Vince.(VNCE)2024-09-17 12:30Financial Performance - Net sales for the three months ended August 3, 2024, were $74,169, an increase of $4,722 or 6.8% compared to $69,447 for the same period in 2023[69] - Gross profit increased 8.6% to $35,131 for the three months ended August 3, 2024, with a gross margin of 47.4%, up from 46.6% in the prior year[69] - Selling, general and administrative (SG&A) expenses for the three months ended August 3, 2024, were $34,001, an increase of $2,460 or 7.8% compared to $31,541 in the prior year[70] - Total net sales for the six months ended August 3, 2024 were $133,340, a slight decrease of $163, or 0.1%, compared to $133,503 for the same period in 2023[78] - Gross profit for the six months ended August 3, 2024 increased by 5.0% to $65,044, with a gross margin of 48.8%, up from 46.4% in the prior year[78] Segment Performance - Vince Wholesale segment net sales increased by $10,777, or 29.6%, to $47,184 for the three months ended August 3, 2024, compared to $36,407 for the same period in 2023[75] - Vince Direct-to-consumer segment net sales decreased by $5,945, or 18.1%, to $26,985 for the three months ended August 3, 2024, from $32,930 in the prior year[76] - Vince Wholesale segment income from operations increased by $6,916, or 34.7%, to $26,847 for the six months ended August 3, 2024, compared to $19,931 for the same period in 2023[81] - The loss from operations in the Vince Direct-to-consumer segment was $1,398 for the three months ended August 3, 2024, compared to income of $1,098 in the same period last year[77] - Net sales from the Vince Direct-to-consumer segment decreased by $8,539, or 13.3%, to $55,899 for the six months ended August 3, 2024, down from $64,438 in the prior year[82] - The Rebecca Taylor and Parker segment reported net sales of $0 for the three months ended August 3, 2024, a decrease of 100% from $110 in the prior year due to the wind-down of the business[77] - Net sales from the Rebecca Taylor and Parker segment decreased by $191, or 100%, to $0 for the six months ended August 3, 2024, due to the wind down of these businesses[83] Expenses and Income - Interest expense, net decreased by $2,490 or 60.2% to $1,647 in the three months ended August 3, 2024, from $4,137 in the same period in 2023[71] - SG&A expenses for the six months ended August 3, 2024 increased by $1,670, or 2.6%, to $65,944 compared to $64,274 for the same period in 2023[78] - Interest expense, net decreased by $4,134, or 55.7%, to $3,293 for the six months ended August 3, 2024, from $7,427 in the prior year[79] - The Vince Direct-to-consumer segment reported a loss from operations of $1,462 for the six months ended August 3, 2024, compared to income of $2,199 for the same period in 2023, primarily due to increased SG&A expenses[82] - The Rebecca Taylor and Parker segment had a gain from operations of $7,633 for the six months ended August 3, 2024, compared to a gain of $2,449 in the prior year, driven by the gain on sale of Rebecca Taylor[83] Strategic Initiatives - The company implemented a transformation program aimed at enhancing profitability through improved gross margin and optimized expense structure[66] - The company entered into a strategic partnership with Authentic Brands Group, contributing its intellectual property for cash consideration and a membership interest in ABG Vince[65] - The company has identified three reportable segments: Vince Wholesale, Vince Direct-to-consumer, and Rebecca Taylor and Parker[65] Cash Flow and Liquidity - Net cash used in operating activities was $7,072 for the six months ended August 3, 2024, compared to $20,160 for the same period in 2023[85] - Net cash used in investing activities was $1,421 for the six months ended August 3, 2024, primarily related to capital expenditures for retail store buildouts[86] - Net cash provided by financing activities was $8,081 for the six months ended August 3, 2024, primarily from net borrowings under the revolving credit facilities[87] - The company believes its sources of liquidity will generate sufficient cash flows to meet obligations over the next twelve months[84] - The company entered into a new $85,000 senior secured revolving credit facility on June 23, 2023, replacing the previous $80,000 facility[89] Debt and Financing - The company repaid all outstanding amounts of $28,724 under the Term Loan Credit Facility on May 25, 2023, which included a prepayment penalty of $553[88] - As of August 3, 2024, the company had $41,109 available under the new credit facility, with $22,357 in borrowings and $6,260 in letters of credit outstanding[91] - The weighted average interest rate for borrowings under the new facility was 8.2% as of August 3, 2024[91] - The 2023 Revolving Credit Facility includes a financial covenant requiring Excess Availability to be no less than the greater of 10.0% of the Loan Cap or $7,500[91] - The previous 2018 Revolving Credit Facility was fully repaid and terminated on June 23, 2023, with a write-off expense of $828 recorded[92] - The Third Lien Credit Facility, amounting to $20,000, was amended to extend its maturity date to September 30, 2028[94] - Interest on the Third Lien Credit Facility is payable at a rate of Daily Simple SOFR plus 9.0%[94] Industry Context - The apparel and fashion industry is cyclical, affecting revenues based on economic conditions and seasonal trends[95] - As of August 3, 2024, there have been no material changes to the critical accounting estimates from the previous annual report[96]