Categories Analysis, Earnings, Retail

Vince Holding Q2 Earnings preview: Here’s what to look for

The market will be closely following the upcoming earnings announcement of Vince Holding (NYSE: VNCE) as the luxury apparel designer is widely expected to improve its financial position in the second quarter, after the relatively lackluster performance in the recent quarters. The results will be published Thursday after the closing bell.

Analysts’ consensus estimates show there would still be pressure on the bottom-line from the high costs. The market is looking for a loss of $0.19 per share on revenue of $68.6 million for the July-quarter, which represents a 9% year-over-year increase.

Also read: Lululemon Athletica’s Q2 results fly past estimates

With profitability under stress, the management is busy ramping up the direct-to-consumer and e-commerce channels. Besides the revised merchandising and marketing strategies, the growing market share of the company’s women’s business adds to the recovery hopes. Encouragingly, Vince has improved its earnings performance over the years.

Photo Courtesy: Vince / Facebook post

The good news is that revenues and comparable-store sales have remained in the positive territory for several quarters now, after ending the downtrend seen a few years ago. This will help the company come up with better-than-expected results for the most recent quarter.

Unlike some of its peers, Vince has not been able to fully overcome the challenings in the general retail sector. The trade-related uncertainty is a major dampener as far as a turnaround is concerned. Going forward, the management needs to focus more on reining in the costs to meet its growth targets.

In the first quarter, Vince’s net loss widened to $7 million or $0.60 per share from $5.6 million or $0.49 per share in the year-ago quarter, mainly due to an increase in operating costs. Sales grew about 1% annually to $55.1 million as comparable-store sales gained modestly.

Considering the dismal performance of Vince’s stock in recent years – which has left investors apprehensive – the company needs to enhance its bottom-line and top-line performance significantly for the stock to bounce back from the historic lows.

Related: Vince Holding Q1 2019 Earnings Call Transcript

The shares have been trading sharply below their last peak, underperforming the market consistently without any sign of regaining strength. Though the stock dropped about 22% since last year, it pared a part of the loss since the beginning of the year.

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