Vince Holding Corp. (NYSE:VNCE), a leading global contemporary
group (“Vince” or the “Company”), today reported its financial
results for the first quarter 2021 ended May 1, 2021.
In this press release, the Company is presenting its historical
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 Exhibit 3 to this press release for a reconciliation
of GAAP measures to such non-GAAP measures.
Highlights for the first quarter ended May 1, 2021:
- Net sales increased 47.5% to $57.5 million as compared to $39.0
million in the same period last year reflecting a 76.3% increase in
Vince brand sales and a 33.6% decrease in Rebecca Taylor and
Parker. The Company has paused the development of new product for
Parker, which contributed to approximately two-thirds of the sales
decline.
- Gross margin rate was 44.3% compared to 41.0% in the same
period last year.
- Loss from operations was $7.1 million compared to a loss from
operations of $49.4 million in the same period last year. Excluding
costs associated with non-cash asset impairment charges, adjusted
loss from operations in the first quarter of fiscal 2020 was $22.5
million.
- Net loss was $11.6 million or $0.98 per share compared to a net
loss of $48.2 million or $4.12 per share in the same period last
year. Excluding costs associated with non-cash asset impairment
charges and a TRA adjustment of $2.3 million, adjusted net loss in
the first quarter of fiscal 2020 was $23.6 million or $2.02 per
share.
Jack Schwefel, Chief Executive Officer, commented, “We are
pleased with the pace of recovery in our business as we begin to
emerge from the pandemic with significant sequential improvement in
our financial performance. Strong consumer demand for the Vince
brand’s effortless sophisticated luxury is reflected in both our
retail and wholesale sell-through rates. Looking ahead, we will
leverage the momentum in the brand as we continue to advance our
global growth strategies. At Rebecca Taylor, we are highly
encouraged by the positive response to the relaunch themed
Romanticism Redefined. I remain excited about the longer-term
potential for this brand as the strategies we are using, which are
similar to those that led to the successful turnaround of the Vince
brand, are beginning to show encouraging signs. Overall, our focus
will remain on driving our initiatives forward while maintaining
discipline in how we operate the business for long term profitable
growth.”
For the first quarter ended May 1, 2021:
- Total Company net sales increased 47.5% to $57.5 million
compared to $39.0 million in the first quarter of fiscal 2020.
- Gross profit was $25.5 million, or 44.3% of net sales, compared
to gross profit of $16.0 million, or 41.0% of net sales, in the
first quarter of fiscal 2020. The increase in the gross margin rate
was primarily due to lower year-over-year adjustments to inventory
reserves partially offset by channel mix.
- Selling, general, and administrative expenses, were $32.6
million, or 56.6% of sales, compared to $38.5 million, or 98.8% of
sales, in the first quarter of fiscal 2020. The decrease in
SG&A dollars was primarily the result of lower consulting and
other third-party costs as well as decreased bad debt expense,
payroll and compensation expense, and marketing expense.
- Loss from operations was $7.1 million compared to loss from
operations of $49.4 million in the same period last year. Excluding
costs associated with non-cash asset impairment charges, adjusted
loss from operations in the first quarter of fiscal 2020 was $22.5
million. Please refer to Exhibit 3 for a reconciliation of GAAP
measures to non-GAAP measures.
- Income tax expense was $2.6 million as a result of the non-cash
deferred tax expense created by the current period amortization of
indefinite-lived goodwill and intangible assets for tax but not for
book purposes.
- Net loss was $11.6 million or $0.98 per share compared to a net
loss of $48.2 million or $4.12 per share in the same period last
year. Excluding costs associated with non-cash asset impairment
charges and a TRA adjustment of $2.3 million, adjusted net loss in
the first quarter of fiscal 2020 was $23.6 million or $2.02 per
share. Please refer to Exhibit 3 for a reconciliation of GAAP
measures to non-GAAP measures.
- The Company ended the quarter with 72 company-operated Vince
and Rebecca Taylor stores, a net increase of 3 stores since the
first quarter of fiscal 2020.
Vince
- Net sales increased 76.3% to $50.7 million as compared to the
first quarter of fiscal 2020.
- Wholesale segment sales increased 150.6% to $26.8 million
compared to the first quarter of fiscal 2020.
- Direct-to-consumer segment sales increased 32.3% to $23.9
million compared to the first quarter of fiscal 2020.
- Income from operations excluding unallocated corporate expenses
was $7.2 million compared to a loss of $17.5 million in the same
period last year. Fiscal 2020 includes non-cash asset impairment
charges of $11.7 million.
Rebecca Taylor and Parker
- Net sales decreased 33.6% to $6.8 million as compared to the
first quarter of fiscal 2020. The Company has paused the
development of new product for Parker, which contributed to
approximately two-thirds of the sales decline.
- Loss from operations was $3.3 million compared to a loss of
$6.1 million in the same period last year. Fiscal 2020 includes
non-cash asset impairment charges of $1.7 million.
Net Sales and Operating Results by Segment:
Three Months Ended
May 1,
May 2,
(in thousands)
2021
2020
Net Sales:
Vince Wholesale
$
26,799
$
10,693
Vince Direct-to-consumer
23,932
18,085
Rebecca Taylor and Parker
6,802
10,240
Total net sales
$
57,533
$
39,018
Income (loss) from operations:
Vince Wholesale
$
7,497
$
(591
)
Vince Direct-to-consumer
(327
)
(16,859
)
Rebecca Taylor and Parker
(3,263
)
(6,139
)
Subtotal
3,907
(23,589
)
Unallocated corporate*
(11,008
)
(25,829
)
Total loss from operations
$
(7,101
)
$
(49,418
)
* 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.
Balance Sheet
At the end of the first quarter of fiscal 2021, total borrowings
under the Company’s debt agreements totaled $87.3 million and the
Company had $27.4 million of excess availability under its
revolving credit facility.
Net inventory at the end of the first quarter of fiscal 2021 was
$71.7 million compared to $67.3 million at the end of the first
quarter of fiscal 2020. The Company continues to work through prior
seasonal product, and anticipates that the balance of newness
versus prior season inventory will continue to improve.
2021 First Quarter Earnings Conference
Call
A conference call to discuss the first quarter results will be
held today, June 10, 2021, at 4:30 p.m. ET, hosted by Vince Holding
Corp. Chief Executive Officer, Jack Schwefel, 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) 392-0629, conference ID 1996203. 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.
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 three months ended May 2, 2020, adjusted operating
income (loss), adjusted income (loss) before income taxes, adjusted
income taxes, adjusted net income (loss) and adjusted earnings
(loss) per share, which are non-GAAP measures, in order to
eliminate the effect of non-cash asset impairment charges and the
TRA adjustment. The Company believes that the presentation of these
non-GAAP measures facilitates an understanding of the Company's
continuing operations without the impact associated with the
aforementioned items. While these types of events can and do recur
periodically, they are excluded from the indicated financial
information due to their impact on the comparability of earnings
across periods. 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 Exhibit 3 to this
press release.
ABOUT VINCE HOLDING CORP.
Vince Holding Corp. is a global contemporary group, consisting
of three brands: Vince, Rebecca Taylor and Parker. Vince,
established in 2002, is a leading global luxury apparel and
accessories brand best known for creating elevated yet understated
pieces for every day effortless style. Known for its range of
luxury products, Vince offers women’s and men’s ready-to-wear,
footwear and accessories through 49 full-price retail stores, 15
outlet stores, and its e-commerce site, vince.com and through its
subscription service Vince Unfold, www.vinceunfold.com, as well as
through premium wholesale channels globally. Rebecca Taylor,
founded in 1996 in New York City, is a high-end women’s
contemporary womenswear line lauded for its signature prints,
romantic detailing, and vintage inspired aesthetic reimagined for a
modern era. The Rebecca Taylor collection is available at 11 retail
stores, through our e-commerce site at rebeccataylor.com and
through its subscription service Rebecca Taylor RNTD,
www.rebeccataylorrntd.com, as well as through major department and
specialty stores in the US and select international markets.
Parker, founded in 2008 in New York City, is a contemporary women’s
fashion brand that is trend focused. Please visit www.vince.com for
more information.
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 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: the impact of
the novel coronavirus (COVID-19) pandemic on our business, results
of operations and liquidity; our ability to continue having the
liquidity necessary to service our debt, meet contractual payment
obligations, and fund our operations; further impairment of our
goodwill and indefinite-lived intangible assets; general economic
conditions; our ability to realize the benefits of our strategic
initiatives; our ability to maintain our larger wholesale partners;
the loss of certain of our wholesale partners; our ability to make
lease payments when due; the execution and management of our retail
store growth plans; the expected effects of the acquisition of the
Acquired Businesses on the Company; our ability to successfully
manage the transition of the new Chief Executive Officer; our
ability to expand our product offerings into new product
categories, including the ability to find suitable licensing
partners; our ability to remediate the identified material weakness
in our internal control over financial reporting; our ability to
optimize our systems, processes and functions; our ability to
mitigate system security risk issues, such as cyber or malware
attacks, as well as other major system failures; our ability to
comply with privacy-related obligations; our ability to comply with
domestic and international laws, regulations and orders; 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 remain competitive in the
areas of merchandise quality, price, breadth of selection and
customer service; our ability to keep a strong brand image; our
ability to attract and retain key personnel; our ability to protect
our trademarks in the U.S. and internationally; 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 current and future
licensing arrangements; seasonal and quarterly variations in our
revenue and income; our ability to ensure the proper operation of
the distribution facilities by third-party logistics providers; the
extent of our foreign sourcing; fluctuations in the price,
availability and quality of raw materials; commodity, raw material
and other cost increases; our reliance on independent
manufacturers; other tax matters; and other factors as set forth
from time to time in our Securities and Exchange Commission
filings, including those described under “Item 1A—Risk Factors” in
our Annual Report on Form 10-K and 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.
Vince Holding Corp. and
Subsidiaries
Exhibit (1)
Condensed Consolidated Statements of
Operations
(Unaudited, amounts in thousands except
percentages, share and per share data)
Three Months Ended
May 1,
May 2,
2021
2020
Net sales
$
57,533
$
39,018
Cost of products sold
32,050
23,018
Gross profit
25,483
16,000
as a % of net sales
44.3
%
41.0
%
Impairment of goodwill and intangible
assets
—
13,848
Impairment of long-lived assets
—
13,026
Selling, general and administrative
expenses
32,584
38,544
as a % of net sales
56.6
%
98.8
%
Loss from operations
(7,101
)
(49,418
)
as a % of net sales
(12.3
)%
(126.7
)%
Interest expense, net
1,878
1,025
Other income, net
—
(2,307
)
Loss before income taxes
(8,979
)
(48,136
)
Provision for income taxes
2,643
42
Net loss
$
(11,622
)
$
(48,178
)
Loss per share:
Basic loss per share
$
(0.98
)
$
(4.12
)
Diluted loss per share
$
(0.98
)
$
(4.12
)
Weighted average shares
outstanding:
Basic
11,812,710
11,693,959
Diluted
11,812,710
11,693,959
Vince Holding Corp. and
Subsidiaries
Exhibit (2)
Condensed Consolidated Balance
Sheets
(Unaudited, amounts in
thousands)
May 1,
January 30,
May 2,
2021
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,370
$
3,777
$
26,654
Trade receivables, net
26,825
31,878
16,523
Inventories, net
71,745
68,226
67,337
Prepaid expenses and other current
assets
5,918
6,703
4,061
Total current assets
105,858
110,584
114,575
Property and equipment, net
16,785
17,741
19,901
Operating lease right-of-use assets
90,915
91,982
81,991
Intangible assets, net
76,327
76,491
76,982
Goodwill
31,973
31,973
31,973
Deferred income tax asset and other
assets
3,957
4,173
5,386
Total assets
$
325,815
$
332,944
$
330,808
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
42,340
$
40,216
$
31,647
Accrued salaries and employee benefits
4,199
4,231
9,361
Other accrued expenses
15,303
15,688
13,056
Short-term lease liabilities
23,297
22,085
20,882
Current portion of long-term debt
687
—
2,750
Total current liabilities
85,826
82,220
77,696
Long-term debt
85,286
84,485
84,647
Long-term lease liabilities
94,242
97,144
85,380
Deferred income tax liability and other
liabilities
5,497
2,888
187
Stockholders' equity
54,964
66,207
82,898
Total liabilities and stockholders'
equity
$
325,815
$
332,944
$
330,808
Vince Holding Corp. and Subsidiaries
Exhibit (3)
Reconciliation of GAAP to Non-GAAP
measures
(Unaudited, amounts in
thousands)
For the three months ended May
1, 2021
As Reported (GAAP)
Long-lived Assets Impairment
Charge
Goodwill and Intangibles
Impairment Charge
TRA Adjustment
As Adjusted (Non-GAAP)
Loss from operations
$
(7,101
)
$
—
$
—
$
—
$
(7,101
)
Interest expense, net
1,878
—
—
—
1,878
Other (income) expense, net
—
—
—
—
—
Loss before income taxes
(8,979
)
—
—
—
(8,979
)
Provision for income taxes
2,643
—
—
—
2,643
Net loss
$
(11,622
)
$
—
$
—
$
—
$
(11,622
)
Loss per share
$
(0.98
)
$
—
$
—
$
—
$
(0.98
)
(1)
For the three months ended May
2, 2020
As Reported (GAAP)
Long-lived Assets Impairment
Charge
Goodwill and Intangibles
Impairment Charge
TRA Adjustment
As Adjusted (Non-GAAP)
Loss from operations
$
(49,418
)
$
(13,026
)
$
(13,848
)
$
—
$
(22,544
)
Interest expense, net
1,025
—
—
—
1,025
Other (income) expense, net
(2,307
)
—
—
(2,320
)
13
(Loss) income before income taxes
(48,136
)
(13,026
)
(13,848
)
2,320
(23,582
)
Provision for income taxes
42
—
—
—
42
Net (loss) income
$
(48,178
)
$
(13,026
)
$
(13,848
)
$
2,320
$
(23,624
)
Earnings (loss) per share
$
(4.12
)
$
(1.11
)
$
(1.18
)
$
0.20
$
(2.02
)
(2)
(1) Based on weighted-average shares outstanding of 11,812,710
for the three months ended May 1, 2021, which excludes the effect
of dilutive equity securities.
(2) Based on weighted-average shares outstanding of 11,693,959
for the three months ended May 2, 2020, which excludes the effect
of dilutive equity securities.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210610005871/en/
Investor Relations Contact: ICR, Inc. Jean Fontana,
646-277-1214 Jean.fontana@icrinc.com
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