The full impact of the new fashion direction at Vince won’t be until the fourth quarter of 2016.
That’s according to Vince Holding Corp.’s new chief executive officer Brendan Hoffman, who joined the company in October and on Thursday conveyed to Wall Street analysts during the firm’s third-quarter conference call that the company “knows what it needs to do to succeed.”
Vince last month brought back founders Rea Laccone and Christopher LaPolice under a two-year consulting pact. They will oversee the company’s product, merchandising and creative efforts. The firm has been plagued by product issues, stock price declines and executive turnover.
During Thursday’s call, Hoffman said Livia Lee, who was hired in July as senior vice president of merchandising, has left the company following the restructuring of the merchandising team.
Hoffman told analysts, “I’ve long admired Vince as a great brand, with a distinct position within the contemporary space. While the brand has maintained leading market share within the department stores, over the last year the business had become challenged. This was partially due to a difficult retail environment, as well as some missteps in the business that caused the brand to stray from its DNA. I believe there are a number of actions that we can take to get us back to the roots in which Vince was founded.”
Hoffman said those roots involved the “creation of everyday, casual luxury essentials, with a modern, effortless style that speaks to multiple generations. The strategy is in place. The focus now is on execution.”
He also said there is room to strengthen the brand’s market share position, with a number of key strategies connected with products, operational performance and enhancement of brand image. “Our first priority is obviously the product. The sensibility of Vince has always reflected tremendous focus on fabric and great attention to the small details and finishes that go into every style, in addition to exceptional fit.”
The ceo also said he is confident he can “leverage” his background in merchandising, branding and e-commerce to drive improved performance in the business.
The company’s results beat Wall Street’s expectations, but Vince’s shares dropped in after-market trading due to a cut in guidance for the full fiscal year.
For the three months ended Oct. 31, the company said net income dropped 55.7 percent to $5.9 million, or 16 cents a diluted share, from $13.3 million, or 35 cents, a year ago. Net sales fell 21.5 percent to $80.9 million from $102.9 million. By segment, wholesale sales fell 28.4 percent to $56.5 million, while direct-to-consumer rose 1.3 percent to $24.4 million. Comparable-store sales declined 12.5 percent.
The company said it expects total net sales for fiscal 2015 to be in the range of $285 million to $290 million, with adjusted diluted earnings per share of 17 cents to 21 cents, excluding adjustments net of tax. In September, when it posted second-quarter results, Vince had lowered guidance for the year to net sales of $285 million to $295 million and adjusted diluted EPS at between 31 cents and 37 cents.
For the third quarter, Wall Street was expecting EPS of 7 cents on sales of $74.9 million. Shares of Vince closed up 6.2 percent to $5.64 in Big Board trading, but then slipped 8.5 percent to $5.16 in after-market trading on the lowered guidance for the full fiscal year.
Separately, the company is looking at options to strengthen its liquidity position given some of the investments it wants to make in the business. In the event it chooses to do a rights offering for its common stock, Vince has the backing of Sun Capital Partners via a commitment of up to $65 million of cash proceeds for the offering.
Sun Capital acquired Kellwood in 2008. Vince, which was part of the Kellwood portfolio of brands, went public in 2013. Sun Capital still holds a stake in Vince.