Vince Q2 Earnings Call Highlights

Key Points

• Vince’s second-quarter sales rose 11.7% to $81.8 million, driven by growth in direct-to-consumer and wholesale channels. Adjusted operating income and EBITDA increased substantially, though gross-margin expansion was helped by a $10.4 million tariff-refund benefit.
• The company raised its fiscal 2026 outlook for the core Vince business, projecting sales growth of approximately 8% to 10% and adjusted EBITDA margins of 9% to 9.5%. Third-quarter sales are expected to increase 5% to 8% year over year.
• Vince plans to expand newly acquired OVO through additional U.S. stores, e-commerce and wholesale distribution. OVO is expected to be earnings-neutral in fiscal 2026 but accretive in fiscal 2027, with management targeting more than $100 million in revenue by fiscal 2030.

Vince NASDAQ: VNCE reported higher second-quarter fiscal 2026 sales and raised its full-year outlook for its core Vince business, while outlining plans to expand its newly acquired OVO streetwear brand through U.S. wholesale, retail and e-commerce.

Chief Executive Officer Brendan Hoffman said the company delivered sales growth of nearly 12% during the quarter, supported by gains across direct-to-consumer and wholesale channels. He said sales were aided by full-price transactions in women’s and men’s apparel, including woven tops, lightweight outerwear, seasonal knits and sweaters.

“Our summer and pre-fall collections resonated particularly well, and that momentum extended into the Nordstrom anniversary event,” Hoffman said. He added that growth in the company’s full-price customer base across channels supported management’s confidence in the business.

Second-Quarter Financial Results

Total net sales increased 11.7% to $81.8 million from $73.2 million in the prior-year quarter. Direct-to-consumer sales rose 13.7%, with growth in both e-commerce and stores, while wholesale sales increased 10.4%.

Gross profit totaled $49.8 million, or 60.9% of sales, compared with $36.9 million, or 50.4% of sales, a year earlier. Chief Financial Officer Yuji Okumura said the latest quarter included a $10.4 million benefit from tariff refunds. Excluding that benefit, gross margin declined 290 basis points, which the company attributed to higher product and freight costs.

Selling, general and administrative expenses were $36.3 million, or 44.3% of sales, compared with $25.8 million, or 35.2% of sales, in the prior-year period. Okumura noted that the prior-year quarter included approximately $5.6 million in Employee Retention Credit payments. Excluding that prior-year benefit and $2.9 million of OVO acquisition-related transaction costs in the latest period, SG&A as a percentage of sales improved by about 210 basis points on higher sales and fixed-cost leverage.

• Income from operations was $13.6 million, compared with $11.2 million a year earlier.
• Adjusted income from operations was $16.4 million, including tariff refunds, compared with $5.5 million in the prior year.
• Net income was $10.6 million, or $0.80 per diluted share, versus $12.1 million, or $0.93 per diluted share, a year earlier.
• Adjusted net income was $13.5 million, or $1.02 per diluted share, compared with $4.9 million, or $0.38 per diluted share, in the prior-year quarter.
• Adjusted EBITDA was $18 million, including the tariff refund benefit, compared with $6.7 million in the prior-year period excluding an Employee Retention Credit benefit.

Long-term debt stood at $12.3 million at the end of the quarter. Net inventory was $73.4 million, down from $76.7 million a year earlier, primarily reflecting $2.6 million in IEEPA tariff refunds, according to Okumura.

Vince Raises Fiscal 2026 Outlook

The company’s updated financial outlook is specific to the Vince business and excludes OVO, along with transaction and integration costs related to the acquisition. The outlook includes tariff refund benefits, although management expects the $2.6 million currently reflected in inventory to flow through during the second half and be offset by elevated product and freight costs.

For the third quarter, Vince expects net sales to rise approximately 5% to 8% from the prior-year period. The company expects adjusted operating income to represent about 7.5% to 8.5% of net sales and adjusted EBITDA to represent about 8.5% to 9.5% of sales.

For the full fiscal year, the company now expects Vince net sales to increase approximately 8% to 10% from fiscal 2025. Vince forecast adjusted operating income margins of approximately 7.5% to 8% and adjusted EBITDA margins of approximately 9% to 9.5%.

Hoffman said the men’s business represents about 25% of total business and continues to grow, although the women’s business is also expanding. He said the company is working with Authentic Brands Group on category extensions including tailored clothing, handbags, shoes, baby and home products, while evaluating opportunities that can add to the store experience and support drop-shipping.

OVO Acquisition Expands Multi-Brand Strategy

On Aug. 27, Vince announced and completed its acquisition of OVO’s operating business. OVO is a contemporary streetwear brand co-founded by Drake, with 12 stores in Canada, the U.S. and the U.K. and an e-commerce business.

Authentic acquired a majority stake in OVO’s intellectual property, while Drake retains a 44% stake. Vince owns 5% of the intellectual property and has a long-term license agreement to manufacture and sell OVO products.

Hoffman said Vince and OVO will retain separate brand operations and creative teams, with Vince providing operating support in areas including sourcing, production, logistics and back-office infrastructure. He said the company plans to use its merchandising, sourcing, production and wholesale capabilities to support OVO’s next phase of growth.

The company expects to expand OVO’s U.S. store and e-commerce presence and introduce the brand to U.S. wholesale partners. Hoffman said management is in discussions with major wholesale partners but has not announced a launch partner. He said a broader wholesale introduction is expected around the summer or back half of next year, though a capsule launch could occur earlier.

OVO generated nearly $50 million in net sales for calendar 2025, according to Hoffman. Vince expects OVO’s pro forma calendar 2026 sales to be relatively flat compared with calendar 2025 as it reinvests in inventory and marketing. OVO is expected to be earnings-neutral to Vince in fiscal 2026, net of transaction costs, and earnings-accretive in fiscal 2027.

Longer-Term OVO Growth Plans

Management said it sees a path for OVO to become a business with more than $100 million in revenue by fiscal 2030 and adjusted EBITDA margins in the low-double-digit percentage range. The plan includes expanding OVO from 12 stores to about 20 stores by 2030, with an emphasis on the U.S. market, launching U.S. wholesale and improving e-commerce through marketing and site optimization.

Vince also intends to use OVO’s Canadian infrastructure and local presence to open five to six Vince stores in Canada and build its e-commerce and wholesale positioning in that market.

Hoffman said Drake remains committed to OVO and is expected to contribute to its overall direction, selected personal appearances and oversight of product and marketing aligned with the brand’s vision. He also said the company plans to focus first on integrating and growing OVO before considering additional brands for the platform.

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.

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