Vince Holding Corp. (NYSE:VNCE), a leading global luxury apparel
and accessories brand (“Vince” or the “Company”), today reported
unaudited results for the first quarter of fiscal year 2018 ended
May 5, 2018.
Highlights for the first quarter ended May 5, 2018:
- Direct-to-Consumer sales increased
14.9%; comparable sales grew 12.3%
- Gross margin rate increased 270 basis
points to 46.8%
- Operating loss improved $3.8 million to
$4.4 million from $8.2 million
- Net loss was $5.6 million or $0.49 per
share compared to a net loss of $9.3 million or $1.88 per
share
Brendan Hoffman, Chief Executive Officer, commented, “We were
pleased with the strong response to our women’s and men’s product
assortments in the first quarter which drove a double digit
comparable sales increase in our full price stores, and more than
25% growth in our eCommerce business. In addition, we are highly
encouraged by our three recent store openings, all of which are
exceeding our sales expectations. In the wholesale channel, we saw
better than expected performance at both Nordstrom and Neiman
Marcus as well as strong sell-through across all accounts,
indicating a favorable response to our product offering. Sales in
our wholesale segment declined, consistent with our expectations,
primarily as the result of our planned reduction in partners in
this channel. Given our increased confidence and visibility in the
business, we have reinstituted annual guidance. With the building
enthusiasm for our brand, we are more confident than ever that we
are on the right path to delivering consistent profitable growth
over the long term.”
For the first quarter ended May 5, 2018:
- Net sales decreased 6.1% to $54.5
million compared to $58.0 million in the first quarter of fiscal
2017. Wholesale segment sales decreased 19.5% to $28.5 million, in
line with expectations, as compared to the same period last year
primarily due to the planned reduction in full-price wholesale
partners. Direct-to-consumer segment sales increased 14.9% to $26.0
million compared to the first quarter of fiscal 2017. Comparable
sales increased 12.3%, including e-commerce sales, primarily due to
an increase in transactions.
- Gross profit was $25.5 million, or
46.8% of net sales, compared to gross profit of $25.6 million, or
44.1% of net sales, in the first quarter of fiscal 2017. The 270
basis point increase in gross margin rate was largely due to lower
sales allowances in the wholesale channel and a favorable shift in
channel mix, partially offset by the unfavorable impact of
adjustments to inventory reserves.
- Selling, general, and administrative
expenses were $29.9 million, or 54.8% of sales, compared to $33.8
million, or 58.2% of sales, in the first quarter of fiscal 2017.
The decline in SG&A dollars was primarily the result of lower
product development costs and the non-recurrence of investments
made last year related to the remediation and optimization of the
systems implemented during fiscal 2016.
- Operating loss was $4.4 million,
compared to an operating loss of $8.2 million for the first quarter
of fiscal 2017.
- Net loss was $5.6 million or $0.49 per
share compared to a net loss of $9.3 million or $1.88 per
share.
- The Company ended the quarter with 57
company-operated stores, a net increase of three stores since the
first quarter of fiscal 2017.
Balance Sheet
The Company ended the first quarter of fiscal 2018 with $5.2
million in cash and cash equivalents and $50.6 million of
borrowings under its debt agreements. The Company decreased
borrowings under its debt agreements since the same period last
year by $15.5 million, primarily due to $14.0 million of payments
to the term loan facility.
Net inventory at the end of the first quarter of fiscal 2018 was
$49.4 million compared to $32.2 million at the end of the first
quarter of fiscal 2017. The increase in net inventory was primarily
due to a change in the timing of shipments to the off-price
wholesale channel, growth of the replenishment program, and the
reinstatement of the Company’s summer collection.
Capital expenditures for the first quarter of fiscal 2018
totaled approximately $0.3 million.
Fiscal 2018 Outlook
For fiscal 2018 the Company expects:
- Net sales to be between $273 million
and $280 million. This compares to net sales of $272.6 million in
fiscal 2017.
- Operating income to be between $3
million and $6 million. This compares to reported operating loss of
$18.3 million in fiscal 2017 which includes a $5.1 million non-cash
asset impairment charge related to property and equipment of
certain retail stores.
2018 First Quarter Earnings Conference
Call
A conference call to discuss the first quarter results will be
held today, June 14, 2018, 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 1985467. 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 leading global luxury apparel
and accessories brand best known for creating elevated yet
understated pieces for every day. The collections are inspired by
the brand’s California origins and embody a feeling of warm and
effortless style. Vince designs uncomplicated yet refined
pieces that approach dressing with a sense of ease. Known for
its range of luxury products, Vince offers women’s and men’s
ready-to-wear, shoes, handbags, and home for a global lifestyle.
Vince products are sold in prestige locations worldwide. As of June
14, 2018, the Company operated 44 full-price retail stores, 14
outlet stores and its e-commerce site, vince.com. The Company is
headquartered in New York and operates a design studio in Los
Angeles. 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 under
"Fiscal 2018 Outlook" and 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, 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;
further impairment of our goodwill and indefinite-lived intangible
assets; our ability to realize the benefits of our recently
announced strategic initiatives; the execution and management of
our retail store growth plans; our ability to make lease payments
when due; our ability to ensure the proper operation of the
distribution facility by a third-party logistics provider; 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 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; 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; effect of the U.S. federal income tax law reform; other
tax matters; and other factors as set forth from time to time in
our Securities and Exchange Commission filings, including those
described in our Annual Report on Form 10-K under “Item 1A—Risk
Factors.” 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 5, April
29, 2018 2017 Net sales $ 54,514 $ 58,045 Cost of
products sold 28,978 32,454 Gross profit 25,536
25,591 as a % of net sales 46.8 % 44.1 % Selling, general and
administrative expenses 29,900 33,784 as a % of net
sales 54.8 % 58.2 % Loss from operations (4,364 ) (8,193 ) as a %
of net sales (8.0 )% (14.1 )% Interest expense, net 1,289 1,044
Other (income) expense, net (64 ) 1 Loss before
income taxes (5,589 ) (9,238 ) Provision for income taxes 48
52 Net loss $ (5,637 ) $ (9,290 )
Loss per share:
Basic loss per share $ (0.49 ) $ (1.88 ) Diluted loss per share $
(0.49 ) $ (1.88 )
Weighted average shares outstanding: Basic
11,616,500 4,942,825 Diluted 11,616,500 4,942,825
Vince Holding Corp. and
Subsidiaries
Exhibit (2)
Condensed Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
May 5, February 3, April 29, 2018
2018 2017 ASSETS Current assets: Cash and cash
equivalents $ 5,228 $ 5,372 $ 15,391 Trade receivables, net 12,764
20,760 20,292 Inventories, net 49,360 48,921 32,213 Prepaid
expenses and other current assets 7,517 6,521
2,868 Total current assets 74,869 81,574 70,764 Property and
equipment, net 29,966 31,608 42,017 Intangible assets, net 76,949
77,099 77,548 Goodwill 41,435 41,435 41,435 Deferred income taxes
and other assets 2,738 2,818 2,518 Total
assets $ 225,957 $ 234,534 $ 234,282
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current liabilities: Accounts payable $ 20,149 $ 22,556 $ 25,016
Accrued salaries and employee benefits 4,003 6,715 2,671 Other
accrued expenses 9,288 7,906 10,739 Current portion of long-term
debt 8,000 8,000 — Total current liabilities
41,440 45,177 38,426 Long-term debt 41,600 40,682 64,395 Deferred
rent 15,316 15,633 16,670 Other liabilities 58,273 58,273 137,830
Stockholders' equity (deficit) 69,328 74,769
(23,039 ) Total liabilities and stockholders' equity $ 225,957 $
234,534 $ 234,282
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version on businesswire.com: https://www.businesswire.com/news/home/20180614005206/en/
Investor Relations:ICR, Inc.Jean Fontana,
646-277-1200Jean.fontana@icrinc.com
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