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NEW YORK--(BUSINESS WIRE)--Jun 8, 2023--
Vince Holding Corp. (NYSE: VNCE) (“VNCE” or the “Company”), a global contemporary retailer, today reported its financial results for the first quarter 2023 ended April 29, 2023.
In 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.
Highlights for the first quarter ended April 29, 2023:
Jack Schwefel, Chief Executive Officer of VNCE said, “Our 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.”
For the first quarter ended April 29, 2023:
Vince First Quarter Highlights
Rebecca Taylor and Parker Fourth Quarter Highlights
Net Sales and Operating Results by Segment: | ||||||||
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| Three Months Ended |
| |||||
|
| April 29, |
|
| April 30, |
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(in thousands) |
| 2023 |
|
| 2022 |
| ||
Net Sales: |
|
|
|
|
|
|
|
|
Vince Wholesale |
| $ | 32,467 |
|
| $ | 33,464 |
|
Vince Direct-to-consumer |
|
| 31,508 |
|
|
| 34,782 |
|
Rebecca Taylor and Parker |
|
| 81 |
|
|
| 10,130 |
|
Total net sales |
| $ | 64,056 |
|
| $ | 78,376 |
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Income (loss) from operations: |
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|
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Vince Wholesale |
| $ | 8,571 |
|
| $ | 10,163 |
|
Vince Direct-to-consumer |
|
| 1,101 |
|
|
| (802) |
|
Rebecca Taylor and Parker |
|
| 1,192 |
|
|
| (1,484) |
|
Subtotal |
|
| 10,864 |
|
|
| 7,877 |
|
Unallocated corporate (1) |
|
| (13,240) |
|
|
| (13,162) |
|
Total loss from operations |
| $ | (2,376) |
|
| $ | (5,285) |
|
(1) Unallocated corporate expenses are related to the Vince brand and are comprised of selling, general and administrative expenses attributable to corporate and administrative activities (such as marketing, design, finance, information technology, legal and human resource departments), and other charges that are not directly attributable to the Company’s Vince Wholesale and Vince Direct-to-consumer reportable segments. In addition, unallocated corporate expenses includes the transaction related expenses associated with the Authentic Transaction. |
Balance Sheet
At the end of the first quarter of fiscal 2023, total borrowings under the Company’s debt agreements totaled $108.0 million and the Company had $20.4 million of excess availability under its revolving credit facility.
Net inventory at the end of the first quarter of fiscal 2023 was $80.0 million compared to $83.3 million at the end of the first quarter of fiscal 2022. The year-over-year decrease in inventory was driven by the wind down of the Rebecca Taylor business, partially offset by a moderate increase in Vince.
During the quarter ended April 29, 2023, the Company did not issue shares of common stock under the ATM program. The Company continues to have shares available under the program to exercise with proceeds to be used as sources, along with cash from operations, to fund future growth.
Subsequent Events
On May 25, 2023, the Company announced that it completed the previously announced transaction with Authentic Brands Group (“Authentic”). As part of the transaction (“Authentic Transaction”), VNCE and Authentic entered into a strategic arrangement whereby VNCE contributed its intellectual property to a newly formed Authentic subsidiary (“ABG Vince”) for total consideration to Vince of $76.5 million in cash from Authentic and 25% membership interest in ABG Vince. Authentic owns the majority stake of 75% membership interest in ABG Vince.
With the proceeds from this transaction, VNCE repaid in full the outstanding balance of $27.7 million under its Term Loan Credit Facility as well as a portion of the outstanding borrowings under its Revolving Credit Facility.
In connection with the Authentic Transaction, VNCE entered into an exclusive, long-term license agreement (the “License Agreement”) with Authentic for usage of the contributed intellectual property for VNCE’s existing business in a manner consistent with the Company’s current wholesale, retail and e-commerce operations. The License Agreement contains an initial ten-year term and eight ten-year renewal options allowing VNCE to renew the agreement.
Concurrent with the close of the Authentic Transaction, the amendment that VNCE previously entered into with its ABL facility became effective. The amendment adjusts the initial commitment level commensurate with the net proceeds after transaction related fees and the debt pay down, and revised the maturity date to June 30, 2024, among other things.
*Non-GAAP Financial Measures
In addition to reporting financial results in accordance with GAAP, the Company has provided, with respect to the financial results relating to three months ended April 29, 2023, adjusted loss from operations, adjusted loss before income taxes, adjusted (benefit) provision for income taxes, adjusted net loss, and adjusted loss per share, which are non-GAAP measures, in order to eliminate the effect of the Transaction Expenses, the Parker IP Sale Gain and the Discrete Tax Benefit. The Company believes that the presentation of these non-GAAP measures facilitates an understanding of the Company's continuing operations without the impact associated with the aforementioned items. While these types of events can and do recur periodically, they are excluded from the indicated financial information due to their impact on the comparability of earnings across periods. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. A reconciliation of GAAP to non-GAAP results has been provided in Exhibit 3 to this press release.
Conference Call
A conference call to discuss the first quarter results will be held today, June 8, 2023, at 8:30 a.m. ET, hosted by Vince Holding Corp. Chief Executive Officer, Jack Schwefel, and Chief Financial Officer, Amy Levy. 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 (833) 470-1428, conference ID 923392. 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 HOLDING CORP.
Vince Holding Corp. is a global retail company that operates the Vince brand women’s and men’s ready to wear business. Vince, established in 2002, is a leading global luxury apparel and accessories brand best known for creating elevated yet understated pieces for every day effortless style. Vince Holding Corp. operates 49 full-price retail stores, 17 outlet stores, and its e-commerce site, vince.com and through its subscription service Vince Unfold, www.vinceunfold.com, as well as through premium wholesale channels globally. Please visit www.vince.com for more information.
Forward-Looking Statements: This document, and any statements incorporated by reference herein contain forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding, among other things, our current expectations about possible or assumed future results of operations of the Company 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 the license agreement with ABG Vince; ABG Vince’s expansion of the Vince brand into other categories and territories; ABG Vince’s approval rights and other actions; our ability to maintain adequate cash flow from operations or availability under our revolving credit facility to meet our liquidity needs; our ability to realize the benefits of our strategic initiatives; general economic conditions; further impairment of our goodwill; the execution and management of our direct-to-consumer business growth plans; our ability to make lease payments when due; our ability to maintain our larger wholesale partners; our ability to remediate the identified material weakness in our internal control over financial reporting; our ability to comply with domestic and international laws, regulations and orders; 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 remain competitive in the areas of merchandise quality, price, breadth of selection and customer service; our ability to attract and retain key personnel; seasonal and quarterly variations in our revenue and income; our ability to mitigate system security risk issues, such as cyber or malware attacks, as well as other major system failures; our ability to optimize our systems, processes and functions; our ability to comply with privacy-related obligations; our ability to ensure the proper operation of the distribution facilities by third-party logistics providers; fluctuations in the price, availability and quality of raw materials; commodity, raw material and other cost increases; the extent of our foreign sourcing; our reliance on independent manufacturers; other tax matters; and other factors as set forth from time to time in our Securities and Exchange Commission filings, including those described under “Item 1A—Risk Factors” in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 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.
Vince Holding Corp. and Subsidiaries |
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| Exhibit (1) |
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Condensed Consolidated Statements of Operations |
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(Unaudited, amounts in thousands except percentages, share and per share data) |
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| Three Months Ended |
| |||||
|
| April 29, |
|
| April 30, |
| ||
|
| 2023 |
|
| 2022 |
| ||
Net sales |
| $ | 64,056 |
|
| $ | 78,376 |
|
Cost of products sold |
|
| 34,464 |
|
|
| 42,741 |
|
Gross profit |
|
| 29,592 |
|
|
| 35,635 |
|
as a % of net sales |
|
| 46.2% |
|
|
| 45.5% |
|
Gain on sale of intangible assets |
|
| (765 | ) |
|
| — |
|
Selling, general and administrative expenses |
|
| 32,733 |
|
|
| 40,920 |
|
as a % of net sales |
|
| 51.1% |
|
|
| 52.2% |
|
Loss from operations |
|
| (2,376) |
|
|
| (5,285) |
|
as a % of net sales |
|
| (3.7)% |
|
|
| (6.7)% |
|
Interest expense, net |
|
| 3,290 |
|
|
| 1,884 |
|
Loss before income taxes |
|
| (5,666 | ) |
|
| (7,169 | ) |
(Benefit) provision for income taxes |
|
| (5,285 | ) |
|
| — |
|
Net income (loss) |
| $ | (381) |
|
| $ | (7,169 | ) |
Earnings (loss) per share: |
|
|
|
|
|
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Basic earnings (loss) per share |
| $ | 0.03 |
|
| $ | (0.60 | ) |
Diluted earnings (loss) per share |
| $ | 0.03 |
|
| $ | (0.60 | ) |
Weighted average shares outstanding: |
|
|
|
|
|
| ||
Basic |
|
| 12,342,355 |
|
|
| 12,030,826 |
|
Diluted |
|
| 12,342,355 |
|
|
| 12,030,826 |
|
Vince Holding Corp. and Subsidiaries |
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| Exhibit (2) |
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Condensed Consolidated Balance Sheets |
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(Unaudited, amounts in thousands) |
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|
| April 29, |
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| January 28, |
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| April 30, |
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| 2023 |
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| 2023 |
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| 2022 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
| $ | 422 |
|
| $ | 1,079 |
|
| $ | 1,260 |
|
Trade receivables, net |
|
| 17,372 |
|
|
| 20,733 |
|
|
| 25,135 |
|
Inventories, net |
|
| 80,036 |
|
|
| 90,008 |
|
|
| 83,347 |
|
Prepaid expenses and other current assets |
|
| 4,201 |
|
|
| 3,515 |
|
|
| 4,644 |
|
Total current assets |
|
| 102,031 |
|
|
| 115,335 |
|
|
| 114,386 |
|
Property and equipment, net |
|
| 9,409 |
|
|
| 10,479 |
|
|
| 16,236 |
|
Operating lease right-of-use assets |
|
| 68,741 |
|
|
| 72,616 |
|
|
| 87,572 |
|
Intangible assets, net |
|
| — |
|
|
| 70,106 |
|
|
| 75,671 |
|
Goodwill |
|
| 31,973 |
|
|
| 31,973 |
|
|
| 31,973 |
|
Assets held for sale |
|
| 69,957 |
|
|
| 260 |
|
|
| — |
|
Other assets |
|
| 1,983 |
|
|
| 2,576 |
|
|
| 3,480 |
|
Total assets |
| $ | 284,094 |
|
| $ | 303,345 |
|
| $ | 329,318 |
|
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
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Accounts payable |
| $ | 45,976 |
|
| $ | 49,396 |
|
| $ | 42,584 |
|
Accrued salaries and employee benefits |
|
| 4,247 |
|
|
| 4,301 |
|
|
| 9,437 |
|
Other accrued expenses |
|
| 16,731 |
|
|
| 15,020 |
|
|
| 11,938 |
|
Short-term lease liabilities |
|
| 19,354 |
|
|
| 20,892 |
|
|
| 22,925 |
|
Current portion of long-term debt |
|
| 3,500 |
|
|
| 3,500 |
|
|
| 3,500 |
|
Total current liabilities |
|
| 89,808 |
|
|
| 93,109 |
|
|
| 90,384 |
|
Long-term debt |
|
| 102,442 |
|
|
| 108,078 |
|
|
| 93,830 |
|
Long-term lease liabilities |
|
| 67,044 |
|
|
| 72,098 |
|
|
| 89,018 |
|
Deferred income tax liability and other liabilities |
|
| 4,499 |
|
|
| 9,803 |
|
|
| 6,692 |
|
Stockholders' equity |
|
| 20,301 |
|
|
| 20,257 |
|
|
| 49,394 |
|
Total liabilities and stockholders' equity |
| $ | 284,094 |
|
| $ | 303,345 |
|
| $ | 329,318 |
|
Vince Holding Corp. and Subsidiaries |
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| Exhibit (3) |
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Reconciliation of GAAP to Non-GAAP |
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(Unaudited, amounts in thousands |
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| For the three months ended April 29, 2023 |
| ||||||||||
| As Reported (GAAP) |
|
Transaction Related Expenses Associated with the Authentic Transaction |
| Gain on Sale of Parker Intangible Assets |
| Transaction Related Expenses Associated with the sale of Parker Intangible Assets |
| Discrete Tax Benefit Associated with Classification Change |
| As Adjusted (Non- GAAP) |
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|
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|
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|
Loss from operations | $(2,376) |
| $(2,741) |
| $765 |
| $(150) |
| $— |
| $(250) |
|
Interest expense, net | 3,290 |
| — |
| — |
| — |
| — |
| 3,290 |
|
Loss before income taxes | (5,666) |
| (2,741) |
| 765 |
| (150) |
| — |
| (3,540) |
|
(Benefit) Provision for income taxes | (5,285) |
| — |
| — |
| — |
| (6,127) |
| 842 |
|
Net loss | $(381) |
| $(2,741) |
| $765 |
| $(150) |
| $6,127 |
| $(4,382) |
|
Loss per share (1) | $(0.03) |
| $(0.22) |
| $0.06 |
| $(0.01) |
| $0.50 |
| $(0.36) |
|
(1) Based on a weighted-average shares outstanding of 12,342,355 for the three months ended April 29, 2023, which excludes the effect of dilutive equity securities. |
View source version on businesswire.com:https://www.businesswire.com/news/home/20230608005340/en/
CONTACT: Investor Relations:
ICR, Inc.
Caitlin Churchill, 646-277-1274
Caitlin.Churchill@icrinc.com
KEYWORD: NEW YORK UNITED STATES NORTH AMERICA
INDUSTRY KEYWORD: LUXURY DEPARTMENT STORES FINANCE OTHER RETAIL PROFESSIONAL SERVICES FASHION FOOTWEAR RETAIL ONLINE RETAIL
SOURCE: Vince Holding Corp.
Copyright Business Wire 2023.
PUB: 06/08/2023 07:30 AM/DISC: 06/08/2023 07:31 AM
http://www.businesswire.com/news/home/20230608005340/en