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 2019 ended
May 4, 2019.
Highlights for the first quarter ended May 4, 2019:
- Net sales increased 1.1% to $55.1
million as compared to $54.5 million in the same period last
year.
- Direct-to-Consumer comparable sales
grew 1.1%.
- Gross margin rate increased 450 basis
points to 51.3%.
- Operating loss was $5.7 million, which
includes $1.4 million of strategic consulting costs, compared to an
operating loss of $4.4 million in the same period last year.
- Net loss was $7.0 million or $0.60 per
share, which includes $1.4 million of strategic consulting costs,
compared to a net loss of $5.6 million or $0.49 per share in the
same period last year.
Brendan Hoffman, Chief Executive Officer, commented, “Our first
quarter results came in largely as expected. We continue to focus
on our direct to consumer business through retail expansion and
enhancements to our eCommerce channel. At wholesale, our women’s
business continues to resonate with consumers, which in our view is
driving further market share gains. Our Vince Unfold subscription
business is gaining traction and we are excited about other
opportunities including a test by Microsoft, expected to launch in
the coming months, presenting Vince in the windows of select
stores. We are pleased with the increased momentum we are seeing in
our business as weather improves and we begin to benefit from some
early timing of shipments. Overall, we believe we are gaining
momentum with merchandising strategies and an elevated focus on
marketing leaving us well positioned to deliver profitable growth
over the long term.”
For the first quarter ended May 4, 2019:
- Net sales increased 1.1% to $55.1
million compared to $54.5 million in the first quarter of fiscal
2018. Wholesale segment sales decreased 4.0% to $27.4 million as
compared to $28.5 million in the same period last year primarily
due to the shift in the timing of seasonal wholesale shipments.
Direct-to-consumer segment sales increased 6.7% to $27.8 million to
the first quarter of fiscal 2018. Comparable sales increased 1.1%,
including e-commerce sales, primarily due to an increase in average
dollar sale.
- Gross profit was $28.3 million, or
51.3% of net sales, compared to gross profit of $25.5 million, or
46.8% of net sales, in the first quarter of fiscal 2018. The 450
basis point increase in gross margin rate was due to the
nonrecurrence of an unfavorable adjustment to inventory reserves in
the prior year, stronger full price selling, and lower product
costs.
- Selling, general, and administrative
expenses were $34.0 million, or 61.7% of sales, compared to $29.9
million, or 54.8% of sales, in the first quarter of fiscal 2018.
The increase in SG&A dollars was primarily the result of
strategic consulting costs of $1.4 million, higher compensation and
benefits, and investments in marketing and new stores.
- Operating loss was $5.7 million, or
10.4% of net sales, which includes the aforementioned strategic
consulting costs of $1.4 million. Operating loss was $4.4 million
for the first quarter of fiscal 2018.
- Net loss was $7.0 million or $0.60 per
share, which includes $1.4 million of strategic consulting costs,
compared to a net loss of $5.6 million or $0.49 per share in the
same period last year.
- The Company ended the quarter with 59
company-operated stores, a net increase of 2 stores since the first
quarter of fiscal 2018.
Balance Sheet
The Company ended the first quarter of fiscal 2019 with $45.6
million of borrowings under its debt agreements. The Company
decreased borrowings under its debt agreements since the same
period last year by $5.0 million, primarily due to $4.2 million of
net repayments to the term loan facilities.
Net inventory at the end of the first quarter of fiscal 2019 was
$50.3 million compared to $49.4 million at the end of the first
quarter of fiscal 2018.
Capital expenditures for the first quarter of fiscal 2019
totaled approximately $0.5 million.
Effective February 3, 2019, the Company adopted the new Lease
Accounting Standards Codification Topic 842 (“ASC 842”) which
resulted in a significant increase in its reported assets and
liabilities associated with its operating leases. The new standard
has a negligible impact on its Consolidated Statements of
Operations and Comprehensive Income (Loss) and Consolidated
Statements of Cash Flows as compared to the previous accounting
standard.
Fiscal 2019 Outlook
For fiscal 2019 the Company continues to expect:
- Net sales to be between $290 million
and $300 million. This compares to net sales of $279.0 million in
fiscal 2018.
- Operating income to be between $7
million and $9 million. This compares to reported operating income
of $4.1 million in fiscal 2018 which included a $1.7 million
non-cash asset impairment charge related to property and equipment
of certain retail stores.
- Capital expenditures to be between $4.0
million and $4.5 million.
This guidance reflects only the current Section 301 tariffs in
place on goods imported from China. The Company has not
incorporated any future increases in tariffs on additional goods
imported from China into the US in its fiscal 2019
guidance.
2019 First Quarter Earnings Conference
Call
A conference call to discuss the first quarter results will be
held today, June 13, 2019, 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 1268888. 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, fragrance, and home for a global lifestyle. Vince
products are sold in prestige locations worldwide. As of June 13,
2019, the Company operated 45 full-price retail stores, 14 outlet
stores, its e-commerce site, vince.com, as well as its subscription
business, Vince Unfold. 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 2019 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
realize the benefits of our strategic initiatives; our ability to
maintain our larger wholesale partners; the execution and
management of our retail store growth plans; our ability to make
lease payments when due; our ability to expand our product
offerings into new product categories, including the ability to
find suitable licensing partners; our ability to comply with the
obligations under our credit facilities; our ability to continue
having the liquidity necessary to service our debt, meet
contractual payment obligations, and fund our operations; 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; changes
in global economies and credit and financial markets; 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.
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, May
5, 2019 2018 Net sales $ 55,122 $ 54,514 Cost of
products sold 26,856 28,978 Gross profit 28,266
25,536 as a % of net sales 51.3 % 46.8 % Selling, general and
administrative expenses 34,015 29,900 as a % of net
sales 61.7 % 54.8 % Loss from operations (5,749 ) (4,364 ) as a %
of net sales (10.4 )% (8.0 )% Interest expense, net 1,077 1,289
Other expense (income), net 108 (64 ) Loss before
income taxes (6,934 ) (5,589 ) Provision for income taxes 42
48 Net loss $ (6,976 ) $ (5,637 )
Loss per share:
Basic loss per share $ (0.60 ) $ (0.49 ) Diluted loss per share $
(0.60 ) $ (0.49 )
Weighted average shares outstanding: Basic
11,629,836 11,616,500 Diluted 11,629,836 11,616,500
Vince Holding Corp. and
Subsidiaries
Exhibit (2)
Condensed Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
May 4, February 2,
May 5, 2019 2019 2018 ASSETS
Current assets: Cash and cash equivalents $ 147 $ 118 $ 5,228 Trade
receivables, net 15,767 28,896 12,764 Inventories, net 50,311
53,271 49,360 Prepaid expenses and other current assets
7,808 6,317 7,517 Total current assets 74,033 88,602
74,869 Property and equipment, net 23,826 25,156 29,966 Operating
lease right-of-use assets 80,430 - - Intangible assets, net 76,351
76,501 76,949 Goodwill 41,435 41,435 41,435 Deferred income taxes
and other assets 3,334 3,237 2,738 Total
assets $ 299,409 $ 234,931 $ 225,957
LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $
21,612 $ 28,787 $ 20,149 Accrued salaries and employee benefits
4,158 5,510 4,003 Other accrued expenses 9,071 8,535 9,288
Short-term lease liabilities 16,524 - - Current portion of
long-term debt 2,750 2,750 8,000 Total current
liabilities 54,115 45,582 41,440 Long-term debt 41,529 42,340
41,600 Deferred rent - 14,636 15,316 Long-term lease liabilities
78,830 - - Other liabilities 58,273 58,273 58,273 Stockholders'
equity 66,662 74,100 69,328 Total liabilities
and stockholders' equity $ 299,409 $ 234,931 $ 225,957
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version on businesswire.com: https://www.businesswire.com/news/home/20190613005679/en/
Investor Relations Contact:ICR, Inc.Jean Fontana,
646-277-1200Jean.fontana@icrinc.com
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