Vince Holding Corp. Q2 FY2025 earnings call

• Channel performance: Encouraging trends in both wholesale and DTC; DTC showed strong results in stores and e-commerce, elongating the full price selling season. • Product assortments: Strength in women's wovens, knits, and buy now, wear now bottoms; men's business strong with knits and bottoms. • Store activity: New Marylebone store exceeded expectations; Nashville opened, Sacramento to open; store remodels validated retail experience investment. • Tariff mitigation: Reduced estimated impact of incremental tariffs by ~50% for H2 through country of origin moves, vendor negotiations, and price increases. • Reinvestment: Beginning to restore top-of-funnel marketing dollars; exploring leveraging platform to bring other brands to life.

Total company net sales for the second quarter decreased 1.3% to $73.2 million compared to $74.2 million in the second quarter of fiscal 2024. The direct-to-consumer (DTC) segment increased 5.5% due to growth in both e-commerce and store channels, while the wholesale segment declined 5.1% due to delays in fall shipments related to tariff mitigation strategies. Gross profit in the second quarter was $36.9 million or 50.4% of net sales, up from $35.1 million or 47.4% of net sales in the prior year. Net inventory was $76.7 million at the end of the second quarter, an increase from $66.3 million the prior year, driven by higher inventory carrying value due to tariffs and strategic shipping ahead of tariff expiration.

• Third quarter net sales expected to be flat to up low single digits compared to prior year. • Operating income as a percentage of net sales expected to be 1% to 4%. • Adjusted EBITDA as a percentage of net sales expected to be 2% to 5%. • Guidance accounts for ~$4M to $5M of estimated incremental tariff costs, with half mitigated through country of origin, vendor negotiations, and price increases, and includes reinvestment in the business.

• Tariff uncertainties continuing to impact supply chain timing and costs. • Potential impact of macroeconomic environment on consumer spending, which could affect sales and margins.

Q: What percentage of products are currently sourced from China and progress on reducing exposure to China?

A: The company is reducing exposure, targeting a 25% cap on any one country, not overexposed in China as tariffs move, and India is not a sourcing country for the company.

Q: Freight cost trends and drivers of delays?

A: Delays in shipments were purposeful due to tariff pauses earlier in the year; freight costs had an effect on gross margin in Q2, and the air vs. boat ratio remains fluid for the back half of the year.

Q: Store openings in Q2 and plans for the rest of the year?

A: Nashville opened last week, Sacramento is slated to open in October; no other store openings are scheduled for the remainder of the year.