Vince Holding Corp. (NYSE:VNCE), a leading global luxury apparel
and accessories brand (“Vince” or the “Company”), today reported
unaudited results for the third quarter of fiscal 2017 ended
October 28, 2017.
Brendan Hoffman, Chief Executive Officer, commented, “We are
pleased with our results in the third quarter, which reflected
double digit comparable store sales growth in both our full price
stores and our eCommerce channel. Customers responded favorably to
our recent collections and to enhancements that we have made in
both of these channels. In addition to the momentum we gained in
our direct-to- consumer channel we also began to take steps to
drive increased profitability in our wholesale segment by focusing
on fewer department store partners. Our teams have already begun to
collaborate with the teams at Nordstrom and Neiman Marcus, and we
are pleased with the progress that we are making thus far as we
move towards our focused distribution arrangements.”
Mr. Hoffman continued, “As we look ahead, we will work to drive
continued momentum in our direct-to-consumer business as well as to
execute a more focused and profitable wholesale business. We plan
to accomplish this by further refining our merchandise offering,
investing in marketing programs with a focus on building brand
awareness and deepening customer engagement, and growing our retail
and eCommerce presence. Overall, we are excited about the
inflection points in our business and we believe we are on the
right track to deliver sustainable profitable growth over the long
term.”
For the third quarter ended October 28, 2017:
- Net sales increased 4.1% to $79.1
million from $76.0 million in the third quarter of fiscal 2016.
Wholesale segment sales increased 3.5% to $53.0 million, primarily
driven by an increase in off-price sales. This was partially offset
by the expected reduced sell-in to the full-price wholesale
channel. Direct-to-consumer segment sales increased 5.3% to $26.1
million compared to the third quarter of fiscal 2016. Comparable
sales increased 4.4%, including e-commerce sales, due to an
increase in average unit retail.
- Gross profit was $36.7 million, or
46.4% of net sales, compared to gross profit of $38.0 million, or
50.0% of net sales, in the third quarter of fiscal 2016. Gross
margin in the third quarter of fiscal 2017 was negatively impacted
by higher product and supply chain costs, higher markdowns in the
direct-to-consumer segment and one-time costs to execute the
wholesale distribution strategy. This was partially offset by a
decrease in the rate of sales allowances as well as reduced
discounts in the off-price wholesale channel.
- Selling, general, and administrative
expenses were $31.4 million, or 39.7% of sales compared to $31.9
million, or 42.0% of sales, in the third quarter of fiscal 2016.
The decline in SG&A dollars for the third quarter of fiscal
2017 was primarily the result of the non-recurrence of investments
related to the transition of IT systems from last year, as well as
savings associated with ending the Company’s consulting arrangement
with its founders. This was partially offset by increased incentive
compensation costs and investments related to the remediation and
optimization of IT systems.
- Operating income was $5.3 million
compared to operating income of $6.1 million for the third quarter
of fiscal 2016.
- Net income was $3.5 million compared to
$3.4 million for the third quarter of fiscal 2016. The net income
for the third quarter of fiscal 2017 includes a negligible benefit
from income taxes due to the offsetting impact of the tax valuation
allowance. The net income for the third quarter of fiscal 2016
included a $1.5 million income tax provision.
- Earnings per diluted share was $0.41
for the third quarter of fiscal 2017, based on 8.6 million diluted
weighted average shares outstanding. This compares to $0.68 per
diluted share, based on 4.9 million diluted weighted average shares
outstanding for the third quarter of fiscal 2016, on a reverse
split adjusted basis. On October 24, 2017, the Company separately
announced the completion of its 1-for-10 reverse stock split, which
reduced the number of outstanding share of the Company’s common
stock by a factor of ten. The increase in diluted weighted average
shares outstanding is a result of the issuance of common stock in
connection with the completion of the rights offering and related
backstop commitment.
- The Company ended the quarter with 55
company-operated stores, an increase of one store since the third
quarter of fiscal 2016.
Balance Sheet
The Company ended the third quarter of fiscal 2017 with $5.7
million in cash and cash equivalents and $68.1 million of
borrowings under its debt agreements. The increase in borrowings
under its debt agreements over the prior year period is due to net
higher borrowings under the revolving credit facility, partially
offset by a $9 million payment to the term loan facility using
proceeds from the $30.0 million rights offering and related
backstop commitment.
Net inventory at the end of the third quarter of fiscal 2017 was
$51.4 million compared to $34.4 million at the end of the third
quarter of fiscal 2016. The increase in net inventory was primarily
driven by the timing and growth of off-price shipments.
Capital expenditures for the third quarter of fiscal 2017
totaled $0.3 million.
2017 Third Quarter Earnings Conference
Call
A conference call to discuss the third quarter results will be
held today, December 7, 2017, at 8:30 a.m. ET, hosted by Vince
Holding Corp. Chief Executive Officer, Brendan Hoffman, and
Executive Vice President 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 4499578. 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/.
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 October 28, 2017, Vince products were sold
in prestige distribution worldwide, including approximately 2,400
distribution locations across more than 40 countries. With
corporate headquarters in New York and its design studio in Los
Angeles, the Company operated 41 full-price retail stores, 14
outlet stores and its e-commerce site, vince.com. Please
visit www.vince.com for more information.
This press release is also available on the Vince Holding Corp.
website (http://investors.vince.com/).
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 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
continue having the liquidity necessary to service our debt, meet
contractual payment obligations (including amortization payments
under the term loan as well as payments under the tax receivable
agreement) and fund our operations; our ability to comply with the
covenants under our credit facilities; our ability to successfully
operate the newly implemented systems, processes, and functions
recently transitioned from Kellwood Company; our ability to
remediate the identified material weaknesses in our internal
control over financial reporting; our ability to regain compliance
with the continued listing standards of the New York Stock
Exchange; 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; 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 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.
Exhibit (1)
Vince Holding Corp. and
Subsidiaries
Condensed Consolidated Statements of
Operations
(Unaudited, amounts in thousands
exceptpercentages, share and per share data )
Three Months Ended
Nine Months Ended October 28,
October 29, October 28, October
29, 2017 2016 2017 2016 Net sales $
79,067 $ 75,973 $ 197,934 $ 204,320 Cost of products sold
42,400 38,015 110,120 110,717 Gross profit
36,667 37,958 87,814 93,603 as a % of net sales 46.4 % 50.0 % 44.4
% 45.8 % Selling, general and administrative expenses 31,358
31,895 99,558 95,343 as a % of net sales 39.7
% 42.0 % 50.3 % 46.7 % Income (loss) from operations 5,309 6,063
(11,744 ) (1,740 ) as a % of net sales 6.7 % 8.0 % (5.9 )% (0.9 )%
Interest expense, net 1,693 1,023 4,013 2,909 Other expense, net
113 191 116 379 Income (loss) before
income taxes 3,503 4,849 (15,873 ) (5,028 ) (Benefit) provision for
income taxes (6 ) 1,469 42 (4,517 ) Net
income (loss) $ 3,509 $ 3,380 $ (15,915 ) $ (511 )
Earnings
(loss) per share: Basic earnings (loss) per share $ 0.41 $ 0.69
$ (2.58 ) $ (0.11 ) Diluted earnings (loss) per share $ 0.41 $ 0.68
$ (2.58 ) $ (0.11 )
Weighted average shares outstanding:
Basic 8,610,869 4,928,744 6,166,219 4,541,966 Diluted 8,611,308
4,947,990 6,166,219 4,541,966
The accompanying financial statements give
retroactive effect to the Reverse Stock Split for all periods
presented, unless otherwise noted. The calculation of basic and
diluted net earnings (loss) per share, as presented in the
condensed consolidated statements of operations, have been
determined based on a retroactive adjustment of weighted average
shares outstanding for all periods presented.
Exhibit (2)
Vince Holding Corp. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
October 28,
January 28, October 29, 2017
2017 2016 ASSETS Current assets: Cash and cash
equivalents $ 5,723 $ 20,978 $ 20,705 Trade receivables, net 31,278
10,336 16,613 Inventories, net 51,378 38,529 34,420 Prepaid
expenses and other current assets 4,045 4,768
8,736 Total current assets 92,424 74,611 80,474 Property and
equipment, net 38,799 42,945 46,097 Intangible assets, net 77,249
77,698 108,597 Goodwill 41,435 41,435 63,746 Deferred income taxes
and other assets 2,816 2,791 97,429 Total
assets $ 252,723 $ 239,480 $ 396,343
LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts
payable $ 15,717 $ 37,022 $ 23,790 Accrued salaries and employee
benefits 5,045 3,427 2,738 Other accrued expenses 11,522 9,992
13,226 Current portion of long-term debt 9,000 —
— Total current liabilities 41,284 50,441 39,754 Long-term
debt 57,621 48,298 50,736 Deferred rent 15,927 16,892 16,795 Other
liabilities 137,830 137,830 140,843 Stockholders' equity (deficit)
61 (13,981 ) 148,215 Total liabilities and
stockholders' equity (deficit) $ 252,723 $ 239,480 $ 396,343
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171207005250/en/
Investor Relations:ICR, Inc.Jean Fontana,
646-277-1200Jean.fontana@icrinc.com
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