\nVince Holding Corp. (NYSE: VNCE) (\u201cVNCE\u201d or the \u201cCompany\u201d), a global contemporary retailer, today reported its financial results for the first quarter 2023 ended April 29, 2023.<\/p>\n
\nIn this press release, the Company is presenting its financial results for the first quarter ended April 29, 2023 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.<\/p>\n
\nHighlights for the first quarter ended April 29, 2023:<\/p>\n
- \n
- \nNet sales were $64.1 million compared to $78.4 million in the same period last year reflecting a 6.3% decrease in Vince brand sales and a 99.2% decrease in Rebecca Taylor and Parker sales, combined, driven by the previously announced wind down of the Rebecca Taylor business.<\/p>\n<\/li>\n
- \nLoss from operations was $2.4 million compared to loss from operations of $5.3 million in the same period last year. Adjusted loss from operations* in the first quarter of fiscal 2023, which excludes the Transaction Expenses and the Parker IP Sale Gain (each as defined below), was $0.3 million.<\/p>\n<\/li>\n
- \nNet loss was $0.4 million or $(0.03) per share compared to a net loss of $7.2 million or $(0.60) per share in the same period last year. Excluding the Transaction Expenses, the Parker IP Sale Gain and the Discrete Tax Benefit (as defined below), adjusted net loss* for the first quarter of fiscal 2023 was $4.4 million or $(0.36) per share.<\/p>\n<\/li>\n<\/ul>\n
\nJack Schwefel, Chief Executive Officer of VNCE said, \u201cOur first quarter results were largely in line with our expectations supported by our efforts to streamline our organization to focus on our core strengths while maintaining a disciplined approach to expense management as we continued to navigate a challenging macro environment. As we look to the remainder of fiscal 2023, while we are maintaining a cautious outlook with respect to the environment, particularly in our wholesale channel, we will continue to focus on driving improved margin performance. With our strengthened balance sheet in place driven by our recent transaction with Authentic Brands Group, we believe we are better positioned to execute our strategic initiatives and prioritize our commitment to improved financial performance over time.\u201d<\/p>\n
For the first quarter ended April 29, 2023:<\/i><\/b><\/p>\n
- \n
- \nTotal Company net sales decreased 18.3% to $64.1 million compared to $78.4 million in the first quarter of fiscal 2022. The year-over-year decline was primarily driven by the previously announced wind down of the Rebecca Taylor business, and to a lesser extent a decline in Vince brand sales.<\/p>\n<\/li>\n
- \nGross profit was $29.6 million, or 46.2% of net sales, compared to gross profit of $35.6 million, or 45.5% of net sales, in the first quarter of fiscal 2022. The increase in gross margin rate was driven by lower freight costs as well as the wind down of the Rebecca Taylor business, which historically operated at a lower overall gross margin, and offset the unfavorable impact from higher discounts in the wholesale off-price channel as well as an increase in promotional activity in the Direct-to-consumer segment.<\/p>\n<\/li>\n
- \nSelling, general, and administrative expenses were $32.7 million, or 51.1% of sales, compared to $40.9 million, or 52.2% of sales, in the first quarter of fiscal 2022. The decrease in SG&A dollars was primarily driven by the wind down of the Rebecca Taylor business resulting in a $5.9 million net expense favorability in the first quarter of fiscal 2023. In addition, the Company also had lower costs associated with compensation and benefits and rent expense compared to the prior year period, which was partially offset by $2.9 million in transaction related expenses (the \u201cTransaction Expenses\u201d) relating to the Authentic Transaction (as defined below) as well as the sale of the Parker brand intellectual property (the \u201cParker IP Sale\u201d) in the first quarter of fiscal 2023.<\/p>\n<\/li>\n
- \nLoss from operations was $2.4 million compared to a loss from operations of $5.3 million in the same period last year. Adjusted loss from operations* in the first quarter of fiscal 2023, which excludes Transaction Expenses as well as the gain on sale of intangible assets relating to the Parker IP Sale (the \u201cParker IP Sale Gain\u201d), was $0.3 million.<\/p>\n<\/li>\n
- \nIncome tax benefit was $5.3 million primarily as a result of the $6.1 million discrete tax benefit from the change in classification of the Company’s Vince tradename indefinite-lived intangibles to Assets Held for Sale as a result of the Authentic Transaction (such impact, the \u201cDiscrete Tax Benefit\u201d), partially offset by $0.8 million of tax expense from applying the Company\u2019s estimated effective tax rate for the fiscal year to the three-months pre-tax loss excluding discrete items. The aforementioned change in classification resulted in a reversal of the non-cash deferred tax liability previously created by the amortization of the indefinite-lived tradename intangible asset recognized for tax but not for book purposes as this non-cash deferred liability can now be used as a source to support the realization of certain deferred tax assets related to the Company\u2019s net operating losses. Excluding the impact of the Discrete Tax Benefit, adjusted provision for income taxes* was $0.8 million.<\/p>\n<\/li>\n
- \nNet loss was $0.4 million or $(0.03) per share compared to a net loss of $7.2 million or $(0.60) per share in the same period last year. Excluding the Transaction Expenses, the Parker IP Sale Gain and the Discrete Tax Benefit, adjusted net loss* for the first quarter of fiscal 2023 was $4.4 million or $(0.36) per share.<\/p>\n<\/li>\n
- \nThe Company ended the quarter with 67 company-operated Vince stores, a net decrease of 1 store since the first quarter of fiscal 2022.<\/p>\n<\/li>\n<\/ul>\n
Vince First Quarter Highlights<\/b><\/p>\n
- \n
- \nNet sales decreased 6.3% to $64.0 million as compared to the first quarter of fiscal 2022.<\/p>\n<\/li>\n
- \nWholesale segment sales decreased 3.0% to $32.5 million compared to the first quarter of fiscal 2022.<\/p>\n<\/li>\n
- \nDirect-to-consumer segment sales decreased 9.4% to $31.5 million compared to the first quarter of fiscal 2022.<\/p>\n<\/li>\n
- \nIncome from operations excluding unallocated corporate expenses was $9.7 million compared to income from operations of $9.4 million in the same period last year.<\/p>\n<\/li>\n<\/ul>\n
Rebecca Taylor and Parker Fourth Quarter Highlights<\/b><\/p>\n
- \n
- \nOn September 12, 2022, the Company announced the strategic decision to wind down its Rebecca Taylor business to focus its resources on the Vince brand. The wind down of the Rebecca Taylor business is now substantially completed.<\/p>\n<\/li>\n
- \nNet sales decreased 99.2% to $0.1 million as compared to the first quarter of fiscal 2022.<\/p>\n<\/li>\n
- \nIncome from operations was $1.2 million compared to a loss from operations of $1.5 million in the same period last year. Income from operations in the first quarter of fiscal 2023 included a $0.8 million gain on the sale of the Parker tradename and $0.2 million in transaction related expenses associated with the sale of Parker intangible assets, with the remainder primarily associated with the release of Rebecca Taylor operating lease liabilities as a result of lease terminations.<\/p>\n<\/li>\n<\/ul>\n