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Apparel Brand Vince Is Poised for Growth

Vince ( VNCE ) is a leading contemporary fashion brand best known for modern, effortless style and everyday luxury essentials. Established in 2002, the brand now offers a wide range of women's, men's and children's apparel, women's and men's footwear, and handbags. Vince products are sold in prestige distribution worldwide, including over 2,500 distribution locations across 42 countries. With corporate headquarters in New York and its design studio in Los Angeles, the company operates 32 full-price retail stores, 12 outlet stores and its ecommerce site, VINCE.com.

Third quarter

Net sales decreased by 21.5% to $80.9 million, down from $102.9 million in the prior year quarter. The wholesale segment decreased by 28.4% year over year and was $56.5 million, while the direct-to-consumer segment increased by 1.3% to $24.4 million. Comparable store sales decreased 12.5%, including e-commerce sales.

Gross profit was $40 million, or 49.5% of net sales. In the year-ago quarter, this was $50.6 million, or 49.2% of net sales.

Operating income was $12.3 million, down from $24.8 million during the prior-year quarter.

Net income was $5.9 million, or 16 cents per diluted share, compared to 35 cents per diluted share during the prior year quarter. The company also opened four new stores, ending the quarter with 46 company-operated stores.

Vince's debt decreased by $6.9 million and stood at $77.9 million during the quarter. Capital expenditures totaled $3.1 million, $2.4 million of which was primarily attributable to new stores and shop-in-shop build-outs.

Expectations for 2015 (updated)

  • Total net sales in the range of $285 million to $290 million.
  • Adjusted gross margin to decrease between 220 and 270 basis points.
  • Adjusted selling, general, and administrative expenses to increase by $18.5 million to $19.5 million.
  • Capex to be around $18 million to $19 million.

Focus

  1. Brand transformation initiatives
  2. Cost reduction
  3. Continual innovation
  4. Constantly evolving

On a concluding note

CEO Brendan Hoffman commented, "Our third quarter results were largely in line with our expectations. We saw continued challenges in the wholesale channel and less traffic in our direct-to-consumer business, along with deeper discounts, which is consistent with what we are seeing in the overall retail environment. Looking ahead, I am excited to be leading the Vince brand and I look forward to working with our founders, Rea and Christopher, as well as the rest of the team to recapture the brand DNA and position the Company for long term sales and profitability growth."

The company continues to expand and is now sold in over 2,400 locations worldwide. The company is now focusing on top territories, including Canada, UK, Japan and Korea.

Disclosure: I do not hold any position in the company.

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This article first appeared on GuruFocus .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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