Vera Bradley, Inc. (VRA) on Q3 2021 Results - Earnings Call Transcript
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Vera Bradley Third Quarter 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 queue up for questions. As a reminder, today’s conference call is being recorded. I would now like to turn the call over to Mark Dely, Vera Bradley’s Chief Administrative Officer.
Mark Dely: Good morning, and welcome, everyone. I’d like to thank you for joining us for Vera Bradley’s earnings call.
Rob Wallstrom: Thank you, Mark. Good morning, everyone, and thank you for joining us on today’s call. John Enwright, our CFO, also joins me today. Our quarterly results once again significantly exceeded last year’s earnings performance, as well as our expectations. We expanded our gross margin rate primarily through sales of cotton masks and controlled promotional activity and we diligently managed our expenses achieving meaningful expense leverage. Our multi-brand strategy is proving to be powerful. Customers are changing the way they shop and we have responded. Our digital competencies are becoming increasingly important especially in this quickly evolving environment. Somewhat fortuitously last year we acquired digitally-native Pura Vida and began working on critical Vera Bradley technology infrastructure and e-commerce site improvements necessary to position the company for future success. Those are enhancements went lives several months ago. Our consolidated e-commerce business was very strong in the third quarter, reflecting growth from both Vera Bradley and Pura Vida. Even as our stores were reopened during the third quarter, our Vera Bradley digital business grew nearly 50% year-over-year and Pura Vida’s e-commerce sales grew over 17% for the quarter, despite disruptions in the supply chain. E-commerce sales comprised over a third of total sales for the quarter. By staying laser focused on the customer and by controlling what we can’t control we have proven we can drive strong results and position ourselves to emerge a stronger and more resilient company, despite facing ongoing headwinds. Our results were achieved through the innovation teamwork and determination of our entire organization. Even while working remotely our teams have demonstrated flexibility in decision making created new products and marketing initiatives and added efficiency to the organization. And our focus on cash management has driven us to think of creative ways to drive sales, expand margins and reduce expenses.
John Enwright: Thanks Rob and good morning. Let me go over a few highlights for the third quarter. As a reminder, financial results have been consolidated to include the July 2019 Pura Vida acquisition. This is the first quarter since the acquisition of a year-over-year quarters are comparable. The numbers I will discuss today are all non-GAAP. For a complete reconciliation of GAAP to non-GAAP numbers, please reference schedules attached to today’s press release. The current year non-GAAP third quarter income statement numbers exclude intangible asset and amortization. The non-GAAP income statement numbers for the prior year third quarter exclude the Pura Vida acquisition related charges and technology replatforming expenses. Consolidated net revenues totaled $124.8 million for the current year third quarter, compared to $127.5 million in the prior year third quarter. Excluding charges, Vera Bradley incorporated non-GAAP consolidated net income was $10.2 million or $0.30 per diluted share for the third quarter, compared to $6.9 million or $0.20 per diluted share last year. Vera Bradley direct segment revenues totaled $78.2 million, compared to $78.4 million in the prior year of third quarter. E-commerce sales growth of 48.8%, offset the 19.1% decline in comparable store sales for the quarter. Store traffic continues to be negatively impacted by the pandemic. The company closed 10 full line stores and opened six factory outlet stores in the last 12 months. Vera Bradley indirect segment revenues totaled $22.3 million, compared to $24.1 million in the prior year third quarter, reflecting a reduction in orders primarily related to the pandemic and in the number of specialty and department store accounts. Pura Vida segment revenues totaled $24.3 million, compared to $25 million in the prior year third quarter, a 17.2% growth in e-commerce sales nearly offset the sales to wholesale accounts, which were negatively affected by the pandemic. Third quarter consolidated gross profit totaled $73.8 million or 59.1% of net revenues, compared to $74.1 million or 58.1% of net revenues in the prior year on a non-GAAP basis. The company expanded its gross margin in the quarter primarily through sales of cotton masks and controlled promotional activity. On a non-GAAP basis, consolidated third quarter SG&A expense totaled $59.4 million or 47.6% of net revenues, compared to $64 million or 50.2% of net revenues. Current year SG&A expenses were lower than the prior year due to both temporary and permanent expense reductions related to the pandemic. On a non-GAAP basis, current year third quarter consolidated operating income totaled $14.4 million or 11.6%, compared to $10.1 million or 7.9% of net revenues last year.
Rob Wallstrom: Thanks, John. Now let’s shift to an update on our two brands. We believe the way that customers live and work has radically and permanently changed. Both Vera Bradley and Pura Vida are particularly well-suited with our purpose driven casual, comfortable and fun positioning that dovetails perfectly into this consumer shift. We remain focused on propelling both brands forward through innovation and product and marketing supported by state of art technology. Our new cloud-based technology platform is allowing us to respond to the rapidly changing environment and to harness customer data and feedback earlier and more instantaneously to drive this innovation. First, let me update you on Vera Bradley. Let’s start with product. I am very proud of the fabric and product innovation being driven by our talented, design, creative and product development teams.
Operator: Thank you. And we will now take our first question. It comes from Oliver Chen of Cowen. Please go ahead, sir.
Oliver Chen: Thanks so much everybody. Appreciate it. So the margins are really strong, but the direct was a little lighter than what we had modeled. What are you seeing in terms of the comp store sales and traffic trends and/or I am sure there’s a fair bit of volatility and how has inventory trended in that channel relative to your expectations?
Rob Wallstrom: Yeah. Thanks, Oliver. From a traffic perspective in the third quarter, we saw improvement obviously from the second quarter in both the factory and full line channels. Of course, factory was better than the full line channel. So we saw better traffic it getting to our stores as we opened up our stores right in earnest in the back half of third quarter. But from inventory perspective, I think, we are well positioned from an inventory perspective for both brands. We have outside of the beginning of this third quarter, Pura Vida got back into inventory late in the quarter, and ultimately, I think, accelerated their sales into the first part of the quarter was a little bit challenging from an inventory position perspective. In regards to stores at the Vera Bradley brand, we were well positioned in inventory for the full quarter.
Oliver Chen: Okay. And as we think about the comp and model the comp, what are some dynamics that you saw on conversion versus check size in the quarter that we just had and any thoughts going forward, will traffic continue to get better? Hopefully there’s added visibility on a reopening?
Rob Wallstrom: Yeah. So from a conversion perspective, conversion was definitely up in all channels, whether that is e-commerce, whether that is the fashion or the full line, because of individuals who came out -- came out to shopping, really came out to buy. So we saw conversion increase. We also saw kind of ADS. We the actual check go up. People were buying a little bit more, but we actually also saw the AUR go down a little bit based on the fact that our masks square portion of the purchase in -- at a $8 price point that’s going to bring AUR down. As we look into the fourth quarter, I think, it’s really -- it’s going to be some challenges and the stores it’s going to be associated with capacity as all retailers kind of deal with the capacity constraints of certain states or certain cities in regards to what they are doing in regards to COVID-19. But you know the hope as we move into next year would be that the vaccine rollout kind of stores, the malls open up to get traffic back to where we thought it would be as we entered into this year. But as you can imagine factory stores from a traffic it looks like the people still feeling a little bit more comfortable going to kind of outside malls or some inside malls.
Oliver Chen: And then Pura Vida all the details and strategy are helpful. I know you called out supply chain in the wholesale as being factors. Could you elaborate on when those might have better visibility in terms of timing and improvement on those features of Pura Vida?
John Enwright: Yeah. So from a supply chain perspective we have corrected some of the challenges that we had. And Rob mentioned in his prepared remarks that we are now working with additional vendors to help kind of on the supply chain that we are not only can fully reliant on the El Salvador plant. From a wholesale perspective, we has -- our stores opened up, as we look at this thing we think that’s why we will see a correction from a wholesale perspective for Pura Vida.
Oliver Chen: Okay. And Rob on product for fourth quarter and then next year, which products would you prioritize as most impactful to an outlook in terms of …
Rob Wallstrom: In terms of, I guess, what is -- are you specifically regarding Pura Vida or Vera Bradley about?
Oliver Chen: Vera Bradley brand.
Rob Wallstrom: Yeah. Yeah. I think with Vera Bradley, I think, there’s a lot of innovation coming. So in fourth quarter I think what becomes really important is, everything that we do around fleeces and home and cozy. Obviously, it’s really important in this time and year kind of all of our holiday patterns. But we are seeing now with hands free being really important as we moved through the fourth quarter, we think that will continue into next year. And then if we look at next year continuing with our collaboration and we now believe which is really important and then continuing with our fabric innovation and those are two things that become really important have across categories. The thing that’s been interesting is if we have watched our youth travel and everyday business, you know we were expecting to see a lot more suppression in the travel business and it’s basically trended more similar to the rest of our business. So that’s been encouraging to see because we are more in that soft travel, car travel category, which is held up better than kind of that hard luggage air travel and so that’s been encouraging to see. Back-to-school was difficult back in August, but we saw some strength coming in September, and obviously, we are hopeful as we move through next year and get to back to school. But it will be in full return hopefully by the time we get to next fall.
Oliver Chen: Thank you very much. Best of luck. Happy holidays.
Rob Wallstrom: Thanks, Oliver.
John Enwright: Thanks, Oliver.
Operator: Our next question comes from Mark Altschwager of Baird. Please go ahead.
Mark Altschwager: Thanks. Good morning, everyone. Just following up on the fourth quarter for a moment and you mentioned that I think sales might not be as strong in the fourth quarter versus the third quarter, understanding that the environment is tough to predict here. But something you could expand upon that a bit, is that primarily conservatism related to store capacity. I guess with consumers focus shifting to get being made less of a headwind related to back to school. I would think that continued sequential improvement might be possible. So maybe just talk a little bit more about the puts and takes there and how you are thinking about the holiday?
Rob Wallstrom: Yeah. I think that the holiday season, right? This holiday is definitely not like any other, right? I think what we have seen in retail in general and we have seen in our numbers is consumers move forward some of their spending. We had a very, very strong start to November. We were feeling very good. Obviously Black Friday, you can tell from all of the market reports, while there is suppression in store traffic as of Black Friday and so we will just watch and see how it plays out over December. I think a couple of days in fourth quarter that are out there is that, as COVID started pulling back on capacity issues that caused a little bit of texture in some of our stores and in some of those capacity pullbacks had been pretty large and so that has been a pressure that we have seen in fourth quarter that we do not see as much in third quarter. And then the second question just can become with the e-commerce as we move through the earlier shipping, right, and all of retail some of the businesses moved on e-comm and how that impacts that last week before Christmas will people get back out in the stores. There’s just still a little bit of uncertainty out there and so we will watch how that works through. And then the other thing just from an earnings standpoint, right, there are shipping surcharges and additional pressure in fourth quarter that we haven’t had the rest of the year. So those are kind of the three key points, right? The reduction in capacity in stores, once the e-commerce shipping, deadline ship off what happens with the customer and third the surcharges, and so those are the things we are watching in fourth quarter that are unique. But it’s not that we think that there is an underlying weakness with the consumer or what we are seeing going on. We think the consumer is continuing to respond to novelty and innovation and so we see it just is kind of navigating through this COVID holiday and then moving into next year and hopefully next year momentum will continue to pick up.
Mark Altschwager: Okay. That’s really helpful. Thank you. And then, on the marketing front, can you talk about how you are engaging with some of the new customers you have acquired with the mask sales over the last couple of quarters. Are they coming back to purchase other categories? I guess what is that behavior looked like in terms of repeat business as the last couple of months have progressed?
Rob Wallstrom: Yeah. No. It’s been very encouraging, both the new customers that we brought in through our mask business, as well as customers that we have brought into Harry Potter. We have very specific marketing journey to get to both of those customers to really engage them with the brand more deeply and widely. We have seen really good response from those customers in terms of coming back. So we are encouraged that we will be able to keep all those customers we have gained.
Mark Altschwager: Got it. Got it. Thanks. And then, I guess, last one for me just bigger picture, Rob, you discussed this permanent shift in consumer behavior in a multiyear journey in terms of evolving what the store base looks like. But any changes to how you are thinking about that in the medium-term just in terms of stores versus digital? And for the outlook business specifically, isn’t your approach evolving for online outlet relative to store outlet business, any high level thoughts there would be great? Thanks.
Rob Wallstrom: Yeah. In terms of overall, right, the journey we have kind of been on we have been -- we had talked about reducing hours full line store fleet, as you see we are projecting to continue to do that next year and we will watch in the mall development very closely to see what happens and in enclosed malls going forward. On the outlet front store, we still feel that there’s opportunity in the outlet channel. We have -- we are very happy with overall how the outlet channel has been performing, customers are coming back faster to the outlets and they are coming back to the enclosed malls. So we see that as an opportunity. We still are very cautious about moving the online outlet onto a digital platform just because of making that off priced product more highly accessible and so we still primarily see our factored business as a brick-and-mortar strategy.
Mark Altschwager: Great. Thanks so much and best of luck.
Rob Wallstrom: Thanks, Mark. J Thanks, Mark.
Operator: Our next question comes from Steve Marotta of CL King & Associates. Please go ahead.
Steve Marotta: Good morning, Rob and John. As far as the recent COVID hotspots and you mentioned, of course, it’s negatively affecting capacity in the stores. Is it having any effect on the e-commerce activity in those areas? In other words, you find that if people can’t get in the stores e-commerce is going up or because of the restrictions and people not feeling very good about anything that sales are going down in those areas as well?
Rob Wallstrom: I think that, overall, it’s definitely not as quick as, you slow downed the stores and then all passed on the e-commerce as they got e-commerce helps offset some of that, which I think we have seen in the industry and we have seen in our channels over this year. But as you -- as areas start to spike we do see just consumers starting to pull back particularly for the first few weeks the things change, right, everybody I think begins to rebalance their life and we see a short-term impact and then usually with time those things begin to medicate.
John Enwright: And the only thing I would add to that to Mark’s question a minute ago is, from the factory perspective when capacity goes down from a factory perspective we don’t have an outlet for that -- from an e-commerce perspective…
Rob Wallstrom: Yeah.
John Enwright: … for those customers to buy.
Rob Wallstrom: Yeah.
Steve Marotta: Okay. I understand. And Rob, maybe you can provide a little bit of your outlook for fiscal ‘21, not obviously from a guidance standpoint, but just from what you see as the trajectory of the consumer over the course of the year the vaccine opens the economy back up again as specific guidelines are reduced, obviously, it’s going to be good for your business in some respect. Do you think there will be different styles that will be utilized? How do you best prepare and capitalize on the reopening and the timing of the reopening?
Rob Wallstrom: Yeah. I think the first half of the year, right? It’s definitely going to be continuing to navigate in a pretty dynamic environment. I think we are all hopeful that as we get summer, there’s some normalcy starting to come back and I think both brands are well positioned. If you think about what we expect to bounce back disproportionately would be things like summer travel. So that whole travel piece of business whether it’s in our travel categories or Pura Vida with all their beach lifestyle and people getting back to beaches and getting out and doing all that. I think the second big one that we expect to really pop back strongly is back to school and I think there’s a lot of impacts from that. There’s -- under the Vera Bradley business in terms of the back to school business obviously this year I think there’s a lot of pent up demand. So we are hopeful there. And secondly, Pura Vida, they do a lot of products around fundraisers and schools and teams and people come use their customizer pack to do fundraisers, and obviously, this year since a lot of that did not happen that business were softer. We think that that’s a real opportunity to bounce back next year. So there could be a lot of positive momentum in the back half of next year as travel and school kind of pop back and return.
Steve Marotta: That’s very helpful. Thank you.
Operator: Our next question is a follow up question from Oliver Chen of Cowen. Please go ahead.
Oliver Chen: Hi. Thank you. A few more just on the shipping and what you are seeing with the shipping deadlines. Is that then limiter to some of the revenue growth and/or as you look at elasticity as issues although you are taking the surcharge? I mean has there been any consumer differences with cancellations and/or timing. And would also -- just this is very hard to forecast, but as you look forward with mask, how are you thinking about planning inventories in that situation and that being a big part of the business currently? Thank you.
Rob Wallstrom: Yeah. I think it from the shipping deadlines. I think we have been managing through shipping deadlines capacity well. I am sure you have seen some of the headlines out there that we were able to secure our capacity needs with UPS and we are managing through that. So we don’t have any disproportionate delays here. We have actually been encouraged by how shipping and logistics piece has been working from just on time performance. That’s not really the issue. There is a surcharge issue, which there is expense associated with that. I think the bigger question is when the shipping cut off happened and so much of the business has moved to e-commerce is what does the consumer do from that kind of shipping cut off of approximately you know 12/15 through 12/25, right, that 10-day window, as she go back out to store like she has traditionally or not. I think that’s the big question mark as we move through the holiday.
John Enwright: And in regards to mask, right, I call the Aspen mask . We do think masks are going to continue to base price as a percentage of total sales. We do -- we think they are going to be important part of business for the fourth quarter and we think into the first quarter, but how it plays out after that we are unsure.
Oliver Chen: Yeah.
John Enwright: Yeah.
Oliver Chen: Okay. And Rob on Amazon, which you called out in the prepared remarks and pricing integrity, what are some of the key guardrails that you have there and what are the main benefits and opportunities that offset some of the risk factors of partnering and deepening the relationship with Amazon?
Rob Wallstrom: Yeah. I think, one, really building kind of a strategic partnership with Amazon was really important, with really dedicated resources people who really understood the channel. And we worked on making sure that we were pulling back on either counterfeit product that was available digitally out in the world and pulling that back to a lot of activities we have been doing there which helps with price stability, making sure that we are working with our other wholesale partners to make sure that they are maintaining price integrity. And doing all of those things has really helped us manage the price integrity on Amazon. And I think it’s just in this new world really being on top of data and management making quick decisions day in and day out has made that partnership effective. The other thing that we have really used Amazon for is, key category penetration, right, there is so many people shopping on Amazon when people are looking for things like backpacks or masks or kind of category type of conversations, we want to be part of that storage, part of the conversation and we can really pick-up new customers that way, which is the reason why we have really lean into it and we have been very happy with that partnership today.
Oliver Chen: Thank you. And finally on the promotional environment, as that you have been seeing it. How have you been seeing it and how has your merchandise margins been relative to your expectations and what you around seeing in terms of being competitive relative to competitors as well?
John Enwright: So, with regards to merchandise margins, they are meeting really kind of our expectations. We haven’t -- from a bureaucratic perspective we haven’t been significantly more promotional. In the third quarter, we are controlling the promotionality. As we look into the fourth quarter we are just being we are looking at kind of what others are doing and they are trying to ensure that we play in the appropriate space. But as we have introduced in kind of Vision 2020, we want to continue to drive full price selling versus kind of just revert back to kind of our time. So we are being thoughtful in kind of how we are promotional throughout the season. But we want to make sure that we don’t leave any opportunity uncovered.
Oliver Chen: And just finally, you have been a pioneer with using a lot of the data in AI for personalization and algorithms internally. What’s the latest there in terms of like results that you have seen from implementing that technology in the organization?
Rob Wallstrom: Yeah. I think that what we have seen, one, is as we have seen a real acceleration of our consumer growth and kind of that 25-year-old to 40-year-old category and a lot of that has been a very specific targeted marketing. We also think as we moving forward as we are continuing to diversify our customer base. Really using a lot of very specific algorithms to really target consumers is really going to help us really talk to each one individually. You can imagine that with our very diverse product portfolio from the color and style standpoint, there’s a lot of regionality, there’s a lot of specificity in terms of ages and as we have been doing that, we have been seeing much higher returns on our ad spent and we think that with time we are going to continue get smarter and continue to get more and more targeted on our costs, not only our product development but also on our marketing and what is available.
John Enwright: Yeah. As we brought in new customers from masks, got new role kind of Harry Potter, we have been able to get their repeat purchases is better than average based on kind of specific earnings. So that’s been helpful.
Oliver Chen: Thank you very much. Best regards.
Rob Wallstrom: Thanks, Oliver.
Operator: Our next question comes from Dana Telsey of Telsey Advisory Group. Please go ahead.
Dana Telsey: Hi. Good morning, everyone. Just wanted to get a little bit more color on Pura Vida. How you are speaking about the operating margins go forward in that business and also how you are thinking about planning it for 2021? And just to follow-up on the expenses, when you think about your fixed cost structure now versus pre-COVID, how much of the leverage do you see is impacting margins as the core business recover from COVID?
Rob Wallstrom: Yeah. From Pura Vida, well, we are still very excited about what the growth opportunity is in front of us with Pura Vida. A lot of initiatives are ahead of us. We think that from an operating margin, we believe that Pura Vida can continue to kind of begin at high-teens -- mid-to-high-teens operating margin. So we still feel very good about that business. From the expense standpoint, I will let John some color on that one.
John Enwright: Yeah. So from an expense perspective, we have a lot of fixed costs there. We saw some savings associated with certain items in the second quarter and third quarter that we likely won’t see kind of in the fourth quarter and some of those savings you can think of as our personal savings as we took some reductions in salaries or other furlough positions that we took. If you think about kind of core savings that we think we can see kind of into next year you can think of that as a discretionary savings and it’s likely in the low single-digit as a percentage of total expense base that we think will be permanent savings on a go forward basis.
Dana Telsey: Got it. And then when you think about the partnerships like with Disney, what’s coming up that we should be marking our calendars for?
Rob Wallstrom: We haven’t put the other launch date out there, but what I can tell you is that we have a very robust pipeline next year that is both with character releases a lot of exciting news that’s going to be coming. So we will continue to build on our partnerships, with Disney continue to build on our partnerships with Harry Potter and you will also be seeing with Pura Vida been taking advantage of a lot of licensing opportunities next year. So those are the seven things we are doing on kind of the character licensing side. And additionally we are continuing to do collaboration work like we have done this year and we have some exciting things in mind next year. So stay tuned.
Dana Telsey: Got it. And just lastly any more learnings on the project Novus side?
Rob Wallstrom: Yeah. I think our big learnings there is just continuing to become more responsive and technology and data driven and then everything that we did around that project was so that we can move more rapidly. We can make changes more rapidly. We have seen in our prepared remarks you heard the comments we will make about the improvements in SEO and how we just really are able to move quicker, right, with our new infrastructure platform more able to make changes and how we execute and what we learn in probably a matter of days versus what might have been months before and that will just over time we will get smarter and better and better. I think that’s one of the big things in this new world with technology and data. Now it’s not a destination so to speak. It’s kind of a journey, right? You keep getting better and better the more you know, the more you learn and you really build up a competitive advantage and that’s what we are working on.
Dana Telsey: Thank you.
Rob Wallstrom: Thanks, Dana.
John Enwright: Thanks, Dana.
Operator: Our next question comes from Eric Beder of SCC Research. Please go ahead.
Eric Beder: Good morning.
Rob Wallstrom: Good morning, Eric.
John Enwright: Good morning.
Eric Beder: Hi. In Q4 you have been a lot more aggressive in terms of apparel and it’s not a store -- in the Vera Bradley stores, but with how to wear pajamas, robes and I think the response has been pretty positive. Is that kind of a one off holiday thing or should we be thinking about that as a potential category or some level of expansion going forward?
Rob Wallstrom: Thanks for the question, Eric. Yeah. During the fourth quarter, we definitely have expanded some of our apparel offerings really focusing on kind of key item areas and we have been very, very happy with the response from the consumer and we do think that’s an area that you will see continued development. One thing that we have always believed in both of these brands is that both brands are truly lifestyle brands. It not just a product they are actually our lifestyle. So we think that there is opportunity to have category expansion in both brands.
Eric Beder: Okay. And speaking of that category, when you put a Pura Vida store-in-store at our Vera Bradley store, did you tell us how -- what kind of -- how big is this in terms of the physical store and what are they selling in there beyond I guess the core, are they selling the entire Pura Vida line. How does that worked right now?
Rob Wallstrom: Yeah. We are still -- we are working on all of the final design. We have identified a location. So it is about an 800 square foot space. So it’s a -- it’s kind of on the smaller store footprint, which we think is a great opportunity for Pura Vida within jewelry store you don’t need as much space therefore you get a much higher sales per square foot to make it more profitable in the long run. In terms of the assortment, it really is going to be focusing on kind of a fairly broad assortment. As you have seen the metal jewelry business continues to be exceptionally strong, so that would be a big part of the assortment supported by the string bracelet business, but also some of these other exciting initiatives they have planned for next year that we will talk -- we will be talking more about on the next call, some of the new initiatives we will be launching in the store too.
John Enwright: Eric your question also in regards to the store and the store foot in the Vera Bradley stores or is it on specific to the Pura Vida new location?
Eric Beder: I think what you described is Pura Vida new location.
John Enwright: Yeah.
Eric Beder: How big is the inside of Vera Bradley -- like Vera Bradley shop as far as I guess?
John Enwright: I think it’s a shop and shop in Vera Bradley. We are testing a few different things. So we are testing in Birmingham. We gave a couple hundred square feet to Pura Vida and that was kind of a focused assortment on kind of their best-selling metal and string bracelets to kind of get a test up. We are rolling it out to additional stores and some of those presentations might be tighter. One thing that’s really great about Pura Vida is with the way they wall units work and how much product you can get in a very small square footage, you don’t necessary need a lot of space. And so we are going to test a few different sizes, some of them might be 100 square feet, some of them might just be 12 linear speed of wall space. But it will be exciting to all that response. And then the charity bracelet program that will be in all of our stores will even be a tighter assortment. But we think it’s a real opportunity. What’s been exciting is, we have seen a good response from our consumers, not only in the full line stores but also in our factory stores buying full price product, whether it’s been with Pura Vida or whether it’s been in some of our collaborations that we tested by Harry Potter in some of our factory stores. So we think there’s a real opportunity to take advantage of some of this with all the traffic that’s going to our factory stores.
Eric Beder: Okay. And finally on ReActive, you have had open for almost a year, next month it will be a year approximately. What other -- I know it’s been caught up unfortunately in the whole flow of everything else. But what kind of -- is it attracting the consumer you expected or are you expecting to be as aggressive with all the patterns of the pieces as you did in 2020. What do you expect to see ReActive kind of over the next, I guess, somewhat normalized year next year?
Rob Wallstrom: Yeah. We have been very happy with the ReActive performance, right? There were really two key elements of ReActive. One was really our first four year moving into sustainability. And the consumers really responded to that messaging and we have seen the younger customer really be attracted to that messaging. You are going to see us. We have made a real commitment to moving our full line assortments to a sustainable fabric platform as we move forward. So more exciting announcements next year, we think that’s critically important and we have been very happy with the response. The second piece of ReActive was just the more active lifestyle, and obviously, we have seen the consumer this year continue to get more casual, get more active. And I think we will continue to be leaning in that and how do we use ReActive to even have a stronger foothold in the active space.
Eric Beder: Great. Thanks. Good luck with the holiday -- rest of the holiday.
Rob Wallstrom: Thank you, Eric.
John Enwright: Thanks, Eric.
Operator: It appears we have no further questions at this time. I would now like to turn the conference back to Rob Wallstrom for any additional or closing remarks.
Rob Wallstrom: Yeah. Thank you so much for joining us on today’s call. I am excited to have the opportunity to lead such a great team of talented, agile and innovative associates, who are passionate about our brand and our customers. Vera Bradley, Inc. is not authentic, iconic, lifestyle company with two powerful brands and devoted customers. We are committed to continual innovation in product and customer engagement. We have a strong balance sheet and ample liquidity and we are fully committed to advancing our ESG and stakeholder focus and to create long-term shareholder value. Once again we have proven that by working together we can thrive even when facing unrelenting headwinds. We are poised to emerge a stronger company with an exciting future. Thank you for your time and interest in Vera Bradley, Inc. We hope you can join us for our fiscal year end call on March 10, 2021.
Operator: This concludes today’s call. Thank you for your participation. You may now disconnect.
