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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Vince Holding Corp | NYSE:VNCE | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.21 | -5.72% | 3.46 | 3.7988 | 3.40 | 3.54 | 213,462 | 01:00:00 |
Net Sales of $59.2 Million Gross Margin Increased 440 basis points vs. Q1 FY2023 Q1 Profitability Exceeds Prior Outlook Reaffirms Full Year FY2024 Outlook
Vince Holding Corp. (NYSE: VNCE) ("VNCE" or the "Company"), a global contemporary retailer, today reported its financial results for the first quarter ended May 4, 2024.
David Stefko, Interim Chief Executive Officer of VNCE said, "Our first quarter results reflect the strategic actions focused on driving improved full-price performance as we continued to reduce the promotional activity in our direct-to-consumer channel and pullback in our off-price business within our wholesale channel. As expected, these actions had a negative impact to our topline performance but helped to drive strong gross margin expansion despite incurring royalty expenses that we did not have in the prior year period. In addition, we continued to execute our Transformation Plan, and we believe we are on track to better align our cost structure with our current operating model inclusive of royalty expenses. Through these actions and initiatives we are well positioned to deliver on our objectives for this year and beyond."
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.
For the first quarter ended May 4, 2024:
Vince First Quarter Review
Rebecca Taylor and Parker First Quarter Review
Net Sales and Operating Results by Segment:
Three Months Ended
May 4,
April 29,
(in thousands)
2024
2023
Net Sales:
Vince Wholesale
$
30,257
$
32,467
Vince Direct-to-consumer
28,914
31,508
Rebecca Taylor and Parker
—
81
Total net sales
$
59,171
$
64,056
Income (loss) from operations:
Vince Wholesale
$
10,184
$
8,571
Vince Direct-to-consumer
(64
)
1,101
Rebecca Taylor and Parker
7,633
1,192
Subtotal
17,753
10,864
Unallocated corporate (1)
(12,149
)
(13,240
)
Total income (loss) from operations
$
5,604
$
(2,376
)
(1) 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. In addition, for the quarter ended April 29, 2023 unallocated corporate expenses includes approximately $2.7 million of transaction related expenses associated with the Authentic Transaction.
Balance Sheet
At the end of the first quarter of fiscal 2024, total borrowings under the Company's debt agreements totaled $50.3 million and the Company had $25.9 million of excess availability under its revolving credit facility.
Net inventory at the end of the first quarter of fiscal 2024 was $56.7 million compared to $80.0 million at the end of the first quarter of fiscal 2023. The year-over-year decrease in inventory was driven by a decline in Vince as the Company sold through higher levels of inventory from the prior year and rebalanced its inventory purchases for the current season.
During the quarter ended May 4, 2024, the Company did not issue shares of common stock under the ATM program. The Company continues to have shares available under the program to exercise with proceeds to be used as sources, along with cash from operations, to fund future growth.
Transformation Program & Fiscal 2024 Outlook
On October 31, 2023, the Company announced its Transformation Program focused on driving enhanced profitability through an improved gross margin profile and an optimized expense structure. The Transformation Program is expected to result in over $30 million in savings over the next three years, including approximately $10 million of savings in fiscal 2024.
As previously noted, given the timing of the completion of the Authentic Transaction in May 2023, the year-over-year comparison in the first half of fiscal 2024 is negatively impacted by the royalty fees now incurred in the business that were not incurred through May 2023.
For the second quarter of fiscal 2024 the Company expects total company net sales to be relatively flat to down low single digits compared to $69.4 million in the second quarter of fiscal 2023. The Company expects second quarter fiscal 2024 total company operating margin to decline approximately 500 to 750 basis points compared to total company adjusted operating margin of 4.1% in the second quarter of fiscal 2023. This guidance assumes SG&A deleverage due to the reestablishment of the Company's short-term incentive compensation plan, as well as approximately a 160 basis point headwind from expense favorability last year due primarily to lease actions associated with the wind down activity with Rebecca Taylor, and approximately 130 basis point negative impact from severance expenses related to organizational changes. This outlook assumes continued gross margin expansion, despite the expected 190 basis point negative impact from royalty fees expected to be incurred in the period, however to a lesser degree as experienced in Q1 primarily driven by the channel mix assumption as the Company has now normalized its offprice wholesale business and expects to benefit from higher levels of fall wholesale shipments in Q2 fiscal 2024 given the strength of the orderbook.
For full year fiscal 2024 the Company continues to expect total company net sales to increase in the low-single-digit range compared to $292.9 million in fiscal 2023. The Company continues to expect full year fiscal 2024 total company operating margin, inclusive of approximately 140 basis point negative impact from expected royalty fees through May, referenced above, to be flat to up 25 basis points compared to total company adjusted operating margin of 1.4% in fiscal 2023.
Strategic Partnership with Authentic Brands Group
On May 25, 2023, the Company announced that it completed the previously announced transaction (the "Authentic Transaction") with Authentic Brands Group ("Authentic").
In connection with the Authentic Transaction, VNCE entered into an exclusive, long-term license agreement (the "License Agreement") with Authentic for usage of the contributed intellectual property for VNCE's existing business in a manner consistent with the Company's current wholesale, retail and e-commerce operations. The License Agreement contains an initial ten-year term and eight ten-year renewal options allowing VNCE to renew the agreement.
*Non-GAAP Financial Measures
In addition to reporting financial results in accordance with GAAP, the Company has provided, with respect to the financial results relating to the three months ended May 4, 2024, adjusted income (loss) from operations, adjusted income (loss) before income taxes and equity in net loss of equity method investment, adjusted income (loss) before equity in net loss of equity method investment, adjusted net income (loss), and adjusted earnings (loss) per share, which are non-GAAP measures, in order to eliminate the effect of the Gain on Sale of Subsidiary. For the three months ended April 29, 2023, the Company has provided adjusted loss from operations, adjusted loss before income taxes and equity in net loss of equity method investment, adjusted (benefit) provision for income taxes, adjusted loss before equity in net loss of equity method investment, adjusted net loss, and adjusted loss per share, which are non-GAAP measures, in order to eliminate the effect of the Transaction Expenses, the Parker IP Sale Gain and the Discrete Tax Benefit. 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.
Conference Call
A conference call to discuss the first quarter results will be held today, June 18, 2024, at 8:30 a.m. ET, hosted by Vince Holding Corp. Interim Chief Executive Officer, Dave Stefko, and Chief Financial Officer, John Szczepanski. 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) 470-1428, conference ID 420390. 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 retail company that operates the Vince brand women's and men's ready to wear business. 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. Vince Holding Corp. operates 47 full-price retail stores, 15 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. Please visit www.vince.com for more information.
Forward-Looking Statements: This document, and any statements incorporated by reference herein contain forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include the statements under “Transformation Program & Fiscal 2024 Outlook” above as well as statements regarding, among other things, our current expectations about possible or assumed future results of operations of the Company 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 the license agreement with ABG Vince, a subsidiary of Authentic Brands Group; ABG Vince's expansion of the Vince brand into other categories and territories; ABG Vince's approval rights and other actions; our ability to maintain adequate cash flow from operations or availability under our revolving credit facility to meet our liquidity needs; restrictions on our operations under our credit facilities, our ability to realize the benefits of our strategic initiatives; our ability to improve our profitability; the execution of our customer strategy; our operating experience and brand recognition in international markets; the execution and management of our direct-to-consumer business growth plans; our ability to make lease payments when due; our ability to maintain our larger wholesale partners; our ability to anticipate and/or react to changes in customer demand and attract new customers, including in connection with making inventory commitments; actual or perceived general economic conditions; our ability to remediate the identified material weakness in our internal control over financial reporting; our ability to comply with domestic and international laws, regulations and orders; increased scrutiny regarding our approach to sustainability matters and environmental, social and governance practices; our ability to remain competitive in the areas of merchandise quality, price, breadth of selection and customer service; the transition associated with the appointment of an interim chief executive officer; our ability to attract and retain key personnel; seasonal and quarterly variations in our revenue and income; further impairment of our goodwill; the protection and enforcement of intellectual property rights relating to the Vince brand; our ability to complete the wind down of the Rebecca Taylor business; our ability to mitigate system security risk issues, such as cyber or malware attacks, as well as other major system failures; our ability to optimize our systems, processes and functions; our ability to comply with privacy-related obligations; our ability to ensure the proper operation of the distribution facilities by third-party logistics providers; fluctuations in the price, availability and quality of raw materials; the extent of our foreign sourcing; our reliance on independent manufacturers; the ethical business and compliance practices of our independent manufacturers; our status as a “controlled company”; our status as a “smaller reporting company”; 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
May 4,
April 29,
2024
2023
Net sales
$
59,171
$
64,056
Cost of products sold
29,258
34,464
Gross profit
29,913
29,592
as a % of net sales
50.6
%
46.2
%
Gain on sale of intangible assets
—
(765
)
Gain on sale of subsidiary
(7,634
)
—
Selling, general and administrative expenses
31,943
32,733
as a % of net sales
54.0
%
51.1
%
Income (loss) from operations
5,604
(2,376
)
as a % of net sales
9.5
%
(3.7
)%
Interest expense, net
1,646
3,290
Income (loss) before income taxes and equity in net loss of equity method investment
3,958
(5,666
)
Benefit for income taxes
(887
)
(5,285
)
Income (loss) before equity in net loss of equity method investment
4,845
(381
)
Equity in net loss of equity method investment
(465
)
—
Net income (loss)
$
4,380
$
(381
)
Earnings (loss) per share:
Basic earnings (loss) per share
$
0.35
$
(0.03
)
Diluted earnings (loss) per share
$
0.35
$
(0.03
)
Weighted average shares outstanding:
Basic
12,507,561
12,342,355
Diluted
12,611,901
12,342,355
Vince Holding Corp. and Subsidiaries
Exhibit (2)
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands)
May 4,
February 3,
April 29,
2024
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
739
$
357
$
422
Trade receivables, net
22,248
20,671
17,372
Inventories, net
56,674
58,777
80,036
Prepaid expenses and other current assets
6,949
4,997
4,201
Total current assets
86,610
84,802
102,031
Property and equipment, net
6,869
6,972
9,409
Operating lease right-of-use assets
70,377
73,003
68,741
Goodwill
31,973
31,973
31,973
Assets held for sale
—
—
69,957
Equity method investment
25,075
26,147
—
Other assets
2,175
2,252
1,983
Total assets
$
223,079
$
225,149
$
284,094
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable
$
22,478
$
31,678
$
45,976
Accrued salaries and employee benefits
4,195
3,967
4,247
Other accrued expenses
9,487
8,980
16,731
Short-term lease liabilities
15,823
16,803
19,354
Current portion of long-term debt
—
—
3,500
Total current liabilities
51,983
61,428
89,808
Long-term debt
50,102
43,950
102,442
Long-term lease liabilities
65,771
67,705
67,044
Deferred income tax liability and other liabilities
3,567
4,913
4,499
Stockholders' equity
51,656
47,153
20,301
Total liabilities and stockholders' equity
$
223,079
$
225,149
$
284,094
Vince Holding Corp. and Subsidiaries
Exhibit (3)
Reconciliation of GAAP to Non-GAAP measures
(Unaudited, amounts in thousands except share and per share amounts)
For the Three Months ended May 4, 2024
As Reported (GAAP)
Gain on sale of subsidiary
As Adjusted (Non-GAAP)
Income (loss) from operations
$
5,604
$
7,634
$
(2,030
)
Interest expense, net
1,646
—
1,646
Income (loss) before income taxes and equity in net loss of equity method investment
3,958
7,634
(3,676
)
Benefit for income taxes
(887
)
—
(887
)
Income (loss) before equity in net loss of equity method investment
4,845
7,634
(2,789
)
Equity in net loss of equity method investment
(465
)
—
(465
)
Net income (loss)
$
4,380
$
7,634
$
(3,254
)
Earnings (loss) per share - diluted (1)
$
0.35
$
0.61
$
(0.26
)
For the Three Months ended April 29, 2023
As Reported (GAAP)
Transaction Related Expenses Associated with the Authentic Transaction
Gain on Sale of Parker Intangible Assets
Transaction Related Expenses Associated with the sale of Parker Intangible Assets
Discrete Tax Benefit Associated with Classification Change
As Adjusted (Non-GAAP)
Loss from operations
$
(2,376
)
$
(2,741
)
$
765
$
(150
)
$
—
$
(250
)
Interest expense, net
3,290
—
—
—
—
3,290
Loss before income taxes and equity in net loss of equity method investment.
(5,666
)
(2,741
)
765
(150
)
—
(3,540
)
(Benefit) Provision for income taxes
(5,285
)
—
—
—
(6,127
)
842
Loss before equity in net loss of equity method investment
(381
)
(2,741
)
765
(150
)
6,127
(4,382
)
Net loss
$
(381
)
$
(2,741
)
$
765
$
(150
)
$
6,127
$
(4,382
)
Loss per share (2)
$
(0.03
)
$
(0.22
)
$
0.06
$
(0.01
)
$
0.50
$
(0.36
)
(1) As reported is based on diluted weighted-average shares outstanding of 12,611,901 and as adjusted is based on basic weighted average shares outstanding of 12,507,561 for the three months ended May 4, 2024. Accordingly, the sum of the as reported earnings (loss) per share and the reconciling items may not equal the as adjusted earnings (loss) per share.
(2) Based on a weighted-average shares outstanding of 12,342,355 for the three months ended April 29, 2023, which excludes the effects of dilutive equity securities.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240618062219/en/
Investor Relations: ICR, Inc. Caitlin Churchill, 646-277-1274 Caitlin.Churchill@icrinc.com
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