Vince Holding Corp. Reports First Quarter 2016 Results

6/7/16

NEW YORK--(BUSINESS WIRE)--Vince Holding Corp. (NYSE:VNCE), a leading contemporary fashion brand reported unaudited results for the first quarter of fiscal 2016 ended April 30, 2016.

For the first quarter ended April 30, 2016:

  • Net sales increased 13.0% to $67.6 million from $59.8 million in the first quarter of fiscal 2015. Wholesale segment sales increased 16.9% to $44.8 million and direct-to-consumer segment sales increased 6.1% to $22.9 million over the first quarter of fiscal 2015. Comparable sales decreased 12.3%, including e-commerce sales, which was in line with expectations, due to the planned reduction in promotional activity and inventory levels.
  • Gross profit was $28.3 million, or 41.8% of net sales. This compares to gross profit of $30.7 million, or 51.4% of net sales, in the first quarter of fiscal 2015. The decrease in gross profit rate was primarily attributable to a change in product mix and continued strategic investments.
  • Selling, general, and administrative expenses were $31.8 million, or 47.0% of sales compared to $25.6 million, or 42.9% of sales, in the first quarter of fiscal 2015. The increase in SG&A dollars for the first quarter of Fiscal 2016 includes continued store and strategic investments made to support the Company’s long term goals.
  • Operating loss was $3.5 million, compared to operating income of $5.1 million for the first quarter of fiscal 2015.
  • Net loss was $1.9 million, or $0.05 per share, compared to net income of $2.5 million, or $0.06 per diluted share, for the first quarter of fiscal 2015.
  • The Company opened three new stores, ending the first quarter with 51 company-operated stores.

Brendan Hoffman, Chief Executive Officer, commented, “Our first quarter results came in largely as expected, despite the difficult retail environment, and we remain on track to meet our expectations for the year. We are excited about the August debut of our Fall Women’s Collection given the highly favorable response we received from our wholesale partners during the preview. This will be the first collection developed by our founders since they returned to the Company as consultants. Overall, we will continue to move forward with strategic actions and investments that support recapturing the Vince DNA as we strive to position the Company for improved results in the second half of Fiscal 2016 and for long-term profitable growth.”

Balance Sheet

The Company’s debt decreased by $15.0 million to $45.0 million during the first quarter of fiscal 2016. During the first quarter, the Company issued 11,818,181 additional shares of common stock, raising gross proceeds of $65 million, as a result of its completed non-transferable rights offering. Portions of the proceeds from the rights offering were used to repay $22.3 million due under the Tax Receivable Agreement with an affiliate of Sun Capital Partners, Inc. as well as to repay $20 million of debt under the Company’s Revolving Credit Facility. The Company had availability under its Revolving Credit Facility of $43.7 million as of April 30, 2016.

Inventory at the end of the first quarter of fiscal 2016 was $23.4 million compared to $41.2 million at the end of the first quarter of fiscal 2015. The year-over-year inventory decline was primarily due to better inventory management.

Capital expenditures for the first quarter of fiscal 2016 totaled $3.7 million, primarily attributable to new stores and IT migration costs.

2016 Outlook

For fiscal 2016, the Company expects:

  • Total net sales between $290 million and $305 million, including revenues from six new retail stores and comparable sales growth inclusive of ecommerce sales in the flat to low-single digit range. The Company expects sales to decrease in the mid- to high-single digit range for the first half of the year and to be flat or increase in the mid-single digit range in the second half of the year as compared to the same prior year periods;
  • Gross margin of approximately 47%;
  • SG&A to be between $131 million and $133 million;
  • Interest expense of approximately $4 million;
  • Diluted EPS of $0.00 to $0.06. The company expects net loss per share to be in the high-single digit to low-teen’s range in the first half of the year due to higher SG&A growth as the result of continued store and strategic investments in early fiscal 2016 and the annualization of store openings and strategic investments made in fiscal 2015. Note that the EPS guidance reflects a share count of approximately 46.4 million, which includes the impact of 11.8 million shares issued in connection with the rights offering; and
  • Capital expenditures between $10 million and $12 million.


ABOUT VINCE

VINCE is a leading contemporary fashion brand best known for modern effortless style and everyday luxury essentials. Established in 2002, the brand now offers a wide range of women's and men's apparel, women's and men's footwear, and handbags. Vince products are sold in prestige distribution worldwide, including over 2,400 distribution locations across 40 countries. With corporate headquarters in New York and its design studio in Los Angeles, the Company has 38 company-operated full-price retail stores, 14 company-operated outlet stores and its e-commerce site, VINCE.com. Please visitwww.VINCE.com for more information.

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