Vince Holding Corp. (NYSE:VNCE), a leading global contemporary
group (“Vince” or the “Company”), today reported its financial
results for the second quarter 2021 ended July 31, 2021.
In this press release, the Company is presenting its historical
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 July 31, 2021:
- Net sales increased 112.5% to $78.7 million as compared to
$37.0 million in the same period last year reflecting a 108.5%
increase in Vince brand sales and a 139.4% increase in Rebecca
Taylor and Parker.
- Gross margin rate was 45.0% compared to 36.0% in the same
period last year.
- Income from operations was $2.6 million compared to a loss from
operations of $14.0 million in the same period last year.
- Net loss was $0.6 million or $0.05 per share compared to a net
loss of $15.1 million or $1.28 per share in the same period last
year.
Jack Schwefel, Chief Executive Officer, commented, “We are
pleased with our performance in the quarter, particularly with the
Vince brand approaching pre-pandemic levels driven by strength in
our direct-to-consumer business. The brand continues to resonate
with both women and men with sophisticated, high-quality
assortments. Going forward, we will continue to focus on
accelerating direct-to-consumer as well as our growth strategies of
building out our ecommerce capabilities, strengthening brand
awareness through marketing, and accelerating growth in men’s. At
Rebecca Taylor, we remain encouraged by the long-term potential we
see for this brand as we continue to leverage the same strategies
that made the Vince brand turnaround so successful.”
For the second quarter ended July 31, 2021:
- Total Company net sales increased 112.5% to $78.7 million
compared to $37.0 million in the second quarter of fiscal
2020.
- Gross profit was $35.4 million, or 45.0% of net sales, compared
to gross profit of $13.3 million, or 36.0% of net sales, in the
second quarter of fiscal 2020. The increase in the gross margin
rate was primarily due to channel mix, lower year-over-year
adjustments to inventory reserves, and lower promotional activity
in the direct-to-consumer channel.
- Selling, general, and administrative expenses, were $32.7
million, or 41.6% of sales, compared to $27.3 million, or 73.9% of
sales, in the second quarter of fiscal 2020. The increase in
SG&A dollars was primarily the result of higher payroll and
compensation expense, increased investments in marketing as well as
higher consulting and other third-party costs.
- Income from operations was $2.6 million compared to a loss from
operations of $14.0 million in the same period last year.
- Income tax expense was $1.3 million as a result of the non-cash
deferred tax expense created by the current period amortization of
indefinite-lived goodwill and intangible assets for tax but not for
book purposes
- Net loss was $0.6 million or $0.05 per share compared to a net
loss of $15.1 million or $1.28 per share in the same period last
year.
- The Company ended the quarter with 78 company-operated Vince
and Rebecca Taylor stores, a net increase of 10 stores since the
second quarter of fiscal 2020.
Vince
- Net sales increased 108.5% to $67.2 million as compared to the
second quarter of fiscal 2020.
- Wholesale segment sales increased 105.0% to $35.2 million
compared to the second quarter of fiscal 2020.
- Direct-to-consumer segment sales increased 112.5% to $32.0
million compared to the second quarter of fiscal 2020.
- Income from operations excluding unallocated corporate expenses
was $15.6 million compared to a loss of $1.1 million in the same
period last year.
Rebecca Taylor and Parker
- Net sales increased 139.4% to $11.5 million as compared to the
second quarter of fiscal 2020.
- Loss from operations was $1.6 million compared to a loss of
$3.1 million in the same period last year.
Net Sales and Operating Results by Segment:
Three Months Ended
July 31,
August 1,
(in thousands)
2021
2020
Net Sales:
Vince Wholesale
$
35,170
$
17,159
Vince Direct-to-consumer
31,982
15,051
Rebecca Taylor and Parker
11,521
4,812
Total net sales
$
78,673
$
37,022
Income (loss) from operations:
Vince Wholesale
$
9,441
$
4,404
Vince Direct-to-consumer
6,126
(5,525
)
Rebecca Taylor and Parker
(1,571
)
(3,059
)
Subtotal
13,996
(4,180
)
Unallocated corporate*
(11,361
)
(9,828
)
Total income (loss) from operations
$
2,635
$
(14,008
)
* 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.
Balance Sheet
At the end of the second quarter of fiscal 2021, total
borrowings under the Company’s debt agreements totaled $87.3
million and the Company had $34.4 million of excess availability
under its revolving credit facility.
Subsequent to the end of the quarter, on September 7th, the
Company entered into a new $35 million senior secured term loan
credit facility, replacing its prior facility of approximately $25
million. This step further enhances the Company’s liquidity
position by increasing its availability as well as reducing
associated covenants. The Company concurrently entered into a
restated and amended revolving credit facility which reflects the
terms of the new term loan credit facility. As a result of the
amendment to the revolving credit facility and new term loan credit
facility, the Company has also reduced its margin rate to
pre-pandemic levels reducing its current cost of capital.
Furthermore, the Company entered into an amendment to its third
lien credit facility, which also reflects other applicable terms of
the new term loan credit facility. The new term loan facility and
amended revolving credit facility now mature in 2026 and the third
lien credit facility now matures in 2027.
Net inventory at the end of the second quarter of fiscal 2021
was $74.3 million compared to $92.1 million at the end of the
second quarter of fiscal 2020. As a reminder, the Company
experienced an increase in seasonal inventory levels in the second
quarter of fiscal 2020 due to order cancellations in the wholesale
channel and temporary store closures. As a result of the actions
taken to work through prior seasonal product, the healthier
inventory levels also reflect an improved balance of newness.
2021 Second Quarter Earnings Conference
Call
A conference call to discuss the second quarter results will be
held today, September 9, 2021, at 4:30 p.m. ET, hosted by Vince
Holding Corp. Chief Executive Officer, Jack Schwefel, 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) 392-0629, conference ID 4054989. 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. 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 50 full-price retail stores, 18
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 womenswear line lauded for its signature prints,
romantic detailing, and vintage inspired aesthetic reimagined for a
modern era. The Rebecca Taylor collection is available at 12 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 major department and
specialty stores in the US and select international markets.
Parker, founded in 2008 in New York City, is a contemporary women’s
fashion brand that is trend focused. 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; further impairment of our
goodwill and indefinite-lived intangible assets; general economic
conditions; 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; the expected effects of the acquisition of the
Acquired Businesses on the Company; our ability to successfully
manage the transition of the new Chief Executive Officer; 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; 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; seasonal and quarterly variations in our
revenue and income; our ability to ensure the proper operation of
the distribution facilities by third-party logistics providers; 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; 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
July 31,
August 1,
July 31,
August 1,
2021
2020
2021
2020
Net sales
$
78,673
$
37,022
$
136,206
$
76,040
Cost of products sold
43,295
23,682
75,345
46,700
Gross profit
35,378
13,340
60,861
29,340
as a % of net sales
45.0
%
36.0
%
44.7
%
38.6
%
Impairment of goodwill and intangible
assets
—
—
—
13,848
Impairment of long-lived assets
—
—
—
13,026
Selling, general and administrative
expenses
32,743
27,348
65,327
65,892
as a % of net sales
41.6
%
73.9
%
48.0
%
86.7
%
Income (loss) from operations
2,635
(14,008
)
(4,466
)
(63,426
)
as a % of net sales
3.3
%
(37.8
)%
(3.3
)%
(83.4
)%
Interest expense, net
1,927
1,022
3,805
2,047
Other expense (income), net
—
4
-
(2,303
)
Income (loss) before income taxes
708
(15,034
)
(8,271
)
(63,170
)
Provision for income taxes
1,298
28
3,941
70
Net loss
$
(590
)
$
(15,062
)
$
(12,212
)
$
(63,240
)
Loss per share:
Basic loss per share
$
(0.05
)
$
(1.28
)
$
(1.03
)
$
(5.39
)
Diluted loss per share
$
(0.05
)
$
(1.28
)
$
(1.03
)
$
(5.39
)
Weighted average shares
outstanding:
Basic
11,898,360
11,784,007
11,855,535
11,739,061
Diluted
11,898,360
11,784,007
11,855,535
11,739,061
Vince Holding Corp. and Subsidiaries Exhibit (2)
Condensed Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
July 31,
January 30,
August 1,
2021
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,524
$
3,777
$
782
Trade receivables, net
31,158
31,878
18,589
Inventories, net
74,336
68,226
92,122
Prepaid expenses and other current
assets
5,614
6,703
3,483
Total current assets
112,632
110,584
114,976
Property and equipment, net
17,687
17,741
18,823
Operating lease right-of-use assets
88,992
91,982
89,004
Intangible assets, net
76,163
76,491
76,819
Goodwill
31,973
31,973
31,973
Other assets
3,745
4,173
5,112
Total assets
$
331,192
$
332,944
$
336,707
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
50,789
$
40,216
$
58,450
Accrued salaries and employee benefits
5,268
4,231
9,021
Other accrued expenses
12,451
15,688
11,265
Short-term lease liabilities
24,231
22,085
19,186
Current portion of long-term debt
1,375
—
2,063
Total current liabilities
94,114
82,220
99,985
Long-term debt
84,759
84,485
72,898
Long-term lease liabilities
90,655
97,144
95,042
Deferred income tax liability and other
liabilities
6,761
2,888
416
Stockholders' equity
54,903
66,207
68,366
Total liabilities and stockholders'
equity
$
331,192
$
332,944
$
336,707
Vince Holding Corp. and
Subsidiaries
Exhibit (3)
Reconciliation of GAAP to Non-GAAP
measures
(Unaudited, amounts in
thousands)
For the three months ended
July 31, 2021
As Reported (GAAP)
Long-lived Assets Impairment
Charge
Goodwill and Intangibles
Impairment Charge
TRA Adjustment
As Adjusted (Non- GAAP)
Income from operations
$
2,635
$
—
$
—
$
—
$
2,635
Interest expense, net
1,927
—
—
—
1,927
Other (income) expense, net
—
—
—
—
—
Income before income taxes
708
—
—
—
708
Provision for income taxes
1,298
—
—
—
1,298
Net loss
$
(590
)
$
—
$
—
$
—
$
(590
)
Earnings per share
$
(0.05
)
$
—
$
—
$
—
$
(0.05
)
(1)
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) income 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
)
(2)
(1)
Based on weighted-average shares outstanding of 11,898,360 for the
three months ended July 31, 2021, which excludes the effect of
dilutive equity securities.
(2)
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.
For the six months ended July
31, 2021
As Reported (GAAP)
Long-lived Assets Impairment
Charge
Goodwill and Intangibles
Impairment Charge
TRA Adjustment
As Adjusted (Non- GAAP)
Loss from operations
$
(4,466
)
$
—
$
—
$
—
$
(4,466
)
Interest expense, net
3,805
—
—
—
3,805
Other (income) expense, net
—
—
—
—
—
Loss before income taxes
(8,271
)
—
—
—
(8,271
)
Provision for income taxes
3,941
—
—
—
3,941
Net loss
$
(12,212
)
$
—
$
—
$
—
$
(12,212
)
Loss per share
$
(1.03
)
$
-
$
-
$
-
$
(1.03
)
(3)
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
)
(4)
(3)
Based on weighted-average shares outstanding of 11,855,535 for the
six months ended July 31, 2021, which excludes the effect of
dilutive equity securities.
(4)
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210909005841/en/
Investor Relations Contact: ICR, Inc. Jean Fontana,
646-277-1214 Jean.fontana@icrinc.com
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