Brendan Hoffman - CEO Dave Stefko - CFO Amy Levy - IR

Good afternoon. My name is Mike and I will be your conference operator today. At this time, I would like to welcome everyone to the Vince Fourth Quarter and Annual 2017 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there’ll be a question-and-answer session. [Operator Instructions]. I will now turn the call over to Amy Levy, Vice President, Investor Relations. You may begin your conference.

Thank you, and good afternoon, everyone. Welcome to Vince Holding Corp’s fourth quarter and annual fiscal 2017 earnings conference call. Hosting the call today are 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 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 present 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 a tax receivable agreement adjustment related to the new Tax Cuts and Jobs Act, and the impact of updated five year projections, and the valuation allowance reported against the company’s deferred tax assets. Certain components included in the calculation of such impact are non-GAAP measures. Discussion 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 investor 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. We are extremely pleased to see that the work we have done over the past several quarters, has resulted in a strong finish to the year, and is helping us regain market share. We saw great response to our product offering in both our direct to consumer and wholesale channels, which drove strong sales growth in the fourth quarter, including a double digit increase in comparable sales. Our increased emphasis on our direct to consumer business at both the store and e-commerce level, as well as the steps we have taken to deepen our wholesale partnerships with Nordstrom and Neiman Marcus, continue to yield positive results. The enthusiasm around our brand, combined with the favorable response to our spring collections, are highly encouraging and we believe this shows that we are moving in the right direction. In fact, the momentum in our direct to consumer business has extended into the first quarter with strong double digit growth in comparable sales thus far for both full price retail stores and e-commerce. We're also seeing strong regular price sell-throughs at Nordstrom's and Neiman Marcus. Given the planned reduction in sell-ins as we transition out of Saks and Bloomingdale's, we expect wholesale sales to be down for the quarter, which is in line with our plan. We do expect improved earnings performance, stemming from higher gross margin and disciplined expense management. For fiscal 2018, we remain focused on building upon our momentum, as we continue to execute on our strategic initiatives to drive sustainable profitable growth over the long term for the Vince brand. Turning back to our fourth quarter financial results. We achieved sales growth of 17%, which included approximately $1.6 million from the 14th week, will strength in both our…

Thank you, Brendan. We are pleased with the continued momentum that we have seen in both our direct to consumer business, as well as with our wholesale transformation, and believe that this leaves us well positioned to continue executing on the initiatives that will enable us to drive growth in the business over the longer term. Turning to the details of our financial results. Fourth quarter net sales increased 16.9% to $74.6 million, including a $1.6 million impact from the 14th week, compared to $63.9 million in the prior year period. Our direct to consumer segment sales increased 22.9% to $36.2 million in the fourth quarter, including the $1.6 million in sales from the 14th week. Comparable sales on a 13 week basis, including e-commerce, increased by 16.1%, reflecting an increase in average unit retail. Results in the DTC business were driven by solid growth in both our full price and e-commerce businesses. Our wholesale channel sales were up 11.7% to $38.5 million, primarily due to an increase in off price sales. The 14th week had an immaterial impact on the wholesale segment. In terms of our off price business, we've continued to build back this business in a healthy way, after significantly reducing our presence in this channel in fiscal 2016. The growth in our off price business was partially offset by the expected decrease in the full price channel as we exited two department store partners as part of our transformation strategy. Gross profit in the fourth quarter was $34 million or 45.5% of net sales. This compares to $29.2 million or 45.7% of net sales in the fourth quarter of last year. The decrease in gross margin rate was largely due to a mix shift in the wholesale channel, and an unfavorable adjustment to inventory reserves, partially…

We thank you for your participation today and look forward to updating you on our Q1 earnings call in June. Thank you very much.

This concludes today's conference call. You may now disconnect.