Good morning or good afternoon all, and welcome to the Vince Q1 2025 Earnings Conference Call. My name is Adam, and I'll be your operator today. I'll now hand over the floor to Akiko Okuma to begin. So please go ahead when you're ready.

Thank you, and good morning, everyone. Welcome to Vince Holding Corp.'s First Quarter Fiscal 2025 Results Conference Call. Hosting the call today is Brendan Hoffman, Chief Executive Officer; and Yuji Okumura, 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 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. Discussions of these non-GAAP measures and information on 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. Now I'll turn the call over to Brendan.

Thank you, Akiko, and thank you, everyone, for joining us today. Given it has not been that long since we last spoke, my remarks today will be relatively brief. Before I review highlights from the first quarter, I want to discuss where we are with respect to our mitigation efforts related to the evolving tariff policies. I cannot overstate how proud I am of our organization and how quickly our team sprang into action over the past few weeks, negotiating with vendors, working closely with supportive partners, and exploring diversification and other opportunities within the supply chain to mitigate impact. In short order, we have already significantly reduced our exposure to China, beginning with our fall product, leveraged opportunities to mitigate near-term costs, and made selective strategic adjustments to our pricing architecture. While we are pleased to see some reprieve in the tariff policy for the moment, given the fluidity of the situation, we are maintaining a disciplined approach to all plans going forward and believe it is prudent to maintain our perspective and not provide full-year guidance at this time. Now let me discuss a few highlights from the quarter. We have continued to see relative outperformance in our Wholesale segment compared to our direct-to-consumer. However, we were pleased to see the sequential improvement in trend within our direct business in the quarter. This was largely driven by our e-commerce channel. But our stores, excluding the impact from closures and remodels, also delivered a nice performance on a like-for-like basis despite contending with headwinds associated with weather and the evolving macroeconomic backdrop that impacted consumer sentiment. In addition to the top line performance, we delivered improved product margins, excluding freight and other distribution costs, a testament to the ongoing success we are seeing in managing a healthier-margin business as we continue to balance our promotional activity as well as extend our full-price seasonal offering. Across both men's and women's, sweaters continue to perform well. We also saw a nice reception to our more traditional spring product like linen tees for women towards the end of the quarter, in line with warmer weather. In our knits business, we introduced new color palettes, which drove solid growth in the category. And our bottoms business also performed nicely with both men's and women's. Our men's business delivered another quarter of strong growth and continues to serve as a key driver as we extend our reach for this offering. As we look ahead, we are also excited for our expanded international presence with the recent opening of our Marylebone location. We have always believed in London as a key city for us as it attracts both local residents and international travelers from around the globe. We are thrilled to have a location in Marylebone, which is a vibrant location in Central London, and will complement our Draycott, Chelsea, and South Kensington store nicely, welcoming both new and existing customers to Vince. In the U.S., we are on track to open our Nashville and Sacramento stores later this year and are continuing to assess plans going forward. We believe in the importance of our store channel and have continued to invest in refreshing and remodeling our stores to ensure we are creating the customer experience that aligns with the look and feel of the Vince brand. We recently remodeled our Greenwich, Stanford, and Mercer stores and are thrilled with the refreshed look each has now. While too early to speak to any lift associated with these remodels, we believe introducing a new flow to the store, leveraging our mobile POS, and opening additional capacity will benefit these locations and provide a nice return to the investments we have made thus far. In closing, our first quarter reflects the dynamic environment in which we are operating as well as the underlying strength of our operations and Vince's brand positioning in the marketplace. As we look to the second quarter, while the tariff situation has delayed pre-fall product shipments, we have been able to extend the full-price selling season for spring, creating a nice support to current trends in the business. This perhaps is a lesson that we can take away from the current situation. As we have talked in the past about how best to align our floor sets to the 'buy now, wear now' behavior customers have shifted to over the last few years. We will be thinking through this in our plans going forward. But for the immediate term, our focus is ensuring we are well positioned as we move into the heart of our selling season later this year. We feel very good with the trends we are seeing to date as reflected in the sequential improvement our outlook implies, but we remain cautious given the level of uncertainty there continues to be with respect to the macroeconomic environment. As discussed on our last call, while we believe in the great opportunities ahead for Vince Holding Corp., our priority at the moment remains navigating today's environment. Once there is more certainty regarding tariffs, we look forward to updating you on our longer-term plans and growth opportunities that we see propelling Vince Holding Corp. into its next chapter. I'll now turn it over to Yuji to discuss our financial results and outlook in more detail.

Thank you, Brendan, and good morning, everyone. Our first quarter performance reflected the trends and drivers we previously discussed on our prior earnings call with our top line reflecting stability in our wholesale business, while our direct-to-consumer segment was more inconsistent as we navigated challenging weather in the beginning of the period and increased macroeconomic uncertainties and declines in our consumer sentiment. With that said, as Brendan reviewed, we are very proud of how our teams have continued to stay flexible and deliver on objectives, including providing customers with the quality and experience they expect from Vince. Now with respect to our first quarter performance, the total company net sales for the first quarter decreased 2.1% to $57.9 million compared to $59.2 million in the first quarter of fiscal 2024. With respect to channel performance, our wholesale segment was relatively flat compared to the prior year, while our direct-to-consumer segment declined 4.4%, primarily due to planned store activity, including closures, remodels, and relocations, along with softer trends in traffic. Gross profit in the first quarter was $29.2 million or 50.3% of net sales. This compares to $29.9 million or 50.6% of net sales in the first quarter of last year. The decrease in gross margin rate was primarily driven by approximately 260 basis points related to higher freight and duty costs, approximately 120 basis points related to wholesale channel mix, and approximately 60 basis points due to higher distribution and handling costs. These factors were partially offset by approximately 330 basis points related to lower product costs, higher pricing, and approximately 80 basis points related to lower promotional activity. Selling, general, and administrative expenses in the quarter were $33.6 million or 58% of net sales as compared to $31.9 million or 54% of net sales for the first quarter of last year. The increase in SG&A dollars compared to the prior year was relatively in line with our expectations given the increased marketing spend earlier in the quarter and other expenses related to timing of store relocations and remodels. In addition, we incurred higher legal, information technology, and third-party costs during the period compared to the prior year. Operating loss for the first quarter was $4.4 million compared to an operating income of $5.6 million in the same period last year. Excluding the gain on sale recorded in the prior-year period, the operating margin declined approximately 425 basis points compared to last year. Net interest expense for the quarter decreased to $0.8 million compared to $1.7 million in the prior year. The decrease was primarily due to lower levels of debt under our term loan credit facility. At the end of the first quarter of fiscal 2025, our long-term debt balance was $34.7 million, a reduction of $15.4 million compared to $50.1 million in the prior year period. The provision for income tax this quarter was 0 as the company is anticipating annual ordinary income for the fiscal year and has determined that it is likely that the tax benefit of the year-to-date loss will not be realized in the current year. The tax for the first quarter of fiscal 2025 compares to an income tax benefit of $0.9 million in the same period last year. Net loss for the first quarter was $4.8 million or loss per share of $0.37, compared to net income of $4.4 million or income per share of $0.35 in the first quarter of last year. Adjusted EBITDA was negative $3 million for the first quarter compared to negative $1.5 million in the prior year. Moving to the balance sheet, net inventory was $62.3 million at the end of the first quarter as compared to $56.7 million at the end of the first quarter last year. The year-over-year increase was driven by a decrease in inventory reserves as well as incremental costs primarily related to freight and increased duty. Moving now to our thoughts on the balance of the year. While we are not providing full-year guidance, given the ongoing volatility and uncertainty in the macroeconomic backdrop and current tariff policies, our teams remain committed to disciplined expense management and operating with excellence. With respect to our expectations for the second quarter, as Brendan reviewed, we are pleased with the momentum we have continued to see in the business. For the second quarter, we expect net sales to be approximately flat to down 3% compared to the prior-year period, operating income as a percentage of net sales to be approximately negative 1% to positive 1%, and for adjusted EBITDA as a percentage of net sales to be approximately 1% to 4%, compared to 3.7% in the prior-year period. This guidance assumes approximately 170 basis points in incremental tariff costs for the period. We are very proud of how quickly our organization has jumped into action to mitigate the impact of the increased tariffs we expect to have on our business. We have already dramatically reduced our exposure to China beginning with our fall product and believe by spring 2026, our exposure to China will be approximately 25% of our cost of goods. As we continue to diversify our sourcing base outside of China, the focus on product quality and integrity remains our top priority. Our strategy is to partner with several factories with whom we have a long and successful history that have established factories outside of China. We can leverage the skill set of the team who is proficient at maintaining the quality standards for which Vince is known. This concludes our remarks. And I'll now turn it over to the operator to open the call for questions.

First of all, congratulations on exceeding my expectations, and it looks like your second quarter is also surpassing my expectations. So congratulations on all the efforts that you have going on there. A couple of questions. You mentioned freight cost as a factor impacting margins. Can you discuss the trends in freight costs? Also, has the company shifted from ocean shipping to air shipping due to U.S. trade policy issues? I was wondering if you could provide some insight on how those costs are currently looking.

Yes, sure. I can take that. In Q1, as we discussed, we did air more products, and we saw the impact of that as we navigated around the timing of Chinese New Year. In terms of Q2, there has been a lot of news about increases in freight costs, which we do expect to see. And we are navigating the air and boat vessel methods, depending on the timing. For Q2, we predominantly shifted that depending on how we try to navigate around the tariff announcement. So for Q2, we do still continue to see higher freight and tariff costs from those impacts, but we were able to avoid the highest of the tariffs for the most part.

Got you. And I guess if you were looking at the third and fourth quarters, would you see the impact of the trade policy issues being more felt in those quarters given that you have a little bit of runway, I guess, in terms of mitigating those costs. But can you kind of give us just thoughts in general, I know that you're not giving guidance, but just thoughts in general, in terms of the cost trends and how the third and fourth quarters might be affected.

Yes. Well, I think in the back half of the year, as you suggest, we've had the opportunity to mitigate some of the assumed tariffs with some of the discounts we've gotten from our suppliers who have been great, some of the rebalancing of sourcing countries, and we always do some strategic pricing increases. I'm really pleased that we just came off our pre-spring market, which would be the first time we showed kind of a product with what we think tariffs will look like and some of the country rebalancing and some of the pricing changes, and the reception was terrific, both in terms of the product but also keeping the quality in terms of the value that they expect from Vince.

Got you. And you had mentioned that you had plans or have plans to raise prices. And I was just wondering if you have a general idea of what those price increases are looking like?

It's really something we always do. We did a little bit in the front half of the year, as I think we had mentioned. And so we just, again, given the new pricing structure, item by item, and where we thought there was some room while maintaining the value, I don't think it will be hugely noticeable by the consumer. I think we're smart about it. And again, the first litmus test was the buyers from the department stores coming in and gauging their reaction, which was really a non-event.

It seems that the underlying trends from a consumer standpoint are looking very good. I was wondering if those trends are influenced by some current fashion trends. I noticed that you introduced a line of linens that seem to occupy a lot of space in some of the stores I've observed. Could you discuss what is driving consumer behavior at this point, as the underlying trends appear to be really positive?

Yes. So linen, for sure, you hit on that, especially as the weather got warm here in the East. We saw a pickup in linen. What was interesting about May, which we were pleased with, was that was with the delay in the pre-fall receipts because of holding stuff at port last month. So pre-fall actually just gets set up today, which is about 3 weeks later than we typically would do it, yet despite that business hung in there. I think we were able to stretch out our traditional spring assortment a little bit longer. I think it just spoke to the strength of the collection around color and some of the novelty and different silhouettes. So excited now that we can fully launch pre-fall; as I said, we launched it last week as a test in our Grove store and saw great results over the weekend. I think we did a really nice job balancing around the fact that we knew these shipments were going to be late while we saw where tariffs landed.

We have no further questions at this time. So I'll hand the call back to Brendan.

Okay. Well, we appreciate you joining us for today's call, and we look forward to updating you on Q2 in September. Thanks very much.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.