Hello everyone and welcome to Vince Holding Corp. Third Quarter Fiscal 2024 Results Call. My name is Lydia, and I'll be your operator today. After the prepared remarks, there will be an opportunity to ask questions. [Operator Instructions] I’ll now hand you over to Akiko Okuma, Chief Administrative Officer and Head of Investor Relations to begin. Please go ahead.

Thank you, and good morning, everyone. Welcome to Vince Holding Corp.’s third quarter fiscal 2024 results conference call. Hosting the call today is Dave Stefko, Interim Chief Executive Officer, and John Szczepanski, 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. 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 Dave.

Thank you, Akiko, and thank you, everyone, for joining us this morning. I will begin with a review of highlights from our third quarter performance before turning the call over to John to discuss our financial results and outlook in more detail. Our third quarter results reflect our ongoing focus on driving a stronger full-price business, while executing an increasingly more efficient operating model through our transformation efforts. Despite our top-line performance falling slightly short of our expectations, driven by lower than expected in-season reorders in our international wholesale business as well as lower than expected sales in our Outlet channel, we delivered profitability results in line with our prior guidance range, driven entirely by gross margin expansion. Within our Direct-to-Consumer channel, we made the strategic decision to both pullback promotional activities even more than originally planned in our Outlet channel which led to the lower than expected sales mentioned, but yielded a much healthier margin performance for the quarter. With the ongoing work in focusing on a stronger full-price business, we were pleased to see growth in our full-price customer file accelerate to the high-single-digit range, outpacing the trends we delivered in the first half of the year. This growth was spread fairly evenly between our stores and e-commerce channels. With respect to our wholesale performance, as we mentioned on our last earnings call, we expected our third quarter sales to be lower than the prior quarter given the earlier timing of shipments. In addition, we saw lower than expected in-season reorders with our international partners, particularly in in Asia. We believe this was largely due to the impact the stronger US dollar had on our partners’ purchasing decisions in season. Despite these topline dynamics, similar to our DTC channel, we saw strong full-price performance across wholesale during the…

Thank you, Dave, and good morning, everyone. As Dave discussed, our disciplined approach to full-price selling and execution of our transformation plan continued to strengthen our financial foundation this quarter. While total revenue declined compared to the prior year period, we achieved meaningful bottom-line improvement highlighted by a substantial gross margin expansion. Let me walk you through the key financial metrics and provide additional color on our performance for the quarter. Total company net sales for the third quarter decreased 4.7% to $80.2 million, compared to $84.1 million in the third quarter of fiscal 2023. The year-over-year decrease in total company net sales was driven by an 8.3% decrease in our Direct-To-Consumer segment and a 2.2% decrease in our wholesale segment. As Dave reviewed, these results were slightly below our expectations, driven by lower than expected in-season reorders in our international wholesale business, as well as lower than expected revenues in our Outlet channel. Combined, these factors negatively impacted sales growth in the quarter by 300 basis points. Excluding these factors, revenue trends would have been more in line to our expectations, which incorporated ongoing headwinds in our Direct-To-Consumer segment from store closures, which was a 163 basis point impact on the quarter, as well as the pullback in promotional activity, compared to the prior year. With respect to our wholesale business, we had expected a deceleration in the top-line from the prior quarter, given the earlier time of shipments that we previously discussed on our last call. Gross profit in the third quarter was $40.1 million or 50% of net sales. This compares to $37.2 million, or 44.2% of net sales in the third quarter of last year. The increase in gross margin rate was driven by approximately 480 basis points related to lower product costing and freight costs…

[Operator Instructions] We have a question from Eric Beder with SCC Research. Please go ahead. Your line is open.

Good morning. Congratulations on the progress.

Thank you.

If we look at the balanced ABG Vince, I want to talk about ABG Vince, I know that some of the products have started to come in - some of the licensed products have started to come into the stores here in Q3, Q4, curious about what the response has been to that. And then what sort of your thinking about next year in terms of potential new product categories for the retail channel going forward?

Thanks, Eric. So, at this time through fall season and now, pre-spring is – we will be starting to ship. It's really the licensed products have been coming in, has really been around shoes and cold weather goods, which are licenses that we've had for a few years. So, as we indicated in our remarks, we're happy with our Black Friday, Cyber Monday and the licensed products continued to perform. When you'll see new licenses that ABG Vince entered into since the transaction, there will be belts and leather goods that will launch with the spring season. And then, handbags license has been signed, but that's not expected to ship until fall, fall of 2025.

Okay. In terms of store potential, I'm excited, that you are opening stores in both the UK and in the US, how should we be thinking about longer term the potential for expanding out the store base even a little bit more recently and the potential in terms of returns I saw there was in Q3, a significant increase in profitability on the operating line for the D2C. Thank you.

I'll address the stores in the John could talk about the results from Q3. But from a store perspective, when you look at the US, as we implied, we completed a study mid-year with Cushman and Wakefield, where we looked at the entire US market and with only 60 stores and a heavy concentration in New York and Los Angeles, we have a lot of white space in the US where we can fill in stores. And as we said in our remarks, we've kind of allowed our e-commerce sales and our wholesale sales, we kind of combined where those happen across the states along with markets and in today's age of technology, you can define, down to malls and shopping centers where the demographics cross with who our consumer is. So we feel it's a really good understanding what markets are good for us. And, you could imagine looking at a map we have opportunities in the Midwest and the Pacific Northwest to name a few. So Nashville became one of the top markets. And so we were focused on looking at not just the top five markets, but the top markets and looking at opportunities. We'll still let economics drive us as to decision-making. When you look outside the US and you look at the UK, we're much more opportunistic. We just thought Marylebone is a fabulous shopping location, similar to being on Madison Avenue here in New York City. It was an opportunity that we felt was important for the brand, especially looking at the results in our existing Drake Card store that's been open for about five years now. So we thought it was the right time to make that investment. As we talked last quarter, Eric, we also looked at a market like China and where we were testing stores, we pulled back in China because of the economic conditions and the economic situations going on in China. So, that's how we view the world and, and the US from a new store opportunity.

And Eric, just to add on that, when we're talking about store performance, sorry, you wanted ask the follow-up?

No, go ahead.

No, I was just going to mention in terms of the financial side of store performance. What we're seeing today, even though our top-line we see was impacted by the store closures that that we had in the fleet, as well as the pullback in promotional activity. What we're really seeing is, is a really positive bottom-line impact from that full-price selling strategy and all the efforts around transformation that is driving our overall margin results. And the other thing that we're seeing is, being able to invest back in the right inventory in season is really helping us give a balanced offer to the customer. So, all of those factors are really driving the performance in stores.

Okay. And one last question. Men’s, congrats on getting over 20%. How did the expansion into all the Nordstrom stores go? And how should we be thinking about the opportunity for men’s in your own stores going forward in terms of expanding that out? Thank you.

Thanks, Eric. So, from a Nordstrom perspective, it's early. I mean, the results were very, very pleased with our Nordstrom results across the board that includes men’s. So we certainly are seeing growth. But from our view it still is a little bit early. In our, in our own stores, again men's is performing well. The pant program was a critical investment and launch that we've made this year. We're reacting to results that we're seeing and making adjustments where needed. But we, we certainly expect to see continued to expansion, not just of managing our stores but as you as you know, Eric we have one standalone men's store that we're evaluating also its performance and how that fits into the strategy going forward.

Great. Thanks.

Thank you. This concludes our Q&A session. So I'll now turn the call back over to Dave Stefko for any closing comments.

Okay. Thank you for joining us today and we look forward to updating you on our 2024 fiscal year end results in our April year-end call. Happy holidays everyone.

Thank you. This concludes today's call. Thank you for joining. You may now disconnect your line.