Vince Net Slips, but Trends Improving
Third-quarter net income at Vince Holding Corp. slipped to $5 million, or 42 cents per diluted share, compared to $6 million, or 50 cents per share a year ago, though the contemporary brand cited sequential improvement in sales trends and market share gains at department stores.
The net was benefited by $4.2 million, or 36 cents, in rent concessions, which in many cases retailers have been able to obtain from landlords due to the pandemic’s impact on business.
Income from operations was $6.3 million for the quarter ended Oct. 31, compared to $7.6 million in the same period last year. Excluding costs associated with the acquisition of Rebecca Taylor and Parker, income from operations in the third quarter of 2019 was $8.3 million.
Net sales in the last quarter decreased 34 percent to $69 million from $104.5 million in the same period last year.
“We believe we performed very well and not just with e-commerce and direct-to-consumer. More importantly, we performed well in the wholesale channel,” David Stefko, interim chief executive officer and chief financial officer, told WWD.
He said Vince returned to Bloomingdale’s in the third quarter, in 10 locations, and on Bloomingdale’s website. The company is also drop shipping Vince products sold at Bloomingdale’s. A few years ago, Vince pulled out of Bloomingdale’s, as well as Saks Fifth Avenue, to focus on selling Neiman Marcus and Nordstrom. “With the pandemic, there’s been a reduced consumer demand at all department stores so we knew there would be space,” to return to Bloomingdale’s, Stefko said.
In other news, Vince plans to open a store in East Hampton, N.Y., in the first week of February, and in the third quarter the company opened Rebecca Taylor outlets in Woodbury Common in Central Valley, N.Y., Sawgrass Mills in Florida and in the Cabazon outlet center in California. In addition, a Vince outlet in Vineland Premium Outlets in Orlando and a full-price Rebecca Taylor store opened recently in The Shops at Riverside Square in Hackensack, N.J. All told, Vince operates a total of 73 stores and outlets.
The company has been overhauling Rebecca Taylor to elevate the quality, keep prices low, and as Stefko, said, “get the brand back to its feminine roots.” Going forward, “The challenge is to get the word out to the consumer that the brand is different from what she has been recently seeing.” Stefko said influencers will be selected to help market the brand, which gets relaunched for spring 2021, at Saks and Bloomingdale’s.
At the Vince brand, net sales decreased 28.7 percent to $61.6 million compared to the third quarter of fiscal 2019.
At the Rebecca Taylor and Parker brands, net sales decreased 58.9 percent to $7.5 million.
In his statement on how Vince Holding performed in the third quarter, Stefko said, “We saw sequential improvement in our sales trends and delivered an operating profit, even excluding the benefit of rent concessions, through prudent cost management in the third quarter.
“This sequential improvement in direct-to-consumer sales and gross margin continued into the fourth quarter as we entered the holiday season. While the current environment remains difficult, Vince remains a top-performing brand in the contemporary luxury segment within our existing wholesale partners with strong customer demand for comfort casual luxury. We are also pleased to see the positive reaction to the brand refresh and merchandising initiatives taking place at Rebecca Taylor. Our proven ability to reestablish the brand leadership position for Vince, combined with the advancements we are making to restore the DNA of Rebecca Taylor, are generating excitement among our wholesale partners.”
As reported, last quarter the company closed on a third lien credit facility and completed amendments to its existing revolving and term loan credit facilities.
“Looking ahead, we believe that we have the liquidity in place to continue to navigate through the challenges presented by the COVID-19 pandemic,” said Stefko. “For Vince, we are well-positioned to gain further market share and advance our strategic initiatives as we emerge from the pandemic. For Rebecca Taylor, we remain enthusiastic about the long-term growth opportunity given the brand’s strong recognition within the contemporary luxury apparel space.”
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