After Authentic Deal, Vince Streamlines Operations

Vince Holding Corp., in the wake of its deal to sell its intellectual property to Authentic Brands Group, is streamlining operations.

Vince expects to cut costs by more than $30 million over the next three years.

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In an announcement Tuesday, the contemporary brand, which sold its IP to Authentic earlier this year, indicated that it was implementing a transformation program to improve profitability, gross margin and its expense structure.

“This year has been a year of significant change for our organization as we continue to position Vince for long-term success,” Jack Schwefel, chief executive officer of Vince, said in a statement. “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.”

Vince plans to: streamline manufacturing and production operations, reduce promotional activity, optimize breadth and depth of markdowns, and enhance efficiencies within store operations, corporate overhead and third-party spend.

The company did not indicate how many employees would be affected by the streamlining, which will be led by Heather Wilberger, Vince’s chief transformation and information officer, who reports directly to Schwefel.

In what it dubbed “a transformative strategic partnership,” Vince Holding Group said last April that it planned to transfer its intellectual property to a newly formed Authentic subsidiary, ABG Vince, in return for $76.5 million in cash and a 25 percent membership interest in the subsidiary. The deal has since closed.

The deal marks something of a changeup for Authentic, which has made a name for itself buying up brands and then finding licensing partners. With Vince, the branding giant is buying three-fourths of the brand and has a built-in supplier — the parent company that is already producing the line.

For the third quarter ended Oct. 28, Vince expects to report net sales of $81 million to $83 million, which it said reflects sequential improvement from the second quarter of 2023.

Vince also expects to report:

  • Income from operations of up to $2 million, inclusive of approximately $4 million in royalty fees that were not incurred in the prior-year period.

  • 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.

  • Total borrowings under the company’s debt agreements at $58 million, compared to $125 million at the end of the third quarter of fiscal 2022.

“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,” said Schwefel. “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.”

Vince Holding Corp., established in 2002, offers understated, easy and elevated apparel and accessories. The brand operates 49 full-price stores, 17 outlets, an e-commerce site, a subscription service called VinceUnfold, and also wholesales to retailers.

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