Vince Holding Corp. (NYSE:VNCE), a leading global contemporary
group (“Vince” or the “Company”), today reported preliminary
results for the first quarter of fiscal year 2020 ended May 2,
2020. These preliminary results are subject to change following the
completion of quarterly financial closing procedures and do not
include the non-cash impact of goodwill and intangible asset
impairment charges, long-lived asset or other finite-lived
intangible asset impairment charges, which are expected to have a
material impact on the Company’s reported results. In addition,
preliminary results exclude any benefit from the re-measurement of
the liability related to the Company’s Tax Receivable Agreement
(“TRA”).
Brendan Hoffman, Chief Executive Officer, commented, “The
momentum in the Vince brand full-price retail and Ecommerce
channels continued into February 2020. Beginning in March, at the
onset of the COVID pandemic and subsequent temporary store
closures, we had to respond quickly to the downturn in our
business. Through this crisis our teams have demonstrated
incredible resiliency, agility and creativity executing under
pressure and with limited resources. Our near term priorities have
been shifted towards actions necessary to reduce costs and enhance
liquidity through the difficult environment. We also quickly
elevated efforts towards Vince’s eCommerce channel to serve and
engage with our customers. We remained active in email, Instagram
and social media providing content relevant to the current
environment, which contributed to strong growth in traffic and
conversions.”
Mr. Hoffman continued, “Despite the near term challenges related
to COVID, I am no less excited about the long term opportunities
for our business. The Vince brand has steadily gained market share
over the last five years and has a proven track of growth in our
direct-to-consumer and wholesale channels. The brand’s distinct
aesthetic of effortless luxury and its comfortable casual
essentials offering aligns well with the strong trend towards
comfort as we move toward a work-from-home lifestyle. Rebecca
Taylor has strong brand equity and its own modern luxury aesthetic
where we see white space opportunity in the contemporary fashion
landscape. We continue to believe that we can create the success we
have achieved at Vince by executing a similar strategic playbook.
We look forward to fully resuming our multiple growth strategies as
we emerge from the pandemic.”
Preliminary Highlights for the first quarter ended May 2,
2020:
- Total Company net sales decreased 47.3% to $39.0 million
compared to $74.0 million in the first quarter of fiscal 2019.
- Vince brand net sales decreased 47.7% to $28.8 million.
- Vince brand wholesale segment sales decreased 60.8% to $10.7
million compared to the first quarter of fiscal 2019.
- Vince brand direct-to-consumer segment sales decreased 34.9% to
$18.1 million compared to the first quarter of fiscal 2019.
- Rebecca Taylor and Parker (“Acquired Businesses”) net sales
decreased 45.8% to $10.2 million.
- Gross profit was $16.0 million, or 41.0% of net sales, compared
to gross profit of $37.9 million, or 51.2% of net sales, in the
first quarter of fiscal 2019. The decrease in the gross margin rate
was primarily due to year-over-year adjustments to inventory
reserves, increased promotional activity and deleveraging of supply
chain costs. This was partially offset by lower sales allowances
and a channel mix shift at the Vince brand.
- 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 $37.9 million, or 97.2% of sales, compared
to $44.1 million, or 59.6% of sales, in the first quarter of fiscal
2019. The decrease in SG&A dollars was primarily the result of
lower payroll and compensation expense, reduced marketing spend and
lower costs related to travel, product development and freight.
This was partially offset by an increase in bad debt expense.
- Loss from operations was $21.9 million compared to loss from
operations of $6.2 million in the same period last year, which does
not include the non-cash impact of goodwill and intangible asset
impairment charges, long-lived asset or other finite-lived
intangible asset impairment charges that are expected to be
material.
- The Company ended the quarter with 69 company-operated Vince
and Rebecca Taylor stores, a net increase of four stores since the
first quarter of fiscal 2019.
Three Months Ended
(Unaudited)
May 2,
May 4,
(in thousands)
2020
2019*
Net sales
$
39,017
$
74,017
Gross profit
16,000
37,892
Selling, general and administrative
expenses**
37,916
44,123
(Loss) Income from operations**
(21,916
)
(6,231
)
* First quarter fiscal 2019 amounts reflect the retrospective
combination of the Acquired Businesses
** For the three months ended May 2, 2020, selling, general, and
administrative expenses and loss from operations do not include the
non-cash impact of goodwill and intangible asset impairment
charges, long-lived asset or other finite-lived intangible asset
impairment charges that are expected to be material.
Balance Sheet
Cash and cash equivalents were $26.6 million at the end of the
first quarter of fiscal 2020 as compared to $1.0 million for the
same period last year. The increase in cash reflects borrowings on
the Company’s revolving credit facility as part of its efforts to
protect liquidity during the COVID-19 crisis.
Total borrowings under the Company’s debt agreements totaled
$88.4 million, reflecting an increase of $25.8 million since the
same period last year.
Net inventory at the end of the first quarter of fiscal 2020 was
$68.1 million compared to $66.0 million at the end of the first
quarter of fiscal 2019.
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 Preliminary First Quarter Earnings
Conference Call
A conference call to discuss the preliminary first quarter
results will be held today, June 16, 2020, at 4:30 p.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 2567292. 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 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 49 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 full-price 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200616005878/en/
Investor Relations Contact: ICR, Inc. Jean Fontana,
646-277-1214 Jean.fontana@icrinc.com
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