Vince Holding Corp. (NYSE:VNCE), a leading global luxury apparel
and accessories brand (“Vince” or the “Company”), today reported
unaudited results for the second quarter of fiscal year 2018 ended
August 4, 2018.
Highlights for the second quarter ended August 4, 2018:
- Net sales increased 3.8% to $63.1
million
- Direct-to-Consumer sales increased
17.2%; comparable sales grew 14.4%
- Gross margin rate increased 190 basis
points to 43.9%
- $6.5 million improvement in operating
loss to $2.4 million
- Net loss was $3.8 million or $0.33 per
share compared to a net loss of $10.1 million or $2.05 per
share
Brendan Hoffman, Chief Executive Officer, commented, “Our second
quarter results illustrate the excellent progress we have made in
repositioning Vince for long term growth. We once again delivered
strong performance in our direct-to-consumer channel as our summer
deliveries were met with favorable response and provided continuity
of product flow throughout the season. Our best performing stores
remain those in close proximity to department store doors that we
exited. We also saw another quarter of strong sell-through within
the department store channel positioning us for continued momentum
and improved profitability in this segment. We remain encouraged by
the overall trends in our business and look forward to building on
our successes as we work towards returning Vince to consistent
profitable growth over the long term.”
For the second quarter ended August 4, 2018:
- Net sales increased 3.8% to $63.1
million compared to $60.8 million in the second quarter of fiscal
2017. Wholesale segment sales decreased 3.6% to $37.8 million as
compared to the same period last year, as expected, due to the
streamlining of the Company's full-price department store business.
Direct-to-consumer segment sales increased 17.2% to $25.3 million
compared to the second quarter of fiscal 2017. Comparable sales
increased 14.4%, including e-commerce.
- Gross profit was $27.7 million, or
43.9% of net sales, compared to gross profit of $25.6 million, or
42.0% of net sales in the second quarter of fiscal 2017, a 190
basis point increase. The gross profit rate benefited from lower
supply chain costs and the favorable impact of channel mix;
partially offset by an unfavorable impact from year-over-year
adjustments to inventory reserves.
- Selling, general, and administrative
expenses were $30.1 million, or 47.7% of sales, compared to $34.4
million, or 56.6% of sales, in the second quarter of fiscal 2017.
The lower SG&A spend for the second quarter of fiscal 2018 was
primarily the result of the non-recurrence of investments made last
year related to the remediation and optimization of the systems
implemented during fiscal 2016, a decrease in severance costs, and
a reduction in product development costs.
- Operating loss was $2.4 million,
compared to operating loss of $8.9 million for the second quarter
of fiscal 2017.
- Net loss was $3.8 million, or $0.33 per
share, compared to a net loss of $10.1 million, or $2.05 per share
for the second quarter of fiscal 2017.
- The Company ended the quarter with 58
company-operated stores, a net increase of three stores since the
second quarter of fiscal 2017.
Balance Sheet
The Company ended the second quarter of fiscal 2018 with $5.3
million in cash and cash equivalents and $64.4 million of
borrowings under its debt agreements. The Company decreased
borrowings under its debt agreements since the same period last
year by $9.1 million, primarily due to $16 million of payments to
the term loan facility; partially offset by an increase in
revolving credit facility, used to fund working capital needs.
On August 21, 2018, the Company refinanced its existing term
loan facility and revolving credit facility by entering into a new
$27.5 million senior secured term loan facility and a new $80
million senior secured revolving credit facility.
The new revolving credit facility is $10 million higher than the
previous facility and carries a slightly improved interest rate of
either LIBOR plus 1.5% to 2% or the prime rate plus 0.5% to 1%.
Post refinancing the Company had $67.1 million of borrowings
under its debt agreements and opening availability of $26.7 million
under its revolving credit facility.
Net inventory at the end of the second quarter of fiscal 2018
was $61.6 million compared to $41.8 million at the end of the
second quarter of fiscal 2017. The increase in inventory was
primarily due to an earlier receipt of inventory for the fall
season, the planned product returns from exited wholesale partners,
the growth of the replenishment program, and the reinstatement of
the Company’s summer collection.
Capital expenditures for the second quarter of fiscal 2018
totaled $0.8 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 $7 million. This compares to reported operating loss of
$18.3 million in fiscal 2017, which included a $5.1 million
non-cash asset impairment charge related to property and equipment
of certain retail stores.
2018 Second Quarter Earnings Conference
Call
A conference call to discuss the second quarter results will be
held today, September 13, 2018, 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 2482229. 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, and capsule collection of handbags, and home
for a global lifestyle. Vince products are sold in prestige
locations worldwide. As of September 13, 2018, the Company operated
43 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.
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 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.
This press release is also available on the Vince Holding Corp.
website (http://investors.vince.com/).
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
August 4, July 29, August 4,
July 29, 2018 2017 2018 2017 Net
sales $ 63,128 $ 60,822 $ 117,642 $ 118,867 Cost of products sold
35,409 35,266 64,387 67,720 Gross
profit 27,719 25,556 53,255 51,147 as a % of net sales 43.9 % 42.0
% 45.3 % 43.0 % Selling, general and administrative expenses
30,143 34,416 60,043 68,200 as a % of net
sales 47.7 % 56.6 % 51.1 % 57.3 % Loss from operations (2,424 )
(8,860 ) (6,788 ) (17,053 ) as a % of net sales (3.8 )% (14.6 )%
(5.8 )% (14.3 )% Interest expense, net 1,297 1,276 2,586 2,320
Other (income) expense, net 73 2 9 3
Loss before income taxes (3,794 ) (10,138 ) (9,383 ) (19,376 )
Provision for income taxes 28 (4 ) 76
48 Net loss $ (3,822 ) $ (10,134 ) $ (9,459 ) $ (19,424 )
Loss
per share: Basic loss per share $ (0.33 ) $ (2.05 ) $ (0.81 ) $
(3.93 ) Diluted loss per share $ (0.33 ) $ (2.05 ) $ (0.81 ) $
(3.93 )
Weighted average shares outstanding: Basic
11,619,664 4,944,971 11,618,082 4,943,898 Diluted 11,619,664
4,944,971 11,618,082 4,943,898
Vince Holding Corp. and
Subsidiaries
Exhibit (2)
Condensed Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
August 4, February
3, July 29, 2018 2018 2017
ASSETS Current assets: Cash and cash equivalents $ 5,321 $
5,372 $ 3,803 Trade receivables, net 22,999 20,760 18,939
Inventories, net 61,616 48,921 41,842 Prepaid expenses and other
current assets 6,726 6,521 6,990 Total current
assets 96,662 81,574 71,574 Property and equipment, net 29,271
31,608 40,494 Intangible assets, net 76,800 77,099 77,398 Goodwill
41,435 41,435 41,435 Deferred income taxes and other assets
2,616 2,818 2,537 Total assets $ 246,784 $ 234,534 $
233,438
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) Current liabilities: Accounts payable $ 30,569 $
22,556 $ 24,554 Accrued salaries and employee benefits 4,347 6,715
4,642 Other accrued expenses 8,938 7,906 10,844 Current portion of
long-term debt — 8,000 — Total current
liabilities 43,854 45,177 40,040 Long-term debt 63,584 40,682
72,040 Deferred rent 15,172 15,633 16,418 Other liabilities 58,273
58,273 137,830 Stockholders' equity (deficit) 65,901
74,769 (32,890 ) Total liabilities and stockholders' equity
$ 246,784 $ 234,534 $ 233,438
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180913005279/en/
Investor Relations:ICR, Inc.Jean Fontana,
646-277-1200Jean.fontana@icrinc.com
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