Vince Holding Corp., continuing to advance its transformation strategy, generated improved profitability in the first quarter amid a sales decline.
Net income for the quarter ended May 4, was $4.4 million, or 35 cents a diluted share, compared with a net loss of $400,000, or 3 cents, a year earlier.
Adjusted net loss totaled $3.3 million or 26 cents per share, compared with adjusted net loss of $4.4 million, or 36 cents, which excludes transaction expenses, the gain on sale of the Parker brand intellectual property to Authentic Brands Group, and a tax benefit.
Income from operations was $5.6 million compared with a loss of $2.4 million a year earlier.
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Net sales decreased 7.6 percent to $59.2 million compared with $64.1 million a year ago, but the company said the decline was expected due to a reduction in promotional activity, which helped margins, as well as a pullback in the off-price business within the wholesale channel. Lower product and freight costs also helped the business.
Vince’s transformation strategy over the last several seasons has included the wind down of the Rebecca Taylor brand and the sale of the Parker intellectual property in return for $76.5 million in cash and a 25 percent membership interest in ABG Vince.
Vince still designs, produces, ships and sells all of the Vince apparel products. ABG has the ability to assign a license for a noncore category, such as eyewear or fragrance. Vince pays ABG Vince royalty payments since Vince gets use of the IP to sell and manufacture the core Vince categories. ABG Vince, which owns 75 percent of the Vince IP, pays Vince a cash distribution equal to 25 percent of ABG Vince’s net cash received from other licensed categories.
The transformation program, laid out in October 2023, also aims to reducing costs by $30 million over three years by streamlining manufacturing and production operations, including approximately $10 million of savings in fiscal 2024.
“Our first-quarter results reflect the strategic actions focused on driving improved full-price performance as we continued to reduce the promotional activity in our direct-to-consumer channel and pullback in our off-price business within our wholesale channel,” said David Stefko, Vince’s interim chief executive officer, said in a statement Tuesday. “As expected, these actions had a negative impact to our top-line performance but helped to drive strong gross margin expansion despite incurring royalty expenses that we did not have in the prior year period. In addition, we continued to execute our transformation plan, and we believe we are on track to better align our cost structure with our current operating model inclusive of royalty expenses. Through these actions and initiatives we are well positioned to deliver on our objectives for this year and beyond.”
Stefko, a director of the company, was chief financial officer, until stepping up to interim CEO following the resignation of the former CEO Jack Schwefel in March.
In other first-quarter results by channel, wholesale segment sales decreased 6.8 percent to $30.3 million. Direct-to-consumer segment sales fell 8.2 percent to $28.9 million.
Net inventory at the end of the first quarter was $56.7 million, compared with $80 million a year earlier.
For all of 2024, Vince expects total sales to increase in the low-single-digit range, compared with $292.9 million in 2023.
Vince ended the quarter with 62 company-operated Vince stores, a net decrease of 5 stores since the first quarter of fiscal 2023
