Executive Summary
Vera Bradley reported Q1 2026 results that underscored a challenging near-term revenue trajectory driven by significant channel mix shifts from store-based to online channels, a verifiable reduction in direct foot traffic, and a broader consumer environment headwind. Revenue for the quarter was $51.7 million, down 35.9% year-over-year and 48.3% quarter-over-quarter, with non-GAAP operating loss of $13.6 million (26.3% of net revenues) and a non-GAAP net loss from continuing operations of $10.0 million ($0.36 per diluted share). GAAP results were more severe, with net income of -$33.46 million and EPS of -$1.20, reflecting the impact of the Pura Vida disposition and ongoing transformation costs. The company completed the sale of Pura Vida in Q1, with discontinued operations now reflecting that business, and the balance sheet remains conservatively financed with $11.3 million of cash and no borrowings on the $75 million ABL facility.
Management initiated a broad transformation program framed around four pillars (product, brand, customer, and channel) and articulated a plan to accelerate operational efficiencies, optimize inventory, and selectively close unprofitable stores (up to 10 this year). Notable strategic progress includes live expansion in wholesale (first order to Costco in Q1; Urban Outfitters Marketplace launch; Target marketplace momentum) and a robust plan to broaden the 18â34-year-old customer base via a social-first marketing campaign launching in July. While management suspended prior-year guidance given continuing macro uncertainty, the long-run thesis hinges on improving gross margin mix, stabilizing unit economics across channels, and accelerating cost discipline to reaccumulate profitability as the brand modernizes.
Investors should monitor (1) margin recovery driven by channel mix optimization and pricing/ promotions, (2) the success and profitability of wholesale partnerships and new IP collections, (3) the pace and financial impact of store closures and ongoing cost-reduction initiatives, and (4) liquidity resilience given ongoing operating cash burn and the absence of forward guidance.
Key Performance Indicators
QoQ: -48.33% | YoY:-35.92%
QoQ: -49.36% | YoY:-44.71%
QoQ: 23.46% | YoY:-56.11%
QoQ: 28.77% | YoY:-312.02%
QoQ: 28.99% | YoY:-361.54%
Key Insights
Revenue: $51.7 million; YoY change: -35.92%; QoQ change: -48.33%
Gross profit: $22.767 million; gross margin: 44.08%; YoY gross margin: -? (44.07% vs prior 51.3% in Q1 2025 non-GAAP) ; QoQ gross margin: -? (vs 51.3% prior-year, per non-GAAP basis)
Operating income (loss): -$17.853 million; operating margin: -34.56%
EBITDA: -$10.341 million; EBITDA margin: -20.02%
Net income: -$33.46 million; net margin: -64.78%
EPS (diluted): -$1.20; Non-GAAP EPS: -$0.36 from continuing operations
Weighted avera...
Financial Highlights
Revenue: $51.7 million; YoY change: -35.92%; QoQ change: -48.33%
Gross profit: $22.767 million; gross margin: 44.08%; YoY gross margin: -? (44.07% vs prior 51.3% in Q1 2025 non-GAAP) ; QoQ gross margin: -? (vs 51.3% prior-year, per non-GAAP basis)
Operating income (loss): -$17.853 million; operating margin: -34.56%
EBITDA: -$10.341 million; EBITDA margin: -20.02%
Net income: -$33.46 million; net margin: -64.78%
EPS (diluted): -$1.20; Non-GAAP EPS: -$0.36 from continuing operations
Weighted average diluted shares: 27.773 million
Non-GAAP gross margin: 47.5% (Q1 2026) vs 51.3% (Q1 2025)
Non-GAAP SG&A: $38.3 million or 74.2% of net revenues; prior year Q1 non-GAAP SG&A: $44.7 million or 65.7%
Non-GAAP operating loss: $-13.6 million (26.3% of net revenues) vs $-9.4 million (13.8%) in prior year
Cash and equivalents: $11.28 million at period end; no borrowings on ABL facility ($75 million)
Inventory: $99.2 million (down ~3% YoY from $101.8 million)
Net working capital dynamics: receivables $14.9m; inventory $99.2m; payables $23.2m
Total assets: $267.94 million; Total liabilities: $121.91 million; Total debt: $80.91 million; Net debt: $69.63 million
Free cash flow: -$19.77 million; Operating cash flow: -$17.90 million; Capex: -$1.871 million
Customer metrics: 45% of active 12-month file are newly acquired customers vs 30% prior year; 18â34 demographic targeted strategy in play.
Key qualitative takeaways: wholesale momentum is improving, e-commerce in value channels is stabilizing, and management is actively testing price elasticity and closing underperforming stores to improve unit economics.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
51.65M |
-35.92% |
-48.33% |
| Gross Profit |
22.77M |
-44.71% |
-49.36% |
| Operating Income |
-17.85M |
-56.11% |
23.46% |
| Net Income |
-33.46M |
-312.02% |
28.77% |
| EPS |
-1.20 |
-361.54% |
28.99% |
Management Commentary
Theme: Strategic transformation and leadership transition
- Quote: "The pivots we are making are starting to resonate and the composition of our customer file is beginning to meaningfully shift." (Jacqueline Ardrey)
- Significance: Signals early qualitative progress in brand repositioning and customer mix, supporting the rationale for ongoing investments in wholesale and new product constructs.
Theme: Channel mix, pricing, and cost discipline
- Quote: "We are testing price elasticity through promo adjustments and are proceeding with plans to close 10 unprofitable full-line store locations this year." (Michael Schwindle)
- Significance: Highlights price optimization efforts, channel profitability focus, and a near-term store rationalization plan to improve margins.
Theme: Wholesale expansion and partnerships
- Quote: "We shipped our first order to Costco in Q1, launched on Urban Outfitters Marketplace last week, continued to deliver strong revenue increases on Target marketplace." (Jacqueline Ardrey)
- Significance: Demonstrates the execution of the wholesale strategy and channel diversification that could support future revenue resilience.
Theme: Leadership transition and governance
- Quote: "I am approaching this role not merely as a caretaker but as someone committed to driving performance and needed change for the company." (Ian Bickley)
- Significance: Indicates Board-driven acceleration of the transformation program and potential strategic realignment under new leadership.
Theme: Market and consumer dynamics
- Quote: "Looking forward, ... social-first marketing campaign launches in July and will run through the holiday season." (Jacqueline Ardrey)
- Significance: Emphasizes investment in next-gen customer acquisition and brand nostalgia to reconnect with core and new consumers.
Theme: Discontinued operations and financial presentation
- Note: Pura Vida was completed in Q1 and is now classified as discontinued; all referenced numbers exclude these operations on a non-GAAP basis per management.
"The pivots we are making are starting to resonate and the composition of our customer file is beginning to meaningfully shift."
â Jacqueline M. Ardrey
"We are testing price elasticity through promo adjustments and are proceeding with plans to close 10 unprofitable full-line store locations this year."
â Michael Schwindle
Forward Guidance
Guidance status: Management suspended prior-year guidance due to ongoing uncertainties in the consumer environment and leadership transitions. No formal forward guidance was provided for QQ2âQQ4 2026.
Outlook considerations for investors:
- Revenue trajectory: Expect continued pressure in Direct channels (stores) with potential stabilization from wholesale channels (Costco, Urban Outfitters Marketplace, Target marketplace) and from new IP collections. Monitor the contribution from Indirect vs Direct segments as the company reshapes its mix.
- Gross margin trajectory: Near-term margin headwinds driven by channel mix shifts toward online and discount channels. Prospective improvements depend on price elasticity experiments, lower freight costs from improved online fulfillment, and a more favorable SKU/mix strategy with heritage and new product lines.
- Cost discipline and profitability: Opex reduction efforts (SG&A optimization) and store closures could drive non-GAAP operating margin improvements in the medium term. Close attention to profitability of remaining stores and the foray into new wholesale channels.
- Liquidity and capital allocation: Cash burn remains a key risk; no debt draw on ABL in Q1 is positive, but ongoing losses require scrutiny of liquidity runway and potential need for additional financing if operating cash flow remains negative.
- Key risk factors: Macro consumer demand softness, promotional intensity impacting margins, execution risk of store closures, and potential adverse effects from leadership change on strategic execution.
Overall investment thesis: Downside protection exists if the transformation accelerates and wholesale partnerships reach profitability, but near-term earnings visibility remains limited given the negative profitability metrics and lack of forward guidance. A cautious stance is warranted until loading indicators (GM recovery, store rationalization, and wholesale profitability) become clearer.