Vince Holding Corp. (VNCE) Earnings

Management highlights

### Overall Business Momentum - The growth momentum built throughout fiscal 2025 accelerated into the first quarter of fiscal 2026, with the company executing its strategic priorities consistently. - Full-price customer acquisition delivered double-digit growth, alongside double-digit growth in newly reactivated customers, confirming strong brand resonance with consumers. - Net operating loss improved by $1.8 million year-over-year to $2.6 million, while net loss improved by $2.7 million to $2.1 million, driven by top-line growth and operating leverage. Adjusted EBITDA improved by $1.9 million to negative $1.1 million year-over-year. Product Category Performance - Women's category: Strong performance was seen in woven tops (including solid blouses, printed styles, and new cotton woven programs), pants (driven by expanded core fabrications, additional color options, and novelty prints), and dresses (which gained momentum late in the quarter, led by knit dresses, elevated event styles, and printed silk designs). - Men's category: Delivered significant growth across all channels, led by novelty textured knits and polos. Growth was also seen across all coordinated living categories and matching sets, which lifted average transaction values. The men's business is a core long-term growth opportunity, targeted to reach 30% of total sales penetration over time. Strategic Initiatives - E-commerce: The dropship business expands product reach without adding inventory risk. After launching shoes six months prior, the company added handbags, belts, and accessories to the dropship offering in Q2 FY2026, expanding assortment and driving higher units per transaction. - Store operations: The company continues targeted store remodels, focusing on repositioning in high-traffic, high-productivity lifestyle centers and existing markets. Remodeled stores have delivered strong payback on investment, with 2026 remodels planned to be completed during off-hours to avoid disrupting ongoing sales. The company will also run in-store marketing activations this summer to boost foot traffic. - Licensing partnerships: Partnering with Authentic Brands Group to expand into new licensed categories including home, kids, and swim, with all products aligned to Vince's core brand aesthetic. Men's suiting, produced via license with Peerless, has tested well, and the company is currently optimizing in-store assortment and service (including adding alteration services) to roll out the category further.

Guidance

Management raised the full-year 2026 guidance from prior levels, based on strong year-to-date momentum and ongoing growth trends: - Second quarter FY2026: Net sales are expected to increase 10% to 12% year-over-year. Adjusted operating income margin is projected to be 6.5% to 7%, and adjusted EBITDA margin is projected to be 8% to 8.5%. - Full-year FY2026: Net sales are now expected to increase 7% to 8% year-over-year (up from prior lower guidance). Adjusted operating income margin is projected to be 4% to 4.5%, and adjusted EBITDA margin is projected to be 5.5% to 6%. - Guidance does not include any potential benefits from future tariff refunds, due to uncertainty around the timing and ultimate amount of any reimbursement.

Segment performance

Vince Holding Corp has two core sales segments for Q1 FY2026: 1. Direct-to-consumer: Net sales grew 15.6% year-over-year, outperforming the company's overall growth rate. This segment is the company's largest contributor to total revenue, driven by strength across both brick-and-mortar stores and e-commerce operations. 2. Wholesale: Net sales grew 5.9% year-over-year. U.S. major wholesale partners saw at-the-register sales up low double digits year-over-year, and the segment currently makes up the remaining portion of total net sales after accounting for the direct-to-consumer channel. Total company net sales for Q1 FY2026 increased 10.5% to $64 million, up from $57.9 million in Q1 FY2025.

Risks & headwinds

• Persistent macroeconomic volatility remains a key external uncertainty, which management has accounted for by maintaining a disciplined approach to planning. • Higher tariffs and input costs have put upward pressure on costs and inventory carrying values; the net impact of these costs is already incorporated into current guidance. • Uncertainty around the timing and amount of potential tariff refunds means these potential benefits cannot be counted on for 2026 results. • SACS Global remains in bankruptcy reorganization, creating some uncertainty around the future of this wholesale partner, though the company has planned conservatively for this exposure.

Analyst Q&A

• Q: How much of the current revenue acceleration comes from favorable contemporary category tailwinds versus company-specific execution, and how sustainable is this growth? /

  A: Brendan Hoffman noted that while the contemporary apparel segment is seeing broad industry tailwinds right now, the majority of Vince's outperformance stems from strong company execution. He added that the consistent long-term product team has continuously elevated product quality and design, and the company outperforms peers among wholesale partner rankings. No slowdown in growth has been observed to date.

• Q: With the improved balance sheet and reduced debt, what are the company's current balance sheet priorities? /

  A: Hoffman confirmed that the balance sheet is in the strongest position it has been in years, with less than $10 million remaining in long-term debt held by Sun Capital, down significantly from 16-18 months prior. The company is positioned to make targeted long-term growth investments, and is also open to potential strategic opportunities to expand beyond the core Vince brand if attractive opportunities arise.

• Q: What is the current status of the company's business with bankrupt SACS Global, and how is this accounted for in guidance? /

  A: Hoffman stated that the company entered 2026 planning for SACS to be 7% of total business, down from prior years, in line with the reduced footprint post-bankruptcy. However, SACS sales have outperformed conservative planning, with order volumes increasing, and SACS management has been a strong partner through the bankruptcy process. A healthy emerging SACS presents upside to Vince's back half 2026 and 2027 results, which is not yet baked into guidance.

• Q: How does the dropship model benefit Vince's business and return profile? /

  A: Hoffman explained that dropship expands the product assortment available to consumers without requiring Vince to hold additional inventory, increasing units per transaction and improving customer engagement with the brand. Early performance of new categories has outperformed internal projections, and the model also supports broader licensed category expansion in partnership with Authentic Brands Group, boosting both revenue and brand awareness.