Vince Holding Corp. reported a first-quarter net loss following the company’s planned reduction in promotional activity and inventory levels.
For the three months ended April 30, the net loss was $1.9 million, or 5 cents a diluted share, against net income of $2.5 million, or 6 cents, a year ago. Net sales rose 13.1 percent to $67.6 million from $59.8 million.
By segment, wholesale sales rose 16.9 percent to $44.8 million, while direct-to-consumer sales rose 6.1 percent to $22.9 million during the quarter. Comparable sales fell 12.3 percent, including e-commerce sales, which was in line with expectations, the company said. Vince had planned reductions in both promotional activity and inventory levels. The company also said gross profit was $28.3 million, or 41.8 percent of net sales. That compares with gross profit of $30.7 million, or 51.4 percent of net sales in the same year-ago quarter. The decline in the gross profit rate was due primarily to a “change in product mix and continued strategic investments,” the company said.
Hoffman affirmed that the company also is on track for its fall women’s collection, scheduled for August, and noted the “highly favorable response we received from our wholesale partners during the preview.” The August line will be the first developed by the brand’s founders since they returned to the company last fall as consultants.
“Overall, we will continue to move forward with strategic actions and investments that support recapturing the Vince DNA as we strive to position the company for improved results in the second half of fiscal 2016 and for long-term profitable growth,” Hoffman said.
For fiscal 2016, the company guided total net sales at between $290 million and $305 million, including revenues from six new retail stores and comps growth inclusive of e-commerce sales in the flat to low-single digit range. Sales are expected to decrease in the mid to high-single digit range for the first half of the year, and then to be flat or increase in the midsingle digit range in the second half. Gross margin is forecast at 47 percent, and diluted earnings per share is expected in the range of 0 cents to 6 cents.
The company in the quarter issued slightly over 11.8 million additional shares of common stock, raising gross proceeds of $65 million from the completion of a nontransferable rights offering. A part of the proceeds were used to repay $22.3 million due under a tax receivable agreement with an affiliate of Sun Capital Partners, and repay $20 million of debt under the company’s revolving credit facility. Sun Capital Partners, the private equity firm based in Boca Raton, Fla., still owns a stake in Vince.
Vince shares closed Friday at $5.96, up 4.75 percent.