Executive Summary
Vera Bradley’s QQ4 2025 results underscore the ongoing transformation under the Project Restoration initiative. Revenue declined versus the prior-year period, with Q4 net revenues of $99.964 million and a non-GAAP gross margin of 45.7%, driven by channel mix and promotional actions. Management highlighted a strategic shift toward higher-value, lower-discounted SKUs, expanded price points, and a disciplined inventory program that reduced year-end inventory by 7% versus the prior year and targeted an additional 10% reduction in fiscal 2026. The company also disclosed a plan to sell the Pura Vida business, signaling a focused portfolio optimization that could materially impact revenue mix and profitability in 2026. In the quarter, the Target Marketplace channel delivered “exceptional results,” validating the firm’s multi-channel strategy and accelerating plans to diversify distribution beyond traditional doors.
From a profitability standpoint, Q4 2025 reflected a significant contraction: non-GAAP gross profit of $45.7 million on $99.964 million revenue, an implied gross margin of 45.7%, and a non-GAAP operating loss of $12.0 million (GAAP) with net income of about negative $46.97 million and basic/diluted loss per share of $1.69. Management’s guidance for fiscal 2026 calls for revenue of about $280 million, gross margin around 52.5%, SG&A around $155 million, an operating loss near $6 million, and a diluted loss per share of about $0.15, with capex about $4 million and end-of-year cash around $40 million. These targets reflect ongoing cost discipline, inventory optimization, and the anticipated benefits of channel diversification and licensing activity, though execution hinges on a persistent weak consumer environment and the successful navigation of the Pura Vida exit. In aggregate, the results and guidance signal a measured path toward long-run profitability, with several near-term catalysts and notable execution risks that investors should monitor.
Key Performance Indicators
QoQ: 24.06% | YoY:-24.99%
QoQ: -122.68% | YoY:-3 633.94%
QoQ: -266.98% | YoY:-2 432.24%
QoQ: -267.39% | YoY:-2 707.31%
Key Insights
Revenue: Q4 2025 net revenues of $99.964 million, YoY -24.99%, QoQ +24.06% (per incomeMetrics).
Gross profit: $44.96 million; gross margin 45.0% (0.450) for Q4 2025, down from 52.3% in the prior-year quarter (margin decline driven by channel mix and promotional activity).
Operating income: -$23.324 million in Q4 2025; EBITDA: -$6.586 million; EBITDAR: -6.586 million.
Net income and EPS: net income -$46.973 million; EPS -$1.69 (diluted).
Cash flow: Operating cash flow $21.655 million; free cash ...
Financial Highlights
Revenue: Q4 2025 net revenues of $99.964 million, YoY -24.99%, QoQ +24.06% (per incomeMetrics).
Gross profit: $44.96 million; gross margin 45.0% (0.450) for Q4 2025, down from 52.3% in the prior-year quarter (margin decline driven by channel mix and promotional activity).
Operating income: -$23.324 million in Q4 2025; EBITDA: -$6.586 million; EBITDAR: -6.586 million.
Net income and EPS: net income -$46.973 million; EPS -$1.69 (diluted).
Cash flow: Operating cash flow $21.655 million; free cash flow $17.332 million; net change in cash +$16.656 million; cash at period end $30.366 million; capex $4.323 million;
Balance sheet: Cash & equivalents $30.366 million; total debt $89.644 million; net debt approximately $59.278 million on a straightforward calculation (total debt less cash); inventory $110.008 million; total current assets $164.872 million; total assets $306.690 million; total current liabilities $57.993 million; total liabilities $127.735 million; stockholders’ equity $178.955 million.
Key liquidity/ratios: current ratio 2.84; quick ratio 0.946; cash ratio 0.524; gross margin 45.0%; operating margin -23.3%; net margin -47.0%; ROE -26.2%; ROA -15.3%; FCF per share $0.63; price-to-book 0.58; debt ratio 0.29; inventory turnover 0.50; days inventory outstanding ~180 days; inventory-driven working capital emphasis noted by management.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
99.96M |
-24.99% |
24.06% |
| Gross Profit |
44.96M |
-34.76% |
3.10% |
| Operating Income |
-23.32M |
-3 633.94% |
-122.68% |
| Net Income |
-46.97M |
-2 432.24% |
-266.98% |
| EPS |
-1.69 |
-2 707.31% |
-267.39% |
Key Financial Ratios
operatingProfitMargin
-23.3%
operatingCashFlowPerShare
$0.78
freeCashFlowPerShare
$0.63
Management Commentary
Key themes from the Q4 2025 earnings call:
- Strategic transformation: Management emphasized ongoing Project Restoration, noting that profitability in the near term has been pressured by a shift of business from stores (notably outlet locations) to e-commerce, but that the strategic direction remains sound and customer-driven adjustments are being implemented. Jackie Ardrey stated, “Fourth quarter remained challenging as we continue to navigate the early stages of Project Restoration,” and highlighted efforts to expand heritage products, reduce high-priced assortments, and reintroduce licensed products.
- Channel diversification and Target Marketplace: Ardrey highlighted the strong performance of Target Marketplace, calling it “extremely successful, and much better than our expectations,” and framed it as a key driver of the indirect channel strategy and a path to future revenue growth.
- IP/licensing and Wicked collection: The Wicked collection was cited as a standout, driving revenue and attracting high-value customers; management signaled a larger, more robust IP licensing program this year and next, with several partnerships in advanced negotiations.
- Inventory discipline and cost reductions: The lineup of inventory initiatives—tier assortments, strategic item management, disciplined buying, and improved sourcing—delivered a year-end inventory level 7% below last year and a target to reduce ~10% more in fiscal 2026. Ardrey indicated that these actions would raise agility and margin opportunity through the cycle.
- Pura Vida sale: The CEO announced a sale of the Pura Vida business with expected close by end of the first quarter, a material strategic move to streamline the portfolio and focus resources on core Vera Bradley brands.
- Guidance and caution on 2026: Michael Schwindle detailed a cautious, macro-weighted 2026 outlook, with revenue guidance of about $280 million, higher gross margins (52.5%), and an operating loss of roughly $6 million; the company also signaled lower capex and stronger balance sheet liquidity, but highlighted ongoing consumer headwinds and channel mix risk. Representative quotes:
• “Target Marketplace has been extremely successful, and much better than our expectations.”
• “The Wicked collection was extremely successful, not only driving significant revenue but also attracting new high-value customers.”
• “We are in advanced negotiations with several major retailers” regarding partnerships, signaling the growth-by-collaboration strategy.
• “No debt… $30 million in cash, and liquidity of $75 million” (as described by management, contrasted with reported balance sheet that shows debt in the quarter).
“Target Marketplace has been extremely successful, and much better than our expectations. So it's helped us pivot into an indirect strategy that we think is going to bear fruit later this year.”
— Jackie Ardrey
“The Wicked collection was extremely successful, not only driving significant revenue but also attracting new high-value customers within our target demographic range. IP remains an important customer acquisition tool for Vera Bradley.”
— Jackie Ardrey
Forward Guidance
Strategic outlook and achievability assessment:
- Revenue trajectory: Expect consolidated net revenues of approximately $280 million in fiscal 2026, reflecting a challenging first half and sequential improvement through the year. The guidance assumes continued consumer headwinds but benefits from channel diversification (notably Target Marketplace) and the reduced reliance on underperforming discount channels through inventory discipline and price architecture adjustments.
- Margin and cost structure: Gross margin targeted at ~52.5% (vs. ~50.3% in fiscal 2025) driven by improved product margins and lower supply chain costs from ongoing structural cost reductions. SG&A to ~ $155 million implies ongoing structural savings and cost discipline.
- Profitability and cash flow: The company expects a consolidated operating loss around $6 million and a diluted EPS around a $0.15 loss, indicating a stabilization phase rather than near-term profitability; this is anchored by plan to reduce working capital needs and capex to roughly $4 million, with end-of-year cash near $40 million.
- Key catalysts and risks: (1) Closing of the Pura Vida sale as planned; (2) continued success of Target Marketplace and expansion into additional digital marketplaces; (3) execution of IP/licensing partnerships and wholesale channel growth; (4) potential offsetting risks from macro consumer weakness, channel mix shifts, and possible delays in partnership deals. Investors should monitor: pace of inventory reductions, progress on SG&A containment, debt/working capital status, and the rate of progress toward stabilized cash generation.
- Bottom line for investors: The 2026 plan is designed to rebase Vera Bradley’s profitability through a leaner cost base, inventory discipline, and channel diversification. The anticipated margin expansion and portfolio simplification offer a path to durable cash generation, albeit with execution risk in a weak consumer environment and execution risk related to the Pura Vida exit and new partnerships.