VNCE - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. My name is Chris and I will be your conference operator today. At this time, I would like to welcome everyone to the Vince Q2 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. Instructions] [Operator

now Investor call Relations. I'll Levy, to the President Vice turn you. over conference Amy Thank

Amy Levy

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

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

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

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

Brendan Hoffman

Thanks were very achieved top we results quarter. We the the with second bottom-line in and strong pleased Amy.

We strong have across resulting excited together undertaken business. that in are initiatives we come to see the particularly the results multiple

same to results, compared quarter an Summarizing our million $X.X operating last improved expanded and of gross period XX%, our performance year. as basis margin loss sales million second net points grew XXX operating XX.X% $X the in to million profit, X.X to

growth our delivered strong all channels. wholesale We retail and double-digit across with in performance channels sales

of designed believe brand respond relevant, season, that assortment season gain to favorably our that our and momentum marketing product collections. beautifully our to campaigns crafted continue customers elevated communicate We after on as in the experience combination market wholesale We in seasonally is leader our share a expand and well doors, the presence our driving business, space. transactions DNA enabling we where become us enhance have to as direct-to-consumer our as shopping

saw and increase in outlet X% quarter channel. since positive across store e-commerce XX%, stores, price the segment, the comps opening attributable revenues strength We comp our as to the increased direct-to-consumer full end year. exceptional our two our In second a well of new as last and

in momentum the continued throughout into our the Our business quarter. quarter has third and strengthened

trends in through expand offering beautifully of categories where we we within strong half consistent under relevant expect year, a the second to product. our We and continue designed key as were penetrated last offerings maintain seasonally apparel,

We our continue fulfill new of to will also needs categories to test as customers. look product lifestyle we the

grew in second revenue channel wholesale XX% the Our quarter.

in specialty strength across and We are third-party retailers excited partners, e-commerce the store our sites and see the around broad-based department to world. here the U.S.

performed Our Nordstrom's at anniversary brand sale. extremely well

sales now incremental Dropship Nordstrom are during our fuel functioning partners, functionality annual which major will margin at drive rates over this continue We favorable with on the long-term. to helps sale. also sales believe store We department fully

enter refining while wholesale journey share stores traffic define our ahead, base Looking conversion marketing to and through remain within as our our and includes in U.S. advancing business strategically channel, we the store initiatives, test our in on categories product on we growth our driving a to the focused expand our and increase new continue international market website. which strategic efforts customer drive markets, direct-to-consumer and

well We significant have as e-commerce growth potential. which continue our presence, growth retail expand as channel, our of to both drive in strong

great exceptional which an off California, Our Santana location, is to start. early Row store opened in another is in August San Jose,

brand as this month, doors, store later as store Aventura our this recognition Midtown are opened as We be highly opportunity in to in this from also recently excited area. is our another increase to business believe we capture exited Manhattan Miami well walkaway to and opening trafficked further Mall

beautifully a with offering be reopened Street merchandise location offering. we experience and expanded an in are to August in excited an store Prince designed elevated expanded early Our shopping

Our excited exceeding centered real leases this we cash-on-cash returns. build largely been short-term around and target success. two on ago, leases, our were strategy, two-year strong and short-term which for estate to is these generating we years The has began payback period

four end, that leases these on to and end. year's we've store additional performance of To new already one extended based plan their before open

improved open We base. we our our the will to stores the continue leases to store U.S. opportunistically while ensure maintaining across flexibility in across drive profitability

United Turning States month, area London. our we South will opening Kensington outside store to operated international be opportunities. company of in Later this our first the the

We XX for our last and Vince, given Nichols opened Selfridges performance Harvey believe this over market ideal an months. with the is strong with shops

driving important on is easy focusing male program luxury kick local influencers brand, our started this firsthand. female We style the awareness as further influencer brand Vince for London, and in This to step in to fuel market equity. an consumers experience our

There's in We've luxury entrance recently peers strong China luxury where a we and for appetite of our real market, believe strong brand successfully networks where seen been many have presence. will this exploring appeal. the developed a into fashion the healthy we also estate Vince region, e-commerce build have

opportunity later a China excited partner to experience new growth of the potential. about us help stages XXXX. the and market I've in fiscal We're choosing market visited evaluate recently in launch to I'm this in the

on focused to Turning initiatives, engagement. marketing seasonal our customer we campaigns compelling drive remain to

region. with first creatives, share to the and short of filmmakers campaign unique storytelling communicate launched including deep For an Vince's to features campaign group highlighting DNA. California our a artists, opportunity photographers, a of and California This films California connections actors series providing fall, we

media also and is New and print, Times, Gentlewoman, on campaign digital advertising The featured and Man, Magazine, T including social York Vince.com. Fantastic

New partners media expanding moments such proven creative experiential and Nast, content, in custom York as Times, exclusive events. invest to including impactful on Goop Conde the continue We

showcases luxurious partnered Vince Goop a on we summers to that as pre For editorial fall with example, looks. for the go relaxed

York Caroline partnership with list Director, Gwyneth joining at location, The Creative Sag New boasting host influential celebrated Paltrow. an Harbor was our Goop, Belhumeur, guest

sales to We're a targeted price direct products. full reintroduced is the also motivated pleased is to who drive catalog. designed customer This have group, by new mail to

digital efficient increased more drive in sophisticated in audience to spend more cost resulting through through session. segmentation, begun marketing per click and decreases rates have We

messaging are more and segments meaningful e-mail delivering and saw higher We various conversion. AOVs as in by segmentation results relevant to resulting positive behaviorally the we customer driven

the started robust future and CRM are of We defining out and process capabilities the customer CEM currently journey. more building

and towards on direct focus build to customer our becoming and direct-to-consumer acquisition tie efforts will retention focused triggered a This goals emails We organization. omnichannel into will mail communication. behaviorally

in last Vince our subscription gain continues model year of Unfold, launched momentum. to QX

new selection apparel. to and We to are receive our growth seeing a women's of steady unlimited signups access broad

growing to This launching customers with were early growth for we avenue confidence this subscription a As number see an services our an align our way brands model, and we offer that are subscription pleased service. shop the of adapters furthers of additional brand. online

we strategic acquisitions synergies. potential brand, Finally, last quarter, as as and the where we opportunity to see well Vince believe may to complimentary we operational as are mentioned gain drive we explore that growth

on the we related partners have we for continue updates current pending on monitor us quarter second efforts, negotiations List been to pricing. accelerating and have shipments with with to started As X, which we in good been continue our mitigation who and working in tariffs including implementing vendors,

will plan we have also on to We believe opportunities. select elasticity. we where other we sourcing also term, some be Longer prices strategically looking at items, increase do

the disciplined will we therefore remain paramount, remains quality process. in However,

together excited bottom-line strong performance. employed In are to strategic top drive summary, initiatives extremely see that the we to and coming we have

to beyond recent of half momentum the We tariff the outside into pressures. continue the and second expect

Having the in working the channel we and extending announced foundation, Moreover, long-term business strategies. through not stabilized drive fiscal financial are expect brand sustainable share impact have XXXX. direct-to-consumer diligently our we cost wholesale tariff do a meaningful these brand increases year presence awareness and opportunity to a continuing results international therefore offset growth the believe to created to-date strong our channel gain meaningful market markets, by and and the a pressures to in our marketing U.S. in have expanding to in and we

Dave. that, turn With it to over I'll

Dave Stefko

Thank you, Brendan.

net XX% Second the to XX.X compared increased million, million to same period. XX.X in sales year quarter prior consolidated

Our seasonal due to of million, wholesale acceleration to XX.X the primarily increased wholesale channel shipments. sales XX.X%

e-commerce second an X.X% comparable sales to average million increase dollar increased segment direct-to-consumer sale. in transactions to the due in XX.X% Our in while sales and increased quarter, including XX

Gross for and of development of in gross million the This to or last point initiatives. profit to net XX.X% the quarter basis general second of was or million, quarter administrative compares in cycle, XX.X% expenses of to the of was the sales, primarily net quarter in XX.X% XXX sourcing sales XX.X% product margin in XX.X quarter million, rate in efficiencies increase sales the XX.X last second Selling, The compared or second or mix and product net XX.X year. net million XX.X sales. as year. due were

associated platforms, costs partially benefits result growth as costs The marketing Unfold well and higher increased the increase investments, dollars increased to primarily e-commerce enhancements and in a in Vince of SG&A stores. new related to related to our stores, was compensation occupancy as with

year. of million loss or Net for the compared X.X% $X.X per of loss last fiscal quarter compared $X a diluted of the the $X.X XXXX. second to second for was of quarter or or $X.XX share, net in second an $X $X.XX income income quarter Operating sales, million was to million net operating per million share

At $X.X quarter our facilities. we debt stores were to primarily the two new quarter, the revolving period primarily million in US, stores. the This agreements. for of facilities, over credit increase period. year, was our under same million ended in agreements We debt borrowings the of borrowings repayments a end $XX.X and under attributable $XX.X a the in stores of the term result XX second year under to the and decrease Capital long sheet. is prior a of of $X million our million with our expenditures balance overall $X.X reflecting of net million net decrease the Moving quarter since to operated the borrowings net a the last

we Before this for offset impact underway will discussed, efforts to of increases have tariff partially as Brendan the turning mitigation fiscal outlook year. our that 'XX,

continue through will these fiscal in XXXX a to advance compromising quality. of our We without number to initiatives commitment efforts

guidance, operating Section our May last and prior. was it XX, impact estimated our an outlook million incorporated effective $X.X income guidance XXX XXXX that million tariffs of $X.X includes in for estimated quarter. As This to were relates provided impact of from the our

Xst income of estimated impact, net or of after of updated today, providing this $X year. on operating million the effective September tariffs mitigation the target the XXX Section additional In excludes we're efforts guidance

For sales $X This to raising fiscal the million. consolidated XXXX midpoint net guidance, by now of $XXX we're million our consolidated sales our single-digit reflects net range. range to at high our a growth updated $XXX million expectation of

be the is range. the $X.X last operating and XX% Noting million expected year, reflecting operating now adjusted midpoint growth compared an million of above, over income between to to the income $X.X at

quarter, first expansion margin consulting the strategic Interest investments deleverage, offset by business. as operating fees approximately the as to expected SG&A continued expect well that the for due be million. We expense partially year recorded $X were in is part to in in

million. $X We continue to $X.X expenditures expect between million capital of to

the In quarter, are financial with second met our our metrics. conclusion, pleased all performance key we expectations in across which

build ability to to and this half off of the achieve expect guidance. our in are our We the year in year momentum confident back full

established sustainable growth for the Looking believe strategies, a Brendan ahead, we and strong deliver position are us our that shareholders. growth executing long-term foundation discussed to we've which strong

comments my Operator? financial regarding We'll questions. now quarter concludes take our This performance. your second

Operator

is [Operator from Advisory Instructions]. Telsey Dana question Telsey first And Group. with your

line open. Your is

Dana Telsey

and Two top tariffs. to the line. One everyone, progress on see nice afternoon on the the Good questions.

do in tariffs the again, excluded be expect year? just in the So, or next buckets mitigation what think through can guidance? you you you the guidance and you are done for do including can in go how they're that And the of

the else the XQ with go Brendan, it's and as you rate and will And mentioned, be how whether product impactful then second collaborations do the we of watching and were that beginning that what growth thing, -- new or and marketing was with we DTC to sales? to anything you in mix on the Thank drove to there And quarter? your stronger think continue a should XQ, the into some you accelerate business be wholesale, end you.

Brendan Hoffman

I if something. Dana. miss all and But through go Thanks, that. me, I'll try pause

stated $X the and million list included the from in in So September and that guidance, tariffs later. guidance, regarding press our not the there's September for are the Xst remarks, as Xst release

$X gave trajectory of we excluding business, tariffs. was the what after million. is the those impact tariffs The about those So of mitigation you

in why included we out. the is the tariffs pulled that's So from earlier May. that's guidance that in $XXX,XXX There

weeks, comfortable that that initiated So able what to was four the reflects because to mitigate, last do. weren't of the operationally over timing. raising did just wasn’t We just not we prices, difficult very fully feel

go selectively forward of of items months. on that our prices over to that and raise are next course happen items some the going core are We of the couple will

to our as very the worked of accelerating mitigate some were shipments well some tariffs have get closely as the them before to with here implemented. increase suppliers We

that we XXXX, as we in have look week, fashion Week. properly less we're just frankly forward we're Fashion at as the to Going merchandise. it's right now price concerned we time And about -- spring

goods what tariffs elevated saw are we'll January, business able we the natural. of know is back shipping strength and And that price no the push we which seemed factor in accordingly to and these to pricing I our accounts, So XX% March. in the speaks very and February the be were from the think, product and now,

not be, of meaningful. we to go why this repair feel we time next So like, proper that's tariffs the even at will into amount level the be with year

Dave Stefko

with as to the cost Brendan to in and with strategies his us worked help do And have it. vendors, mentioned managing mention some absorb have our of comments, also to support we us that to tariff

Brendan Hoffman

know, won't you be. as to every it towards we And what these morning and up new wake seems sentiment be as change seems know, -- or all to a there's will tariffs I this

felt why did. way it categorize it was we that's to the better So we

Dana Telsey

Got it.

Brendan Hoffman

anything of Dana? on -- or guidance, And in tariffs else terms

Dana Telsey

that Just year, million, for on to it? as annual mitigate million thing the of get or is, you do mitigate some $X you you million $X may on, for or an million the basis? some can $X on $X down of only million, And you about of $X.X think think XXXX, it even or the other as

Brendan Hoffman

I Yes, see a Dave much risk. see, XXXX being of mentioned, don't don't I as as

there pricing think, time the market of just will tariffs with the, the of I this in the all. and at it and terms given have the accounts from fresh pushback in and XX% at, this no retails natural how QX off we week be is merchandise for major was seemed

of place think, anticipate combined XXXX. other of able and to I pass So with in a vendors increases the enough given headwind to us don't that market I be negotiations we're factors for at, the on being or the in we're going price the mitigating partnerships it

Dana Telsey

it. Got

Brendan Hoffman

of the of working of a growth were product in to added woven see that's and the asked to changed with We how dresses. we lot continue keep to terms what on in colors. evolved lot saw, the I weights knits the to us, brand to you going this QX, center so around they going. I year, comments think more growth hit the bullseye and was femininity in a -- In for has prints we we lot different our dresses line, was back appropriate team added the more mean a Vince and just I it customer, the keeps driven fabrication, seasonably

merchandising to for the that June time, wearable product at in closet not you still when July, So, weather and have that something we're in moment your changes. is in put

we're from seeing. the results the we so high to and marks And from both continue get comments

that QX. And in was so see very exciting to

Dana Telsey

revenue DTC, as the of much the [indiscernible] as operating looking then the it Got out. wholesale just the the I anything growth like And as last puts thing, come wasn't am it that and on Was it XX-Q And terrific. wholesale? looks And on just margin like margins operating through didn't literally takes on at one margin looks was and came it. DTC strong. operating of there

Brendan Hoffman

less it natural wholesale, dilutions. to margin seeing regarding growth channel So, continues the I just improve. at rate speaks our we're the to with mean,

means, support able the we're season true with give just we have wholesale to reduce ups And as amount so that ending of our we accounts, them.

to exciting really that's So see.

DTC… terms of In

Dave Stefko

income On DTC, is you're you operating are line, Dana, asking? about? the asking

Dana Telsey

exactly. Yes,

Brendan Hoffman

on is side looking margin we out, DTC, on gross gross the full see prior margin, the mean in to continue at better throughs. And, while going are sell that healthy price to tariffs Dave markup…. I the

Dave Stefko

talking about income operating you're that you're through mean, I Dana, asking? what on flow the is

Dana Telsey

compared it line? to what it operating the think Anything to quarter drop the just was revenue was because income I year. was operating note grew, $XXX,XXX so the I says think million, the $XX that between income didn't in around $XXX,XXX to wondering last for

Dave Stefko

we've rent that last stores. we year. that to look cost second, were year we then And adjustments benefited for We stores. quarter. looking Hang the a [indiscernible] it. made at that inventory have of at also of impact also we're And on And the got new last reserves have

Dana Telsey

it. Got

Dave Stefko

of Kind a non-repeating item.

Dana Telsey

it. Got Thank you.

Brendan Hoffman

into QX, you continue that mentioned I Dana, we're asked when in we're asked business my had in misses, in went mean, points. anniversary the starting, better we Nordstrom, the mid-September price my as QX went our you think, remarks we got in along about what I as some -- forward. think great year the a I is we're going And at and think last well I into lift we've as that's I -- I here. in momentum seen improve own and the in quarter terms had business DTC mentioned remarks, we seeing sale mentioned, how providing I and a seeing collection of

higher shearling AU, DT priced in higher own some the own and leathers, the have as our year stores, some really items stores online that particularly this of We can with needle. move and and

we enhance and felt to great that that, that early And was a when last identified so something is that the post having would we business collection. we reaction those mortem fall driving it

And so it far, looks right. we like were

Operator

conclude does period. for Hoffman the remarks. turn it back closing this over gentlemen, and Ladies any Brendan Q&A I'll to

Brendan Hoffman

call thank for Well, the joining today. Great. you

initiatives. with to build long-term of third in our As we're to growth Thank quarter progress momentum our more see, you about and much. call. our can you potential strategic on forward I we you sharing really our continue excited very look

Operator

conference This call. concludes today's

You may now disconnect.

Vince Holding (VNCE) 12 Sep 192019 Q2 Earnings call transcript