Another one bites the dust.
In 2013, Bloomberg called Vince Holding Corp. (NYSE: VNCE) "the anonymous fashion line that's cleaning up on Wall Street" with mid-priced luxury basics that sell well at Bloomingdales, Nordstrom, Neiman Marcus, Macy's, Barneys New York, and Saks Fifth Avenue.
Now, three-and-a-half years later, the retailer says it has "substantial doubt" about its ability to continue for the next 12 months, according to a May 2 report by Yahoo Finance…
Shares of the luxury brand plummeted over 58% on April 28 (Friday) after the company issued a gloomy notice to its shareholders – effectively making it the latest victim of the retail ice age.
You see, the company has been treading water for quite some time.
Vince's net sales declined 11.3% to $268.2 million in the year that ended Jan. 28. The company recorded a net loss of $162.7 million and ended the period with $21 million in cash. However, the retailer has $50.2 million in debt.
Now, VNCE stock is trading at just pennies a share – $0.38.
Vince's "substantial doubt" language may sound familiar…
Sears Holdings Corp. (Nasdaq: SHLD) used identical language in an announcement to shareholders roughly one month ago. "Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern," Sears said in its annual report on March 22.
Sears stock plunged more than 13% after the news.
The Retail Ice Age Is Particularly Frigid in 2017
Vince's downfall comes as the number of retail bankruptcies have reached the highest level since the 2008 financial collapse. In fact, America has seen over 3,000 store closures so far in 2017.
And we're only four months into the year…
You see, Shah has been following the retail ice age for years, and he's seeing a major problem with the way investors are trying to play the plague.
"Sure, some down-in-the-dumps retail stocks will bounce if the market keeps on rallying," said Shah. "But beware – these stocks aren't being bought because they're value stocks. They aren't even good bargains."
According to Shah, there's only one reason these stocks are moving up, and it's scary.
- Bloomberg: The Anonymous Fashion Line That's Cleaning Up on Wall Street
- Money Morning: The Slow Death of American Icon Sears – and Who Will Be Next
- Money Morning: Why Sears Is Still the Most Dangerous Stock on Wall Street
- Money Morning: This Key Chinese Company Just Crashed – by Doing the Same Thing Sears Did