US' Vince Holding posts solid Q3 sales growth despite margin pressure

The gross profit reached $41.9 million, representing 49.2 per cent of net sales. The margin contracted as higher tariffs reduced profitability by around 260 basis points and increased freight costs added a further 100 basis points. These pressures were partly offset by lower product costs, improved pricing, and reduced discounting.

Selling, general, and administrative (SG&A) expenses rose to $36.5 million from $34.3 million, mainly due to higher compensation, benefits, and marketing spending, though SG&A remained flat at 42.8 per cent of sales, Vince Holding said in a press release.

The operating income stood at $5.4 million, slightly lower than the $5.8 million recorded a year earlier, reflecting increased corporate costs and tariff-related pressures. The net income declined to $2.7 million, or $0.21 per diluted share, compared with $4.3 million, or $0.34 per diluted share, in Q3 FY24.

Adjusted EBITDA also softened to $6.5 million. Segment operating income improved to $19.6 million, supported by stronger wholesale performance and improved DTC profitability, but higher unallocated corporate expenses reduced consolidated operating income.

The company ended the period with 60 Vince-operated stores, one fewer than last year. Inventory rose to $75.9 million, partly reflecting $4.2 million in higher carrying value due to tariffs. Vince reported borrowings of $36.1 million and excess credit facility availability of $47.3 million. During the quarter, it raised $1.29 million through its at-the-market share issuance programme at an average price of $3.55 per share.

“We are extremely proud of our third quarter performance, delivering healthy sales growth across all channels while exceeding expectations for both top and bottom-line results. Our direct-to-consumer segment is showing broad-based strength benefiting from enhancements we have made to the customer experience,” said Brendan Hoffman, chief executive officer (CEO) of Vince. “This includes the store renovations from earlier this year, as well as an e-commerce site refresh, increased marketing support, and the launch of drop-ship capabilities expanding the breadth and depth of our assortment online in the third quarter. This momentum has continued into the fourth quarter with a record holiday sales weekend in DTC.”

Looking ahead, Vince expects Q4 FY25 net sales to increase between 3 and 7 per cent, with adjusted operating income projected at 0 to 2 per cent of net sales and adjusted EBITDA at 2 to 4 per cent of net sales.

For the full fiscal, it forecasts net sales growth of 2 to 3 per cent, adjusted operating income of 2 to 3 per cent of sales, and adjusted EBITDA of 4 to 5 per cent. The guidance factors in $4–5 million in incremental tariff costs, which the company aims to mitigate through pricing and operational measures.

“As we look ahead, I am more confident than ever in our trajectory as we successfully balance disciplined execution with strategic reinvestment to position the Vince Holding Corp platform for sustained long-term profitable growth,” added Hoffman.

Vince also highlighted its ongoing strategic partnership with Authentic Brands Group, established through the 2023 Authentic Transaction. The long-term licensing agreement grants Vince exclusive rights to operate its wholesale, retail, and e-commerce business under the brand for an initial ten-year term, with multiple ten-year renewal options, added the release.

The company said it remains focused on strengthening brand positioning, enhancing profitability, and executing its mitigation strategies as tariff headwinds persist.

ALCHEMPro News Desk (SG)