Brendan Hoffman is getting a second shot at Vince Holding Corp., returning to the business — and not just as chief executive officer but also as a buyer this time.
P180, which Hoffman and CaaStle CEO Christine Hunsicker started last year, has bought majority control of Vince from Sun Capital.
Hoffman and Hunsicker are looking to put a new model to work at the brand, driving margins by alleviating the potential impact of markdowns with a rental option.
It’s an approach to inventory that Hunsicker has advocated for years with CaaStle, but is now starting to gain more traction. P180 formed a digital partnership with Elysewalker last year and has helped the retailer boost margins as slower-moving goods that would have been marked down are instead rented out. The company took a stake in Altuzarra in October and is looking to help rev up that business as well.
But Vince is a much bigger proving ground for P180.
The company logged sales of $292.9 million in 2023 and expects to report a low-single-digit top-line decrease on that for 2024 — still making Vince about 95 percent of P180’s business going forward.
Things are going to be different this time through for Vince and for Hoffman, who led the company from 2015 to 2020, when he decamped to Wolverine Worldwide.
During his first tour at Vince, Hoffman dabbled in rental with CaaStle, but he could never quite fully commit to the approach.
That’s changed.
“I’ve seen the light, absolutely,” Hoffman told WWD in an interview.
Vince launched its Unfold rental subscription offering about seven years ago, allocating inventory to the service up front.
“When I sat in the chair before, Vince Unfold was just subscription rental,” Hoffman said. “Now, as I’ve been embedded with the CaaStle team over the last couple of years fully and fluently [I see it as] an inventory monetization platform.”
Hoffman, who is expected to become CEO again at Vince around Feb. 3, plans to add Borrow, a one-time rental feature to the mix, giving consumers an option to rent a single look instead of buy it.
“That also unlocks a lot of other decisions around pricing and return policies, all of which lead to more profit,” he said, adding that about half of the people who make a one-time rental end up buying the piece.
All together, it’s a change that promises to give the brand a new complexion.
“Rental does lend itself to things that are a little bit edgier and that you might want to just wear once or twice, whether it’s for a special occasion or just to shake up your wardrobe a little,” Hoffman said. “If you look at the markdown racks at retailers, that’s generally what’s left is the stuff that is a little more fashion forward. Rental is such a great channel because it gives another option for consumers to engage with that item but not have to make the full commitment.
“If you can raise the floor of what your markdown liability is, you can take more risks on the front end,” he said. “And that’s why I say this ultimately drives regular price.”
The approach takes what Hoffman described as the industry’s “doom loop” and turns it into a “virtuous cycle.”
“We know it’s unorthodox and we know it’s different, but I believe the industry is at a crossroads and the same old, same old is not going to work,” he said. “You see some of the best brands in the world now finding themselves in trouble. We think the moment is now.”
At Vince, Hoffman can move maybe a little quicker than he could at another brand.
“The fact that it’s Vince, it’ll allow me to just hit the ground that much quicker because I know all these people,” he said. “The CaaStle team also knows Vince because that’s what Christine and I met. I love the brand to death and think it has so much potential and we also think it can be a great platform and engine for us to support some of the other investments we’ve made and investments still to come.”
Brendan Hoffman
While Vince is now the biggest part of P180, the company — originally called Project 180 as it was intended to flip retail on its head — is very much carrying on.
Hoffman said the deal would “supercharge” P180.
“Now we have a $300 million brand that’s profitable — that we can improve the profitability with the technology and methodology that CaaStle brings,” he said.
P180 also continues to look to cut deals with other brands and then plug them into its now considerably larger platform.
It’s been a long journey for Vince, which was founded in 2002 and sold to Kellwood Co. in 2006. That company was then taken private by Sun Capital and Vince was ultimately spun out again with an IPO in 2013. But the brand ran headlong into a market in the midst of serious flux.
Last year, Vince sold 75 percent of its intellectual property to Authentic Brands Group.
Brand management companies like Authentic could be powerful allies as Hoffman and Hunsicker grow Vince.
“They need operating companies like us,” Hoffman said. “That’s what we’re hoping to build out.”
While the Vince business model will be tweaked, the rest of the company’s structure will stay as is for now.
Vince in Palm Desert, Calif.
“It will remain public and over time we’ll determine what the best capital structure is,” Hoffman said. “It is, as I remember, difficult to be a small public company, it’s certainly expensive. So that’s a consideration. But it might also end up being the best platform for Vince and P180.”
The price of the deal was not immediately disclosed, but P180 bought about 65 percent of the company’s stock from Sun. Before the deal was announced, the stock was trading at $2.31 for a total market capitalization of $30 million.
“P180’s acquisition represents a transformative opportunity for Vince,” said chairman Michael Mardy in a statement. “With this transaction, we will gain the working capital, operational expertise, and cutting-edge digital capabilities needed to drive the brand’s future success.”
The deal also takes some pressure off of the company’s balance sheet.
Alongside of the traction, Vince paid $15 million to Sun’s SK Financial Services using its asset-backed loan facility, resulting in a $20 million paydown of a Sun debt facility. Sun also forgave $7 million in loans, leaving the company with $7.5 million in outstanding principal under the Sun facility.
David Stefko, who has been serving as Interim CEO of Vince, is going to stay on the board.
