Vince (NASDAQ:VNCE) reported fourth quarter and full-year fiscal 2025 results that management said reflected accelerating momentum in its direct-to-consumer business and improving profitability, despite tariff-related cost pressures and disruption tied to the reorganization of Saks Global.
Direct-to-consumer momentum drives fourth quarter growth
Chief Executive Officer Brendan Hoffman said the company delivered “exceptional momentum” at the end of fiscal 2025 that “has continued into the start of fiscal 2026.” He pointed to holiday-period strength that carried through the quarter, with direct-to-consumer (DTC) sales up about 10% year over year, supported by efforts to improve the customer experience and pricing actions taken earlier in the fall.
Hoffman said developments tied to Saks Global created a headwind of approximately $2 million to sales in the quarter, but noted that Saks Global recently represented less than 7% of the company’s total sales. He added the company now has “more clarity” following Saks Global’s reorganization and is working with partners there, saying Vince remains supportive of the new leadership team’s efforts to stabilize the business. Hoffman also said the company expects potential changes at that partner to be offset by strength elsewhere in wholesale given its diversified customer base and relationships.
Margins pressured by tariffs, promotions, and freight; bad debt drove SG&A increase
Okumura reported fourth quarter gross profit of $41.1 million, or 49.1% of net sales, compared with $40.1 million, or 50.1% of net sales, in the prior-year quarter. He said the gross margin rate decline was primarily driven by:
- Approximately 300 basis points of unfavorable impact from higher tariffs
- About 160 basis points from promotional Black Friday and Cyber Monday events
- Roughly 125 basis points from higher freight costs
Those headwinds were partially offset by a favorable impact of about 380 basis points, “primarily due to higher pricing,” according to Okumura.
Selling, general, and administrative expenses rose to $44 million, or 52.6% of net sales, compared with $37.8 million, or 47.2% of net sales, a year earlier. Okumura said the increase was primarily driven by $6 million of bad debt expense related to Saks’ reorganization.
Loss from operations narrowed to $2.9 million from a loss of $29.7 million in the prior-year quarter. On an adjusted basis excluding the $6 million Saks-related bad debt expense, adjusted operating income was $3.1 million versus adjusted operating income of $2.5 million a year ago (which excluded goodwill impairment charges and transaction expenses in the prior period).
Net interest expense decreased to $0.7 million from $1.6 million, which Okumura said was primarily due to a paydown of the third lien facility in January 2025. Long-term debt at the end of the fourth quarter was $19.5 million.
Net loss for the quarter was $3.6 million, or $0.28 per share, compared with a net loss of $28.3 million, or $2.24 per share, in the year-ago quarter. Adjusted net income, excluding the Saks-related bad debt expense, was $2.4 million, or $0.18 per share, compared with adjusted net income of $0.8 million, or $0.06 per share, in the prior-year quarter.
Adjusted EBITDA was $4.5 million, compared with $5.4 million in the fourth quarter of fiscal 2024.
Full-year results show sales growth despite tariffs
Hoffman said fiscal 2025 results included sales growth of over 2% and adjusted EBITDA growth of about 8% despite approximately $8 million of incremental tariff costs. He credited mitigation efforts including diversified sourcing across Asia and globally and working with manufacturing partners to maintain quality, along with pricing increases that he said were implemented “while maintaining unit sales.”
Okumura reported full-year net sales growth of 2.2%, reported net income of $6.4 million, and adjusted EBITDA of $15.1 million.
On the balance sheet, Okumura said net inventory at quarter end was $66.2 million, compared with $59.1 million a year earlier, with the increase primarily driven by approximately $4.8 million of higher inventory carrying value due to tariffs.
Strategic initiatives: store updates, drop-ship expansion, men’s growth, and international opportunities
Management discussed several initiatives aimed at supporting growth in fiscal 2026 and beyond. Hoffman said the company is exploring opportunities to invest in the customer experience in full-price DTC, including “special events, people, and store operations, including remodels and new store openings,” while continuing to leverage its digital platform.
Hoffman also highlighted plans to expand drop-ship offerings into additional categories. He said that in Spring 2026, drop-ship categories will include handbags, tailored clothing, belts, and accessories, which he described as creating revenue opportunity with minimal inventory risk. In response to an analyst question, Hoffman said Vince started drop ship with shoes through Caleres and expects to add handbags, suiting, and accessories in the second quarter.
Men’s remains another growth area. Hoffman said the company ended the year with men’s representing approximately 24% of total sales and sees opportunity to expand this to 30% penetration, driven by wholesale partnerships and expanded assortments in Vince stores and online.
Internationally, Hoffman said the company’s second London store in Marylebone “exceeded expectations” and validated its view on additional international expansion. He said the company is exploring additional flagship opportunities in gateway cities such as Paris “in the next two years,” while noting that the company wants the right flagship location given limited current representation in Paris.
Hoffman also said the company continues to evaluate ways to “maximize Vince Holding Corp. as a platform” by supporting additional brands, though he emphasized there was nothing to report yet. He praised the company’s partnership with Authentic Brands Group (ABG), citing marketing and customer engagement opportunities, including a recent event at the Masters and other brand activations with wholesale partners. Hoffman also described recent brand events, including a Spring 2026 capsule collection tied to Bloomingdale’s California Love campaign and an event attended by “over 100 editors and influencers,” along with a private dinner for Bloomingdale’s top customers.
Fiscal 2026 outlook: growth expected to continue
Okumura said the momentum from the fourth quarter has continued into the start of fiscal 2026. For the first quarter, the company expects total net sales growth of approximately 8.5% to 10.5%. The company projects an adjusted operating loss as a percentage of net sales of approximately -3.5% to -4.5% and adjusted EBITDA as a percentage of net sales of approximately -1.5% to -2.5%, representing year-over-year expansion versus -5.2% in the prior-year period.
For the full year fiscal 2026, Vince expects net sales growth of approximately 3% to 6%, adjusted operating income as a percentage of net sales of approximately 3.5% to 4%, and adjusted EBITDA margin of approximately 5% to 5.5% compared with 5% in the prior year.
Okumura said the outlook assumes a reduced reciprocal tariff rate of 15% and expects any benefit to be “largely offset” by increased supply chain costs driven by higher fuel and shipping costs. He added the company is not assuming any benefit from potential tariff refunds.
During the Q&A session, Hoffman said store performance has been particularly strong, calling recent results “probably the best performance I’ve seen over the course of six months in our stores” during his tenure with the company. He said Vince expects to open and close some domestic stores but does not anticipate a large increase in store count, focusing instead on rationalization and productivity improvements. On wholesale, Hoffman said growth is increasingly tied to deepening relationships with existing partners, highlighting expansion and events with Nordstrom and Bloomingdale’s, while expressing cautious optimism that the Saks Global business will move in the right direction under new leadership.
Hoffman closed the call by telling investors the company would provide a first quarter update in June.
About Vince (NASDAQ:VNCE)
Vince Holding Corp. designs, merchandises, and sells luxury apparel and accessories in the United States and internationally. It operates through three segments: Vince Wholesale, Vince Direct-to-Consumer, and Rebecca Taylor and Parker. The company offers a range of women’s products, such as cashmere sweaters, silk blouses, leather and suede leggings and jackets, dresses, skirts, denims, pants, t-shirts, footwear, outerwear, and accessories; and men’s products comprising t-shirts, knit and woven tops, sweaters, denims, pants, blazers, footwear, and outerwear under the Vince brand.
