Vince Holding Corp., the luxury brand known for its relaxed, understated styles, concluded 2024 with a lift in sales, and a gross profit gain for the fourth quarter.
While there was a net loss of $28.3 million or $2.24 per share in the fourth quarter, which ended Feb. 1, it was attributed to a goodwill impairment charge and transaction expenses related to the acquisition of Vince by P180 from Sun Capital in January. Excluding the impact of the charge and transaction expenses, adjusted net income was $800,000, or 6 cents per share. P180 has a 65 percent stake in Vince, which is publicly traded.
In the year-ago fourth quarter, Vince had a net loss of $4.7 million, or 37 cents per share.
Gross profit in the most recent fourth quarter was $40.1 million, or 50.1 percent of net sales, compared to gross profit of $34.2 million, or 45.4 percent of net sales, in the year-ago quarter. Vince indicated that the increase in the gross margin rate was primarily driven by about 320 basis points due to lower promotional activity in the direct-to-consumer segment and lower discounting, and about 210 basis points related to lower product and freight costs.
Total sales last quarter increased 6.2 percent to $80 million, compared to $75.3 million in the fourth
quarter of fiscal 2023, due to strength in the Vince wholesale channel, which included a slight benefit from earlier shipments. The sales result was somewhat offset by softness in the DTC channel including the Vince stores. Excluding the extra week in the fourth quarter of fiscal 2023, net sales increased about 9 percent.
The report pushed Vince’s stock price up 12 percent to just over $2.19 late Friday morning.
P180 is involved in a lawsuit against Caastle and its former chief executive officer Christine Hunsicker, who abruptly left the company amid a swirl of fraud allegations. Hunsicker teamed with Vince CEO Brendan Hoffman last year to cofound P180, which forged a partnership with Elyse Walker, bought 25 percent of Altuzarra and then purchased its stake in Vince.
This year, Hoffman returned to Vince, again assuming the role of CEO, after a five-year absence. Hoffman previously served as CEO of Vince from 2015 to 2020 before leaving to lead Wolverine Worldwide, first as president and then CEO through August 2023.
Brendan Hoffman
Courtesy
“The number-one priority is navigating tariff policies and the dynamic consumer landscape,” Hoffman said during the company’s fourth-quarter conference call Friday with investors and retail analysts — his first since returning as CEO.
Hoffman said the company is grappling with the uncertainty in the macro environment and the potential impact on consumer behavior that tariffs will have. Sixty-six percent of Vince’s cost of goods is in China as of the end of last year, but Hoffman said the company has “begun to dramatically reduce exposure in China,” and that he does not expect any material impact of tariffs to the first quarter, which is the smallest volume quarter of the year for Vince, in terms of sales and profits. The company is moving production of about one-third of fall product outside of China, Hoffman said.
“Our team is on the ground in Asia working closely with our partners, our suppliers, to move production where we can without sacrificing quality to other parts of Asia,” said Hoffman. “There will definitely be a sku (stock keeping unit) reduction. This is a work in progress, with changes depending on where tariffs ultimately land.”
Hoffman said the company is “better positioned to navigate through today’s environment” because there’s been progress in strengthening the organization, there’s a “consistency of product” and significant strides in operational efficiencies have been made.
In October 2023, Vince unveiled a transformation program aimed at reducing costs by $30 million over three years period, including streamlining manufacturing and production operations. The transformation plan “fostered a culture to effect change” and improve results, Hoffman said. The strategy also included the wind-down of the Rebecca Taylor brand and the sale of the Vince intellectual property to Authentic Brands Group in return for $76.5 million in cash and a 25 percent membership interest in ABG Vince.
Vince still designs, produces, ships and sells all of its apparel products and pays ABG Vince royalty payments since Vince gets use of the IP to sell and manufacture the core categories. The Authentic connection enables Vince to expand its offering with more diversity of product.
The transformation yielded more than $10 million of savings in fiscal 2024. Given the evolving tariff policies, Vince is reevaluating its goals with the strategy to help mitigate the impact from tariffs.
For the first quarter of this year, the company expects net sales to decline about 5 percent and adjusted operating margin to decline about 500 basis points from a year ago. Given the increased uncertainty related to the potential impact and duration of tariffs, the company is not providing guidance for the full year.
Commenting on last quarter’s performance, Hoffman said he was “amazed” at the growth in wholesaling, which performed better than Vince’s DTC channel. Key wholesale accounts include Bloomingdale’s and Nordstrom where the brand gets prominent floor space.
He also cited double-digit growth in full-price customers, and said the company is increasing its attention on its highest-spending customer tier.
In women’s last quarter, sweaters, bottoms and pants were the bestselling categories; in men’s, cashmere sweaters and pants were top performers. Vince menswear, once a key item business, has evolved into a full collection business, Hoffman said.
“Since returning to the CEO role earlier this year, my initial observations of the company have been reinforced. I’ve been impressed by the resilience and depth of our leadership team and by the progress that has been made in strengthening the foundation and overall business model,” Hoffman said in a statement Friday.
“The stronger-than-expected end to the year is also a testament to the team, the quality product offerings that they have delivered that have continued to resonate with customers, as well as improvements in operational efficiencies from our transformation initiatives. As we look ahead, we will be shifting the focus and goals of our transformation plan to align with today’s environment and needs as we work to mitigate the impact of the evolving tariff policies. Despite the increased uncertainty with respect to the macro environment, I remain confident in the business’ long-term trajectory and our team’s ability to adjust and react accordingly to deliver customers the product and experience they expect from us.”
For the year, Vince had a net loss of $19 million, or $1.51 per share, compared to net income of $25.4 million, or $2.04 per diluted share, in the same period last year. Adjusted net income for fiscal 2024 was $2.4 million, or $19 cents per share, compared to an adjusted net loss of $7.7 million, or 62 cents per share, in the same period last year.
Net sales increased 0.2 percent to $293.5 million compared to $292.9 million in fiscal 2023. This performance was driven by strength in the Vince wholesale channel, which offset softness in the Vince DTC channel. Excluding the extra week in fiscal 2023, total company sales increased approximately 1 percent compared to the prior year.
Gross profit was $145.2 million, or 49.5 percent of net sales, compared to gross profit of $133.3 million, or 45.5 percent of net sales, in fiscal 2023. The increase in gross margin rate was driven by about 330 basis points related to lower promotional activity and discounting and about 320 basis points due primarily to lower product costing and freight costs. These factors were partially offset by about 150 basis points of royalty expenses associated with the licensing agreement. Authentic Brands Group controls the Vince brand, but Vince Holding still runs the business.
Vince ended the quarter with 57 company-operated stores, a net decrease of six stores
since the fourth quarter of fiscal 2023. Despite the macro uncertainties, Vince is proceeding with some store openings with units soon to launch in Sacramento, Calif. and Nashville, and a second store opening in London later this month.
