Vince Holding Corp. Reports Second Quarter 2024 Results
Gross Margin Increased 80 basis points vs. Q2 FY2023
Updates Full Year FY2024 Outlook
In this press release, the Company is presenting its financial results in conformity with
For the second quarter ended
-
Total Company net sales increased 6.8% to$74.2 million compared to$69.4 million in the second quarter of fiscal 2023. The year-over-year increase was driven by a 7.0% increase in Vince brand sales due to a 29.6% increase in the wholesale channel driven by earlier than expected shipments of fall product as well as the normalization of the off-price business within the channel. The growth in the wholesale channel more than offset the 18.1% decline in the direct-to-consumer channel which continued to be impacted by the reduction in promotional activity as well as store closures. The prior year periodTotal Company net sales included$0.1 million inRebecca Taylor and Parker segment sales. -
Gross profit was
$35.1 million , or 47.4% of net sales, compared to gross profit of$32.3 million , or 46.6% of net sales, in the second quarter of fiscal 2023. The increase in gross margin rate was primarily driven by approximately 510 basis points related to lower product costing and freight costs. These factors were partially offset by approximately 220 basis points attributable to channel mix, and approximately 180 basis points of royalty expenses associated with the Licensing Agreement (as defined below). -
Selling, general, and administrative expenses were
$34.0 million , or 45.8% of sales, compared to$31.5 million , or 45.4% of sales, in the second quarter of fiscal 2023. The increase in SG&A dollars was primarily driven by a$2.0 million increase in rent and occupancy costs due to lease adjustments in the prior year as well as$1.8 million in increased compensation and benefits due primarily to higher severance and bonuses, and was partially offset by$2.0 million of expense favorability compared to last year given the transaction-related expenses (the "Transaction Expenses") associated with the Authentic Transaction (defined below). -
Income from operations was
$1.1 million compared to income from operations of$32.9 million in the same period last year. The second quarter of fiscal 2023 included one-time items related to the gain on sale of intangible assets relating to the Vince IP Sale (the "Vince IP Sale Gain") and Transaction Expenses. Excluding the$32.0 million Vince IP Sale Gain and the$2.0 million of Transaction Expenses, Adjusted income from operations* in the second quarter of fiscal 2023 was$2.8 million . -
Income tax benefit was
$0.8 million due to the reversal of the$0.8 million of ordinary tax expense recorded during the first quarter of fiscal 2024 as the Company has year-to-date ordinary pre-tax losses for the interim period and is anticipating annual ordinary pre-tax income for the fiscal year. The Company has determined that it is more likely than not that the tax benefit of the year-to-date loss will not be realized in the current or future years and as such, tax provisions for the interim periods should not be recognized until the Company has year-to-date ordinary pre-tax income. The tax benefit in the second quarter of fiscal 2024 compares to an income tax benefit of$0.6 million in the same period last year. -
Net income was
$0.6 million or$0.05 per diluted share compared to net income of$29.5 million or$2.36 per share in the same period last year. The prior year period includes the one-time item noted above. Excluding these items, Adjusted net loss* in the second quarter of fiscal 2023 was$0.5 million or$(0.04) per share. - The Company ended the quarter with 61 company-operated Vince stores, a net decrease of 5 stores since the second quarter of fiscal 2023.
Vince Second Quarter Review
-
Net sales increased 7.0% to
$74.2 million as compared to the second quarter of fiscal 2023. -
Wholesale segment sales increased 29.6% to
$47.2 million compared to the second quarter of fiscal 2023. -
Direct-to-consumer segment sales decreased 18.1% to
$27.0 million compared to the second quarter of fiscal 2023. -
Income from operations excluding unallocated corporate expenses was
$15.3 million compared to income from operations of$12.5 million in the same period last year.
-
On
September 12, 2022 , the Company announced the strategic decision to wind down itsRebecca Taylor business to focus its resources on the Vince brand. The wind down of the Rebecca Taylor business was completed in Q2 Fiscal 2023. -
Following the completion of the wind down of the Rebecca Taylor business in Fiscal 2023, in the first quarter of Fiscal 2024, the Company completed a nominal sale of all outstanding shares of
Rebecca Taylor , which prior to the sale was in a net liability position, resulting in a gain of$7.6 million ("Gain on Sale of Subsidiary"). -
Given the completion of the wind down of the Rebecca Taylor and Parker segment, in the second quarter of fiscal 2024 there was no income from operations associated with the segment. In the second quarter of fiscal 2023, the Rebecca Taylor and Parker segment had income from operations of
$1.3 million .
|
|
Three Months Ended |
|
|||||
|
|
|
|
|
|
|
||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Vince Wholesale |
|
$ |
47,184 |
|
|
$ |
36,407 |
|
Vince Direct-to-consumer |
|
|
26,985 |
|
|
|
32,930 |
|
|
|
|
— |
|
|
|
110 |
|
Total net sales |
|
$ |
74,169 |
|
|
$ |
69,447 |
|
|
|
|
|
|
|
|
||
Income (loss) from operations: |
|
|
|
|
|
|
||
Vince Wholesale |
|
$ |
16,663 |
|
|
$ |
11,360 |
|
Vince Direct-to-consumer |
|
|
(1,398 |
) |
|
|
1,098 |
|
|
|
|
— |
|
|
|
1,257 |
|
Subtotal |
|
|
15,265 |
|
|
|
13,715 |
|
Unallocated corporate (1) |
|
|
(14,135 |
) |
|
|
19,135 |
|
Total income from operations |
|
$ |
1,130 |
|
|
$ |
32,850 |
|
(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, for the three months ended
Balance Sheet
At the end of the second quarter of fiscal 2024, total borrowings under the Company's debt agreements totaled
Net inventory at the end of the second quarter of fiscal 2024 was
During the quarter ended
Stock Repurchase Program
On
Under the stock repurchase program, the Company may repurchase shares of common stock from time to time in open market transactions or in privately negotiated transactions as permitted under applicable rules and regulations of the
Transformation Program
On
On
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.
Outlook
For the third quarter of fiscal 2024 the Company expects total company net sales to be flat to down low single digits compared to
For full year fiscal 2024 the Company now expects total company net sales to decrease in the low-single-digit range compared to
As a reminder, fiscal 2023 included a 53rd week which represented approximately
*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 the three and six months ended
Conference Call
A conference call to discuss the second quarter results will be held today,
Those who wish to participate in the call may do so by dialing (833) 470-1428, conference ID 726141. 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
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 the statements under “Outlook” above as well as 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, a subsidiary of
|
|
|
|
|
Exhibit (1) |
|
|
|
|
|
|
|
||||
Condensed Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
||||||
(Unaudited, amounts in thousands except percentages, share and per share data) |
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net sales |
|
$ |
74,169 |
|
|
$ |
69,447 |
|
|
$ |
133,340 |
|
|
$ |
133,503 |
|
Cost of products sold |
|
|
39,038 |
|
|
|
37,099 |
|
|
|
68,296 |
|
|
|
71,563 |
|
Gross profit |
|
|
35,131 |
|
|
|
32,348 |
|
|
|
65,044 |
|
|
|
61,940 |
|
as a % of net sales |
|
|
47.4 |
% |
|
|
46.6 |
% |
|
|
48.8 |
% |
|
|
46.4 |
% |
Gain on sale of intangible assets |
|
|
— |
|
|
|
(32,043 |
) |
|
|
— |
|
|
|
(32,808 |
) |
Gain on sale of subsidiary |
|
|
— |
|
|
|
— |
|
|
|
(7,634 |
) |
|
|
— |
|
Selling, general and administrative expenses |
|
|
34,001 |
|
|
|
31,541 |
|
|
|
65,944 |
|
|
|
64,274 |
|
as a % of net sales |
|
|
45.8 |
% |
|
|
45.4 |
% |
|
|
49.5 |
% |
|
|
48.1 |
% |
Income from operations |
|
|
1,130 |
|
|
|
32,850 |
|
|
|
6,734 |
|
|
|
30,474 |
|
as a % of net sales |
|
|
1.5 |
% |
|
|
47.3 |
% |
|
|
5.1 |
% |
|
|
22.8 |
% |
Interest expense, net |
|
|
1,647 |
|
|
|
4,137 |
|
|
|
3,293 |
|
|
|
7,427 |
|
(Loss) income before income taxes and equity in net income (loss) of equity method investment |
|
|
(517 |
) |
|
|
28,713 |
|
|
|
3,441 |
|
|
|
23,047 |
|
Benefit for income taxes |
|
|
(794 |
) |
|
|
(592 |
) |
|
|
(1,681 |
) |
|
|
(5,877 |
) |
Income before equity in net income (loss) of equity method investment |
|
|
277 |
|
|
|
29,305 |
|
|
|
5,122 |
|
|
|
28,924 |
|
Equity in net income (loss) of equity method investment |
|
|
292 |
|
|
|
207 |
|
|
|
(173 |
) |
|
|
207 |
|
Net income |
|
$ |
569 |
|
|
$ |
29,512 |
|
|
$ |
4,949 |
|
|
$ |
29,131 |
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per share |
|
$ |
0.05 |
|
|
$ |
2.37 |
|
|
$ |
0.39 |
|
|
$ |
2.35 |
|
Diluted earnings per share |
|
$ |
0.05 |
|
|
$ |
2.36 |
|
|
$ |
0.39 |
|
|
$ |
2.34 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
|
12,569,488 |
|
|
|
12,428,339 |
|
|
|
12,538,695 |
|
|
|
12,385,347 |
|
Diluted |
|
|
12,617,085 |
|
|
|
12,479,667 |
|
|
|
12,606,575 |
|
|
|
12,470,085 |
|
|
|
|
|
|
|
|
|
Exhibit (2) |
|
|||
Condensed Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|||
(Unaudited, amounts in thousands) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|||
ASSETS |
|
|
|
|
|
|
|
|
|
|||
Current assets: |
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents |
|
$ |
711 |
|
|
$ |
357 |
|
|
$ |
869 |
|
Trade receivables, net |
|
|
35,054 |
|
|
|
20,671 |
|
|
|
20,859 |
|
Inventories, net |
|
|
66,343 |
|
|
|
58,777 |
|
|
|
85,079 |
|
Prepaid expenses and other current assets |
|
|
6,564 |
|
|
|
4,997 |
|
|
|
11,148 |
|
Total current assets |
|
|
108,672 |
|
|
|
84,802 |
|
|
|
117,955 |
|
Property and equipment, net |
|
|
6,298 |
|
|
|
6,972 |
|
|
|
8,345 |
|
Operating lease right-of-use assets |
|
|
79,659 |
|
|
|
73,003 |
|
|
|
75,286 |
|
|
|
|
31,973 |
|
|
|
31,973 |
|
|
|
31,973 |
|
Equity method investment |
|
|
24,727 |
|
|
|
26,147 |
|
|
|
26,232 |
|
Other assets |
|
|
2,294 |
|
|
|
2,252 |
|
|
|
2,595 |
|
Total assets |
|
$ |
253,623 |
|
|
$ |
225,149 |
|
|
$ |
262,386 |
|
|
|
|
|
|
|
|
|
|
|
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|||
Accounts payable |
|
$ |
36,736 |
|
|
$ |
31,678 |
|
|
$ |
39,170 |
|
Accrued salaries and employee benefits |
|
|
6,442 |
|
|
|
3,967 |
|
|
|
2,764 |
|
Other accrued expenses |
|
|
9,545 |
|
|
|
8,980 |
|
|
|
9,022 |
|
Short-term lease liabilities |
|
|
14,787 |
|
|
|
16,803 |
|
|
|
18,250 |
|
Total current liabilities |
|
|
67,510 |
|
|
|
61,428 |
|
|
|
69,206 |
|
Long-term debt |
|
|
54,401 |
|
|
|
43,950 |
|
|
|
67,204 |
|
Long-term lease liabilities |
|
|
75,704 |
|
|
|
67,705 |
|
|
|
72,901 |
|
Deferred income tax liability and other liabilities |
|
|
3,567 |
|
|
|
4,913 |
|
|
|
2,976 |
|
Stockholders' equity |
|
|
52,441 |
|
|
|
47,153 |
|
|
|
50,099 |
|
Total liabilities and stockholders' equity |
|
$ |
253,623 |
|
|
$ |
225,149 |
|
|
$ |
262,386 |
|
|
|
|
Exhibit (3) |
|
|||||||
Reconciliation of GAAP to Non-GAAP measures |
|
|
|
|
|||||||
(Unaudited, amounts in thousands except share and per share amounts) |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|||
|
For the Three Months ended |
|
|||||||||
|
As Reported (GAAP) |
|
|
Gain on sale of subsidiary |
|
|
As Adjusted
|
|
|||
|
|
|
|
|
|
|
|
|
|||
Income from operations |
$ |
1,130 |
|
|
$ |
— |
|
|
$ |
1,130 |
|
Interest expense, net |
|
1,647 |
|
|
|
— |
|
|
|
1,647 |
|
Loss before income taxes and equity in net income of equity method investment |
|
(517 |
) |
|
|
— |
|
|
|
(517 |
) |
Benefit for income taxes |
|
(794 |
) |
|
|
— |
|
|
|
(794 |
) |
Income before equity in net income of equity method investment |
|
277 |
|
|
|
— |
|
|
|
277 |
|
Equity in net income of equity method investment |
|
292 |
|
|
|
— |
|
|
|
292 |
|
Net income |
$ |
569 |
|
|
$ |
— |
|
|
$ |
569 |
|
Earnings per share (1) |
$ |
0.05 |
|
|
$ |
— |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
|||
|
For the Six Months ended |
|
|||||||||
|
As Reported (GAAP) |
|
|
Gain on sale of subsidiary |
|
|
As Adjusted
|
|
|||
|
|
|
|
|
|
|
|
|
|||
Income (loss) from operations |
$ |
6,734 |
|
|
$ |
7,634 |
|
|
$ |
(900 |
) |
Interest expense, net |
|
3,293 |
|
|
|
— |
|
|
|
3,293 |
|
Income (loss) before income taxes and equity in net loss of equity method investment |
|
3,441 |
|
|
|
7,634 |
|
|
|
(4,193 |
) |
Benefit for income taxes |
|
(1,681 |
) |
|
|
— |
|
|
|
(1,681 |
) |
Income (loss) before equity in net loss of equity method investment |
|
5,122 |
|
|
|
7,634 |
|
|
|
(2,512 |
) |
Equity in net loss of equity method investment |
|
(173 |
) |
|
|
— |
|
|
|
(173 |
) |
Net income (loss) |
$ |
4,949 |
|
|
$ |
7,634 |
|
|
$ |
(2,685 |
) |
Earnings (loss) per share (1) |
$ |
0.39 |
|
|
$ |
0.61 |
|
|
$ |
(0.21 |
) |
|
For the Three Months ended |
|
|||||||||||||||||||||||||
|
As Reported (GAAP) |
|
|
Gain on Sale of Vince Intangible Assets |
|
|
Transaction Related Expenses Associated with the Authentic Transaction |
|
|
Gain on Sale of Parker Intangible Assets |
|
|
Transaction Related Expenses Associated with the sale of Parker Intangible Assets |
|
|
Discrete Tax Benefit Associated with Classification Change |
|
|
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 loss of equity method investment. |
|
28,713 |
|
|
|
32,043 |
|
|
|
(2,041 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,289 |
) |
Benefit 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 (2) |
$ |
2.36 |
|
|
$ |
2.57 |
|
|
$ |
(0.16 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
For the Six Months ended |
|
|||||||||||||||||||||||||
|
As Reported (GAAP) |
|
|
Gain on Sale of Vince Intangible Assets |
|
|
Transaction Related Expenses Associated with the Authentic Transaction |
|
|
Gain on Sale of Parker Intangible Assets |
|
|
Transaction Related Expenses Associated with the sale of Parker Intangible Assets |
|
|
Discrete Tax Benefit Associated with Classification Change |
|
|
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 and as adjusted are based on diluted weighted-average shares outstanding of 12,617,085 for the three months ended
(2) 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
View source version on businesswire.com: https://www.businesswire.com/news/home/20240916094392/en/
Investor Relations:
Caitlin.Churchill@icrinc.com
Source: