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Vince, the upmarket New York retailer known for its buttery cashmere knits and simple jersey cotton tees, has warned investors that there is “substantial doubt” that it can continue to stay in business over the next year.
The so-called going concern alarm, which last month was sounded by troubled department store Sears, accompanied a double-digit decline in revenues and sent the company’s stock down roughly 30 per cent on Friday to 95 cents a share.
In a statement, the company said the going concern assessment related to its ability to maintain debt below levels previously agreed with its lenders. Vince had $21m of cash at the end of its fiscal fourth quarter and roughly $50m of debt.
The company added that the warning did not take into account talks with lenders and its majority shareholder on additional financing, which it said “could be reasonably possible of occurring but are not yet final.”
Vince, which sells its clothing at department stores like Harrods, Bloomingdale’s and Neiman Marcus, suspended its sales and earnings guidance amid what it characterised a “difficult retail environment.”
Sales in the fourth quarter fell 22 per cent from a year earlier to $63.9m, below analyst expectations for $74.6m. The company reported a net loss of $162.1m, or $3.28 per share for the three months to January 28. A year earlier it earned a profit of $1.8m.
The loss included $3.13 per share in part related to asset impairment charges, as it wrote down the value of its tradename.
“We believe that Vince remains a strong brand with a loyal customer following,” said Marc Leder, chairman of the company’s board and the co-chief executive of Sun Capital Partners, a private equity group that holds more than half of the company’s stock.
He added: “While we recognise that the apparel industry remains challenging and there is still work to be done, we believe that the management team has made important strides in resetting the brand.”