Vince Holding Corp.

Hello everyone and welcome to Vince Holding Corp's third quarter fiscal 2024 results call. My name is Lydia and I'll be your operator today. After the prepared remarks, there'll be an opportunity to ask questions. If you'd like to participate in the Q&A, you can do so by pressing star followed by one on your telephone keypad. I'll now hand you over to Akiko Okuma, Chief Administrative Officer and Head of Investor Relations to begin. Please go ahead.

Thank you and good morning everyone. Welcome to Vince Holding Corp's third quarter fiscal 2024 results conference call. Hosting the call today is Dave Stesco, Interim Chief Executive Officer, and John Sapansky, 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. In addition, in today's discussion, the company is presenting its financial results in conformity with GAAP and on an adjusted basis. The adjusted results that the company presents today are non-GAAP measures. Discussions of these non-GAAP measures and information on reconciliations of them to their most comparable GAAP measures are included in today's press release and related schedules, which are available in the Investors section of the company's website at investors.biz.com. Now I'll turn the call over to Dave.

Thank you, Akiko, and thank you everyone for joining us this morning. I will begin with a review of highlights from our third quarter performance before turning the call over to John to discuss our financial results and outlook in more detail. Our third quarter results reflect our ongoing focus on driving a stronger full price business while executing an increasingly more efficient operating model through our transformation efforts. Despite our top line performance falling slightly short of our expectations driven by lower than expected in season reorders in our international wholesale business, as well as lower than expected sales in our outlet channel, we delivered profitability results in line with our prior guidance range, driven entirely by gross margin expansion. Within our direct to consumer channel, we made the strategic decision to pull back promotional activity even more than originally planned in our outlet channel which led to the lower than expected sales mentioned, but yielded a much healthier margin performance for the quarter. With the ongoing work in focusing on a stronger full-price business, we were pleased to see growth in our full-price customer file accelerate to the high single-digit range, outpacing the trends we delivered in the first half of the year. This growth was spread fairly evenly between our stores and e-commerce channels. With respect to our wholesale performance, as we mentioned on our last earnings call, we expected our third quarter sales to be lower than the prior quarter given the earlier timing of shipments. In addition, we saw lower than expected in-season reorders with our international partners, particularly in Asia. We believe this was largely due to the impact the stronger U.S. dollar had on our partners' purchasing decisions in season. Despite these top-line dynamics, similar to our DTC channel, we saw strong full-price performance across wholesale during the period. We are continuing to see customer demand shift from the higher-end designer luxury assortments into contemporary brands like Vince. Our relationships with our key wholesale partners remain strong, and we are again highlighted by Nordstrom as a leading brand supporting the mid-teen sales growth they delivered in their women's apparel business in the third quarter. We were also excited to have Jill Norton, our President of North American Sales, recently participate in the NordiPod, hosted by Pete Nordstrom, where they discussed the long history we have with the iconic department store over the past 20 plus years. In women's and men's, our knits assortments outperformed as customers continued to demonstrate buy now, wear now behavior. While the first half of the quarter is typically a more transitional period from summer to fall in retail, we were pleased to successfully continue to sell through the summer assortment at full price as customers responded to the fabrications and color palette of our offering. While we did see a slower start to our sweaters and outerwear assortments given the unseasonally warm weather this fall, we entered the fourth quarter with a strong full price assortment that we believe will now resonate with the colder temperatures. In addition, we also continue to see opportunity in expanding our men's business, which currently exceeds 20% of our total sales. During the quarter, we successfully launched our new men's pants program, which highlighted a broader range of fits with superior Italian fabrics at a competitive retail price. In conjunction with this launch, we introduced a pant guide to communicate fit names and measurements more clearly to the customer in order to increase customer satisfaction and decrease returns. We have been very pleased with the initial response to this offering and helps to further support our goal in expanding our men's business to 30% of total revenues. As we look to further progress our strategic growth initiatives with the strengths we are seeing in our customer file, we're even more confident in the opportunity we have with the Vince brand and our ability to acquire a higher value customer. To support these efforts, we have continued to look for opportunity to further enhance our customer acquisition efforts through more personalized and targeted initiatives focused on increasing lifetime value across our customer base, especially amongst our top 10% of customers, our VICs, who represent nearly 40% of demand across the full price direct-to-consumer channel. James Rattling Leafs, During the quarter and heading into the holidays, we have introduced early access events encourage traffic to stores through exclusive offerings and are exploring other engagement opportunities that we believe will resonate with this cohort. James Rattling Leafs, Our most recent direct mail campaign which ran through November and ended on December 2 saw outsized performance from our VIPs with a redemption rate four times that of our non VIP audience and a 50% higher. average order value than our non-BIC audience. As we have discussed before, another vehicle for customer acquisition is through new stores, and we are actively working to identify white space opportunities for the brand. Our recent market analysis, completed with Cushman and Wakefield, evaluated our e-commerce and wholesale sales data by zip code along with demographic information to identify the most promising markets for store expansion in the U.S. Through this analysis, we identified Nashville as one of our top five untapped markets. We recently executed a lease for our first Nashville store, which will open in late fiscal 2025. We're hopeful to also open a store for an additional top five market in 2025. In addition, we are also expanding our presence in London with the opening of our second location in the region. This new London store, located on Marylebone High Street a famed destination known for its unique blend of history, culture, and shopping, will officially open in the spring of fiscal 2025. We have temporarily opened it as a pop-up location for the holiday shopping season and look forward to expanding our reach in this important natural market. As we look ahead, we'll continue to explore other opportunities to expand our presence and enhance our omni-channel experience welcoming both new and existing customers to the brand. As we continue to position Vince for long-term sustainable growth, we also remain committed to delivering on our transformation plan. At the end of the third quarter, we are ahead of our plans to achieve our target for fiscal 2024. In addition to the improvements we are making within our cost of goods as part of the transformation plan, We have also been working on strategies to diversify our geographical exposure in light of the ongoing discussions regarding tariffs. As we begin to take actions for 2025 product seasons, we believe we will see a reduction of nearly 40% in our production of product in China. Further reduction strategies are being discussed. Looking ahead, we expect to continue to execute a healthy full price business across all channels and are very encouraged by the results we have driven thus far this quarter, including across the Black Friday, Cyber Monday period. While we are enthused by our results to date, we remain cautious with our outlook given the shortened holiday season and the ongoing uncertainty around the consumer. We do believe we're well positioned to deliver on our objectives for this year. Before I turn the call over to John, I would like to acknowledge our teams for their continued efforts towards achieving our goals while prioritizing and enhancing our relationships with our customers, vendors, and wholesale partners. We are highly confident in Vince's future and together remain dedicated to ensuring its long-term success. I'll now turn it over to John to discuss our financial results and outlook in more detail. John?