Vince Holding Corp (VNCE) Q2 2024 Earnings Call Transcript Highlights: Strong Wholesale Growth ...

GuruFocus Research
6 min read

In This Article:

  • Total Company Net Sales: Increased 6.8% to $74.2 million compared to $69.4 million in Q2 fiscal 2023.

  • Wholesale Segment Sales: Increased 29.6% due to earlier-than-expected shipments.

  • Direct-to-Consumer Segment Sales: Declined 18.1%, impacted by store closures and lower markdown sales.

  • Gross Profit: $35.1 million or 47.4% of net sales, compared to $32.3 million or 46.6% of net sales in Q2 fiscal 2023.

  • SG&A Expenses: $34 million or 45.8% of net sales, compared to $31.5 million or 45.4% of net sales in Q2 fiscal 2023.

  • Operating Income: $1.1 million compared to $32.9 million in Q2 fiscal 2023.

  • Net Income: $0.6 million or earnings per share of $0.05, compared to $29.5 million or earnings per share of $2.36 in Q2 fiscal 2023.

  • Net Inventory: $66.3 million at the end of Q2, compared to $85 million at the end of Q2 fiscal 2023.

  • Adjusted Operating Margin: Increased 1.5%, driven by 80 basis points of gross margin expansion.

  • Stock Repurchase Program: Authorized for up to $1 million of common stock.

  • Q3 Fiscal 2024 Sales Outlook: Expected to be flat to down low single digits relative to the prior year.

  • Full-Year Fiscal 2024 Sales Outlook: Expected to decline in the low-single-digit range compared to fiscal 2023.

  • Full-Year Fiscal 2024 Adjusted Operating Margin: Expected to increase 25 basis points to 50 basis points compared to fiscal 2023.

Release Date: September 16, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Vince Holding Corp (NYSE:VNCE) delivered a sales growth of nearly 7% and an adjusted operating margin of 1.5%, exceeding guidance expectations.

  • The company's wholesale business performed solidly, benefiting from earlier-than-expected shipments and strong demand across key partners.

  • Vince Holding Corp (NYSE:VNCE) saw strength in both women's and men's businesses, with notable performance in sweaters, knit tops, and bottoms for women, and linen programs and knit T-shirts for men.

  • The company is expanding its men's business, including a new enhanced bottoms program and increased presence in Nordstrom stores.

  • Vince Holding Corp (NYSE:VNCE) is making strategic investments in brand marketing and customer acquisition, aiming to enhance brand awareness and increase lifetime value across its customer base.

Negative Points

  • The direct-to-consumer business experienced softer performance due to a pullback in promotional activity and fewer stores compared to the prior year.

  • Store closures negatively impacted direct-to-consumer sales by 440 basis points, contributing to an 18.1% decline in this segment.

  • The company has paused operations in China due to a dynamic environment, which may limit international growth opportunities in the short term.

  • Despite overall sales growth, the adjusted operating margin declined by approximately 260 basis points compared to the prior year, driven by various factors including severance expenses and royalty fees.

  • Vince Holding Corp (NYSE:VNCE) has revised its full-year sales outlook to reflect a more cautious top-line outlook due to increased uncertainty around consumer spending and the potential impact of the upcoming November election.

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