Good results for Vince

Vince Holding Corp, a leading contemporary fashion brand reported last Thursday unaudited results for its fourth quarter and fiscal year 2014 ended January 31, 2015. Jill Granoff, Chairman and Chief Executive Officer of Vince, commented, «We are proud of our strong performance in our first full year as a public company.  We delivered record sales in 2014, with double-digit increases across all product categories and distribution channels. We are particularly pleased with the exceptional growth in our retail, ecommerce, international and licensing businesses, building a platform for the future. 

«In addition, our adjusted profits grew by nearly 29%, outpacing our sales growth, driven primarily by better than expected gross margin expansion of 280 basis points.  We were also pleased with our performance in the fourth quarter, in which we achieved solid sales growth, gross margin expansion, and a nearly 22% adjusted earnings increase», said Ms. Granoff . 

Ms. Granoff continued, «Our customers remain passionate about our everyday luxury products, and we are seeing increasing demand on a global basis.  While we are resetting our near-term growth plans in domestic wholesale for the long-term health of our brand, we have many growth opportunities in our domestic wholesale business and will continue to focus on strategically driving our productivity within existing doors while maintaining our brand’s luxury profile.

«At the same time, we will aggressively pursue our other meaningful growth levers from a product, channel, and international expansion perspective to realize the full potential of the VINCE brand and deliver double-digit growth in sales and profit over the long term», said Ms. Granoff. 

Vince completed an initial public offering («IPO») of its common stock on November 27, 2013.  Prior to the IPO and the related restructuring transactions, Vince Holding Corp., formerly known as Apparel Holding Corp. and Kellwood Holding Corp., was a diversified apparel company operating a broad portfolio of fashion brands, which included Vince.

As a result of the IPO and the related restructuring transactions, the non-Vince businesses were separated from the Vince business on November 27, 2013, and the Vince business became the sole operating business of Vince Holding Corp.  On July 1, 2014, certain stockholders of the Company, including affiliates of Sun Capital Partners, Inc. (collectively, the «Sun Capital Entities»), completed a secondary public offering of the Company’s common stock (the «Secondary Offering»), which decreased the Sun Capital Entities’ ownership of the Company’s common stock from 68.0% to 54.6%.

For the fourth quarter ended January 31, 2015:

• Net sales increased 7.9% to $94.7 million from $87.8 million in the fourth quarter of fiscal 2013.  The wholesale segment declined 0.6% to $68.9 million and the direct-to-consumer segment increased 39.7% to $25.8 million over the fourth quarter of fiscal 2013.   Comparable store sales increased 8.7% over the fourth quarter of fiscal 2013. Including ecommerce sales, comparable sales increased 15.5%.
• Gross profit increased 14.0% to $45.8 million from $40.1 million in the fourth quarter of fiscal 2013.  Gross profit as a percentage of net sales increased 260 basis points to 48.3% from 45.7% in fiscal 2013.
• Selling, general, and administrative expenses were $25.5 million or 26.9% of sales compared to $25.2 million or 28.7% of sales in the fourth quarter of fiscal 2013, including public company transition costs.  Adjusted selling, general, and administrative expenses as a percent of sales were 25.8% in the fourth quarter of fiscal 2013.

• Operating income increased 35.8% to $20.3 million or 21.4% of sales compared to $14.9 million or 17.0% of sales for the fourth quarter of fiscal 2013.  Compared to adjusted operating income in fiscal 2013 of $17.5 million, operating income increased 15.9%.  Adjusted operating income as a percent of sales in the fourth quarter of fiscal 2013 was 19.9%.
• Net income increased to $10.5 million, or 11.1% of sales, compared to $0.6 million for the fourth quarter of fiscal 2013, including public company transition costs and results of the non-Vince businesses that were separated on November 27, 2013.  Compared to adjusted net income in fiscal 2013 of $8.7 million, or 9.9% of sales, net income increased 20.6%.
• Diluted earnings per share for the fourth quarter of fiscal 2014 was $0.28 compared to diluted earnings per share for the fourth quarter of fiscal 2013 of $0.02.  Diluted earnings per share increased 21.7% compared to the adjusted diluted earnings per share of $0.23 earned in the fourth quarter of fiscal 2013.

For the fiscal year ended January 31, 2015:

• Net sales increased 18.1% to $340.4 million from $288.2 million during fiscal year 2013.  The wholesale segment increased 13.2% to $259.4 million and the direct-to-consumer segment increased 37.1% to $81.0 million over fiscal year 2013.  Comparable store sales increased 7.8% over the prior year period.  Including ecommerce sales, comparable sales increased 12.1%.
• Gross profit increased 25.4% to $166.8 million from $133.0 million in fiscal 2013.  Gross profit as a percentage of net sales increased 280 basis points to 49.0% from 46.2% last year.
• Selling, general, and administrative expenses were $96.6 million or 28.4% of sales, including the Secondary Offering costs, compared to $83.7 million or 29.0% of sales in fiscal year 2013, including public company transition costs.  Adjusted selling, general and administrative expenses were $96.0 million, or 28.2% of sales in fiscal 2014, and $73.9 million, or 25.6% of sales in fiscal 2013.

• Operating income increased 42.3% to $70.3 million, or 20.6% of sales, compared to $49.4 million, or 17.2% of sales, for fiscal year 2013.  Adjusted operating income for fiscal 2014 increased 19.8% and as a percent of sales, was 20.8% compared to 20.5%, for fiscal year 2013.
• Net income increased to $35.7 million, including the impact of the Secondary Offering costs, compared to a net loss of ($27.4) million in fiscal 2013, including public company transition costs and results of the non-Vince businesses that were separated on November 27, 2013.  Adjusted net income increased 28.4% to $36.1 million, or 10.6% of sales in fiscal 2014 compared to adjusted net income of $28.1 million, or 9.7% of sales, for fiscal year 2013.
• Diluted earnings per share was $0.93 compared to a net loss per share for the same period in fiscal 2013 of ($0.98).  Adjusted diluted earnings per share increased 28.8% to $0.94 in fiscal 2014 over $0.73 earned in fiscal year 2013.

2015 Outlook. For fiscal 2015, the Company expects to:

• Achieve total net sales of $360 million to $370 million, including revenues from 8 to 10 new retail stores and comparable sales growth inclusive of ecommerce sales in the low double-digit range.
• Expand gross margin 50 to 100 basis points
• Increase selling, general, and administrative expenses as a percent of net sales 175 to 200 basis points over the adjusted fiscal 2014 rate of 28.2%
• Generate diluted earnings per share of $1.00 to $1.05
• Spend $17 million to $20 million in capital expenditures.

Disclosure: This is a Company report.