Vince Holding Corp. Reports Second Quarter 2024 Results

Business Wire

In This Article:

Net Sales of $74.2 Million
Gross Margin Increased 80 basis points vs. Q2 FY2023
Updates Full Year FY2024 Outlook

NEW YORK, September 16, 2024--(BUSINESS WIRE)--Vince Holding Corp. (NYSE: VNCE) ("VNCE" or the "Company"), a global contemporary retailer, today reported its financial results for the second quarter ended August 3, 2024.

David Stefko, Interim Chief Executive Officer of VNCE said, "We are pleased with our second quarter results driven by strong performance in our wholesale channel, ongoing focus on full price selling and disciplined expense management of our core operating cost structure which helped to partially offset the expected headwinds from ongoing royalty expenses as well as the re-establishment of our incentive compensation program. The strength in our wholesale channel was driven in part by our ability to fulfill demand earlier than expected and helped to offset softer performance in our direct-to-consumer channel which was impacted by store closures and our strategic decision to continue to pull back on promotional activity. As we look ahead to the remainder of the year, while we are taking a more prudent approach to our outlook for direct-to-consumer sales as we continue to execute our strategy amidst an increasingly uncertain macroeconomic backdrop, our outlook for our wholesale channel remains unchanged and our increased expectations for profitability underscore our commitment to operating a stronger full price business model."

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 Exhibit 3 to this press release for a reconciliation of GAAP measures to such non-GAAP measures.

For the second quarter ended August 3, 2024:

  • 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 period Total Company net sales included $0.1 million in Rebecca 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.

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