Vince Holding Corp. Announces Delay in Fiscal 2016 10-K Filing
April 14 2017 - 2:00PM
Business Wire
Vince Holding Corp. (NYSE:VNCE), a leading global luxury apparel
and accessories brand (“Vince” or the “Company”), today announced
that it is delaying the release of its financial results for the
fourth quarter and fiscal year ended January 28, 2017. As such, the
Company has filed a Form 12b-25 Notification of Late Filing for its
Annual Report on Form 10-K with the Securities and Exchange
Commission, extending the deadline to file its Form 10-K on or
before April 28, 2017. The extension is necessary due to
unanticipated delays in compiling financial reports and other data
that are necessary in preparing and completing the financial
statements. These delays are related to the transition from
Kellwood, the Company’s former parent company, and the integration
of the Company’s new ERP System with its internal business
processes and third-party systems, as well as additional procedures
and processes that the Company is undertaking to ensure that its
financial statements are fairly and accurately presented. In
addition, although the Company has not concluded its assessment of
the effectiveness of its internal controls over financial reporting
as of January 28, 2017, it believes that the transition and
implementation described above will result in one or more material
weaknesses in internal controls.
Brendan Hoffman, Chief Executive Officer, commented, “We
undertook an IT migration project to make Vince independent from
the Kellwood platform and to create greater efficiencies in our
business. While the implementation was completed, we have
experienced difficulties in the integration and identified certain
issues associated with these new systems which we believe will
result in one or more material weaknesses in internal controls. We
are in the process of correcting any systems deficiencies that we
have identified and expect this to be completed during fiscal 2017.
I would note that, until our systems are fully remediated, we will
continue to conduct additional due diligence around our quarterly
closing procedures to ensure the accuracy of our financial
results.”
The Company currently anticipates that its results for the
fiscal year ended January 28, 2017 will be further impacted by,
among other matters, material asset impairment charges, including
impairment charges relating to its goodwill and tradename, and the
recording of a valuation allowance against all of its deferred tax
assets in the fourth quarter. Moreover, the Company has made a
specified equity contribution of $1.7 million and currently
anticipates to make one or more additional specified equity
contributions to its operating subsidiary using a portion of the
cash it held for purposes of an equity cure in connection with the
Company’s compliance with the covenant relating to the consolidated
net total leverage ratio under its term loan facility as of January
28, 2017. The Company continues to hold approximately $20 million
of cash until needed by its operating subsidiary, including for
purposes of future equity cures under its credit facilities. In
addition, today the Company entered into a side letter with Bank of
America which amends and restates the initial side letter dated
March 6, 2017. The side letter provides the Company with the
ability, through July 31, 2017, to borrow against a portion of its
approximately $20 million of cash currently held.
Furthermore, as required by the new Financial Accounting
Standards Board Accounting Standards, management is assessing
whether there are conditions or events that raise substantial doubt
about the Company’s ability to continue as a going concern within
one year after its financial statements are issued. This includes,
among other factors, the impact of the current trends in the retail
business environment on the Company’s future projections and its
effect on the Company’s ability to comply with, or cure any
potential future violation of, the Leverage Ratio Covenant during
such period. Such trends have contributed to management lowering
the Company’s projections in the past.
Hoffman continued, “In addition, we completed a side letter with
Bank of America that increases our borrowing flexibility, allowing
us to operate our business more efficiently. However, in light of
the difficult retail environment we believe that it is prudent to
consider a scenario in which we do not meet our financial
covenants. That said, we have done a lot of work to reset the brand
and believe that we are taking the right strategic steps to
optimize our wholesale business, expand our direct-to-consumer
business and grow our international presence.”
ABOUT VINCE
Established in 2002, Vince is a global luxury brand best known
for utilizing luxe fabrications and innovative techniques to create
a product assortment that combines urban utility and modern
effortless style. From its edited core collection of ultra-soft
cashmere knits and cotton tees, Vince has evolved into a global
lifestyle brand and destination for both women’s and men’s apparel
and accessories. As of January 28, 2017, Vince products were sold
in prestige distribution worldwide, including approximately 2,300
distribution locations across more than 40 countries. With
corporate headquarters in New York and its design studio in Los
Angeles, the Company operated 40 full-price retail stores, 14
outlet stores and its e-commerce site, vince.com. Please visit
www.vince.com for more information.
This document, and any statements incorporated by reference
herein, contains forward-looking statements under the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements include the statements regarding, among other things,
our current expectations about the Company's future results and
financial condition, revenues, store openings and closings,
margins, expenses and earnings and are indicated by words or
phrases such as "may," "will," "should," "believe," "expect,"
"seek," "anticipate," "intend," "estimate," "plan," "target,"
"project," "forecast," "envision" and other similar phrases.
Although we believe the assumptions and expectations reflected in
these forward-looking statements are reasonable, these assumptions
and expectations may not prove to be correct and we may not achieve
the results or benefits anticipated. These forward-looking
statements are not guarantees of actual results, and our actual
results may differ materially from those suggested in the
forward-looking statements. These forward-looking statements
involve a number of risks and uncertainties, some of which are
beyond our control, including, without limitation: our ability to
maintain adequate cash flow from operations or availability under
our revolving credit facility to meet our liquidity needs
(including our obligations under the tax receivable agreement); our
ability to successfully complete the migration of our systems and
processes from Kellwood Company and to successfully implement the
new systems, processes and functions following the migration; our
ability to ensure the proper operation of the distribution facility
by a third party logistics provider recently transitioned from
Kellwood; our ability to remain competitive in the areas of
merchandise quality, price, breadth of selection, and customer
service; our ability to anticipate and/or react to changes in
customer demand and attract new customers, including in connection
with making inventory commitments; our ability to control the level
of sales in the off-price channels; our ability to manage excess
inventory in a way that will promote the long-term health of the
brand; changes in consumer confidence and spending; our ability to
maintain projected profit margins; unusual, unpredictable and/or
severe weather conditions; the execution and management of our
retail store growth plans, including the availability and cost of
acceptable real estate locations for new store openings; the
execution and management of our international expansion, including
our ability to promote our brand and merchandise outside the U.S.
and find suitable partners in certain geographies; our ability to
expand our product offerings into new product categories, including
the ability to find suitable licensing partners; our ability to
successfully implement our marketing initiatives; our ability to
protect our trademarks in the U.S. and internationally; our ability
to maintain the security of electronic and other confidential
information; serious disruptions and catastrophic events; changes
in global economies and credit and financial markets; competition;
the impact of recent turnover in the senior management team; the
fact that a number of members of the management team have less than
one year of tenure with the Company, and the current senior
management team has not had a long period of time working together;
our ability to attract and retain key personnel; commodity, raw
material and other cost increases; compliance with domestic and
international laws, regulations and orders; changes in laws and
regulations; outcomes of litigation and proceedings and the
availability of insurance, indemnification and other third-party
coverage of any losses suffered in connection therewith; tax
matters; and other factors as set forth from time to time in our
Securities and Exchange Commission filings, including under the
heading "Item 1A—Risk Factors" in our Annual Report on Form 10-K
and our Quarterly Reports on Form 10Q. We intend these
forward-looking statements to speak only as of the time of this
release and do not undertake to update or revise them as more
information becomes available.
This press release is also available on the Vince Holding Corp.
website (http://investors.vince.com/).
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version on businesswire.com: http://www.businesswire.com/news/home/20170414005222/en/
Investor Relations:ICR, Inc.Jean Fontana,
646-277-1200Jean.fontana@icrinc.com
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