Earnings Per Share

3 Months Ended

May 02, 2020

Basic earnings per share is computed based on the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed based on the weighted-average number of common shares outstanding, plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares represent outstanding restricted stock units.

On July 16, 2019, as contemplated by the Interest Purchase Agreement, the Company and certain of its subsidiaries and the owners of the remaining twenty-five percent (25%) ownership interest in Pura Vida (the “Sellers”) which was not acquired by the Company (the “Remaining Pura Vida Interest”) entered into a Put/Call Agreement (the “Put/Call Agreement”). Pursuant to the Put/Call Agreement, and subject to the terms and conditions thereof, the Sellers have the right to sell all of the Remaining Pura Vida Interest to the Company, and the Company has the right to purchase all of the Remaining Pura Vida Interests from Sellers, in each case generally at any time following the fifth anniversary of the closing date of the transaction until the tenth anniversary thereof. The purchase price for any Remaining Pura Vida Interest put to, or called by, the Company will be determined based on the arithmetic average of a multiple of adjusted EBITDA of Pura Vida and a multiple of adjusted EBITDA of the Company, as defined in the Put/Call Agreement, over the twelve-month period ending on the last day of the month immediately preceding the month in which an exercise notice is delivered by a relevant party.

As a result of this redemption feature, the Company recorded the noncontrolling interest as redeemable and classified it in temporary equity within its Condensed Consolidated Balance Sheets initially at its acquisition-date fair value. The noncontrolling interest is adjusted each reporting period for income (or loss) attributable to the noncontrolling interest. A measurement period adjustment, if any, is then made to adjust the noncontrolling interest to the higher of the redemption value or carrying value each reporting period. These adjustments are recognized through retained earnings and are not reflected in net loss or net loss attributable to Vera Bradley, Inc. When calculating earnings per share attributable to Vera Bradley, Inc., the Company adjusts the net loss attributable to Vera Bradley, Inc. for the measurement period adjustment to the extent the redemption value exceeds the fair value of the noncontrolling interest on a cumulative basis.

The components of basic and diluted earnings per share were as follows (in thousands, except per share data):


	Thirteen Weeks Ended
	May 2, 2020		May 4, 2019
Numerator:
Net loss	$	(15,537)	$	(2,405)
Less: Net loss attributable to redeemable noncontrolling interest	(200)		—
Net loss attributable to Vera Bradley, Inc.	(15,337)		(2,405)
Plus: Excess portion of redeemable noncontrolling interest redemption value adjustment	(6,800)		—
Net loss available to Vera Bradley, Inc. common shareholders	$	(22,137)	$	(2,405)

Denominator:
Weighted-average number of common shares (basic)	33,330		34,228
Dilutive effect of stock-based awards	—		—
Weighted-average number of common shares (diluted)	33,330		34,228

Net loss per share available to Vera Bradley, Inc. common shareholders:
Basic	$	(0.66)	$	(0.07)
Diluted	$	(0.66)	$	(0.07)

For the thirteen weeks ended May 2, 2020 and May 4, 2019, all potential common shares were excluded from the diluted share calculation because they were anti-dilutive due to the net loss in the period.