Despite supply chain woes, Vince Holdings Corp. reported ongoing momentum in its pandemic recovery across fashion brands Vince, Rebecca Taylor and Parker, over the third quarter of 2021 ending Oct. 30.
On Thursday, the company announced that net sales grew 26.7 percent over the same period last year, pulling in $87.5 million versus $69 million. The upward trend reflected sales increases of 27.3 percent for the Vince brand and 22 percent for Rebecca Taylor and Parker.
Income from operations was $3.1 million, beating the previous quarter’s $2.6 million, though it paled in comparison to $6.3 million in the third quarter of 2020. Gross margin rate of 48.2 percent showed improvement over the previous quarter’s 45 percent and the year-ago period, at 45.9 percent. But net income came in at $2.2 million, lower than the $5 million charted last year.
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“I would like to point out that net income for the third quarter reflects $1.5 million in deferred financing costs and a prepayment penalty, both associated with the termination of the 2018 term loan facility,” chief financial officer David Stefko explained on an earnings call Thursday.
The company believes the third quarter “reflects the ongoing strength in our Vince brand,” Jack Schwefel, chief executive officer, said in a statement. “Product and engagement continue to resonate with customers, and although we are facing challenges to our supply chain, our strong brand equity and high customer demand demonstrate the long-term opportunity of this brand.”
On the call, he noted a few critical initiatives that helped drive the business forward. It moved up the kickoff to the holiday season to early November with a Vince gift card promotion and the launch of gifting pages.
The Vince brand saw double-digit conversion gains, he pointed out. Direct-to-consumer sales jumped 56.5 percent to $35.7 million, while wholesale delivered $42.6 million, for a year-over-year increase of 10 percent. At Rebecca Taylor and Parker, net sales of $9.1 million made for 22 percent growth over last year.
In a conversation with WWD, Schwefel called out a few highlights: The Vince Crafted collection for Nordstrom exceeded expectations, with Schwefel calling it “exceptional.” The partners hope to work on another collaboration, he said.
Meanwhile, the cooler season fueled demand for knits and outerwear, and the company noted strong performance in the men’s category, which was at least partially buoyed by rental business Vince Unfold expanding to include men’s wear in September.
“We look at that as a way to have more reach to a newer customer, someone who might be a little bit more price-conscious and can’t afford to outfit themselves the way they might want to invest,” he said in the interview. “But they can rent it. And as their income grows over the years, we look to reel him in as a full-time customer.”
Of course, the supply chain issues won’t go away anytime soon — Schwefel believes it will continue until at least the first half of next year — but it’s “transitory,” he said. And until then, Vince Holdings’ brands have advantages that can help mitigate the effects, such as strong pricing power due to deep brand loyalty.
Much of that hinges on consumer awareness, so it’s no surprise that marketing is one of the company’s key focus areas, along with e-commerce, amplifying the men’s business and international growth. Schwefel said he may pick up previous conversations with venture partners about the Chinese market.
So far, London and the European market have been slower to recover than the U.S. market, but the CEO said improvement there offers reason to be “cautiously optimistic.” If it enters China, it would represent a major step in its global expansion.
At home, he’s excited by the prospect of growing the Rebecca Taylor brand. While the organization is very much focused on direct-to-consumer, it remains steadfast in its wholesale interests and hopes to extend the brands to more retail partners.
As for technology, the organization has plans in mind for that, too. A new point-of-sale system allows stores to capture more data, but the company needs to do more work in the back end to make the most of it, Schwefel said. This year, the business will also focus on optimizing its online business for mobile.
“We need to deal with [data] in a more robust way, which will allow us to start doing some of the personalization and things that we should be doing,” he added. “If you bought a coat from us, we shouldn’t be sending you emails and/or SMS about a coat. We should be talking to you about scarves and gloves. We haven’t had that ability. But we now have the foundation, so we can start to think about that.”