U.S. Markets open in 48 mins

Vince Holding Corp. Reports Second Quarter 2019 Results

NEW YORK--(BUSINESS WIRE)--

Vince Holding Corp. (VNCE), a leading global luxury apparel and accessories brand (“Vince” or the “Company”), today reported unaudited results for the second quarter of fiscal year 2019 ended August 3, 2019.

Highlights for the second quarter ended August 3, 2019:

  • Net sales increased 13.0% to $71.4 million as compared to $63.1 million in the same period last year.
  • Direct-to-Consumer comparable sales grew 7.1%.
  • Gross margin rate increased 480 basis points to 48.7%.
  • Operating performance improved $4.4 million to $2.0 million compared to an operating loss of $2.4 million in the same period last year.
  • Net earnings improved $4.8 million to net income of $1.0 million or $0.08 per diluted share compared to a net loss of $3.8 million or $0.33 per share in the same period last year.

Brendan Hoffman, Chief Executive Officer, commented, “We were very pleased with the exceptional top and bottom line performance in the second quarter reflecting double digit sales growth in both our direct-to-consumer and wholesale channels. Our results are evidence that the multiple initiatives that we have been undertaking are coming together to deliver strong performance in all areas of the business.

We are excited about the momentum in our business as we continue to make progress across our strategic initiatives which include driving global expansion across our retail, e-commerce and wholesale channels as well as increasing brand awareness globally. We believe that we are well positioned within the luxury market to deliver consistent long term profitable growth and enhance shareholder value.”

For the second quarter ended August 3, 2019:

  • Net sales increased 13.0% to $71.4 million compared to $63.1 million in the second quarter of fiscal 2018. Wholesale segment sales increased 14.7% to $43.4 million as compared to $37.8 million in the same period last year due primarily to the acceleration of seasonal wholesale shipments. Direct-to-consumer segment sales increased 10.6% to $28.0 million compared to the second quarter of fiscal 2018. Comparable sales increased 7.1%, including e-commerce sales, primarily due to an increase in transactions and average dollar sale.
  • Gross profit was $34.7 million, or 48.7% of net sales, compared to gross profit of $27.7 million, or 43.9% of net sales, in the second quarter of fiscal 2018. The 480 basis point increase in gross margin rate was primarily due to product mix, efficiencies in the product development cycle and sourcing initiatives.
  • Selling, general, and administrative expenses were $32.8 million, or 45.9% of sales, compared to $30.1 million, or 47.7% of sales, in the second quarter of fiscal 2018. The growth in SG&A dollars was primarily the result of increased compensation and benefits partially related to growth in stores, increased marketing investments, costs associated with enhancements to our ecommerce and Vince Unfold platforms, as well as higher occupancy costs related to new stores.
  • Operating income was $2.0 million, or 2.8% of net sales. Operating loss was $2.4 million for the second quarter of fiscal 2018.
  • Net income was $1.0 million or $0.08 per diluted share compared to a net loss of $3.8 million or $0.33 per share in the same period last year.
  • The Company ended the quarter with 60 company-operated stores, a net increase of 2 stores since the second quarter of fiscal 2018.

Balance Sheet

The Company ended the second quarter of fiscal 2019 with $52.1 million of borrowings under its debt agreements, reflecting a decline of $12.3 million since the same period last year. The decrease was due to a $9.4 million decrease in net borrowings under the revolving credit facilities and $2.9 million of net repayments to the term loan facilities.

Net inventory at the end of the second quarter of fiscal 2019 was $59.7 million compared to $61.6 million at the end of the second quarter of fiscal 2018.

Capital expenditures for the second quarter of fiscal 2019 totaled approximately $1.0 million.

Fiscal 2019 Outlook

Mr. Hoffman concluded, “We are extremely pleased to be raising our outlook for sales and operating income, exclusive of tariff impacts, reflecting our increased confidence that the strategies we are executing will continue to drive momentum on our financial performance. I am more excited than ever about the future of the Vince brand.”

For fiscal 2019 the Company now expects:

  • Net sales to be between $295 million and $305 million. This compares to net sales of $279.0 million in fiscal 2018.
  • Operating income to be between $7.5 million and $9.5 million, which includes approximately $0.5 million of impact from the Section 301 tariffs that were effective May 10, 2019 and prior. This guidance excludes $2 million of estimated impact, net of targeted mitigation efforts, of additional Section 301 tariffs effective on or after September 1, 2019.

    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.

2019 Second Quarter Earnings Conference Call

A conference call to discuss the first quarter results will be held today, September 12, 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 8146279. 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 September 12, 2019, the Company operated 46 full-price retail stores, 15 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.

 

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

 

 

Six Months Ended

 

 

 

August 3,

 

 

August 4,

 

 

August 3,

 

 

August 4,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net sales

 

$

71,351

 

 

$

63,128

 

 

$

126,473

 

 

$

117,642

 

Cost of products sold

 

 

36,635

 

 

 

35,409

 

 

 

63,491

 

 

 

64,387

 

Gross profit

 

 

34,716

 

 

 

27,719

 

 

 

62,982

 

 

 

53,255

 

as a % of net sales

 

 

48.7

%

 

 

43.9

%

 

 

49.8

%

 

 

45.3

%

Selling, general and administrative expenses

 

 

32,752

 

 

 

30,143

 

 

 

66,767

 

 

 

60,043

 

as a % of net sales

 

 

45.9

%

 

 

47.7

%

 

 

52.8

%

 

 

51.1

%

Income (loss) from operations

 

 

1,964

 

 

 

(2,424

)

 

 

(3,785

)

 

 

(6,788

)

as a % of net sales

 

 

2.8

%

 

 

(3.8

)%

 

 

(3.0

)%

 

 

(5.8

)%

Interest expense, net

 

 

947

 

 

 

1,297

 

 

 

2,024

 

 

 

2,586

 

Other expense (income), net

 

 

 

 

 

73

 

 

 

108

 

 

 

9

 

Income (loss) before income taxes

 

 

1,017

 

 

 

(3,794

)

 

 

(5,917

)

 

 

(9,383

)

Provision for income taxes

 

 

29

 

 

 

28

 

 

 

71

 

 

 

76

 

Net income (loss)

 

$

988

 

 

$

(3,822

)

 

$

(5,988

)

 

$

(9,459

)

Earnings (Loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share

 

$

0.08

 

 

$

(0.33

)

 

$

(0.51

)

 

$

(0.81

)

Diluted earnings (loss) per share

 

$

0.08

 

 

$

(0.33

)

 

$

(0.51

)

 

$

(0.81

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

11,672,914

 

 

 

11,619,664

 

 

 

11,651,375

 

 

 

11,618,082

 

Diluted

 

 

11,860,063

 

 

 

11,619,664

 

 

 

11,651,375

 

 

 

11,618,082

 

 

Vince Holding Corp. and Subsidiaries

Exhibit (2)

Condensed Consolidated Balance Sheets

(Unaudited, amounts in thousands)

 

 

August 3,

 

 

February 2,

 

 

August 4,

 

 

 

2019

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

227

 

 

$

118

 

 

$

5,321

 

Trade receivables, net

 

 

28,587

 

 

 

28,896

 

 

 

22,999

 

Inventories, net

 

 

59,749

 

 

 

53,271

 

 

 

61,616

 

Prepaid expenses and other current assets

 

 

6,890

 

 

 

6,317

 

 

 

6,726

 

Total current assets

 

 

95,453

 

 

 

88,602

 

 

 

96,662

 

Property and equipment, net

 

 

23,139

 

 

 

25,156

 

 

 

29,271

 

Operating lease right-of-use assets

 

 

85,735

 

 

 

 

 

 

 

Intangible assets, net

 

 

76,201

 

 

 

76,501

 

 

 

76,800

 

Goodwill

 

 

41,435

 

 

 

41,435

 

 

 

41,435

 

Deferred income taxes and other assets

 

 

3,212

 

 

 

3,237

 

 

 

2,616

 

Total assets

 

$

325,175

 

 

$

234,931

 

 

$

246,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

34,083

 

 

$

28,787

 

 

$

30,569

 

Accrued salaries and employee benefits

 

 

4,880

 

 

 

5,510

 

 

 

4,347

 

Other accrued expenses

 

 

8,913

 

 

 

8,535

 

 

 

8,938

 

Short-term lease liabilities

 

 

16,429

 

 

 

 

 

 

 

Current portion of long-term debt

 

 

2,750

 

 

 

2,750

 

 

 

 

Total current liabilities

 

 

67,055

 

 

 

45,582

 

 

 

43,854

 

Long-term debt

 

 

48,107

 

 

 

42,340

 

 

 

63,584

 

Deferred rent

 

 

 

 

 

14,636

 

 

 

15,172

 

Long-term lease liabilities

 

 

83,583

 

 

 

 

 

 

 

Other liabilities

 

 

58,273

 

 

 

58,273

 

 

 

58,273

 

Stockholders' equity

 

 

68,157

 

 

 

74,100

 

 

 

65,901

 

Total liabilities and stockholders' equity

 

$

325,175

 

 

$

234,931

 

 

$

246,784

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20190912005845/en/