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VH

VINCE HOLDING CORP. (VNCE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 FY2025 net sales decreased 2.1% to $57.9M; gross margin held at 50.3%, but the company swung to a GAAP operating loss of $4.4M (−7.7% margin) and diluted EPS of −$0.37 due to higher freight/duty and SG&A spend .
  • Results were relatively in line with internal expectations and better than prior guidance calling for ~5% sales decline; wholesale was flat (+0.1%) while direct-to-consumer fell 4.4% amid store closures/remodels and softer traffic .
  • Management pivoted rapidly to mitigate evolving tariff policies: diversified sourcing, vendor negotiations, selective pricing, and expects China exposure to ~25% of COGS by spring 2026; full-year FY2025 guidance withheld given tariff uncertainty .
  • Q2 FY2025 outlook: net sales flat to −3% YoY, operating income margin −1% to +1%, adjusted EBITDA margin 1%–4% (assumes ~170 bps incremental tariff costs) .
  • Potential stock catalysts include progress on tariff mitigation and execution vs Q2 outlook; note NYSE continued listing notice received May 6, 2025 adds headline risk pending acceptance of a remediation plan .

What Went Well and What Went Wrong

What Went Well

  • Wholesale segment resilience: wholesale sales +0.1% YoY to $30.3M; segment operating income $9.4M, reflecting stable partner demand and product margin improvement ex freight/distribution .
  • Rapid tariff mitigation: “significantly reduced our exposure to China… beginning with our fall product,” with target ~25% of COGS by spring 2026; diversified supply chain, negotiated with vendors, and adjusted pricing architecture .
  • Product reception: strong performance in sweaters, knits (new color palettes), bottoms, and men’s (continued strong growth); e-commerce drove sequential improvement in DTC trends .

What Went Wrong

  • Margin pressure from costs: gross margin rate impact of ~260 bps higher freight/duty, ~120 bps wholesale mix, ~60 bps distribution/handling, only partially offset by lower product costs/pricing and lower promotions .
  • SG&A deleverage: SG&A rose to $33.6M (58.0% of sales) driven by higher marketing/advertising, legal/IT/third-party costs, and remodel/relocation expenses; contributed to GAAP operating loss .
  • DTC softness and store activity: direct-to-consumer sales −4.4% amid planned closures, remodels, relocations, and softer traffic; segment operating loss of −$0.8M .

Financial Results

MetricQ3 FY2024Q4 FY2024Q1 FY2025
Net Sales ($USD Millions)$80.162 $79.950 $57.933
Gross Margin (%)50.0% 50.1% 50.3%
Operating Income (Loss) ($USD Millions)$5.761 $(29.671) $(4.438)
Operating Margin (%)7.2% −37.1% −7.7%
Diluted EPS ($USD)$0.34 $(2.24) $(0.37)
Adjusted EBITDA ($USD Millions)N/AN/A$(3.028)

Segment Net Sales

SegmentQ3 FY2024Q4 FY2024Q1 FY2025
Vince Wholesale ($USD Millions)$48.765 $39.143 $30.290
Vince Direct-to-Consumer ($USD Millions)$31.397 $40.807 $27.643
Total ($USD Millions)$80.162 $79.950 $57.933

Segment Income from Operations

SegmentQ3 FY2024Q4 FY2024Q1 FY2025
Vince Wholesale ($USD Millions)$18.223 $12.835 $9.397
Vince Direct-to-Consumer ($USD Millions)$0.614 $3.818 $(0.800)
Total Segment Income ($USD Millions)$18.837 $16.653 $8.597

KPIs and Balance Sheet Highlights

KPIQ3 FY2024Q4 FY2024Q1 FY2025
Company-Operated Stores (count)61 57 58
Inventory ($USD Millions)$63.775 $59.146 $62.260
Total Borrowings ($USD Millions)$50.8 $19.2 $34.7
Cash & Equivalents ($USD Millions)$0.892 $0.607 $2.588

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net SalesQ1 FY2025Decline ~5% YoY Actual −2.1% YoY Better than guided
Adjusted Operating MarginQ1 FY2025Decline ~500 bps vs prior year adjusted GAAP operating margin −7.7% ; prior year adjusted loss from operations $(2.0)M on $59.2M sales In line to slightly better vs guidance (directional)
Net SalesQ2 FY2025N/AFlat to −3% YoY Set
Operating Income MarginQ2 FY2025N/A−1% to +1% Set
Adjusted EBITDA MarginQ2 FY2025N/A1% to 4% Set
Tariff Cost AssumptionQ2 FY2025N/A~170 bps incremental tariff costs Set
Full-Year FY2025 GuidanceFY2025N/ANot provided due to tariff uncertainty Withdrawn/Not issued

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 FY2024 and Q4 FY2024)Current Period (Q1 FY2025)Trend
Tariffs/MacroRe-evaluating transformation plan to help mitigate potential tariff impacts; maintained prudence given consumer uncertainty Aggressively mitigating tariffs; reduced China exposure beginning fall, targeting ~25% by spring 2026; cautious on full-year guidance Elevated focus; proactive mitigation
Supply Chain & FreightTransformation driving lower product and freight costs YoY ; earlier shipments benefited Q4 wholesale Higher freight/duty costs weighed on Q1 margins; mix shift and distribution costs impacted; balancing air vs ocean; expect higher freight in Q2 Cost headwinds near term
Product PerformanceGross margin expansion via lower promotions/discounting; brand strength noted Strength in sweaters, knits (new palettes), bottoms, linen; men’s continued strong growth; e-commerce improved sequentially Healthy assortment, men’s momentum
Pricing StrategyPullback in off-price; reduced promotions; healthier full-price mix Selective strategic price increases; buyer reaction “non-event” Price discipline with limited demand impact
Retail FootprintNet store count down; focus on remodels/refresh, planned closures Remodels in Greenwich, Stanford, Mercer; upcoming Nashville and Sacramento openings; London Marylebone expansion Curated expansion, quality focus
Channel MixWholesale stability; DTC softness/outlet normalization Wholesale flat; DTC down 4.4% due to store activity and traffic; e-com sequential improvement Wholesale resilient, DTC mixed

Management Commentary

  • CEO: “I cannot overstate how proud I am of our organization and how quickly our team sprung into action… we have already significantly reduced our exposure to China… and made select and strategic adjustments to our pricing architecture.”
  • CEO: “Our first quarter reflects the dynamic environment… we delivered improved product margins, excluding freight and other distribution costs… men’s business delivered another quarter of strong growth.”
  • CFO: “Operating loss for the first quarter was $4.4 million… Net loss… was $4.8 million… Adjusted EBITDA was negative $3 million… inventory increase driven by lower reserves and incremental freight/duty costs.”
  • Press Release: “We quickly pivoted… to develop and put into action mitigation plans in light of the evolving tariff policies… diversified our supply chain, negotiated with vendors, and leveraged other opportunities to mitigate near-term costs.”

Q&A Highlights

  • Freight/duty and shipping mix: Management balanced air vs ocean amid tariff timing; expects higher freight costs in Q2; largely avoided highest tariffs to date .
  • Tariff trajectory and mitigation: Anticipates better back-half mitigation via supplier discounts, sourcing rebalance, and strategic pricing; early wholesale buyer reception to new pricing was favorable .
  • Product/category drivers: Linen resonated with warmer weather; extended full‑price spring selling due to delayed pre‑fall shipments; knits/color novelty and bottoms strong; men’s growth remains a key driver .
  • Store remodels and experience: Remodeled key stores with mobile POS and capacity improvements; expects returns on investment though too early to quantify .
  • Outlook color: Q2 guidance embeds ~170 bps incremental tariff costs; disciplined expense management continues; cautious on macro .

Estimates Context

  • S&P Global consensus estimates for Q1 FY2025 revenue/EPS were unavailable at time of writing due to SPGI rate limits; therefore, we cannot quantify beats/misses versus Wall Street consensus in this report (consensus not retrieved; values unavailable).
  • Analyst on the call noted VNCE “beat my expectations,” but this is not a substitute for S&P Global consensus comparison .

Key Takeaways for Investors

  • Q1 FY2025 was resilient on the top line (−2.1% vs prior year) and better than guided, but profitability compressed on freight/duty and SG&A; watch Q2 margin trajectory as tariff mitigation actions scale .
  • Wholesale remains stable and profitable; DTC is improving sequentially in e‑commerce but still pressured by planned store activity—track remodel ROI and upcoming openings (Nashville, Sacramento) .
  • Tariff risk is the central narrative; management is diversifying sourcing and expects China exposure to ~25% of COGS by spring 2026—monitor sourcing mix, freight trends, and realized pricing actions .
  • Q2 FY2025 guide implies sequential improvement with operating margin between −1% and +1% and adjusted EBITDA margin 1%–4%; execution against these ranges is the near-term driver .
  • Inventory and borrowings ticked up in Q1; liquidity includes $20.4M revolver availability—watch working capital discipline amid tariff volatility .
  • Corporate actions: NYSE continued listing notice introduces headline risk but does not affect operations; follow the business plan submission and NYSE review timeline .
  • Medium-term thesis hinges on men’s category growth, ABG licensing tailwinds, and sustained full‑price mix with controlled promotions; near‑term trading sensitive to tariff headlines and Q2 delivery .