Good morning and good afternoon, everyone and welcome to the Vince Q1 2022 Earnings Conference Call. My name is Emily and I will be coordinating the call today. [Operator Instructions] I will now turn the call over to our host, Amy Levy. Please go ahead.

Thank you and good morning, everyone. Welcome to Vince Holding Corp's first quarter fiscal 2022 results conference call. Hosting the call today is Jack Schwefel, Chief Executive Officer; and Dave 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 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. 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.

Thank you, Amy, and thank you, everyone, for joining us this morning for a discussion on our first quarter performance. Having just spoken with you a few weeks ago on our year-end performance, I'm going to provide you with a brief update on the quarter along with trends impacting the remainder of the year. We are pleased with our first quarter results which were in line with our expectations. We continue to see momentum in Vince with growth this quarter aided by a significant increase in store traffic as customers return to in-person shopping. Additionally, Rebecca Taylor remains on the right path and we continue to believe this brand can capitalize on meaningful white space. Beginning with a review of our performance events, during the quarter, direct-to-consumer sales exceeded 2019 results, led by strength in our e-commerce as well as double-digit growth in our retail stores. While the wholesale channel remains challenged, we meaningfully surpassed 2019 levels and we continue to see strong sell-through at the retail level. The strength of the brand was exemplified by the lack of distinguishable resistance to our initial price increases, enabling us to partially offset inflationary pressures. Overall, we remain confident that Vince is well positioned within the everyday luxury category, with a superb assortment of sophisticated casual items that strongly resonate with the needs and wants of our customers. During the quarter, we saw a strong response to styles that aligned with the continued trends, return to work and social activities, such as pants and blouses with strong demand for versatile and occasion-based items. Based on the successful swimwear collaboration with Nu Swim last year, we launched another collection with them for the spring/summer season. This line which launched in mid-May, is now available in select stores and on vince.com. We continue to…

Thanks, Jack. As we continue to navigate through the unprecedented macro headwind challenges that are beyond our control, we remain focused on driving our key strategic initiatives to capitalize on the strong foundation we have built. Total company net sales for the first quarter increased 36.2% to $78.4 million compared to $57.5 million in the first quarter of fiscal 2021. For the Vince brand, first quarter consolidated net sales increased 34.5% to $68.2 million compared to $50.7 million in the same prior year period. Our Vince direct-to-consumer segment sales increased 45.3% to $34.8 million in the first quarter and exceeded 2019 levels, led by growth in our e-commerce business as well as double-digit growth in retail stores. In our Wholesale segment, net sales increased 24.9% and exceeded first quarter 2019 sales levels. Rebecca Taylor and Parker combined net sales increased 48.9% to $10.1 million as compared to the same period last year. This was primarily driven by sales growth in Rebecca Taylor retail locations. Gross profit in the first quarter was $35.6 million or 45.5% of net sales. This compares to $25.5 million or 44.3% of net sales in the first quarter of last year. The 120 basis point increase in gross margin rate compared to the first quarter of fiscal 2021 was primarily due to favorable leveraging of distribution and other overhead costs, a nonrecurring insurance recovery as well as channel and product mix, partially offset by higher product and freight costs. Selling, general and administrative expenses in the quarter was $40.9 million or 52.2% of net sales as compared to $32.6 million or 56.6% of net sales for the first quarter of last year. The increase in SG&A dollars is a result of higher payroll and compensation expense, increased investments in marketing and higher consulting and other third-party…

[Operator Instructions] Our first question comes from Dana Telsey with Telsey Advisory Group.

Nice to see the product acceptance and navigating this environment constructively like you are. Jack, can you tell us a little bit about when you talked about different categories of product performing well, what are you seeing there, how does it differ between men's and women's? And does it differ online versus in-store? And then I have a follow-up for Dave.

Sure. Dana, good question. In terms of categories, what we're seeing on the men's side is a lot of return to work product. It mean by that is a lot of wovens, a lot of linen woven specifically this spring. They were strong last year. They were even stronger this year. Along with that, though, we're seeing things like Linen pull-on pants and also some of our other fabrications of pull-on pants be very, very strong. So we know that this is a customer that's working in a hybrid model. clearly stressing a few days of the week but dressing down on other days. Very, very similar on the women's side as well, where we're seeing dresses, we're seeing strength in skirts but we're also seeing strength in more casual styles as well. The breakdown in terms of -- in stores versus online, it's quite similar, not a lot of differential there at all.

Got it. And then when you think about inflation days and price increases and what you mentioned about the gross margin, given more off-price business, what do you expect inventory levels to be at the end of the second quarter? How much -- what type of price increases are you taking, whether now for spring/summer and how you're thinking about fall merchandise. And if you think about on the SG&A buckets, any puts and takes on gross margin and SG&A as you think about it going forward beyond Q2?

Dana, thanks. I can cover all what you asked. And when you look at price increases and we did put increases in for the spring season. But as we've said in our last call, we're trailing the build of costing. We have seen -- especially when you look at the transportation side, there's definitely an increase in the material side also. But specifically on transportation which we all saw growing throughout the year to kind of hit its peak in the late fourth quarter. So we've seen it stabilize and slightly decline to some degree. As we get into the back half of the year, we are anticipating elevated levels in freight costs still but we have recognized that in increasing pricing in the fall and future seasons from that perspective. And then also, we can be more reactive from a product perspective on the percentage of product that we need to air versus both because we are seeing, while Shanghai has had its issues the port congestion is not what it was -- and we'll see where the back half of the year goes but we're anticipating that we'll be able to have a better mix of on the water versus air product. And your other question was about inventory levels. We are seeing items that -- we've made an investment in inventory for Q2 in replenishment goods. We felt in the back half of last year that we missed some sales opportunity because we did not have enough volume there. So we're looking at that as an opportunity which will drive our inventory higher this year. And then, we've also to kind of fight the freight and port congestions and things. We've made a bigger investment in lightweight sweaters that we think will have more sustainability as we go through the pre-spring and spring seasons.

Got it. And then when you think of wholesale and you mentioned because we've been hearing out there in the marketplace, wholesale accounts are falling orders or canceling orders, whatever it may be. How are you dealing with that -- and are you seeing that too? And what does this do to your expansion, whether it's doors in Saks or that you're opening up or Bloomingdale's, how are you planning that going forward?

Yes I'll take that one. Look, I think we've seen some conservatism over the last couple of seasons and that just seems to continue. We have very good relationships with our big wholesale partners. And I've heard some of the same things but we're very pleased with the partnership and collaboration. We get with all four of them. You're aware that we've recently decided to do business, we come to an agreement with Saks. So that's -- it's a new relationship again. And I think we're excited to see where that goes. But I feel very, very good about the relationship with the other three department store chains. We collaborate talking to them on a weekly basis and we share our victories and figure out ways to mitigate this climate right now.

Got it. And then just on Rebecca Taylor, what are you seeing in terms of the reopening, given the strength that we hear about dresses and occasion wear?

Yes. Absolutely. And our assortment this year, it really more reflects that than it did even last year where we had some success. We're still in the early innings here figuring out the brand candidly. We have some categories that are working well and you just mentioned a couple of them and we're figuring out how to work in the other categories, too and get some victories and start to building on them. And we have to remind ourselves that we have this very large collection on the other side with Vince. And with Rebecca, we don't want to be that large as a collection until we really start to figure things out. But I can't overemphasize that we're still -- we're still figuring out some very different business events.

Yes. And then you have a very small international business but we've been hearing about the reopening and international doing well. What have you experienced?

Yes. We actually knock on wood, we've had a very solid, steady ride with our international business. We continue to grow it. We're excited about the fact we just added another department store with Corte Inglés in Spain. Spain has been very strong. Australia has been shockingly strong given just where they've been with the pandemic. Korea as well. Looking forward to opening in Shanghai this fall and seeing where we go with that with China next year. So no, we're -- I would say we're very bullish on our international business. We like what we see in Europe and we especially like what we're seeing in Asia.

I will now turn the call back to Jack to conclude.

Thank you, operator. We look forward to a really robust summer of selling and activity. There are clearly macroeconomic and political issues to be dealt with as well as macro and a micro business opportunities to be seized. Thank you for your time today and this concludes our -- we'll be back in September with Q2 earnings and this concludes our Q1 2022 earnings call. Thank you.

Thank you, everyone, for joining us today. This concludes our conference call and you may now disconnect your lines