Last spring, Vince Holdings Corp. warned about the prospects for its future. On Thursday it was a much different story, with the fashion brand reporting a slight profit gain and decent revenue growth and spelling out strategies to sustain the turnaround progress.
Among the plans, Vince aims to open stores with shorter leases and better terms, narrow the wholesale distribution, continue to generate greater full-price selling of buy-now-wear-now product, and fine-tune the assortment at outlets.
Recently, Vince reduced its debt, improved liquidity, completed a 1-for-10 reverse stock split to help regain compliance with the New York Stock Exchange for a continued listing, and returned to normal terms with key suppliers following trips to China.
The quarter ended Oct. 28 saw a gain in net profits to $3.5 million, compared to $3.4 million in the year-ago period. Sales rose 4.1 percent to $79.1 million from $76 million in the year-ago period. Comparable sales were up 4.4 percent. Vince’s stock was lifted by the results, and were up about 10 percent, or 49 cents, to $5.20 by late morning.
“We are making progress,” Vince chief executive officer Brendan Hoffman told WWD. “We are executing our new wholesale strategy and focusing on our own stores. The product is resonating. We are much more focused on buy-now-wear-now. That’s a big changeover.” Hoffman said outerwear, sweaters and pant silhouettes are bestsellers.
One soft spot was the outlets. “We’re going back to the historical mix of about 50 percent of the assortment specifically made for outlets; 50 percent excess merchandise from the regular collection,” Hoffman said.
The ceo cited other changes in the works, including more outdoor posters, targeted marketing to let shoppers know where Vince can be bought as the wholesale distribution changes, and a recently launched mobile app.
Earlier, in a conference call, Hoffman said customers “responded favorably to our recent collections and to enhancements that we have made in both full-price stores and e-commerce channels. In addition to the momentum we gained in our direct-to-consumer channel, we also began to take steps to drive increased profitability in our wholesale segment by focusing on fewer department store partners. Our teams have already begun to collaborate with the teams at Nordstrom and Neiman Marcus, and we are pleased with the progress that we are making thus far as we move toward our focused distribution arrangements.”
Earlier this year, Vince said it will focus its department store distribution on Neiman Marcus and Nordstrom, and no longer sell at Bloomingdale’s and Saks Fifth Avenue, effective next year. However, Vince shoes, which are the only licensed products in the line, are still being sold at Saks and Bloomingdale’s.
“As we look ahead, we will work to drive continued momentum in our direct-to-consumer business as well as execute a more focused and profitable wholesale business,” Hoffman said. “We plan to accomplish this by further refining our merchandise offering, investing in marketing programs with a focus on building brand awareness and deepening customer engagement, and growing our retail and e-commerce presence. Overall, we are excited about the inflection points in our business and we believe we are on the right track to deliver sustainable profitable growth over the long term.”
In the third quarter, wholesale sales increased 3.5 percent to $53 million, primarily driven by an increase in off-price sales. This was partially offset by the expected reduced sell-in to the full-price wholesale channel. Direct-to-consumer segment sales increased 5.3 percent to $26.1 million.
Optimism was further fueled with Hoffman stating that the company experienced a successful Black Friday weekend.
He also said the company continues to test some categories new to the brand, having recently debuted a capsule home collection. “We are also very excited to be relaunching our handbag offering at select retail stores and online in December,” Hoffman said.
On the brick-and-mortar front, the ceo said the company plans to open stores “where it makes sense on either a permanent or temporary basis. We are aggressively evaluating these opportunities, which includes exploring new doors in select locations where we can negotiate shorter-term leases and at lower rent rates than our historical leases. A good example of our real estate efforts is the relocation of our Melrose store,” in California. “While just a few blocks away from the previous location, we see higher traffic, better neighboring stores and more favorable lease terms. Performance so far has exceeded our expectations. We’re currently evaluating a number of similar opportunities, both for on-street locations in key cities as well as for more traditional mall locations.
“We have also begun to upgrade the aesthetic in our stores with a variety of natural textures and colors to fill each space, evoking a coastal lifestyle,” Hoffman said. “In addition, we have brought in more sculptural desert plants and have begun to weave in elements of our home collection, both of which add warmth and life to the stores. Enhancements have already gone a long way to making our locations more inviting to consumers.”
At the end of the third quarter, Vince had 55 stores in the U.S, including 41 full-price units and 14 outlets.