Equity Research Focusing on the Consumer Sector, Small Cap Consumer Research

Small Cap Consumer Research

Equity Research Focusing on the Consumer Sector

Small Cap Consumer Research, LLC is a leading company-sponsored equity research provider focusing on the consumer sector (apparel, brand licensing and specialty retailing segments).

Equity Bottom-Up

<ul><li>We are reiterating our Buy rating, $4 price target and projections for Vince as we look at key trends for 2HFY25 and beyond.</li><li>We believe, more than any other player in our universe, VNCE has been affected by worries over tariffs; given that the company registered over 60% of their goods from China in FY24, this is not surprising.</li><li>That said, we believe Vince management has done yeoman's work in quickly diversifying the supply chain and focusing on the key longer term drivers of the business, from continued store expansion and upgrades, increasing wholesale penetration, international growth, deepening the focus on men's and adding new categories to the store mix to become even more of a lifestyle brand.</li></ul>

We are reiterating our Buy rating, $4 price target and projections for Vince as we look at key trends for 2HFY25 and beyond.We believe, more than any other player in our universe, VNCE has been affected by worries over tariffs; given that the company registered over 60% of their goods from China in FY24, this is not surprising.That said, we believe Vince management has done yeoman's work in quickly diversifying the supply chain and focusing on the key longer term drivers of the business, from continued store expansion and upgrades, increasing wholesale penetration, international growth, deepening the focus on men's and adding new categories to the store mix to become even more of a lifestyle brand.

VNCE: 2H Signposts: Tariffs Defer the VNCE Growth Story; Reiterate Buy, $4 PT

Research from Water Tower Research, Water Tower Research

Water Tower Research

Research from Water Tower Research

Water Tower Research is a leading equity research firm that provides research on micro, small and mid cap companies.

Water Tower Research was founded by Wall Street veterans after witnessing a fundamental shift in the investment research industry with the result being a declining knowledge base among investors, a lack of awareness and a shrinking pool of fundamental research being conducted on companies across the small-cap and micro-cap spectrum. The same issues are now increasingly occurring in the mid-cap space. This sea change within the investment community is impacting not only the companies themselves but also current shareholders and potential investors. With significantly less active sell-side sponsorship by Wall Street, a substantial information gap has developed between companies and various constituents in the financial community. The net result is fewer channels for insight and information to flow between companies and investors.

Equity Research Firm

Thematic (Sector/Industry)

<ul><li>The WTR Consumer Stock Index trailed the Small Cap S&amp;P 600 in 2Q, declining 2.4% versus the 1.1% gain in the broader index.</li><li>The underperformance of our index was mostly due to a larger decline in prospective earnings, coupled with a lesser expansion in its prospective P/E ratio.</li><li>Our index saw prospective earnings decline 7.2% in 2Q versus a 5.0% decline in the S&amp;P 600, while its prospective P/E ratio expanded 0.8x in 2Q to 15.7x versus the 0.9x expansion to 15.3x in the S&amp;P 600.</li></ul>

The WTR Consumer Stock Index trailed the Small Cap S&amp;P 600 in 2Q, declining 2.4% versus the 1.1% gain in the broader index.The underperformance of our index was mostly due to a larger decline in prospective earnings, coupled with a lesser expansion in its prospective P/E ratio.Our index saw prospective earnings decline 7.2% in 2Q versus a 5.0% decline in the S&amp;P 600, while its prospective P/E ratio expanded 0.8x in 2Q to 15.7x versus the 0.9x expansion to 15.3x in the S&amp;P 600.

Consumer Products Monthly WTR Consumer Index Lags S&P 600 in 2Q

<ul><li>The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x from 18.1x at the end of 2024.</li><li>Prospective earnings for the index are down 2.3% so far this year, but we note that it has outperformed the broader S&amp;P 600 Small Cap Index, which is down 6.3%.</li><li>Meanwhile, the S&amp;P SmallCap 600 Index is down 13.1% YTD, better than the WTR Consumer Products Index, despite relative earnings underperformance versus our index, as its prospective absolute P/E ratio compressed a lesser 1.2x to 15.3x from 16.5x at the end of 2024. </li></ul>

The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x from 18.1x at the end of 2024.Prospective earnings for the index are down 2.3% so far this year, but we note that it has outperformed the broader S&amp;P 600 Small Cap Index, which is down 6.3%.Meanwhile, the S&amp;P SmallCap 600 Index is down 13.1% YTD, better than the WTR Consumer Products Index, despite relative earnings underperformance versus our index, as its prospective absolute P/E ratio compressed a lesser 1.2x to 15.3x from 16.5x at the end of 2024. 

WTR Consumer Products Index Lags S&P 600 YTD Despite Relative Earnings Outperformance

<ul><li>We are reiterating our Buy rating, $4 price target and projections for Vince Holding after visiting stores in Connecticut, Long Island and New Jersey.</li><li>After a somewhat confusing visit last month, when product flows were shifted due to the tariff situation, our June tours were more normalized, with Vince stores beginning to flow the Pre-Fall 1 collection; while slightly (one week) later than last year, we believe the depth and breadth of goods demonstrates the company is quickly responding to tariffs and providing the customer with the looks, quality and versatility they expect.</li><li>Further, we believe the Summer and Pre-Fall 1 collections have remained fashion right, with great colors, solid knits and sweaters and warm weather items, from dress to short sleeve tops and shorts.</li></ul>

We are reiterating our Buy rating, $4 price target and projections for Vince Holding after visiting stores in Connecticut, Long Island and New Jersey.After a somewhat confusing visit last month, when product flows were shifted due to the tariff situation, our June tours were more normalized, with Vince stores beginning to flow the Pre-Fall 1 collection; while slightly (one week) later than last year, we believe the depth and breadth of goods demonstrates the company is quickly responding to tariffs and providing the customer with the looks, quality and versatility they expect.Further, we believe the Summer and Pre-Fall 1 collections have remained fashion right, with great colors, solid knits and sweaters and warm weather items, from dress to short sleeve tops and shorts.

VNCE: Snapping the Store: Flows, Fashion Return to Normal; Reiterate Buy, $4 PT

<ul><li>We are reiterating our Buy rating and $4 price target on Vince Holding Corp. and increasing our FY25 EPS projections after the company registered slightly better 1QFY25 (April) results than previously guided and provided initial 2QFY25 guidance which indicates Vince is registering strong progress in reducing the negative impact of China tariffs, while continuing to offer compelling items for their core customer base.</li><li>Further, we believe virtually all the key pieces of the Vince growth story, from store expansion, more men's offerings, continued category expansion and international growth opportunities, remain fully intact and will become even more evident as the tariff shock abates.</li><li>As such, we are raising our EPS projections for FY25 and reiterating our Buy rating and $4 price target for VNCE.</li></ul>

We are reiterating our Buy rating and $4 price target on Vince Holding Corp. and increasing our FY25 EPS projections after the company registered slightly better 1QFY25 (April) results than previously guided and provided initial 2QFY25 guidance which indicates Vince is registering strong progress in reducing the negative impact of China tariffs, while continuing to offer compelling items for their core customer base.Further, we believe virtually all the key pieces of the Vince growth story, from store expansion, more men's offerings, continued category expansion and international growth opportunities, remain fully intact and will become even more evident as the tariff shock abates.As such, we are raising our EPS projections for FY25 and reiterating our Buy rating and $4 price target for VNCE.

VNCE: 1Q Review: Moving Quickly to Keep on Winning; Reiterate Buy, $4 PT

United States

Ralph Lauren Corporation designs, markets, and distributes men's, women's and children's apparel, accessories, fragrances, and home furnishings. The Company's products are sold under a wide range of brands. Ralph Lauren's operations include wholesale, retail, and licensing.

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Ralph Lauren (RL US)

VNCE: 2H Signposts: Tariffs Defer the VNCE Growth Story; Reiterate Buy, $4 PT

We are reiterating our Buy rating, $4 price target and projections for Vince as we look at key trends for 2HFY25 and beyond. We believe, more than...

Small Cap Consumer Research

Consumer Products Monthly WTR Consumer Index Lags S&P 600 in 2Q

The WTR Consumer Stock Index trailed the Small Cap S&P 600 in 2Q, declining 2.4% versus the 1.1% gain in the broader index.

Water Tower Research

WTR Consumer Products Index Lags S&P 600 YTD Despite Relative Earnings Outperformance

The WTR Consumer Products Index is down 17.5% YTD through June 23, 2025, on a 2.8x decline in its 12-month prospective absolute P/E ratio to 15.3x...

Water Tower Research

VNCE: Snapping the Store: Flows, Fashion Return to Normal; Reiterate Buy, $4 PT

We are reiterating our Buy rating, $4 price target and projections for Vince Holding after visiting stores in Connecticut, Long Island and New...

Small Cap Consumer Research

VNCE: 1Q Review: Moving Quickly to Keep on Winning; Reiterate Buy, $4 PT

We are reiterating our Buy rating and $4 price target on Vince Holding Corp. and increasing our FY25 EPS projections after the company registered...

Small Cap Consumer Research

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