Good afternoon. My name is Mike and I will be your conference operator today. At this time, I would like to welcome everyone to the Vince Holding Corp. Q1 2015 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. [Operator Instructions]. I would now like to turn the call over to Ms. Jennifer Poland, Vice President of Finance. You may begin your conference.

Thank you and good morning everyone. Welcome to our first quarter 2015 earnings conference call. I'm Jennifer Poland, Vice President of Finance. Joining me today is Jill Granoff, our Chief Executive Officer and Lisa Klinger, our Chief Financial Officer who will be your speakers for today's call. 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 we expect. 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 Web site. 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. After our prepared comments we will be available to take your questions for as long as time permits. Now, I'll turn the call over to Jill.

Thank you, Jennifer. And thank you everyone for joining us today to discuss our first quarter 2015 results. I will start by giving you an update on the quarter as well as our growth initiatives for the balance of 2015, then I will turn it over to Lisa for a more detailed review of the financials and outlook before I end with some brief closing remarks. Vince is a leading contemporary fashion brand, we offer our customers everyday luxury essentials and modern effortless style and as a result of brand has brought more appeal. We’re successfully evolving into a global dual gender multichannel lifestyle brand and have multiple levers for long-term sustainable growth. We remained focused on our strategic initiatives which include enhancing our women's product assortment, further developing our men's business, selectively opening new retail stores, leveraging e-commerce to drive awareness in sales and broadening our international reach. As we look at the first quarter our results came in generally as we expected and we saw many positives in our business. Sales grew 12% with growth in virtually every channel. Our increase was driven by our direct-to-consumer segment which grew by 34%. Comp sales increased 9.7% including e-commerce which saw significant traffic increases. Our wholesale segment was up slightly driven by our domestic wholesale business and licensing loyalties. Gross margin expanded 200 basis points to 51.4% in the quarter while SG&A costs increased due to strategic investments in our business. In addition, EPS grew 50% to $0.06 in the first quarter. Turning to some operational highlights from the quarter, as you know product is paramount at Vince and we continue to make strides in our evolution into a lifestyle brand. We were pleased with our performance in a number of women categories including dresses, bottoms and outerwear with significant…

Thank you Jill. For the first quarter net sales were 12% to $59.8 million versus $53.5 million in the prior year period. Our wholesale channel sales increased 2.6% to $38.3 million due to slight growth in our U.S wholesale segment and an increase in our licensing royalty revenue. Our direct to consumer segment sales increased 33.6% in the first quarter as we added 13 new stores towards the first quarter of last year and grew our comparable store sales including e-commerce by 9.7%. Our comparable stores sales growth was driven primarily by strength in our e-commerce business. Moving on to profitability gross profit in the first quarter increased 16.4% to $30.7 million versus the first quarter of fiscal 2014 as a result of both an increase in sales and an increase in gross margin rate. Gross profit as a percentage of net sales increased 200 basis points to 51.4% from 49.4% last year. The gross margin rate increase was driven primarily by increased product margin and higher sales penetration of our direct to consumer and license businesses, partially offset by higher inventory reserve and a shift to lower margin businesses such as men's and handbags. Selling general and administrative expenses in the quarter were $25.6 million or 42.9% of sales compared to $21.2 million or 39.7% of sales for the first quarter of last year. As we have discussed previously as we continue to invest in our direct to consumer channel our SG&A rate is up due primarily to increased store labor occupancy cost and depreciation expenses related to our retail growth strategy. SG&A costs were also impacted by the increase in equity compensation expense as well as increased new office cost. This resulted in operating income for the first quarter of $5.1 million or 8.5% of sales compared to…

Thanks Lisa. Well, we are not happy about our revised guidance. We firmly believe in the long-term potential of the Vince Brand and are taking step to solidify our leadership position and achieve continued success. We know our customers are passionate about Vince product and we are committed to realizing our full potential as a global lifestyle brand. We have a lot of opportunity ahead of us from a products channel in geographic prospective and we look forward to driving significant growth in our company and increasing shareholder value over the long-term. Before turning the call over for questions, I would like to thank our amazing Vince team in New York, LA in the field for their tireless effort. I'd also like to thank our wholesale, licensing and international distribution partners, who showcase and support the brand globally. Now let's open it up for questions. Operator.

[Operator Instructions]. The first question is from Ed Yruma with KeyBanc Capital Markets. Your line is open.

Just a couple of quick ones, I guess first, can you talk a little bit about the reduction shipments to off price, I know that was one of the reason you called out for softener annual guidance when you reported last, I guess where is the change in off price considering that you're already trying to ranch it up back. And then as a follow up, how should we [dimensionalize] the handbag business from a dollar perspective? And then finally, Jill I noticed that Marc Leder was elected Chairman, I guess, how should we view that changes, is that just a corporate governance change or is there, more changes in the senior leadership team.

Sure. So, in terms of the offprice shipments, as you know, we increased our off price sales penetration, last year above our targeted 20% range. We wanted to penetrate to 20, we actually penetrated slightly higher. And what we've learned is that many of our partners have actually passed and healthy inventory is seasonally appropriate and now they feel that they've sufficient supply to meet the demand. So, as a result we're seeing that shipments are down but the good news is retail sales are still planned positively. In terms of handbags, it's really too soon we feel to dimensionalize this business, we have obviously, just taken a major change in our pricing strategy, the good news there is that the initial result seeing very, very promising. But so we will get back to you on that, but we think that handbags obviously can be a meaningful portion of the business when we look at some of our competitors and what handbags represent as a percentage total. And also just go back on off price for a minute, I mean, I'm sure you will see that we have lowered our guidance by about $20 million, roughly $10 million of that is the offprice shipment reduction. So, we wanted to clearly dimensionalize for you that the bulk of the decline in our guidance, is in wholesale and that is split roughly, equally between the reduction and offprice for the tune of roughly $10 million and then also a reduction in our planned reorder rate. And so we can talk about that in a minute. In terms of Marc Leder being named Chairman to your point that is exactly a corporate governance issue, the Board felt that it would be really appropriate to the separate the Chairman and CEO role and Marc said that he would step-in and fulfill the role as Chairman, so we made that announcement the other day.

Your next question comes is from Matthew Boss with JP Morgan.

I Christina [Bradley] on for Matt. Thanks for taking my question. And so now that the EPS growth bar is kind of aesthetic -- can you just walk through your ability to rebound in fiscal '16 and return to that 20% EPS growth rate algorithm that we talked about previously. Are there any potential headwinds in fiscal '16 that we should be thinking about? And then in addition, can you just describe the learning from the knit sweater in this category during the quarter, what was the key driver there?

Sure. So, at this point of time, we're not giving guidance for 2016. Obviously, with the change in our guidance been driven by the reset of our wholesale business as we again mentioned on our call, three months ago, and that's continuing to -- sort of find its footing over the next few quarters. But we're very confident there is a path to double-digit sales growth and mid to high teens earnings growth in the foreseeable future. But that 2016, is a really a little bit too early to tell.

And then on the sweater and knits category, any color there?

Yes. So, I mean, what I would say, here this is probably to a certain extents of self inflected wound, and the good news with that is ht it's something that we can correct, we've really been listening to our customers, our customers have said to us, they really wanted head to toe looks, looks, they wanted more bottom, more dresses, easy, casual wear to work clothes, year round outwear and we responded to that and obviously we've had very good results in that, each of those category has been up in the double-digit range and we're really seeing those categories become a meaningful percent to total. When we're planning our assortments, what we also did was we reduced our style counts in knits and sweaters, our knit style count was down 27%, our sweater style count was down 7% and in addition to that what we did was we actually eliminated styles in the good and better price bucket. So, what that in effect did was raise our AUR. So now that we've gone back to look at the business let's say wow, we're really known for sweaters and knits these didn’t perform to the degree we thought -- what happened here, and I think part of it is that, we really pulled back the style, our average prices went up and as a result of the performance, of those categories went down. And this is what we're known for, so really we focusing on our core heritage categories and then also especially in sweaters, there is a big cry for 100% cashmere the luxurious hand feel, that Vince is known for, we've been able to address that and the impact our fall and pre-spring deliveries that the back half of this year.

Next question is from Jeff Van Sinderen with B. Riley.

And I know you mentioned that most of the comp was driven by e-commerce but I was just wondering if you could break out what -- if you want breaking out what the brick and mortar comp was? And then any other underlying metrics you could share there, maybe AUR, [UP TATV] transactions what you are seeing in traffic and then also discounting on promotional levels in your own retail stores versus last year?

In terms of comps overall as you know we've made the decision to combine e-commerce and stores because that’s just the way that customers are shopping now. I mean it’s incredible how many people look online buying store, look in store by online. So we’re not breaking that out but we’re providing directional input as we've mentioned to say that our e-commerce business was the predominant driver. What I would say to you is that we did see our store performance was slightly better in the West Coast region and in mall locations than what we saw in the East Coast and the street location. So our retail stores did come in below where we saw and again we were really impacted in the East Coast and on the street, from the traffic perspective overall we saw very nice traffic increases overall but again a lot of that was driven in e-commerce but the good news is we feel that our digital marketing initiatives are really working as well as the fact that we’re seeing increased momentum in brand interest the traffic was up quite significantly online. Hopefully that provides you with good color in terms of our comp range overall coming in nearly 10%.

And I don't know if you don't want get into this or not? But is there anything you can help us with as we think about sort of quarterly progress. I know you are only giving annual guidance but anything we should think about in terms of how the quarters fall, maybe how we should think about Q2?

So I think on the last call I had indicated that we were looking for comp growth that was pretty steady throughout the quarter, obviously with the slight decline versus our expectation in the first quarter were probably a little bit more back end loaded in the fourth quarter than what we’re originally planning. So there could be a gradual step up from each quarter throughout the rest of the year.

And then is there anything else to add in terms of or I guess frame things in terms of your discounting levels in wholesale what you are hearing from your partners there? How their merchandise margins have been running, I know you said that the bookings were they were cutting down a little bit of bookings, was that just because they had the sale through rates where they expected or the margins were or maybe any color to frame that would be helpful.

Our mark downs are up a little bit year-over-year. We are cycling on Nordstrom's pricing matching activity that they didn't really start doing that until early summer last year so from a year-over-year perspective we still are feeling that from a promotional standpoint in whole sale. I would say that on the margin they are promoting a little bit more heavily than they were last year but it's not dramatical. I would say the only key differential year-over-year is the as the Nordstrom price match being cycling that we have.

Next question is from Joan Payson with Barclays.

I think you mentioned in addition to the off price reduction that maybe there were some macro-factors having an impact upon the revenue outlook for the rest of the year. Maybe you could talk a little bit about what those are if tourism having an impact at all on your business. And then I think you also mentioned that both men's and handbag's are lower gross margin businesses currently, do you expect that to continue longer-term or is there a point at which those should begin to turn to lower unit cost businesses.

I will take the macro factors and then Lisa can address the margin situation. So the macro factors that were referring to is something that we discussed on our last call as well and obviously we’re seeing that our department store partners are looking for their inventory to term factor, so they are just buying less inventory upfront. So that’s one of the factors that we’re seeing. In addition to that other macro factor when you look at the department stores business is that we're really getting their growth in the off price sector and a little bit in the digital sector but not in the full price sector and as you know we have a state of strategy that we don't want to increase our off price penetration as a matter of fact we want to reduce our off price penetration. As a matter of fact we want to reduce our off price penetration. And then the other is within the full price stores themselves we've see our department store partners becoming more promotional. So the fact that they are buying a little bit less inventory upfront that they are distorting their efforts to off price and in addition to that they were bit more promotional these are all things that are impacting our business. Tourism has also impacted our business in selected locations but not across the board. Some of the other macro factors that other people talk about like foreign exchange currency has not really impacted us, we had minor impacts due to port delay I wouldn't say that was major, I would say it's really about the dynamics within the department store sector, and certainly a little in terms of tourism in selected markets.

And then from a gross margin perspective, we would certainly look for handbags to be accretive over time once we brought that to scale. And I think on a men's perspective it will be difficult to have those margins be higher than our women’s category, but we been certainly again as we scale and build that business, we’d look for that differential scenario.

The next question is from Mark Altschwager with Robert W Baird.

It sounds like you're looking to reverse some of the AUR increases in women’s top and then handbag smaller today, but initial prices are lower with the fall assortment. So with those changes how are you thinking about the gross margin profile of the business longer term? And then separately with the change in the revenue growth trajectory and any opportunity on the cost side to offset that looking forward?

So from an AUR perspective, we still do get some nice mix benefits from some of the other categories. Again knit is one of our lowest AUR categories anyway for the fact that it's going down a little bit, it's not skewing it dramatically, we still are getting some nice mix benefits from outerwear and leather and few other categories that we have. And again we weren’t anticipating for handbags to be a large portion of the mix so that price shift there doesn’t really move the consolidated AUR needle per say. And then I am sorry what was the second question?

Any opportunity on the cost side given the change in revenue trajectory versus kind of the plan 12 to 18 months ago?

Yes, so from an SG&A perspective, we have certainly taken a very sharp pencil to each one of our variable and discretionary cost. We’re doing that prudently though because as a growing company you want to make sure that you're supporting the initiatives that you have for the long-term. So to the extent that we can again prudently cut cost or defer cost we are doing that, we are absolutely still investing in the business and investing in the long-term future.

And Lisa maybe one more if I could, just any help on the cadence of that wholesale growth rate over the remainder of the year and should we expect to more severe slowdown maybe in Q2 offset by later in the year with the improvement in the assortment?

Yes, it's actually -- it's going to be pretty much kind of high single, low double-digit decline for Q2, Q3 and Q4 for our wholesale segment. It does take a little while to get some of those changes through the product mix.

And the other thing I would just add to that as you know our wholesale segment is really three sectors in total. So this really is a domestic wholesale issue, we are continuing to forecast double-digit growth, not only in DTC both retail and e-commerce, but also in international and licensing. So the one channel sector of the business that we are projecting down to Lisa's point is really in our domestic wholesale we do realize this is a large part of our business. So obviously that’s impacting the total, but we are very pleased to see that all of our other channel, all of our other category are growing at double-digit rate. Operator Next question is from Lindsay Drucker-Mann with Goldman Sachs.

My first question are some of the that you're facing within women’s wholesale in U.S. is there a broader issue on the contemporary floor, in other words do you have other brands or I mean wholesale partners talking about similar challenges for some of your competitors?

Well actually we are hearing that to a certain degree. I think years ago contemporary was a new category, you have a lot of designer customers trading down, you have a lot of new entrance, it was very high growth, we were the key driver of that growth, I think now that business has developed more there are more people there. So the growth rates have definitely slowed. We certainly don’t see this there is a Vince issue. We definitely see it more of a channel issue and within this segment. That said, if you have great product and innovative product the customer will buy it and that’s why we are really refocusing on our core heritage product to drive continued growth. But to your point we are seeing it as a broader issue beyond Vince's performance.

So do you get the sense that you're losing share of contemporary or your business is weak alongside the broader category?

We don’t get the feeling that we’re losing share, we are still the number one brand at Neiman’s effect and at Nordstrom still number two at Bloomingdale our space allocation is remaining the same. We are meeting with all of our department store partners. They are telling us how important we are to them. So I don’t see it as the situation where, we’re overall loosing share from a retail perspective, I just see it as a broader issue.

And then I just wanted to get some clarification I think Jill you mentioned before, I don’t know if I heard it right, but that part of the issue for wholesale, shipments is here is that some of your wholesale partners had carryover inventory or pack away inventory that they are going to be selling again which I don’t know if I’ve heard you say before, I just wanted maybe I have it wrong, but could you explain a little bit more in depth what’s going on there?

Yes, well you have it exactly right. So what we said was the off price shipments would be down. We shipped a lot last year and what we have learned is that several of our partners have decided to pack and hold that inventory for seasonally appropriate goods obviously at the end of the year you have a lot of fall product and they're holding that. So as we look at the back half of the year they basically feel that they have supply to meet the demand. Obviously that can change in time but that’s the current view that we have.

So it's not your full price department storage we're holding on to products.

No, no it's only in the office.

The next question is from Erinn Murphy with Piper Jaffray.

I guess I had a question on the inventory being up 30% at the end of the quarter. It's a little bit high given kind of the adjustment and guidance to be flat low single for the year from a sales perspective. So can you just help us understand how you see that kind of moving throughout the year and where does that actually go when you have wholesale down low double digit and they're really working hard to pull back on the off-price channel?

Yes, no so this is the last quarter where we do have the in-transit impact on year-over-year. So $9 million year-over-year increase roughly half of that is due to this in-transit impact. So between the in-transit our 13 new retail stores year-over-year and the incremental handbag inventory that really accounts for about 90% of that $9 million year-over-year increase. So these are current goods that are causing the increase, it's not any older goods per se. Now since this is our last quarter of the in-transit for the second quarter we would look for inventory level to be kind of mid to high teen. And then we're looking for the full year year-over-year -- truly be up kind of in the low teens range and that obviously off of up low single-digit sales. We've articulated in the past that given our growth trajectory new stores that we have in the pipeline shop-in-shop those sorts of things that we will have inventory growth faster than prior quarter sales growth again to feel the growth. And so that is typically about 10-point differential. That’s about how we try to measure the year-over-year inventory growth on a normalized basis if that makes sense.

And then I guess can you tell a different way in what percent of the goods that you guys cut heading into the season fold through. And then how did that compare to your plan thus far.

So what we're able to do which is actually great. As we have a fairly rigorous procurement approval processes, so we have the ability kind of flex up the buy based up on our projections for sales and this really allows us the opportunities to scale both up and down as we see changes in the marketplace. So again we have that flexibility so that you don't necessarily get painted in a corner. Second point as we do have many options to liquidate the inventory across very profitable third party off price venues including our own Vince outlet. So we have a good task in order to take care of any true excess that we have but more importantly we have the ability to flex up and down before we actually place a lot of those upfront buys.

I guess I can follow up on that offline as well. And then on the gross margin side how do we think about the cadence throughout the year kind of guiding 50 to 70 bps versus the 200 basis points improvement in Q1. And then what are you reserving from markdown allowance period? I know last year you had pretty significant reserve in Q3. So just help us think about the cadence some of the puts and takes.

So on a quarterly basis we likely will not see the sorts of expansion that we saw here in the first quarter. This is really the last quarter where we had some significant contribution from the operational initiative and improvements that we put in place. So we start to cycle on those starting in the second quarter. So again you will see the expansion on a quarterly basis certainly compressed over the next three quarters to a more normalized levels. From a markdown perspective we did put in place a higher markdown reserve in the second half of last year. So obviously we face that pressure in the first half of this year on a year-over-year basis. But again it should be a little bit more even over the next three quarters, with a little bit more pressure like I said in the second quarter as we continue to cycle on some of the markdown issues that we started facing in the third quarter of last year.

[Operator Instructions]. The next question is from Richard Jaffe with Stifel.

Just if you could add some color to the men's business it sounded like that was on the up and wondering if you could provide some I guess detail about the business and how high is that -- how big you think that could or should be as a percent of total?

Well I have to say Richard we're very-very excited about our men's business as our department store partners as is the customer -- it's probably where women's was five years ago in terms of being very-very focused, with sweater and knits and we've begun to add outerwear and bottoms and we've seen really, really nice growth in those categories. So I think I mentioned in my remarks the greatest growth really did come from the knit top; from pants and from outerwear. We're opening more shops in men's which in great on the retail side. We opened our first men's only store and we're also going to be testing some side-by-side retail format. We actually opened one like that in DC with a separate entrance to the store for men's is doing quite well. Separate resting room and separate cash rep. We'll be doing that also in our store opening in Abbot Kinney in Venice. So, we think there is a lot of upside in terms of the product assortment expansion in terms of expanding our footprint within our department store partners obviously giving some additional space and location within retail stores as well and across the board. We are seeing really nice double-digit increases. So, it's very exciting and it's like -- we haven't even touched the opportunity internationally. Right now we're really focused domestically. So, men's today is -- I don’t about 13% of our business and we believe that over time it could probably approach 20% of the business overall.

And that would include men's shoes?

No, that does not really include men's shoes because footwear is a licensed business. So we get royalties on men's footwear from brown shoe now Caleres, so that would impact our wholesale line that's where the royalties are recorded. However, as we roll out men's footwear online and in DTC, we'll see some growth there as well, but those numbers are predominantly what we are projecting for our men's sportswear business.

There are no further questions at this time. I'll now turn the call over to Jill Granoff.

Thank you all for listening and participating in our call today. We look forward to speaking with you again in September for our fiscal 2015 second quarter earnings call.