Vince Holding (VNCE) 12 Sep 232023 Q2 Earnings call transcript

Hello, and welcome to today's Vince Q2 2023 Earnings Conference Call. I'm now going to hand over to Caitlin Churchill, Investor Relations, to begin. Catlin, please go ahead.

Thank you, and good morning, everyone. Welcome to Vince Holding Corp, second quarter fiscal 2023 results conference call. are Chief Chief Financial today Michael Officer; call Interim Hand, Officer. the Jack Executive Schwefel, and Hosting

available Before filings, we statements, in are begin, cause the statements in to made company let and and today's actual me which remind this risks website. company's on risks from the may press you results call expects. to the release constitute those that Those company's described forward-looking uncertainties which are differ subject on are SEC could that that certain uncertainties and

should assume will no discussed later the Investors not during information that the call. undertakes remain time, statements call company obligation made any the a to update operative at on and

on today's is the company in results presenting addition, in discussion, adjusted GAAP an basis. financial In and its conformity with

are in them most to and press and at Discussions presents results these of adjusted company's the included measures their related investors.vince.com. of Investors which company available the website are information today's The reconciliations measures in non-GAAP measures. the on are section release of schedules, GAAP today comparable non-GAAP

to expects XXb-XX the days provided company of amended. for as Form fiscal has quarterly of Act Finally, on late report filing to and The with Form XXXX the with of the under the XXXX. five notification Securities XX, on quarterly report within rule file period XX-Q July of company extension filed Exchange calendar ended its a Securities quarter Commission the Exchange XXb-XX respect the

will there remarks, Q&A today's Following no session. be

I Jack. Now Jack? call the will turn to over

Caitlin, morning. us this and for you, thank joining Thank everyone, you,

focus Since the May. time of our product that our June improving sheet and on executing growth of Brands continued spend close a allowing quarter ABL balance our we initiatives. for our marks with strategic following strengthen chapter our Group and The our performance our facility focusing the more refinancing enhanced liquidity late strengthened with second on to margin time, and beginning position, transaction of Authentic us transaction have the new in The the to in business. the late Vince

on our let update an performance. provide from this I review highlights me quarter progress, Before second

we are As quarter, the improvement our navigate the we our which channels. said, pleased challenging environment direct-to-consumer during expected, to off-price channel macro decision sequential direct-to-consumer with continued and was impacted pressured That in and the our delivered second compared wholesale penetration quarter, to wholesale strategic both the first business. full-price due of more focus more our the pull while channel enhance the back to profitable to on a

the our decision customer channels, impacts pleased While top-line it's inventories the especially approach, in believe normalized. our this Across have as assortment. to term, our with right performance both reception we the near are we

selling and from believe women's, we also for fall our move bodes saw product into assortment, season we the both we For key very pre-fall Vince. which nice as well men's results

with are With gross respect by to improvement, year-over-year primarily the driven adjusted we lower pleased we margin due costs. to delivered income, freight in profitability, operating expansion

move we In we as a addition, a inventory continue organization, on disciplined which operating to focused management and will to forward. benefit maintaining also more approach believe we remain streamlined us

through the our growing strategic presence enhanced business. to customer our our capabilities Turning Men's e-commerce initiatives, against CDP international and expanding base leveraging progress growing our including platform, growth and our

e-commerce drove spend in our respect to in store our CDP we to our we improvements e-commerce capabilities as CDP notable compared in we of First, e-commerce fleet to enhanced with continued site, the increased the performance site. and see outperformance capabilities traffic leveraging also our benefiting relative marketing leverage platform, have experienced to that while from quarter were conversion to and later better our while able platform

X Trion investments our on results with Charnas, influencers her help shared key drive such we the site. million her in pleased Vince over particularly are as to who demand social Instagram Arielle significant and over traffic partnerships We saw with e-commerce followers and from through with with

better which top loyalty to platform, to continue position CDP leverage believe engage with and our us our acquisition our customer we base, we to increased customers continue we targeted will improve drive and addition, well as move In to customer communication deliver across forward. more

next to expansion. our on Turning international focus

plans and are spring two to to this coming China in We Nanjing excited announce new early in in our stores 'XX. open Beijing the months fall in in

year, have and store our in to in to opened expanding September of continued first pleased with Shanghai, our presence the look be We country. which in forward last

now our progress business. in me the discuss Let men's

performance in our can We the We continue grow to this our recently initial opened and including performance business next of well to approximately men's top-line Roosevelt be encouraged by the we Field to years in track four this achieving on are goal. our business, are seeing store. we from the momentum XX% believe

future. In QX, strength shirts areas high Linen opportunity well as and summer and further products Short saw as Cabana the we in these in our Boucle Stripe see for polos,

also in addition to Vince neckwear, initiatives, Peerless, We and of we and 'XX. to and and it. forward for with showcasing our with are the distribute the in announced North our tailored with producer addition recently agreement dress accessories States neckwear boy’s against shirts, product clothing, in across pleased clothing to Canada. who online long-term America our United and and strategic largest believe this manufacture, tailored a is fall a look Vince progress we stores partnership men's In Authentic the men's this great the partnership design, brand,

in saw quarter. remaining we into Heroes enter and the remainder as pieces respect Vince our the ahead highlighting a As third encouraged outlook, we business, the versatile We for continuing our campaign, later with fall the we we prudent of most to look are we year, particularly by wholesale while our second launched season. lean loved as trend are the to in improvements recently we selling quarter the

in and will mix also days, silhouettes which focus, in shown the in upcoming varying showcase color be Gray be will tones our Matters We will season's campaign launching the timeless of this which textures.

basis to cost to to continuing entire we expansion efficiencies needs continue this over are and drive with Along find time. to sourcing margin focus, evaluate our also

well with pricing engaged We a recently to of architecture, needs. have working as review as overall operating McKenzie help our and evaluation capital expenses, this us

close, I for continued teams With entered growth strategic thank I we work dedication all chapter and hard we to believe I for well-positioned this and long-term new on want of strengthened have deliver financial their our Before our as Vince. focus to success. our enhanced position initiatives, are

us introduce let teams earlier CFO, that, Michael across me experience summer, retail, e-commerce With Michael financial this and businesses. our leading Hand, significant bringing wholesale, and joined Interim accounting

a in accounting our finance organization. CFO, permanent our continue and we have pleased am search I ongoing to support for As leading his

over financial our more in it Michael? turn will Michael to detail. I review to Now results

Thank exciting and you, am pleased Jack, Vince to the during and this be good here with team time. morning, everyone. I working

drive discussed, as with enhanced Jack was to the business. we second an began the initiatives Authentic As we focus improvements our strengthened one the following through important both the for position our and company on our transaction quarter operational as financial across strategic

our in the quarter reminder, Authentic. as of Before this that with a I review reflects detail, first is more results financial impact our the partnership

transaction-related from second sale partially As gain by noted million IP, expenses. quarter release, in the on of a results million $XX offset our Vince in the $X benefited press our

licensing recorded the which goods addition, Authentic will accessories we be of business In footwear cost in pay terms of accordance in ABG begun to transferred soft we to for and have Vince, the have with now sold, our and to agreement. royalties officially

given from the Vince reduction impact XX% earnings items in by our lower benefit these ABG expect offset expense The was our initial attributed going forward, interest ownership the from we partially to of also debt. and to

decrease quarter Turning XX.X% now was XXXX. Total compared decreased our second company to to in detail. the and net quarter to sales Parker $XX.X wind million announced of is to $XX.X combined by in and now in second a which million Rebecca a of due Rebecca the sales also fiscal driven the in Vince results complete XX.X% for sales. the year-over-year Taylor decrease previously more The net brand Taylor business down XX.X% decrease

year-over-year brand direct-to-consumer Vince and sales segments. wholesale decrease driven our in The both by declines net was

on the our off-price to As impacted macro-related our wholesale top-line Jack and within business channel. our was discussed, headwinds decision pull performance strategic back by

In addition soft licensing as overall sequential the business direct-to-consumer, as compared accessories our and fall transfer by of The we wholesale to in select impacted In compared year. outperformance this deliveries was last to pleased to channel. decision, performance for segment in footwear timing the are the of stores our cautiousness well the later see the with also continue we improvement compared in to quarter. ongoing e-commerce, first but to the

lower basis net was sales increase approximately year. XXX million basis a to approximately margin $XX.X was quarter of driven quarter historically of with at million in Rebecca XX.X% year-over-year $XX.X This overall freight the or of Authentic. the lower favorable business, net or Taylor compares The reserves, to with profit rate adjustments wind-down XXX well last of as inventory by of associated XX.X% as which partially and second related the to agreement gross sales. by the costs, Gross margin expenses in gross licensing offset in royalty second points operated points the

quarter in the sales and the $XX.X were of $XX of million fiscal by net general, sales XX.X% net year. of business, Taylor was XXXX. in the in net expense of quarter XX.X% second in million The as decrease the to Selling, administrative a expenses for favorability or million primarily or last wind-down of driven $X.X quarter SG&A dollars Rebecca resulting the second compared

third-party transaction. other comp well the by expenses and Authentic lower costs were consulting to lower related offset benefits related partially had million also as costs as product and we addition, expenses and in development. transaction These In to lower $X

the expense was to of Operating period excludes in driven year. $X.X the to fiscal income facility compared prior the for of related second Net of the Adjusted as of transactions The the the quarter an expenses IP million $X.X last well refinancing interest quarter prior for credit Vince year. transaction $XX.X $X.X including the increase terminations gain was loss the which expenses million term the in facility. compared income and by operating increased the to XXXX. sale the in on as quarter credit to million revolving million loan entirely operating the was second $X.X million same

quarter in net net our applying expense Going loss the tax -- interest taxes of to debt. fiscal the as income the method of forward, discrete Income year million and we second in income investment, income rate equity tax expense lower $X.X result a the items. be to was three-month equity effective given excluding before reduction for benefit sorry, tax for expect I'm estimated

sale $X.X Discrete these with second transaction items compares million the period million in has which quarter benefit gain fiscal no was $XX tax with net The currently operating for at IP state allowance. valuation million in items company associated expense discrete the included $X to the levels, as the tax both of federal XXXX and substantial tax and second There an losses, in Vince the income are of a same in year. the held expense last reserve expenses. quarter

of For a the an loss $X.XX as of the the report second share of income $X.X Net loss expect per expenses transaction year. second Vince was or the share full $XX.X $XX million or net from in we impact XXXX, for benefit year, diluted gain the the or million. second a last income for fiscal per the million per well net million IP approximately $X.X quarter $X.XX share. quarter to sale tax excluding loss $X.XX quarter was Adjusted as compared to

the purchases sheet. balance The of by season. as second compared as in as was the and inventory year. as the well inventory million driven of the Rebecca current end to $XX.X $XXX.X decrease million within we at the was rebalanced second of through quarter year-over-year the Taylor prior normalization the of last quarter Moving to Vince wind-down from the end at for of Net year inventory levels inventory higher the business our the sold inventory

half have to current into levels We for year inventory. comparisons as below buys inventory the through reflecting units as conservative actions the and year we our remain as move second the of more taken fiscal we to continue well prior to XXXX last season expect to the move

with transaction the call, Authentic. was in on May, closed As discussed successfully last we our earnings

strengthened proceeds portion under in $XX.X repaid overall outstanding repaid capital. a and working our under the from transaction, this We increased our our the liquidity With credit we that borrowings was facility. term position million facility the of credit loan revolving full outstanding and

provides of facility into credit Bank June, ABL facility and our of new these and $XX agreement replaced mature expanded June refinanced a to ABL expected we new our with in in actions, Following five-year entered America. capacity The prior XXXX. facility successfully million

Turning of to for our XXXX. balance the year expectations the fiscal

notwithstanding, are our this in While not compared expect top-line third to we the business, we momentum earnings second seeing in the given formal macro we the guidance improvement quarter. headwinds in are to quarter providing the performance at sequential time, deliver

to second forward we'll to fiscal With will benefit inventory our disciplined a approach you we well-positioned management. against XXXX, of half our to respect updated to to expect believe and to we from maintain to look expense continuing the execute We tailwinds we keep objectives, to progress. continue be with freight continue and and

for concludes our you us This remarks. this Thank morning. joining