Jacob Mutschler

Jacob Mutschler asked about Vince Holding Corp.'s current percentage of products sourced from China in Q2 and the company's progress in diversifying its supply chain away from China. He also inquired about anticipated freight cost trends for the latter half of the year and the specific reasons behind recent shipping delays. Additionally, Mutschler sought clarification on the number of stores open in Q2 compared to the previous year and any further store opening plans beyond Nashville and Sacramento.

Answer

CEO Brendan Hoffman explained that the company is making significant progress in reducing China exposure, targeting a 25% cap for any single country by holiday and into spring, noting that current fall product was not impacted. He clarified that Q2 shipping delays were purposeful, stemming from a pause during high tariff periods in April/May, which then led to holding merchandise to allow spring sales to breathe. CFO Yuji Okumura added that while freight costs impacted Q2 gross margin, no significant uptick is expected for the back half, though the air/boat ratio remains fluid. Okumura confirmed Nashville recently opened, Sacramento is slated for October, and no other openings are planned for the year. Hoffman and Okumura clarified the store count as 40 full-price and 14 outlets, with a couple fewer full-price stores compared to last year.

Jacob Mutschler from NOBLE Capital Markets asked about Vince's current percentage of products sourced from China in Q2, following previous disclosures of 80% in fiscal 2024 and 60% in Q1, and the company's progress in reducing its overall exposure to China. He also sought clarification on freight cost trends for the back half of the year and the specific drivers behind the shipping delays experienced in Q2. Additionally, Mutschler inquired about the number of store locations open in Q2 compared to the prior year and any further planned store openings beyond Nashville and Sacramento.

Answer

CEO Brendan Hoffman stated that Vince is making significant progress in diversifying its sourcing, targeting a cap of 25% from any single country, which they expect to achieve by holiday and into spring, noting that the current tariffs are dynamic. He explained that Q2 shipping delays were purposeful, stemming from a pause in April/May due to high tariffs, followed by a rapid influx of goods once tariffs were lowered, leading to a strategic hold of merchandise to allow spring sales to breathe. CFO Yuji Okumura added that while Q2 saw an impact from freight costs, they don't anticipate a significant uptick in overall freight costs for the back half, though the air/boat ratio will remain fluid. Regarding stores, Yuji Okumura confirmed Nashville recently opened and Sacramento is slated for October, with no other openings planned for the remainder of the year. Brendan Hoffman and Yuji Okumura clarified that Vince currently has 40 full-price stores and 14 outlets, with a couple fewer full-price stores compared to the prior year.