Vince Holding Corp. Reports Fourth Quarter and Fiscal Year 2023 Results
Q4 Fiscal 2023 Total Company
Q4 Fiscal 2023 Total Company Gross Margin Increased 580 basis points vs. Q4 Fiscal 2022
Q4 Fiscal 2023 Total Company Operating Margin Improved 390 basis points vs. Q4 Fiscal 2022
In this press release, the Company is presenting its financial results in conformity with
For the fourth quarter ended
-
Total Company net sales decreased 17.5% to$75.3 million compared to$91.3 million in the fourth quarter of fiscal 2022. The year-over-year decline was driven by a 100.0% decrease inRebecca Taylor and Parker segment sales, combined, due to the previously announced wind down of the Rebecca Taylor business, and to a lesser extent a 6.3% decrease in Vince brand sales. -
Gross profit was
$34.2 million , or 45.4% of net sales, compared to gross profit of$36.2 million , or 39.6% of net sales, in the fourth quarter of fiscal 2022. The increase in gross margin rate was driven by approximately 790 basis points related to lower promotional activity and 190 basis points related to the wind down of the Rebecca Taylor business, which historically operated at a lower overall gross margin. These factors were partially offset by approximately 430 basis points of royalty expenses associated with the Licensing Agreement (as defined below). -
Selling, general, and administrative expenses were
$35.8 million , or 47.6% of sales, compared to$42.3 million , or 46.3% of sales, in the fourth 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$5.6 million net expense favorability in the fourth quarter of fiscal 2023 as well as lower expenses in the Vince business related to product development, staffing and marketing. These lower costs were partially offset by an increase in rent and occupancy costs as well as transformation-related consulting costs. -
Loss from operations was
$1.7 million compared to a loss from operations of$5.5 million in the same period last year. -
Income tax provision was
$1.9 million primarily driven by a portion of the non-cash deferred tax liability related to the Company's equity method investment, which cannot be used as a source of income to support the realization of certain deferred tax assets related to the Company's net operating losses ("Equity Method Investment Naked Credit"). The tax expense in the fourth quarter of fiscal 2023 compares to an income tax expense of$1.7 million in the same period last year. -
Net loss was
$4.7 million or$(0.37) per share compared to a net loss of$11.0 million or$(0.89) per share in the same period last year. - The Company ended the quarter with 63 company-operated Vince stores, a net decrease of 4 stores since the fourth quarter of fiscal 2023.
For the fiscal year ended
-
Total Company net sales decreased 18.1% to$292.9 million compared to$357.4 million in fiscal 2022. The year-over-year decline was driven by a 99.5% decrease inRebecca Taylor and Parker segment sales, combined, due to the previously announced wind down of the Rebecca Taylor business, and to a lesser extent a 8.3% decrease in Vince brand sales. -
Gross profit was
$133.3 million , or 45.5% of net sales, compared to gross profit of$138.0 million , or 38.6% of net sales, in fiscal 2022. The increase in gross margin rate was driven by approximately 310 basis points related to the wind down of the Rebecca Taylor business, which historically operated at a lower overall gross margin, lower freight costs, favorable year-over-year adjustments to inventory reserves, and lower promotional activity. These factors were partially offset by approximately 320 basis points of royalty expenses associated with the Licensing Agreement (as defined below). -
Selling, general, and administrative expenses were
$134.5 million , or 45.9% of sales, compared to$161.4 million , or 45.2% of sales, in fiscal 2022 . The decrease in SG&A dollars was primarily driven by the wind down of the Rebecca Taylor business resulting in a$26.8 million net expense favorability in fiscal 2023 as well as lower compensation and benefits, a decline in expenses due to production efficiencies and lower marketing and advertising costs. These lower costs were partially offset by$5.0 million in transaction related expenses (the "Transaction Expenses") relating to the Authentic Transaction (as defined below), and an increase in rent and occupancy costs primarily attributable to lease modifications effective in late fiscal 2022. -
Income from operations was
$31.6 million compared to a loss from operations of$25.4 million in the same period last year. Adjusted income from operations* in fiscal 2023 was$4.0 million . -
Income tax benefit was
$3.5 million primarily driven by a tax benefit of$5.5 million associated with the Authentic Transaction offset by the Equity Method Investment Naked Credit. The tax benefit in fiscal 2023 compares to an income tax expense of$3.0 million in the same period last year. -
Net income was
$25.4 million or$2.04 per diluted share compared to a net loss of$38.3 million or$(3.14) per share in the same period last year. Adjusted net loss* for fiscal 2023 was$(7.7) million or$(0.62) per share.
The Company follows the retail 5-4-4 reporting calendar, which included an extra week in the fourth quarter of fiscal 2023 (the 53rd week). The 53rd week contributed approximately
Vince Fourth Quarter Review
-
Net sales decreased 6.3% to
$75.3 million as compared to the fourth quarter of fiscal 2022. -
Wholesale segment sales decreased 9.7% to
$30.9 million compared to the fourth quarter of fiscal 2022. -
Direct-to-consumer segment sales decreased 3.7% to
$44.4 million compared to the fourth quarter of fiscal 2022. -
Income from operations excluding unallocated corporate expenses was
$11.9 million compared to income from operations of$9.4 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. -
Given the timing of the completion of the wind down, the Rebecca Taylor and Parker segment did not generate net sales or income from operations in the fourth quarter of fiscal 2023 compared to net sales of
$11.0 million and loss from operations of$1.1 million in the fourth quarter of fiscal 2022.
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Three Months Ended |
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Twelve Months Ended |
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(in thousands) |
|
2024 |
|
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2023 |
|
|
2023 |
|
|
2022 |
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||||
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Vince Wholesale |
|
$ |
30,889 |
|
|
$ |
34,196 |
|
|
$ |
149,603 |
|
|
$ |
169,375 |
|
Vince Direct-to-consumer |
|
|
44,422 |
|
|
|
46,137 |
|
|
|
143,096 |
|
|
|
149,770 |
|
|
|
|
— |
|
|
|
10,975 |
|
|
|
191 |
|
|
|
38,297 |
|
Total net sales |
|
$ |
75,311 |
|
|
$ |
91,308 |
|
|
$ |
292,890 |
|
|
$ |
357,442 |
|
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|
|
|
|
|
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Income (loss) from operations: |
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||||
Vince Wholesale |
|
$ |
8,318 |
|
|
$ |
6,280 |
|
|
$ |
43,416 |
|
|
$ |
43,592 |
|
Vince Direct-to-consumer |
|
|
3,623 |
|
|
|
3,120 |
|
|
|
5,774 |
|
|
|
2,397 |
|
|
|
|
- |
|
|
|
(1,131 |
) |
|
|
2,443 |
|
|
|
(21,255 |
) |
Subtotal |
|
|
11,941 |
|
|
|
8,269 |
|
|
|
51,633 |
|
|
|
24,734 |
|
Unallocated corporate (1) |
|
|
(13,620 |
) |
|
|
(13,807 |
) |
|
|
(20,009 |
) |
|
|
(50,156 |
) |
Total (loss) income from operations |
|
$ |
(1,679 |
) |
|
$ |
(5,538 |
) |
|
$ |
31,624 |
|
|
$ |
(25,422 |
) |
(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 year ended
Balance Sheet
At the end of fiscal 2023, total borrowings under the Company's debt agreements totaled
Net inventory at the end of fiscal 2023 was
During the year ended
Transformation Program & Fiscal 2024 Outlook
On
As noted, the Company remains focused on driving improved profitability in fiscal 2024 and expects actions including lower promotions and pull-back in the off-price channel to impact topline results in Q1 fiscal 2024 similar to Q4 2023. In addition, given the timing of the completion of the Authentic Transaction in
For the first quarter of fiscal 2024 the Company expects total company net sales to decline in the high-single-digit range compared to
For full year fiscal 2024 the Company expects total company net sales to increase in the low-single-digit range compared to
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.
*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 twelve months ended
Conference Call
A conference call to discuss the fourth quarter results will be held today,
Those who wish to participate in the call may do so by dialing (833) 470-1428, conference ID 375096. 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 “Transformation Program & Fiscal 2024 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
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Exhibit (1) |
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Condensed Consolidated Statements of Operations |
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(Unaudited, amounts in thousands except percentages, share and per share data) |
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Three Months Ended |
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Fiscal Year |
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2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net sales |
|
$ |
75,311 |
|
|
$ |
91,308 |
|
|
$ |
292,890 |
|
|
$ |
357,442 |
|
Cost of products sold |
|
|
41,144 |
|
|
|
55,148 |
|
|
|
159,598 |
|
|
|
219,472 |
|
Gross profit |
|
|
34,167 |
|
|
|
36,160 |
|
|
|
133,292 |
|
|
|
137,970 |
|
as a % of net sales |
|
|
45.4 |
% |
|
|
39.6 |
% |
|
|
45.5 |
% |
|
|
38.6 |
% |
Impairment of intangible assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,700 |
|
Impairment of long-lived assets |
|
|
— |
|
|
|
1,014 |
|
|
|
— |
|
|
|
1,880 |
|
Gain on sale of intangible assets |
|
|
— |
|
|
|
(1,620 |
) |
|
|
(32,808 |
) |
|
|
(1,620 |
) |
Selling, general and administrative expenses |
|
|
35,846 |
|
|
|
42,304 |
|
|
|
134,476 |
|
|
|
161,432 |
|
as a % of net sales |
|
|
47.6 |
% |
|
|
46.3 |
% |
|
|
45.9 |
% |
|
|
45.2 |
% |
(Loss) income from operations |
|
|
(1,679 |
) |
|
|
(5,538 |
) |
|
|
31,624 |
|
|
|
(25,422 |
) |
as a % of net sales |
|
|
(2.2 |
)% |
|
|
(6.1 |
)% |
|
|
10.8 |
% |
|
|
(7.1 |
)% |
Interest expense, net |
|
|
1,698 |
|
|
|
3,665 |
|
|
|
11,118 |
|
|
|
9,887 |
|
(Loss) income before income taxes and equity in net income of equity method investment |
|
|
(3,377 |
) |
|
|
(9,203 |
) |
|
|
20,506 |
|
|
|
(35,309 |
) |
Provision (benefit) for income taxes |
|
|
1,890 |
|
|
|
1,749 |
|
|
|
(3,478 |
) |
|
|
3,037 |
|
(Loss) income before equity in net income of equity method investment |
|
|
(5,267 |
) |
|
|
(10,952 |
) |
|
|
23,984 |
|
|
|
(38,346 |
) |
Equity in net income of equity method investment |
|
|
599 |
|
|
|
— |
|
|
|
1,462 |
|
|
|
— |
|
Net (loss) income |
|
$ |
(4,668 |
) |
|
$ |
(10,952 |
) |
|
$ |
25,446 |
|
|
$ |
(38,346 |
) |
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
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|
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Basic (loss) earnings per share |
|
$ |
(0.37 |
) |
|
$ |
(0.89 |
) |
|
$ |
2.05 |
|
|
$ |
(3.14 |
) |
Diluted (loss) earnings per share |
|
$ |
(0.37 |
) |
|
$ |
(0.89 |
) |
|
$ |
2.04 |
|
|
$ |
(3.14 |
) |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
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Basic |
|
|
12,503,472 |
|
|
|
12,332,547 |
|
|
|
12,442,781 |
|
|
|
12,223,004 |
|
Diluted |
|
|
12,510,853 |
|
|
|
12,332,547 |
|
|
|
12,478,215 |
|
|
|
12,223,004 |
|
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Exhibit (2) |
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Condensed Consolidated Balance Sheets |
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|
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(Unaudited, amounts in thousands) |
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2024 |
|
|
2023 |
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ASSETS |
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Current assets: |
|
|
|
|
|
|
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Cash and cash equivalents |
|
$ |
357 |
|
|
$ |
1,079 |
|
Trade receivables, net |
|
|
20,671 |
|
|
|
20,733 |
|
Inventories, net |
|
|
58,777 |
|
|
|
90,008 |
|
Prepaid expenses and other current assets |
|
|
4,997 |
|
|
|
3,515 |
|
Total current assets |
|
|
84,802 |
|
|
|
115,335 |
|
Property and equipment, net |
|
|
6,972 |
|
|
|
10,479 |
|
Operating lease right-of-use assets |
|
|
73,003 |
|
|
|
72,616 |
|
Intangible assets, net |
|
|
— |
|
|
|
70,106 |
|
|
|
|
31,973 |
|
|
|
31,973 |
|
Assets held for sale |
|
|
— |
|
|
|
260 |
|
Equity method investment |
|
|
26,147 |
|
|
|
— |
|
Other assets |
|
|
2,252 |
|
|
|
2,576 |
|
Total assets |
|
$ |
225,149 |
|
|
$ |
303,345 |
|
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LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
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Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
31,678 |
|
|
$ |
49,396 |
|
Accrued salaries and employee benefits |
|
|
3,967 |
|
|
|
4,301 |
|
Other accrued expenses |
|
|
8,980 |
|
|
|
15,020 |
|
Short-term lease liabilities |
|
|
16,803 |
|
|
|
20,892 |
|
Current portion of long-term debt |
|
|
— |
|
|
|
3,500 |
|
Total current liabilities |
|
|
61,428 |
|
|
|
93,109 |
|
Long-term debt |
|
|
43,950 |
|
|
|
108,078 |
|
Long-term lease liabilities |
|
|
67,705 |
|
|
|
72,098 |
|
Deferred income tax liability and other liabilities |
|
|
4,913 |
|
|
|
9,803 |
|
Stockholders' equity |
|
|
47,153 |
|
|
|
20,257 |
|
Total liabilities and stockholders' equity |
|
$ |
225,149 |
|
|
$ |
303,345 |
|
|
|
|
Exhibit (3) |
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Reconciliation of GAAP to Non-GAAP measures |
|
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|
|||||||||||||||||||||||
(Unaudited, amounts in thousands except share and per share amounts) |
|
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|
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|
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For the Year 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 |
|
|
Income Tax Effect (2) |
|
|
As Adjusted (Non- GAAP) |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|||||||
Income (loss) from operations |
$ |
31,624 |
|
|
$ |
32,043 |
|
|
$ |
(5,030 |
) |
|
$ |
765 |
|
|
$ |
(150 |
) |
|
$ |
— |
|
|
$ |
3,996 |
|
Interest expense, net |
|
11,118 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,118 |
|
Income (loss) before income taxes and equity in net income of equity method investment |
|
20,506 |
|
|
|
32,043 |
|
|
|
(5,030 |
) |
|
|
765 |
|
|
|
(150 |
) |
|
|
— |
|
|
|
(7,122 |
) |
(Benefit) provision for income taxes |
|
(3,478 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,523 |
) |
|
|
2,045 |
|
Income (loss) before equity in net income of equity method investment |
|
23,984 |
|
|
|
32,043 |
|
|
|
(5,030 |
) |
|
|
765 |
|
|
|
(150 |
) |
|
|
5,523 |
|
|
|
(9,167 |
) |
Equity in net income of equity method investment |
|
1,462 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,462 |
|
Net income (loss) |
$ |
25,446 |
|
|
$ |
32,043 |
|
|
$ |
(5,030 |
) |
|
$ |
765 |
|
|
$ |
(150 |
) |
|
$ |
5,523 |
|
|
$ |
(7,705 |
) |
Earnings (loss) per share - diluted (1) |
$ |
2.04 |
|
|
$ |
2.57 |
|
|
$ |
(0.40 |
) |
|
$ |
0.06 |
|
|
$ |
(0.01 |
) |
|
$ |
0.44 |
|
|
$ |
(0.62 |
) |
(1) As reported is based on diluted weighted-average shares outstanding of 12,478,215 and as adjusted is based on basic weighted average shares outstanding of 12,442,781 for the twelve months ended
(2) Income tax effect is due primarily to the tax impact associated with the Authentic Transaction related items and for the year ended
View source version on businesswire.com: https://www.businesswire.com/news/home/20240430194228/en/
Investor Relations Contact:
Caitlin.Churchill@icrinc.com
Source: