Vince Holding Corp.

Good day and thank you for standing by and welcome to the Vince Q3 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 on your telephone. If you should require any further assistance, please press star 0. I'd now like to hand the conference over to your speaker for today, Jean Fontana. Thank you. Please go ahead.

Thank you, and good afternoon, everyone. Welcome to Vince Holding Corporation's third quarter fiscal 2021 results conference call. Hosting the call today is Jax Russell, Chief Executive Officer, and Dave Sepko, Chief Financial Officer. Before we begin, let me remind you that certain statements made on this call may constitute broad-looking statements which are subject to risks and uncertainties that could cause actual results to differ from those that the company expects. Those risks and uncertainties are described in today's press release and in the company's SEC filings, which are available on the company's website. Investors should not assume that statements made during the call will remain operative at a later time and the company undertakes no obligation to update any information discussed on the call. After prepared remarks, management will be available to take your questions for as long as time permits. With that, I will turn the call over to Jack.

Thank you, Jane, and thank you, everyone, for joining us this afternoon for a discussion of our third quarter performance. We are encouraged with the trends in our business given the many macro challenges facing the industry. We are pleased to see the momentum in our e-commerce business within our Vince brand. Our customers continue to love our sophisticated, high-quality women's and men's assortments. Our men's business has shown particular strength in the quarter, improving against both 2020 and 2019 levels. At Rebecca Taylor, we feel confident in the progress made on our brand turnaround and remain focused on driving key strategies. I will begin with a review of the performance of our Vince brand. Direct-to-consumer revenue sales have recovered to slightly above fiscal 2019 results, partially offset by sales pressure in the challenged wholesale channel. In spite of our current headwinds impacting the industry, the demand for the Vince brand remains strong and we remain confident in our ability to continue to drive further market share gains within the contemporary luxury category. Our business in the third quarter was fueled by dressier items as people returned to the office and social activities. We continue to see a strong response to dresses, particularly versatile styles that can be dressed up or dressed down based on the occasion. Our latest collections have shifted to an emphasis of gifting and family-themed messaging, including product for both comfortable gatherings and dressed-up events during the holidays. We have also seen a pickup in sweaters and outerwear as our customers are focused on buy-now, wear-now products. In direct-to-consumer, the continued momentum in our e-commerce business, which was up double-digit to 2019 levels, was partially offset by softer-than-expected results in our retail stores. Looking at our store performance by region, we are seeing locations in urban markets outfacing the store base, which we attribute to the return to workwear. During the third quarter, we opened four full-price Vint stores in Roosevelt Field, New York, Pentagon City, Virginia, Cherry Creek in the Denver market, and Knox Street in Dallas. We are very pleased with the strong early results and will continue to focus new store openings in highly favorable locations, all with short-term renewable leases. Our store openings in new markets, Charlotte and Denver, for example, have performed well and have fueled a significant increase in regional traffic to the website as well. In wholesale, supply chain disruptions and delays moving product through distribution centers and into stores remains a challenge that we believe will continue to impact our business further in the fourth quarter. Overall, we remain pleased with the sell-through at retail, which continues to demonstrate the demand for Vince as we remain a leading contemporary brand for our partners. As mentioned on last quarter's call, we launched a Vince-crafted collection for Nordstrom on October 14th. This included an offering of six hand-knitted exclusive styles, which created a unique experience for customers. This collection was a huge success and generated a lot of press, including Elle magazine, naming it one of the best fashion campaigns for fall 2021. We are excited to announce that the Vince Crafted collection is now available in five of our own retail stores, Melrose Avenue and Pacific Palisades in the Los Angeles market. Dallas, Palo Alto, and Mercer Street here in New York. Building on our offering, we launched family cashmere themes for the holidays during the quarter for Nordstrom's as well as for our own stores. The reception of our brand at Bloomingdale's also continues to be very strong, which we attribute to high demand for the brand and customers returning to stores. We see an opportunity to grow the relationship over time and will look to do so in a way that complements our existing wholesale footprint. In men's, we are extremely pleased with the momentum of our business in the wholesale channel and in our own stores. We are seeing a strong response to sweaters, knits, and especially outerwear. Given the impressive performance in the men's category this quarter, we are even more confident of the strength of our positioning within the contemporary men's category. We believe that men's is a significant growth opportunity for the men's brand and will remain a key strategic focus. We will continue to work closely with our wholesale partners to navigate the supply chain headwinds, which we will speak to shortly. Importantly, we believe that these challenges are transitory and that wholesale distribution will remain a meaningful part of our growth strategy as it enables us to broaden our customer reach. From a brand perspective, we are focused on progressing our marketing and digital initiatives to accelerate our brand presence at both Vince and Rebecca Tower. We have been focusing on further driving our analytics and data capabilities, which are paying substantial dividends in our paid search channels and our email and SMS programs. These programs drive over 60% of our e-commerce traffic. In advance of the holiday shopping period, we launched gifting pages on our websites for both Vince and Rebecca Taylor on November 2nd. For the Vince brand, we have seen double-digit conversion gains for both 2020 and 2019 levels. Further, the Vince gift pages are driving over 10% of total e-commerce sales, and customers visiting these pages convert at nearly double the rate of those who do not. As a result, we will remain focused on driving more online traffic to these pages. Looking ahead to 2022, we are already planning a holiday campaign where gifting will be a major feature, along with holiday dressing. We see this as a meaningful opportunity, particularly in our Knits and Cashmere lines, as these items make perfect gifts. As part of this concentration on gifting, a key focus for both brands has been an introduction of considered social campaigns. We are currently working with over 100 influencers, all of whom will be posting gifting and omnichannel content onto our social channels through the end of the year. The reach of these influencers offers the opportunity to be seen by upwards of 70 million U.S. consumers, driving additional consumers to each brand. We executed press days in the autumn, which included outreach to key social influencers, garnering publicity for both brands. Another enhanced initiative was the Vince gift card promotion, where we gifted our top customers with a $150 invitation to shop full price during the early part of November. We planned for the holiday selling season to begin earlier this year, and by moving up the timing of this promotion, we were able to capture those sales. We will deploy different offers in December to offset last year's offers. We also completed the base implementation of our point of sale system for the Vince brand, further enhancing our targeted marketing and personalization capabilities. We have ship-from-store capability for e-commerce up and running, making more efficient use of our omnichannel inventories. Through the Black Friday Cyber Monday weekend, the ship-from-store component yielded a significant contribution to our total e-commerce sales, which was entirely incremental as this product was not available at our e-commerce distribution center. Looking at our international businesses, we are cautiously optimistic with our retail store momentum in London, as well as with our partners throughout Western Europe, and we believe this momentum will carry into 2022 and beyond. We are exceeding 2020 sales in all international wholesale markets and showing strength in mainland Europe, the Middle East, as well as all international web channels. We are also excited to announce that we have restarted conversations with our joint venture partner to launch our brands in China. This is an incredible opportunity for us to further enhance our presence and brand positioning, given many of our competitors already have a meaningful footprint in mainland China. As these conversations progress, we look forward to providing you with an update on future calls. Overall, I am pleased with the performance of the Vince brand, and we continue to be extremely excited about the future. We see ample opportunities to grow this brand both domestically and internationally as we built out our e-commerce capabilities, develop new marketing strategies, and accelerate growth in our men's business. Turning to Rebecca Taylor, with the reset now complete, the growing potential for this brand is exciting as the brand equity remains strong. We saw a positive response to our spring market results, and this will be set on the floor for February and March next year. we are focusing on full price selling as we establish margin healthy strategies to grow this business over time. Extending the spring 2021 relaunch and our recent fall assortment, we will continue to reflect a collection of categories that address more of her lifestyle needs, with a particular focus on building out occasion-based items that can be dressed up or down to adjust to her changing needs. During the third quarter, We opened one full-price store and two outlet stores for Rebecca Taylor, all of which are showing encouraging initial results. In early November, we opened our last store of the year in Beverly Hills at the Bev Center, our first Rebecca store in the Los Angeles market. As we have increased our marketing efforts, we are seeing results. Our social engagement rate in the third quarter increased materially with product engagement as well. In November, we saw our biggest gains in engagement and growth of our Rebecca audience since we acquired the brand. Overall, we remain focused on utilizing a similar strategic plan to what drove the success we achieved at Vince to redefine our merchandise assortment, enhance our brand messaging, and optimize our channel distribution. Our performance during the third quarter reflects the strength of our brands, and we are excited about the future growth we see for the company. Heading into holiday, We move up our promotions to begin in early November, and the results have been encouraging with margin positive and up compared to 2019 levels. Before turning the call over to Dave, I would like to provide an update on the supply chain issues we are experiencing. Similar to most of the industry, we continue to see challenges with ongoing port congestion and higher freight cost pressures. While we expect these supply chain disruptions to continue through at least the first half of next year, we will keep taking precautionary steps to mitigate the impact, including by leveraging our impressive pricing power, which results from our strong brand loyalty. In conclusion, we are very excited about the future of our distinct fashion brands. We will continue to use a disciplined approach while executing the strategies in place to fuel long-term profitable growth for our shareholders. Since joining Vince Holdings nine months ago, we have navigated unprecedented industry challenges and at the same time continue to execute our strategies while establishing an even stronger foundation for the future growth. Coming out of fiscal 2021, we are finalizing our three-year plan and look forward to updating you on our long-term targets at the ICR conference in January. With that, I will turn it over to Dave.