Good day and thank you for standing by. Welcome to the Vince Q1 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Amy Levy. Please go ahead.

Thank you and good afternoon, everyone. Welcome to Vince Holding Corp's first quarter fiscal 2021 results conference call. Hosting the call today is Jack Schwefel, Chief Executive Officer and David Stefko, 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 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 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. The fiscal 2020 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 investor's section of the company's website at investors.vince.com. After the prepared remarks, management will be available to take your questions for as long as time permits. Now, I'll turn the call over to Jack.

Great, thank you, Amy, and thank you everyone for joining us this afternoon. We are pleased with the pace of recovery in our business led by the Vince brand. Revenue in the first quarter grew 47.5% and loss from operations was $7.1 million, a more than $15 million improvement over the adjusted loss in the first quarter of fiscal 2020. We are highly encouraged by this performance as we emerge from the crisis with two distinct global fashion brands that I believe has tremendous long-term growth potential. Starting with Vince; revenue in each of the direct to consumer and wholesale segments are showing strong recovery. Wholesale revenue is nearing fiscal first quarter 2019 results while retail, store sales are just modestly lower as traffic recovers, and they were operating in Q1 at 23% fewer hours as compared to pre-COVID days. While still impacted by a lack of international travel, particularly in our tourist markets, customers are enthusiastic about shopping us in-store. At the same time, we continue to gain market share within the luxury contemporary category within our wholesale partner doors. The momentum of the Vince brand is firmly in place as the sophisticated, effortless style of the brand continues to resonate with consumers. As consumers begin to vacation -- vacation again, we have launched the new swim wear collaboration with New Swim that will be available in select wholesale partner doors and vince.com. We believe that Swim is another category through which we can increase our share of her closet, when we look forward to this partnership. In men's, we are particularly excited to see the strong performance as wholesale as we become a clear leader within the men's contemporary luxury category. We continue to see men's as a meaningful growth opportunity for Vince and we are highly encouraged…

Thanks, Jack. We are encouraged to see the accelerated pace of recovery in our business in the first quarter. Our top line trends continue to increase sequentially, giving us confidence to continue to advance our near term strategies. Total company net sales for the first quarter increased 47.5% to $57.5 million compared to $39 million in the first quarter of fiscal 2020. For the Vince brand, first quarter consolidated net sales increased 76.3% to $50.7 million compared to $28.8 million in the same prior year period. Our Vince direct to consumer segment sales increased 32.3% to $23.9 million in the first quarter. This increase reflects improved traffic trends in our retail business still led by non-tourist areas including retail stores in the Midwest, Florida and Texas while urban areas continue their recovery at a slower pace. Growth in our e-commerce business was less pronounced as consumers return to in-person shopping as stores reopen. As a reminder, our e-commerce business in the first quarter of fiscal 2020 grew significantly due to the temporary store closures resulting from mandated COVID lockdowns. In our wholesale segment, net sales increased 150.6%. As Jack said, we remain confident in our market share position within this segment, as Vince continues to outperform peers within the contemporary luxury category. Rebecca Taylor and Parker combined net sales decreased 33.6% to $6.8 million as compared to the same period last year, As we have shared in the past with the COVID crisis, we have paused the development of new product for our Parker business to focus resources on the operations of our Vince and Rebecca Taylor brands. This contributed to about two thirds of the sales decline in the quarter. For Rebecca Taylor, the decline was largely due to decreased e-commerce traffic as a result of a pullback in…

[Operator Instructions] We have a question from Dana Telsey with Telsey Advisory Group. Your line is now open.

Good afternoon and glad to hear about the recovery that you're beginning to see. As you think about the recovery in Vince with the 76% increase and frankly, back to nearly --- and wholesale back to nearly 2019 levels, how is the online business performing as stores reopen? What are you seeing there? And as you just -- as you went through the quarter, was there any difference in cadence and region in terms of regional performance? And then a couple of follow-ups.

Well, those are great questions, hi Dana, this is Jack.

Hi.

A couple of thoughts on that. In terms of the web, we're continuing to see growth in the web. We -- I'd like to see a lot more to be quite honest with you and I look to the -- I look to later this quarter, third and fourth quarter to really see that accelerate. I'm bringing in a digital person to really help with that, and I think that that would, that's just the beginning, and that's just the first step. As far as cadence, we've -- we're building momentum. I think we started slow at the beginning of the fiscal year. There were some shipping issues, there -- we had late product. The port issues in China and in California clearly affected us. As we stock products is where we started to see the momentum. We've looked down the supply chain and are taking measures to ensure that that doesn't happen again, and it won't happen again. So I do think, as we gotten better inventory positions, we really saw the acceleration. We're starting to in our own DTC, in our own stores, we are beginning to expand store hours, where it makes sense, where the traffic is guarding to really come back. We saw, I think like a lot of retailers, like a lot of brands, we saw a lot of growth rate quickly from vacation destinations and we've really watch that now go across the country and very, very pleased with the progress we've seen with it.

Thank you. And then, as you think about the wholesale operating income. The wholesale operating income, where did -- where does that strength come from? Is it lower markdowns? How are you doing with the Neiman Marcus, Nordstrom doors. Anything new to note and other partnerships on the platform side with online in terms of wholesale?

I'm working on a lot of different things with platforms that it's a great -- good question and I think in the coming calls, I'll be able to share some. I hate this, to talk about things before they happen but as far as, as wholesale goes, Dave, was pretty specific on the last call about we were a little frustrated for a while with the open to buy from some of our wholesale partners was a bit tight as they were trying to ratchet down their inventories. We're starting to see some remedy of that and I think opportunistically, the better inventory positions we will be in, that give us a competitive advantage over some of our competitors that aren't in that inventory position.

Got it. And then, you mentioned marketing investments ramping up. How do you think about the marketing budget this year may be compared to 2019? So what should we look for in the back half of the year on marketing?

Well most of it will be around digital, which I don't think is a surprise in 2021, beginning to start to put our toe in the water in terms of what -- how do I investment spend, how do I look at that channels that are working, whether it's of interest for Rebecca or follow me ads for Vince and as we start to see some progress, I think we're willing and able to -- to be able to react to it and move much quicker.

Got it. And then on the port congestion and supply chain, the inventory was up 6.5% to $71.7 million. How are you thinking about inventory go forward? And then on taxes, what's your expectation there for the balance of the year? Thank you.

From an inventory perspective, Dana, I would expect us to see the inventories slightly up to last year, where we were from a tax perspective. Like we said, it's all non-cash, we should be -- we're projecting 2.8 million of non-cash to asset tax expense for the year, it will fluctuate through the quarters, depending on whether we are positive from that operating income or negative from the operating income perspective.

Got it. And then, promotional environment and your AURs, I mean, we are seeing lean promotions. What are you seeing? And how you're thinking about AURs going forward?

Look, I think this year it provides a reset, and an ability to be less promotional than we probably have been historically, and definitely dialoging about that with some -- with our partners about a bit of where can we do -- not just because, it's an anniversary sale to -- that doesn't have to be what it was, doesn't have to be as deep as it was. And I think everyone is cognizant because of some inventory issues that that are out there that there isn't a necessity so much to have to be highly promotional upfront. So very encouraged but what the landscape looks like there.

And one last thing, Jack, Rebecca Taylor. Any initial reads there and what you're seeing and your expectations go forward?

Look, I think we're still in an evolving period with that and very excited, I mean, very excited about what the reception has been, as we get more eyeballs on it and I think that will -- that momentum is building and it will continue to build all through this year.

Terrific. Thank you very much.

This concludes the Q&A session. I will now turn the call back to Jack Schwefel.

Thank you. Just want to thank everyone for being on the call today, appreciate it and look forward to talking to you again at the end of the second quarter. Have a great day.

This concludes today's conference. Thank you for joining. You may now disconnect.