Good afternoon. My name is Julian and I will be your conference operator today. At this time, I would like to welcome everyone to the Vince Q1 2019 Earnings 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, VP of Investor Relations, you may begin your conference.

Thank you. Good afternoon everyone. Welcome to Vince Holding Corp.'s first quarter fiscal 2019 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 the 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. 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. Good afternoon everyone and thank you for joining us today. Overall, sales in the first quarter came in largely as expected. While we did see topline pressure in direct-to-consumer business, performance has improved in the second quarter-to-date. Overall, stores that we've opened near department stores we exited continued to perform better than the company average. In the wholesale channel, sales were below last year as a result of timing of shipments, but came in better than expected. Our product continues to perform at the register despite the overall challenges within the department store space and we believe we are gaining further market share with our women's collections. Importantly, our consistent performance has enabled us to gain both premium placement and expanded space in the selling floor. Looking at the first quarter, net sales grew 1%, gross margin expanded 450 basis points to 51.3%. Our operating loss was essentially flat to last year excluding the $1.4 million in strategic consulting fees. Looking at our direct-to-consumer segment, revenue increased 6.7% attributable to the four new store openings since the end of the first quarter last year as well as growth in our e-commerce channel which includes our Vince UNFOLD business. While the overall comp performance was below our expectations, we are encouraged with the recent performance reflecting higher full-price sell-through of our spring/summer collection as we saw warmer weather. We also continue to benefit from targeted marketing efforts across mobile, e-commerce, and social channels focused on customers who had shopped us at exited partner stores. Turning to the wholesale channel, revenue was down 4% related to the shift in timing of shipments as we said last quarter. As stated earlier, our brand is performing well at both Neiman Marcus and Nordstrom as well as across our specialty retail and…

Thank you, Brendan. To reiterate, our first quarter results were largely as expected. First quarter net sales increased 1.1% to $55.1 million compared to $54.5 million in the same prior year period. Also, wholesale channel sales were down 4% to $27.4 million, primarily due to the shift in the timing of seasonal wholesale shipments. Our direct-to-consumer segment sales increased 6.7% to $27.8 million in the first quarter, while comparable sales including e-commerce increased 1.1%, mainly due to an increase in average dollar sale. Note, we are lapping a benefit to e-commerce sales in the first quarter of 2018 related to a favorable adjustment to expected product returns, which negatively impacted the DTC comp growth rate for the first quarter of 2019. Gross profit in the first quarter was $28.3 million or 51.3% of net sales. This compares to $25.5 million or 46.8% of net sales in the first quarter last year. The 450 basis point increase in gross margin rate was due to the non-recurrence of an unfavorable adjustment to inventory reserves in the prior year, stronger full-price selling and lower product cost. Selling, general and administrative expenses in the quarter were $34 million or 61.7% of net sales as compared to $29.9 million or 54.8% of net sales for the first quarter of last year. The increase in SG&A dollars was primarily the result of strategic consulting cost of $1.4 million related to Phase 1, higher compensation and benefits and investments in marketing and new stores. Operating loss was $5.7 million or 10.4% of net sales. Excluding the aforementioned strategic consulting cost of $1.4 million, operating loss was $4.3 million as compared to an operating loss of $4.4 million for the fourth quarter of fiscal 2018. Net loss for the first quarter including the strategic consulting cost was $7…

[Operator Instructions] Your first question comes from Dana Telsey from Telsey Advisory Group. Your line is open.

Good afternoon everyone. Congratulations on the progress you made. It was a very choppy first quarter and certainly on that top line side and the gross margin you came through very nicely. Brendan as you think about the categories that worked for you and what you saw both from your own stores and what you saw from wholesale, what was the difference in terms of what you saw? How promotional was it and what resonated? Thank you.

Yes. Thanks Dana. Well, what's working for us now both in our own stores and wholesale is regular price. As we've changed our cadence to be really buy now wear now, the product that hits the stores is perfect for that selling season. So for example, if you go into our stores now, as we said, business is off to a good start this quarter, you see what we call pre-fall, but look very summer, with yellow and lilac. And it's doing great, because it's matching the weather. Where we actually had some trouble in the first quarter and something we're figuring out how to manage through is, when that product gets marked down three months later, it's not as seasonably relevant as it was in years past. So, I'd say, that was what we saw in both channels, was regular price doing really well; and then sales, we're struggling with. So we're going to think through how to take advantage of that. And you also saw it in the margin and the margin results that we mentioned.

And on the strategic consulting learnings, any initial learnings of what you're learning from that so far?

Yes. I think, it helped to validate and crystallize the opportunity we have with the Vince brand and all the different levers we need to pull in order to maximize our top and bottom line, but doing it in a way that feels appropriate for the brand and is sustainable, that's repeatable. And so, we think a lot of good has come out of that. And as Dave mentioned, we're in the process now of developing what that's going to look like moving forward, while we obviously deal with some of these other macro pressures with the tariffs that have taken up a lot of time from me and management over the last month or so.

Got it. And then just lastly, on the wholesale business with Nordstrom and Neiman and we've seen some of their results. Certainly it sounds like, your brands resonating with both of them and not feeling the impact that they had felt in terms of overall apparel sales being sluggish.

Right. No. I mean we're clearly -- we believe, we're clearly taking market share, based on our results and seeing their results. And when they come into market, them telling us how well we're doing. We feel more bullish going into the back half of the year that some of the chasing of receipts will open up on us. As Nordstrom mentioned, they've corrected some things. And actually, we're really excited about anniversary sale with them that we're shipping in some more products as we speak. So while we didn't get the full benefit in Q1 of the results we had with our department store partners, we think there's more upside in the back half of the year.

Thank you.

Thanks, Dana.

We have no further questions. I turn the call back over to Mr. Brendan Hoffman for closing remarks.

Well, thank you everyone for joining us today. We look forward to updating you on our Q2 results in September. Thanks very much.

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