Vince Holding Corp. Reports First Quarter 2024 Results
Gross Margin Increased 440 basis points vs. Q1 FY2023
Q1 Profitability Exceeds Prior Outlook
Reaffirms Full Year FY2024 Outlook
In this press release, the Company is presenting its financial results in conformity with
For the first quarter ended
-
Total Company net sales decreased 7.6% to$59.2 million compared to$64.1 million in the first quarter of fiscal 2023. The year-over-year decline was in line with expectations and driven by a 7.5% decrease in Vince brand sales due to the reduction in promotional activity in the direct-to-consumer channel and the pullback in the off-price business within the wholesale channel. The prior year period included$0.1 million inRebecca Taylor and Parker segment sales. -
Gross profit was
$29.9 million , or 50.6% of net sales, compared to gross profit of$29.6 million , or 46.2% of net sales, in the first quarter of fiscal 2023. The increase in gross margin rate was driven by approximately 770 basis points related to lower promotional activity and lower discounting and 240 basis points related to lower product costing and freight costs. These factors were partially offset by approximately 460 basis points of royalty expenses associated with the Licensing Agreement (as defined below). -
Selling, general, and administrative expenses were
$31.9 million , or 54.0% of sales, compared to$32.7 million , or 51.1% of sales, in the first quarter of fiscal 2023. The decrease in SG&A dollars was primarily driven by expense favorability compared to last year given the transaction-related expenses (the "Transaction Expenses") associated with the Authentic Transaction (defined below), and was partially offset by an increase in rent and occupancy costs due to lease adjustments in the prior year as well as increased incentive compensation and benefits. -
Income from operations was
$5.6 million compared to a loss from operations of$2.4 million in the same period last year. Adjusted loss from operations* in the first quarter of fiscal 2024, which excludes the Gain on Sale of Subsidiary (as defined below), was$2.0 million . Adjusted loss from operations* in the first quarter of fiscal 2023, which excludes the Transaction Expenses and the gain on sale of the Parker brand intellectual property, was$0.3 million . The change in adjusted loss from operations* compared to the prior year period was primarily driven by the wind down of the Rebecca Taylor business and the lease adjustments in the prior year as noted above. -
Income tax benefit was
$0.9 million , mainly driven by$1.7 million of discrete tax benefit primarily recognized from the reversal of a portion of the non-cash deferred tax liability related to the Company's equity method investment (which portion can now be used as a source of income to support the realization of certain deferred tax assets related to the Company's net operating losses). This was offset by tax expense of$0.8 million due to the impact of applying the Company’s estimated effective tax rate for the fiscal year to the three-month pre-tax loss excluding discrete items. The tax benefit in the first quarter of fiscal 2024 compares to an income tax benefit of$5.3 million in the same period last year. -
Net income was
$4.4 million or$0.35 per diluted share compared to a net loss of$0.4 million or$(0.03) per share in the same period last year. Adjusted net loss* was$3.3 million or$(0.26) per share in the first quarter of fiscal 2024, excluding the one-time item noted above, compared to adjusted net loss* of$4.4 million or$(0.36) per share, which excludes the Transaction Expenses, the gain on sale of the Parker brand intellectual property, and the discrete tax benefit associated with classification change. Net income and adjusted net loss* for the first quarter fiscal 2024 includes$(0.5) million from the equity in net loss of equity method investment, which had no impact on the cash distribution from the entity. - The Company ended the quarter with 62 company-operated Vince stores, a net decrease of 5 stores since the first quarter of fiscal 2023.
Vince First Quarter Review
-
Net sales decreased 7.5% to
$59.2 million as compared to the first quarter of fiscal 2023. -
Wholesale segment sales decreased 6.8% to
$30.3 million compared to the first quarter of fiscal 2023. -
Direct-to-consumer segment sales decreased 8.2% to
$28.9 million compared to the first quarter of fiscal 2023. -
Income from operations excluding unallocated corporate expenses was
$10.1 million compared to income from operations of$9.7 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"). -
The Rebecca Taylor and Parker segment had income from operations of
$7.6 million in the first quarter of fiscal 2024 compared to income from operations of$1.2 million in the first quarter of fiscal 2023. The change was driven by the Gain on Sale of Subsidiary of$7.6 million in fiscal 2024.
|
|
Three Months Ended |
|
|||||
|
|
|
|
|
|
|
||
(in thousands) |
|
2024 |
|
|
2023 |
|
||
|
|
|
|
|
|
|
||
Vince Wholesale |
|
$ |
30,257 |
|
|
$ |
32,467 |
|
Vince Direct-to-consumer |
|
|
28,914 |
|
|
|
31,508 |
|
|
|
|
— |
|
|
|
81 |
|
Total net sales |
|
$ |
59,171 |
|
|
$ |
64,056 |
|
|
|
|
|
|
|
|
||
Income (loss) from operations: |
|
|
|
|
|
|
||
Vince Wholesale |
|
$ |
10,184 |
|
|
$ |
8,571 |
|
Vince Direct-to-consumer |
|
|
(64 |
) |
|
|
1,101 |
|
|
|
|
7,633 |
|
|
|
1,192 |
|
Subtotal |
|
|
17,753 |
|
|
|
10,864 |
|
Unallocated corporate (1) |
|
|
(12,149 |
) |
|
|
(13,240 |
) |
Total income (loss) from operations |
|
$ |
5,604 |
|
|
$ |
(2,376 |
) |
(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 quarter ended
Balance Sheet
At the end of the first quarter of fiscal 2024, total borrowings under the Company's debt agreements totaled
Net inventory at the end of the first quarter of fiscal 2024 was
During the quarter ended
Transformation Program & Fiscal 2024 Outlook
On
As previously noted, given the timing of the completion of the Authentic Transaction in
For the second quarter of fiscal 2024 the Company expects total company net sales to be relatively flat to down low single digits compared to
For full year fiscal 2024 the Company continues to expect 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 three months ended
Conference Call
A conference call to discuss the first quarter results will be held today,
Those who wish to participate in the call may do so by dialing (833) 470-1428, conference ID 420390. 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
|
|
|
|
|
Exhibit (1) |
|
||
Condensed Consolidated Statements of Operations |
|
|
|
|
||||
(Unaudited, amounts in thousands except percentages, share and per share data) |
|
|||||||
|
|
|
|
|
|
|
||
|
|
Three Months Ended |
|
|||||
|
|
|
|
|
|
|
||
|
|
2024 |
|
|
2023 |
|
||
Net sales |
|
$ |
59,171 |
|
|
$ |
64,056 |
|
Cost of products sold |
|
|
29,258 |
|
|
|
34,464 |
|
Gross profit |
|
|
29,913 |
|
|
|
29,592 |
|
as a % of net sales |
|
|
50.6 |
% |
|
|
46.2 |
% |
Gain on sale of intangible assets |
|
|
— |
|
|
|
(765 |
) |
Gain on sale of subsidiary |
|
|
(7,634 |
) |
|
|
— |
|
Selling, general and administrative expenses |
|
|
31,943 |
|
|
|
32,733 |
|
as a % of net sales |
|
|
54.0 |
% |
|
|
51.1 |
% |
Income (loss) from operations |
|
|
5,604 |
|
|
|
(2,376 |
) |
as a % of net sales |
|
|
9.5 |
% |
|
|
(3.7 |
)% |
Interest expense, net |
|
|
1,646 |
|
|
|
3,290 |
|
Income (loss) before income taxes and equity in net loss of equity method investment |
|
|
3,958 |
|
|
|
(5,666 |
) |
Benefit for income taxes |
|
|
(887 |
) |
|
|
(5,285 |
) |
Income (loss) before equity in net loss of equity method investment |
|
|
4,845 |
|
|
|
(381 |
) |
Equity in net loss of equity method investment |
|
|
(465 |
) |
|
|
— |
|
Net income (loss) |
|
$ |
4,380 |
|
|
$ |
(381 |
) |
Earnings (loss) per share: |
|
|
|
|
|
|
||
Basic earnings (loss) per share |
|
$ |
0.35 |
|
|
$ |
(0.03 |
) |
Diluted earnings (loss) per share |
|
$ |
0.35 |
|
|
$ |
(0.03 |
) |
Weighted average shares outstanding: |
|
|
|
|
|
|
||
Basic |
|
|
12,507,561 |
|
|
|
12,342,355 |
|
Diluted |
|
|
12,611,901 |
|
|
|
12,342,355 |
|
|
|
|
|
|
|
|
|
Exhibit (2) |
|
|||
Condensed Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|||
(Unaudited, amounts in thousands) |
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|||
ASSETS |
|
|
|
|
|
|
|
|
|
|||
Current assets: |
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents |
|
$ |
739 |
|
|
$ |
357 |
|
|
$ |
422 |
|
Trade receivables, net |
|
|
22,248 |
|
|
|
20,671 |
|
|
|
17,372 |
|
Inventories, net |
|
|
56,674 |
|
|
|
58,777 |
|
|
|
80,036 |
|
Prepaid expenses and other current assets |
|
|
6,949 |
|
|
|
4,997 |
|
|
|
4,201 |
|
Total current assets |
|
|
86,610 |
|
|
|
84,802 |
|
|
|
102,031 |
|
Property and equipment, net |
|
|
6,869 |
|
|
|
6,972 |
|
|
|
9,409 |
|
Operating lease right-of-use assets |
|
|
70,377 |
|
|
|
73,003 |
|
|
|
68,741 |
|
|
|
|
31,973 |
|
|
|
31,973 |
|
|
|
31,973 |
|
Assets held for sale |
|
|
— |
|
|
|
— |
|
|
|
69,957 |
|
Equity method investment |
|
|
25,075 |
|
|
|
26,147 |
|
|
|
— |
|
Other assets |
|
|
2,175 |
|
|
|
2,252 |
|
|
|
1,983 |
|
Total assets |
|
$ |
223,079 |
|
|
$ |
225,149 |
|
|
$ |
284,094 |
|
|
|
|
|
|
|
|
|
|
|
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
|||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|||
Accounts payable |
|
$ |
22,478 |
|
|
$ |
31,678 |
|
|
$ |
45,976 |
|
Accrued salaries and employee benefits |
|
|
4,195 |
|
|
|
3,967 |
|
|
|
4,247 |
|
Other accrued expenses |
|
|
9,487 |
|
|
|
8,980 |
|
|
|
16,731 |
|
Short-term lease liabilities |
|
|
15,823 |
|
|
|
16,803 |
|
|
|
19,354 |
|
Current portion of long-term debt |
|
|
— |
|
|
|
— |
|
|
|
3,500 |
|
Total current liabilities |
|
|
51,983 |
|
|
|
61,428 |
|
|
|
89,808 |
|
Long-term debt |
|
|
50,102 |
|
|
|
43,950 |
|
|
|
102,442 |
|
Long-term lease liabilities |
|
|
65,771 |
|
|
|
67,705 |
|
|
|
67,044 |
|
Deferred income tax liability and other liabilities |
|
|
3,567 |
|
|
|
4,913 |
|
|
|
4,499 |
|
Stockholders' equity |
|
|
51,656 |
|
|
|
47,153 |
|
|
|
20,301 |
|
Total liabilities and stockholders' equity |
|
$ |
223,079 |
|
|
$ |
225,149 |
|
|
$ |
284,094 |
|
|
|
|
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
|
|
|
As Adjusted
|
|
|||
|
|
|
|
|
|
|
|
|
|||
Income (loss) from operations |
$ |
5,604 |
|
|
$ |
7,634 |
|
|
$ |
(2,030 |
) |
Interest expense, net |
|
1,646 |
|
|
|
— |
|
|
|
1,646 |
|
Income (loss) before income taxes and equity in net loss of equity method investment |
|
3,958 |
|
|
|
7,634 |
|
|
|
(3,676 |
) |
Benefit for income taxes |
|
(887 |
) |
|
|
— |
|
|
|
(887 |
) |
Income (loss) before equity in net loss of equity method investment |
|
4,845 |
|
|
|
7,634 |
|
|
|
(2,789 |
) |
Equity in net loss of equity method investment |
|
(465 |
) |
|
|
— |
|
|
|
(465 |
) |
Net income (loss) |
$ |
4,380 |
|
|
$ |
7,634 |
|
|
$ |
(3,254 |
) |
Earnings (loss) per share - diluted (1) |
$ |
0.35 |
|
|
$ |
0.61 |
|
|
$ |
(0.26 |
) |
|
For the Three Months ended |
|
|||||||||||||||||||||
|
As Reported (GAAP) |
|
|
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
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loss from operations |
$ |
(2,376 |
) |
|
$ |
(2,741 |
) |
|
$ |
765 |
|
|
$ |
(150 |
) |
|
$ |
— |
|
|
$ |
(250 |
) |
Interest expense, net |
|
3,290 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3,290 |
|
Loss before income taxes and equity in net loss of equity method investment. |
|
(5,666 |
) |
|
|
(2,741 |
) |
|
|
765 |
|
|
|
(150 |
) |
|
|
— |
|
|
|
(3,540 |
) |
(Benefit) Provision for income taxes |
|
(5,285 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,127 |
) |
|
|
842 |
|
Loss before equity in net loss of equity method investment |
|
(381 |
) |
|
|
(2,741 |
) |
|
|
765 |
|
|
|
(150 |
) |
|
|
6,127 |
|
|
|
(4,382 |
) |
Net loss |
$ |
(381 |
) |
|
$ |
(2,741 |
) |
|
$ |
765 |
|
|
$ |
(150 |
) |
|
$ |
6,127 |
|
|
$ |
(4,382 |
) |
Loss per share (2) |
$ |
(0.03 |
) |
|
$ |
(0.22 |
) |
|
$ |
0.06 |
|
|
$ |
(0.01 |
) |
|
$ |
0.50 |
|
|
$ |
(0.36 |
) |
(1) As reported is based on diluted weighted-average shares outstanding of 12,611,901 and as adjusted is based on basic weighted average shares outstanding of 12,507,561 for the three months ended
(2) Based on a weighted-average shares outstanding of 12,342,355 for the three months ended
View source version on businesswire.com: https://www.businesswire.com/news/home/20240618062219/en/
Investor Relations:
Caitlin.Churchill@icrinc.com
Source: