NEW YORK--(BUSINESS WIRE)--
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 2017 ended July 29, 2017.
Brendan Hoffman, Chief Executive Officer, commented, “We were pleased to
see the stabilization in net sales during the second quarter, which
showed significant sequential improvement versus our first quarter
results. In our wholesale business, sales decreased slightly, due to a
reduction in international sales. We also saw disruption in receipt
flows for pre-Fall and Fall deliveries. In our direct-to-consumer
segment, we saw sequential improvement in sales, with strong sales
growth in our e-commerce business. In addition, we were very pleased
with the positive sell through that we have seen for our Fall product
thus far in our retail channel.”
Mr. Hoffman continued, “As we look ahead, we have taken steps to
rationalize our department store distribution and made the strategic
decision to enter into limited distribution arrangements for
non-licensed products with two department store partners, Nordstrom and
Neiman Marcus, beginning in fiscal 2018. We expect that these
partnerships will bring a number of benefits to our business, including
driving improved profitability over the long-term. Overall, we believe
that we have the right initiatives and team in place for our brand, and
expect to stabilize and ultimately drive growth in the business as we
refine our wholesale distribution strategy, and enhance our
direct-to-consumer segment. In addition, we believe that our efforts to
deliver product that is better aligned with customers’ needs and
enhanced, targeted marketing initiatives, combined with our focus on
reducing costs across the business while making investments in our
infrastructure will support our long term growth objectives.”
For the second quarter ended July 29, 2017:
-
Net sales increased 0.2% to $60.8 million from $60.7 million in the
second quarter of fiscal 2016. Wholesale segment sales decreased 0.9%
to $39.3 million, primarily due to a reduction in sales
internationally. Direct-to-consumer segment sales increased 2.3% to
$21.6 million compared to the second quarter of fiscal 2016.
Comparable sales decreased 0.8%, including e-commerce sales, due to a
decrease in average order value.
-
Gross profit was $25.6 million, or 42.0 % of net sales. This compares
to gross profit of $27.4 million, or 45.1% of net sales, in the second
quarter of fiscal 2016. The prior year results reflected a $1.9
million benefit from favorable adjustments to inventory reserves. In
addition, gross margin in the second quarter of fiscal 2017 was
negatively impacted by a higher mix of markdowns in the
Direct-to-consumer segment, as well as an unfavorable impact from
higher product and supply chain costs, partially offset by decreased
discounts and allowances in the Wholesale segment.
-
Selling, general, and administrative expenses were $34.4 million, or
56.6% of sales compared to $31.6 million, or 52.1% of sales, in the
second quarter of fiscal 2016. The growth in SG&A expense for the
second quarter of fiscal 2017 was primarily due to a net increase of
$2.3 million reflecting investments related to the remediation and
optimization of IT systems, severance, and other one-time investments
as well as savings related to the Company’s previous consulting
arrangement with its founders.
-
Operating loss was $8.9 million, compared to operating loss of $4.3
million for the second quarter of fiscal 2016.
-
Net loss was $10.1 million, or $0.20 per share, compared to a net loss
of $2.0 million, or $0.04 per share, for the second quarter of fiscal
2016. The net loss for the second quarter of fiscal 2017 does not
include a benefit from income taxes due to the offsetting impact of
the tax valuation allowance. The net loss for the second quarter of
fiscal 2016 included a $3.3 million income tax benefit.
-
The Company opened one retail store during the quarter, and ended the
quarter with 55 company-operated stores, an increase of three stores
since the second quarter of fiscal 2016.
Balance Sheet
The Company ended the second quarter of fiscal 2017 with $3.8 million in
cash and cash equivalents and $73.5 million of borrowings under its debt
agreements. The increase in borrowings under its debt agreements over
the prior year period is due to higher borrowings under the revolving
credit facility.
Gross inventory increased $5.7 million in comparison to the second
quarter of fiscal 2016, while inventory reserves decreased $1.5 million
as a result of less excess and aged inventory. As a result, net
inventory at the end of the second quarter of fiscal 2017 was $41.8
million compared to $34.7 million at the end of the second quarter of
fiscal 2016. The increase in net inventory was primarily driven by the
timing of off-price shipments.
Capital expenditures for the second quarter of fiscal 2017 totaled $0.9
million, primarily attributable to investments in new retail stores and
the Company’s new systems.
On September 7, 2017, the Company separately announced the results of
its non-transferable rights offering, which it expects to settle on or
about September 8, 2017. The Company expects to raise gross proceeds of
$30 million from the rights offering and the related investment
agreement.
2017 Second Quarter Earnings Conference Call
A conference call to discuss the second quarter results will be held
today, September 7, 2017, 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 75902197. 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 global luxury brand best known for
utilizing luxe fabrications and innovative techniques to create a
product assortment that combines urban utility and modern effortless
style. From its edited core collection of ultra-soft cashmere knits and
cotton tees, Vince has evolved into a global lifestyle brand and
destination for both women’s and men’s apparel and accessories. As of
July 29, 2017, Vince products were sold in prestige distribution
worldwide, including approximately 2,300 distribution locations across
more than 40 countries. With corporate headquarters in New York and its
design studio in Los Angeles, the Company operated 41 full-price retail
stores, 14 outlet stores and its e-commerce site, vince.com. 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 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 (including under the tax receivable agreement) and fund our
operations; our ability to comply with the covenants under our term loan
facility; our ability to continue as a going concern; our ability to
successfully complete the previously announced rights offering; 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; our ability to regain
compliance with the continued listing standards of the New York Stock
Exchange; our ability to ensure the proper operation of the distribution
facility by a third party logistics provider recently transitioned from
Kellwood; 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 control the level of sales in the off-price channels; 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; unusual,
unpredictable and/or severe weather conditions; the execution and
management of our retail store growth plans, including the availability
and cost of acceptable real estate locations for new store openings; 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; tax matters;
and other factors as set forth from time to time in our Securities and
Exchange Commission filings, including under the heading "Item 1A—Risk
Factors" in our Annual Report on Form 10-K and our 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.
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Exhibit (1)
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Vince Holding Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited, amounts in thousands except
percentages,
share and per share data )
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Three Months Ended
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Six Months Ended
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July 29,
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July 30,
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July 29,
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July 30,
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2017
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2016
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2017
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2016
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|
|
Net sales
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$
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60,822
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$
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60,702
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$
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118,867
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$
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128,347
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Cost of products sold
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35,266
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33,315
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67,720
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72,702
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Gross profit
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25,556
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27,387
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51,147
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55,645
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as a % of net sales
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42.0
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%
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45.1
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%
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43.0
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%
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43.4
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%
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Selling, general and administrative expenses
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34,416
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31,642
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68,200
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63,448
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as a % of net sales
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56.6
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%
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52.1
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%
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57.3
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%
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|
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49.5
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%
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Loss from operations
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(8,860
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)
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(4,255
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)
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(17,053
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)
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(7,803
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)
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as a % of net sales
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(14.6
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)%
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(7.0
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)%
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(14.3
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)%
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(6.1
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)%
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Interest expense, net
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1,276
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|
1,005
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2,320
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1,886
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Other expense, net
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2
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28
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3
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188
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Loss before income taxes
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(10,138
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)
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(5,288
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)
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(19,376
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)
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(9,877
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)
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(Benefit) provision for income taxes
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(4
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)
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(3,321
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)
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48
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(5,986
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)
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Net loss
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$
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(10,134
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)
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|
$
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(1,967
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)
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|
|
$
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(19,424
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)
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$
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(3,891
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)
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Loss per share:
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Basic loss per share
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$
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(0.20
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)
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$
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(0.04
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)
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$
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(0.39
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)
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$
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(0.09
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)
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Diluted loss per share
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$
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(0.20
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)
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$
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(0.04
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)
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$
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(0.39
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)
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$
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(0.09
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)
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Weighted average shares outstanding:
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Basic
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49,449,717
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48,968,760
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49,438,988
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43,485,767
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Diluted
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49,449,717
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48,968,760
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|
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|
49,438,988
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|
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43,485,767
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Exhibit (2)
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Vince Holding Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands)
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|
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|
|
|
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July 29,
|
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|
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January 28,
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July 30,
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2017
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2017
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2016
|
|
ASSETS
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Current assets:
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Cash and cash equivalents
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$
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3,803
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|
|
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$
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20,978
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|
|
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$
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21,347
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Trade receivables, net
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18,939
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|
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10,336
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|
|
21,040
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Inventories, net
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41,842
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|
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38,529
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34,681
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Prepaid expenses and other current assets
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6,990
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4,768
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10,953
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Total current assets
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|
71,574
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|
|
|
|
74,611
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|
|
|
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88,021
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Property and equipment, net
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40,494
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|
|
42,945
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|
|
|
|
43,865
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Intangible assets, net
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|
77,398
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|
|
|
|
77,698
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|
|
|
|
108,747
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Goodwill
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|
|
41,435
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|
|
|
|
41,435
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|
|
|
|
63,746
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|
Deferred income taxes and other assets
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|
|
|
2,537
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|
|
|
|
2,791
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|
|
|
|
97,946
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|
Total assets
|
|
|
$
|
233,438
|
|
|
|
$
|
239,480
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|
|
|
$
|
402,325
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|
|
|
|
|
|
|
|
|
|
|
|
|
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|
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
|
|
|
|
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|
|
|
|
|
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|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Accounts payable
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|
$
|
24,554
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|
|
|
$
|
37,022
|
|
|
|
$
|
33,297
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|
Accrued salaries and employee benefits
|
|
|
|
4,642
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|
|
|
|
3,427
|
|
|
|
|
4,543
|
|
Other accrued expenses
|
|
|
|
10,844
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|
|
|
|
9,992
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|
|
|
|
12,543
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Total current liabilities
|
|
|
|
40,040
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|
|
|
|
50,441
|
|
|
|
|
50,383
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|
Long-term debt
|
|
|
|
72,040
|
|
|
|
|
48,298
|
|
|
|
|
52,798
|
|
Deferred rent
|
|
|
|
16,418
|
|
|
|
|
16,892
|
|
|
|
|
16,667
|
|
Other liabilities
|
|
|
|
137,830
|
|
|
|
|
137,830
|
|
|
|
|
140,854
|
|
Stockholders' (deficit) equity
|
|
|
|
(32,890
|
)
|
|
|
|
(13,981
|
)
|
|
|
|
141,623
|
|
Total liabilities and stockholders' (deficit) equity
|
|
|
$
|
233,438
|
|
|
|
$
|
239,480
|
|
|
|
$
|
402,325
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170907005322/en/
Source: Vince Holding Corp.