Buys VNCE this A.M. at $9.50. The valuation comes in at 14.55. All the discretionary spending stocks have been taking a hit for several months now. The big dump(close yesterday was 12.130) was caused by the CEO resignation. Looks like a good thing over time for this stock.


STORY STOCKS® | Updated: 14-Jul-15 | Archive | Add to Column Alerts
Brief synopsis and analysis of news items that are affecting the equities market.
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Vince (VNCE) is trading sharply lower on CEO resignation; hopefully shake-up revives brand

Vince Holding Corp (VNCE) is trading sharply lower today (-15%) after announcing that CEO Jill Granoff has resigned. In case you’re not familiar, Vince is a luxury apparel brand founded in 2002. It started with a collection of stylish women’s knits and cashmere sweaters but it has since expanded into a wide range of women’s, men’s and children’s apparel, women’s and men’s footwear, and handbags.

VNCE does have some of its own retail stores but not very many: 32 full-price retail stores and 10 outlet stores. The majority of its sales are via the wholesale channel in prestige department stores. About 64% of AprQ revenue came from wholesale, while the remaining 36% came from direct-to-consumer (Vince stores and online). The DTC segment is growing faster (+34% YoY in AprQ vs +2.6% “modest increase” in wholesale segment) and is increasingly becoming a larger part of total revenue.

Of note, Vince believes it has a significant opportunity to increase brand awareness. Vince has brand awareness of only around 20% compared to 30-50% for other contemporary brands and 75-90% for brands like Michael Kors, Diane von Furstenburg and Ralph Lauren. The company believes that with its low awareness level, coupled with the high affinity and purchase intent it has among existing consumers, this creates a significant growth opportunity to convert potential new customers.

Turning to today’s news. Ms. Granoff will remain CEO through a transition period to ensure an orderly transition. The Board of Directors plans to work with an executive search firm to identify potential CEO candidates. As part of the reorganization, the company also announced that it has hired Livia Lee as the new Senior VP of Merchandising, reporting directly to Ms. Granoff in the interim and then her successor once appointed.

Ms. Lee, who will join the company on July 20 and will drive the company’s merchandise strategy, has extensive experience with multiple top fashion brands, including Lacoste, Diesel, Ralph Lauren, Victoria’s Secret, and Gap. Ms. Lee’s experience has included women’s and men’s apparel, retail and wholesale distribution, and work in US and international markets.

As part of this hiring, the company has reorganized the operational reporting structure, with merchandising for men’s and women’s apparel, accessories, retail and e-commerce merchandising as well as visual merchandising now all reporting to Ms. Lee. In addition, Karin Gregersen, Chief Creative Officer, has decided to leave the company and the company does not intend to fill that position at this time.

In sum, times have been tough for VNCE as some questionable fashion choices have led to disappointing results. Most recently, on June 5, the company lowered full year guidance. Investors are selling today but long term holders are hoping that a new CEO and a new Senior VP of Merchandising can turn things around for the Vince brand.

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