Vince Holding Corp. saw a 34 percent drop in sales during the third quarter, but enhanced its liquidity position to help navigate through the pandemic.
Vince also said Monday that it has delayed its earnings release for the third quarter to Dec. 21. It was originally scheduled to be issued Monday.
Net sales for the third quarter ended Oct. 31 decreased to $69 million from $104.5 million in the same period last year. The gross margin rate slipped to 45.9 percent compared to 48.8 percent in the same period last year.
“The third quarter experienced sequential improvement in direct-to-consumer sales and gross margin, which continued into the fourth quarter as we entered the holiday season,” said David Stefko, interim chief executive officer and chief financial officer. “At the same time, we continued to tightly manage our expenses.” He expects “a continued recovery” in the business.
Stefko also said the company closed on a third lien credit facility and completed amendments to its existing revolving and term loan credit facilities. “As we continue to navigate the near-term headwinds resulting from COVID-19, these steps enhanced our liquidity position to support the continued execution of our strategies.” He said the company has been “very pleased to see continued market share gains in our Vince brand and look forward to the continued execution of our multipronged growth strategy. For Rebecca Taylor, we remain encouraged by the opportunity to replicate the Vince recovery and growth playbook.”
Last week, the company entered into a $20 million third lien credit facility with SK Financial Services LLC, an affiliate of Sun Capital Partners Inc., which owns about 72 percent of Vince’s common stock. Fees under this credit facility are payable in kind and the proceeds were used to pay down the borrowings under the company’s existing revolver.
In addition, Vince entered into amendments to its existing revolving credit facility and term loan credit facility. The amendments, among others, extended the period during which the testing under a financial covenant is suspended, lowered the fixed charge coverage ratio to be maintained thereafter, extended the applicability of certain revised eligibility criteria for trade receivables and waived certain term loan amortization payments.
The company said it had to delay the third-quarter earnings report because it experienced “a significant shortage in staffing due to the additional burdens relating to COVID-19. Despite the company hiring additional temporary staffing, the turnover and remote working has delayed the preparation of the required financial statements and related disclosures, including lease accounting adjustments related to the COVID-19 impact on existing leases.”