Good afternoon, everyone, and thank you for attending today's Vince Q2 Earnings Conference Call. My name is Jasmin, and I will be your moderator today. At this time, I would now like to pass the conference over to your host, Akiko Okuma. You may now proceed.

Thank you, and good afternoon, everyone. Welcome to Vince Holding Corp.'s Second 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 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 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 good afternoon, everyone. I will begin with an overview of highlights from the second quarter before turning the call over to Yuji to provide more details on our financial performance and outlook. We are very proud of the second quarter results we delivered with sales coming in at the high end of our expectations and profitability far exceeding our guidance. The outperformance in our bottom line is a testament to our team, our incredible product and the disciplines we continue to operate with as we contend with an evolving macro landscape. Let me start with our channel performance, where we saw encouraging trends across both wholesale and direct-to-consumer. Our DTC business showed particularly strong results in both our stores and e-commerce channels contributing to the growth we delivered. What's especially encouraging is that across both channels, we successfully elongated our full price selling season from spring, which supported our margin performance overall. In wholesale, we continue to be pleased with our performance at key partners. At Nordstrom's anniversary sale this year, we continue to be one of the top overall brands and across all partners, we're seeing strong momentum in our contemporary market positioning. With that said, our overall top line performance did reflect some delays in the shipping of fall orders at the end of the quarter as we recalibrated the supply chain amidst the evolving tariff landscape. Our product assortments continue to resonate with customers. In Q2, we saw strength in women's wovens and knits as well as with our buy now, wear now bottoms category, including pants and skirts. Our outfitting approach combining tops and bottoms, both knits and wovens has been a clear winner. Our men's business delivered another solid quarter with knits leading the way through elevated textures, while we also continue to benefit from nice results in our bottoms assortment. We're continuing to refine our messaging around fits for bottoms, maintaining consistency in our communication to male customers, and we're seeing a nice return of the customer. Women remain strong and wovens have picked up significantly for men's. Globally, I'm encouraged by our newly opened Marylebone store, which far exceeded expectations, and we will continue to evaluate opportunities longer term abroad. Here in the U.S., we're excited about our store openings this fall. Nashville opened up this past weekend, and we look forward to our upcoming Sacramento store opening. These markets represent strategic opportunities to fill gaps in our geographic coverage while supporting our e-commerce business in these regions. In addition, we are pleased with the results driven from our store remodels, validating our investment in enhancing our retail experience. There is a lot of momentum in the business right now. And as I mentioned, I've been very proud of our teams and our ability to successfully navigate the current environment. During the first half of this year, the bulk of our attention has been focused on dealing with the evolving tariff landscape. So far, we've done a phenomenal job with our mitigation strategies and expect to reduce the estimated impact from incremental tariffs by approximately 50% for the second half of the year through moving country of origin, vendor negotiations and strategic price increases. We are encouraged that we have not seen a change in quality of product and/or changes in our order book amidst these actions. This validates not only our strong value proposition, but our competitive positioning with contemporary. With more certainty around the tariff situation, we are now beginning to reinvest in the business. We're primarily focused on restoring top-of-funnel marketing dollars that we had pulled back on in the latter half of Q1. In addition, we're starting to think more about our longer-term growth opportunities. One of our most exciting prospects is leveraging our platform to bring other brands to life. As we look ahead, I'm more confident than ever in our strategic positioning. We are successfully navigating the tariff challenges, demonstrating our value proposition and maintaining the quality and brand integrity that Vince is known for. Our diverse sourcing approach is working. Our retail partners remain supportive. And most importantly, our customers continue to respond positively to our product offering. While we remain confidently cautious given the dynamic environment, the underlying fundamentals of our business are strong, and we're excited about the growth trajectory for Vince Holding Corp. With that, I'll turn it over to Yuji to discuss our financial results in more detail. Yuji?

Thank you, Brendan, and good afternoon, everyone. As Brendan reviewed, our second quarter performance reflected our disciplined execution of our objectives as we deliver strong bottom line results with sales in line with the higher end of our expectations. Total company net sales for the second quarter decreased 1.3% to $73.2 million compared to $74.2 million in the second quarter of fiscal 2024. With respect to channel performance, our direct-to-consumer segment increased 5.5% with both our e-commerce and store channels contributing to the growth. This was offset, however, by a 5.1% decline in our wholesale segment as fall shipments went out later than the prior year as tariff mitigation strategies pushed the timing of receipts back by approximately 3 weeks. Despite the impact on the top line, the delays in our supply chain enabled us to elongate our spring selling season, contributing to strong gross margin performance for the quarter. Gross profit in the second quarter was $36.9 million or 50.4% of net sales. This compares to $35.1 million or 47.4% of net sales in the second quarter of last year. The increase in gross margin rate was primarily driven by approximately 340 basis points due to the favorable impact of lower product costing and higher pricing, approximately 210 basis points due to favorable impact of lower discounting, partially offset by approximately 170 basis points due to higher tariffs and 100 basis points due to higher freight costs. Selling, general and administrative expenses in the quarter were $25.8 million or 35.2% of net sales as compared to $34 million or 45.8% of net sales for the second quarter of last year. The decrease in SG&A dollars was primarily driven by decreased compensation and benefit expenses due to the receipt of approximately $7.2 million of payments from the U.S. Department of Treasury under the Employee Retention Credit Program, of which $5.6 million was recorded as an offset to SG&A and $1.6 million was recorded in other income. Excluding this benefit, underlying SG&A still leveraged as we maintained strong expense discipline in light of evolving tariff policies and broader macroeconomic environment. Operating income for the second quarter was $11.2 million compared to an operating income of $1.1 million in the same period last year. Excluding the ERC payments received, adjusted income from the operations as a percentage of sales was 7.6%, reflecting an increase of 604 basis points compared to the prior year period. Net interest expense for the quarter decreased to $0.8 million compared to $1.6 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 second quarter of fiscal 2025, our long-term debt balance was $31.1 million, a reduction of $23.3 million compared to the $54.4 million in the prior year period. The provision for income taxes this quarter was $0.1 million related to discrete state tax impact associated with the interest portion of the ERC. The ordinary income tax expense was 0 as the company is anticipating annual ordinary income for the fiscal year and has determined that it is more likely than not that the tax benefit of the year-to-date loss will not be realized in the current year. This compares to an income tax benefit of $0.8 million in the same period last year. Net income for the second quarter was $12.1 million or income per share of $0.93 compared to the net income of $0.6 million or income per share of $0.05 in the second quarter of last year. Excluding the payments from the U.S. Department of Treasury under the ERC, the adjusted net income was $4.9 million or $0.38 per share in the second quarter of fiscal 2025. Adjusted EBITDA was $6.7 million for the second quarter compared to $2.7 million in the prior year. Moving to the balance sheet. Net inventory was $76.7 million at the end of second quarter as compared to $66.3 million at the end of second quarter last year. The year-over-year increase was driven by approximately $5.2 million higher inventory carrying value due to tariffs as well as our strategic decision to ship goods earlier in advance of the expiration of reciprocal tariff extensions. Turning to our outlook. For the third quarter, we expect net sales to be approximately flat to up low single digits compared to the prior year period, operating income as a percentage of net sales to be approximately 1% to 4% and for adjusted EBITDA as a percentage of net sales to be approximately 2% to 5% compared to the 9.2% in the prior year period. Our guidance takes into account our plans to begin to reinvest into the business, as Brendan reviewed, as well as approximately $4 million to $5 million of estimated incremental tariff costs that we expect to mitigate approximately half of through moving country of origin, vendor negotiations and strategic price increases. And while we have not seen any changes in our customer trends thus far, our guidance also assumes a fairly cautious view on our consumers heading into the second half of the year, given the uncertainty that remains in the industry content with the incremental tariff pressures. With that said, as we have demonstrated to date, despite navigating a dynamic environment, our teams have remained committed to disciplined execution while delivering on our objectives and that we will continue to be our focus as we enter important fall and holiday selling season. This concludes our remarks, and I will now turn it over to the operator to open the call for questions.

Our first question comes from Eric Beder with SCC Research.

I'm curious about the Q2 shift in collections related to tariffs, which seemed to result in some changes in timing and discounting strategies. It appears that this adjustment was beneficial. Looking ahead to next year, how do you intend to manage your collections? What lessons have you learned from this experience, and how can you optimize your approach when you start the collection process again and prepare for the future?

Yes, I have been in this industry for over 30 years, and we've discussed how deliveries have not aligned well with the actual seasonality. I believe we gained some insights from having to extend spring. We will analyze this further as we review a longer timeframe to see if it informs our approach for next year. It can be challenging across the entire industry as we want to ensure we're not falling behind with new deliveries. Therefore, we will need to examine this closely and make decisions based on more comprehensive data. However, it was promising that we managed to extend spring while pausing pre-fall due to the tariffs.

Okay. And on the wholesale front, what do you look at here as kind of the ability to maintain the wholesale? And do you look upon kind of your decisions to maintain the quality, maintain the pieces as an opportunity here to pick up maybe more physical share in the wholesale as other players were not as kind of adept or as quick to respond as you were?

Yes. I can't speak for others, but if that’s the case, our ability to be agile and get back on track quickly definitely gives us a competitive edge. I've mentioned this before; it's a reflection of the experience and stability of our team in creative design, product development, logistics, and more, which has enabled us to get moving swiftly. We've maintained a consistent presence in Asia since this happened, so I believe we are performing as well as anyone. Additionally, as we begin to see how the strategic price increases are received, I hope there is potential there because we continue to offer significant value. If any decline in units can be more than balanced by the price increases, that will be another benefit for us.

When you consider the price increases, I believe your customer base can handle those increases better than many others. They tend to be more affluent. How do you view the elasticity of raising prices? Additionally, how should we consider your customer base, particularly in terms of the affluent versus aspirational segments, and how can we continue to meet the needs of both groups?

Yes, we are in a strong position. For some customers, we are seen as a value option for true designers, while for others, we are aspirational. We carefully consider both of these perspectives. When implementing price changes, we do so selectively rather than across the board, evaluating each style to ensure the perceived value remains at the new price point. This approach is deliberate, not a blanket increase. The team has prior experience with this strategy, having implemented similar changes earlier this year, which positively impacted our margins. I believe we are in a favorable situation. Additionally, our higher-end and elevated products allow us to have more flexibility compared to lower-priced products, where price increases tend to be more challenging for customers to accept.

Okay. And for my last question, I remember that at the start of the year, you mentioned plans to increase with more accessories and other items in the fall. How have the tariff issues impacted that? What can we expect to see in stores regarding new categories or accessories in the second half of the year?

Yes. So those are really licenses for things like handbags, accessories, and tailored clothing. Our partners, with whom we collaborate closely, are engaging in similar discussions about resource allocation and pricing adjustments that are sensible for consumers. However, our direct involvement is limited since we are purchasing directly from them.

Our next question comes from Jacob Mutchler with NOBLE Capital Partners.

I was just curious if you could let me know what percentage of products are currently sourced from China. I know it was mentioned in Q1 that roughly 80% of products came in were from China in '24 and then roughly 60% in Q1. So just curious where you're at in Q2 and how the company is progressing on reducing exposure to China.

Yes, the company is making incredible progress. As I mentioned earlier, it's due to the experience of our team and their on-the-ground presence. The products that are currently being delivered had already been produced and were previously held back. We are really focusing on the pre-spring and holiday periods for significant movement. Additionally, the situation regarding China has become less critical due to fluctuating tariffs. Our aim is to avoid being overly reliant on any single country, with a target of keeping exposure to 25% for any one country. I believe we can achieve this by the holiday season and certainly by spring, as we continue to track the changing tariff landscape. It's also important to note that India has never been a sourcing country for us, so we are not influenced by high tariffs there.

Got you. Thanks for the color. And would you be able to talk about some of the freight cost trends you're seeing in the back half of the year? And I know you mentioned some shipping delays. And could you give a little bit of color around some of the drivers of those delays?

Yes, I'll talk about the delays and then Yuji can talk about some of the costing. I mean the delays were purposeful. I mean it was back in April and May when the tariffs were 150% and us like lots of people paused everything at Port of Origin. When the tariffs got brought down to the current levels, we, like everybody else, started to bring things in quite quickly to make sure that we beat any additional incremental tariffs. So we actually had the goods here. But because of what was mentioned on the earlier question by Eric, the delayed and the extended timing, it's kind of just backed everything else up. So pre-fall got in a little bit later, which, again, spring benefited from that. So we didn't want to have fall land right on top of that in store. So while we had a lot of the merchandise here, we held it for a few more weeks to give everything a chance to sell and breathe. I think that will normalize as we get into the back half of the year just because Christmas is a natural stopping point. So we'll have to manage backwards from Christmas. And so I think it will be more normalized. In terms of the freight costs, Yuji?

Yes. For the freight cost, I mean, as you saw in Q2, it did have an effect on our gross margin. When you're looking ahead, like in terms of the trend, we don't see like significant uptick in our overall freight cost. But again, as we kind of trigger and move around the timing of goods, we have to think about the air and boat ratio as well. So that will continue to be fluid for the back half of the year.

Got you. And then one last question. As far as the number of stores that the company had in the quarter, could you just remind me of how many locations were opened in this quarter compared to last year? And then also, I know you mentioned the Nashville location and Sacramento location opening up. Are there any other openings planned this year outside of Sacramento?

Yes. We just opened our Nashville location last week, and Sacramento is scheduled to open in October. We do not have any other store openings planned for the remainder of the year.

Got you. Could you remind me of the number of locations that were opened in the second quarter, as well as the number from the same quarter last year?

We have 45 full-price stores opened and 14 outlets in last year. Just to double check, 47 full-price, yes, I think it was 14 outlets as well.

There are no additional questions waiting at this time. So I'll pass the conference back over to Brendan Hoffman for any further remarks.

Okay. Well, thank you, everybody, for joining us, and we look forward to updating you on Q3 in December. Thanks.

That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.