Vince.(VNCE) - 2026 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements for Vince Holding Corp. for the three months ended May 3, 2025, and related disclosures Item 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for Vince Holding Corp. as of May 3, 2025, and for the three-month period then ended, compared with the previous fiscal year-end and the corresponding prior-year period Unaudited Condensed Consolidated Balance Sheets%20Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of May 3, 2025, total assets were $218.0 million, a slight decrease from $222.7 million at February 1, 2025, primarily due to lower trade receivables and other accrued expenses, partially offset by an increase in inventories and long-term debt Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | May 3, 2025 | February 1, 2025 | | :--- | :--- | :--- | | Total Assets | $217,957 | $222,735 | | Cash and cash equivalents | $2,588 | $607 | | Inventories, net | $62,260 | $59,146 | | Total Liabilities | $180,790 | $180,976 | | Long-term debt | $34,749 | $19,156 | | Total Stockholders' Equity | $37,167 | $41,759 | Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) For the three months ended May 3, 2025, the company reported a net loss of $4.8 million, a significant shift from a net income of $4.4 million in the prior-year period, driven by decreased net sales, lower gross profit, and higher SG&A expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 FY2025 (ended May 3, 2025) | Q1 FY2024 (ended May 4, 2024) | | :--- | :--- | :--- | | Net sales | $57,933 | $59,171 | | Gross profit | $29,163 | $29,913 | | (Loss) income from operations | $(4,438) | $5,604 | | Net (loss) income | $(4,803) | $4,380 | | Diluted (loss) earnings per share | $(0.37) | $0.35 | - The prior year's results for the three months ended May 4, 2024, included a significant gain on the sale of the Rebecca Taylor subsidiary amounting to $7.6 million, which favorably impacted income from operations and net income for that period[20][53] Unaudited Condensed Consolidated Statements of Stockholders' Equity%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased from $41.8 million at the beginning of the quarter to $37.2 million as of May 3, 2025, primarily due to the net loss of $4.8 million for the period - The primary driver for the decrease in stockholders' equity during the quarter was the net loss of $4.8 million[25] Unaudited Condensed Consolidated Statements of Cash Flows%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was $11.8 million for the quarter, a significant increase from $3.9 million in the prior-year period, mainly due to changes in working capital, while net cash provided by financing activities was $15.2 million, primarily from net borrowings under the revolving credit facility Cash Flow Summary (in thousands) | Activity | Three Months Ended May 3, 2025 | Three Months Ended May 4, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,817) | $(3,878) | | Net cash used in investing activities | $(1,424) | $(740) | | Net cash provided by financing activities | $15,219 | $5,003 | Notes to Unaudited Condensed Consolidated Financial Statements%20Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant corporate events and accounting policies, including the acquisition of a majority stake by P180 in January 2025, the 2023 sale of Vince intellectual property to ABG Vince and subsequent license agreement, and the completed wind-down and sale of the Rebecca Taylor business - On January 22, 2025, P180 Vince Acquisition Co. acquired a majority stake (approx. 67%) in the Company from Sun Capital Partners[37][65] - In May 2023, the Company sold its Vince brand intellectual property to ABG Vince for $76.5 million in cash and a 25% membership interest, concurrently entering a long-term license agreement requiring annual guaranteed minimum royalties of $11.0 million[34][54][62] - On May 3, 2024, the Company completed the sale of all outstanding shares of Rebecca Taylor, Inc., recognizing a gain of $7.6 million as the subsidiary was in a net liability position[53] - In connection with the P180 acquisition, the Third Lien Credit Facility was modified, resulting in a debt extinguishment where the outstanding principal was reduced by approximately $27,000, leaving $7,500 outstanding[94][95] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial results for the first quarter of fiscal 2025, highlighting a 2.1% decrease in net sales to $57.9 million and a shift to an operating loss of $4.4 million from an income of $5.6 million in the prior year Q1 FY2025 vs Q1 FY2024 Performance (in thousands) | Metric | Q1 FY2025 | Q1 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $57,933 | $59,171 | -2.1% | | Gross Profit | $29,163 | $29,913 | -2.5% | | Gross Margin | 50.3% | 50.6% | -30 bps | | SG&A Expenses | $33,601 | $31,943 | +5.2% | | (Loss) Income from Operations | $(4,438) | $5,604 | N/A | - The decrease in gross margin was primarily driven by unfavorable impacts from higher freight and duty costs (260 bps) and wholesale channel mix (120 bps), partially offset by favorable impacts from lower product costing and higher pricing (330 bps)[156] - SG&A expenses increased by $1.7 million, or 5.2%, mainly due to higher marketing, legal, IT, and retail remodel/relocation costs[157][163] Performance by Segment The Vince Wholesale segment saw a slight sales increase of 0.1% to $30.3 million, but its income from operations decreased by 7.7% to $9.4 million, while the Vince Direct-to-consumer segment's sales fell 4.4% to $27.6 million, and its operating loss widened to $0.8 million from $0.1 million in the prior year Segment Net Sales (in thousands) | Segment | Q1 FY2025 | Q1 FY2024 | % Change | | :--- | :--- | :--- | :--- | | Vince Wholesale | $30,290 | $30,257 | +0.1% | | Vince Direct-to-consumer | $27,643 | $28,914 | -4.4% | - Vince Wholesale income from operations decreased by $0.8 million, primarily due to lower gross margin[167] - Vince Direct-to-consumer comparable sales (including e-commerce) increased by 2.8%, driven by higher e-commerce traffic, but total segment sales declined due to a $2.0 million decrease in non-comparable sales, including the impact of four net store closures since the prior year[168] Liquidity and Capital Resources The company's primary liquidity sources are cash, operating cash flows, and its $85 million revolving credit facility, with net cash used in operations of $11.8 million and net borrowings of $15.4 million from the credit facility during the quarter - Net cash used in operating activities was $11.8 million, primarily due to a net loss and cash used in working capital, including a decrease in accounts payable and an increase in inventories[172] - Net cash provided by financing activities was $15.2 million, mainly from $15.35 million in net borrowings under the revolving credit facilities[176] - As of May 3, 2025, the company had $26.8 million in borrowings and $6.2 million in letters of credit outstanding under its 2023 Revolving Credit Facility, with $20.4 million of availability[85][188] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," Vince Holding Corp. is not required to provide the information requested in this item - The company is exempt from this disclosure requirement due to its status as a "smaller reporting company"[202] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of May 3, 2025, due to a previously identified material weakness in internal control over financial reporting related to inadequate user access controls, with remediation efforts ongoing - The CEO and CFO concluded that disclosure controls and procedures were not effective as of the end of the period[205] - The ineffectiveness is due to a material weakness in internal control over financial reporting, specifically related to not maintaining adequate user access controls to ensure appropriate segregation of duties and restrict access to financial applications and data[207] - Remediation efforts are in progress, including modifying system access rights, re-certifying user access, and improving user provisioning/de-provisioning processes[209][210] PART II. OTHER INFORMATION This section covers other information not included in the financial statements, such as legal proceedings, risk factors, and various disclosures Item 1. Legal Proceedings The company is involved in various legal proceedings that arise in the ordinary course of business, which management believes will not have a material adverse impact on the company's financial position, results of operations, or cash flows - The company is party to legal proceedings arising in the ordinary course of business and does not expect them to have a material adverse impact[214] Item 1A. Risk Factors The company's risk factors have not materially changed from its 2024 Annual Report on Form 10-K, except for a new risk regarding its NYSE listing, as it received a notice of non-compliance on May 6, 2025, for failing to meet minimum market capitalization and stockholders' equity requirements - On May 6, 2025, the company received a non-compliance notice from the NYSE for failing to meet the minimum market capitalization and stockholders' equity requirements[218] - As of May 5, 2025, the 30-trading day average market capitalization was approximately $22.6 million, and the last reported stockholders' equity was $41.8 million, both below the $50 million threshold[218] - The company is required to submit a business plan to the NYSE within 45 days to demonstrate how it will regain compliance, with failure potentially leading to delisting[219] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities during the period[221] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities during the period - There were no defaults upon senior securities during the period[222] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the company[223] Item 5. Other Information No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended May 3, 2025 - No directors or officers made changes to their trading arrangements during the quarter[224] Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report, including CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002 and Inline XBRL data files - Exhibits filed include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[225]