Vince Holdings Narrows First-Quarter Losses
Vince Holdings Corp. narrowed its loss in the first quarter and reported progress in recovery efforts and strong demand for its products.
The operator of the Vince, Rebecca Taylor and Parker contemporary brands has several growth strategies in motion, among them ramping up retail store and outlet openings, emphasizing greater full price selling and extending its rental program, chief executive officer Jack Schwefel, told WWD in an interview Thursday, just after the company reported a net loss of $11.6 million for the first quarter ended May 1, compared to a net loss of $48.2 million in the same period last year.
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The loss from operations was $7.1 million compared to a loss from operations of $49.4 million in the same period last year. Excluding costs associated with non-cash asset impairment charges, the adjusted loss from operations in the first quarter of fiscal 2020 was $22.5 million.
Net sales increased 47.5 percent to $57.5 million, compared to $39 million in the same period last year, reflecting a 76.3 percent increase in Vince brand sales and a 33.6 percent decrease in Rebecca Taylor and Parker. The company has paused the development of new product for Parker, which contributed to about two-thirds of the sales decline at those two brands. “It’s on a hiatus, but we know we’ll go back to it,” Schwefel told WWD. “We have enough on our plate at the moment. We’re not letting it go so long that people forget about it.”
The company is getting aggressive with stores opening this year, with 19 set, including four that already opened. The group includes seven Vince stores and three Vince outlets; four Rebecca Taylor retail stores and five Rebecca Taylor outlets. The company seeks “short-term, low investment leases” and is taking advantage of more locations and more favorable terms with landlords that have arisen during the pandemic.
Swimwear is a new category for Vince, which has been selling some exclusive items through a collaboration with Nu Swim. “We are pleased with the results. We will see swim again, whether it’s through a collaboration or we take it on ourselves,” said Schwefel.
Vince has switched its marketing so that the message focuses on wear-to-work and going out, after being focused on comfort and at-home styles. It’s also been shifting away from sales to greater full-price messaging. “This year provides a reset and an ability to be less promotional than we been historically.” Notably, the gross margin rate was 44.3 percent last quarter compared to 41 percent in the same period last year.
In a big capital project, Vince Holdings is upgrading its POS system to benefit stores and the digital business and “make us more omni-channel,” Schwefel said.
During a conference call, Schwefel said that with e-commerce, “We’re seeing growth. We’d like to see a lot more on the Internet…Port issues in China and California clearly affected us.”
He also expressed some frustration with wholesale customers buying less but added that the situation to some degree is remedying.
To spur the e-commerce side of the business, a chief marketing and digital officer has been hired and will be announced in two weeks. It’s a new position at the company.
The company just relaunched the Rebecca Taylor collection “with added categories to make it a full fashion line, an very elevated attitude, and re-engineered prices,” said Schwefel.
Also, the company is advancing its rental business, with Vince women’s re-launching at the end of June, Rebecca Taylor women’s re-launching at the end of August, and Vince men’s rental launching at the end of August for the first time. A new feature called Borrow will launch for both brands at the end of August, enabling rentals without paid subscriptions.
“We are pleased with the pace of recovery in our business as we begin to emerge from the pandemic with significant sequential improvement in our financial performance,” Schwefel said in a statement that he issued after the market closed.
“Strong consumer demand for the Vince brand’s effortless sophisticated luxury is reflected in both our retail and wholesale sell-through rates.
“Looking ahead, we will leverage the momentum in the brand as we continue to advance our global growth strategies. At Rebecca Taylor, we are highly encouraged by the positive response to the relaunch, themed Romanticism Redefined. I remain excited about the longer-term potential for this brand as the strategies we are using, which are similar to those that led to the successful turnaround of the Vince brand, are beginning to show encouraging signs. Overall, our focus will remain on driving our initiatives forward while maintaining discipline in how we operate the business for long term profitable growth.”
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