US' Vince Holding's Q2 net income jumps to $12.1 mn on margin gains

The gross profit climbed to $36.9 million, or 50.4 per cent of sales, compared to $35.1 million, or 47.4 per cent, a year earlier. The margin expansion was aided by lower product costs, higher pricing, and reduced discounting, though partially offset by tariff and freight headwinds.

Selling, general, and administrative (SG&A) expenses dropped sharply to $25.8 million from $34 million, aided by a $7.2 million Employee Retention Credit (ERC) benefit. Income from operations surged to $11.2 million from $1.1 million last year, while adjusted income from operations—excluding the ERC—stood at $5.5 million, Vince Holding said in a press release.

The net income rose significantly to $12.1 million, or $0.93 per diluted share, from $0.6 million, or $0.05 per diluted share, in Q2 FY24. On an adjusted basis, excluding ERC-related effects, net income was $4.9 million, or $0.38 per diluted share. Adjusted EBITDA more than doubled to $6.7 million from $2.7 million last year.

The company ended the quarter with 58 company-operated Vince stores, a net decrease of three locations compared to Q2 FY24.

“We are very proud of our second quarter performance which reflects disciplined execution and strong customer reception to our product offerings especially as we elongated our full price selling season. As we remain mindful of the dynamic macro environment, our ability to navigate today's challenges while preserving product quality and customer loyalty remains our utmost priority,” said Brendan Hoffman, chief executive officer (CEO) at Vince Holdings.

For the first half (H1) of fiscal 2025, net sales of the company totalled $131.2 million, a decline from $133.3 million in the same period last year. The gross profit increased slightly to $66.1 million, representing 50.4 per cent of sales.

SG&A expenses in H1 fell to $59.4 million (45.3 per cent of sales). Income from operations remained flat at $6.7 million, or 5.1 per cent of sales. The net income for H1 rose to $7.3 million, or $0.56 per diluted share.

For the third quarter of fiscal 2025, the company anticipates net sales to range from flat to a 3 per cent increase compared with the prior-year period. Adjusted operating income margin of around 1 to 4 per cent, and adjusted EBITDA margin of roughly 2 to 5 per cent.

This guidance factors in $4 million to $5 million in additional tariff costs, with about half expected to be offset through adjustments in country of origin, vendor negotiations, and selective price increases. Due to ongoing uncertainty regarding the scope and duration of current tariff policies, the company is not issuing full fiscal 2025 guidance, added the release.

“Given the strength of our underlying trends, we are pleased to be in a position to begin to reinvest in the business as we remain focused on the growth opportunities ahead for the Vince brand as well as the Vince Holding Corp platform,” added Hoffman.

ALCHEMPro News Desk (SG)