US' Vince Holding's gross profit at 50% of net sales in Q3 FY24

The increase in gross margin rate was primarily driven by approximately 480 basis points (bps) related to lower product costing and freight costs and 80 basis points related to lower promotional activity in the direct-to-consumer (DTC) segment and lower discounting. These factors were partially offset by approximately 50 bps attributable to channel mix, Vince Holding said in a press release.

Selling, general, and administrative (SG&A) expenses were $34.3 million, or 42.8 per cent of sales, compared to $34.4 million, or 40.9 per cent of sales, in the third quarter (Q3) of FY23.

The income from operations was $5.8 million compared to income from operations of $2.8 million in the same period last fiscal. Excluding the $0.2 million of transaction expenses, adjusted income from operations in the third quarter of fiscal 2023 was $3.1 million.

Segment-wise, wholesale sales decreased 2.2 per cent to $48.8 million compared to the third quarter of fiscal 2023. Direct-to-consumer (DTC) segment sales decreased 8.3 per cent to $31.4 million compared to the third quarter of fiscal 2023.

"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 fiscal. 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, said David Stefko, interim chief executive officer of Vince.

“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. 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, " added Stefko.

Nine-month (9M) financials

For the nine months, Vince Holding Corp has reported net sales of $213.5 million, slightly lower than $217.6 million in the same period of the prior fiscal. Gross profit of the company increased to $105.1 million (49.2 per cent of net sales) from $99.1 million (45.6 per cent) in 9M FY23, reflecting improved margins. SG&A expenses rose to $100.2 million (47.0 per cent of net sales) from $98.6 million (45.3 per cent). The income from operations was $12.5 million, down from $33.3 million in the same period in FY23. Net income was $9.3 million, a decline from $30.1 million in the previous fiscal. Basic and diluted earnings per share were $0.74, compared to $2.42 and $2.41, respectively, in 9M FY23.

Outlook

For the fourth quarter (Q4) of fiscal 2024, Vince expects net sales to be down mid-single-digits to up low-single digits compared to $75.3 million in the fourth quarter of fiscal 2023. The company expects Q4 FY24 operating margin to increase 200-300 basis points compared to operating margin of minus 2.2 per cent in the fourth quarter of fiscal 2023.

For full year fiscal 2024, the company expects net sales to decrease in the low-single-digit range compared to $292.9 million in fiscal 2023. It also expects operating margin, excluding the $7.6 million gain on sale of subsidiary recorded in the first quarter, to increase 25 basis points to 50 basis points, compared to adjusted operating margin of 1.4 per cent in fiscal 2023.

Fibre2Fashion News Desk (SG)