Vince Holding Corp. (NYSE:VNCE), a leading global contemporary
group (“Vince” or the “Company”), today reported results for the
second quarter of fiscal year 2020 ended August 1, 2020.
In this press release, the Company is presenting its financial
results in conformity with U.S. generally accepted accounting
principles ("GAAP") as well as on an "adjusted" basis. Adjusted
results presented in this press release are non-GAAP financial
measures. See "Non-GAAP Financial Measures" below for more
information about the Company's use of non-GAAP financial measures
and Exhibit 3 to this press release for a reconciliation of GAAP
measures to such non-GAAP measures.
Highlights for the second quarter ended August 1, 2020:
- Net sales decreased 59.9% to $37.0 million as compared to $92.2
million in the same period last year.
- Gross margin rate was 36.0% compared to 47.0% in the same
period last year.
- Loss from operations was $14.0 million compared to an operating
loss of $18.4 million in the same period last year. Excluding
non-cash asset impairment charges, income from operations in the
second quarter of fiscal 2019 was $1.7 million.
- Net earnings improved $4.5 million to a net loss of $15.1
million or $1.28 per share compared to a net loss of $19.5 million
or $1.67 per share in the same period last year. Excluding non-cash
asset impairment charges, net income in the second quarter of
fiscal 2019 was $590,000 or $0.05 per diluted share.
David Stefko, Interim Chief Executive Officer and Chief
Financial Officer, commented, “Looking back on our second quarter
results, we began to rebuild momentum at Vince, following the
initial impact of the pandemic, as consumer buying shifted to
ecommerce and stores slowly re-opened. eCommerce sales for the
Vince Brand grew over 60%, driven by heightened promotions as we
move through inventory as well as a positive response to our
merchandise assortment as our casual luxury offerings across
categories are well-suited for the stay-at-home lifestyle. We have
reprioritized our growth strategies to align with the near-term
environment with a focus on e-Commerce initiatives, maintaining our
strong connection with our customers and expanding our reach
through our direct-to-consumer and wholesale presence. For Rebecca
Taylor, we are excited about the anticipation among our wholesale
partners as we prepare to relaunch the brand and return to our
elevated casual and feminine flirty roots.”
Mr. Stefko continued, “In terms of liquidity, we continued to
execute cash savings strategies across expense, capital
expenditure, and working capital areas to align with the recovery
of the business. Overall, we remain optimistic about our long-term
potential as we leverage our iconic brands to drive global sales
growth and enhanced profitability.”
For the second quarter ended August 1, 2020:
- Total Company net sales decreased 59.9% to $37.0 million
compared to $92.2 million in the second quarter of fiscal
2019.
- Gross profit was $13.3 million, or 36.0% of net sales, compared
to gross profit of $43.4 million, or 47.0% of net sales, in the
second quarter of fiscal 2019. The decrease in the gross margin
rate was primarily due to increased promotional activity,
year-over-year adjustments to inventory reserves, channel mix, and
deleveraging of supply chain costs partially offset by lower sales
allowances.
- Selling, general, and administrative expenses, excluding the
non-cash impact of goodwill and intangible asset impairment
charges, long-lived asset or other finite-lived intangible asset
impairment charges, were $27.3 million, or 73.9% of sales, compared
to $41.6 million, or 45.1% of sales, in the second quarter of
fiscal 2019. The decrease in SG&A dollars was primarily the
result of lower payroll and compensation expense, reduced marketing
spend, decreased depreciation and amortization expense due to
previous impairments as well as the streamlining of other operating
costs.
- Loss from operations was $14.0 million compared to loss from
operations of $18.4 million in the same period last year. Excluding
non-cash asset impairment charges, income from operations in the
second quarter of fiscal 2019 was $1.7 million.
- Net loss was $15.1 million or $1.28 per share compared to a net
loss of $19.5 million or $1.67 per share in the same period last
year. Excluding non-cash asset impairment charges, net income in
the second quarter of fiscal 2019 was $590,000 or $0.05 per diluted
share.
- The Company ended the quarter with 68 company-operated Vince
and Rebecca Taylor stores, a net increase of 2 stores since the
second quarter of fiscal 2019.
Vince
- Net sales decreased 54.9% to $32.2 million as compared to the
second quarter of fiscal 2019.
- Wholesale segment sales decreased 60.5% to $17.2 million
compared to the second quarter of fiscal 2019.
- Direct-to-consumer segment sales decreased 46.2% to $15.1
million compared to the second quarter of fiscal 2019.
- Loss from operations excluding unallocated corporate expenses
was $1.1 million compared to income from operations of $15.4
million in the same period last year.
Rebecca Taylor and Parker
- Net sales decreased 76.9% to $4.8 million as compared to the
second quarter of fiscal 2019.
- Loss from operations was $3.1 million compared to a loss of
$20.4 million in the same period last year. Fiscal 2019 loss from
operations includes non-cash asset impairment charges of $20.1
million.
Net Sales and Operating Results by Segment:
Three Months Ended
August 1,
August 3,
(in thousands)
2020
2019**
Net Sales:
Vince Wholesale
$
17,159
$
43,393
Vince Direct-to-consumer
15,051
27,958
Rebecca Taylor and Parker
4,812
20,872
Total net sales
$
37,022
$
92,223
(Loss) income from operations:
Vince Wholesale
$
4,404
$
15,327
Vince Direct-to-consumer
(5,525
)
54
Rebecca Taylor and Parker
(3,059
)
(20,372
)
Subtotal
(4,180
)
(4,991
)
Unallocated corporate*
(9,828
)
(13,417
)
Total loss from operations
$
(14,008
)
$
(18,408
)
* Unallocated corporate expenses are related
to the Vince brand and are comprised of selling, general and
administrative expenses attributable to corporate and
administrative activities (such as marketing, design, finance,
information technology, legal and human resource departments), and
other charges that are not directly attributable to the Company’s
Vince Wholesale and Vince Direct-to-consumer reportable
segments.
**Fiscal 2019 amounts reflect the
retrospective combination of the entities.
Balance Sheet
At the end of the second quarter of fiscal 2020, total
borrowings under the Company’s debt agreements totaled $76.0
million and the Company had $34.7 million of excess availability
under the 2018 Revolving Credit Facility.
Net inventory at the end of the second quarter of fiscal 2020
was $92.1 million compared to $74.9 million at the end of the
second quarter of fiscal 2019. As expected, due to order
cancellations in the wholesale channel and temporary store
closures, the Company experienced an increase in seasonal inventory
levels in the second quarter.
Outlook
Due to the uncertainty related to the impact of the COVID-19
pandemic, the Company is not providing an outlook for fiscal 2020,
as previously announced.
The COVID-19 pandemic remains volatile and continues to evolve
on a daily basis, which could negatively affect the outcome of the
measures intended to address its impact and/or our current
expectations of the Company’s future business performance.
2020 Second Quarter Earnings Conference
Call
A conference call to discuss the second quarter results will be
held today, September 14, 2020, at 4:30 p.m. ET, hosted by Vince
Holding Corp. Interim Chief Executive Officer and Chief Financial
Officer, David Stefko. During the conference call, the Company may
make comments concerning business and financial developments,
trends and other business or financial matters. The Company's
comments, as well as other matters discussed during the conference
call, may contain or constitute information that has not been
previously disclosed.
Those who wish to participate in the call may do so by dialing
(833) 235-5655, conference ID 1968835. Any interested party will
also have the opportunity to access the call via the Internet at
http://investors.vince.com/. To listen to the live call, please go
to the website at least 15 minutes early to register and download
any necessary audio software. For those who cannot listen to the
live broadcast, a recording will be available for 12 months after
the date of the event. Recordings may be accessed at
http://investors.vince.com/.
Non-GAAP Financial
Measures
In addition to reporting financial results in accordance with
GAAP, the Company has provided, with respect to financial results
relating to six months ended August 1, 2020, adjusted operating
income (loss), adjusted income (loss) before income taxes, adjusted
income taxes, adjusted net income (loss) and adjusted earnings
(loss) per share, which are non-GAAP measures, in order to
eliminate the effect of non-cash asset impairment charges and the
TRA adjustment. In addition, with respect to financial results
relating to the second quarter and six months ended August 3, 2019,
adjusted operating income (loss), adjusted income (loss) before
income taxes, adjusted income taxes, adjusted net income (loss) and
adjusted earnings (loss) per share, which are non-GAAP measures, in
order to eliminate the effect on operating results of non-cash
asset impairment charges. The Company believes that the
presentation of these non-GAAP measures facilitates an
understanding of the Company's continuing operations without the
impact associated with the aforementioned items. While these types
of events can and do recur periodically, they are excluded from the
indicated financial information due to their impact on the
comparability of earnings across periods. Non-GAAP financial
measures should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with
GAAP. A reconciliation of GAAP to non-GAAP results has been
provided in Exhibit 3 to this press release.
ABOUT VINCE HOLDING CORP.
Vince Holding Corp. is a global contemporary group, consisting
of three brands: Vince, Rebecca Taylor and Parker. Vince,
established in 2002, is a leading global luxury apparel and
accessories brand best known for creating elevated yet understated
pieces for every day effortless style. Known for its range of
luxury products, Vince offers women’s and men’s ready-to-wear,
footwear and accessories through 48 full-price retail stores, 14
outlet stores, and its e-commerce site, vince.com and through its
subscription service Vince Unfold, www.vinceunfold.com, as well as
through premium wholesale channels globally. Rebecca Taylor,
founded in 1996 in New York City, is a high-end women’s
contemporary lifestyle brand inspired by beauty in the everyday.
The Rebecca Taylor collection is available at six retail stores,
through our e-commerce site at rebeccataylor.com and through its
subscription service Rebecca Taylor RNTD,
www.rebeccataylorrntd.com, as well as through high-end department
and specialty stores in select international markets. Parker,
founded in 2008 in New York City, is a contemporary women’s fashion
brand that is trend focused. The Parker collection is available at
high-end department and specialty stores in select international
markets. Please visit www.vince.com for more information.
Forward-Looking Statements: 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 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: the impact of
the novel coronavirus (COVID-19) pandemic on our business, results
of operations and liquidity; our ability to continue having the
liquidity necessary to service our debt, meet contractual payment
obligations, and fund our operations; changes in global economics
and credit and financial markets; the expected effects of the
acquisition of the Acquired Businesses on the Company; our ability
to integrate the Acquired Businesses with the Company, including
our ability to retain customers, suppliers and key employees; our
ability to realize the benefits of our strategic initiatives; our
ability to maintain our larger wholesale partners; the loss of
certain of our wholesale partners; our ability to make lease
payments when due; the execution and management of our retail store
growth plans; our ability to expand our product offerings into new
product categories, including the ability to find suitable
licensing partners; our ability to remediate the identified
material weakness in our internal control over financial reporting;
our ability to optimize our systems, processes and functions; our
ability to mitigate system security risk issues, such as cyber or
malware attacks, as well as other major system failures; our
ability to comply with privacy-related obligations; our ability to
comply with domestic and international laws, regulations and
orders; changes in laws and regulations; our ability to ensure the
proper operation of the distribution facilities by third-party
logistics providers; 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 remain
competitive in the areas of merchandise quality, price, breadth of
selection and customer service; our ability to keep a strong brand
image; our ability to attract and retain key personnel; our ability
to protect our trademarks in the U.S. and internationally; 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 current and
future licensing arrangements; the extent of our foreign sourcing;
fluctuations in the price, availability and quality of raw
materials; commodity, raw material and other cost increases; our
reliance on independent manufacturers; seasonal and quarterly
variations in our revenue and income; further impairment of our
goodwill and indefinite-lived intangible assets; competition; other
tax matters; and other factors as set forth from time to time in
our Securities and Exchange Commission filings, including those
described under “Item 1A—Risk Factors” in our Annual Report on Form
10-K and Quarterly Reports on Form 10-Q. 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, except as required by law.
Vince Holding Corp. and Subsidiaries
Exhibit (1)
Condensed Consolidated Statements of
Operations
(Unaudited, amounts in thousands except
percentages, share and per share data)
Three Months Ended
Six Months Ended
August 1,
August 3,
August 1,
August 3,
2020
2019*
2020
2019*
Net sales
$
37,022
$
92,223
$
76,040
$
166,240
Cost of products sold
23,682
48,869
46,700
84,994
Gross profit
13,340
43,354
29,340
81,246
as a % of net sales
36.0
%
47.0
%
38.6
%
48.9
%
Impairment of goodwill and intangible
assets
—
19,491
13,848
19,491
Impairment of long-lived assets
—
641
13,026
641
Selling, general and administrative
expenses
27,348
41,630
65,892
85,753
as a % of net sales
73.9
%
45.1
%
86.7
%
51.6
%
Loss from operations
(14,008
)
(18,408
)
(63,426
)
(24,639
)
as a % of net sales
(37.8
)%
(20.0
)%
(83.4
)%
(14.8
)%
Interest expense, net
1,022
1,221
2,047
2,580
Other (Income) expense, net
4
9
(2,303
)
119
Loss before income taxes
(15,034
)
(19,638
)
(63,170
)
(27,338
)
Provision (benefit) for income taxes
28
(96
)
70
(49
)
Net loss
$
(15,062
)
$
(19,542
)
$
(63,240
)
$
(27,289
)
Loss per share:
Basic loss per share
$
(1.28
)
$
(1.67
)
$
(5.39
)
$
(2.34
)
Diluted loss per share
$
(1.28
)
$
(1.67
)
$
(5.39
)
$
(2.34
)
Weighted average shares
outstanding:
Basic
11,784,007
11,672,914
11,739,061
11,651,375
Diluted
11,784,007
11,672,914
11,739,061
11,651,375
* August 3, 2019 amounts reflect the retrospective combination
of the entities.
Vince Holding Corp. and
Subsidiaries
Exhibit (2)
Condensed Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
August 1,
February 1,
August 3,
2020
2020
2019*
ASSETS
Current assets:
Cash and cash equivalents
$
782
$
466
$
1,159
Trade receivables, net
18,589
40,660
36,830
Inventories, net
92,122
66,393
74,891
Prepaid expenses and other current
assets
3,483
6,725
9,652
Total current assets
114,976
114,244
122,532
Property and equipment, net
18,823
25,274
26,399
Operating lease right-of-use assets
89,004
94,632
98,855
Intangible assets, net
76,819
81,533
81,860
Goodwill
31,973
41,435
41,435
Deferred income taxes and other assets
5,112
5,184
4,074
Total assets
$
336,707
$
362,302
$
375,155
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
58,450
$
43,075
$
41,049
Accrued salaries and employee benefits
9,021
9,620
5,122
Other accrued expenses
11,265
14,194
12,088
Short-term lease liabilities
19,186
20,638
19,818
Short-term borrowings
—
—
20,099
Current portion of long-term debt
2,063
2,750
2,750
Total current liabilities
99,985
90,277
100,926
Long-term debt
72,898
48,680
48,107
Long-term lease liabilities
95,042
90,211
95,638
Other liabilities
416
2,354
58,520
Stockholders' equity
68,366
130,780
71,964
Total liabilities and stockholders'
equity
$
336,707
$
362,302
$
375,155
* August 3, 2019 amounts reflect the retrospective combination
of the entities.
Vince Holding Corp. and Subsidiaries
Exhibit (3)
Reconciliation of GAAP to Non-GAAP
measures
(Unaudited, amounts in
thousands)
For the three months ended
August 1, 2020
As Reported (GAAP)
Long-lived Assets Impairment
Charge
Goodwill and Intangibles
Impairment Charge
TRA Adjustment
As Adjusted (Non- GAAP)
Loss from operations
$
(14,008
)
$
—
$
—
$
—
$
(14,008
)
Interest expense, net
1,022
—
—
—
$
1,022
Other (income) expense, net
4
—
—
—
$
4
Loss before income taxes
(15,034
)
—
—
—
$
(15,034
)
Provision for income taxes
28
—
—
—
$
28
Net loss
$
(15,062
)
$
—
$
—
$
—
$
(15,062
)
Loss per share
$
(1.28
)
$
—
$
—
$
—
$
(1.28
)
(1)
For the three months ended
August 3, 2019*
As Reported (GAAP)
Long-lived Assets Impairment
Charge
Goodwill and Intangibles
Impairment Charge
TRA Adjustment
As Adjusted (Non- GAAP)
(Loss) income from operations
$
(18,408
)
$
(641
)
$
(19,491
)
$
—
$
1,724
Interest expense, net
1,221
—
—
—
$
1,221
Other (income) expense, net
9
—
—
—
$
9
(Loss) income before income taxes
(19,638
)
(641
)
(19,491
)
—
$
494
Benefit for income taxes
(96
)
—
—
—
$
(96
)
Net (Loss) income
$
(19,542
)
$
(641
)
$
(19,491
)
$
—
$
590
(Loss) earnings per share
$
(1.67
)
$
(0.05
)
$
(1.67
)
$
—
$
0.05
(2)
(1) Based on weighted-average shares outstanding of 11,784.007
for the three months ended August 1, 2020, which excludes the
effect of dilutive equity securities.
(2) Based on weighted-average shares outstanding of 11,860,063
for the three months ended August 3, 2019.
* August 3, 2019 amounts reflect the retrospective combination
of the entities.
For the six months ended
August 1, 2020
As Reported (GAAP)
Long-lived Assets Impairment
Charge
Goodwill and Intangibles
Impairment Charge
TRA Adjustment
As Adjusted (Non- GAAP)
Loss from operations
$
(63,426
)
$
(13,026
)
$
(13,848
)
$
—
$
(36,552
)
Interest expense, net
2,047
—
—
—
$
2,047
Other (income) expense, net
(2,303
)
—
—
(2,320
)
$
17
(Loss) income before income taxes
(63,170
)
(13,026
)
(13,848
)
2,320
$
(38,616
)
Provision for income taxes
70
—
—
—
$
70
Net (loss) income
$
(63,240
)
$
(13,026
)
$
(13,848
)
$
2,320
$
(38,686
)
(Loss) earnings per share
$
(5.39
)
$
(1.11
)
$
(1.18
)
$
0.20
$
(3.30
)
(3)
For the six months ended
August 3, 2019*
As Reported (GAAP)
Long-lived Assets Impairment
Charge
Goodwill and Intangibles
Impairment Charge
TRA Adjustment
As Adjusted (Non- GAAP)
Loss from operations
$
(24,639
)
$
(641
)
$
(19,491
)
$
—
$
(4,507
)
Interest expense, net
$
2,580
—
—
—
$
2,580
Other (income) expense, net
$
119
—
—
—
$
119
Loss before income taxes
(27,338
)
(641
)
(19,491
)
—
$
(7,206
)
Benefit for income taxes
$
(49
)
—
—
—
$
(49
)
Net loss
$
(27,289
)
$
(641
)
$
(19,491
)
$
—
$
(7,157
)
Loss per share
$
(2.34
)
$
(0.06
)
$
(1.67
)
$
—
$
(0.61
)
(4)
(3) Based on weighted-average shares outstanding of 11,739.061
for the six months ended August 1, 2020, which excludes the effect
of dilutive equity securities.
(4) Based on weighted-average shares outstanding of 11,651.375
for the six months ended August 3, 2019, which excludes the effect
of dilutive equity securities.
* August 3, 2019 amounts reflect the retrospective combination
of the entities.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200914005821/en/
Investor Relations: ICR, Inc. Jean Fontana, 646-277-1214
Jean.fontana@icrinc.com
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