Vince Holding Corp (NYSE:VNCE) Q1 2019 Earnings Conference Call Transcript

Jun 13, 2019 • 04:30 pm ET


Vince Holding Corp (NYSE:VNCE) Q1 2019 Earnings Conference Call Transcript


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Good afternoon. My name is Julian, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Vince Q1 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. Amy Levy, VP of Investor Relations, you may begin your conference.

Amy Levy

Thank you, and good afternoon everyone. Welcome to Vince Holding Corp.'s first quarter fiscal 2019 earnings conference call. Hosting the call today are Brendan Hoffman, Chief Executive Officer; and Dave Stefko, Chief Financial Officer.

Before we begin, let me remind you that certain statements made on this call may constitute forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ from those that the Company expects. Those risks and uncertainties are described in today's press release and in the Company's SEC filings, which are available on the Company's website.

Investors should not assume that the statements made during the call will remain operative at a later time and the Company undertakes no obligation to update any information discussed on the call. After the prepared remarks, management will be available to take your questions for as long as time permits.

Now, I'll turn the call over to Brendan.

Brendan L. Hoffman

Thank you, Amy. Good afternoon everyone, and thank you for joining us today. Overall, sales in the first quarter came in largely as expected. While we did see top line pressure in our direct-to-consumer business, performance has improved in the second quarter-to-date. Overall, stores that we've opened near department stores we exited continued to perform better than the Company average.

In the wholesale channel, sales were below last year as a result of timing of the shipments, but came in better than expected. Our product continues to perform at the register, despite the overall challenges within the department store space, and we believe we are gaining further market share with our women's collections. Importantly, our consistent performance has enabled us to gain both premium placement and expanded space in the selling floor.

Looking at the first quarter, net sales grew 1%, gross margin expanded 450 basis points to 51.3%. Our operating loss was essentially flat to last year excluding the $1.4 million in strategic consulting fees. Looking at our direct-to-consumer segment, revenue increased 6.7% attributable to the four new store openings since the end of the first quarter last year, as well as growth in our e-commerce channel, which includes our Vince UNFOLD business.

While the overall comp performance was below our expectations, we are encouraged with the recent performance, reflecting higher full-price sell-through of our spring/summer collection as we saw warmer weather. We also continued to benefit from targeted marketing efforts across mobile, e-commerce, and social channels focused on customers, who had shopped us at exited partner stores.

Turning to the wholesale channel, revenue was down 4% related to the shift in timing of the shipments as we said last