Vince cuts deal with Authentic, reports 2022 sales uptick of 10%
Vince Holdings Inc. announced on Monday it has entered into a partnership with Authentic Brands Group, in a move that will see the firm sell its intellectual property to a newly formed Authentic subsidiary, 'ABG Vince'.
The New York-based fashion company said the arrangement comes for a total consideration to Vince of $76.5 million in cash from Authentic and 25% membership interest in ABG Vince. Authentic will own the majority stake of 75% membership interest in ABG Vince, according to a press release.
Vince said it will use proceeds from the new partnership to strengthen its overall liquidity position, increase its working capital, and repay in full the outstanding balance of $27.7 million under its term loan credit facility, and to repay a portion of the outstanding borrowings under its revolving credit facility.
The partnership also includes a long-term license agreement with Authentic to use the contributed intellectual property for Vince’s existing business consistent with the company’s current wholesale, retail and e-commerce operations, and will pay a royalty fee to ABG Vince. Vince will receive a quarterly distribution equal to 25% of ABG Vince’s net cash. The license agreement contains an initial ten-year term and eight ten-year renewal options.
“We are pleased to enter into this transformative partnership with Authentic which will provide us the necessary capital to strengthen our balance sheet allowing for opportunities to enhance our focus on driving margin expansion, and focusing on our strategic growth initiatives including leveraging our enhanced e-commerce capabilities and CDP platform, expanding our international presence, growing our men’s business and selectively opening new retail doors in the U.S," said Jack Schwefel, chief executive officer of Vince.
"Through this strategic partnership we will also benefit from leveraging Authentic’s expertise and lifestyle and entertainment platforms, which provide opportunities to grow the Vince brand into adjacent categories and territories.”
Vince Holdings also announced on Monday net sales in fiscal 2022 increased 10.8% to $357.4 million, compared to $322.7 million in fiscal year 2021. That comes on the back of fourth-quarter sales decrease of 7.8% to $91.3 million for the three months ending January 28.
“Fiscal 2022 was a challenging year, but I am very proud of the resiliency of our teams, and believe, through the actions we have taken, we are well positioned to drive improved results and long-term success," said Schwefel.
"During the fourth quarter we substantially completed the wind down of the Rebecca Taylor business and continued to take actions with respect to our inventory balance to end the year in a healthier position. As we look ahead, we will continue to operate with discipline while staying focused on our long-term strategic initiatives while leveraging our recent agreement with Authentic Brands Group.”
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