Q3 2025 Vince Holding Corp Earnings Call

December 9, 2025

Speaker #1: Good morning or good afternoon, and welcome to the VINCE Q2 2025 earnings conference call. My name is Adam, and I'll be your operator today.

Operator: Good morning, or good afternoon, or welcome to the Vince Q3 2025 earnings conference call. My name is Adam, and I'll be your operator today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing STAR followed by 1 on your telephone keypad. I will now hand the floor to Akiko Okuma to begin, so please go ahead when you are ready.

Operator: Good morning, or good afternoon, or welcome to the Vince Q3 2025 Earnings Conference Call. My name is Adam, and I'll be your operator today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing Star followed by 1 on your telephone keypad. I will now hand the floor to Akiko Okuma to begin, so please go ahead when you are ready.

Speaker #1: If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypad.

Speaker #1: I will now hand the floor to Akiko Okuma to begin, so please go ahead when you are ready.

Speaker #2: Thank you, and good afternoon, everyone. Welcome to VINCE HOLDING CORP.'s third quarter fiscal 2025 results conference call. Hosting the call today is Brendan Hoffman, Chief Executive Officer, and Yuji Okumura, Chief Financial Officer.

Yuji Okumura: Thank you and good afternoon, everyone. Welcome to Vince Holding Corp. Q3 2025 results conference call. Hosting the call today is Brendan Hoffman, Chief Executive Officer, and Yuji Okumura, 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.

Akiko Okuma: Thank you and good afternoon, everyone. Welcome to Vince Holding Corp. Q3 2025 Results Conference Call. Hosting the call today is Brendan Hoffman, Chief Executive Officer, and Yuji Okumura, 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.

Speaker #2: Before we begin, let me remind you that certain statements made on this call may constitute forward-looking statements, which are subject to risk and uncertainties differ from those that the company expects.

Speaker #2: 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 that could cause actual results to obligation to update any information discussed on the call.

Speaker #2: 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.

Yuji Okumura: 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.vince.com. Now I'll turn the call over to Brendan.

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.vince.com. Now I'll turn the call over to Brendan.

Speaker #2: 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 investor section of the company's website at investors.vince.com.

Speaker #2: Now I'll turn the call over to Brendan.

Speaker #3: Thank you, Akiko, and good morning, everyone. We are extremely proud of our third quarter performance as we grow healthy sales growth across all channels and exceeded our expectations for both top and bottom line.

Brendan Hoffman: Thank you, Akiko, and good morning, everyone. We are extremely proud of our Q3 performance as we drove healthy sales growth across all channels and exceeded our expectations for both top and bottom line. Our assortments are resonating across both our women's and men's businesses, but most encouraging is the acceptance we have seen to the strategic price increases implemented this quarter, as well as in the momentum in our DTC segment given the enhancements we have made to the customer experience. In our women's assortment, which has the highest impact from tariffs, prices increased more than our overall average increase of approximately 6%, but units were nearly flat to last year, validating the quality and value of our product in the marketplace. Beyond the pricing actions, our teams have done an exceptional job in continuing to manage the evolving tariff environment.

Speaker #3: Our assortments are resonating across both our women's and men's businesses, but most encouraging is the acceptance we have seen to the this quarter as well as in the momentum strategic price increases implemented in our DTC segment, given the enhancements we have made to the customer experience.

Speaker #3: In our women's assortment, which has the highest impact from tariffs, prices increased more than our overall average increase of approximately 6%. But units were nearly flat to last year, validating the quality and value of our product in the marketplace.

Speaker #3: Beyond the pricing actions, our teams have done an exceptional job in continuing to manage the evolving tariff environment. Significant changes in sourcing and our goods are flowing smoothly. Despite this, importantly, we've maintained our quality standards throughout this transition.

Brendan Hoffman: Our goods are flowing smoothly despite significant changes in sourcing, and importantly, we've maintained our quality standards throughout this transition. With respect to customer experience, following the store renovations from earlier this year, we enhanced our e-commerce site in Q3 with a strategic site refresh, increased marketing support, and the launch of Dropship. Our e-commerce site refresh elevated the customer experience with more modern, creative elements and enhanced site merchandising. We are now using AI-generated video content to enrich product detail pages and introduce more service elements like our cashmere care guide. This investment in our digital platform contributed meaningfully to our strong performance, and we're seeing the benefits flow through in both conversion rates and average order values. Our e-commerce site also significantly benefited from the marketing investments we made in mid-funnel marketing this quarter.

Our goods are flowing smoothly despite significant changes in sourcing, and importantly, we've maintained our quality standards throughout this transition. With respect to customer experience, following the store renovations from earlier this year, we enhanced our e-commerce site in Q3 with a strategic site refresh, increased marketing support, and the launch of Dropship. Our e-commerce site refresh elevated the customer experience with more modern, creative elements and enhanced site merchandising. We are now using AI-generated video content to enrich product detail pages and introduce more service elements like our cashmere care guide. This investment in our digital platform contributed meaningfully to our strong performance, and we're seeing the benefits flow through in both conversion rates and average order values. Our e-commerce site also significantly benefited from the marketing investments we made in mid-funnel marketing this quarter.

Speaker #3: With respect to customer experience, following the store renovations from earlier this year, we enhanced our e-commerce site in Q3 with a strategic site refresh, increased marketing support, and the launch of dropship.

Speaker #3: Our e-commerce site refresh elevated the customer experience with more modern, creative elements and enhanced site merchandising. We are now using AI-generated video content to enrich product detail pages and introduce more service elements like our cashmere care platform contributed meaningfully to our strong performance, and we're seeing the guide.

Speaker #3: benefits flow through in both conversion rates and average order values. Our e-commerce site also significantly benefited from the marketing investments we made in mid-funnel marketing this quarter.

Brendan Hoffman: Through this work, we drove triple-digit growth in site traffic late in the quarter and supported full-price new customer acquisition as well. At the end of the quarter, we went live with a new dropship strategy, which we believe will be a significant growth opportunity for us moving forward. In the first month since launch, we have seen significant increase in volume. Our initial launch focused only on shoes, but we have plans to expand to other categories, capitalizing on our partnership with Authentic Brands and the category expansion opportunities that provides. The dropship strategy allows us to not only offer more fashion-forward products that we might typically feel comfortable procuring directly, but enables us to showcase a more diverse assortment to our customer, providing learnings on customer preferences that we may incorporate into our store channel as well.

Through this work, we drove triple-digit growth in site traffic late in the quarter and supported full-price new customer acquisition as well. At the end of the quarter, we went live with a new dropship strategy, which we believe will be a significant growth opportunity for us moving forward. In the first month since launch, we have seen significant increase in volume. Our initial launch focused only on shoes, but we have plans to expand to other categories, capitalizing on our partnership with Authentic Brands and the category expansion opportunities that provides. The dropship strategy allows us to not only offer more fashion-forward products that we might typically feel comfortable procuring directly, but enables us to showcase a more diverse assortment to our customer, providing learnings on customer preferences that we may incorporate into our store channel as well.

Speaker #3: we grow triple-digit growth in site traffic, late in the quarter, and supported full-price new customer acquisition as well. And at the This investment in our digital end of the quarter, we went live with a new Through this work, significant growth opportunity for us moving dropship strategy, which we believe will be a forward.

Speaker #3: In the first month since launch, we have seen significant increase in volume. Our initial launch focused only on shoes, but we have plans to expand to other categories, capitalizing on our partnership with Authentic Brands, and the category expansion opportunities that provides.

Speaker #3: The dropship strategy allows us to not only offer more fashion-forward products that we might typically feel comfortable procuring directly, but it enables us to showcase a more diverse assortment to our customers, providing learnings on customer preferences that we may incorporate into our store channel as well.

Speaker #3: In addition to these initiatives, we opened two new stores this quarter in Nashville and Sacramento, following our successful store opening in Marliabone, London, earlier this year, which continues to exceed our expectations.

Brendan Hoffman: In addition to these initiatives, we opened two new stores this quarter in Nashville and Sacramento, following our successful store opening in Marylebone, London, earlier this year, which continues to exceed our expectations. Moving to our wholesale business, we delivered solid growth versus last year, with some of this reflecting the timing benefits from the Q2 shipment delays that we discussed previously, as well as ongoing performance with key partners. We were excited to recently celebrate our 2025 holiday collection, along with our continued partnership with Nordstrom, with an immersive experience in LA with Nordstrom's top clientele, Nordstrom's VP Fashion Director, and our Creative Director, Caroline Belhumer. It was a great event to kick off the holiday season and highlight our holiday campaign, which celebrates our brand spirit and showcases connections through stories and gift-giving with a 360-degree omnichannel strategy.

In addition to these initiatives, we opened two new stores this quarter in Nashville and Sacramento, following our successful store opening in Marylebone, London, earlier this year, which continues to exceed our expectations. Moving to our wholesale business, we delivered solid growth versus last year, with some of this reflecting the timing benefits from the Q2 shipment delays that we discussed previously, as well as ongoing performance with key partners. We were excited to recently celebrate our 2025 holiday collection, along with our continued partnership with Nordstrom, with an immersive experience in LA with Nordstrom's top clientele, Nordstrom's VP Fashion Director, and our Creative Director, Caroline Belhumeur. It was a great event to kick off the holiday season and highlight our holiday campaign, which celebrates our brand spirit and showcases connections through stories and gift-giving with a 360-degree omnichannel strategy.

Speaker #3: Moving to our wholesale business, we delivered solid growth versus last year, with some of this reflecting the timing benefits from a Q2 shipment delays that we discussed previously, as well as ongoing performance of key partners.

Speaker #3: We were excited to recently celebrate our 2025 holiday collection, along with our continued partnership with Nordstrom, with an immersive experience in LA, with Nordstrom's top clientele, Nordstrom's VP fashion director, and our creative director, Caroline Belhumer.

Speaker #3: It was a great event to kick off the holiday season and highlight our holiday campaign, which celebrates our brand spirit and showcases connections through stories and gift-giving with a 360-degree omnichannel strategy.

Brendan Hoffman: Thus far, we have seen a very strong start to the holiday quarter, including record sales across the Black Friday and Cyber Monday weekend in our direct-to-consumer business. Given the strength of Q3 and the momentum we are continuing to drive, I am more confident than ever in the trajectory ahead for Vince Holding Corp., the prospects we have to leverage our platform further to drive growth. We continue to successfully navigate the tariff challenges while maintaining the quality and brand integrity we are known for. We are beginning to reinvest in the business, particularly in marketing initiatives that we had pulled back on earlier in the year, and we're seeing positive returns on these investments. The underlying fundamentals of our business remain strong, but we're operating with disciplined execution while positioning for growth.

Thus far, we have seen a very strong start to the holiday quarter, including record sales across the Black Friday and Cyber Monday weekend in our direct-to-consumer business. Given the strength of Q3 and the momentum we are continuing to drive, I am more confident than ever in the trajectory ahead for Vince Holding Corp., the prospects we have to leverage our platform further to drive growth. We continue to successfully navigate the tariff challenges while maintaining the quality and brand integrity we are known for. We are beginning to reinvest in the business, particularly in marketing initiatives that we had pulled back on earlier in the year, and we're seeing positive returns on these investments. The underlying fundamentals of our business remain strong, but we're operating with disciplined execution while positioning for growth.

Speaker #3: Holiday quarter, including record sales across the Black Friday and Cyber Monday weekend in our direct-to-consumer business. So far, we have seen a very strong start to the Q4 2025. Given the strength of Q3 and the momentum we are continuing to drive, I am more confident than ever in the trajectory ahead for Vince Holding Corp and the prospects we have to leverage our platform further to drive growth.

Speaker #3: We continue to successfully navigate the tariff challenges while maintaining the quality and brand integrity we are known for. We are beginning to reinvest in areas that we pulled back on earlier in the year, and we're seeing positive returns on these investments.

Speaker #3: the business, particularly in marketing initiatives The underlying fundamentals of our business remain strong. We're operating with disciplined execution while positioning for growth. With that strong foundation and the momentum we're building, I'll now turn it over to Yuji to discuss our financial results in more detail and provide our updated

Brendan Hoffman: With that strong foundation and the momentum we're building, I'll now turn it over to Yuji to discuss our financial results in more detail and provide our updated outlook.

With that strong foundation and the momentum we're building, I'll now turn it over to Yuji to discuss our financial results in more detail and provide our updated outlook.

Speaker #4: Thank you, Brendan. And good morning, everyone. As Brendan reviewed, we are very pleased with

Yuji Okumura: Thank you, Brendan, and good morning, everyone. As Brendan reviewed, we are very pleased with our Q3 performance as we saw momentum continue across the business, enabling us to begin to reinvest in key areas of the business. Total company net sales for the Q3 increased 6.2% to $85.1 million compared to $80.2 million in the Q3 of fiscal 2024. With respect to channel performance, our wholesale channel increased 6.7%, and our direct-to-consumer segment increased 5.5%. As Brendan reviewed, part of the growth in wholesale reflects the timing of shipments given the delays we experienced earlier in the year with tariff disruptions. Our teams are doing an excellent job in continuing to manage our supply chain, and our goods are flowing smoothly and expect to be back in line to normal course timing by spring. Gross profit in the Q3 was $41.9 million, or 49.2% of net sales.

Speaker #4: reinvest in key areas of the business. Total company net sales for the third quarter, increased 6.2% to $85.1 million, compared to $80.2 million in the third quarter of fiscal 2024.

Speaker #4: With respect to channel performance, our wholesale channel increased 6.7% and our direct-to-consumer segment increased 5.5%. As Brendan reviewed, part of the growth in outlook.

Speaker #4: profit in the third quarter was $41.9 million, or $49.2% of net sales. This compares to $40.1 million, or 50% of net sales in the third quarter of last year.

Yuji Okumura: This compares to $40.1 million, or 50% of net sales in the Q3 of last year. The decrease in gross margin rate was primarily driven by approximately 260 basis points due to the unfavorable impact of higher tariffs and approximately 100 basis points due to increased freight costs, partially offset by 140 basis points increase due to favorable impacts of lower product costing and higher pricing, and approximately 110 basis points due to favorable impact of lower discounting. As Brendan reviewed, we are very encouraged by customers' response to our strategic price changes and our team's ongoing focus on tariff mitigation efforts. Given timing and mix of sales, we experienced less of a headwind than originally expected from tariffs during the quarter, but expect these costs to ramp into the Q4.

This compares to $40.1 million, or 50% of net sales in the Q3 of last year. The decrease in gross margin rate was primarily driven by approximately 260 basis points due to the unfavorable impact of higher tariffs and approximately 100 basis points due to increased freight costs, partially offset by 140 basis points increase due to favorable impacts of lower product costing and higher pricing, and approximately 110 basis points due to favorable impact of lower discounting. As Brendan reviewed, we are very encouraged by customers' response to our strategic price changes and our team's ongoing focus on tariff mitigation efforts. Given timing and mix of sales, we experienced less of a headwind than originally expected from tariffs during the quarter, but expect these costs to ramp into the Q4.

Speaker #4: The decrease in gross margin rate was primarily driven by approximately $260 basis points due to the unfavorable impact of higher tariffs and approximately $100 basis points due to increased freight costs, partially offset by $140 basis points increase due to favorable impacts of lower product costing and higher pricing, and approximately $110 basis points due to favorable impact of lower discounting.

Speaker #4: As Brendan reviewed, we are very encouraged by customers' response to our strategic price changes and our team's ongoing focus on tariff mitigation efforts. Given the timing and mix of sales, we experienced less of a tariff impact during the quarter, but expect these costs to ramp up into Q4.

Speaker #4: Selling general and administrative expenses in the quarter were headwind than it originally expected from $36.5 million, or $42.8% of net sales, as compared to $34.3 million, or $42.8% of net sales for the third quarter of last year.

Yuji Okumura: Selling, general, and administrative expenses in the quarter were $36.5 million, or 42.8% of net sales, as compared to $34.3 million, or 42.8% of net sales for the Q3 of last year. The increase in SG&A dollars was primarily driven by approximately $1.1 million related to compensation and benefits, and $760,000 of increase in marketing and advertising costs as we reinvested into mid-funnel activities. Operating income for the Q3 was $5.4 million compared to operating income of $5.8 million in the same period last year. Net interest expense for the quarter decreased to $1 million compared to $1.7 million in the prior year. The decrease was primarily due to lower levels of debt under our Term Loan Credit Facility. At the end of Q3 fiscal 2025, our long-term debt balance was $36.1 million, a reduction of $14.5 million compared to $50.6 million in the prior year period.

Selling, general, and administrative expenses in the quarter were $36.5 million, or 42.8% of net sales, as compared to $34.3 million, or 42.8% of net sales for the Q3 of last year. The increase in SG&A dollars was primarily driven by approximately $1.1 million related to compensation and benefits, and $760,000 of increase in marketing and advertising costs as we reinvested into mid-funnel activities. Operating income for the Q3 was $5.4 million compared to operating income of $5.8 million in the same period last year. Net interest expense for the quarter decreased to $1 million compared to $1.7 million in the prior year. The decrease was primarily due to lower levels of debt under our Term Loan Credit Facility. At the end of Q3 fiscal 2025, our long-term debt balance was $36.1 million, a reduction of $14.5 million compared to $50.6 million in the prior year period.

Speaker #4: The increase in SG&A dollars was primarily driven by approximately $1.1 million related to $760,000 of increase in marketing and advertising costs, as compensation and benefits, and we reinvested into mid-funnel Operating income for the third activities.

Speaker #4: quarter was $5.4 million, compared to operating income of $5.8 million in the same period last year. Net interest expense for the quarter decreased to $1 million, compared to $1.7 million in the prior year.

Speaker #4: lower levels of debt under our term loan The decrease was primarily due to credit facility. At the end of third quarter of fiscal was $36.1 million, a reduction of $14.5 2025, our long-term debt balance million in the prior year period.

Yuji Okumura: Income tax expense was $2 million compared to zero income tax provision in the same period last year. The increase is due to the impact of applying our estimated annual effective tax rate to the year-to-date ordinary pre-tax income. In the prior comparative period, we had year-to-date ordinary pre-tax losses for the interim period, and as such, we did not record any tax expense for the same period last year. As a reminder, following the change in controls at earlier this calendar year, we have limitations to use of the NOLs that we did not have last year, also impacting the cash tax expense comparison to previous years. Net income for the Q3 was $2.7 million, or income per share of $0.21, compared to net income of $4.3 million, or income per share of $0.34 in the Q3 of last year.

Income tax expense was $2 million compared to zero income tax provision in the same period last year. The increase is due to the impact of applying our estimated annual effective tax rate to the year-to-date ordinary pre-tax income. In the prior comparative period, we had year-to-date ordinary pre-tax losses for the interim period, and as such, we did not record any tax expense for the same period last year. As a reminder, following the change in controls at earlier this calendar year, we have limitations to use of the NOLs that we did not have last year, also impacting the cash tax expense comparison to previous years. Net income for the Q3 was $2.7 million, or income per share of $0.21, compared to net income of $4.3 million, or income per share of $0.34 in the Q3 of last year.

Speaker #4: Expense was $2 million, compared to $50.6 million and a zero income tax provision in the same period last year. The income tax increase is due to the impact of applying our estimated annual effective tax rate to the year-to-date ordinary pre-tax income.

Speaker #4: In the prior comparative period, we had a year-to-date ordinary pre-tax losses for the interim period, and as such, we did not record any tax expense for the same period last year.

Speaker #4: As a reminder, following the change in controls earlier this calendar year, we have limitations on the use of the NOLs that we did not have last year, which also impacts the cash tax expense comparison to previous years.

Speaker #4: Net $2.7 million, or income income for the third quarter was per share of $0.21, compared to net income of $4.3 million, or income per share of $0.34, in the third quarter of last year.

Speaker #4: The year-over-year decline in net income was driven by the adjusted increase in tax expense in the third quarter, compared to $7.4 million in the prior year.

Yuji Okumura: The year-over-year decline in net income was driven by the increase in tax expense. Adjusted EBITDA was $6.5 million for the Q3 compared to $7.4 million in the prior year. Moving to the balance sheet, net inventory was $75.9 million at the end of the Q3 as compared to $63.8 million at the end of the Q3 last year. The year-over-year increase was primarily driven by approximately $4.2 million higher inventory carrying value due to tariffs. Turning to our outlook, as Brendan discussed, we have seen a very strong start to the Q4 with a record-holiday weekend sales performance in our DTC segment. Our outlook for the period assumes that this momentum continues with the growth in DTC segment expected to outpace our total net sales growth for the period, which is expected to increase approximately 3% to 7%.

The year-over-year decline in net income was driven by the increase in tax expense. Adjusted EBITDA was $6.5 million for the Q3 compared to $7.4 million in the prior year. Moving to the balance sheet, net inventory was $75.9 million at the end of the Q3 as compared to $63.8 million at the end of the Q3 last year. The year-over-year increase was primarily driven by approximately $4.2 million higher inventory carrying value due to tariffs. Turning to our outlook, as Brendan discussed, we have seen a very strong start to the Q4 with a record-holiday weekend sales performance in our DTC segment. Our outlook for the period assumes that this momentum continues with the growth in DTC segment expected to outpace our total net sales growth for the period, which is expected to increase approximately 3% to 7.

Speaker #4: Moving to the balance sheet, net inventory was $75.9 million, at the end of the third quarter, as compared to $63.8 million at the end of the third quarter last year.

Speaker #4: The year-over-year increase was primarily driven by approximately $4.2 million higher inventory carrying value due to tariffs. Turning to our outlook, as Brendan discussed, we have seen a very strong start to the fourth quarter with a record holiday weekend sales performance in our DTC segment.

Speaker #4: Our outlook for the period assumes that this momentum continues, with the growth in the DTC segment expected to outpace our total net sales growth for the period, which is expected to increase approximately 3% to 7%.

Speaker #4: This guidance also takes into account potential shifts in timing with respect to wholesale shipments, given end-of-the-year seasonality. In addition, we expect adjusted operating income as a percentage of net sales for the quarter to be approximately 5% to 2%, and for the adjusted EBITDA as a percentage of net sales to be approximately 2% to 4%, compared to period.

Yuji Okumura: This guidance also takes into account potential shifts in timing with respect to wholesale shipments given end-of-the-year seasonality. In addition, we expect adjusted operating income as a percentage of net sales for the quarter to be approximately 5% to 2%, and for the Adjusted EBITDA as a percentage of net sales to be approximately 2% to 4% compared to 6.7% in the prior year period. Our guidance for the quarter takes into account approximately $4 million to $5 million of estimated incremental tariff costs that we continue to expect to partially offset with our mitigation strategy.

This guidance also takes into account potential shifts in timing with respect to wholesale shipments given end-of-the-year seasonality. In addition, we expect adjusted operating income as a percentage of net sales for the quarter to be approximately 5% to 2, and for the adjusted EBITDA as a percentage of net sales to be approximately 2% to 4 compared to 6.7% in the prior year period. Our guidance for the quarter takes into account approximately $4 to 5 million of estimated incremental tariff costs that we continue to expect to partially offset with our mitigation strategy.

Speaker #4: Our guidance for the quarter takes into account approximately 4 to 5 million of estimated incremental tariff costs that we continue to expect to 6.7% in the prior year partially offset with our mitigation strategy.

Speaker #4: Given our year-to-date performance and our outlook for the fourth quarter, we expect full year-end net sales growth to be approximately 2% to 3%, adjusted operating income as a percentage of net sales to be approximately 2% to 3%, and for the adjusted EBITDA as a percentage of net sales to be approximately 4% to 5%, compared to 4.8% in the prior year period, despite incurring approximately 8 to 9 million of incremental tariff year.

Yuji Okumura: Given our year-to-date performance and our outlook for the Q4, we expect full year net sales growth to be approximately 2% to 3%, adjusted operating income as a percentage of net sales to be approximately 2% to 3%, and for the Adjusted EBITDA as a percentage of net sales to be approximately 4% to 5% compared to 4.8% in the prior year period, despite incurring approximately 8 million to 9 million of incremental tariff costs compared to last year. This concludes our remarks, and I'll now turn it over to the operator to open the call for questions.

Given our year-to-date performance and our outlook for the Q4, we expect full year net sales growth to be approximately 2% to 3, adjusted operating income as a percentage of net sales to be approximately 2% to 3, and for the adjusted EBITDA as a percentage of net sales to be approximately 4% to 5 compared to 4.8% in the prior year period, despite incurring approximately $8 to 9 million of incremental tariff costs compared to last year. This concludes our remarks, and I'll now turn it over to the operator to open the call for questions.

Speaker #4: costs compared to last and I'll now turn it over to the This concludes our remarks, operator to open the call for questions.

Speaker #2: Thank you. As a reminder, if you'd like to ask a question on today's call, please press star followed by one at your telephone keypad now to enter the queue.

Brendan Hoffman: Thank you. As a reminder, if you'd like to ask a question on today's call, please press *1 at the top of your telephone keypad now to enter the queue. Remember, if you're about to ask a question, please ensure you are unmuted locally. And our first question comes from Eric Beder at SCC Research. Eric, your line is open. Please go ahead.

Operator: Thank you. As a reminder, if you'd like to ask a question on today's call, please press *1 at the top of your telephone keypad now to enter the queue. Remember, if you're about to ask a question, please ensure you are unmuted locally. And our first question comes from Eric Beder at SCC Research. Eric, your line is open. Please go ahead.

Speaker #2: ahead.

Speaker #3: Good morning. Congratulations on a great Q3. Thank

Eric Beder: Good morning. Congratulations on a great Q3.

Speaker #4: Thanks, Eric.

Brendan Hoffman: Thanks, Aaron.

Brendan Hoffman: Thanks, [inaudible]

Speaker #3: you. I want to talk a little bit about some of the potential drivers here. So you have just started to roll product we've seen handbags and out some of the license suiting in our store tours.

Eric Beder: Thank you. I want to talk a little bit about some of the potential drivers here. So you have just started to roll out some of the licensed product. We've seen handbags and suiting in our store tours. I'm curious, you mentioned it also in your comments, where do you think that goes? And I know that the tariffs kind of slowed down the rollouts, but what you would be thinking about the potential for that in 2026 and beyond?

Eric Beder: I want to talk a little bit about some of the potential drivers here. So you have just started to roll out some of the licensed product. We've seen handbags and suiting in our store tours. I'm curious, you mentioned it also in your comments, where do you think that goes? And I know that the tariffs kind of slowed down the rollouts, but what you would be thinking about the potential for that in 2026 and beyond?

Speaker #3: I'm curious, you mentioned it also in your comments. Where do you think that goes? And I know that the tariffs kind of slowed down the rollouts, but what should we be thinking about the potential for that in 2026 and beyond?

Speaker #4: Well, I think I'm even more bullish now after the last month, based on my comments on dropship. So what we saw with dropship with Kalaris and shoes in the last four or five weeks is truly spectacular.

Brendan Hoffman: Well, you know I think I'm even more bullish now after the last month based on my comments on dropship. So what we saw with dropship with Caleres and shoes in the last four or five weeks is truly spectacular. And so the opportunity to launch that in e-commerce in the spring on these other categories and then figure out how to better utilize that within the stores, in addition to obviously showcasing the product, I think it has a real impact on our business more than I was anticipating prior to the dropship launch.

Speaker #4: And so the opportunity to launch spring on these other categories and then figure out how to better utilize that in an e-commerce in the to, obviously, showcasing the product I think it has a it that within the stores in addition can have a real impact on our business more than I prior to the dropship was anticipating

Speaker #3: And when you look at I know that you've been also

Eric Beder: And when you look at, you know, I know that you've been also looking at putting some COH denim into some of the stores. You know, how should we be thinking about that potential opportunity to kind of collaborate with other key fashion brands to kind of help both of you?

Speaker #3: looking at putting you put some COH denim into some of the stores. How should we be thinking about that potential opportunity to kind of collaborate with other key fashion brands to kind of help both of launch.

Speaker #3: you?

Brendan Hoffman: Yeah, that's something that we're going to continue to explore and prioritize. Very happy with the Citizens of Humanity collab. You know it also highlights the opportunity we have in denim. So whether we do that in-house, although that's a long haul, we'll continue to do partnerships in denim with Citizens and look for other categories that perhaps ABG isn't licensing at this point, and you know we can bring to kind of round out our assortment. So that was another good win for Vince.

Speaker #4: That we're going to continue to explore and prioritize very happily. We're happy with the citizens. Yeah, that's something of humanity collab, the opportunity we have in denim.

Speaker #4: We're also highlights in-house, although that's a long haul, we'll continue to do partnerships in denim with citizens perhaps ABG isn't and look for other categories that licensing at this point.

Speaker #4: And we can bring to kind of round out our assortment. So that was another good win for VINCE.

Speaker #3: Great. And you opened up two new stores in new markets. I know it's very short. Could you give us a little bit of thought process on that and kind of what should we be thinking about?

Eric Beder: Great. You opened up two new stores in new markets. I know it's very short. Could you give us a little bit of thought process on that and kind of what should we be thinking about? I know that we pulled back on that a little bit this year just because of all things going on this year. Given the results here, what is the store opportunity kind of back on full swing for next year and going forward? Thank you.

Speaker #3: I know that we pulled back on that a little bit this year just because of all things going on this year. But given the results here, what is the store opportunity kind of back on full swing for next year and going forward?

Speaker #3: Thank you.

Speaker #4: Yeah, thanks. I mean, we're pleased with the way the community. It's still early Nashville and Sacramento have been received within the days. Also, we'll be monitoring what it does to our e-commerce business.

Brendan Hoffman: Yeah, thanks. I mean, you know we're pleased with the way the Nashville and Sacramento have been received within the community. You know it's still early days. Also, we'll be monitoring what it does to our e-commerce business. You know I think we have 60 stores now between the outlets and full price. You know I wouldn't expect that number to move much, maybe a couple more, a couple less, depending on opportunities. We continue to be really pleased with our Marylebone store in London. We're going to see if there's opportunities in other parts of Europe, both to do business where we can be profitable like in Marylebone, and also provide some visibility for us in regions where we have a wholesale business, and stores can just reinforce that. You know we'll continue to monitor the direct-to-consumer opportunity led by e-commerce.

Speaker #4: I think we have 60 stores now between the outlets in full price. And I wouldn't expect that number to move much, maybe a couple more, a couple less, depending on opportunities.

Speaker #4: Marlio Bone store in London. So going to see if there's We continue to be really pleased with our opportunities in other parts of Europe both to do business where we can be profitable like the Marlio Bone and also provide some visibility for us in regions where we have a wholesale business and stores can just reinforce that.

Speaker #4: So we'll continue to monitor the direct-to-consumer opportunity led by e-commerce. But as I've always said, it's not an either/or with direct-to-consumer and our wholesale business.

Brendan Hoffman: But you know, as I've always said, it's not an either/or with direct-to-consumer and our wholesale business. It's both. It's an and. And I think they just reinforce each other. And we saw that in Q3 and continue to see that in Q4.

But you know, as I've always said, it's not an either/or with direct-to-consumer and our wholesale business. It's both. It's an and. And I think they just reinforce each other. And we saw that in Q3 and continue to see that in Q4.

Speaker #4: It's both. It's an "and." And I think they just reinforce each other, and we saw that in Q3 and continue to see that in Q4.

Speaker #3: Great. Congrats and good luck for the rest of the holiday season.

Eric Beder: Great. Congrats and good luck for the rest of the holiday season.

Speaker #4: Thank you.

Brendan Hoffman: Thank you.

Speaker #2: The next question comes from Michael Kapinski from Noble Capital Markets. Michael, please go ahead. Your line is open.

Brendan Hoffman: The next question comes from Michael Kapinski from Noble Capital Markets. Michael, please go ahead. Your line is open.

Operator: The next question comes from Michael Kupinski from Noble Capital Markets. Michael, please go ahead. Your line is open.

Speaker #5: Thank you. And I'd like to offer my congratulations as well. Sales were obviously much better than what we were looking for. Were there any particular bottlenecks or limitations that could have delivered even better sales?

Michael A. Kupinski: Thank you. I'd like to offer my congratulations as well. Sales were obviously much better than what we were looking for. Were there any particular bottlenecks or limitations that could have delivered even better sales? I'm thinking any inventory constraints for particular items, for instance.

Michael Kupinski: Thank you. I'd like to offer my congratulations as well. Sales were obviously much better than what we were looking for. Were there any particular bottlenecks or limitations that could have delivered even better sales? I'm thinking any inventory constraints for particular items, for instance.

Speaker #5: And I'm thinking about any inventory constraints for particular items, for instance.

Speaker #4: I mean, there's never a crystal ball. So you always there's certain things you wish you had a little bit more of. But I think I overall, we were in a good inventory position.

Brendan Hoffman: I mean, you know there's never a crystal ball, so you always, there's certain things you wish you had a little bit more of. But I think overall, we were in a good inventory position, you know, really working through the first half of the year disruption from tariffs, as we discussed. So as I'm doing my store tours, I'm not getting too much pushback from the stores about where they need more inventory. I think Vince also, since I was here last, is doing a much better job with our logistics and operations, refilling the stores on a timely basis. So I think we have a good handle on that. You know again, not to harp on it, but I am so excited about it, this dropship opportunity, which allows us to take full advantage of Caleres's shoe inventory.

Speaker #4: Really working through the first half of the year disruption from tariffs, as we discussed. So, as I'm doing my store tours, I'm not getting too much pushback from the stores about where they need more inventory.

Speaker #4: I think VINCE also since I was here last is doing a much better job with our logistics and operations, refilling the stores on a timely basis.

Speaker #4: So I think we have a good Again, not to harp on it, but I am so excited about it. This handle on that. dropship opportunity, which allows us to take full advantage of Kalaris's shoe inventory.

Speaker #4: I mean, that's a big deal because that's where we did have some holes in our inventory with our third-party partners assortment because it's a little bit more difficult to properly procure ahead of time.

Brendan Hoffman: I mean, that's a big deal because that's where we did have some holes in our inventory assortment because it's a little bit more difficult with our third-party partners to properly procure ahead of time. So this opens up a really big opportunity for us going forward, as I've been saying. But overall, the inventories, I think we're in a good position and help fuel the growth we saw.

I mean, that's a big deal because that's where we did have some holes in our inventory assortment because it's a little bit more difficult with our third-party partners to properly procure ahead of time. So this opens up a really big opportunity for us going forward, as I've been saying. But overall, the inventories, I think we're in a good position and help fuel the growth we saw.

Speaker #4: So this opens up a really big opportunity for us going forward, as I've been saying. But overall, the inventories, I think we're in a good position.

Speaker #4: And help fuel the growth we

Speaker #4: saw. Thank you for that.

Michael A. Kupinski: Thank you for that. And how much of this strong revenue growth was driven by price versus product volume? I know that you touched on that in your comments, but I was wondering if you could just expand on that.

Michael Kupinski: Thank you for that. And how much of this strong revenue growth was driven by price versus product volume? I know that you touched on that in your comments, but I was wondering if you could just expand on that.

Speaker #5: And how much of the strong revenue growth was driven by price versus product volume? I know that you touched on that in your comments, but I was wondering if you could just expand on that.

Speaker #4: Yeah, well, I mean, we were really pleased that the units held steady. And actually grew at the higher price point. So we had anticipated, given the price changes, that we would see a little bit of erosion in our unit velocity.

Brendan Hoffman: Yeah, well, I mean, we were really pleased that the units held steady and actually grew at the higher price point. So you know we had anticipated, given the price changes, that we would see a little bit of erosion in our unit velocity. But you know so far, we haven't seen that, you know and the customer seems to be trading up with us. I don't know if that's because they're trading down from other luxury brands and as those prices skyrocket. But our core customer continues to see us as a value. And you know as I said in my comments, women's was where we had to take the largest price changes, and the units held strong. So you know that was a win-win, and that's continued into all of it.

Speaker #4: But so far, we haven't seen that. And the customers seem to be trading up with us. I don't know if that's because they're trading down from other luxury brands.

Speaker #4: And as those prices skyrocket, but our value. And as I said in my comments, Women's was where we had to take the largest price changes.

Speaker #4: core customer continues to see us as a And the units held strong. So that was a win-win. And that's continued into all of it.

Speaker #4: So we'll continue to monitor that, continue to see if there's even a little bit more opportunity to push up price where we think the customer will react positively.

Brendan Hoffman: So we'll continue to monitor that, continue to see if there's even a little bit more opportunity to push up price, you know where we think the customer will react positively. But definitely a driver was the strength in the units.

So we'll continue to monitor that, continue to see if there's even a little bit more opportunity to push up price, you know where we think the customer will react positively. But definitely a driver was the strength in the units.

Speaker #4: But definitely a driver was the strength in the

Speaker #4: units. And then given

Michael A. Kupinski: And then, given that wholesale and direct-to-consumer looked like revenues were, the revenue growth were pretty much similar, but I was wondering if there was any divergence between the two channels in terms of product sales, particularly as you go into the Q4.

Michael Kupinski: And then, given that wholesale and direct-to-consumer looked like revenues were, the revenue growth were pretty much similar, but I was wondering if there was any divergence between the two channels in terms of product sales, particularly as you go into the Q4.

Speaker #5: that wholesale and direct-to-consumer look like revenues were the revenue growth were pretty much similar, but I was wondering if there was any divergence between the two channels in terms of product sales and particularly as you go into the fourth quarter.

Speaker #4: No, I mean, we e-commerce, our e-commerce was clearly the big winner and driver when you look across all the channels. But overall, saw strength at the register at with our wholesale partners.

Brendan Hoffman: No, I mean, we, you know, e-commerce; our e-commerce was clearly the big winner and driver when you look across all the channels. But overall, we saw strength at the register with our wholesale partners. You know, we continue to work with Saks Global to make sure that we're able to properly service their business while they go through their transformation. So that creates a little bit of noise. But you know, overall, as we start December, the product's checking at the register everywhere.

Speaker #4: We're continuing to work with Saks Global to make sure that we're able to properly service their business while they go through their transformation. So that creates a little bit of noise.

Speaker #4: But overall, we start December, the products checking at the register

Speaker #4: everywhere. Gotcha.

Michael A. Kupinski: Gotcha. My final question is, can you just talk a little bit about trends in freight costs? I know that I was just wondering if you'd negotiate annual contracts and if you could just talk a little bit about what you're seeing there.

Michael Kupinski: Gotcha. My final question is, can you just talk a little bit about trends in freight costs? I know that I was just wondering if you'd negotiate annual contracts and if you could just talk a little bit about what you're seeing there.

Speaker #5: My final question is, can you just talk a little bit about trends in freight costs? I know that I was just wondering if you negotiate annual contracts and if you could just talk a little bit about what you're seeing

Speaker #5: there. Yeah.

Brendan Hoffman: Yeah, certainly. So yeah, we are seeing freight cost increases. That's also partially due to the fact that we are changing sources as well of where we're sourcing our products. So it's really more of a product of depending on the shift in timing, we're airing more stuff or certain pieces are taking longer in terms of distance-wise to get here. So it's not so much of the actual inherent sort of freight contract and the pricing related to that. It's really more along the lines of the timing of when we want to bring in the product, which method we're using to bring in the product.

Brendan Hoffman: Yeah, certainly. So yeah, we are seeing freight cost increases. That's also partially due to the fact that we are changing sources as well of where we're sourcing our products. So it's really more of a product of depending on the shift in timing, we're airing more stuff or certain pieces are taking longer in terms of distance wise to get here. So it's not so much of the actual inherent sort of freight contract and the pricing related to that. It's really more along the lines of the timing of when we want to bring in the product, which method we're using to bring in the product.

Speaker #4: Certainly. So yeah, we are seeing freight cost increases. That's also partially due to the fact that we are changing sources of where we're sourcing our products.

Speaker #4: So it's really more the product of depending on the shift in timing where airing more stuff or certain pieces are taking longer in terms of distance-wise to get here.

Speaker #4: So it's not so much about the actual inherent sort of freight contracts and the pricing related to that. It's really more along the lines of the timing of when we want to bring in the product, which method for the product.

Speaker #4: we're using to bring in the

Speaker #5: Gotcha. Okay. Thank you. That's all I

Michael A. Kupinski: Gotcha. Okay, thank you. That's all I have.

Michael Kupinski: Gotcha. Okay, thank you. That's all I have.

Speaker #5: have.

Speaker #2: Any further questions at this

Brendan Hoffman: No further questions at this time, but as a final reminder, that's star 1. We have no further questions, so I'll hand the call back to the management team for any closing comments.

Operator: No further questions at this time, but as a final reminder, that's star 1. We have no further questions, so I'll hand the call back to the management team for any closing comments.

Speaker #2: Time. As a final reminder, staff, followed by one. We have no further questions, so I hand it back to the management team for any closing comments.

Speaker #4: Okay. Well, thank you all again for your participation today. And we look forward to updating you on our year-end results in the spring. And happy holidays to all.

Brendan Hoffman: Okay, well, thank you all again for your participation today, and we look forward to updating you on our year-end results in the spring. Happy holidays to all. Thank you.

Speaker #4: Thank

Speaker #2: This concludes today's call.

Brendan Hoffman: This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.

Operator: This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.

Q3 2025 Vince Holding Corp Earnings Call

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