NEW YORK--(BUSINESS WIRE)--
Vince Holding Corp. (NYSE:VNCE), a leading contemporary fashion brand
(“Vince” or the “Company”), today reported unaudited results for the
second quarter of fiscal 2016 ended July 30, 2016.
In this press release, the Company is presenting its financial results
in conformity with U.S. generally accepted accounting principles
("GAAP") as well as on an "adjusted" basis. Adjusted results presented
in this press release are non-GAAP financial measures. See "Non-GAAP
Financial Measures" below for more information about the Company's use
of non-GAAP financial measures and Exhibits 3 and 4 to this press
release for a reconciliation of GAAP results to such adjusted results.
For the second quarter ended July 30, 2016:
-
Net sales decreased 24.1% to $60.7 million from $80.0 million in the
second quarter of fiscal 2015. Wholesale segment net sales decreased
32.1% to $39.6 million due to the planned reduction in full-price
orders related to the transition of product under the new design team.
Direct-to-consumer segment net sales decreased 2.8% to $21.1 million
compared to the second quarter of fiscal 2015. Comparable sales
decreased 18.7%, including e-commerce sales, as a result of declines
in the number of transactions, which reflected the planned reduction
in inventory levels associated with the product transition.
-
Gross profit was $27.4 million, or 45.1% of net sales. This compares
to gross profit of $20.8 million, or 26.0% of net sales, in the second
quarter of fiscal 2015, which includes a $14.4 million charge
associated with the write-down of excess inventory and aged product to
expected net realizable value. Excluding the inventory write-down,
gross profit in the second quarter of 2015 was $35.2 million, or 44.0%
of net sales. Excluding the write-down in the prior year quarter, the
increase in gross profit rate for the second quarter of 2016 reflected
the favorable impact from lower year-over-year adjustments to
inventory reserves, partially offset by an increase in the rate of
sales allowances on lower net sales.
-
Selling, general, and administrative expenses were $31.6 million, or
52.1% of sales. This compares to $27.3 million, or 34.2% of sales, in
the second quarter of fiscal 2015, which included $2.9 million of net
management transition costs related to executive severance and related
costs. Excluding these costs, selling, general and administrative
costs in the second quarter of 2015 were $24.5 million or 30.6% of net
sales. The increase in SG&A dollars for the second quarter of fiscal
2016 includes costs associated with 10 additional stores, incentive
compensation costs and continued strategic investments to support the
Company’s long term goals.
-
Operating loss was $4.3 million, compared to operating loss of $6.5
million for the second quarter of fiscal 2015. Excluding the inventory
write-down and net management transition costs, operating income for
the second quarter of fiscal 2015 was $10.8 million.
-
Net loss was $2.0 million, or $0.04 per share, compared to net loss of
$5.0 million, or $0.14 per share, for the second quarter of fiscal
2015. Excluding the inventory write-down and net management transition
costs, net income for the second quarter of fiscal 2015 was $5.2
million, or $0.14 per share.
-
The Company opened one new store, ending the second quarter with 52
company-operated stores.
Brendan Hoffman, Chief Executive Officer, commented, “Our second quarter
results were largely in line with our expectations. As we transitioned
our product to Fall, we flowed fewer styles into the wholesale channel
as well as our own retail stores, which contributed to the reduction in
sales. Our Fall collection has just recently been set on the selling
floor and we are very pleased with the presentation. As we have said in
the past, we look forward to the holiday season, at which time our new
vision will be fully reflected in our assortment. Overall, we believe
that we are on track to achieve our net sales and diluted EPS targets
for fiscal 2016.”
Balance Sheet
The Company ended the second quarter with $21.3 million in cash and cash
equivalents and $55.0 million of borrowings under its debt agreements.
Inventory at the end of the second quarter of fiscal 2016 was $34.7
million compared to $45.6 million at the end of the second quarter of
fiscal 2015. The year-over-year inventory decline was primarily due to
better inventory management.
Capital expenditures for the second quarter of fiscal 2016 totaled $5.6
million, primarily attributable to new stores and IT migration costs.
2016 Outlook
For fiscal 2016:
-
Total net sales are still expected to be between $290 million and $305
million, including revenues from six new retail stores and comparable
sales growth inclusive of ecommerce sales in the flat to low-single
digit range;
-
Gross margin is now expected to be approximately 46.2%, mainly due to
additional strategic investments, as well as the higher rate of sales
allowances and lower mix of full-price sales in the first half;
-
SG&A is now expected to be between $128 million and $133 million,
contingent upon the level of annual incentive compensation programs to
be realized in fiscal 2016;
-
Interest expense is still expected to be approximately $4 million;
-
Diluted EPS is still expected to be $0.00 to $0.06. Note that the EPS
guidance reflects a share count of approximately 46.6 million, which
includes the impact of 11.8 million shares issued in connection with
the rights offering; and
-
Capital expenditures are now expected to be between $12.5 million and
$14.5 million, due to additional branding initiatives, as well as an
increase in the Company’s IT migration investment.
Non-GAAP Financial Measures
In addition to reporting financial results in accordance with GAAP, the
Company has provided, with respect to financial results relating to the
second quarter and first half of fiscal 2015, adjusted cost of products
sold, adjusted gross margin, adjusted selling, general and
administrative expenses, adjusted operating income, adjusted income
before taxes, adjusted income taxes, adjusted net income and adjusted
earnings per share and related shares outstanding, which are non-GAAP
financial measures, in order to eliminate the effect on operating
results of the inventory write-down for excess and aged product and
management transition costs. The Company believes that the presentation
of adjusted results facilitates an understanding of the Company's
continuing operations without the non-recurring impact associated with
the inventory write-down and management transition costs. 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
Exhibits 3 and 4 to this press release.
2016 Second Quarter Earnings Conference Call
A conference call to discuss the second quarter results will be held
today, September 8, 2016, at 4:30 p.m. ET, hosted by Vince Holding Corp.
Chief Executive Officer, Brendan Hoffman, and Chief Financial Officer,
David Stefko. During the conference call, the Company may answer
questions concerning business and financial developments, trends and
other business or financial matters. The Company's responses to these
questions, 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 (877)
201-0168, conference ID 63568042. 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
VINCE is a leading contemporary fashion brand best known for modern
effortless style and everyday luxury essentials. Established in 2002,
the brand now offers a wide range of women's and men's apparel, women's
and men's footwear, and handbags. Vince products are sold in prestige
distribution worldwide, including approximately 2,400 distribution
locations across approximately 40 countries. With corporate headquarters
in New York and its design studio in Los Angeles, as of September 8th,
2016, the Company has 40 company-operated full-price retail stores, 14
company-operated outlet stores and its e-commerce site, VINCE.com.
Please visit www.VINCE.com
for more information.
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 “2016 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
maintain adequate cash flow from operations or availability under our
revolving credit facility to meet our liquidity needs (including our
obligations under the tax receivable agreement); our ability to
successfully complete the migration of our systems and processes from
Kellwood Company and to successfully implement the new systems,
processes and functions following the migration; 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; the impact of recent turnover in the senior management
team; the fact that a number of members of the management team have less
than one year of tenure with the Company, and the current senior
management team has not had a long period of time working together; 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 10Q. 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.
This press release is also available on the Vince Holding Corp. website (http://investors.vince.com/).
|
|
|
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
|
|
|
|
|
July 30,
|
|
|
August 1,
|
|
|
|
July 30,
|
|
|
August 1,
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
2016
|
|
|
2015
|
|
|
Net sales
|
|
$
|
60,702
|
|
|
$
|
79,993
|
|
|
|
$
|
128,347
|
|
|
$
|
139,835
|
|
|
Cost of products sold
|
|
|
33,315
|
|
|
|
59,204
|
|
|
|
|
72,702
|
|
|
|
88,305
|
|
|
Gross profit
|
|
|
27,387
|
|
|
|
20,789
|
|
|
|
|
55,645
|
|
|
|
51,530
|
|
|
as a % of net sales
|
|
|
45.1
|
%
|
|
|
26.0
|
%
|
|
|
|
43.4
|
%
|
|
|
36.9
|
%
|
|
Selling, general and administrative expenses
|
|
|
31,642
|
|
|
|
27,331
|
|
|
|
|
63,448
|
|
|
|
52,971
|
|
|
as a % of net sales
|
|
|
52.1
|
%
|
|
|
34.2
|
%
|
|
|
|
49.5
|
%
|
|
|
37.9
|
%
|
|
Loss from operations
|
|
|
(4,255
|
)
|
|
|
(6,542
|
)
|
|
|
|
(7,803
|
)
|
|
|
(1,441
|
)
|
|
as a % of net sales
|
|
|
(7.0
|
)%
|
|
|
(8.2
|
)%
|
|
|
|
(6.1
|
)%
|
|
|
(1.0
|
)%
|
|
Interest expense, net
|
|
|
1,005
|
|
|
|
1,623
|
|
|
|
|
1,886
|
|
|
|
2,939
|
|
|
Other expense, net
|
|
|
28
|
|
|
|
350
|
|
|
|
|
188
|
|
|
|
491
|
|
|
Loss before income taxes
|
|
|
(5,288
|
)
|
|
|
(8,515
|
)
|
|
|
|
(9,877
|
)
|
|
|
(4,871
|
)
|
|
Benefit for income taxes
|
|
|
(3,321
|
)
|
|
|
(3,489
|
)
|
|
|
|
(5,986
|
)
|
|
|
(2,299
|
)
|
|
Net loss
|
|
$
|
(1,967
|
)
|
|
$
|
(5,026
|
)
|
|
|
|
(3,891
|
)
|
|
|
(2,572
|
)
|
|
Loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share
|
|
$
|
(0.04
|
)
|
|
$
|
(0.14
|
)
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.07
|
)
|
|
Diluted loss per share
|
|
$
|
(0.04
|
)
|
|
$
|
(0.14
|
)
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.07
|
)
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
48,968,760
|
|
|
|
36,774,752
|
|
|
|
|
43,485,767
|
|
|
|
36,763,933
|
|
|
Diluted
|
|
|
48,968,760
|
|
|
|
36,774,752
|
|
|
|
|
43,485,767
|
|
|
|
36,763,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit (2)
|
|
Vince Holding Corp. and Subsidiaries
|
|
|
|
Condensed Consolidated Balance Sheets
|
|
|
|
(Unaudited, amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
July 30,
|
|
|
January 30,
|
|
|
|
2016
|
|
|
2016
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
21,347
|
|
|
$
|
6,230
|
|
Trade receivables, net
|
|
|
21,040
|
|
|
|
9,400
|
|
Inventories, net
|
|
|
34,681
|
|
|
|
36,576
|
|
Prepaid expenses and other current assets
|
|
|
10,953
|
|
|
|
8,027
|
|
Total current assets
|
|
|
88,021
|
|
|
|
60,233
|
|
Property, plant and equipment, net
|
|
|
43,865
|
|
|
|
37,769
|
|
Intangible assets, net
|
|
|
108,747
|
|
|
|
109,046
|
|
Goodwill
|
|
|
63,746
|
|
|
|
63,746
|
|
Deferred income taxes and other assets
|
|
|
97,946
|
|
|
|
92,774
|
|
Total assets
|
|
$
|
402,325
|
|
|
$
|
363,568
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
33,297
|
|
|
$
|
28,719
|
|
Accrued salaries and employee benefits
|
|
|
4,543
|
|
|
|
5,755
|
|
Other accrued expenses
|
|
|
12,543
|
|
|
|
37,174
|
|
Total current liabilities
|
|
|
50,383
|
|
|
|
71,648
|
|
Long-term debt
|
|
|
52,798
|
|
|
|
57,615
|
|
Deferred rent
|
|
|
16,667
|
|
|
|
14,965
|
|
Other liabilities
|
|
|
140,854
|
|
|
|
140,838
|
|
Stockholders' equity
|
|
|
141,623
|
|
|
|
78,502
|
|
Total liabilities and stockholders' equity
|
|
$
|
402,325
|
|
|
$
|
363,568
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit (3)
|
|
Vince Holding Corp. and Subsidiaries
|
|
|
|
Reconciliation of net income on a GAAP basis to “Adjusted net
income”
|
|
|
|
(Unaudited, amounts in thousands except percentages, share and
per share
|
|
data)
|
|
|
|
|
|
|
|
|
|
|
For the three months ended August 1, 2015
|
|
|
|
|
|
As Reported
|
|
|
Adjustments
|
|
|
As Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
79,993
|
|
|
|
|
|
|
$
|
79,993
|
|
|
Cost of products sold
|
|
|
|
59,204
|
|
|
|
(14,447
|
)
|
(a)
|
|
44,757
|
|
|
Gross profit
|
|
|
|
20,789
|
|
|
|
14,447
|
|
|
|
35,236
|
|
|
as a % of sales
|
|
|
|
26.0
|
%
|
|
|
|
|
|
|
44.0
|
%
|
|
Selling, general and administrative expenses
|
|
|
|
27,331
|
|
|
|
(2,861
|
)
|
(b)
|
|
24,470
|
|
|
as a % of sales
|
|
|
|
34.2
|
%
|
|
|
|
|
|
|
30.6
|
%
|
|
(Loss) Income from operations
|
|
|
|
(6,542
|
)
|
|
|
17,308
|
|
|
|
10,766
|
|
|
as a % of sales
|
|
|
|
(8.2
|
)%
|
|
|
|
|
|
|
13.5
|
%
|
|
Interest expense, net
|
|
|
|
1,623
|
|
|
|
|
|
|
|
1,623
|
|
|
Other expense, net
|
|
|
|
350
|
|
|
|
|
|
|
|
350
|
|
|
(Loss) Income before income taxes
|
|
|
|
(8,515
|
)
|
|
|
17,308
|
|
|
|
8,793
|
|
|
(Benefit) provision for Income taxes
|
|
|
|
(3,489
|
)
|
|
|
7,079
|
|
(c)
|
|
3,590
|
|
|
Net (Loss) Income
|
|
|
$
|
(5,026
|
)
|
|
$
|
10,229
|
|
|
$
|
5,203
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share
|
|
|
$
|
(0.14
|
)
|
|
$
|
0.28
|
|
|
$
|
0.14
|
|
|
Diluted earnings (loss) per share
|
|
|
$
|
(0.14
|
)
|
|
$
|
0.28
|
|
|
$
|
0.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic shares
|
|
|
|
36,774,752
|
|
|
|
|
|
|
|
36,774,752
|
|
|
Diluted shares
|
|
|
|
36,774,752
|
|
|
|
|
|
|
|
37,658,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) To adjust cost of products sold to remove the impact of
inventory write downs of approximately $14.4 million primarily
|
|
related to excess out of season and current inventory.
|
|
(b) To adjust selling, general and administrative expenses to remove
executive severance costs of $3.7 million, partially
|
|
offset by the favorable impact of $(0.8) million related to
executive stock option forfeitures.
|
|
(c) Adjusted amount represents adjusted pretax income multiplied by
a normalized tax rate of 40.9%. The normalized tax rate was
|
|
derived by reference to statutory tax rates in the jurisdictions in
which the Company operates, without giving effect to the
|
|
Company’s valuation allowance or potential use of its net operating
loss carryforwards.
|
|
|
|
|
|
Exhibit (4)
|
|
Vince Holding Corp. and Subsidiaries
|
|
|
|
Reconciliation of net income on a GAAP basis to “Adjusted net
income”
|
|
|
|
(Unaudited, amounts in thousands except percentages, share and
per share
|
|
data)
|
|
|
|
|
|
|
|
|
|
|
For the six months ended August 1, 2015
|
|
|
|
|
|
As Reported
|
|
|
Adjustments
|
|
|
As Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$
|
139,835
|
|
|
|
|
|
|
$
|
139,835
|
|
|
Cost of products sold
|
|
|
|
88,305
|
|
|
|
(14,447
|
)
|
(a)
|
|
73,858
|
|
|
Gross profit
|
|
|
|
51,530
|
|
|
|
14,447
|
|
|
|
65,977
|
|
|
as a % of sales
|
|
|
|
36.9
|
%
|
|
|
|
|
|
|
47.2
|
%
|
|
Selling, general and administrative expenses
|
|
|
|
52,971
|
|
|
|
(2,861
|
)
|
(b)
|
|
50,110
|
|
|
as a % of sales
|
|
|
|
37.9
|
%
|
|
|
|
|
|
|
35.8
|
%
|
|
(Loss) Income from operations
|
|
|
|
(1,441
|
)
|
|
|
17,308
|
|
|
|
15,867
|
|
|
as a % of sales
|
|
|
|
(1.0
|
)%
|
|
|
|
|
|
|
11.3
|
%
|
|
Interest expense, net
|
|
|
|
2,939
|
|
|
|
|
|
|
|
2,939
|
|
|
Other expense, net
|
|
|
|
491
|
|
|
|
|
|
|
|
491
|
|
|
(Loss) Income before income taxes
|
|
|
|
(4,871
|
)
|
|
|
17,308
|
|
|
|
12,437
|
|
|
(Benefit) provision for Income taxes
|
|
|
|
(2,299
|
)
|
|
|
7,079
|
|
(c)
|
|
4,780
|
|
|
Net (Loss) Income
|
|
|
$
|
(2,572
|
)
|
|
$
|
10,229
|
|
|
$
|
7,657
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) earnings per share
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.28
|
|
|
$
|
0.21
|
|
|
Diluted (loss) earnings per share
|
|
|
$
|
(0.07
|
)
|
|
$
|
0.27
|
|
|
$
|
0.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic shares
|
|
|
|
36,763,933
|
|
|
|
|
|
|
|
36,763,933
|
|
|
Diluted shares
|
|
|
|
36,763,933
|
|
|
|
|
|
|
|
37,855,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) To adjust cost of products sold to remove the impact of
inventory write downs of approximately $14.4 million primarily
|
|
related to excess out of season and current inventory.
|
|
(b) To adjust selling, general and administrative expenses to remove
executive severance costs of $3.7 million, partially
|
|
offset by the favorable impact of $(0.8) million related to
executive stock option forfeitures.
|
|
(c) Adjusted amount represents adjusted pretax income multiplied by
a normalized tax rate of 40.9%. The normalized tax rate was
|
|
derived by reference to statutory tax rates in the jurisdictions in
which the Company operates, without giving effect to the
|
|
Company’s valuation allowance or potential use of its net operating
loss carryforwards.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160908006536/en/
Source: Vince Holding Corp.