Vince Holding Corp. again warned of its going concern prospects with the release of fourth-quarter results.
After a delay in year-end figures that included allusions to a default “scenario,” Vince posted fourth-quarter net sales of $63.9 million, a drop of 21.9 percent, and a net loss of $162.1 million, equal to a loss of $3.28 per share.
Wholesale net sales also decreased 28.4 percent to $34.4 million due to a “reduction” in off-price and replenishment orders from retailers and direct-to-consumer sales dropped 12.6 percent to $29.4 million.
The brand’s stock plummeted by 48.2 percent in pre-market trading, hitting $1.35 per share.
Vince chief executive Brendan Hoffman said the results were “below expectations,” but again pointed to a change in company systems after separating from its former parent, the Sun Capital-controlled Kellwood, which took the company public in 2013. He said the shift “led to delayed shipments of spring product and off-price shipments, as well as lower-than-expected performance in our pre-spring collection.”
The company also said management has agreed that “there is substantial doubt” about Vince’s ability to continue as a going concern over the next year, due to the apparently dim prospect of complying with its term loan facility.
While Hoffman sought to bring some positivity to the results by highlighting “improved performance” in direct-to-consumer and online sales during the first quarter of 2017 and characterizing last year as a time to “reset and transition,” the company has decided to stop providing any performance guidance.
“We have made the prudent decision to suspend our sales and EPS guidance as we work to make our new systems more efficient and complete our business transition,” Hoffman said. “This decision to suspend guidance was further driven by the difficult retail environment in which we continue to operate. That said, we remain focused on expanding our direct-to-consumer business, optimizing our wholesale channel and growing our international presence over the long-term.”
Vince’s board chairman Marc Leder reiterated that the company has “made important strides in resetting the brand,” and added that “We believe Vince remains a strong brand with a loyal customer following.”