Vera Bradley Revenue Falls 24 Percent

Vera Bradley(NASDAQ:VRA) reported second quarter fiscal 2026 results on September 10, 2025, posting $70.9 million in revenue (non-GAAP), down approximately 24.5% from $94 million in the prior-year period with a net loss (non-GAAP) of $0.5 million compared to net income in the prior year. Management outlined substantial brand and operational restructuring initiatives, emphasizing early signs of sequential improvement and ongoing strategic transformation.

Brand revitalization strategy accelerates at Vera Bradley

New Executive Chairman Ian Martin Bickley, in office for just two months, highlighted the activation of a comprehensive brand revitalization plan, supported by a recently established strategy and transformation committee. This multi-pronged effort began with merchandising changes in May and aims to recapture historical strengths in occasion-based products while modernizing marketing across digital platforms.

"We are implementing a comprehensive strategy to revitalize our market position by leveraging our brand's proven emotional connection with consumers. Our integrated approach spans strategic merchandising and product innovation, targeted marketing, and how we show up across shopping channels. All designed to reengage our loyal customer base while expanding our reach to new market segments. This disciplined focus on our core brand strengths, combined with data-driven consumer insights and seamless execution, will, over time, drive sustainable growth and restore our competitive advantage."
-- Ian Martin Bickley, Executive Chairman

This transformation banks on restoring prior market relevance and brand equity to drive long-term topline recovery, but its ultimate success will hinge on Vera Bradley’s ability to execute operationally and adapt its message to evolving consumer tastes.

Direct and indirect segments decline; sequential comps improve

Direct segment revenue (non-GAAP) was $60.5 million, down 16.2% year-over-year, while the indirect segment dropped 52.5% year-over-year to $10.3 million (non-GAAP), hit by lower key account orders and liquidation activity; comparable sales in the direct segment declined 17.3% (non-GAAP) due to lower conversion rates across channels. Yet, the company reported sequential gains in comparable store sales and digital engagement metrics, particularly after leveraging influencer-led campaigns and nostalgia-driven product launches during the back-to-school period.

"Notably, we saw sequential improvement versus the first quarter in our comparable store sales across our store fleet and on vb.com. And in each month during the second quarter. We are encouraged that this trend has continued and that our brand channels are leading the way."
-- Ian Martin Bickley, Executive Chairman

Although YoY metrics remain pressured, the early sequential improvement and revitalized digital engagement signal the brand may be stabilizing core shopper demand.

Cost control and operational overhaul drive margin discipline

Gross margin (non-GAAP) held steady at 49.9% versus 49.8% last year, aided by reduced liquidation pressure, even as revenues fell; SG&A expenses decreased by $7.3 million year-over-year, resulting from restructuring, headcount reductions, and lower advertising spend. Management also noted a 13.2% year-over-year inventory reduction and ongoing prioritization of operational efficiency, with additional cost-savings initiatives and reviews of product development, store labor, and other areas.

"Inventory was $96.7 million at the end of the second quarter of fiscal 2026, compared to $111.4 million at the end of the same period last year. We recognize that inventory performance is a key opportunity for our business, and are focused on developing strategies to improve our turns over the next twelve to eighteen months. Immediate actions include aligning receipt plans more closely with sales expectations, and evaluating our SKU assortments to identify opportunities to reduce overall counts allowing for greater depth and high-performing colors and patterns."
-- Michael Schwindle, CFO

This ongoing discipline on costs and inventory presents a critical lever for restoring profitability and cash flows, especially as tariff headwinds and cautious consumer behavior continue to challenge the revenue base.

Looking ahead

Management is not providing forward quantitative guidance due to transformation efforts and dynamic consumer conditions. Key operational milestones include piloting the new Outlet 2.0 concept during the 2025 holiday season, with a potential rollout in 2026, continued omnichannel unification, and partnership expansion in both wholesale and licensing. Securing a new CEO remains a major near-term priority, with progress updates pending.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.