Good morning. My name is [Sylvia] and I will be your conference operator today. At this time, I would like to welcome everyone to the Vince Holding Corp. Q4 2016 Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. [Amy Levy] Vice President of Finance and Investor Relations, you may begin your conference.

Thank you, and good morning, everyone. Welcome to Vince Holding's fourth quarter and annual fiscal 2016 earnings conference call. Hosting the call today is Brendan Hoffman, 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 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 adjusted results that the company presents today are non-GAAP measures. In addition the company is presenting an estimated impact to earnings per share related to certain asset impairment charges as well as the valuation allowances reported against the company's deferred tax asset. Certain components included in the calculation of such impact are non-GAAP measures. Discussions of these non-GAAP measures and 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. 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 Brendan.

Thank you, Amy, and thank you everyone for joining us today. As we look back at 2016, our organization has undergone a number of changes that were necessary to create a solid infrastructure and to reestablish Vince as a luxury fashion brand. We engaged our Founders as consultants to help us recapture our brand ecstatic. We rebalance the assortment to bring more fashion into the mix and reset our basic replenishment business and we once again began to work with number of our former factories and fabric mills to enhance the quality of our pieces. We also continuously gathered feedback from our wholesale partners, our store associates and our customers much of which are design team is incorporated into our upcoming collections. Finally, we migrated to a new IT infrastructure and a new warehouse as we separated from Kellwood systems. Unfortunately, the complex systems transition was met with a number of challenges, including integration and process issues leading to a reduction in visibility in our financial reporting systems and causing a delay in our 10-K filing. This also led to material weaknesses in our internal controls which Dave will discuss in more detail. While we completed the implementation of these systems, which ran across several functions of our business, the integration and process issues also caused delayed shipments, particularly in the off-price channel and some order cancellations as well as returns, primarily for pre-spring product. In addition, performance of our pre-spring collections fell short of our expectations as we did not have enough buy -- enough of the buy now, wear now product that she was looking for. These factors in addition to the malaise in the apparel industry continue to weigh in our business. Lastly, we significantly reduced promotional activity during the year. Our business have become far too…

Thank you, Brendan. Before I begin the overview of our financial results, I like to take a moment to address our 10-K filing extension and material weaknesses noted in the filing. First, we'll file our 10-K later today within the available period. During the transition from legacy Kellwood systems, we experienced some issues related to integrating our new ERP system with our internal business processes and third-party systems. Ultimately, we believe these systems will serve to increase our operational efficiency. However, this system's transition and implementation resulted in delays in compiling financial reports and other data -- controls. As a result of material weakness identified, we performed additional analysis, substantive testing, and other post-closing procedures to help ensure that our consolidated financial statements were prepared in accordance with U.S. GAAP and we believe they present fairly, in all material respects, the financial results of the company. We have made progress in our remediation plan to address these material weaknesses relating to both IT general controls and governance of IT projects. We have been remediating our control weaknesses over the last two months and have implemented a number of controls to address these weaknesses. However, we will need to test the effectiveness of these fixes and make adjustments as necessary. There are still additional controls to be implemented and tested, which we are diligently working on. Until our systems and material weaknesses are fully remediated, which we expect be completed by the end of fiscal 2017, we will continue to conduct additional diligence around our quarterly closing procedures to ensure the accuracy of our financial results. Now, turning to our financial performance, as Brendan mentioned, our fourth quarter topline sales results did not meet our expectations, primarily due to the challenges we encountered as a result of our complex systems conversion…

[Operator Instructions] Your first question comes from the line of Drew North of Robert W. Baird. Please go ahead.

Good morning. Thanks for taking our question. You mentioned rebuilding off-price business in a strategic way, what do you see as an optimal mix of full price versus off-price business for the brand overtime?

Well, as we've been discussing for last year and half -- one of our issues that we believe was how -- how much our off-price shipments have risen over the previous few years, when I first got here and walk into a lot of the off-price I think there was just a statement of Vince toward our competition. Dave mentioned that we kind of flush that out in the first quarter last year, but did so at unfavorable margins for us so that we pulled back and try to reset the supply and demand. During the course of the year, we got to have conversations with the leaders of our biggest wholesale partners to encourage us to support this channel as it become so important to them as they continue open up more and more location. As we went to the back half of last year, we really worked hard to try and see how we can take advantage of the opportunity, support our partners yet do it in a way that was accretive to the brand and to our profitability and I am not sure exactly where the number ends up because some of it has to do with the factors in the business but I can tell you the two things that most conscientious about is one what price are we selling the shop at because that's the biggest thing that tells us are we are flooding the market which are committed not to do and that we look relative to her peers out there in the stores. And so right now we are in very adventitious -- advantage of situation where there is tremendous demand because of how much we’ve cut back supply. I mean I’ve gotten countless notes from a different partners saying that their inventory is down over 50% from last year and really imploring us to ship them product. So, as Dave said a lot of the constraint was due to our systems in last three-months not getting a little bit more product out there, but we feel that we will be able to get a normalized flow out there that best calibrate the business for us and for them.

Thanks for the additional color. Regarding your wholesale partners, how is the end of the consulting agreement with the founders impacted these conversations? Are you seeing any change in their willingness to commit to orders for the upcoming seasons or I guess more broadly what are you hearing from them on order plan given the tough traffic in apparel spending environment?

I am sorry, can you repeat that you were cut out for a second. I apologize.

Sure. No problem. Just regarding your wholesale partners has the end of the consulting agreement with the founders impacted those conversations? And what are you hearing more broadly from them on order plan given the tough traffic in apparel spending environment?

Yes, sure. No I mean, I think everyone understood Rea and Christopher, the timing of their re-retirement as I call it, I mean they were incredibly important to me and to the company into our wholesale partners to help redefine and reset the brand. But as I said in when they left that their work was done and now we needed to move the business forward in for today's customer which has changed over the last few years as we continually talk about and I think our wholesale partners recognize that as well that they were very pleased that they were here, they re-establish those relationships, they the reset the brand, but that they understood the timing of them leaving and we’re very comfortable with the team in place here. I think that the second party of our question, business is rough out there I mean we hear that from all angles and certain of the department stores are being very cautious in terms of their receipt placements. They want to put more and more of the burden on the brand to hold inventory and as I mentioned in my remarks although I have heard maybe they want to cut out, we are analyzing the wholesale business to determine if there's a better opportunity to rationalize our points of distribution. We need to be smarter about part of that, but -- to make sure that we are being smart about the way we do we distribute the brand.

All right. Thanks for taking my questions.

Your next question comes from the line of Jeff Van Sinderen of B. Riley. Please go ahead.

Good morning. So, given Christopher and his departure, just wondering if -- and obviously [Indiscernible] fairly short time ago, is the recent improvement in trend in business that you're seeing in their business or is that due to changes that we're making, they left again. I guess what gives you confidence that you can turn the business around at this point?

Well, I think that it’s a combination. It's hard to separate them and separated. As I said, there's so much value we got from them coming back and pointing us in the right direction and imprinting kind of the Vince DNA in the organization. I do think there's something we've done since they left in our own direct-to-consumer business that have helped message the brand that will bit more aggressively. That's spurred some of the improved trends we've seen both online and in the stores and better balancing the mix of end of season sale with new product the way we are re-merchandising the store. I think a lot of this was started and taught by Rea and Christopher, but I do think to a certain extent there, their retirement has freed up the organization to be a little more empowered and make decisions at a local level to drive business. And I think that helped our Q1 trends. So, I think it's building on the foundation that they helped rebuild here, but also recognizing that the consumer is changing and the way she wants to shop and be talked to and obviously, the product the same in our stores as it is in the wholesale channels more or less. And I just think it speaks to know our understanding of our brand, our connection with our customer, the way we present the merchandise, the way we romance the merchandise that has allowed for far improved performance.

Okay. And then you also mentioned that you're bringing a pre-fall shipment. I think you said that's shipped out in May. Just wondering if that I guess what kind of merchandise within that shipment, is that summer way merchandise or how should we think about that merchandise?

Yes. So, that was a delivery that had always important to Vince, but due to the timing year and a half ago when the Founders came back, we just could not get that delivery executed. So, we had to cut it. So, it's a big plus to have that back. It is exactly as you suggest. Its transitional merchandise that is wearable -- in ways that are wearable for June/July, but in colors that will start to transition to have longer life as we move on into early fall. And I think this goes back exactly to what we've talked about so much in the last few months with this buy now, wear now whereas that delivery two years ago would have been much more heavily geared towards fall with [heavier weights] and darker colors. And while there still will be as I said in my remarks some emotional pieces that really are meant to be with worn in fall, it has a much greater balance of instant gratification. So, we're really excited about that collection. The collection has gotten great response from our specialty store accounts and the reason I called that out is, specialty store accounts, we -- there is no -- there are long-term relationships, but there's not the same agreements that go along with the majors. So, they buy-in if they like it and the fact that we've gotten an increased response there both for pre-fall and fall as the teams hit the road is exciting for us to see that the merchandise is really getting on track.

Okay. Then another one if I can just add. As far as the stores go, your own stores, I'm just wondering what needs to happen for you to get that to positive contribution in those stores. In other words, what sort of account do you need to run? For how? What sort of gross margin improvement would you need to have? Just trying to get some sort of gauge on that and I guess how far away you might be from getting those back deposit contributions?

Well, I mean we're not going to lay out quite a specific as you suggest. But again, directionally, really pleased with what we're seeing in Q1. The website has been phenomenal and the full price of the -- all the stores have shown tremendous improvement in trend from where they were in 2016. I think a big part of this is the reduction -- great reduction in promotional activity that we did in 2016. I mean we kept trying to call out how much that hurt our comps in 2016, not anniversaring all those month-long buy more save more events that we had previously and n the aggressive nature of our friends and family promotions. Now, we're up against a much cleaner business that we can build off of and we're starting to see the benefits of that in Q1. So, as I mentioned in my remarks we're really focused on what we can do to drive more through the direct-to-consumer omnichannel business because we may go up our margin based -- if we get past the fixed cost as you're alluding to. So, we'll certainly have more on that as the year goes on, but it's definitely a focus of ours and starting to see some real momentum.

Okay. And one final one if I could. Just wondering if there's anything could you say about the potential resolution towers the [Indiscernible] in terms of how to write the capital structure?

Well, I mean Sun has been and continues to be a great partner for Vince. They have very senior representatives on the Board and are fully engaged on a day-to-day basis with management. As Mark Leder has quoted in the press release, big supporter of the company and its business plan and look forward to continuing to work with them on solutions and opportunities.

Okay. Thanks for taking my questions.

There are no further questions at this time. I will turn the call back over to Brendan Hoffman.

Thank you everyone for your interest in Vince Holding's. We look forward to updating you on our progress on our next conference call.