Greetings. Welcome to the Vera Bradley Third Quarter Fiscal 2025 Earnings Conference Call. At this time all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now market pleasure to introduce your host, Mark Dely, Chief Administrative Officer. Thank you, you may begin.

Good morning and welcome everyone. I'd like to thank you for joining us for today's call. Some of the statements made during our prepared remarks 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 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. We undertake no obligation to update any information discussed on today's call. I will now turn the call over to Vera Bradley CEO, Jackie Ardrey, Jackie?

Thanks, Mark. Good morning, everyone and thank you for joining us on today's call. The third quarter was extremely challenging, as we remained in the early stages of project restoration, our strategic initiative to transform our business model and transition Vera Bradley's brand positioning. We have made meaningful adjustments to our assortment and value proposition, in response to customer feedback. With the current consumer mindset focused on value, we have more work ahead of us, on our repositioning journey that I will talk to you later. I am pleased to report that, we're seeing steady progress with several green shoots late in third quarter, which have continued into the fourth quarter to date. We have modestly adjusted our promotional strategy to deliver an improved value proposition and are seeing better results, but we remain committed to driving shareholder value, through improved brand resonance and reduction of low-margin revenue. With the launch of our holiday assortments late in third quarter and the careful strategic promotional adjustments we executed, we experienced a steady trend line improvement across the majority of our Vera Bradley direct-to-consumer channels. We are seeing strong customer response to heritage prints, key giftable price point products and continued success in elevated price point offerings like leather. We experienced a marked improvement in our brand awareness and equity scores in the quarter and we continued to broaden our reach with younger and higher-income household consumers. Recognizing the need to address our value proposition, in November, we made the strategic decision to selectively post value pricing offers to drive continued shopper engagement across our branded and outlet channels. I'm pleased to report that, the response has been strong with our revenue modestly exceeding forecast over the Black Friday weekend through Cyber Monday week and at higher margins, as discounting levels for…

Thanks, Jackie. Good morning, everyone, and thank you for joining us. I will open this up for some questions in a few minutes, but first we'll cover the results for the quarter as well as briefly discuss our updated guidance for the year. For the sake of clarity, all the numbers I am discussing today are non-GAAP and exclude charges as outlined in today's press release. A complete detail of items excluded from the non-GAAP numbers as well as a reconciliation of GAAP to non-GAAP numbers can be found in that release. For the third quarter, our consolidated revenues totaled $80.6 million compared to $115 million in the prior year third quarter. Our net loss for third quarter totaled $7.5 million or $0.27 per diluted share compared to a net income of $6.1 million last year or $0.19 per diluted share. In terms of segment performance, Vera Bradley Direct segment revenues for the current year third quarter totaled $52.5 million, 27% decrease from $72.3 million in the prior year third quarter. Comparable sales similarly declined 27% with the largest impact in the outlet channel, which continues the challenges similar to prior quarters. Total revenues year-over-year were also impacted by five store closures. We did open five new outlet stores during the quarter, with four of these just two days before the end of the quarter. Another two outlet stores also opened about two weeks into our fourth quarter. While the third quarter impact from late quarter opens was negligible, we are very pleased with the sales performance of our new outlet stores to-date and we look forward to continued success in the coming years. Vera Bradley Indirect segment revenues totaled $18 million a 28% decrease from $25 million in the prior year third quarter. The decrease was related primarily to…

Thank you. [Operator Instructions]. Our first question comes from the line of Eric Beder with SCC Research. Please proceed with your question.

Good morning. So, I want to talk a little bit about the store openings and how you feel that piece starts to flow and I know you just opened the full-price store in Natick. How should we be thinking about that going forward, as you kind of move through in terms of Project Restoration?

Great question. Thank you, Eric. I think, as we look at the store openings, we have seen opportunities within the national outlet fleets that mostly Tanger and Simon have to continue to expand our footprint there. The outlet stores that we have opened are in the Simon Premium outlet portfolio, where, we think there's a great alignment there as they continue to work to innovate at their properties, and we're very excited about those opportunities. So, we feel very good about that. In terms of the branded store opportunities, we're being admittedly very cautious. We saw an opportunity to return to Natick, and we saw that as a great opportunity, and we went ahead and moved back into that space. So, we're excited to see how the consumer re-engages with us in that area -- in the Boston area.

I think, Eric, just to add to we talked a little bit today and more expansively about some of the operational improvements that we're pursuing across the portfolio. That certainly includes our store outlook. So, as we're opening these new stores, we're looking at some new operational models that we expect to help us improve performance.

Okay. And when you look at, I know, we're still in the early innings here with Project Restoration. When you look at kind of winning pieces and losing pieces, how should we be thinking about it when we step above it here? Is the newer customer spending money differently than the prior customer and kind of the spacing between one making up for the other? How does that kind of look? And I guess the other question is, how do collaborations kind of work in the new world? Obviously, you have Wicked, it came through, you did a Disney collaboration after Project Restoration. How should we be thinking about that as a potential traffic driver and margin driver going forward? Thank you.

Yes. Thanks, Eric. That's a great question. So, some of the green shoots in Project Restoration that we're building on right now are about first attracting this new customer, who is younger, more affluent, and the most important part of this is that, the customer acquisition is happening at lower discount levels. So that's the key here. That's certainly going to take more time to play out, but that's an important green shoot in project restoration. There's also a real top-of-the-funnel effect, that happened here and we're really encouraged by this. Our brand awareness and sentiment scores increasing as much as they did in such a short time is an important part of our story and it's the very beginning part of the story, but it's an important part of the story. We've also made this progress in the 35 year to 54-year-old, that's again a key part of the strategy. And then, the collaborations, both with the outside properties and IP like Wicked, first of all, those are about kind of being in culture. And so, being able to continue to expand our brand awareness and be where the customer is. So that's really important. We're continuing to evaluate how those properties can live in both outlet and in the brand channels, because she has some significant interest in those from us. So, we definitely also are looking at other partnerships and collaborations, like again, we've had this really successful one with Urban. There's the internal licensing and then there's the external collaborations that help us to expand our reach. So, we're really looking at how do we expand both of those, the internal and the external, to get the new customer at lower Eric.

[Operator Instructions]. Our next question comes from the line of Daniel Harriman with Sidoti. Please proceed with your question.

Thank you. Good morning, Jackie. Thank you for taking my call and questions. Unfortunately, Eric's question was so strong and Jackie's response kind of hit on what my main points were going to be. But just Jackie and Michael, going back to the green shoots that we're seeing here, obviously, the environment is very difficult and has been for a couple of quarters now. But you've got your first awareness increase in three years. You're resonating more with that age cohort that you're going after and also seeing additional sales from that higher income consumer, which were all part of what you were going after with Project Restoration. In terms of timing, are you pleased with how quickly that feedback has gotten to you, or were you expecting a little bit sooner? And then just secondly, and again, you touched on this, but can you talk about any future partnerships that we could be expecting outside of Urban Outfitters? You touched upon that last quarter and then a little bit now. So, any information would be helpful. Thanks.

Sure. Yes. And we expected that question. What I want to say, what I want you to take away is that, first of all, we are disappointed in this result. It was a tough quarter, but we're really encouraged by the green shoots that we're seeing, all the ones that I've talked about, and we're taking those and really mining them in the organization to be sure that, we can learn all that we can, make the right pivots. I'm really proud of how quickly we've been able to adjust to all of the feedback that we've gotten from customers and from our selling data. We are really increasing our focus on improving operations, and then working these green shoots, the most important of which are the inbound interest that we're getting that I wish I could talk more about and specifically about, I just can't at this time. But we are getting quite a bit of inbound interest from other brands, which was not the case for us. So that is what I would like you to take away is that, that's another green shoot that we are really working internally. And the inbound amount of calls and partnerships from different brands across different categories is something that, we are -- we'll talk more about when we can, but that's what I would leave you with.

Okay. Thanks so much, Jackie. And we just wanted to say, we enjoyed our recent store visit. We're impressed with the holiday collection and wish you all the best in the coming quarters.

Great. Thank you.

We have no further questions at this time. I'd like to turn the floor back over to Ms. Ardrey for closing comments.

Thank you. In closing, we remain committed to driving shareholder value through Project Restoration and look forward to sharing Q4 results on our next call. Thank you everyone.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.