Vince Holding Corp., a global contemporary group, reported results for the second quarter of fiscal year 2020 ended 1st August, 2020.
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Total company net sales for the second quarter ended 1st August, 2020 decreased 59.9% to $37.0 million compared to $92.2 million in the second quarter of fiscal 2019. Gross profit was $13.3 million, or 36.0% of net sales, compared to gross profit of $43.4 million, or 47.0% of net sales, in the second quarter of fiscal 2019. The decrease in the gross margin rate was primarily due to increased promotional activity, year-over-year adjustments to inventory reserves, channel mix, and deleveraging of supply chain costs partially offset by lower sales allowances.
Selling, general, and administrative expenses, excluding the non-cash impact of goodwill and intangible asset impairment charges, long-lived asset or other finite-lived intangible asset impairment charges, were $27.3 million, or 73.9% of sales, compared to $41.6 million, or 45.1% of sales, in the second quarter of fiscal 2019. The decrease in SG&A dollars was primarily the result of lower payroll and compensation expense, reduced marketing spend, decreased depreciation and amortization expense due to previous impairments as well as the streamlining of other operating costs.
Loss from operations was $14.0 million compared to loss from operations of $18.4 million in the same period last year. Excluding non-cash asset impairment charges, income from operations in the second quarter of fiscal 2019 was $1.7 million.
Net loss was $15.1 million or $1.28 per share compared to a net loss of $19.5 million or $1.67 per share in the same period last year. Excluding non-cash asset impairment charges, net income in the second quarter of fiscal 2019 was $590,000 or $0.05 per diluted share.
The company ended the quarter with 68 company-operated Vince and Rebecca Taylor stores, a net increase of 2 stores since the second quarter of fiscal 2019.
Net sales for Vince decreased 54.9% to $32.2 million as compared to the second quarter of fiscal 2019. Wholesale segment sales decreased 60.5% to $17.2 million compared to the second quarter of fiscal 2019. Direct-to-consumer segment sales decreased 46.2% to $15.1 million compared to the second quarter of fiscal 2019. Loss from operations excluding unallocated corporate expenses was $1.1 million compared to income from operations of $15.4 million in the same period last year.
Net sales for Rebecca Taylor and Parker decreased 76.9% to $4.8 million as compared to the second quarter of fiscal 2019. Loss from operations was $3.1 million compared to a loss of $20.4 million in the same period last year. Fiscal 2019 loss from operations includes non-cash asset impairment charges of $20.1 million.
David Stefko, Interim Chief Executive Officer and Chief Financial Officer, commented, “Looking back on our second quarter results, we began to rebuild momentum at Vince, following the initial impact of the pandemic, as consumer buying shifted to ecommerce and stores slowly re-opened. eCommerce sales for the Vince Brand grew over 60%, driven by heightened promotions as we move through inventory as well as a positive response to our merchandise assortment as our casual luxury offerings across categories are well-suited for the stay-at-home lifestyle. We have reprioritized our growth strategies to align with the near-term environment with a focus on e-Commerce initiatives, maintaining our strong connection with our customers and expanding our reach through our direct-to-consumer and wholesale presence. For Rebecca Taylor, we are excited about the anticipation among our wholesale partners as we prepare to relaunch the brand and return to our elevated casual and feminine flirty roots.”
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Mr. Stefko continued, “In terms of liquidity, we continued to execute cash savings strategies across expense, capital expenditure, and working capital areas to align with the recovery of the business. Overall, we remain optimistic about our long-term potential as we leverage our iconic brands to drive global sales growth and enhanced profitability.”