Vince Holding Corp., showing more progress in its turnaround efforts, managed to cut its loss in the first quarter to $5.6 million, or 49 cents a share, from the net loss of $9.3 million, or $1.88, in the year-ago period.
The improvement came despite a 6.1 percent decline in net sales to $54.5 million for the first quarter ended May 5, from $58 million a year ago. The company has reinstituted annual guidance, reflecting increased confidence in managing the business.
Wholesale sales decreased 19.5 percent to $28.5 million, which was “in line with expectations” and primarily due to the planned reduction in full-price wholesale partners. As reported, Vince cut its distribution of non-licensed products with Bloomingdale’s and Saks Fifth Avenue to strengthen its business with Nordstrom and Neiman Marcus. Bloomingdale’s and Saks still carry the licensed Vince shoes.
Direct-to-consumer segment sales increased 14.9 percent to $26 million, while comparable-store sales rose 12.3 percent. The gross margin rate increased 270 basis points to 46.8 percent, largely due to lower sales allowances in the wholesale channel and a favorable shift in channel mix, partially offset by the unfavorable impact of adjustments to inventory reserves.
The operating loss narrowed to $4.4 million from $8.2 million.
“We were pleased with the strong response to our women’s and men’s product assortments in the first quarter, which drove a double-digit comparable-sales increase in our full-price stores, and more than 25 percent growth in our e-commerce business,” said Brendan Hoffman, chief executive officer.
“In addition, we are highly encouraged by our three recent store openings, all of which are exceeding our sales expectations. In the wholesale channel, we saw better-than-expected performance at Nordstrom and Neiman Marcus as well as strong sell-through across all accounts, indicating a favorable response to our product offering. Sales in our wholesale segment declined, consistent with our expectations, primarily as the result of our planned reduction in partners in this channel. Given our increased confidence and visibility in the business, we have reinstituted annual guidance.”
For 2018, net sales are expected to be between $273 million and $280 million, compared with net sales of $272.6 million in fiscal 2017.
Operating income is expected to come in at between $3 million and $6 million, compared to an operating loss of $18.3 million a year ago, which included a $5.1 million noncash asset impairment charge related to property and equipment of certain retail stores.
The company will open two stores, including one at The Domain in Austin, Tex., in late June, followed by a new Los Angeles flagship in Palisades Village — the Caruso development opening this September in Pacific Palisades.
The Domain store, in addition to recently opened Vince locations at the Waterside Shops in Naples, Fla.; The Gardens on El Paseo in Palm Desert, Calif., and The Mall at Short Hills in Short Hills, N.J., strengthens the brand’s foothold in shopping centers with department stores it has exited as part of the company’s transformation strategy.
Vince ended the quarter with 57 company-operated stores, a net increase of three since the first quarter of fiscal 2017.
During a conference call with analysts, Hoffman cited several growth maneuvers, including expanding the assortment in its stores and adding more seasonally relevant buy-now-wear-now styles; showcasing an exclusive four-piece denim group from the Los Angeles-based Trave Denim; bolstering dresses that were underpenetrated in the collection; using targeted geo-location marketing to help drive customers to Vince stores in areas where they may have previously shopped department stores that no longer sell Vince, and refining Vince’s web site experience so it’s easier to navigate, among other initiatives.
“We’ve successfully returned Vince to the luxury brand positioning,” Hoffman said.