Vince Holding Corp., despite seeing momentum in the Vince brand, saw its net loss grow in the second quarter to $15 million, or $1.23 per share, from the year-ago loss of $0.6 million, or $0.05 per share.
The company also said Monday that it is discontinuing its Rebecca Taylor business, which includes the Parker label as well. Those two labels were purchased by Vince Holding in November 2019 from Sun Capital for $19.7 million to diversify its portfolio and attempt to strengthen its stake in the contemporary fashion market. The deal at the time brought $84 million in sales to the corporation. While Vince, Rebecca Taylor and Parker are all considered contemporary labels, their price points and aesthetics are different.
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For the second quarter ended July 30, Vince Holding’s net sales increased 13.4 percent to $89.2 million as compared to $78.7 million in the same period last year, reflecting a 20.5 percent increase in Vince brand sales and a 27.9 percent decrease in Rebecca Taylor and Parker sales, combined.
Gross margin rate was 40.8 percent compared to 45.0 percent in the same period last year.
Loss from operations was $5.2 million compared to income from operations of $2.6 million in the same period last year. Loss from operations for the second quarter of fiscal 2022 includes a $1.7 million impairment charge associated with the Rebecca Taylor indefinite-lived tradename and a $0.9 million impairment charge associated with property and equipment of certain Rebecca Taylor retail stores.
“During the second quarter we saw momentum in Vince across both our women’s and men’s businesses as customers have returned to more normalized activities and events and are gravitating to the versatility of our sophisticated high-quality assortment,” Jack Schwefel, Vince’s chief executive officer, said Monday. “While we are operating in a challenging macro environment with increased pressure on profitability, we remain focused on executing against our strategic initiatives for Vince, including the upcoming relaunch of the brand’s e-commerce platform.
“Given the increased headwinds from the range of macroeconomic and pandemic-related issues in the industry that Rebecca Taylor in particular has faced over the past two years, we have made the difficult decision to exit our Rebecca Taylor business,” Schwefel said. “The closure of Rebecca Taylor will allow the company to focus on Vince’s core businesses and our overall financial foundation for the long term.”
The company is in discussions with its lenders to finalize the wind-down plan, which is expected to include selling off its assets and exiting various business channels.
At the Vince brand, net sales increased 20.5 percent to $80.9 million as compared to the second quarter of fiscal 2021. Wholesale segment sales increased 32.8 percent to $46.7 million compared to the second quarter of fiscal 2021. Direct-to-consumer segment sales increased 6.9 percent to $34.2 million compared to the second quarter of fiscal 2021. Income from operations excluding unallocated corporate expenses was $12.2 million compared to $15.6 million in the same period last year.
At the Rebecca Taylor and Parker brands, net sales decreased 27.9 percent to $8.3 million as compared to the second quarter of fiscal 2021. The loss from those operations was $5.5 million compared to a loss from operations of $1.6 million in the same period last year.
For the company overall, the gross profit was $36.4 million, or 40.8 percent of net sales, compared to gross profit of $35.4 million, or 45 percent of net sales, in the second quarter of fiscal 2021. According to the company, the decrease in the gross margin rate was primarily due to unfavorable year-over-year adjustments to inventory reserves, higher product and freight costs, and an increase in promotional activity, partially offset by favorable leveraging of distribution and other overhead costs.
The company ended the quarter with 67 company-operated Vince stores and 18 company-operated Rebecca Taylor stores, a net increase of seven company-operated Rebecca Taylor stores since the second quarter of fiscal 2021.