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8-K - 8-K- 2.02 - VINCE HOLDING CORP.vnce-8k_20170608.htm

Exhibit 99.1

 

Vince Holding Corp. Reports First Quarter 2017 Results

 

NEW YORK, New York – June 8, 2017 – Vince Holding Corp. (NYSE: VNCE), a leading global luxury apparel and accessories brand (“Vince” or the “Company”), today reported unaudited results for the first quarter of fiscal 2017 ended April 29, 2017.

 

Brendan Hoffman, Chief Executive Officer, commented, “Our first quarter results were largely in line with our expectations.  As anticipated, our wholesale business was negatively impacted primarily due to the elimination of our summer delivery.  We saw sequential improvement in our direct-to-consumer business, led by ecommerce, and we are seeing this momentum continue into the second quarter.  Looking ahead, we will remain focused on strengthening our direct-to-consumer business as well as take steps to optimize our wholesale business as we look to engage consumers across channels.  In addition, we have recently strengthened our design and product development leadership and are excited about the product refinements and planned brand enhancements we have underway.  Overall, we believe the Vince brand remains strong and we are making progress toward driving improved performance.”

For the first quarter ended April 29, 2017:

 

 

Net sales decreased 14.2% to $58.0 million from $67.6 million in the first quarter of fiscal 2016.  Wholesale segment sales decreased 20.9% to $35.4 million, primarily due to a reduction in full-price orders as a result of the elimination of the Company’s summer delivery.  Direct-to-consumer segment sales decreased 1.0% to $22.6 million compared to the first quarter of fiscal 2016. Comparable sales decreased 5.7%, including e-commerce sales, due to a decrease in average order value.

 

Gross profit was $25.6 million, or 44.1% of net sales. This compares to gross profit of $28.3 million, or 41.8% of net sales, in the first quarter of fiscal 2016. The increase in the gross profit rate for the first quarter of 2017 reflected a favorable channel mix shift and decreased discounts from the liquidation of excess inventory in the first quarter of fiscal 2016, partially offset by higher allowances and supply chain costs.

 

Selling, general, and administrative expenses were $33.8 million, or 58.2% of sales compared to $31.8 million, or 47.0% of sales, in the first quarter of fiscal 2016. The growth in SG&A expense for the first quarter of fiscal 2017 was due to increased costs associated with the remediation of the Company’s new systems, and higher product development, marketing, and new stores costs, partially offset by a decrease in incentive compensation, consulting, and temporary labor costs, in addition to transition, severance, and other strategic costs that did not reoccur in the first quarter of fiscal 2017.

 

Operating loss was $8.2 million, compared to operating loss of $3.5 million for the first quarter of fiscal 2016.

 

Net loss was $9.3 million, or $0.19 per share, compared to a net loss of $1.9 million, or $0.05 per share, for the first quarter of fiscal 2016.  The net loss for the first quarter of 2017 does not include a benefit from income taxes due to the offsetting impact of the tax valuation allowance.

 

The Company ended the quarter with 54 company-operated stores, an increase of three stores since the first quarter of fiscal 2016.

 


 

Balance Sheet

 

The Company ended the first quarter of 2017 with $15.4 million in cash and cash equivalents and $66.1 million of borrowings under its debt agreements.  The increase in borrowings under its debt agreements over the prior year period is due to higher borrowings under the revolving credit facility.

Gross inventory increased $2.7 million in comparison to the first quarter of fiscal 2016, while inventory reserves decreased $6.1 million as a result of less excess and aged inventory.  As a result, net inventory at the end of the first quarter of fiscal 2017 was $32.2 million compared to $23.4 million at the end of the first quarter of fiscal 2016.

Capital expenditures for the first quarter of fiscal 2017 totaled $1.8 million, primarily attributable to investments in new retail stores and the Company’s new systems.

 

2017 First Quarter Earnings Conference Call

 

A conference call to discuss the first quarter results will be held today, June 8, 2017, at 8:30 a.m. ET, hosted by Vince Holding Corp. Chief Executive Officer, Brendan Hoffman, 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 (877) 201-0168 conference ID 31871482. 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 VINCE

 

Established in 2002, Vince is a global luxury brand best known for utilizing luxe fabrications and innovative techniques to create a product assortment that combines urban utility and modern effortless style. From its edited core collection of ultra-soft cashmere knits and cotton tees, Vince has evolved into a global lifestyle brand and destination for both women’s and men’s apparel and accessories. As of April 29, 2017, Vince products were sold in prestige distribution worldwide, including approximately 2,300 distribution locations across more than 40 countries. With corporate headquarters in New York and its design studio in Los Angeles, the Company operated 40 full-price retail stores, 14 outlet stores and its e-commerce site, vince.com. Please visit www.vince.com for more information.

 

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 the 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: our ability to maintain adequate cash flow from operations or availability under our revolving credit facility to meet our liquidity needs (including our obligations under the Tax Receivable Agreement with the Pre-IPO Stockholders); our ability to continue as a going concern; our ability to successfully operate the newly implemented systems, processes, and functions recently transitioned from Kellwood Company; our ability to remediate the identified material weaknesses in our internal control over financial reporting; our ability to regain compliance with the continued listing standards of the New York Stock Exchange; our ability to commence and complete a potential rights offering; our ability to ensure the proper operation of the distribution facility by a third party logistics provider recently transitioned from Kellwood; our ability to remain competitive in the areas of merchandise quality, price, breadth of selection, and customer service; 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 control the level of sales in the off-price channels; our ability to manage excess inventory in a way that will promote the long-term health of the brand; changes in consumer confidence and spending; our ability to maintain projected profit margins; unusual, unpredictable and/or severe weather conditions; the execution and management of our retail store growth plans, including the availability and cost of acceptable real estate locations for new store openings; 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 ability to expand our product offerings into new product categories, including the ability to find suitable licensing partners; our ability to successfully implement our marketing initiatives; our ability to protect our trademarks in the U.S. and internationally; our ability to maintain the security of electronic and other confidential information; serious disruptions and catastrophic events; changes in global economies and credit and financial markets; competition; our ability to attract and retain key personnel; commodity, raw material and other cost increases; compliance with domestic and international laws, regulations and orders; changes in laws and regulations; outcomes of litigation and proceedings and the availability of insurance, indemnification and other third-party coverage of any losses suffered in connection therewith; tax matters; and other factors as set forth from time to time in our Securities and Exchange Commission filings, including under the heading "Item 1A—Risk Factors" in our Annual Report on Form 10-K and our Quarterly Reports on Form 10Q. 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.

 

This press release is also available on the Vince Holding Corp. website (http://investors.vince.com/).

 

 

Investor Relations Contact:

Jean Fontana

ICR, Inc.

Jean.fontana@icrinc.com

646-277-1200

 


 

 

 

Vince Holding Corp. and Subsidiaries

 

Condensed Consolidated Statements of Operations

 

 

(Unaudited, amounts in thousands except percentages, share and per share data)

Exhibit (1)

 

 

 

 

Three Months Ended

 

 

 

April 29,

 

 

April 30,

 

 

 

2017

 

 

2016

 

Net sales

 

$

58,045

 

 

$

67,645

 

Cost of products sold

 

 

32,454

 

 

 

39,387

 

Gross profit

 

 

25,591

 

 

 

28,258

 

as a % of net sales

 

 

44.1

%

 

 

41.8

%

Selling, general and administrative expenses

 

 

33,784

 

 

 

31,806

 

as a % of net sales

 

 

58.2

%

 

 

47.0

%

Loss from operations

 

 

(8,193

)

 

 

(3,548

)

as a % of net sales

 

 

(14.1

)%

 

 

(5.2

)%

Interest expense, net

 

 

1,044

 

 

 

881

 

Other expense, net

 

 

1

 

 

 

160

 

Loss before income taxes

 

 

(9,238

)

 

 

(4,589

)

Provision (benefit) for income taxes

 

 

52

 

 

 

(2,665

)

Net loss

 

$

(9,290

)

 

$

(1,924

)

Loss per share:

 

 

 

 

 

 

 

 

Basic loss per share

 

$

(0.19

)

 

$

(0.05

)

Diluted loss per share

 

$

(0.19

)

 

$

(0.05

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

49,428,259

 

 

 

38,002,774

 

Diluted

 

 

49,428,259

 

 

 

38,002,774

 

 

 

 

 

 

 

 

 


 

 

 

Vince Holding Corp. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited, amounts in thousands except percentages, share and per share data)

Exhibit (2)

 

 

 

 

 

April 29,

 

 

January 28,

 

 

April 30,

 

 

 

2017

 

 

2017

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

15,391

 

 

$

20,978

 

 

$

21,563

 

Trade receivables, net

 

 

20,292

 

 

 

10,336

 

 

 

17,152

 

Inventories, net

 

 

32,213

 

 

 

38,529

 

 

 

23,367

 

Prepaid expenses and other current assets

 

 

2,868

 

 

 

4,768

 

 

 

10,863

 

Total current assets

 

 

70,764

 

 

 

74,611

 

 

 

72,945

 

Property and equipment, net

 

 

42,017

 

 

 

42,945

 

 

 

39,836

 

Intangible assets, net

 

 

77,548

 

 

 

77,698

 

 

 

108,896

 

Goodwill

 

 

41,435

 

 

 

41,435

 

 

 

63,746

 

Deferred income taxes and other assets

 

 

2,518

 

 

 

2,791

 

 

 

94,830

 

Total assets

 

$

234,282

 

 

$

239,480

 

 

$

380,253

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

25,016

 

 

$

37,022

 

 

$

20,956

 

Accrued salaries and employee benefits

 

 

2,671

 

 

 

3,427

 

 

 

2,358

 

Other accrued expenses

 

 

10,739

 

 

 

9,992

 

 

 

13,898

 

Total current liabilities

 

 

38,426

 

 

 

50,441

 

 

 

37,212

 

Long-term debt

 

 

64,395

 

 

 

48,298

 

 

 

42,613

 

Deferred rent

 

 

16,670

 

 

 

16,892

 

 

 

16,217

 

Other liabilities

 

 

137,830

 

 

 

137,830

 

 

 

140,854

 

Stockholders' (deficit) equity

 

 

(23,039

)

 

 

(13,981

)

 

 

143,357

 

Total liabilities and stockholders' (deficit) equity

 

$

234,282

 

 

$

239,480

 

 

$

380,253