VNCE Slashes Debt 40% YoY: Will Leverage Gains Drive EPS Growth?

Vince Holding Corp. (VNCE) delivered a major balance sheet improvement in the second quarter of fiscal 2025, cutting long-term debt by more than 40% year over year. The company’s debt dropped from $54.4 million at the end of the second quarter of fiscal 2024 to $31.1 million this year, a reduction of $23.3 million that reflects disciplined financial management and a more efficient capital structure.

This deleveraging effort has already begun to strengthen earnings. Net interest expense fell to $0.8 million, half of what Vince Holding recorded in the prior-year period. This improvement was achieved through disciplined cash management and tighter control of working capital, reflecting the company’s focus on strengthening its financial position amid a shifting retail landscape.

The lower interest burden played a key role in boosting profitability. GAAP earnings per share jumped to 93 cents from 5 cents a year earlier, while adjusted earnings, excluding the ERC impact, came in at 38 cents. Although stronger gross margins also contributed, the sharp cut in leverage provides a structural tailwind, reducing financing costs and enhancing the company’s capacity to sustain earnings growth in future periods.

By meaningfully lowering its debt load, Vince Holding has not only eased pressure on its balance sheet but also created room for continued earnings per share expansion through a permanently reduced cost of capital.

How RL & PVH Stack Up Against Vince Holding

Ralph Lauren Corporation’s (RL) demonstrated strong financial discipline in the first quarter of fiscal 2026, maintaining a fortress balance sheet with $2.3 billion in cash against $1.6 billion in total debt. This solid net cash position allowed Ralph Lauren to return $300 million to its shareholders through buybacks and dividends. Supported by a 270-basis-point expansion in adjusted operating margin, Ralph Lauren continues to showcase confidence in its premium positioning and the enduring appeal of the brand.

PVH Corp. (PVH) showcased a commitment to shareholder returns, executing $561 million in share repurchases in the first quarter of 2025 as part of its PVH+ Plan. However, the company did not repurchase any shares during the second quarter of 2025. Despite this pause, PVH delivered solid performance with non-GAAP earnings of $2.52 for the second quarter, exceeding guidance. PVH reaffirmed its full-year non-GAAP earnings outlook of $10.75-$11.00, underscoring confidence in the long-term growth and global brand strength of Calvin Klein and Tommy Hilfiger.

VNCE’s Price Performance, Valuation & Estimates

Shares of Vince Holding have gained 85.9% in the past three months compared with the industry’s growth of 62.9%.

From a valuation standpoint, VNCE trades at a forward price-to-earnings ratio of 43.74X, up from the industry’s average of 17.17X.

The Zacks Consensus Estimate for VNCE’s fiscal 2025 earnings indicates year-over-year growth of 215.8%, whereas the same for fiscal 2026 implies a year-over-year decline of 86.7%.

Vince Holding currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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