Vince Holding Corp. Reports Second Quarter 2023 Results
- Income from operations increased significantly, indicating improved profitability. Net income turned positive, showing a strong turnaround in financial performance.
- Net sales decreased by 22.1%, reflecting a decline in sales for the Vince brand and the wind down of the Rebecca Taylor and Parker segments.
In this press release, the Company is presenting its financial results in conformity with
Highlights for the second quarter ended July 29, 2023:
-
Net sales were
$69.4 million $89.2 million 14.3% decrease in Vince brand sales and a98.7% decrease in Rebecca Taylor and Parker segment sales, combined, driven by the previously announced wind down of the Rebecca Taylor business. -
Income from operations was
$32.9 million $5.2 million $32.0 million $2.0 million $2.8 million -
Net income was
$29.5 million $2.36 $15.0 million $(1.23) $0.5 million $(0.04)
Jack Schwefel, Chief Executive Officer of VNCE said, "The second quarter marked an important chapter for Vince. We successfully closed the previously announced transaction with Authentic Brands Group and swiftly took actions to strengthen our balance sheet while enhancing our focus on our strategic growth initiatives and maintaining a disciplined approach to inventory management and expenses. Our second quarter sales performance was impacted by the ongoing macro-related headwinds as well as our strategic decision to pull back on the off-price wholesale business as our inventory balance has normalized compared to last year. We are encouraged by the improvement in trend we delivered in our direct-to-consumer channel during the period and have maintained this momentum as we have entered the start of the third quarter. We continue to believe we are well positioned to execute our initiatives and deliver on our objectives."
For the second quarter ended July 29, 2023:
-
Total Company net sales decreased
22.1% to$69.4 million $89.2 million
-
Gross profit was
$32.3 million 46.6% of net sales, compared to gross profit of$36.4 million 40.8% of net sales, in the second quarter of fiscal 2022. The increase in gross margin rate was driven by lower freight costs, favorable year-over-year adjustments to inventory reserves, as well as approximately 120 basis points related to the wind down of the Rebecca Taylor business, which historically operated at a lower overall gross margin, and partially offset by approximately 320 basis points of royalty expenses associated with the Licensing Agreement (as defined below).
-
Selling, general, and administrative expenses were
$31.5 million 45.4% of sales, compared to$39.0 million 43.7% of sales, in the second quarter of fiscal 2022. The decrease in SG&A dollars was primarily driven by the wind down of the Rebecca Taylor business resulting in a$6.6 million $2.0 million
-
Income from operations was
$32.9 million $5.2 million $2.8 million
-
Income tax benefit was
$0.6 million $32.0 million $2.0 million $7.9 million
-
Net income was
$29.5 million $2.36 $15.0 million $(1.23) $0.5 million $(0.04)
- The Company ended the quarter with 66 company-operated Vince stores, a net decrease of 1 store since the second quarter of fiscal 2022.
Vince Second Quarter Highlights
-
Net sales decreased
14.3% to$69.3 million -
Wholesale segment sales decreased
22.0% to$36.4 million -
Direct-to-consumer segment sales decreased
3.7% to$32.9 million -
Income from operations excluding unallocated corporate expenses was
$12.5 million $12.2 million
Rebecca Taylor and Parker Segment Second Quarter Highlights
- On September 12, 2022, the Company announced the strategic decision to wind down its Rebecca Taylor business to focus its resources on the Vince brand. The wind down of the Rebecca Taylor business is now substantially completed.
-
Net sales decreased
98.7% to$0.1 million -
Income from operations was
$1.3 million $5.5 million $1.1 million
Net Sales and Operating Results by Segment:
|
|
Three Months Ended |
|
|||||
|
|
July 29, |
|
|
July 30, |
|
||
(in thousands) |
|
2023 |
|
|
2022 |
|
||
Net Sales: |
|
|
|
|
|
|
||
Vince Wholesale |
|
$ |
36,407 |
|
|
$ |
46,692 |
|
Vince Direct-to-consumer |
|
|
32,930 |
|
|
|
34,200 |
|
Rebecca Taylor and Parker |
|
|
110 |
|
|
|
8,302 |
|
Total net sales |
|
$ |
69,447 |
|
|
$ |
89,194 |
|
|
|
|
|
|
|
|
||
Income (loss) from operations: |
|
|
|
|
|
|
||
Vince Wholesale |
|
$ |
11,360 |
|
|
$ |
12,797 |
|
Vince Direct-to-consumer |
|
|
1,098 |
|
|
|
(617 |
) |
Rebecca Taylor and Parker |
|
|
1,257 |
|
|
|
(5,485 |
) |
Subtotal |
|
|
13,715 |
|
|
|
6,695 |
|
Unallocated corporate (1) |
|
|
19,135 |
|
|
|
(11,899 |
) |
Total income (loss) from operations |
|
$ |
32,850 |
|
|
$ |
(5,204 |
) |
(1) Unallocated corporate expenses are related to the Vince brand and are comprised of selling, general and administrative expenses attributable to corporate and administrative activities (such as marketing, design, finance, information technology, legal and human resource departments), and other charges that are not directly attributable to the Company's Vince Wholesale and Vince Direct-to-consumer reportable segments. In addition, unallocated corporate expenses includes the |
Balance Sheet
On June 26, 2023, the Company announced that it entered into a new five-year credit agreement for an
At the end of the second quarter of fiscal 2023, total borrowings under the Company's debt agreements totaled
Net inventory at the end of the second quarter of fiscal 2023 was
During the quarter ended July 29, 2023, the Company did not issue shares of common stock under the ATM program. The Company continues to have shares available under the program to exercise with proceeds to be used as sources, along with cash from operations, to fund future growth.
Strategic Partnership with Authentic Brands Group
On May 25, 2023, the Company announced that it completed the previously announced transaction with Authentic Brands Group ("Authentic"). As part of the transaction ("Authentic Transaction"), VNCE and Authentic entered into a strategic arrangement whereby VNCE contributed its intellectual property to a newly formed Authentic subsidiary ("ABG Vince") for total consideration to VNCE of
With the proceeds from this transaction, VNCE repaid in full the outstanding balance of
In connection with the Authentic Transaction, VNCE entered into an exclusive, long-term license agreement (the "License Agreement") with Authentic for usage of the contributed intellectual property for VNCE's existing business in a manner consistent with the Company's current wholesale, retail and e-commerce operations. The License Agreement contains an initial ten-year term and eight ten-year renewal options allowing VNCE to renew the agreement.
*Non-GAAP Financial Measures
In addition to reporting financial results in accordance with GAAP, the Company has provided, with respect to the financial results relating to three and six months ended July 29, 2023, adjusted income (loss) from operations, adjusted income (loss) before income taxes and equity in net income of equity method investment, adjusted (benefit) provision for income taxes, adjusted income (loss) before equity in net income of equity method investment, adjusted net income (loss), and adjusted earnings (loss) per share, which are non-GAAP measures, in order to eliminate the effect of the Vince IP Sale Gain, Transaction Expenses, the Parker IP Sale Gain and the Discrete Tax Benefit. The Company believes that the presentation of these non-GAAP measures facilitates an understanding of the Company's continuing operations without the impact associated with the aforementioned items. While these types of events can and do recur periodically, they are excluded from the indicated financial information due to their impact on the comparability of earnings across periods. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP results has been provided in Exhibit 3 to this press release.
Conference Call
A conference call to discuss the second quarter results will be held today, September 12, 2023, at 8:30 a.m. ET, hosted by Vince Holding Corp. Chief Executive Officer, Jack Schwefel, and Interim Chief Financial Officer, Michael Hand. 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) 470-1428, conference ID 294165. 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 HOLDING CORP.
Vince Holding Corp. is a global retail company that operates the Vince brand women's and men's ready to wear business. Vince, established in 2002, is a leading global luxury apparel and accessories brand best known for creating elevated yet understated pieces for every day effortless style. Vince Holding Corp. operates 49 full-price retail stores, 17 outlet stores, and its e-commerce site, vince.com and through its subscription service Vince Unfold, www.vinceunfold.com, as well as through premium wholesale channels globally. Please visit www.vince.com for more information.
Forward-Looking Statements: This document, and any statements incorporated by reference herein contain forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about possible or assumed future results of operations of the Company 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 maintain the license agreement with ABG Vince; ABG Vince's expansion of the Vince brand into other categories and territories; ABG Vince's approval rights and other actions; our ability to maintain adequate cash flow from operations or availability under our revolving credit facility to meet our liquidity needs; our ability to realize the benefits of our strategic initiatives; general economic conditions; further impairment of our goodwill; the execution and management of our direct-to-consumer business growth plans; our ability to make lease payments when due; our ability to maintain our larger wholesale partners; our ability to remediate the identified material weakness in our internal control over financial reporting; our ability to comply with domestic and international laws, regulations and orders; 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 attract and retain key personnel; seasonal and quarterly variations in our revenue and income; our ability to mitigate system security risk issues, such as cyber or malware attacks, as well as other major system failures; our ability to optimize our systems, processes and functions; our ability to comply with privacy-related obligations; our ability to ensure the proper operation of the distribution facilities by third-party logistics providers; fluctuations in the price, availability and quality of raw materials; commodity, raw material and other cost increases; the extent of our foreign sourcing; our reliance on independent manufacturers; 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 |
|
|
Six Months Ended |
|
||||||||||
|
|
July 29, |
|
|
July 30, |
|
|
July 29, |
|
|
July 30, |
|
||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
Net sales |
|
$ |
69,447 |
|
|
$ |
89,194 |
|
|
$ |
133,503 |
|
|
$ |
167,570 |
|
Cost of products sold |
|
|
37,099 |
|
|
|
52,822 |
|
|
|
71,563 |
|
|
|
95,563 |
|
Gross profit |
|
|
32,348 |
|
|
|
36,372 |
|
|
|
61,940 |
|
|
|
72,007 |
|
as a % of net sales |
|
|
46.6 |
% |
|
|
40.8 |
% |
|
|
46.4 |
% |
|
|
43.0 |
% |
Impairment of intangible assets |
|
|
— |
|
|
|
1,700 |
|
|
|
— |
|
|
|
1,700 |
|
Impairment of long-lived assets |
|
|
— |
|
|
|
866 |
|
|
|
— |
|
|
|
866 |
|
Gain on sale of intangible assets |
|
|
(32,043 |
) |
|
|
— |
|
|
|
(32,808 |
) |
|
|
— |
|
Selling, general and administrative expenses |
|
|
31,541 |
|
|
|
39,010 |
|
|
|
64,274 |
|
|
|
79,930 |
|
as a % of net sales |
|
|
45.4 |
% |
|
|
43.7 |
% |
|
|
48.1 |
% |
|
|
47.7 |
% |
Income (loss) from operations |
|
|
32,850 |
|
|
|
(5,204 |
) |
|
|
30,474 |
|
|
|
(10,489 |
) |
as a % of net sales |
|
|
47.3 |
% |
|
|
(5.8 |
)% |
|
|
22.8 |
% |
|
|
(6.3 |
)% |
Interest expense, net |
|
|
4,137 |
|
|
|
1,882 |
|
|
|
7,427 |
|
|
|
3,766 |
|
Income (loss) before income taxes and equity in net income of equity method investment |
|
|
28,713 |
|
|
|
(7,086 |
) |
|
|
23,047 |
|
|
|
(14,255 |
) |
(Benefit) provision for income taxes |
|
|
(592 |
) |
|
|
7,903 |
|
|
|
(5,877 |
) |
|
|
7,903 |
|
Income (loss) before equity in net income of equity method investment |
|
|
29,305 |
|
|
|
(14,989 |
) |
|
|
28,924 |
|
|
|
(22,158 |
) |
Equity in net income of equity method investment |
|
|
207 |
|
|
|
— |
|
|
|
207 |
|
|
|
— |
|
Net income (loss) |
|
$ |
29,512 |
|
|
$ |
(14,989 |
) |
|
$ |
29,131 |
|
|
$ |
(22,158 |
) |
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings (loss) per share |
|
$ |
2.37 |
|
|
$ |
(1.23 |
) |
|
$ |
2.35 |
|
|
$ |
(1.83 |
) |
Diluted earnings (loss) per share |
|
$ |
2.36 |
|
|
$ |
(1.23 |
) |
|
$ |
2.34 |
|
|
$ |
(1.83 |
) |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
12,428,339 |
|
|
|
12,220,693 |
|
|
|
12,385,347 |
|
|
|
12,125,759 |
|
Diluted |
|
|
12,479,667 |
|
|
|
12,220,693 |
|
|
|
12,470,085 |
|
|
|
12,125,759 |
|
Vince Holding Corp. and Subsidiaries |
|
|
|
|
|
|
|
Exhibit (2) |
|
|||
Condensed Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|||
(Unaudited, amounts in thousands) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
July 29, |
|
|
January 28, |
|
|
July 30, |
|
|||
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|||
ASSETS |
|
|
|
|
|
|
|
|
|
|||
Current assets: |
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents |
|
$ |
869 |
|
|
$ |
1,079 |
|
|
$ |
1,073 |
|
Trade receivables, net |
|
|
20,859 |
|
|
|
20,733 |
|
|
|
27,469 |
|
Inventories, net |
|
|
85,079 |
|
|
|
90,008 |
|
|
|
129,472 |
|
Prepaid expenses and other current assets |
|
|
11,148 |
|
|
|
3,515 |
|
|
|
4,179 |
|
Total current assets |
|
|
117,955 |
|
|
|
115,335 |
|
|
|
162,193 |
|
Property and equipment, net |
|
|
8,345 |
|
|
|
10,479 |
|
|
|
15,590 |
|
Operating lease right-of-use assets |
|
|
75,286 |
|
|
|
72,616 |
|
|
|
82,437 |
|
Intangible assets, net |
|
|
— |
|
|
|
70,106 |
|
|
|
73,807 |
|
Goodwill |
|
|
31,973 |
|
|
|
31,973 |
|
|
|
31,973 |
|
Assets held for sale |
|
|
— |
|
|
|
260 |
|
|
|
— |
|
Equity method investment |
|
|
26,232 |
|
|
|
— |
|
|
|
— |
|
Other assets |
|
|
2,595 |
|
|
|
2,576 |
|
|
|
3,218 |
|
Total assets |
|
$ |
262,386 |
|
|
$ |
303,345 |
|
|
$ |
369,218 |
|
|
|
|
|
|
|
|
|
|
|
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|||
Accounts payable |
|
$ |
39,170 |
|
|
$ |
49,396 |
|
|
$ |
80,309 |
|
Accrued salaries and employee benefits |
|
|
2,764 |
|
|
|
4,301 |
|
|
|
6,259 |
|
Other accrued expenses |
|
|
9,022 |
|
|
|
15,020 |
|
|
|
12,148 |
|
Short-term lease liabilities |
|
|
18,250 |
|
|
|
20,892 |
|
|
|
22,860 |
|
Current portion of long-term debt |
|
|
— |
|
|
|
3,500 |
|
|
|
2,625 |
|
Total current liabilities |
|
|
69,206 |
|
|
|
93,109 |
|
|
|
124,201 |
|
Long-term debt |
|
|
67,204 |
|
|
|
108,078 |
|
|
|
111,992 |
|
Long-term lease liabilities |
|
|
72,901 |
|
|
|
72,098 |
|
|
|
83,109 |
|
Deferred income tax liability and other liabilities |
|
|
2,976 |
|
|
|
9,803 |
|
|
|
14,469 |
|
Stockholders' equity |
|
|
50,099 |
|
|
|
20,257 |
|
|
|
35,447 |
|
Total liabilities and stockholders' equity |
|
$ |
262,386 |
|
|
$ |
303,345 |
|
|
$ |
369,218 |
|
Vince Holding Corp. and Subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
Exhibit (3) |
|
|
||||||||||||||
Reconciliation of GAAP to Non-GAAP measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(Unaudited, amounts in thousands except share and per share amounts) |
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
For the three months ended July 29, 2023 |
|
|
|||||||||||||||||||||||||
|
As
|
|
|
Gain on
|
|
|
Transaction
|
|
|
Gain on
|
|
|
Transaction
|
|
|
Discrete Tax
|
|
|
As Adjusted
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Income (loss) from operations |
$ |
32,850 |
|
|
$ |
32,043 |
|
|
$ |
(2,041 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,848 |
|
|
Interest expense, net |
|
4,137 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,137 |
|
|
Income (loss) before income taxes and equity in net income of equity method investment |
|
28,713 |
|
|
|
32,043 |
|
|
|
(2,041 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,289 |
) |
|
(Benefit) provision for income taxes |
|
(592 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(592 |
) |
|
Income (loss) before equity in net income of equity method investment |
|
29,305 |
|
|
|
32,043 |
|
|
|
(2,041 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(697 |
) |
|
Equity in net income of equity method investment |
|
207 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
207 |
|
|
Net income (loss) |
$ |
29,512 |
|
|
$ |
32,043 |
|
|
$ |
(2,041 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(490 |
) |
|
Earnings (loss) per share (1) |
$ |
2.36 |
|
|
$ |
2.57 |
|
|
$ |
(0.16 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
For the six months ended July 29, 2023 |
|
|
|||||||||||||||||||||||||
|
As
|
|
|
Gain on
|
|
|
Transaction
|
|
|
Gain on
|
|
|
Transaction
|
|
|
Discrete Tax
|
|
|
As Adjusted
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Income (loss) from operations |
$ |
30,474 |
|
|
$ |
32,043 |
|
|
$ |
(4,782 |
) |
|
$ |
765 |
|
|
$ |
(150 |
) |
|
$ |
— |
|
|
$ |
2,598 |
|
|
Interest expense, net |
|
7,427 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7,427 |
|
|
Income (loss) before income taxes and equity in net income of equity method investment |
|
23,047 |
|
|
|
32,043 |
|
|
|
(4,782 |
) |
|
|
765 |
|
|
|
(150 |
) |
|
|
— |
|
|
|
(4,829 |
) |
|
(Benefit) provision for income taxes |
|
(5,877 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,127 |
) |
|
|
250 |
|
|
Income (loss) before equity in net income of equity method investment |
|
28,924 |
|
|
|
32,043 |
|
|
|
(4,782 |
) |
|
|
765 |
|
|
|
(150 |
) |
|
|
6,127 |
|
|
|
(5,079 |
) |
|
Equity in net income of equity method investment |
|
207 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
207 |
|
|
Net income (loss) |
$ |
29,131 |
|
|
$ |
32,043 |
|
|
$ |
(4,782 |
) |
|
$ |
765 |
|
|
$ |
(150 |
) |
|
$ |
6,127 |
|
|
$ |
(4,872 |
) |
|
Earnings (loss) per share (2) |
$ |
2.34 |
|
|
$ |
2.57 |
|
|
$ |
(0.38 |
) |
|
$ |
0.06 |
|
|
$ |
(0.01 |
) |
|
$ |
0.49 |
|
|
$ |
(0.39 |
) |
|
(1) As reported is based on diluted weighted-average shares outstanding of 12,479,667 and as adjusted is based on basic weighted average shares outstanding of 12,428,339 for the three months ended July 29, 2023. |
(2) As reported is based on diluted weighted-average shares outstanding of 12,470,085 and as adjusted is based on basic weighted average shares outstanding of 12,385,347 for the six months ended July 29, 2023. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230912271210/en/
Investor Relations:
ICR, Inc.
Caitlin Churchill, 646-277-1274
Caitlin.Churchill@icrinc.com
Source: Vince Holding Corp.
