Good morning ladies and gentlemen, thank you for standing by. Welcome to the Vera Bradley Fourth Quarter and Fiscal Year-End 2014 Earnings 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 enter the queue for questions. As a reminder, today’s presentation is being recorded. I would now like to turn the call over to Stacy Knapper, Vera Bradley’s Senior Vice President and General Counsel. Please go ahead.

Good morning and welcome everyone. We'd like to thank you for joining us this morning for Vera Bradley's Fourth Quarter and Fiscal Year-End 2014 Earnings conference 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 February 2, 2013, 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 the call over to Vera Bradley's Chief Executive Officer, Rob Wallstrom.

Thank you, Stacy. Good morning everyone and thank you for joining us on today’s call. With me today are Kevin Sierks, our EVP and Chief Financial Officer; Sue Fuller, our EVP of Merchandising, and Julia Bentley, our VP of IR and Communications. 2014 was a challenging year for our business. Sales were soft, gross margin suffered, and our EPS fell for the first time since becoming a public company. We continue to face external headwinds and certain challenges within the business, and fiscal 2015 will be a year of some continued uncertainty and one of transition as we begin to implement elements of our strategic plan. This is reflected in our guidance that Kevin will discuss later on the call. We have spent the last few months developing our comprehensive five-year strategic plan designed to improve financial performance and shareholder value over the long term. Our vision is to build on our rich heritage and establish Vera Bradley as a premium lifestyle brand that is relevant to the future, expanding our customer reach, and growing our customer connections. We will achieve this vision through our strategic plan with encompasses three key elements: product, distribution channels, and marketing. After Kevin gives us an update on the financial information, Sue and I will fill you in on more details related to these three components of our strategic plan. Of course, our strategic plan will be supported by three key foundational elements: sustaining and enhancing our unique company culture, attracting and retaining top talent, and improving our analytics and reporting to drive fact-based decision making. These three things will be core to our success. Let me make a couple of comments on the talent piece in our organizational structure. My number one priority was filling the chief merchant role, and Sue came to…

Thanks Rob, and good morning. Net revenues totaled $157.5 million for the current year fourth quarter compared to $162.6 million in the prior year fourth quarter. Net income totaled $19.4 million or $0.48 per diluted share for the current year fourth quarter. These results included a pre-tax inventory write down of $4.8 million, equating to approximately $3 million after tax or $0.07 per share. The inventory write down primarily related to fabrics and certain retired patterns no longer considered saleable, and to certain merchandise in the baby gift category, which is being discontinued by the company. Net income totaled $25.1 million or $0.62 per diluted share in the prior year fourth quarter. Keep in mind that the fourth quarter and fiscal year ended February 1, 2014 represented 13-week and 52-week periods respectively. The prior year fourth quarter and fiscal year ended February 2, 2013 represented 14-week and 53-week periods respectively. The 53rd week of fiscal 2013 contributed $4.9 million of net revenues and approximately $0.02 per diluted share to both the fourth quarter and full year of fiscal 2013. Our fourth quarter sales and earnings were below last year’s levels; however, net income exceeded our expectations as revenue, gross margin excluding the aforementioned write off, and SG&A expenses were all favorable to our projections. Current year fourth quarter direct segment revenues increased 5.2% to $108.7 million from $103.3 million in the prior year. Fourth quarter year-over-year net revenues from the company stores grew 14.5%. This growth reflected the opening of 19 full line and 4 outlet stores during the past 12 months and was partially offset by a comparable store decline of 10.2%. Ecommerce revenues decreased 7.2% compared to the prior year. The decreases in comparable store and ecommerce revenues were due to year-over-year declines in traffic, a lower average…

Thanks Kevin. As I noted earlier, our vision is for Vera Bradley to be a true lifestyle brand that while rooted in our rich heritage continues to remain relevant and modern. We certainly want to keep our existing customers, but it is imperative that we broaden our reach in our customer base. As we implement the three key elements of our five-year strategic plan – product, distribution channels, and marketing – I believe we can achieve that goal. First, product – we have a relevancy issue with our existing product. While we have a very loyal customer base and a dominant share of market in the cotton casual handbag and travel accessories business, we still own a narrow percentage of the total market in these categories when all fabrications are included. Demand for existing product is declining, as evidenced by our recent comp store and ecommerce sales performance, and I believe that we have over-saturated our existing customer base with (indiscernible). As Sue will describe and continuing into the future, we will work to become more relevant by modernizing and elevating our product to appeal to a wider range of customers. For example, we are very focused on creating product and an environment that will appeal to the career professional. As Kevin noted, however, we expect that our fiscal 2015 performance will be challenged as we work through our existing product and prudently work to evolve our product offering. Let me ask Sue to provide more details on our product strategies. Sue?

Thanks Rob. First of all, I feel very privileged and honored to be part of such a great company. I’m inspired by the level of knowledge, talent and creativity within the organization. Our associates have such passion and a sense of pride in Vera Bradley, and we are really committed to working together to make our business even better. Over the last couple of months, I have received feedback directly from many of our retail partners and customers and have worked closely with Barbara Baekgaard and the rest of the design team. Together, we have developed a comprehensive product strategy that we believe will update and elevate our assortment. These action steps are not only intended to stabilize the business in the short term but I believe they will expand our customer base, drive sales, generate gross margin improvement, and dramatically simplify the way we run our business over the long term. Our product strategy is four-pronged and includes: an elevated product assortment, a focused product assortment and one that is narrow in the short term, brand extensions, and gross margin expansion. Allow me to go into a bit more detail on each of these. First, we will elevate our product assortment beginning later this year. We will extend our price offering, which is currently very narrow, and build aspiration by creating halo product in new fabrications, particularly in the handbag category, while maintaining a solid opening price strategy. We are not walking away from the core but building on it. We will work to stabilize the business by majoring in the majors, making a bigger impact in the classifications Vera Bradley is known for and what we do best, like travel, backpacks, bags and accessories. We will also invest in emerging growth and brand-enhancing opportunities that will strengthen the…

Thanks, Sue. Let me now talk about the second key component of our strategic plan – our multi-channel distribution opportunity. Our objective is to shape Vera Bradley into a tightly integrated multi-channel business. Our distribution channels must support our overarching goal to expand our customer reach and our customer base. We will grow our direct distribution channel, including full line stores, factory outlet stores and ecommerce, right-size and work to strengthen the performance in our gift channel, and further develop our department store and other indirect channel relationships. We continue to have a long-term vision of around 300 full line Vera Bradley stores. Since we only have 84 full line stores today after adding 19 stores last year, there are a myriad of essentially untapped geographies for Vera Bradley, like the west coast. We plan to add 13 new full line stores in fiscal 2015 and believe we can accelerate that pace beginning in fiscal 2016 to add approximately 20 to 25 new stores per year. I’m especially excited about our plans to introduce a new prototype store design in fiscal 2016 which will make our locations more modern to align with our new product strategies and showcase the lifestyle aspects of the brand. In the meantime, we are working to further refine and de-clutter the visual presentation of merchandise in our existing stores. Managed prudently, the outlet channel is a huge opportunity for us. All of our peers employ factory outlet stores to a much greater degree than we do. We will continue to use our outlet stores as a clearance vehicle for merchandise from our full line stores, but the cornerstone of our outlet strategy will become products specifically manufactured for the outlet, which is not done today. Within three years, we expect approximately 40% of the produce…

Thank you. [Operator instructions] Our first question comes from Edward Yruma with Keybanc Capital Markets. Edward Yruma – Keybanc Capital Markets: Good morning, and thanks for taking my question. First, you indicated that there will be some additional inventory liquidation in 1Q. How should we think of the medium term inventory liquidation picture, particularly as you wind out of some categories and maybe (indiscernible) yourself and look to license?

Yes, it’s a good question, Ed. I think with regards to liquidation, we plan for $12 million this year and that planning is to put us in a better position as we exit the year, and it’s also to help us with our MFO strategy that Sue can touch on. But that’s why we’re planning for that liquidation. We have done this in the past. We didn’t have much in the prior year, so if you think about it from a comp perspective, it’s mostly additional this year compared to last year. Edward Yruma – Keybanc Capital Markets: Got it, and how should we think about—you know, you’ve talked about some of the new products you’re introducing, some new patterns. How do we think about product flow for the back half of the year, I guess your comfort level with products that are already in the pipeline, and the kind of flow as you progress through the year? Thanks.

Yeah, it’s a great question. Thanks. We believe that for the back half of the year is where we are going to be—for the first time, we effected our assortment utilizing our biometrics, and where we actually did in fact make a change to the assortment using a more scientific approach. However, we realized it also a blend of art and science from a pattern perspective. Secondly, we also are in the process of currently introducing a few new fabrications such as faux leather and leather into assortments that touch upon the elevation of our product assortment. And last but not least, we are continuing to increase our solid penetration. We mentioned earlier that black is our number one color, and we believe that this represents very much an opportunity for us on the back half of the year as well, and we plan on increasing our penetration.

Just a couple things I would add and comment on the product standpoint. I think what you’ll begin to see happen in fall is that Sue and the team have really been able to start editing significantly. We believe that this over-saturation was our number one issue, and so the team took quick action as soon as they could in the lifecycle of the product to start pulling the assortment back. You will see that in fall. You will see the introduction of the new fabrics that Sue spoke about, and also the introduction of some more graphic patterns in terms of utilizing some of the smaller patterns that have been inside the bag and bringing it outside the bag. All of those actions, we think will help kind of focus the assortment and modernize the assortment and begin this repositioning, but it just will be the first steps, we would say, along that path. We still have a lot of excitement coming out even as we go into next year, but you will begin to see some early changes in fall.

And then, Ed, the other reminder that back to campus is kind of our second biggest time during the year and we’re introducing four new styles this year. We had two new styles last year, so we’re very excited about that. One of those styles is water resistant, and not very many companies compete with us in terms of colorful backpacks, so we’re excited about back-to-campus as well. Edward Yruma – Keybanc Capital Markets: Great. Thanks so much, guys.

Our next question comes from Mark Altschwager with Robert W. Baird. Mark Altschwager – Robert W. Baird: Hey, good morning and thanks for taking the questions. First, I appreciate all the detail – it’s great. Rob, just following up, what do you see as the optimal mix of direct-to-consumer versus indirect over time, and then could you talk a little bit more about where international growth fits into that five-year plan?

Yeah, we definitely—as we look at our five-year plan, we definitely see the direct penetration continuing to grow, as we laid out. We see significant growth in both our full price and outlet channels. In regards to the indirect channel, what we see is a stabilization of our gift channel which still we think will be shrinking and contracting slightly as we go through the five years, but then offset with an expansion in the department store world. So we believe we’ll see some small expansion in the indirect world, but the majority of our growth will be coming out of the direct world. In terms of international, like we said, we believe that Japan is the first area that we’ve been able to grow internationally. It’s been very encouraging. I was over there this year to really look at how we were positioned in the market. I was impressed by our productivity in our current spaces, even though I was not necessarily happy with our current real estate, so that’s why we’re looking for an opportunity to strengthen our positioning from a real estate perspective and potentially work with an outside partner to really even leverage the brand further. I think we have significant opportunity, but we want to make sure in the short term that we’re really focused here in the U.S. getting the product right, and then we’ll expand internationally after that. But we don’t have a lot of international growth in our current five-year plan and how we’ve built out the revenue line. Mark Altschwager – Robert W. Baird: Okay. And then you talked about plans to modernize and elevate the product. As you move more into solids and potentially more premium materials, how will you differentiate the Vera Bradley brand in an increasingly competitive handbag marketplace? What do you want the brand to represent to that career customer?

Yeah, I think a few things. I think one, as we look at the Vera Bradley brand, we believe that there’s quite a brand DNA in terms of our—you know, we really connect with the consumer. It’s a fun brand. It’s a brand that is not overly serious, and so as we do career introductions, we think we can keep some of that spirit – it can be a little bit more fun. So as we look at some of these products on the outside, it would still be very appropriate for the office, whether that’s leather, whether that’s faux leather, obviously much more solid driven. By inside, there’s still going to be kind of that surprise and delight of happy Vera Bradley patterns, and we think there’s a real opportunity in the entry price point in this leather and faux leather business that we think Vera Bradley can have a very strong market position in. So as we talk about aspiration, we’re looking at our current cotton bag business as around $100 price point. We think that our faux business can probably be in the $200 price point and the leather business up to the $300 price point, so that’s kind of how we’re thinking about the business today.

I would say the other major differentiator is our functionality that our bags provide, and that is a key component of our DNA that we are continuing to make sure that we build into every new program that we’re introducing, as well as every major classification as well as every new material that we introduce. Mark Altschwager – Robert W. Baird: Great, thank you.

Thanks Mark.

We’ll go next to Randy Konik with Jefferies. Randy Konik – Jefferies: Great, thanks a lot. I guess my first question is along the lines of how the consumer visualizes the brand. I guess right now if you ask a woman what she thinks of Vera Bradley, what she thinks in her head, it’s a paisley-type bag, and I’ve asked this question when we had the sell-side event. We saw something similar with Deckers where the top-of-mind thought process with the woman was that major kind of boot that they have, and the company expanded their product offering and diversified so the consumer would think of more than just the core boot from Uggs. Do you see similarities or differences in what you’re trying to do with the product here at Vera Bradley in terms of the consumer mindset of what they think of—what the brand stands for? That’s my first question. Thanks.

Well, I think there’s a couple things to, I guess, talk about there. One, I think that Uggs is an interesting analogy, but I do think that we’re slightly different because I think Uggs was so dominant and a very focused one item type of boot that as they expanded, they did a nice job; but I do think with Vera Bradley, what we’re finding from our consumer is that she’s not limited to our printed cotton quilted business. We’re already seeing such strong response to our solid, microfiber bag which is different. We’ve introduced a few more in terms of the other fabrications into the line, whether it’s straw or some of the other things, that we know our customer will go beyond the printed cotton quilted already. So that gives us some confidence, and we believe that really will allow us to launch these other businesses. Right now as we look at our five-year plan, though, we still believe the majority of our business will remain in the cotton quilted business and we really feel that this faux leather and leather business is the halo product for us that will allow our customers to engage with the brand when she goes to the office, because what we’ve found right now is that she’s not taking Vera Bradley with her to the office, and we think there’s an opportunity from our customer research to be able to do that to keep that relationship going. Randy Konik – Jefferies: That’s super helpful. When you think about your distribution, let’s say west of the Mississippi, do you think of any channel differences about the western part of the United States versus the eastern part of the United States regarding retail versus potentially department stores? I guess in the comment in your commentary and in the press release, it sounds like there’s potential more department store distribution beyond Dillard’s that you could foresee on the horizon. Could you comment on that? Lastly, can you just reconfirm – did you say that 30 accounts in the specialty channel account for 70% of that channel? I just want to clarify that. Thanks.

Yeah, let me clarify that and then Rob will take your first question, Randy. It is 30% of our accounts, of our customers make up 70% of the revenue, and that’s just related to the gift channel, so just think about those specialty accounts. It doesn’t account for the key accounts like Dillard’s and Disney and QVC, et cetera. Randy Konik – Jefferies: Understood.

So as we talk about the west coast, I think one, your first statement is right – we do believe on the west coast that the gift channel will not represent a significant portion of the west coast strategy and that the department stores will represent a larger part of that strategy. We do believe, though, that there is a significant retail, direct retail opportunity in the west coast. Part of the reason that we’ve been looking at—you hear us keep talking about modernizing the brand, whether it’s through the assortment or also through this new store prototype design. We feel that part of becoming stronger on the west coast is communicating the Vera Bradley message in a store environment that’s a little bit more applicable to the west coast. So we are not looking at revolution but we are looking at evolution and moving from what I would call a much more classic brand to a modern classic brand. We’re not trying to move to contemporary but we are trying to move to a more modern classic brand, as I think you’ve seen some other retailers do. One that I’ve always admired is how Ralph Lauren managed that transition over the years, and we think there’s a real opportunity for us to follow a similar path. Randy Konik – Jefferies: Got it. Just one last question, if I may – at the sell side event, you talked about the issues of executive communication with various headquarter buildings or different buildings on a campus. Can you just describe to the buy side what you currently have from an office location set-up, what was the communication like or not like, lack of communication in the past, and what you’re moving towards and the time line of consolidating offices? That’s my last question. Thanks.

Yes, so currently in Fort Wayne we have five different buildings—

Five buildings in four locations.

Yeah. As you think about the executive team, what we really had is we had our one of our north buildings where we had a lot of our finance, operations, (indiscernible) had up here kind of the northern part of Fort Wayne, and then the creative team was down in our VBD design center, so there was really kind of a separation between the creative design group and more the operational-administrative part of the company. What we’ve done in the short term is to make sure that we really start integrating a lot more. I moved my office down to the design center. We have our executive meetings down in the design center most of the time to really make sure we have strong alignment amongst the teams. I think we’ve already started to make some nice headway there, but it’s not perfect. So our campus consolidation will be happening. It’s being built as we speak, and we will move in about this time next year, so that will make that process even more seamless and more fully integrated. But I wouldn’t want to mislead anybody that we think that that alignment is going to take until next year to get to. We’re working on that right now in just how we’re changing our practices on a daily basis, and I think we’ve made significant headway in aligning everybody. Randy Konik – Jefferies: Super helpful. Thank you.

Our next question comes from Neely Tamminga with Piper Jaffray. Neely Tamminga – Piper Jaffray: Great, good morning. I want to say welcome to Sue and congrats to Kevin and the team on their promotions. So if I may, Sue, it sounds like exactly what we need to hear here, right, in terms of the process change going on, in terms of your role and how you’re getting everybody functioning on the same page. Do you actually have the tools that you need to do what you need to do – like, do you have the PLM software that you need, et cetera, or is that kind of a future stage? And then related to this, and you guys are referencing this five-year plan, strategic plan, are we thinking with the SKU rationalization we could actually get beyond prior peak gross margin levels in five years? Thank you.

I’ll answer the first part of the question, which is do we have the tools necessary to ensure success, and what I am pleasantly surprised about, actually, in working with the IT team is that there has been a large investment made in our software over the years to enable our success, which is fantastic. We actually have—as of May, we’ll have upgrades that we’ve been making to the PLM systems to continue to streamline the processes and to improve two-way communication, not only internally but also to our partners overseas, which make a huge difference in streamlining our supply chain and also increase and enhance our speed to market, which will lead to more product relevancy at a faster rate. So I feel confident that the platforms that have been put into place over time will enable us to be successful.

And then Neely, with regards to gross margin, we do believe we can improve our gross margin over the five year strategic plan. We think SKU rationalization plays into that, modernizing and elevating, and a focused assortment obviously will play into that. We’re obviously as we’re going through the SKU rationalization, we’re taking out the unproductive or the lower productive SKUs, so that will help as well. Obviously we’re not able to leverage our overhead costs right now either, so in the back half of this past year we really slowed down our inventory ordering, which is the right thing for the business but nevertheless you have less units to spread that cost over. So we’ll naturally be able to get more leverage over time as well as we work through our inventory, and we think by the end of this year we’ll really be in a better inventory position than we are as we exited this year. Our retired inventory levels will go down about 10% over the course of this year, which will put us in a really good place from our perspective as we exit the year. There is also some supply chain efficiencies we think we can do as well. We’re looking at lower cost manufacturing locations over in Asia, we’re looking at the use of our facility here in town that manufactures about 6 or 7% of our product, looking at exactly what we produce there and how we can run that more efficiently. So there’s a long list of things we’re looking at currently. Most of this will obviously impact next year, not the current year we’re in right now, only because we have to work through our inventory position and we also have to make some headway on our MFO strategy. Neely Tamminga – Piper Jaffray: Thank you so much, guys.

The only thing I would add to that is I agree with everything that’s been said, that we do believe that there is—you know, the gross margin long term is going to be moving in the right direction and get back in the historic levels. The one thing to keep in mind, though, is as we build the factory business, it definitely improves the margin over the current outlet structure, but it’s still slightly dilutive in terms of the overall gross margin on the top line. So we are making significant improvements in our full price margin and how that margin is flowing through our department store channel, and then the mix is holding it back slightly; but we still believe with the mix of that, we can get up above historical levels. Neely Tamminga – Piper Jaffray: Thank you, good luck.

Thanks Neely.

We’ll take our next question from Oliver Chen with Citigroup. Nancy Hilliker – Citigroup: Hi everyone, thanks for taking my question. This is Nancy filling in for Oliver. I was wondering if you could just talk a little bit about the made-for-factory. As that ramps up as a percentage of the factory mix, how does that play into SKU rationalization? Will it mirror the launches in the full price? And then also could you just comment on your thoughts on promotional cadence going into this year and what your expectations are so far seeing the trends so far this year?

Yeah, a couple things. I think one, from a promotional standpoint, we’re basically planning that we think the environment is going to be similar to last year, so that’s how we’re approaching the promotional planning at this point. As we look at the MFO, we do believe that the MFO assortments are going to be similar to what we’re doing in full price, but part of the MFO strategy is that the product will be different and we do believe that that’s a critical part of the strategy. It’s currently one of our problems in our current outlet strategy is that we’re putting retired product in the outlets right on the heels of it being in our full price channel, and so our indirect channel in some cases is holding the same product that were in outlets. We’re trying to move that apart so that will not happen in the future – we’ll have much more MFO product, but one thing about the factory channel that is so advantageous is that we believe we can keep a very, very tight SKU assortment. We basically can take best-selling styles from our full price business. We don’t have to do as much experimentation and R&D, so we can take the lessons learned from our full price and monetize it in our factories, so it will be a very, very tight assortment in our factory channel. Nancy Hilliker – Citigroup: Thank you guys so much.

We’ll go next to Evren Kopelman with Wells Fargo. Evren Kopelman – Wells Fargo: Thank you. Two questions. One is can you talk a little bit about how you plan to kind of manage the risk of alienating that core loyal customer with all the product changes that you’re planning on making and changes to stores? The second question is, I’m not sure if this was mentioned earlier, but do you plan to reduce the number of—that 3,100 indirect doors further in this fiscal year? Thanks.

Yeah Evren, thank you. A couple things – one, in terms of the overall store count, we do believe that our gift channel will end up with a similar store count by the end of the year. There’s always accounts that we’re editing out of, but we’ll add a few, so roughly the same count if not just slightly lower. I think your question about alienating our core customer is something that we have spent a lot of time talking about, and obviously watching a lot of brands over the years handle this transition, I’ve seen some do it very well and some do it poorly. I think that what we’re talking about with Vera Bradley is we really are talking about broadening and expanding our customer reach, not replacing our customer reach. You know, our core quilted cotton bag is still going to be the core of our business. That’s our heritage, that’s our signature. We have every intention of keeping that; we’re just adding to it. And when you talk about the store design, again what we’re just trying to do is modernize it. We’re not going to make it a revolutionary change. We’re just going to bring it forward I’ve used the example even internally going back to Ralph Lauren – I just watched over the years how it went from a very strong kind of mahogany, very polo mallet, (indiscernible) inspired turning to introduce white lacquer and chrome and just keeping the whole feel of the brand a little bit more modern and a little bit more current. So we’re looking at that same concept in our stores. It’s just how do we bring it forward, how do we keep it current and modern, not how do we revolutionize it. So we believe that these changes will allow us to attract a new customer without alienating our core customer. It is a delicate balance. It’s something that we’ll be managing and watching every step of the way, but we feel pretty good about the plan that we’ve laid out right now and we believe that it will get us to where we need to be. Evren Kopelman – Wells Fargo: Thank you.

We’ll go next to Dana Telsey with Telsey Advisory Group. Dana Telsey – Telsey Advisory Group: Hi, good morning everyone. You talked at the event about new people and adding some new people to the team. Where are you in that process? And as you think about the appropriate mix of prints, patterns and solids and what the margin potential is, how do you see that evolving and should that be 2015, 2016 as we look out? Thank you.

So I will talk about the people, and then I’ll turn it over to Sue to talk a little bit about the margins and patterns. So from a people standpoint, one, the number one thing I was working quick on was obviously getting Sue on board. Sue has also been working on building out her team and so we’ve been looking at talent there and made some nice progress there. I have also been simultaneously out—we have been talking and looking at chief marketing officer candidates and head of sales candidates and head of ecommerce candidates, and moving through that process. What’s been exciting is we’ve had very good response from the market in terms of people being attracted to the Vera Bradley brand, and we’re just making sure that we are diligent and making sure that we really get the top talent. So hopefully in the next few months, we’ll continue to add to the team, but we are right in the midst of those interviews and that process right now.

Then as we think about our print, patterns and obviously the margin opportunity there, and as we mentioned in the script, our first point of action was actually to look at reducing the number of patterns that we’re offering; so again, normally we would have offered 18, we’ll immediately be going down to 14 and then down to 10 to 12 by early next year. The biggest opportunity that we see, obviously, is enhancing that brand assortment with solids. We’re really excited – it’s something she’s already responding to, and so we know that there’s incremental opportunity there, which will obviously lead to margin enhancement for us as well. Dana Telsey – Telsey Advisory Group: Thank you.

Our next question comes from Ike Boruchow with Sterne Agee. Ike Boruchow – Sterne Agee: Hi everyone. Morning, and thanks for taking my question. I guess the first question I wanted to ask is in regards to the guidance for the year that kind of implies a bit of a ramp in the SG&A spend and also in the CAPEX spend. I guess, Kevin, if you could just help walk us through—I guess Rob talked about increased marketing, but is there anything else we should be thinking about as you invest to try to grow the business?

Yeah, a lot of the investment is the headcount that Rob mentioned in terms of the executive team, and then an increase in marketing which we believe we’ve under-invested in over the years. The other large item, Ike, to keep in mind, though, is that $8 million is a really big number as you convert that to an EPS number, and that’s related to the incentive that didn’t hit last year because we didn’t hit our financial metrics internally. So those are the large items that are impacting SG&A. Obviously we still are focused on cost containment. We’ve got an initiative that will intensify this year. We’ll keep you updated along the way. To the extent we realize more savings, we’ll make the decision on whether or not we invest those savings. Currently, we obviously want to invest to make sure we set ourselves up to meet our strategic goals, but that will be the focus. But those are the three major items from an S&GA perspective. Then as you look at COGS, cost of sales, Rob mentioned the promotional environment. We plan to be fairly equal to this past year, but we have to get through some of those overhead costs due to ordering inventory levels more appropriate with our sales levels, so that does impact us this year as well, and the liquidation impacts us as well, so a little bit accretive to the bottom line but nevertheless impacts our gross margin percentage. Ike Boruchow – Sterne Agee: And then any comment—

Oh, and then you mentioned—yeah Ike, you mentioned capital. Capital is really relatively flat year-over-year except for the campus expansion or consolidation, so that’s about $20 million. Our normalized CAPEX each year, as you know Ike, is about $20 million, and of that $20 million about $10 million to $11 million relates to stores. There’s around $6 million that relates to IT, and then the rest is kind of what I’d call other in terms of manufacturing and distribution spend. Ike Boruchow – Sterne Agee: Okay, thanks. That’s helpful, Kevin. And I guess one more for Rob – I guess, Rob, you talked about the store base, and it sounds like the thought process is maybe even to ramp the new stores, the 20 to 25 once we get into 2015 and beyond. Just curious – I mean, obviously the retail environment is tough and the store comps are negative. Right now, was there never a thought to maybe slow down the expansion and just try to work on productivity and getting the traffic back before you re-accelerate the store growth? I’m just kind of curious the puts and takes that you think about when you think about expanding the footage.

Yeah, great question. As we went through this strategic process, we did think about whether we should maintain or slow or go forward more aggressively, and one thing is we looked at our direct channel – you know, our stores are profitable, even though we’ve had some challenging comp environments. We believe that the number one driver of the negative comp environment is some of the product conversations that we’ve been having. There’s a lot of feedback from customers and customer research that we were introducing too many patterns and that we needed to slow that process down, and the customer was really looking for something newer. In the past, it used to be that you could just introduce a new pattern and the new pattern felt new and exciting, but because we’ve had such a hyper pattern introduction, the customer no longer saw that as new. So we believe that the comp issue is really primarily a product relevancy issue, and we feel pretty good about our strategy to improve that. Since our stores are so profitable and our store base is still so small, we felt it was important to continue to build up our store base to really control our brand positioning in the market, and we felt that there was a lot of opportunity. You know, if we had a base of 300 stores already, we might be thinking about this differently; but with only 84 full price stores and 15 outlet stores, we just have really begun the retail expansion and we feel there’s really an opportunity to do it, and we really wanted to wait on that expansion until next year to get the product right and at the same time get this new store design right. Those are the two dependencies on the store growth. Ike Boruchow – Sterne Agee: Okay great, thanks. Good luck.

We’ll go next to Janet Kloppenburg with JJK Research. Janet Kloppenburg – JJK Research: Hi everybody, and congratulations to Kevin. I wanted to ask about the growth of the majors – Dillard’s, Disney, QVC, what percentage that is of your direct business, Rob, and what percentage you see it becoming. And if you could talk a little bit about the margin attributes of that business – do they help overall margins, or if that business is to grow, could it pressure overall margin performance? And for Sue, I was wondering if you could talk a little bit about your lead times, what they are now, what opportunity you see for those lead times coming down, and also if you’ll be testing any of your new product this year to lower your risk as you launch these new introductions for next year. I was just wondering as you did your research, whether you thought that the appeal of Vera Bradley on what I call a trans-generational basis continues, and if you’ll play into that appeal going forward. Thank you.

Janet, maybe I’ll start with the sales question. You asked about QVC specifically. So if you look at last year— Janet Kloppenburg – JJK Research: Well Kevin, QVC and Dillard’s and Disney, all three together, what those three businesses—I call them the majors. What do they represent, and what that should that be in the indirect business?

No, that’s exactly where I was going, Janet. We don’t give those numbers out specifically on what percentage they make up. I can tell you last year, though, as the gift channel was obviously declining, all three of theses – QVC, Disney and Dillard’s – helped us offset some of that decline in the gift channel. We expect to see that happen this year as well in our numbers, but we don’t give the numbers specifically. I can tell you Disney has been a huge success, though, and I know Sue and Rob have spent a lot of time with Disney even since they’ve been here, and we do expect that business to grow in the current year.

Yeah, and I think your other question was related to margins in majors versus everything else. Really it’s about building the strategic partnerships with the majors, and what’s been really great is that with these relationships, we can really work together to work on maintaining margins. And even though maybe there is a slight pressure on the margin with your major account, there’s also some benefits from an SG&A standpoint. So really from a profitability standpoint, we feel very good about where we are with the major accounts. Janet Kloppenburg – JJK Research: Okay, great. Thank you.

Yeah Janet, as you have indicated, will we begin to test products, and actually I’m happy to report that we actually have already started that process, so we have tested our MFO product. In addition, we are currently in the process of testing some new faux leather product. We will have additional tests that will begin to flow in from March all the way through October, and just about every month or every other month, we’re going to be testing the resonance of the new product introductions that we will be having in order to ensure that we are mitigating the risk, as you had indicated. From a lead time perspective, what I can tell you is that we’re very focused on this, and a few ways that we are looking to take time out of the supply chain, one is we’re looking at streamlining processes, and actually we have started that initiative internally. We’ve met with some of our strategic partners domestically as well as we will be headed overseas in order to understand how we can continue to collaborate more efficiently to take time line out. Additionally, I mentioned that we will have an upgrade to our systems that will allow two-way communication that will enable streamlining. And then last but not least, the corporate proximity of some of the teams coming together on the campus will certainly help that effort as well. Janet Kloppenburg – JJK Research: Good luck. Thanks so much.

Thank you.

Thanks Janet.

Our next question comes from Steve Marotta with CL King & Associates. Steve Marotta – CL King & Associates: Good morning everybody. With the exception of the upcoming need for outlet product, are there other opportunities to segment product by channel, offering either exclusives to specific retailers or to channels of distribution?

Yeah, the answer is absolutely yes. We have that underway. I think one of the great examples of that has been even in Disney. What’s been really interesting to watch with Disney as we’ve gone exclusive with them to deepen the bidding up between—in the secondary market, right, in terms of that Disney has gone on eBay and how the prices keep going up as they go on eBay. We believe that exclusivity and scarcity is really going to be key to this brand going forward because we really want patterns to be much more limited, and so we’ve already begun some of those conversations with some of our key partners of how we can do some exclusive and unique things with them. We believe that will become a larger part of the business going forward. Steve Marotta – CL King & Associates: That’s great. Last question – as it pertains to marketing, can you quantify what the expense is expected to be this year versus last year?

You know, our marketing spend in fiscal ’15 is approximately $18 million to $20 million in total, depending on how you look at that number, and it’s going up only slightly this year. Steve Marotta – CL King & Associates: All right, thank you.

At this time, there are no further questions in the queue. I’ll turn the call back to our speakers.

Thank you. In closing, I continue to be extremely optimistic about the future for Vera Bradley. Fiscal 2015 undoubtedly will be a year of transition for the company, but we are taking the right actions to position the company for the long term. I believe we are assembling the right team and have the right product distribution and marketing strategies in place to drive improved performance and to enhance shareholder value over the next five years. I look forward to updating you on our progress in the quarters ahead and thank you so much for your interest and time.