Vince Holding Corp.

Good morning. My name is Lisa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Vince Holding Corp.'s third quarter 2018 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. Amy Levy, Vice President, Investor Relations. You may begin your conference.

Thank you and good morning everyone. Welcome to Vince Holding Corp's third quarter fiscal 2018 earnings conference call. Hosting the call today is Brendan Hoffman, Chief Executive Officer and Dave Stefko, Chief Financial Officer. Before we begin, let me remind you that certain statements made on this call may constitute forward-looking statements which are subject to risks and uncertainties that could cause actual results Thank you, Amy.

Good morning, everyone, and thank you for joining us today. We are pleased with our third quarter results across all financial metrics. In our direct-to-consumer segment, we saw continued momentum in our e-commerce business with strong growth in our mobile app. We continue to be pleased with the performance of stores we opened over the last year, and we signed an additional lease for a store in Midtown Manhattan due to open in the fall of 2019. In our wholesale segment, we saw continued sales growth as our collections resonated with consumers, while we also achieved further market gains within existing department store doors. We were also excited to see the number of editorials on Vince in both the U.S. and international press, which we believe will help us to attract new customers to the brand. Overall, with another quarter of great results under our belt, combined with our performance through the Black Friday weekend, we are raising the low end of our guidance, and we are more optimistic than ever about our future growth potential. Turning to some brief financial highlights from the third quarter, net sales grew nearly 6%, driven primarily by growth in our direct-to-consumer segment, which delivered a comp sales increase of 14%. While sales in our wholesale segment were flat, this was largely due to the exit of certain wholesale partners, which were offset by reduced allowances. Operating profit grew nearly 70% to $9 million, and operating margin increased 400 basis points to 10.7%, reflecting both gross margin expansion and SG&A leverage. Looking at our direct-to-consumer segment, sales grew 17%. We remain laser-focused on capturing walk-away sales from partners we exited and have been serving ads on mobile, e-commerce, and social channels based on geographical location in an effort to capture that exited partner's customers. Our retail expansion strategy is also progressing well. We opened a beautiful flagship store in Palisades Village that carries our full assortment of women's, men's, and home merchandise, as well as our new handbag collection, which we had rolled out to 43 stores for holiday. The store features an open-air deck that is ideal for hosting exclusive events. We also recently opened our store in Palm Beach Gardens. Looking ahead, we are excited to announce that we are planning to open a store at 609 Fifth Avenue in Manhattan, for which we were able to achieve attractive economics. This is a great location across from Rockefeller Center and we look forward to benefiting from the significant foot traffic. This location also plays nicely into our strategy to capture walkaway sales. We continue to expect to drive improved profitability in our direct-to-consumer segment as we target additional locations that fit the Vince brand DNA and offer favorable economics with shorter leases, as well through improved performance in our existing locations. Turning to our latest endeavor, you may have seen our recent announcement about the launch of Vince Unfold. This is an innovative new subscription service that will enable us to provide customers with unlimited access to our full collection of women's apparel for a monthly flat fee. Subscribers receive four garments at any one time for a monthly cost of $160 with the option to purchase any items. We have seen shopping patterns change over time and see this as becoming an increasingly popular way to shop. We launched the service in mid-November and initial sign-ups exceeded our expectations. While we do not expect a meaningful short-term financial impact and we are in early stages, we believe this will help to further expand brand awareness and has the potential to be an additional revenue stream. Turning now to the wholesale channel, At both Neiman's and Nordstrom's, as well as across our specialty retail and third-party e-commerce partners, we were extremely pleased with the sell-through of our new collections, as well as the performance of our replenishment business. As you may recall, we re-established our replenishment assortment to ensure we always have our customers' everyday essentials, including tees, our stretch satin blouse, and seam front legging for women. For men, this includes double-layered hoodies, essential tees, and our slub polo. We are excited to be achieving further market share gains within our department store partners as customers are rediscovering the Vince brand. Turning to product, each season we are gaining traction as we focus on offering high quality design and craftsmanship in a seasonably appropriate assortment. Our shift to a buy now, wear now strategy is definitely aligning with our customers' needs. In addition, we are winning with color as she loved our fall palette fused with shades of copper, ink blue, Sandalwood, and Vintage Rose, purposefully designed to be paired together tonally. Our dresses and our bottoms business performed well with the strength in pants and skirts as we capitalized on trends including wide leg pants, culottes, and pleated skirts. We have also seen strength in our active leisure styles that are great for everyday wear. For spring, our collection embodies a warm color palette with tonal prints of jacquard, pajama plaid, and constellation, as well as metallic for layering. We will also be adding new silhouettes to our luxe summer weight cashmere offerings, as well as bottoms, including low-slung jeans, belted pinstripe trousers, and a silky wide leg pair with a drawstring waist. We continue to increase our marketing investments to drive brand awareness and traffic among existing customers. This included the launch of two digital campaigns. We have also selectively allocated marketing dollars to print advertising in global and regional publications with similar customer demographics. On a more grassroots scale, we partnered with some of our most influential customers to host private events aimed at expanding brand awareness and engagement with events brands. We also received press coverage with editorials in Vogue, Man Repeller, and Goop, among others. Internationally, we've made progress on several fronts. Strong sell-through performance is driving retail growth with accounts and brand awareness with customers in key markets. We relocated our shop-and-shop within the for their presentation, and Harvey Nichols. In February, we plan to open a shop-and-shop in Selfridges after strong performance in their multi-brand area. Two shop-and-shops opened with El Corte Inglés in Madrid and Marbella, expanding our presentation and performance. During the quarter, we launched men's in Japan and Korea. International press coverage has grown with features in Air France, Medellin, Oceans Japan, Safari Japan, and numerous editorial placements including Vogue, Elle France, Sunday Times Style and The Observer in the UK. In conclusion, we remain pleased with the overall performance of our business. Our collections continue to resonate with customers and we are making progress in attracting new customers to the brand. We remain focused on making further refinements to our product offering, honing our marketing investments to those programs that provide the highest response, strategically expanding our retail presence and building our international penetration. We look forward to building on our strategic initiatives to drive long-term profitable growth. And with that, I'll turn it to Dave to review our financial results.