Abbot Kinney Opening, Vince Venice Beach, Los Angeles, America - 11 Nov 2015Abbot Kinney Opening, Vince Venice Beach, Los Angeles, America - 11 Nov 2015

Vince’s financial situation is challenging enough that even Wall Street is scaling back coverage.

Only a few days after Vince released delayed financial results showing a 21.9 percent drop in sales for the fourth quarter and a net loss of $162.1 million that included a reiteration of doubts on the brand’s ability to continue as a going concern, financial advisory firm B. Riley & Co. is discontinuing its coverage of the retailer to “focus our resources elsewhere.”

B. Riley was one of two firms still monitoring and analyzing Vince, the other being Robert W. Baird & Co. A Baird spokeswoman confirmed that the firm is currently still covering Vince.

B. Riley senior analyst Jeff Van Sinderen said in a research note that Vince’s results “affirmed substantial doubts” about the company and he pointed to the brand’s decision to stop providing guidance on future performance along with “limited visibility in more respects” as part of the cause for the discontinuation.

He added that the fate of Vince now depends on what majority shareholder and private equity firm Sun Capital does next, the options being a substantial capital infusion, restructuring or a sale, either in or outside of bankruptcy.

“We continue to believe that the brand has potential (particularly in a restructured form),” Van Sinderen said. “However, in our view, the capital structure and current form of the business are unsustainable.”

Although the financial situation at Vince seems tough — the company recently gave an operating subsidiary $1.7 million to remain in compliance with financial covenants and with management has come to agree that there is doubt about the brand’s future regarding its loan covenants — chief executive officer Brendan Hoffman is looking ahead to store openings and expansions.

During a Friday call with analysts, which included only B. Riley and Baird, Hoffman said Vince is in the process of broadening assortments, noting the brand’s spring collection has sold better than pre-spring product, which saw order cancellations and returns.

He also said Vince will be “methodically” adding new stores, while expanding existing locations and working to “better utilize space” across the store base.

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