Vince Holding Corp., impacted by inventory issues and charges stemming from the wind-down of the Rebecca Taylor business, went into the red during the third quarter.
The contemporary fashion retailer posted a net loss of $5.2 million, or $0.43 a share, in the quarter ended Oct. 29, compared to net income of $2.2 million or $0.18 a share, in the same period last year.
However, net sales increased 12.7 percent to $98.6 million as compared to $87.5 million in the same period last year, reflecting a 14.4 percent increase in Vince brand sales and a 2.2 percent decrease in Rebecca Taylor and Parker sales, combined.
Loss from operations was $9.4 million compared to income from operations of $3.1 million in the same period last year. Loss from operations for the third quarter 2022 includes $11.1 million of costs associated with the wind down of the Rebecca Taylor business.
“Our third-quarter performance reflects continued growth from our Vince brand as we saw nice reception across our men’s and women’s assortment particularly as we transitioned into the cooler fall season,” Jack Schwefel, chief executive officer, said in a statement Tuesday. “In addition, during the quarter, we were very pleased to have celebrated our 20th anniversary with capsule collections that focused on our rich brand heritage that continues to support our growth especially as we navigate the ongoing challenging consumer environment.
“Like many other retailers, we have taken aggressive actions to reduce our inventory balance to better position us as we move into preparing for our next fiscal year,” Schwefel added. “We believe these actions combined with our previously announced strategic decision to exit the Rebecca Taylor business, as well as our focus on driving further efficiencies and enhanced disciplines across our organization, will position Vince for long-term profitable growth.”
Gross profit was $29.8 million, or 30.2 percent of net sales, compared to gross profit of $42.1 million, or 48.2 percent of net sales, in the third quarter of fiscal 2021. The decrease in the gross margin rate was primarily driven by the wind down of the Rebecca Taylor business, as well as unfavorable year-over-year adjustments to inventory reserves, and an increase in promotional activity in the direct-to-consumer channel, partially offset by favorable leveraging of distribution and other overhead costs.
The company ended the quarter with 67 company-operated Vince stores and 18 company-operated Rebecca Taylor stores, a net increase of two stores since the third quarter of fiscal 2021.
By brand, sales at Vince increased 14.4 percent to $89.7 million. Wholesale sales increased 29.1 percent to $55 million. Direct-to-consumer sales decreased 3 percent to $34.7 million. Income from operations excluding unallocated corporate expenses was $15 million compared to income from operations of $18.1 million in the same period last year.
At Rebecca Taylor, which includes the Parker label, net sales decreased 2.2 percent to $8.9 million. The loss from operations was $13.2 million compared to a loss from operations of $3.1 million in the same period last year.
Last September, the company revealed its decision to wind down Rebecca Taylor so it could focus its resources on the Vince brand.