Vince, the understated, coastal California-inspired brand, is showing signs that its transformation plan is working.
On Tuesday, Vince reported that net income for the third quarter ended Nov. 2 rose to $4.3 million, or 34 cents per diluted share, compared with net income of $1 million, or 8 cents, a year earlier.
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Income from operations totaled $5.8 million and compared with income from operations of $2.8 million in the same period last year.
Net sales decreased 4.7 percent to $80.2 million from $84.1 million. The year-over-year decrease was driven by an 8.3 percent drop in Vince brand direct-to-consumer sales and a 2.2 percent decline in Vince brand wholesale sales, the company indicated.
Gross profit came in at $40.1 million, or 50 percent of net sales, compared to gross profit of $37.2 million, or 44.2 percent of net sales, an increase primarily driven by an approximately 480 basis-point gain related to lower product and freight costs and 80 basis points related to lower promotional activity in the direct-to-consumer segment and lower discounting. These factors were partially offset by an approximately 50 basis-point decline attributable to channel mix, the company said.
“Our ongoing focus on driving a healthier, full-price business and executing on our transformation plan continues to yield strong results, as evidenced by the significant gross margin expansion and improved profitability we delivered in the third quarter compared to the prior year,” said David Stefko, interim chief executive officer of Vince, in a statement. “While revenue fell slightly short of our expectations, primarily due to lower in-season reorders in our international wholesale business and lower than expected outlet channel sales, the underlying strength of the Vince brand continues to resonate with customers.
“As we look ahead, we expect to continue to execute a healthy full price business across all channels, and are very encouraged by the results we have driven thus far in the fourth quarter,” Stefko added. “While we remain prudent with our outlook given the shortened holiday selling season and the ongoing uncertainty around the consumer, we believe we are well positioned to deliver on our objectives for this year.”
Vince’s transformation strategy has included the wind-down of the Rebecca Taylor brand and the sale of the Vince intellectual property in return for $76.5 million in cash and a 25 percent membership interest in ABG Vince.