Vince Holding Corp. (NYSE:VNCE), a leading global luxury apparel
and accessories brand (“Vince” or the “Company”), today reported
unaudited results for the third quarter of fiscal 2018 ended
November 3, 2018.
Highlights for the third quarter ended November 3, 2018:
- Net sales increased 5.6% to $83.5
million
- Direct-to-Consumer sales increased
17.1%; comparable sales grew 14.1%
- Gross margin rate increased 250 basis
points to 48.9%
- Operating income increased 68.9% to
$9.0 million
- Net income was $6.8 million or $0.57
per diluted share compared to net income $3.5 million or $0.41 per
diluted share
Brendan Hoffman, Chief Executive Officer, commented, “Our third
quarter results reflect continued strength across several areas of
our business. Operating income for the quarter increased by $3.7
million and for the year-to-date period, operating results improved
by $13.9 million. For the third quarter, our retail segment
delivered a 14.1% comp with continued momentum in our eCommerce
business while in our wholesale segment, we saw continued strength
in our department store doors with higher sell-through rates and
further market share gains. During the third quarter, we opened two
stores in premier locations and we recently signed a lease for a
store in midtown Manhattan across from Rockefeller Center. Overall,
with another quarter of great results under our belt, combined with
our performance through the Black Friday weekend, we are raising
the low end of our full year guidance and are more optimistic than
ever about our ability to deliver profitable growth over the long
term.”
For the third quarter ended November 3, 2018:
- Net sales increased 5.6% to $83.5
million from $79.1 million in the third quarter of fiscal 2017.
Wholesale segment sales were flat at $53.0 million, as shipment
declines related to the exit of certain wholesale partners were
offset by lower sales allowances than in the same prior year
period. Direct-to-consumer segment sales increased 17.1% to $30.5
million compared to the third quarter of fiscal 2017. Comparable
sales increased 14.1%, including e-commerce sales, due primarily to
an increase in transactions partially offset by a lower average
unit retail related to product mix.
- Gross profit increased 11.3% to $40.8
million, or 48.9% of net sales, compared to gross profit of $36.7
million, or 46.4% of net sales, in the third quarter of fiscal
2017. The 250 basis point increase in gross margin rate in the
third quarter of fiscal 2018 was due to a decrease in the rate of
sales allowances in the wholesale segment, non-recurring costs
incurred in the third quarter of fiscal 2017 related to the exit of
certain wholesale partners and lower product and supply chain
costs. This was partially offset by an unfavorable impact from
year-over-year adjustments to inventory reserves.
- Selling, general, and administrative
expenses were $31.9 million, or 38.2% of sales compared to $31.4
million, or 39.7% of sales, in the third quarter of fiscal
2017.
- Operating income increased by 68.9% to
$9.0 million, or 10.7% of net sales compared to operating income of
$5.3 million, or 6.7% of net sales for the third quarter of fiscal
2017.
- Net income was $6.8 million, or $0.57
per diluted share compared to $3.5 million, or $0.41 per diluted
share for the third quarter of fiscal 2017.
- The Company ended the quarter with 59
company-operated stores representing a net increase of four stores
since the third quarter of last year.
Balance Sheet
The Company ended the third quarter of fiscal 2018 with $1.0
million in cash and cash equivalents and $63.0 million of
borrowings under its debt agreements. On August 21, 2018, the
Company refinanced the 2013 Revolving Credit Facility and the 2013
Term Loan Facility by entering into the 2018 Revolving Credit
Facility and 2018 Term Loan Facility. All outstanding amounts under
the previous credit facilities totaling $69.8 million including
interest were repaid in full.
The Company decreased overall borrowings under its debt
agreements since the same period last year by $5.1 million,
primarily due to $8.5 million of net repayments to the term loan
facilities, partially offset by an increase in net borrowings under
the revolving credit facilities to fund working capital needs.
Net inventory at the end of the third quarter of fiscal 2018 was
$61.5 million compared to $51.4 million at the end of the third
quarter of fiscal 2017. The increase in inventory was primarily due
to the planned product returns in the first half of the fiscal year
from exited wholesale partners and the growth of the replenishment
program.
Capital expenditures for the third quarter of fiscal 2018
totaled $1.3 million.
Fiscal 2018 Outlook
For fiscal 2018 the Company now expects:
- Net sales to be between $277 million
and $280 million. This compares to net sales of $272.6 million in
fiscal 2017.
- Operating income to be between $5
million and $7 million, excluding any potential non-cash asset
impairment charges. 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 Third Quarter Earnings Conference
Call
A conference call to discuss the third quarter results will be
held today, December 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 3394516. 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 and footwear as well as capsule collections of
handbags and home for a global lifestyle. Vince products are
sold in prestige locations worldwide. As of December 13, 2018, the
Company operated 45 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 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 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.
Exhibit (1)
Vince Holding Corp. and
Subsidiaries
Condensed Consolidated Statements of
Operations
(Unaudited, amounts in thousands except
percentages, share and per share data)
Three Months Ended Nine Months Ended
November 3, October 28, November
3, October 28, 2018 2017
2018 2017 Net sales $ 83,526 $ 79,067 $ 201,168 $
197,934 Cost of products sold 42,709 42,400
107,096 110,120 Gross profit 40,817 36,667 94,072 87,814 as
a % of net sales 48.9 % 46.4 % 46.8 % 44.4 % Selling, general and
administrative expenses 31,850 31,358 91,893
99,558 as a % of net sales 38.2 % 39.7 % 45.7 % 50.3 %
Income (loss) from operations 8,967 5,309 2,179 (11,744 ) as a % of
net sales 10.7 % 6.7 % 1.1 % (5.9 )% Interest expense, net 2,154
1,693 4,740 4,013 Other expense, net 78 113 87
116 Income (loss) before income taxes 6,735 3,503 (2,648 )
(15,873 ) Provision (benefit) for income taxes (30 )
(6 ) 46 42 Net income (loss) $ 6,765 $ 3,509 $ (2,694
) $ (15,915 )
Earnings (Loss) per share: Basic earnings
(loss) per share $ 0.58 $ 0.41 $ (0.23 ) $ (2.58 ) Diluted earnings
(loss) per share $ 0.57 $ 0.41 $ (0.23 ) $ (2.58 )
Weighted
average shares outstanding: Basic 11,621,012 8,610,869
11,619,059 6,166,219 Diluted 11,847,606 8,611,308 11,619,059
6,166,219
Exhibit (2)
Vince Holding Corp. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
November 3, February 3, October 28,
2018 2018 2017 ASSETS Current assets:
Cash and cash equivalents $ 1,050 $ 5,372 $ 5,723 Trade
receivables, net 32,323 20,760 31,278 Inventories, net 61,515
48,921 51,378 Prepaid expenses and other current assets
6,369 6,521 4,045 Total current assets 101,257 81,574
92,424 Property and equipment, net 28,158 31,608 38,799 Intangible
assets, net 76,650 77,099 77,249 Goodwill 41,435 41,435 41,435
Deferred income taxes and other assets 3,422 2,818
2,816 Total assets $ 250,922 $ 234,534 $ 252,723
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Accounts payable $ 27,053 $ 22,556 $ 15,717 Accrued salaries and
employee benefits 6,514 6,715 5,045 Other accrued expenses 9,473
7,906 11,522 Current portion of long-term debt 2,750
8,000 9,000 Total current liabilities 45,790 45,177 41,284
Long-term debt 58,730 40,682 57,621 Deferred rent 15,111 15,633
15,927 Other liabilities 58,273 58,273 137,830 Stockholders' equity
73,018 74,769 61 Total liabilities and
stockholders' equity $ 250,922 $ 234,534 $ 252,723
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181213005099/en/
Investor Relations:ICR, Inc.Jean Fontana,
646-277-1214Jean.fontana@icrinc.com
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