Q3 2024 Vince Holding Corp Earnings Call
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.
Speaker Change: I'll now hand, you over to Akiko Kumar Chief administrative officer, and head of Investor Relations to begin. Please go ahead.
Speaker Change: Thank you and good morning, everyone welcome to Vince holding Corp, third quarter fiscal 2024 results conference call hosting the call today is <unk>.
Speaker Change: <unk> interim Chief Executive Officer, and John <unk> Chief.
Speaker Change: Chief Financial Officer.
Speaker Change: 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 could differ from those that the company expects.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: In addition in todays 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 a reconciliation of them to their most comparable GAAP measures are included in today's.
Speaker Change: Press release and related schedules, which are available in the investors section of the company's website at investors often dot com.
Dave: Now I'll turn the call over to Dave.
Dave: Thank you P J and thank you everyone for joining us this morning.
Dave: 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.
Dave: Our third quarter results reflect our ongoing focus on driving a stronger full price business.
Dave: Executing an increasingly more efficient operating model through our transformation efforts.
Dave: Despite our topline performance falling slightly short of our expectations driven by lower than expected in <unk>.
Dave: Season, Reorders, and 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.
Dave: 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 and focusing on our stronger full price business. We were pleased to see growth in our full price customer file accelerated to the high single digit range outpacing the trends we delivered in the first half of the year.
Dave: This growth was spread fairly evenly between our stores and ecommerce channels.
Dave: 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.
Dave: In addition, we saw lower than expected in season, Reorders with our international partners, particularly in Asia.
Dave: We believe this was largely due to the impact of the stronger U S. Dollar had on our partner's purchasing decisions in season.
Dave: Despite these top line dynamics similar to our DTC channel.
Dave: We saw strong full price performance across wholesale during the period.
Dave: We are continuing to see customer demand shifts from the higher end designer luxury assortments into contemporary brands like Vince.
Dave: Our relationships with our key wholesale partners remained strong and we are again highlighted by Nordstrom is a leading brand supporting the mid teen sales growth they delivered and their women's apparel business in the third quarter.
Dave: We were also excited to have Joe Norton, our president of North American sales recently participate in minority pod hosted by Pete Nordstrom, where they discussed the long history, we have with the iconic department store over the past 20 plus years.
Dave: In women's and men's our niche assortments outperformed as customers continued to demonstrate buy now wear now behavior.
Dave: While the first half of the quarter is typically a more transitional period from summer to fall and retail we were pleased to successfully continue to sell through the.
Dave: The summer assortment at full price as customers responded to the fabrications and color palette of our offering.
Dave: While we did see a slower start to our sweaters and outerwear assortment given the unseasonably warm weather this fall.
We entered the fourth quarter with strong full price assortment that we believe will now resonate with the colder temperatures.
Dave: In addition, we also continued to see opportunity and expanding our men's business, which currently exceeds 20% of our total sales.
Dave: During the quarter, we successfully launched our new men's pants program.
Dave: Highlight a broader range of fits with superior Italian fabrics at a competitive retail price.
Dave: 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 decreased returns.
Dave: 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.
Dave: As we look to further progress our strategic growth initiatives with the strength, we're 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 are zic's will represent nearly 40% of <unk>.
Dave: <unk> across the full price direct to consumer channel.
Dave: 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.
Dave: Our most recent direct mail campaign, which ran through November and ended on December 2nd saw outsized performance from our <unk> with a redemption rate four times that of our non the IC audience and a 50% higher average order value than our non <unk> audience.
Dave: 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.
Dave: 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.
Dave: Through this analysis, we identified Nashville is one of our top five untapped markets.
Dave: We recently executed a lease for our first national store, which will open in late fiscal 2025.
Dave: We are hopeful to also open a store for an additional top five market in 2025.
Dave: In addition, we are also expanding our presence in London with the opening of our second location in the region.
Dave: This new London store located on marrow bone High Street, a feigned destination known for its unique blend of history culture and shopping.
Dave: Actually opened in the spring of fiscal 2025.
Dave: We have temporarily open it as a pop up location for the holiday shopping season, and look forward to expanding our reach in this important metro market.
Dave: As we look ahead, we will continue to explore other opportunities to expand our presence and enhance our omnichannel experience without winning both new and existing customers to the brand.
In conjunction with this launch we introduced a pad guide to communicate fit names and measurements more clearly to the customer in order to increase customer satisfaction and decreased returns.
Dave: As we.
Dave: <unk> positioned Vince for long term sustainable growth. We also remain committed to delivering on our transformation plan.
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.
Dave: At the end of the third quarter. We are ahead of our plans to achieve our target for fiscal 2024.
As we look to further progress our strategic growth initiatives with the strength, we're 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.
Dave: In addition to the improvements we are making within our cost of goods as part of the transformation plan.
Dave: We have also been working on strategies to diversify our geographical exposure in light of the ongoing discussions regarding tariffs.
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 are the EIC, who represent nearly 40% of the <unk>.
Dave: As we began to take actions for 2025 products seasons, we believe we will see a reduction of nearly 40% and our production of product in China.
Dave: Further reduction strategies are being discussed.
Dave: Looking ahead, we expect to continue to execute our 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.
Man across the full price direct to consumer channel.
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.
Dave: 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.
Dave: We do believe we are well positioned to deliver on our objectives for this year.
Our most recent direct mail campaign, which ran through November and ended on December 2nd saw outsized performance from our <unk> with a redemption rate four times that of our nod the IC audience, and a 50% higher average order value than our non zic audience.
Dave: Before I turn the call over to John I would like to acknowledge our team for their continued efforts towards achieving our goals, while prioritizing and enhancing our relationships with our customers vendors and wholesale partners.
Speaker Change: We're highly confident in <unk> future and together remain dedicated to ensuring its long term success.
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.
Speaker Change: I'll now turn it over to John to discuss our financial results and outlook in more detail.
Speaker Change: John.
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.
John: Thank you, Dave and good morning, everyone.
As Dave discussed our disciplined approach to full price selling and execution of our transformation plan continued to strengthen our financial foundation this quarter.
John: While total revenue declined compared to the prior year period, we achieved meaningful bottom line improvements highlighted by substantial gross margin expansion.
Through this analysis, we identified Nashville is one of our top five untapped markets.
We recently executed a lease for our first Nashville store, which will open in late fiscal 2025.
John: Let me walk you through the key financial metrics and provide additional color on our performance for the quarter.
We are hopeful to also open a store for an additional top five market in 2025.
John: Total company net sales for the third quarter decreased four 7% to $80 2 million.
In addition, we are also expanding our presence in London with the opening of our second location in the region.
John: Compared to $84 1 million in the third quarter of fiscal 2023.
New London store located on a marrow bone high Street.
John: The year over year decrease in total company net sales was driven by an eight 3% decrease in our direct to consumer segment and a two 2% decrease in our wholesale segment.
Feigned destination known for its unique blend of history culture and shopping will officially open in the spring of fiscal 2025.
Speaker Change: As Dave reviewed these results were slightly below our expectations driven by lower than expected in season, Reorders and our international wholesale business as well as lower than expected revenues in our outlet channel.
We have temporarily open it as a pop up location for the holiday shopping season, and look forward to expanding our reach in this important metro market.
As we look ahead, we will continue to explore other opportunities to expand our presence and enhance our omnichannel experience.
Speaker Change: Combined these factors negatively impacted sales growth in the quarter by 300 basis points.
Both new and existing customers to the brand.
Speaker Change: Excluding these factors revenue trends would have been more in line to our expectations, which incorporated ongoing headwinds in our direct to consumer segment from store closures, which was a 163 basis point impact on the quarter as well as the pullback in promotional activity compared to the prior year.
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.
With respect to our wholesale business, we had expected a deceleration in the top line from the prior quarter given the earlier timing of shipments that we previously discussed on our last call.
Speaker Change: Gross profit in the third quarter was $40 1 million or 50% of net sales.
As we began to take actions for 2025 products seasons, we believe we will see a reduction of nearly 40% in our production of product in China.
Speaker Change: This compares to $37 2 million or 44, 2% of net sales in the third quarter of last year.
Further reduction strategies are being discussed.
Speaker Change: The increase in gross margin rate was driven by approximately 480 basis points related to lower product costing and freight costs and 80 basis points related to lower promotional activity in the <unk>.
Looking ahead, we expect to continue to execute our healthy full price business across all channels and are very encouraged by the results, we've driven thus far this quarter, including across the Black Friday cyber Monday period.
Speaker Change: Direct to consumer segment and lower discounting.
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.
Speaker Change: These factors were partially offset by approximately 50 basis points attributable to channel mix.
Speaker Change: Selling general and administrative expenses in the quarter were $34 3 million or 42, 8% of net sales as compared to $34 4 million or 49% of net sales for the third quarter of last year.
We do believe we are well positioned to deliver on our objectives for this year.
Before I turn the call over to John I would like to acknowledge our team for their continued efforts towards achieving our goals, while prioritizing and enhancing our relationships with our customers vendors and wholesale partners.
Speaker Change: SG&A dollars were relatively flat compared to the prior year as a zero point $5 million decrease in marketing and advertising expenses, a zero point $3 million decrease in rent and occupancy costs.
John: We are highly confident in <unk> future and together remain dedicated to ensuring its long term success.
John: I'll now turn it over to John to discuss our financial results and outlook in more detail.
Speaker Change: Europe was $2 million of expense favorability compared to last year, given the transaction related expenses with the authentic transaction was offset by <unk> 8 million and increased compensation and benefits due primarily to higher severance and incentive compensation.
John: John.
Thank you, Dave and good morning, everyone.
John: As Dave discussed our disciplined approach to full price selling and execution of our transformation plan continued to strengthen our financial foundation this quarter.
John: While total revenue declined compared to the prior year period, we achieved meaningful bottom line improvements highlighted by substantial gross margin expansion.
Speaker Change: Operating income for the third quarter was $5 8 million compared to an operating income of $2 8 million in the same period last year.
Speaker Change: Let me walk you through the key financial metrics and provide additional color on our performance for the quarter.
Speaker Change: Excluding the transaction related expenses incurred in the prior year period, adjusted operating income for the third quarter of fiscal 2023 was $3 1 million.
Speaker Change: Total company net sales for the third quarter decreased four 7% to $80 2 million.
Speaker Change: Adjusted operating margin increased approximately 350 basis points compared to the prior year driven by the gross margin expansion, which was partially offset by SG&A deleverage in the quarter given the decline in revenue.
Speaker Change: Compared to $84 1 million in the third quarter of fiscal 2023.
Speaker Change: The year over year decrease in total company net sales was driven by an eight 3% decrease in our direct to consumer segment and a two 2% decrease in our wholesale segment.
Speaker Change: Net interest expense for the third quarter decreased $1 $7 million compared to $2 million in the prior year.
As Dave reviewed these results were slightly below our expectations driven by lower than expected in season, Reorders and our international wholesale business as well as lower than expected revenues in our outlet channel.
Speaker Change: The decrease was primarily driven by expenses related to the refinancing transactions in the prior year as well as the year over year reduction in debt.
Combined these factors negatively impacted sales growth in the quarter by 300 basis points.
Speaker Change: There was no provision for income taxes this quarter as given our year to date ordinary pretax losses for the interim period.
Excluding these factors revenue trends would have been more in line to our expectations, which incorporated ongoing headwinds in our direct to consumer segment from store closures, which was a 163 basis point impact on the quarter as well as the pullback in promotional activity compared to the prior year.
Speaker Change: And our expectation for annual ordinary pretax income for the fiscal year.
Speaker Change: We determined that it is more likely than not that the tax benefit of the year to date loss will not be realized in the current or future years and as such tax provisions for the interim periods should not be recognized until we have year to date ordinary pretax income.
Speaker Change: With respect to our wholesale business, we had expected a deceleration in the top line from the prior quarter given the earlier timing of shipments that we previously discussed on our last call.
Speaker Change: This compares to an income tax benefit of <unk> 5 million in the same period last year.
Speaker Change: Net income for the third quarter was $4 $3 million or earnings per share of <unk> 34.
Speaker Change: Gross profit in the third quarter was $40 1 million or 50% of net sales.
Speaker Change: Compared to net income of $1 million or earnings per share of <unk> <unk> in the third quarter last year.
Speaker Change: This compares to $37 2 million.
Speaker Change: Or 44, 2% of net sales in the third quarter of last year.
Speaker Change: The prior year period includes a onetime items related to transaction expenses.
Speaker Change: The increase in gross margin rate was driven by approximately 480 basis points related to lower product costs and freight costs.
Speaker Change: Excluding these items adjusted net income in the third quarter of fiscal 2023 was $1 $8 million or income per share of <unk> 15.
Speaker Change: And 80 basis points related to lower promotional activity in the direct to consumer segment and lower discounting.
Moving to the balance sheet net.
Speaker Change: Net inventory was $63 8 million at the end of the third quarter as compared to $69 6 million at the end of the third quarter last year.
Speaker Change: These factors were partially offset by approximately 50 basis points attributable to channel mix.
Speaker Change: Selling general and administrative expenses in the quarter were $34 3 million or 42, 8% of net sales as compared to $34 4 million or 49% of net sales for the third quarter of last year.
As we are continuing to take a disciplined approach to investing back into inventory to support the growth in both DTC and wholesale channels. We now expect inventory for fiscal 2024 to be up high single digits to fiscal 2023.
Speaker Change: SG&A dollars were relatively flat compared to the prior year as a zero point $5 million decrease in marketing and advertising expenses, a zero point $3 million decrease in rent and occupancy costs.
Speaker Change: Turning now to our outlook for the balance of the year.
For Q4 fiscal 2024, we expect total net sales to be down mid single digits to up low single digits compared to $75 $3 million in the prior year quarter.
Speaker Change: And <unk> $2 million of expense favorability compared to last year, given the transaction related expenses with the authentic transaction was offset by <unk> 8 million and increased compensation and benefits due primarily to higher severance and incentive compensation.
Speaker Change: With respect to operating margin, we expect Q4 fiscal 2024 operating margin to increase approximately 200 to 300 basis points compared to last year's adjusted operating margin of negative two 2%.
Speaker Change: Operating income for the third quarter was $5 8 million compared to an operating income of $2 8 million in the same period last year.
We expect improved full price penetration disciplined promotions and the impact of our transformation initiatives to be the primary drivers of the operating margin increase somewhat offset by SG&A deleverage from incentive compensation.
Excluding the transaction related expenses incurred in the prior year period.
Speaker Change: Adjusted operating income for the third quarter of fiscal 2023 was $3 1 million.
Speaker Change: With respect to our full year fiscal 2024 outlook, which as a reminder is a 52 week fiscal year. We continue to expect total net sales to decline in the low single digit range compared to $292 9 million in fiscal 2023, which included a 50 <unk> week, which.
Speaker Change: Adjusted operating margin increased approximately 350 basis points compared to the prior year driven by the gross margin expansion, which was partially offset by SG&A deleverage in the quarter given the decline in revenue.
Speaker Change: Net interest expense for the third quarter decreased $1 7 million compared to $2 million in the prior year.
Speaker Change: <unk> at approximately $2 2 million in net sales.
Speaker Change: We also continue to expect adjusted operating margins to increase 25 to 50 basis points compared to fiscal 2023, adjusted operating margin of one 4%.
Speaker Change: The decrease was primarily driven by expenses related to the refinancing transactions in the prior year as well as the year over year reduction in that there was no provision for income taxes this quarter as given our year to date ordinary pretax losses for the interim period.
Speaker Change: This outlook includes the negative impact of approximately 140 basis points from non comparable royalty expenses through may 2024 that we expect to offset through ongoing gross margin expansion and disciplined expense management driven in part by our transformation efforts.
And our expectation for annual ordinary pretax income for the fiscal year.
Speaker Change: We determined that it is more likely than not that the tax benefit of the year to date loss will not be realized in the current or future years and as such tax provisions for the interim periods should not be recognized until we have year to date ordinary pretax income.
As Dave reviewed we are pleased with the progress we are making with our transformation plan and are ahead of our plan to achieve our annual target as we enter the fourth quarter of fiscal 2024 as.
Speaker Change: As a reminder, about half of our total benefits from the transformation plan are expected to come from product cost efficiencies with no compromises to quality with the balance driven by targeted initiatives to improve pricing and promotions and reduce operating expenses.
Speaker Change: This compares to an income tax benefit for the zero point $5 million in the same period last year.
Speaker Change: Net income for the third quarter was $4 $3 million or earnings per share of 34.
Speaker Change: Compared to net income of $1 million or earnings per share of <unk> <unk> in the third quarter last year.
Speaker Change: This concludes our remarks and I will now turn it over to the operator to open the call for questions.
Speaker Change: The prior year period includes a onetime items related to transaction expenses.
Speaker Change: Thank you.
Speaker Change: Please press star followed by the number one if you'd like to ask a question I mean surely your devices, Amit you'd likely reinsurance on state.
Speaker Change: Excluding these items adjusted net income in the third quarter of fiscal 2023 was $1 $8 million or income per share of <unk> 15.
Speaker Change: Have you changed your mind you. The question has already been on stage for your.
Speaker Change: Your question by question, followed by the number changed.
Speaker Change: Moving to the balance sheet.
Speaker Change: Net inventory was $63 8 million at the end of the third quarter as compared to $69 $6 million at the end of the third quarter last year.
Speaker Change: We have a question from Eric data with Televisa.
Speaker Change: Please go ahead your line is open.
Speaker Change: As we are continuing to take a disciplined approach to investing back into inventory to support the growth in both DTC and wholesale channels. We now expect inventory for fiscal 2024 to be up high single digits to fiscal 2023.
Speaker Change: Good morning, congratulations on the progress.
AVG Ben: Thanks, a little bit about AVG Ben.
Speaker Change: How about AVG event, I know that some of the products have started to come in and some of the licensed products have started to come into the store at the end of Q3.
Speaker Change: Turning now to our outlook for the balance of the year.
For Q4 fiscal 2024, we expect total net sales to be down mid single digits to up low single digits compared to $75 3 million in the prior year quarter.
Speaker Change: For curious what the response has been to that and what should we be thinking about next year in terms of potential new product categories.
Speaker Change: The retail channel.
Speaker Change: Forward.
Speaker Change: With respect to operating margin, we expect Q4 fiscal 2024 operating margin to increase approximately 200 to 300 basis points compared to last year's adjusted operating margin of negative two 2%.
Thanks, Eric So at this time through fall season, and now pre spring is we'll be starting to ship.
Speaker Change: It's really the licensed products have been coming in has really been around shoes, and cold weather goods, which which are licenses that we've had for a few years.
Speaker Change: We expect improved full price penetration disciplined promotions and the impact of our transformation initiatives to be the primary drivers of the operating margin increase somewhat offset by SG&A deleverage from incentive compensation.
Speaker Change: As we as we indicated.
Speaker Change: In our remarks.
Speaker Change: Happy with our Black Friday, cyber Monday, and the license products continue to perform well.
Speaker Change: With respect to our full year fiscal 2024 outlook, which as a reminder is a 52 week fiscal year. We continue to expect total net sales to decline in the low single digit range compared to $292 9 million in fiscal 2023, which included a 50 <unk> week, which.
Speaker Change: Youll see new new licenses that AVG, Vince entered into since the transaction there will be a Belgian leather goods that will launch with the spring season, and then handbags.
Speaker Change: License has been signed but that's not expected to ship until fall fall of 2025.
<unk> approximately $2 2 million in net sales.
We also continue to expect adjusted operating margins increased 25% to 50 basis points compared to fiscal 2023, adjusted operating margin of one 4%.
Speaker Change: Okay.
Speaker Change: In terms of store potential.
As you are opening stores in both the UK and in the U S. How should we be thinking about.
Speaker Change: This outlook includes the negative impact of approximately 140 basis points from non comparable royalty expenses through may 2024 that we expect to offset through ongoing gross margin expansion and disciplined expense management driven in part by our transformation efforts.
Speaker Change: Longer term the potential for expanding out the store base, a little bit more aggressively and the potential in terms of returns.
Speaker Change: There was in Q3, a significant increase in profitability on the operating margin line for the needed can you just see thank you.
Speaker Change: As Dave reviewed we are pleased with the progress we are making with our transformation plan and are ahead of our plan to achieve our annual target as we enter the fourth quarter of fiscal 2024.
Speaker Change: I'll address the stores and then John can talk about about our recent results from Q3, but from a store perspective, when you look at at the U S. As we've as we implied we completed a study.
Speaker Change: As a reminder, about half of our total benefits from the transformation plan are expected to come from product cost efficiencies with no compromises to quality with the balance driven by targeted initiatives to improve pricing and promotions and reduce operating expenses.
Speaker Change: Mid year with Cushman and Wakefield when we looked at the entire U S market and was the only with only 60 stores in heavy concentration in New York, Los Angeles, we have a lot of.
Speaker Change: This concludes our remarks and I will now turn it over to the operator to open the call for questions.
White space in the U S, where we can fill in stores and as we said in our remarks, we've kind of allowed our our e-commerce sales in our wholesale sales, we kind of combined where those happen across the states along with markets.
Speaker Change: Thank you.
Speaker Change: Please press star followed by the number one if you'd like to ask a question Julia devices, Amit you'd likely ranch, Oregon State.
Speaker Change: If you change your mind you. The question has already been on stage for your question by pressing star followed by the number.
Speaker Change: And in today's.
<unk> technology you can define.
Speaker Change: We have a question from Eric data with Televisa.
Speaker Change: Two.
Speaker Change: Malls and shopping centers, where the demographics cros.
Speaker Change: Please go ahead your line is open.
Speaker Change: With who our consumers.
Speaker Change: Good morning, congratulations on the progress.
Speaker Change: So we feel really good understanding what markets are good for us and you know you can imagine.
Speaker Change: Thanks, Laura split about AVG Ben.
Speaker Change: Looking at a map we have opportunities in the in the Midwest and the Pacific Northwest team.
Speaker Change: How about AVG event, I know that some of the products have started to come in and some of the licensed products have started to come into the store at the end of Q3.
I'm a few so Nashville became one of the top markets and so we're focused on looking at.
Speaker Change: For curious what the response has been to that and then what should we be thinking about next year in terms of.
Not just the top five markets, but the top markets and looking at opportunities, which we'll still let.
Speaker Change: Essential new product categories.
Speaker Change: The retail channel.
Speaker Change: Economics.
Speaker Change: Going forward.
Speaker Change: Drive us as to decision, making when you look outside of the U S and you look at the U K, we're much more opportunistic.
Speaker Change: Thanks, Eric So at this time through fall season, and now pre spring, we'll be starting to ship.
Speaker Change: Marla bone is a fabulous shopping location similar to being on Madison Avenue here in New York City, There was an opportunity that we felt.
Speaker Change: It's really the licensed products have been coming in has really been around shoes, and cold weather goods, which which are licenses that we've had for a few years. So.
Speaker Change: What's important for the brand, especially looking at the results in our in our existing dray cost store that's been open for about five years now.
Speaker Change: As we as we indicated.
Speaker Change: In our remarks, we're happy with our Black Friday, cyber Monday, and the license products continue to perform when.
Speaker Change: So we thought was the right time to make that investment as we talked last quarter Eric.
Speaker Change: Eric We also looked at a market like China, where we have we're testing stores, we've pulled back and we pulled back in China because of the economic.
Speaker Change: When youll see new new licenses that that AVG, Vince entered into since the transaction there will be.
Speaker Change: Conditions in the economic situations going on in China. So that's how we view the world and the U S from a new store opportunity.
Speaker Change: <unk> leather goods that will launch with the spring season, and then handbags.
Speaker Change: License has been signed but that's not expected to ship until fall fall of 2025.
Speaker Change: And Eric just to just to add on that and I'm talking about store performance.
Speaker Change: Okay.
Speaker Change: Sorry, you wanted to ask a follow up.
Speaker Change: In terms of store potential I'm excited as you are opening stores in both the UK and in the U S.
No go ahead.
No I was just I was just going to mentioned in terms of the financial side of store performance, what we're seeing today.
Speaker Change: Should we be thinking about.
Speaker Change: Longer term the potential for <unk>.
Spanning out the store base, even a little bit more aggressively and the potential in terms of returns I saw there was in Q3, a significant increase in profitability.
Speaker Change: Even though our top line, we see was impacted by the store closures that we had in the fleet as well as the pullback in promotional activity what.
Speaker Change: On the operating margin line for the D to C C.
Speaker Change: What we're really seeing is a really positive bottom line impact.
Speaker Change: Thank you.
Speaker Change: I'll address the stores and then John can talk about about.
Speaker Change: From from that full price selling strategy and all the efforts around transformation that is driving our overall margin results.
The results from Q3, but from a store perspective, when you look at the U S.
Speaker Change: We implied we completed a study.
Speaker Change: The other thing that we're seeing is.
Speaker Change: Mid year with Cushman and Wakefield when we looked at the entire U S market and was the only with only 60 stores in a heavy concentration in New York Los Angeles.
Speaker Change: Being able to invest back in the right inventory in season.
Speaker Change: Is really helping us give a balanced offered to the customer. So all of those factors are really driving.
Speaker Change: We have a lot of.
Speaker Change: White space in the U S, where we can fill in stores and as we said in our remarks, we've kind of allowed our our e-commerce sales in our wholesale sales, we kind of combined where those happen across the states along with markets.
Speaker Change: The performance in stores.
Speaker Change: Okay, and one last question mens congrats on getting over 20% how did the expansion into all of the Nordstrom stores go and.
Speaker Change: How should we be thinking about the opportunity for mens in your own stores going forward in terms of expanding that out. Thank you.
Speaker Change: And in today's age.
Speaker Change: <unk> technology you can define.
Speaker Change: Down too.
Speaker Change: Malls and shopping centers, where the demographics cros.
Speaker Change: Yes, Thanks, Eric.
Speaker Change: From a Nordstrom perspective, it's early I mean, the results were very very pleased with our Nordstrom results across the board that includes mens should we we certainly are seeing.
Speaker Change: With who our consumers so.
Speaker Change: So we feel really good understanding what markets are good for us and you can imagine.
Growth.
Speaker Change: Looking at a map we have opportunities in the in the Midwest and the Pacific Northwest team.
Speaker Change: But from our view it's Jos.
Speaker Change: A little bit early.
Speaker Change: In our own stores again.
Speaker Change: I'm a few so Nashville.
<unk> became one of the top markets and so we're focused on looking at.
Speaker Change: Managed is performing well the pant program was critical.
Speaker Change: Not just the top five markets, but the top markets and looking at opportunities, we'll still let.
Speaker Change: Investment in launch and we've made this year, we're reacting to.
Speaker Change: Results that we're seeing and making adjustments where needed.
Speaker Change: Economics.
Drive us as to decision, making when you look outside the U S.
Speaker Change: But we certainly expect to see continued expansion.
Speaker Change: Look at the U K, we're much more opportunistic.
Speaker Change: Not just managing our stores, but.
Speaker Change: As you know Eric we are.
Speaker Change: Marla bone is a fabulous shopping location similar to being on Madison Avenue here in New York City. It was an opportunity that we felt.
Speaker Change: We have one standalone mens store.
Speaker Change: We're evaluating also its performance and how that fits into the strategy going forward.
Speaker Change: Whats important for the brand, especially looking at the results in our in our existing dray cost store that's been open for about five years now.
Speaker Change: Great. Thanks.
Speaker Change: Thank you.
Speaker Change: So we thought was the right time to make that investment as we talked last quarter Eric.
Speaker Change: This concludes our Q&A session I'll now turn the call back over to todays Douglas for any closing comments.
Speaker Change: Eric We also looked at a market like China, where we have we're testing stores, we've pulled back and we pulled back in China because of the economic.
Douglas: Okay. Thank you for joining us today, and we look forward to updating you on our 2020 for fiscal year on our results in our April yearend call happy holidays, everyone.
Speaker Change: Conditions in the economic situations going on in China. So that's how we view the world in the U S from a new store opportunity.
Thank you. This concludes today's call. Thank you for joining you may now disconnect your line.
Speaker Change: And Eric just to just to add on that and I'm talking about store performance.
Speaker Change: Sorry, you wanted to ask a follow up.
Speaker Change: No go ahead.
Speaker Change: No I was just I was just going to mention in terms of the financial side of store performance, what we're seeing today.
Speaker Change: Even though our top line.
Speaker Change: C was impacted by the store closures that we had in the fleet as well as the pullback in promotional activity, what we're really seeing is a.
Speaker Change: Really positive bottom line impact.
Speaker Change: From from that full price selling strategy.
Speaker Change: And all the efforts around transformation that is driving our overall margin results.
Speaker Change: The other thing that we're seeing is.
Speaker Change: Being able to invest back in the right inventory in season.
Speaker Change: Is really helping us give a balanced offered to the customer. So all of those factors are really driving.
The performance in stores.
Speaker Change: Okay. One last question mens congrats on getting over 20% how did the expansion into all the Nordstrom stores go and how should we be thinking about the opportunity for mens in your own stores going forward in terms of expanding that out. Thank you.
Speaker Change: Yes, Thanks, Eric.
Speaker Change: From a Nordstrom perspective, it's early I mean, the results were very very pleased with our Nordstrom results across the board that includes mens should we we certainly are seeing.
Speaker Change: Growth.
Speaker Change: But from our view it's Jos.
Speaker Change: A little bit early.
Speaker Change: In our own stores again.
Speaker Change: Men's is performing well the pant program was critical.
Speaker Change: Investment and launch it we've made this year, we're reacting to.
Speaker Change: Results that we're seeing and making adjustments where needed.
Speaker Change: But we certainly expect to see continued expansion.
Speaker Change: Not just managing our stores, but.
Speaker Change: As you know Eric.
Speaker Change: We have one standalone mens store.
Speaker Change: We're evaluating also its performance.
Speaker Change: And how that fits into the strategy going forward.
Speaker Change: Great. Thanks.
Speaker Change: Thank you.
Douglas: This concludes our Q&A session I'll now turn the call back over to todays Douglas for any closing comments.
Douglas: Okay. Thank you for joining us today, and we look forward to updating you on our 2020 for fiscal year on our results in our April year end call.
Speaker Change: The holidays everyone.
Speaker Change: Thank you. This concludes today's call. Thank you for joining you may now disconnect your line.
Speaker Change: [music].