Vince Holding Corp.

Hello and welcome to today's Vince Q4 2021 earnings conference call. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during a presentation, you may do so by pressing star followed by one on your telephone keypad. And I'd like to hand over to Amy Levy, Vice President and Investor Relations. Please go ahead when you're ready.

Thank you and good morning, everyone. Welcome to Vince Holding Corp's fourth quarter fiscal 2021 results conference call. Hosting the call today is Jack Schwekel, Chief Executive Officer and Dave Stesko, 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 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 the prepared remarks, management will be available to take your questions for as long as time permits. Now, I'll turn the call over to Jack.

Thank you, Amy, and thank you, everyone, for joining us this morning for a discussion on fourth quarter and our fiscal year performance. We remain encouraged by the trends in our business in spite of the current macro Edwin's impacting our industry. Looking back at 2021 and through the first quarter of 2022, we are very pleased with the ongoing momentum and advanced business. We continue to gain traction in both the direct-to-consumer and wholesale partner channels as we further refine our offerings and enhance the customer experience. In terms of Rebecca Taylor, the team has made progress in developing a versatile collection with floral prints and silhouettes while maintaining the romantic aesthetic of the brand. I would like to begin with a review of the performance of our VINs brand. In the fourth quarter, direct-to-consumer sales recovered to slightly above fiscal 2019 results, while we saw continued sales pressure in the challenging wholesale channel. Our gross margin improved significantly last year, despite higher freight costs. The strength of the brand combined with our high-quality product provides us with pricing power to offset cost headwinds. We remain extremely well positioned in the contemporary luxury category. as we continue to evolve the assortment to meet the needs of our customers. Looking back at our holiday season, we were very pleased with our performance as we rolled out promotions beginning in early November, earlier in the quarter than usual. Customers responded positively to our gifting assortments, particularly knitted sweaters, as well as the dressier styles ahead of the season, and based on the success, we expect to repeat this cadence in 2022. In addition to dressier items, our business in the fourth quarter was fueled by styles that prepared customers for return to work and social activities outside the home. We saw a very strong response to cashmere and leather and will build on these strengths. This trend of supplementing her wardrobe has continued into the first quarter. Our spring collections introduced an array of fashion colors, which have been well received in the first quarter as we shift away from mostly neutrals. As we look ahead towards fall, Ours have shown enthusiasm in our pants assortments as well as our new line of cold-weather accessories, both for men and women, by Amical, our new licensing partner. In addition, based on the success I mentioned earlier, we see a very big opportunity with sweaters, outerwear, and particularly leather in the back half of the ship. In men's, we are extremely pleased with the continued momentum, both in the wholesale channel and in our own stores and websites. While we are seeing excellent growth across these all categories, knits, wovens, tops, pants, and in addition to sweaters, particularly performed well during the fourth quarter. Thus far in the first quarter, we have seen a great response to linen and pants, including joggers, as we evidently have capitalized on the hybrid work-from-home environment. Based on the impressive performance we are seeing quarter after quarter, we are confident that the men's category remains a significant growth opportunity and is a key strategic focus for the Vince brand. In particular, wholesale distribution will remain a meaningful part of this growth strategy as we work to drive market share gains by broadening our customer reach. Looking at store performance by region, urban locations continue outpace the store base. That said, during the quarter, store productivity remained under pressure as a result of Omicron related buying behavior. We began to see this trend improve in March, especially in some of our resort vacation locations like Honolulu in Las Vegas. E-commerce continues to show momentum even as the mix shifts towards stores. We plan to continue to lean into e-commerce as the consumer utilizes both channels. We've reopened our Fifth Avenue store this past week. We are excited to be reopening this store, given its high traffic location and the fact that it's the first VIN store to offer extended sizes. For the first half of the year, we plan to open a new store in the Boston Seaport. In wholesale, supply chain disruptions and delays remain a challenge, but our teams are working closely with our partners to get product into stores in a timely manner. Like others, we believe these headwinds will continue at least through the first half of this year. Overall, we remain pleased with the sell-through at retail, which continues to demonstrate the demand for Vince as we remain the leading contemporary brand for our partners. The reception of our brand at Bloomingdale's continues to be very strong, particularly driven by younger customers in urban markets such as New York City and Los Angeles. As mentioned on last quarter's call, we see an opportunity to grow this relationship, and we'll look to do so in a way that complements our existing wholesale footprint. We are also excited to share that during the quarter, we reached an agreement with Saks Fifth Avenue to launch our collections on Saks.com, as well as select locations this June. Saks represents another great partnership opportunity for events, and we look forward to growing this relationship over time. From a brand perspective, we have installed a disciplined approach to marketing throughout the funnel at both Vince and Rebecca Taylor. We have been focusing on combining top of funnel marketing with performance marketing or owning, coding the message for each brand. During the holiday shopping period, we launched clear holiday campaigns on social media for both Vince and Rebecca Taylor. While these campaigns were mainly rooted in social, We also used email and SMS in a very tactical manner to drive customers both to the website and into stores, while simultaneously increasing our brand awareness. As a result of these marketing strategies, we have seen double the traffic and conversion from the fourth quarter of the previous year. Another enhanced initiative for Vince was our direct mail campaign, where we offered our most valuable customers with a gift with a gift card to drive it into stores and onto the website. We will use direct marketing more in the future. During the spring season, we strategically positioned the VINZ brand using messaging focused on living life your way. For example, we introduced a series called Crafted with VINZ this past spring, which takes eight artists and builds stories around each of their lives and how they fit VINZ clothes into these stores. The ethics of Vince is, and always has been, quiet contemporary luxury, a type of luxury that fits into your daily life. Our customers are highly affluent, and as such, they truly appreciate the quality of the Vince brand. In order to expand our customer base, a key focus for us has been to grow brand awareness and loyalty across generations, particularly to the younger customer, through the introduction of a considered social campaign. The use of our influencer strategy will continue to be critical to both Vince and Rebecca Taylor as we aim to increase awareness and drive conversion. As mentioned last quarter, we completed the base implementation of our point of sale system for the Vince brand, further enhancing our omnichannel capabilities. Our shift from store capability, which makes more efficient use of our omnichannel inventories, has been a huge success and it's become an instrumental piece of our e-commerce business. During the fourth quarter, shift from store counted for 14% of total e-commerce demand quarter to date, and more than 25% of our online sales are being fulfilled through stores, allowing us to ship a much larger percentage of demand than we were a year ago. In addition to our shift from store capability, my online pickup and store, which we launched at the end of the fourth quarter, has started to show encouraging results as it allows for more speed to market in terms of where product is coming from. We expect both shift from store and focus to be even more refined in the second half of this year. In addition, we have seen strength in our retail marketing strategies, which is driving conversion in stores. Looking forward, we will continue to focus on strengthening our omnichannel capabilities to drive Vince Holding Corporation's digital transformation. We will be replatforming the front end platforms of both Vince and Rebecca Taylor starting in the second half of 2022. We have selected Salesforce, our current partner for these new platforms, and we'll have them in place by the end of the year. Subsequent to that, we will install a true customer data platform, CDP, which will further enhance our target marketing and personalization capabilities. Turning to our international business, I'd like to start by acknowledging the deeply troubling situation that is happening in the Ukraine. All of us have been standing stand in support with the people of Ukraine. And to show the support, we have made a $50,000 donation to Ukrainian relief efforts. In addition, we have created a selection of accessories with our partner and account for Ukrainian refugee support to further raise funds for this cause. All of that said, our business in Eastern Europe is extremely small and we have now stopped that business. We are confident we can make up this exposure in Eastern Europe between our Spanish, Australian, and Chinese businesses. In China, we are excited to announce that we have entered a wholesale relationship, which will allow us to open our first store in Shanghai and launch on web in the back half of this year. Alongside that, we are still in conversations with our joint venture partner to fully launch the Vince brand in China. We look forward to providing you with an update on future calls as these conversations progress. Overall, we are very pleased with the performance of the Thence brand over the past year and remain extremely confident in its future. Our teams will continue to work hard to take advantage of all of the opportunities ahead as we drive market share gains in the contemporary luxury category. Turning to Rebecca Taylor, we are making progress and heading in the right direction. As we grow the brand, a key focus for the team has been establishing margin healthy strategies through full price selling. Similar to the Vince brand, Rebecca has been met with no resistance to price increases. We are encouraged by the reception of her spring assortment, which extends the spring 2021 relaunch, and our recent fall and winter assortments by continuing to 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 first quarter, We have seen a great response to lace, crochet, and prints thus far. In wholesale, we have seen success by leveraging relationships with existing partners. We believe there is a growing white space in this category that we can take advantage of to drive market share gains. Looking ahead, we will be launching a test of six select Dillard stores this coming fall. We are encouraged by the performance of our West Coast stores, including our new store in Palm Springs, as well as our outlets in Carlsbad and Livermore, California. During the fourth quarter, we opened three full-price stores and one outlet for Rebecca Taylor. As a reminder, we currently have 18 Rebecca Taylor stores, 10 of which are full-price and 8 of which are outlet stores. As we continue to increase our marketing efforts, we are seeing the results start to meet our expectations. The social engagement rate in the fourth quarter sequentially increased approximately 42%. For spring, we are taking the foundation of the Rebecca brand and embedding it into the concept of travel around the world. Similar to Vince, our messaging focuses on demonstrating how the brand is appropriate wherever you go as the world starts to regain the need for occasion-based items. Based on the successful partnership Vince has had with American Express for several years, we made it a focus for Rebecca Taylor in the first quarter and are very pleased with the results. Overall, we will continue to learn to lean into a similar strategic plan to what drove success at Vint's as we redefined our merchandising servant and enhanced our brand messaging. In conclusion, our performance reflects the strength of our distinct fashion brands. Despite experiencing extraordinary headwinds as I joined Vint's holding a year ago, we continue to impressively manage through these challenges while making progress on our three-year plan that we announced in January. As I watch the hard work, the good hard work, of our teams put in quarter after quarter, I continue to be more excited about the future. In 2022, we will continue to use a disciplined approach while executing on key strategies to drive future growth for our shareholders. With that, I will turn it over to Dan.