0.05
freeCashFlowPerShare
$-0.05
Management Commentary
Key management themes from the QQ2 2025 earnings call include: 1) Project Restoration execution and brand repositioning remain the core strategic driver, with Zooey Deschanel as brand ambassador and collaboration expansion (Urban Outfitters) to broaden reach and attract a younger, more affluent customer segment. 2) Financial position described as strong with ample liquidity and disciplined cost management; management reiterated no debt on the ABL facility although overall debt exists on the books, and noted a cash balance of roughly $44 million. 3) Mixed channel dynamics: Direct revenues totaled $72.2 million with a circa 19% operating margin, indirect revenues $21.8 million with similar margins, and Pure Vida contributing $16.8 million with a modest 4.1% margin, underscoring margin dispersion across segments. 4) Margin pressure from promotional activity and liquidation in direct channels, offset in part by product mix and higher-margin leather offerings; management cited ongoing assortment optimizations and a push toward higher-end, top-of-pyramid styles. 5) Incremental investments in marketing and brand-building as part of a broader investment year, with a focus on brand awareness and achieving sustainable long-term growth; management acknowledged the pace of improvement is slower than planned. 6) Updated guidance points to a cautious outlook for the back half of 2025, supported by inventory discipline, ongoing cost optimizations, and selective store-related investments, with a target end-year cash balance near $50 million and modest single-digit operating income.
we enter the second-half in a strong financial position, however, with no debt and $44 million in cash
— Jackie Ardrey
Yes, this is an investment year across lots of different aspects of the business, CapEx and marketing as well.
— Michael Schwindle
Forward Guidance
Management maintains a conservative but constructive full-year plan for 2025. Key targets include consolidated net revenues around $410 million and gross margin of roughly 53%, reflecting continued promotional activity and higher liquidation costs, partially offset by cost reductions and supply chain improvements. SG&A is expected to run around $215 million, with an anchored operating income near $3 million and diluted earnings per share near $0.10 on a 52-week basis. Capital expenditures are projected at roughly $13 million, driven by new and remodeled stores and technology/logistics enhancements. The company projects year-end inventory about 5% lower than the prior year and cash around $50 million. Investment considerations for investors include: (i) the pace of brand restoration and customer acquisition, (ii) the sustainability of gross margin as promotional activity evolves, (iii) effectiveness of marketing investments in driving full-price mix and margin expansion, and (iv) the trajectory of Pure Vida profitability amid elevated digital marketing costs. Near-term monitoring should focus on: trajectory of direct-to-consumer sales mix, wholesale partner onboarding (notably Urban Outfitters and other potential retailers), and inventory management outcomes that influence cash flow and liquidity.