Vince Announces Transformation Program Focused on Driving Enhanced Profitability

Vince Holding Corp. (NYSE: VNCE) (“VNCE” or the “Company”), a global contemporary retailer, today announced that it will be implementing a transformation program focused on driving enhanced profitability through an improved gross margin profile and optimized expense structure.

Jack Schwefel, Chief Executive Officer of VNCE, said, “This year has been a year of significant change for our organization as we continue to position VNCE for long-term success. Our transaction with Authentic Brands Group provided increased financial flexibility as we fortified our balance sheet, and resulted in increased royalty expenses which we plan to offset with our transformation program. Following a thorough review of our business and cost structure, we have identified opportunities to further streamline our organization and drive efficiencies across our operations. We believe the transformative actions we are implementing along with our enhanced focus on our strategic growth initiatives position us well to deliver sustainable, profitable growth and drive value for all of our stakeholders.”

The transformation program is focused on improving the Company’s gross margin profile and driving cost efficiencies through, among other things:

• Streamlining manufacturing and production operations;
• Reducing promotional activity and optimizing breadth and depth of markdowns; and
• Enhancing efficiencies within store operations, corporate overhead and third-party spend.

The transformation efforts are expected to generate over $30 million in savings over the next three years. The efforts will be led by Heather Wilberger, VNCE’s Chief Transformation and Information Officer, who reports directly to Mr. Schwefel.

Preliminary Third Quarter 2023 Business Update

For the Third Quarter 2023 ended October 28, 2023, the Company preliminarily expects to deliver the following:

• Net sales of $81 million to $83 million reflecting sequential improvement compared to the second quarter 2023;
• Gross margin expansion compared to the third quarter 2022 driven by increased full price selling, lower promotional activity and lower freight expense offsetting royalty fees incurred; and
• Income from operations of $0 million to $2 million, inclusive of approximately $4 million in royalty fees that were not incurred in the prior-year period.
• At the end of the third quarter of fiscal 2023, total borrowings under the Company's debt agreements are expected to be $58 million compared to $125 million at the end of the third quarter of fiscal 2022.

Jack Schwefel, Chief Executive Officer of VNCE, said, “For the third quarter, we preliminarily expect to deliver sequential topline improvement compared to the second quarter across both our direct-to-consumer and wholesale channels as customers responded well to our compelling fall product assortment. In addition, despite expected lower year-over-year total net sales, we preliminarily expect to deliver year-over-year gross profit increase and gross margin expansion for the quarter driven in part by ongoing inventory management leading to increased full price selling and lower promotional activity. We look forward to sharing more on our third quarter performance on our upcoming earnings call in early December.”