VINCE HOLDING CORP. Q1 FY2025 earnings call

Mitigation of Tariffs - Proud of team's quick action in mitigating tariff impact, reduced exposure to China starting with fall product, negotiated with vendors, and made strategic pricing adjustments. ### Segment Performance - Wholesale outperformed direct-to-consumer, but direct-to-consumer had sequential improvement, especially via e-commerce. Stores (excluding closures/remodels) performed well like-for-like despite weather/macroeconomic headwinds. ### Product Highlights - Sweaters performed well; spring products like tees, linen, knits with new color palettes, and bottoms all did nicely. Men's business continued strong growth. ### Expansion - Opened Marylebone location in London; on track to open Nashville and Sacramento stores in U.S.; invested in store remodels (Greenwich, Stanford, Mercer) to enhance customer experience.

Total company net sales for the first quarter decreased 2.1% to $57.9 million compared to $59.2 million in Q1 2024. The wholesale segment was relatively flat year-over-year, while the direct-to-consumer segment declined 4.4% primarily due to planned store activity and softer traffic. Gross profit in Q1 was $29.2 million (50.3% of net sales) compared to $29.9 million (50.6% of net sales) in Q1 2024. Margins were impacted by higher freight and duty costs, wholesale channel mix, and distribution/handling costs, but partially offset by lower product costs and higher pricing.

Full-Year - No full-year guidance provided due to ongoing tariff uncertainty and macroeconomic volatility. ### Q2 Expectations - Net sales expected to be flat to down 3% y-o-y. Operating income as % of net sales expected to be -1% to +1%. Adjusted EBITDA as % of net sales expected to be 1% to 4%. ### Tariffs - Assumes ~170 basis points in incremental tariff costs for Q2. ### China Exposure - Aim to reduce China exposure to ~25% of cost of goods by spring 2026 by diversifying sourcing outside China.

• Volatility in macroeconomic environment impacting consumer sentiment. - Uncertainty in tariff policies affecting costs and margins. - Increase in freight costs and challenges in navigating shipping method shifts (air vs boat) to mitigate impacts.

Q: Talk about trends in freight cost and whether the company shifted distribution from ocean shipping to air due to trade policy issues.

A: Yuji Okumura said in Q1 air shipping was used more around Chinese New Year timing. In Q2, freight costs are increasing, and the company is navigating between air and boat methods depending on timing. Q2 still expects higher freight and tariff costs but avoided the highest tariffs mostly.

Q: Thoughts on third and fourth quarter cost trends given mitigation efforts.

A: Brendan Hoffman noted the back half of the year allows mitigation with supplier discounts and sourcing rebalancing, and the pre-spring market showed good reception despite tariff delays.

Q: Details on price increases and consumer trends driving underlying positivity.

A: Brendan Hoffman said price increases are strategic, item-by-item, maintaining value; consumer trends are driven by fashion like linen uptake as weather warmed, and ability to stretch the spring assortment due to delayed pre-fall shipments while still seeing strong business.