VINCE HOLDING CORP. (VNCE) SEC Filing 10-Q Quarterly report for the period ending Saturday, October 28, 2017

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EXHIBIT 99.1

 

 

 

Vince Holding Corp. Reports Third Quarter 2017 Results

 

NEW YORK, New York – December 7, 2017 – Vince Holding Corp. (NYSE:VNCE), a leading global luxury apparel and accessories brand (“Vince” or the “Company”), today reported unaudited results for the third quarter of fiscal 2017 ended October 28, 2017.

 

Brendan Hoffman, Chief Executive Officer, commented, “We are pleased with our results in the third quarter, which reflected double digit comparable store sales growth in both our full price stores and our eCommerce channel.  Customers responded favorably to our recent collections and to enhancements that we have made in both of these channels. In addition to the momentum we gained in our direct-to- consumer channel we also began to take steps to drive increased profitability in our wholesale segment by focusing on fewer department store partners.  Our teams have already begun to collaborate with the teams at Nordstrom and Neiman Marcus, and we are pleased with the progress that we are making thus far as we move towards our focused distribution arrangements.”

 

Mr. Hoffman continued, “As we look ahead, we will work to drive continued momentum in our direct-to-consumer business as well as to execute a more focused and profitable wholesale business.  We plan to accomplish this by further refining our merchandise offering, investing in marketing programs with a focus on building brand awareness and deepening customer engagement, and growing our retail and eCommerce presence.  Overall, we are excited about the inflection points in our business and we believe we are on the right track to deliver sustainable profitable growth over the long term.”  

 

For the third quarter ended October 28, 2017:

 

 

Net sales increased 4.1% to $79.1 million from $76.0 million in the third quarter of fiscal 2016.  Wholesale segment sales increased 3.5% to $53.0 million, primarily driven by an increase in off-price sales.  This was partially offset by the expected reduced sell-in to the full-price wholesale channel. Direct-to-consumer segment sales increased 5.3% to $26.1 million compared to the third quarter of fiscal 2016. Comparable sales increased 4.4%, including e-commerce sales, due to an increase in average unit retail.

 

Gross profit was $36.7 million, or 46.4% of net sales, compared to gross profit of $38.0 million, or 50.0% of net sales, in the third quarter of fiscal 2016. Gross margin in the third quarter of fiscal 2017 was negatively impacted by higher product and supply chain costs, higher markdowns in the direct-to-consumer segment and one-time costs to execute the wholesale distribution strategy. This was partially offset by a decrease in the rate of sales allowances as well as reduced discounts in the off-price wholesale channel.

 

Selling, general, and administrative expenses were $31.4 million, or 39.7% of sales compared to $31.9 million, or 42.0% of sales, in the third quarter of fiscal 2016. The decline in SG&A dollars for the third quarter of fiscal 2017 was primarily the result of the non-recurrence of investments related to the transition of IT systems from last year, as well as savings associated with ending the Company’s consulting arrangement with its founders. This was partially offset by increased incentive compensation costs and investments related to the remediation and optimization of IT systems.

 

Operating income was $5.3 million compared to operating income of $6.1 million for the third quarter of fiscal 2016.  


The following information was filed by VINCE HOLDING CORP. on Thursday, December 7, 2017 as an 8K 2.02 statement, which is a press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Click a sentiment analysis snippet below from VNCE's Management Discussions to find these positive and negative remarks within their 10-Q Quarterly report:
  • vnce_10q_2017-12-07_58_136
    Financial - Expense
    A decrease in strategic investments of $3,732 related to costs incurred in the prior year related to the realignment of our supplier base, the transition of the information technology systems and infrastructure in-house from Kellwood, severance and other costs related to handbags and costs related to our brand update initiatives
  • vnce_10q_2017-12-07_91_45
    Financial - Earnings
    Effective with the second amendment, interest is payable on the loans under the Revolving Credit Facility at either the LIBOR or the Base Rate, in each case, plus an applicable margin of 1.75% to 2.25% for LIBOR loans or 0.75% to 1.75% for Base Rate loans, and in each case subject to a pricing grid based on an average daily excess availability calculation.
  • vnce_10q_2017-12-07_40_119
    Financial - Income
    Operating income from our Wholesale segment decreased $1,962, or 10.7%, to $16,454 in the three months ended October 28, 2017 from $18,416 in the three months ended October 29, 2016 primarily driven by a decrease in gross margin.
  • vnce_10q_2017-12-07_77_151
    Other - Other
    Net cash used in investing activities of $3,017 during the nine months ended October 28, 2017 represents capital expenditures primarily related to the investment in our retail store build-outs, including leasehold improvements and store fixtures and our new systems.
  • vnce_10q_2017-12-07_78_152
    Other - Other
    Net cash used in investing activities of $12,677 during the nine months ended October 29, 2016 represents capital expenditures related primarily to the investment in our new systems and related infrastructure and retail store build-outs, including leasehold improvements and store fixtures.
  • vnce_10q_2017-12-07_48_126
    Revenue - Product
    The favorable impact from reduced discounts in the off-price wholesale channel and a decrease in the rate of sales allowances contributed approximately 300 basis points of improvement.
  • vnce_10q_2017-12-07_31_110
    Revenue - Product
    The favorable impact from a decrease in the rate of sales allowances as well as reduced discounts in the off-price wholesale channel contributed approximately 150 basis points of improvement.
  • vnce_10q_2017-12-07_60_138
    Financial - Income
    Operating income from our direct-to-consumer segment decreased $2,428, or 103.6%, to an operating loss of $84 in the nine months ended October 28, 2017 from operating income of $2,344 in the nine months ended October 29, 2016 primarily due to a decrease in gross profit, as well as the impact of higher SG&A expenses associated with higher digital marketing and advertising expenses and increased incentive compensation.
  • vnce_10q_2017-12-07_95_64
    Other - Other
    The BMO LC Line also may be released upon request by Vince, LLC so long as the Company has received at least $30,000 of cash proceeds from the 2017 Rights Offering, $15,000 of which must be used to repay the principal amount of the outstanding loans under the Revolving Credit Facility without permanent reduction of commitments or the Excess Availability is greater than $10,000 after giving pro forma effect to the 2017 Rights Offering proceeds.
  • vnce_10q_2017-12-07_88_162
    Other - Other
    Net cash provided by financing activities was $61,304 during the nine months ended October 29, 2016, primarily consisting of net proceeds received from the issuance of common stock in connection with the completed 2016 Rights Offering of $63,773 and $4,731 of proceeds from stock option exercises, partially offset by $7,200 of net repayments of borrowings under our Revolving Credit Facility.
  • vnce_10q_2017-12-07_59_137
    Financial - Income
    Operating income from our wholesale segment decreased $3,540, or 9.0%, to $35,882 in the nine months ended October 28, 2017 from $39,422 in the nine months ended October 29, 2016 primarily driven by the sales volume decline discussed above.
  • vnce_10q_2017-12-07_97_69
    Financial - Earnings
    Effective with the Term Loan Amendment, interest is payable on loans under the Term Loan Facility at a rate of either i the Eurodollar rate subject to a 1.00% floor plus an applicable margin of 7.00% or ii the base rate applicable margin of 6.00%.
  • vnce_10q_2017-12-07_14_94
    Financial - Debt
    As of October 28, 2017, we had $68,076 of total debt principal outstanding, comprised of $36,000 outstanding under our Term Loan Facility and $32,076 outstanding on our Revolving Credit Facility, as well as $5,723 of cash and cash equivalents.
  • vnce_10q_2017-12-07_27_21
    Revenue - Product
    Comparable sales increased $1,091, or 4.4%, including e-commerce, reflecting an increase in average unit retail.
  • vnce_10q_2017-12-07_87_161
    Other - Other
    Net cash provided by financing activities was $46,408 during the nine months ended October 28, 2017, primarily consisting of $29,047 of net proceeds received from the 2017 Rights Offering and $26,876 of net proceeds from borrowings under our Revolving Credit Facility, partly offset by $9,000 of payments under the Term Loan Facility.
  • vnce_10q_2017-12-07_52_130
    Financial - Expense
    $903 of increased depreciation and amortization expenses primarily associated with our new systems
  • vnce_10q_2017-12-07_94_54
    Other - Other
    As of October 29, 2016, the availability under the Revolving Credit Facility was $31,980 net of the amended loan cap and there were $7,800 of borrowings outstanding and $7,474 of letters of credit outstanding under the Revolving Credit Facility.
  • vnce_10q_2017-12-07_93_52
    Other - Other
    As of October 28, 2017, the availability under the Revolving Credit Facility was $29,882 net of the amended loan cap and there were $32,076 of borrowings outstanding and $8,041 of letters of credit outstanding under the Revolving Credit Facility.
  • vnce_10q_2017-12-07_38_117
    Financial - Expense
    $782 of decreased product development costs and
  • vnce_10q_2017-12-07_27_22
    Revenue - Product
    Non-comparable sales contributed $232 of sales growth.
  • vnce_10q_2017-12-07_10_17
    Financial - Expense
    Additionally, in the prior year we incurred $1,588 and $5,316 during the three and nine months ended October 29, 2016, respectively, of strategic investment costs related to i the migration of our distribution facilities to a new third party service provider ii the realignment of our supplier base iii the transition of information technology systems and infrastructure in-house from Kellwood iv the estimated impact of our strategic decision regarding handbags and v our brand update initiatives.
  • vnce_10q_2017-12-07_26_106
    Revenue - Product
    Net sales from our Wholesale segment increased $1,771, or 3.5%, to $52,990 in the three months ended October 28, 2017 from $51,219 in the three months ended October 29, 2016, primarily driven by an increase in off-price sales partly offset by an expected reduction in full-price orders.
  • vnce_10q_2017-12-07_9_15
    Revenue - Product
    Comparable sales, including e-commerce, increased 4.4% compared to last year.
  • vnce_10q_2017-12-07_103_81
    Revenue - Product
    While inflation may impact our sales, cost of goods sold and expenses, we believe the effects of inflation on our results of operations and financial condition are not significant.
  • vnce_10q_2017-12-07_63_28
    Financial - Debt
    Our primary cash needs are funding working capital requirements, meeting our debt service requirements, paying amounts due under the Tax Receivable Agreement and capital expenditures for new stores and related leasehold improvements.
  • vnce_10q_2017-12-07_92_49
    Financial - Dividend
    The Revolving Credit Facility generally permits dividends in the absence of any event of default including any event of default arising from the contemplated dividend, so long as i after giving pro forma effect to the contemplated dividend, for the following six months Excess Availability will be at least the greater of 20% of the adjusted loan cap and $10,000 and ii after giving pro forma effect to the contemplated dividend, the Consolidated Fixed Charge Coverage Ratio for the 12 months preceding such dividend shall be greater than or equal to 1.0 to 1.0 provided that the Consolidated Fixed Charge Coverage Ratio may be less than 1.0 to 1.0 if, after giving pro forma effect to the contemplated dividend, Excess Availability for the six fiscal months following the dividend is at least the greater of 35% of the adjusted loan cap and $15,000.
  • vnce_10q_2017-12-07_51_129
    Financial - Expense
    $1,427 of increased expenses associated with new stores
  • vnce_10q_2017-12-07_99_71
    Financial - Debt
    In addition, the Term Loan Facility contains customary representations and warranties, other covenants, and events of default, including but not limited to, limitations on the incurrence of additional indebtedness, liens, negative pledges, guarantees, investments, loans, asset sales, mergers, acquisitions, prepayment of other debt, the repurchase of capital stock, transactions with affiliates, and the ability to change the nature of the Companys business or its fiscal year, and distributions and dividends.
  • vnce_10q_2017-12-07_94_55
    Other - Other
    The weighted average interest rate for borrowings outstanding under the Revolving Credit Facility as of October 29, 2016 was 4.0%.
  • vnce_10q_2017-12-07_93_53
    Other - Other
    The weighted average interest rate for borrowings outstanding under the Revolving Credit Facility as of October 28, 2017 was 3.9%.
  • vnce_10q_2017-12-07_33_112
    Financial - Expense
    $2,341 of increased incentive compensation costs
  • vnce_10q_2017-12-07_55_133
    Financial - Expense
    $788 of increased marketing and advertising expenses.
  • vnce_10q_2017-12-07_9_14
    Revenue - Product
    Our Wholesale net sales increased 3.5% to $52,990 and our Direct-to-consumer net sales increased 5.3% to $26,077.
  • vnce_10q_2017-12-07_27_20
    Revenue - Product
    Net sales from our Direct-to-consumer segment increased $1,323, or 5.3%, to $26,077 in the three months ended October 28, 2017 from $24,754 in the three months ended October 29, 2016.
  • vnce_10q_2017-12-07_45_24
    Revenue - Product
    Net sales from our direct-to-consumer segment increased $1,581, or 2.3%, to $70,287 in the nine months ended October 28, 2017 from $68,706 in the nine months ended October 29, 2016.
  • vnce_10q_2017-12-07_8_91
    Revenue - Product
    Our net sales totaled $79,067, reflecting a 4.1% increase compared to prior year net sales of $75,973.
  • vnce_10q_2017-12-07_53_131
    Financial - Expense
    $1,151 of additional one-time investments primarily associated with our efforts to reduce costs and improve profitability
  • vnce_10q_2017-12-07_45_25
    Revenue - Product
    Non-comparable sales contributed $1,903 of sales growth which was partly offset by a decline in comparable sales of $322, or 0.5%, including e-commerce, reflecting a decrease in average unit retail.
  • vnce_10q_2017-12-07_42_121
    Financial - Expense
    Unallocated corporate expenses are comprised of SG&A expenses attributable to corporate and administrative activities such as marketing, design, finance, information technology, legal and human resources departments, and other charges that are not directly attributable to our reportable segments.
  • vnce_10q_2017-12-07_61_139
    Financial - Expense
    Unallocated corporate expenses are comprised of selling, general and administrative expenses attributable to corporate and administrative activities such as marketing, design, finance, information technology, legal and human resources departments, and other charges that are not directly attributable to our reportable segments.
  • vnce_10q_2017-12-07_92_48
    Financial - Debt
    The Revolving Credit Facility also contains representations and warranties, other covenants and events of default that are customary for this type of financing, including limitations on the incurrence of additional indebtedness, liens, negative pledges, guarantees, investments, loans, asset sales, mergers, acquisitions, prepayment of other debt, the repurchase of capital stock, transactions with affiliates, and the ability to change the nature of the Companys business or its fiscal year.
  • vnce_10q_2017-12-07_73_37
    Financial - Expense
    Net cash used in working capital primarily resulted from a cash outflow of $20,942 in receivables, net primarily driven by the timing of collections, a cash outflow in accounts payable and accrued expenses of $17,234 due to the timing of payments to vendors and a cash outflow of $13,014 in inventories.
  • vnce_10q_2017-12-07_109_85
    Other - Other
    An entity may elect to perform a qualitative impairment assessment for goodwill and indefinite-lived intangible assets.
  • vnce_10q_2017-12-07_107_168
    Other - Other
    Fair Value Assessments of Goodwill and Other Indefinite-Lived Intangible Assets
  • vnce_10q_2017-12-07_108_169
    Other - Other
    Goodwill and other indefinite-lived intangible assets are tested for impairment at least annually and in an interim period if a triggering event occurs.
  • vnce_10q_2017-12-07_102_79
    Revenue - Product
    In addition, fluctuations in the amount of sales in any fiscal quarter are affected by the timing of seasonal wholesale shipments and other events affecting direct-to-consumer sales as such, the financial results for any particular quarter may not be indicative of results for the fiscal year.

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  • Form Type: Quarterly
  • Number of times amended: 0
  • Accession Number: 0001564590-17-024660
  • Submitted to the SEC: Thursday, December 7, 2017
  • Accepted by the SEC: Thursday, December 7, 2017
  • Period Ending: October 2017
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