Vince Holding Corp., continuing to show momentum, reported preliminary results for the holiday season that included gains across its selling channels.
The Vince brand direct-to-consumer sales increased 11 percent for the nine-week period ended Jan. 4, driven by comparable sales growth of approximately 6 percent, the opening of five net new stores since the end of the same period last year and sales from the Vince Unfold subscription business launched in November 2018. Rebecca Taylor and Parker, both recent acquisitions, had minimal impact on sales growth rates.
“We are pleased with our holiday results as we see the momentum in the Vince brand continue in both our direct-to-consumer and wholesale channels,” said chief executive officer Brendan Hoffman. “We are seeing strong trends online and in our retail stores while Vince Unfold continues to drive incremental growth in our direct-to-consumer business. Notably, we continued to drive higher full-price sales and reduce promotional activity, which led to a more than 200 basis-point increase in our direct-to-consumer gross margin as compared to the same prior-year period.
“In the wholesale channel, we saw exceptional performance at our two department store partners [Nordstrom and Neiman Marcus] with their combined sales growth of the Vince brand in excess of 30 percent,” Hoffman said. “This performance is attributable to both favorable response to product as well as improved and increased floor space, which is enabling us to achieve further market share gains.”
The ceo said the integration of the recently acquired Rebecca Taylor and Parker brands has begun. “We believe both of these brands are highly regarded and have significant long-term growth potential. We plan to employ the strategic playbook that drove the successful turnaround at the Vince brand. As part of this, we hired a new senior creative director, Steven Cateron, to lead the creative direction and oversee this effort.”
Hoffman said strategic growth initiatives for Rebecca Taylor and Parker, which like Vince are considered contemporary fashion brands, include accelerating direct-to-consumer business at Rebecca Taylor with brick-and-mortar stores and e-commerce initiatives; extending apparel product classifications by leveraging core competencies of Vince, and growing Rebecca Taylor’s rental business, developing new revenue streams and accelerating international distribution.
Hoffman also cited the potential to drive operating margin expansion through leveraging higher revenue, benefiting from economies of scale and creating operational efficiencies.
The company provided new guidance for the Vince brand in fiscal 2019 that includes the impact of higher tariff costs and additional strategic investments. Volume is seen unchanged at $295 million to $305 million, but operating income is seen at $5.5 million to $7.5 million versus $7.5 million to $9.5 million previously.
Including Rebecca Taylor and Parker, the company now expects net sales between $365 million and $378 million, compared to net sales of $363.5 million in fiscal 2018. An operating loss of $500,000 to operating income of $3 million is seen, which excludes non-cash asset impairment charges of approximately $20.3 million recognized by Rebecca Taylor and Parker prior to the acquisition, as well as transaction and related costs of about $3.2 million.
In fiscal 2018, the company reported operating income of $5.4 million, which included a $1.7 million non-cash asset impairment charge for Vince related to property and equipment of certain stores.
Capital expenditures are seen at between $4 million and $4.5 million.
“We believe that we are uniquely positioned to drive meaningful profitable growth for the Rebecca Taylor and Parker brands. As we evaluated the Rebecca Taylor brand in particular, we saw an opportunity to acquire this company during a downturn in fiscal 2019 and leverage the same strategies that led to significantly improved financial performance at the Vince brand to reinvigorate profitable growth. We expect to achieve low-single digit operating margin in fiscal 2020 for the company and to drive further top-line growth and margin expansion thereafter.”
Vince is best known for its California-inspired understated, effortless styles. The brand sells women’s and men’s ready-to-wear and accessories at 49 retail stores, 15 outlets, vince.com, the Unfold subscription service and through wholesaling.
Rebecca Taylor is sold at Rebecca Taylor boutiques, rebeccataylor.com, department and specialty stores and through its subscription service. Parker sells at parkerny.com, and at department and specialty stores.