Vince Holding Corp. got through a tough quarter but sees its negative comps shrinking and a lot of potential to build volume overseas.
After reporting a fourth quarter, marked by sharp pandemic-related sales declines and a preliminary net loss, executives from Vince told WWD that international expansion and boosting direct-to-consumer sales were priorities for the near future. They stressed that the Vince brand has a level of global recognition that far exceeds it actual volume, and that the company’s Rebecca Taylor label should have distribution in cities like Tokyo, Seoul, Beijing and Hong Kong, where the brand’s very feminine aesthetic could be well received.
“We are operating in quite a few countries, but in London, for example, where we have one store, we don’t drive as much volume as we should. We could have a larger brick-and-mortar there,” Jack Schwefel, Vince’s new chief executive officer, told WWD. “I feel the same way about Paris, and we just launched a partnership in Australia with David Jones [the department store] with three in-store shops,” Schwefel added. “That could be significantly larger.
“Also, we don’t have any brick-and-mortar presence in Asia. We will be pursuing partnerships there,” Schwefel said, citing Japan, South Korea and China. He’s been at Vince for 30 days and was formerly CEO of Cost Plus Inc. and before that, CEO of Dutch Fashion LLC, which operates the Joie, Equipment and Current/Elliott brands.
Vince’s digital business accounts for approximately one-third of the company’s total volume, according to David Stefko, Vince’s chief financial officer. He believes digital should be a larger percent of the business and that it will get a boost once buy online, pick up in store is rolled out to Vince’s fleet of more than 70 stores. It’s expected to happen later this year. The opening of more international stores would support digital growth overseas.
Vince Holding went into the red in the fourth quarter, reporting a net loss of $5.76 million, or 48 cents per share, compared to a profit of $51.68 million, or $4.29 a share, in the year-ago period.
The net loss excludes the impact of a non-cash deferred tax item. The company has not yet completed its financial closing procedures with respect to the analysis of the item, which could lead to an increase in the loss per share of between 10 and 15 cents a share in the fourth quarter.
The loss from operations was $3.9 million in the fourth quarter ended Jan. 30, compared to a loss of $3.3 million in the year-ago period. Excluding costs associated with the acquisition of Rebecca Taylor and Parker and non-cash asset impairment charges, adjusted loss from operations in the fourth quarter of fiscal 2019 was $300,000.
Net sales in the fourth quarter decreased 28.4 percent to $74.8 million, compared to $104 million in the same period a year ago. Vince brand sales saw a 20.4 percent decrease, while the Rebecca Taylor and Parker brands dropped 68.9 percent.
Asked to characterize the fourth-quarter experience, Stefko said, “I would say we saw a good holiday business, and from a consumer shopping perspective, we really saw a pullback after the holidays.” He suggested the pullback could have resulted from the post-holiday spike in COVID-19 cases and “buyers’ tiredness.”
The company was also impacted by the timing of spring shipments. Some were delayed due to a switch from air to ocean shipping for cost-cutting reasons.
On a positive note, Stefko said there was “sequential improvement” from the third to fourth quarters and that Vince’s negative comps are shrinking. He said Vince’s first quarter ends May 1 and will be reported about six weeks from now. In terms of revenues, “We expect the first quarter to be up 40 to 50 percent from the first quarter of 2020,” Stefko said.
On another positive note, in the last three to six weeks, there has been a pickup in sales of dresses and dressy pants, Schwefel said. “The vaccine rollout is helping people get back into shopping for occasions. Newness is working for us.
“As the world recovers from the COVID-19 pandemic and life begins to normalize, we are excited about the future of our brands,” said Schwefel, in a statement earlier in the day. “Vince is distinctly positioned as a brand that embodies effortless sophisticated style. We will continue to leverage Vince’s brand equity and deep consumer connections to expand awareness and drive growth with an increased focus on the direct-to-consumer channel. Rebecca Taylor also possesses a strong DNA and as we return to the brand’s heritage in a modernized way, we believe we can achieve a similar level of recognition that was recaptured by Vince.”
Stefko added in his statement, “We saw sequential improvement in the Vince brand during the fourth quarter led by our wholesale business. Within the wholesale channel, retail sales continue to improve as we believe we are taking share within the contemporary luxury category. At Rebecca Taylor, the decrease in sales reflects a resetting of the brand including an elimination of one of our seasonal collections. We are enthusiastic about the relaunch for spring, which has been received with favorable response. As we continue to navigate through the recovery of the macro environment, we will remain focused on maintaining disciplined cost controls and optimizing liquidity as we position our brands for the future.”
Vince brand’s net sales for fourth quarter were $69.5 million. Rebecca Taylor and Parker brands generated $5.3 million in sales.
For all of the fiscal year ended Jan. 31, total net sales decreased 41.4 percent to $219.9 million from $375.2 million in the previous year. The operating loss was $61.1 million, compared to the operating loss of $20.4 million in the year before.