Good day, and welcome to the Vera Bradley Q2 fiscal 2023 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Mark Dely, Chief Administrative Officer. Please go ahead, sir. Good morning, and welcome everyone. We'd like to thank you for joining us for today's call. Some of the statements made 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 in 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 provide any information discussed on today's call. I will now turn the call over to Vera Bradley's CEO, Rob Wallstrom. Rob? Thank you, Mark. Good morning, and thank you for joining us on today's call. John Enwright, our CFO, also joins me today. While total company Q2 revenues of $130.4 million were modestly below our expectations, and we continue to experience gross margin pressures due to logistics costs, we drove product innovation at both Vera Bradley and Pura Vida, initiated meaningful cost reduction actions, and completed $6 million of share repurchases while maintaining a solid debt-free balance sheet. We are continuing to see bifurcation in the spending of our customer base. At Vera Bradley, direct full price channel comparable revenues were nearly flat to last year and up double digits to fiscal 2020. Additionally, our Vera Bradley indirect channel continued to experience a healthy year-over-year rebound. However, inflationary pressures, especially higher gas prices, continued to negatively impact the traffic and spending in our Vera Bradley factory stores. However, as gas prices are easing, we have seen a recent improvement in our factory traffic and revenues. We are taking decisive actions to strengthen our core brands in the overall enterprise. We have begun implementation of targeted cost reductions of $25 million, which are expected to be fully realized in fiscal 2024. These cost reductions will help offset inflationary expense pressures and the recessionary spending behavior from lower income households. Expense savings are being derived across various areas of the company, including retail store efficiencies, marketing expenses, information technology contracts, professional services, logistics and operational costs, and corporate payroll. In addition, we are continuing to evaluate and execute strategic price increases for both brands to offset rising raw material and freight costs. At our Vera Bradley brand, we remain confident in our core strategy by continuing to innovate and build on our lifestyle merchandising focus. We are continuing to optimize the travel category, which is nearly back to pre-pandemic levels, maximizing back to campus opportunities with strategic assortment enhancements and continuing with powerful product collaborations like Disney and Harry Potter. We are excited about expanding our home assortments this fall and adding VB Cloud slip-ons and mules to our Vera Bradley footwear franchise next month. Pura Vida's e-commerce revenues continue to be affected by the shift in social and digital media effectiveness and escalating digital media costs. At Pura Vida, we are evolving our business model from one that is largely dependent on e-commerce and digital marketing to one that is a true omni-channel business with a more diversified marketing base. This will take time, but we are taking the actions to make this transformation happen and return the brand to long-term growth. Our number one priority is to build a more diverse, innovative, effective and performance-based marketing program to drive e-commerce sales, and we are bolstering our internal marketing and data analytics talent. Most importantly, we are in the process of implementing a comprehensive customer data platform from Pura Vida to build a single coherent, complete view of each customer so that we can better target and personalize marketing and become less reliant on third-party marketing. In the meantime, we are continuing to work with our micro-influencers, expanding our TikTok presence, launching impactful ads on connected TV, optimizing SMS, and aggressively exploring other methods to effectively reach our customers day in and day out. Pura Vida's future growth will be a balance of online growth and growth in physical distribution channels. Stores will play a key role in driving new customer acquisition as we continue to diversify our marketing platforms. During the quarter, we opened a new Pura Vida store in the Irvine Spectrum Center in Irvine, California, and in August, we opened a third location at Broadway at the Beach in Myrtle Beach, South Carolina. Like our original location opened last year in San Diego's Westfield UTC Mall, both new locations are exceeding our expectations. We will open a fourth store at the SanTan Village in Metro Phoenix in September. Stores can play a key role in driving new customer acquisition as we continue to diversify our marketing platforms, and they demonstrate the power a retail presence has in driving digital sales, omni-channel loyalty, and spending. For example, we continue to experience a double-digit differential in our San Diego e-commerce business relative to the rest of the country since that store opened. We look forward to the impact of more stores in the future. On the product front, we continue to build customer excitement and engagement through collaborations like Disney, Harry Potter, Hello Kitty, and the World Surf League, partnering with key influencers, offering themed collections centered around key events like Shark Week, and the launch of our Demi-Fine collection featuring 18-karat gold plating, sterling silver, and natural stones. Looking to the balance of the year and even into next year, we are planning for the macro environment to remain challenging. Despite the strength in Pura Vida's store business and opportunity for new store openings, we expect it to take time to return Pura Vida's e-commerce business to growth as rebuilding and transforming the marketing program is underway. We are taking critical actions that will further strengthen both core brands and our company as a whole, not only to successfully manage through this period, but to position us for the future. Our teams are focused, and our cash position and balance sheet remain strong. We have successfully managed through challenging business cycles before, and I am confident that we will manage through this period as well. We look forward to returning both brands to steady growth. Now let me turn the call over to John to review the financial results. John? Thanks, Rob, and good morning. Let me go over a few highlights for the Q2. The numbers I will discuss today are all non-GAAP and exclude the charges outlined in today's release, totaling $32.2 million on an after-tax basis. The major components of this total are a write-down of Pura Vida goodwill and intangible asset impairment charges of $18.2 million, $7 million of severance charges and consulting fees primarily associated with cost-saving initiatives, and $5.6 million of inventory-related charges for the write-down of masks and other inventory, as well as fees related to the cancellation of certain orders for the spring 2023 goods. For complete detail of items excluded from the non-GAAP numbers as well as a reconciliation of GAAP to non-GAAP numbers, please reference today's press release. Consolidated net revenues totaled $130.4 million, compared to $147 million in the prior year's Q2. Consolidated net income totaled $2.4 million, or $0.08 per diluted share, compared to $9.5 million, or $0.28 per diluted share last year. Vera Bradley Direct segment revenues totaled $87 million, a 10.4% decrease from $97.1 million last year. Comparable sales declined 13.8% in the Q2. Vera Bradley Indirect segment revenues totaled $17.3 million, a 2.9% increase over $16.8 million in the prior year's Q2. Pura Vida segment revenues totaled $26 million, a 21.3% decrease from $33.1 million last year. Q2 gross margin totaled $67.8 million or 52% compared to $80.4 million or 54.6% last year. The current year rate was negatively impacted by higher inbound and outbound freight expense, deleverage of overhead costs, and channel mix changes, partially offset by price increases. Consolidated SG&A expense totaled $64 million or 49.1% for the current quarter, compared to $68 million or 46.2% last year. As expected, Vera Bradley's SG&A current year expenses were lower than prior year, primarily due to a reduction in variable-related expenses due to lower sales volume and other cost reduction initiatives. The company's Q2 consolidated operating income totaled $3.9 million or 3% of net revenues, compared to $13.4 million or 9.1% of net revenues in the prior year. Now let's turn to the balance sheet. Total quarter end inventory was $179.6 million, compared to $148 million at the end of the Q2 last year. We have $24 million of additional inventory in transit this year as we continue to navigate delays in the supply chain and ensure we have adequate inventory coverage going into the fall and holiday selling periods. Cash, cash equivalents, and investments at quarter end totaled $38.3 million, compared to $76.5 million at the end of last year's Q2. A key reason for the lower cash position is due to the inventory build of $31.6 million over last year. We remain in a solid cash position with a debt-free balance sheet. We will continue to take a conservative approach to cash, particularly in this volatile and challenging environment. During the quarter, we repurchased approximately $6 million of our common stock, representing 1 million shares at an average price of $6.11. We have $29.3 million remaining under our $50 million repurchase authorization. Now let's shift to our fiscal 2023 outlook. We expect the challenging macroeconomic environment to continue for the balance of the year and anticipate it will take additional time to return Pura Vida e-commerce business to growth. High gas prices and other inflationary pressures will continue to impact the Vera Bradley factory channel, and there will be a continued pressure on gross margin. As a result, we have adjusted our outlook for the balance of the fiscal year. All forward-looking guidance numbers that I will discuss are non-GAAP. For fiscal 2023, we expect consolidated net revenues of $480 million-$490 million compared to $540.5 million in fiscal 2022. We expect our consolidated gross margin will range from 53.7%-54.1% compared to 53.3% last year. We expect year-over-year increase is primarily related to incremental inbound and outbound freight expense and expected deleverage on overhead costs more than offset by price increases. Consolidated SG&A expense should range from $246 million-$250 million compared to $258.8 million in fiscal 2022. The reduction in SG&A expense is being driven by cost reduction initiatives and a reduction in compensation expense, marketing, and other variable-related expenses due to the expected sales decline from last year. We expect consolidated diluted EPS of $0.20-$0.28 compared to $0.57 last year. Net capital spending should total approximately $8-10 million compared to $5.5 million in the prior year. Operator, we will now open the call for questions. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, to ask a question, press star one on your telephone keypad. We'll take our first question from Oliver Chen with Cowen and Company. Please go ahead. Hi, Rob and John. Good morning. Could you speak to the inventory in terms of the status of it with having coverage, yet taking the write-downs and why was this the right time for the write-downs and what that means going forward? You also have some cancellations, so would love to understand the composition of inventory because it sounds like some things are working, but clearly some are not. Thank you. Yeah. Oliver, good question. For the write-downs, it was more specific to certain categories. As we looked at our mask inventory, we had built the mask inventory based on the pandemic, and we had expected to continue to work through that inventory. You know, with some of the changes from the CDC, as well as just consumer behavior, we're not really seeing that sell through. That was the vast majority of the write-down in both brands was associated with mask inventory. If you look at the remainder, it really was associated with tech accessories and think of that as kind of older iPhone accessories that ultimately we're also not seeing the sell-through as people have moved on to newer models. Really, that was the basis of the write-down and why we took the write-down at this time. In inventory, the growth is, you know, year-over-year is really being driven by two things. It's really being driven by the in-transit inventories. It's about 100% higher than it was at this point last year in the Q2, just to ensure we have the appropriate product in place for holiday season, as well as incremental freight expenses that has burdened the inventory. You know, year-over-year, we've seen that increase from where we were the first half of the year. Obviously, the back half of the year, the freight expense was exacerbated last year, and we're seeing some benefit, or we should see a little bit of benefit to that, given how freight is being less challenged this year versus last year. Okay. The comps being down 13.8%, what happened in terms of the volatility? Is the biggest negative portion traffic, and what's implied in your guidance for what you're seeing? Did you close more stores than you expected to, or that had already been in your plans? This year, ultimately, we're gonna close about the number of stores that we anticipated. You know, as we continue to look for next year, we're still working through what that means next year. In regards to the comps, the comps are being driven really from the off-price business, the outlet business. You know, we're seeing a better performance in our full price business, whether that is in full line stores or that's on verabradley.com. We're taking the expected trend that we saw in the first half of the business in those channels and assuming that they're similar in the back half of the year. Okay. On the Pura Vida side, the issues around digital marketing have been apparent within the industry at large for a while. What's happening now with the state of digital marketing and the path ahead for that business? What are the key hurdles and things that you need to do to improve it more structurally and have it be more sustainably growing over time? Yeah. I think from the Pura Vida marketing, Oliver, I think a few things. One, you're right that they're definitely in this direct consumer market, everybody's feeling the impact. For us at Pura Vida, we've been bringing in both outside teams as well as supplementing talent to move our reliance on what I'll call the Meta platform, for lack of a better term, in terms of Instagram, Facebook, and those platforms, and starting to push more into first party marketing, building up our CDP platform, and also looking at other alternatives. In other words, they're launching a connected TV program here in this quarter coming up, so we're looking at new ways of doing that. Long term, we believe that part of the fix to the marketing challenge is also gonna be this diversification into omni-channel, which you've seen with other direct consumer companies, that what we've seen in San Diego has been encouraging to see, you know, such a significant relative improvement in the San Diego market. If we continue to see that, which the early signs and it's, you know, it's only been weeks and months in the other stores, we're seeing similar behavior in the other locations, that we think that stores in and of themselves will play a very important part in stabilizing the Pura Vida business as we go forward. Okay. On the merchandise margins and price increases, could you update us on your thoughts there? It feels like the environment has gotten worse, yet you've been able to get some price increases. What are you thinking about what's embedded for merchandise margins and also inflation of the COGS relative to price increases going forward? From a merchandise margin perspective, we're actually seeing, you know, the price increases are being accepted and we're seeing, you know, improvement year-over-year. Really the challenge that we're seeing is associated with logistics costs. You know, we're actually seeing from a logistics cost some benefit in potentially in the back half year, and we're thinking we'll see that benefit into next year just given some of the inflationary pressures on the macro economy. We would expect to see some benefit from those inflationary costs, i.e. freight, into the back half and into next year. In regards to product cost, you know, we're still working through some of the challenges associated with that, but we don't anticipate a significant increase in some of our raw material costs into next year, given some of the macro events that are happening or the inflation and how the economy, generally speaking from a worldwide perspective, is not as strong as it was this time last year. We are still assessing whether or not, you know, whether it makes sense to continue to push prices, and we'll continue to do that through the remainder of this year as we look into next year. I think though from a price increase, Oliver, what we're doing is we took pretty broad price increases across both brands in the beginning of the year and kind of been working through that in the H1 of the year. I think as we look at going forward, it's gonna be more micro adjustments on those price increases, so not as much across the board. We think in a lot of cases we've kind of, the consumers accepted, but we can already begin to see that there's some resistance in a few items. It's gonna be a much more detailed adjustment in prices as we go through the next 12 months. Okay. Very helpful. On the balance sheet and cash balance, what should we know about working capital and the source or use of cash flow in terms of Q4 to 4Q? Your cash balance went down $38.3 million year-over-year. Should we be worried about that? I would, you know, obviously, everything's contingent on kind of performance in the back half of the year. I would say as we think about how we're looking at cash and cash utilization in the first half of the year, we spent some money increasing from an inventory perspective as well as usage of cash associated with share repurchases. We would like to be more conservative on the back half of the year in both of those uses of cash. You know, as we currently forecast, we expect our cash balance to grow by the end of the year, but that's all contingent on, you know, our performance. Okay. Rob Wallstrom, on the consumer, this bifurcation trend has continued, and you called it out early, and then plenty of retail companies just even taking guidance out. What are you seeing now with the consumer? You know, does the volatility concern you? We certainly have a lot of negatives and positives, but the consumers still have spending power. Yeah. I think a couple things. I think, one, what we're seeing from a spending behavior, the biggest story for us is the impact of gas prices on the factory channel. We'll be perfectly honest. Even not so much just total discretionary spending, but just the ability to go out to factory stores, generate the traffic there, that we're seeing the impact. That's our biggest concern. Gas prices in and of themselves is the number one impact we're seeing. It's been good. As gas prices started to moderate a little bit, we saw traffic beginning to rebound in factory stores relative to trend, and we began to see that come through on the revenue line. We're hoping that the gas price situation continues to moderate, and that could be helpful. Overall, it's been interesting watching the consumer. I know all of us are thinking about the back half and what's gonna be happening with the consumer. As we think about what's been happening in July and August, we haven't seen an overall further deterioration, and I think a lot of it is that gas price piece that's been rebounding and kind of moderating. You know, we're hopeful that where we see the consumer today as we move through the year will be similar to what we see in the back half. It's not robust by any means, but we're not seeing further deterioration, which is good. Okay. I'd love it if you could just talk briefly about the key product initiatives, you know, both Vera and Pura Vida, that we should be focused on just a few priorities. You know, you've done a lot of innovative partnerships, and the Pura Vida brand is definitely mission-focused. Well, I think a couple things. I think, one, if you think about the product assortment, there's a couple different ways we look at the product innovation. From a licensing standpoint, that's been very successful across both brands. That's been very impactful, not only in driving some revenue and excitement, but really in customer acquisition. Those programs are really important to bringing new customers in. It makes the marketing efficiency stronger. We continue to see that we'll continue to look for those partnerships and keep them exciting as we move forward, and just stay tuned for more new exciting announcements there. If you get into specifics in terms of product categories across the two brands, at Vera Bradley, they continue to do a lot of innovation. We have things, not only our core innovation that we've seen coming through, but also in newness. Like the Vera Bradley footwear launch in fall is gonna be, you know, an important launch for us. We're gonna watch that. At Pura Vida, there's two things we're looking at. One, the consumer still is very, very engaged in the core bracelet business, particularly as travel's rebounded, that we're seeing that business kinda take a pop back up, which is encouraging to see. At the same time, they've launched into this Demi-Fine collection, which is just a higher price point, a higher quality, and the initial response has been very positive there, and really has helped us to kind of you know engage deeper that 25-35-year-old customer, which has historically been part of the magic of Pura Vida, kind of both this young teenage customer as well as kind of this 25-35-year-old customer. Those are the areas that I would say are the most important to be watching. Yeah. The only thing I would add to that, Rob, if you think about Pura Vida in the stores, the apparel business, you know, when the consumer gets the opportunity to touch and feel the quality of the apparel business, we're seeing, you know, them engage with that product much more broadly than they do when they're online. As we open up more stores, there'll be an opportunity for that category. Yes. Okay. On the charges, the biggest one was that $18.2 million Pura Vida asset impairment charge. What was underlying that valuation, you know, from an accounting and/or market valuation perspective? Then the $0.8 million of store impairment, what could you just provide a little more details about what that related to, the $0.6 million of store impairment? Thanks. Sure. If you think about the Pura Vida impairment, and you know, the majority of that is associated with a goodwill impairment or a trade name impairment. Really, on an annual basis, we would do a test after we made that purchase, and we look at future cash flows. Given kind of the current performance of the brand and you know, the near-term expected performance of the brand, based on just the expected cash flows, we had to write down you know, that goodwill and that trade name. In regards to the store impairments, we looked at, really, it's the same thing. We looked at future cash flows of those individual stores compared to the current asset value for those stores. Based on the expected cash flows, we needed to write off some of those assets. Should we be concerned about incremental write-offs? I mean, I get this is a review process that has to be done regularly from an accounting regulation perspective. Is that a true statement? Rob, as you step back and what do you think are the key risk factors that you're monitoring? I'll just answer the first question, right. Yes, we have to regularly review the goodwill balance. We'll do that on a quarterly basis as a review. We do an actual test on an annual basis, which is done in the Q2. We'll continue to review it. You know, based on what we've, you know, put forward in our expectations for the business, we would say if we perform to those expectations, then we shouldn't see another write-down. I think your second part of the question, Oliver, what I'll do is talk about the risks and opportunities because I think both are really important. From a risk standpoint, taking it by brand, at Vera Bradley, I would say the number one risk factor at this point is gas. You know, if gas, you know, rebounds and all of a sudden we're back $5, $6, $7, $8 a gallon as we go in the back half of the year, that will suppress the factory channel. I would say gas is by far the largest risk. At Pura Vida, I think it's just a matter of the recovery, this digital marketing and how what, you know, was a big asset for the business was its ability to manage digital marketing and not having the same impact. We've got to get the marketing platform reset. Getting that reset is the biggest risk in the Pura Vida business. I think it's important to talk about opportunity because if you back up and you think about what's going on with the company, I think that there's three big macro impacts that have impacted us. One is the logistics cost. The logistics costs that are flowing to our P&L right now are what we would probably consider peak from what we're seeing. We're beginning to see logistics costs, particularly the international inbound shipping, begin to moderate, and so that hopefully will be a tailwind as we move forward and can help us. That's encouraging. I actually think that that's a positive on the logistics as we move through the end of the year, particularly as we are able next year to redo contracts, as we're able to get the capitalized costs working through the balance sheet, that will be a profit improvement, that you'll definitely see as we move into next year, which is encouraging to see. One of the macros is logistics and duty that will get better. That's good news. The second real big one has been this gas price impact in factory. As gas prices moderate, which we think, you know, we're hoping to see, that will be a lift. The third one has just really been this performance marketing with Pura Vida. As we have more stores, that will help us. As we get all of the work that we're investing now in terms of the data platform and rebuilding the performance marketing organization, I think that that's another big lift. I think that the three things that have affected our business in terms of gas, logistics, and this digital media shift are just big macro ones that we were more exposed overall than the industry. We're working through them, but I think we're working through them, and then it will get better as we move into next year. Okay. Last question. One on the digital marketing and performance, was that an issue with the Vera Bradley brands and/or are there any highlights there? Second, regarding the inventory cancellations, it sounds proactive. Which parts of the inventory did you do that with in terms of the composition? Thanks a lot. John, do you wanna take some of the inventory stuff, and I can just talk about digital? Yeah, if you could just repeat your question on inventory. I didn't actually hear the specific question, Oliver. The cancellations, John, in terms of the inventory cancellations, which parts of the inventory needed to be canceled? We looked at future orders that we made in all categories, quite honestly. We looked at where we expected the sales to come in on a forward basis into kind of next year and where we expected to sit in inventory. We looked at opportunities where we felt that we could offset some of the liability based on new sales expectations and obviously with the inventory kind of growing year over year. It wasn't specific to a particular category. It was specific to, you know, opportunistic ability to cancel some orders, really. Yeah. I think the only thing I would add to that, Oliver, if you just think about what's been happening in our factory channel, right? As gas price has gone up, business has slowed. Getting that inventory back in line is probably one of the primary drivers of that cancellation. Don't think about it as, "Oh, well, a category is not working or an item's not working." That's not really it. It's just an overall demand, and it gave us the opportunity to just kinda moderate that inventory risk as we went into next year, so. Yeah, I think it's more channel specific versus category specific. Yeah. That's a good way to think about it. Yep. I think your second question, Oliver, was what about Vera Bradley and digital marketing. I think there's two different aspects. First of all, one of the great assets at Vera Bradley is we have a very strong first-party marketing. You know, we control our customers, we communicate with them directly. We're not as dependent upon third-party marketing for our known customer base. We use the third-party marketing more for acquisition. Then what the team's been able to do here over the last couple years of building out our, you know, highly detailed analytical performance marketing base, they've been able to mitigate some of the cost by rebalancing, refocusing. They have a few more tools in the toolbox, shall we say. What we're doing is taking a lot of those learnings that we've already implemented at Vera Bradley and beginning to leverage back against Pura Vida, to learn from. The biggest difference in Vera Bradley, it's not that they haven't experienced some of the same challenges. They've been a little bit more effective in finding workarounds, but two, it's not as impactful to the total business as it is at Pura Vida. Okay. Thanks for answering all my questions. Best regards. Thanks, Oliver. Thank you, Oliver. All right. Up next, we'll take questions from Joe Gomes with Noble Capital. Please go ahead. Good morning. Morning, Joe. You talked about, you know, the positive impact of opening, you know, Pura Vida stores. You got the one additional one in Phoenix to open, I think, in September you mentioned. Can you kinda give us a game plan of what you see on the go-forward basis of new store openings in Pura Vida? Yeah, Joe, I can jump into that one. First of all, we do have the new store in SanTan that's opening. We are now anniversary in our UTC store in San Diego, so we're obviously gonna start watching that from a comp performance standpoint. Once we kind of evaluate, I would say this fall, how all of the new stores are performing, it'll really inform our go-forward real estate strategy. I do believe there's significant opportunity for stores in the Pura Vida brand going forward. Okay. You talked about, you know, the $25 million in cost reduction initiatives, which is, you know, kind of at the high end of what you'd talked about previously. Wondering, you know, how did you get to the high end? Two, you know, how much of that did impact the Q2? 'Cause I think in the Q1, John Enwright, you mentioned you did expect to see some of that flow through in the Q2. Yeah. We saw a little bit in the Q2 flow through 'cause we weren't finalized with all the plans really until call it in the middle part of the Q2. We, you know, we obviously, on a quarterly basis, you know, given performance, we look at opportunities to make savings regardless if it was associated with the $25 million. We will see some of that benefit, which is built into our guidance in the back half of the year. How we ended up at the high end, really just looked at kind of opportunity and really the teams all worked together based on where we see current performance and where we expect the business to be next year on areas that we felt we could slim down in. It really was a collective effort among both brands and the corporate team to come up with that value. Okay. Just, you know, one of the things that, you know, you had talked about in the past, you know, kinda has been, you know, M&A being part of the growth strategy. Given the transition going forward here, do we still see M&A as part of the growth plan and the growth strategy, I guess? Or is that gonna kinda take a back seat to, you know, getting and working on the two existing brands? That's a great question, Joe. I think that what the board and team's focus is, number one, is getting the core core brands strong. You know, Vera Bradley overall, we think is in a pretty good place, but we need to see the macro environment improve there. The Pura Vida, we need to get the performance marketing really working and get that brand really turned around. The board's very focused on getting those two things accomplished first before, you know, highly focusing, shall we say, on M&A activity. I think, you know, we're always open to any version of, you know, shareholder return, but I don't think that the M&A activity is gonna be a primary focus over the next 12 months. As we get through the transition, I think that the board and the new CEO will kind of align on what role does M&A play as we move forward. Okay, great. Thanks for taking the questions. I'll get back in queue and let someone else ask a question. Thanks, Joe. All right, our next question will come from Eric Beder with SCC Research. Please go ahead. Good morning. Morning. Morning. Rob Wallstrom, I wanna do a follow-up on the $25 million in savings. Yeah, how much of that is gonna be incremental next year? What should we be thinking about in terms of the flow of it? I know you mentioned there's gonna be some in the back half, but how much of that is gonna be? What should we be thinking about that? Your question is how much are we gonna achieve this year versus the full run rate next year? I think, you know, there's an opportunity this year probably to achieve, call it 40% of the total. There might be more opportunity, but we're looking at kind of the timing associated with that. If I look at some of the product things, you've gone through almost two years of the Harry Potter piece, it's had its time come by. What have you taken away from that? Are there collaborations in terms of how long they should be, and how do you keep them fresh going forward? I think a couple things that we've learned from our collaborations is, first of all, they are a great way to bring customers into the brand. We've had success in bringing new customers in and converting them into the brand, which has been very encouraging across both Vera Bradley and Pura Vida. We think that it definitely plays an important role. We have seen that it is important to keep that licensing pipeline fresh and continue to look for the right opportunities and, you know, find new ways of doing things. You know, whenever we introduce a new licensing, the first one quite often is the largest launch, and then the other ones are more follow-ups. I think the follow-up plays a role, but I think we have to continue to be fresh, continue to look for new opportunities. You've seen us do that in both brands, right? Like last Christmas when we did the Peanuts collab at Vera Bradley, that was fresh and new and highly impactful, and you're seeing the same type of thing at Pura Vida. I think we have to keep that pipeline fresh as we move forward. You know, I think, you know, just to add on to that, I think it's the execution of product. At Pura Vida, we're in the second release of really Harry Potter, and we're seeing, you know, good success in the second release and probably a little bit better success than we saw in the first release. Yep. I just think that speaks to kind of how the product evolves over time too. It's product and marketing execution. Yeah. Because what was encouraging is that for Harry Potter, they did put the video out. I think it's a combination of both the product and marketing. Okay. Store base for Vera Bradley. You've got about 65 or so full price, 77 or so outlets. What should we be thinking longer term? Are those about where you wanna be for these pieces of the chain? I know the outlets have gone up and these full price stores have continued to shift online. What should we be thinking about that? Yeah. I would continue to think that we'll close some full-price stores. Ultimately, we're still working through that for next year and what the number will be. You know, I think we'll see that number come down, and we still think there's still some opportunity in the factory channel for Vera Bradley for next year and into, you know, the years after that. You know, I don't know if we'll be opening six a year because that's typically what we've opened up in the past few years. We still think there's opportunity to increase that. You know, the organization and teams looking at other opportunities from a full-price perspective for Vera Bradley. We're not gonna continue to close all the doors there. We're just looking at opportunities and how and where we can speak to our consumer a little bit better. Okay. Last quarter you guys did some online, I guess, flash sales for the outlets. You know, what was the response to that? Is that something that's gonna continue to expand going forward? Because I know you tried to keep the outlet sales outside of the online in the website. On a monthly basis, we have a flash sale, what we call online outlet, and that's up every month, and it's been up for two years, three years that we've been doing it. It had more. I think your question may be had more outlet product than it had had previously. We kind of work through inventory, I would expect it to continue to have, you know, a higher percentage of factory product than it's had historically, you know, as we work through, you know, our inventory values this year. Yeah, no, I think everything John said, like, is definitely what the focus. I think the other thing to keep in mind is that, as John said, we've had the online outlet now for a few years, and what it really does is help us liquidate. What you're seeing is that because factory inventory is building, we're putting more factory in there. You know, if we were in a different situation, we had more full line, we would adjust it. It's a very efficient liquidation channel for us. We'll continue to do that. At this point, we have not executed that as a primary growth channel. We've just used it as a primary liquidation channel. Okay. All right, guys. Good luck for the back half of the year. Thanks, Eric. Thanks, Eric. All right. We have no additional questions at this time. I'll turn the call back to Rob Wallstrom for closing remarks. Before I close, I wanted to give you a brief update on the CEO search. As you know, I recently announced my planned retirement, but my plans are to remain in the CEO role until my successor is named, which is expected by the beginning of 2023. The board has formed a search committee and a national search is underway. As the board searches for the next CEO, they are in the desirable position of having two iconic brands with a loyal and dedicated customer base, a solid balance sheet, and a talented leadership team. The board takes very seriously its responsibility to find the right CEO and will continue our focus on building consistent, sustainable growth over the long term. We are preparing for the macro environment to remain challenging through the remainder of this year and into next year. We know it will take time, but we are taking decisive actions that will further strengthen both core brands and our enterprise as a whole. Our challenges have been largely driven by the macro environment, but we have a solid foundation with our two unique brands, strong customer loyalty, and amazing cultures. I am confident that the company will return to growth as the economic headwinds and cost pressures begin to recede. Thank you for joining us today, and we look forward to speaking with you on December 7th on our Q3 earnings call. This concludes today's call. We thank you again for your participation. You may now disconnect.