Latest news with #ChristineHunsicker
Associated Press
3 days ago
- Business
- Associated Press
Bragar Eagel & Squire, P.C. is Investigating CaaStle, Inc. on Behalf of Stockholders and Encourages Fund Investors to Contact the Firm
NEW YORK, June 01, 2025 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C. is investigating potential claims on behalf of investors of fashion startup CaaStle, Inc. Our investigation concerns whether CaaStle has violated the federal securities laws and/or engaged in other unlawful business practices. On March 31, 2025, Axios published a story accusing former-CEO Christine Hunsicker of financial misconduct. Specifically, the report stated that CaaStle's Board had sent a letter to investors on March 29, 2025 revealing that Hunsicker had provided investors with 'misstated financial statements and falsified audit opinions, as well as capitalization information that understated the number of company shares outstanding.' Hunsicker reportedly resigned from her position shortly after the letter went out. Then, on April 7, 2025, Axios published an additional report stating that CaaStle's Board allowed Hunsicker to retain her position for a period of time even after finding out about her alleged fraud and was slow to warn investors of her alleged financial misconduct. Following these reports, on April 8, 2025, EXP Topco, LLC filed a lawsuit against CaaStle accusing the Company of breach of a license agreement and a settlement agreement. According to the lawsuit, in light of the 'corporate meltdown' CaaStle was experiencing, the Company backed out of a license agreement with EXP over the use of an EXP trademark and entered into a settlement agreement in which it agreed to make a payment to EXP that it ultimately failed to make. Then, on April 18, 2025, P180 filed a lawsuit against CaaStle accusing the Company of misrepresenting its financial health in order to induce P180 to raise capital and take out loans. P180 claims it suffered losses upwards of $58 million. If you have invested in CaaStle, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at [email protected], or telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you. About Bragar Eagel & Squire, P.C.: Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York and California. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit Attorney advertising. Prior results do not guarantee similar outcomes. Follow us for updates on LinkedIn, X, and Facebook, and keep up with other news by following Brandon Walker, Esq. on LinkedIn and X. Contact Information: Bragar Eagel & Squire, P.C. Brandon Walker, Esq. Marion Passmore, Esq. (212) 355-4648 [email protected]
Yahoo
02-05-2025
- Business
- Yahoo
Vince Sees Q4 Sales and Profitability Gains, but Projects Q1 Declines Amid Macro Uncertainties
Vince Holding Corp., the luxury brand known for its relaxed, understated styles, concluded 2024 with a lift in sales, and a gross profit gain for the fourth quarter. While there was a net loss of $28.3 million or $2.24 per share in the fourth quarter, which ended Feb. 1, it was attributed to a goodwill impairment charge and transaction expenses related to the acquisition of Vince by P180 from Sun Capital in January. Excluding the impact of the charge and transaction expenses, adjusted net income was $800,000, or 6 cents per share. P180 has a 65 percent stake in Vince, which is publicly traded. More from WWD Fashion's Enron? P180 Blasts CaaStle's Christine Hunsicker in Fraud Lawsuit CaaStle Gets $2.75M Bridge Loan to Plan Chapter 11 Filing and Weigh Strategic Transactions Where Was CaaStle's Board? Christine Hunsicker's Exit, Liquidity Crunch Draws Scrutiny In the year-ago fourth quarter, Vince had a net loss of $4.7 million, or 37 cents per share. Gross profit in the most recent fourth quarter was $40.1 million, or 50.1 percent of net sales, compared to gross profit of $34.2 million, or 45.4 percent of net sales, in the year-ago quarter. Vince indicated that the increase in the gross margin rate was primarily driven by about 320 basis points due to lower promotional activity in the direct-to-consumer segment and lower discounting, and about 210 basis points related to lower product and freight costs. Total sales last quarter increased 6.2 percent to $80 million, compared to $75.3 million in the fourthquarter of fiscal 2023, due to strength in the Vince wholesale channel, which included a slight benefit from earlier shipments. The sales result was somewhat offset by softness in the DTC channel including the Vince stores. Excluding the extra week in the fourth quarter of fiscal 2023, net sales increased about 9 percent. The report pushed Vince's stock price up 12 percent to just over $2.19 late Friday morning. P180 is involved in a lawsuit against Caastle and its former chief executive officer Christine Hunsicker, who abruptly left the company amid a swirl of fraud allegations. Hunsicker teamed with Vince CEO Brendan Hoffman last year to cofound P180, which forged a partnership with Elyse Walker, bought 25 percent of Altuzarra and then purchased its stake in Vince. This year, Hoffman returned to Vince, again assuming the role of CEO, after a five-year absence. Hoffman previously served as CEO of Vince from 2015 to 2020 before leaving to lead Wolverine Worldwide, first as president and then CEO through August 2023. 'The number-one priority is navigating tariff policies and the dynamic consumer landscape,' Hoffman said during the company's fourth-quarter conference call Friday with investors and retail analysts — his first since returning as CEO. Hoffman said the company is grappling with the uncertainty in the macro environment and the potential impact on consumer behavior that tariffs will have. Sixty-six percent of Vince's cost of goods is in China as of the end of last year, but Hoffman said the company has 'begun to dramatically reduce exposure in China,' and that he does not expect any material impact of tariffs to the first quarter, which is the smallest volume quarter of the year for Vince, in terms of sales and profits. The company is moving production of about one-third of fall product outside of China, Hoffman said. 'Our team is on the ground in Asia working closely with our partners, our suppliers, to move production where we can without sacrificing quality to other parts of Asia,' said Hoffman. 'There will definitely be a sku (stock keeping unit) reduction. This is a work in progress, with changes depending on where tariffs ultimately land.' Hoffman said the company is 'better positioned to navigate through today's environment' because there's been progress in strengthening the organization, there's a 'consistency of product' and significant strides in operational efficiencies have been made. In October 2023, Vince unveiled a transformation program aimed at reducing costs by $30 million over three years period, including streamlining manufacturing and production operations. The transformation plan 'fostered a culture to effect change' and improve results, Hoffman said. The strategy also included the wind-down of the Rebecca Taylor brand and the sale of the Vince intellectual property to Authentic Brands Group in return for $76.5 million in cash and a 25 percent membership interest in ABG Vince. Vince still designs, produces, ships and sells all of its apparel products and pays ABG Vince royalty payments since Vince gets use of the IP to sell and manufacture the core categories. The Authentic connection enables Vince to expand its offering with more diversity of product. The transformation yielded more than $10 million of savings in fiscal 2024. Given the evolving tariff policies, Vince is reevaluating its goals with the strategy to help mitigate the impact from tariffs. For the first quarter of this year, the company expects net sales to decline about 5 percent and adjusted operating margin to decline about 500 basis points from a year ago. Given the increased uncertainty related to the potential impact and duration of tariffs, the company is not providing guidance for the full year. Commenting on last quarter's performance, Hoffman said he was 'amazed' at the growth in wholesaling, which performed better than Vince's DTC channel. Key wholesale accounts include Bloomingdale's and Nordstrom where the brand gets prominent floor space. He also cited double-digit growth in full-price customers, and said the company is increasing its attention on its highest-spending customer tier. In women's last quarter, sweaters, bottoms and pants were the bestselling categories; in men's, cashmere sweaters and pants were top performers. Vince menswear, once a key item business, has evolved into a full collection business, Hoffman said. 'Since returning to the CEO role earlier this year, my initial observations of the company have been reinforced. I've been impressed by the resilience and depth of our leadership team and by the progress that has been made in strengthening the foundation and overall business model,' Hoffman said in a statement Friday. 'The stronger-than-expected end to the year is also a testament to the team, the quality product offerings that they have delivered that have continued to resonate with customers, as well as improvements in operational efficiencies from our transformation initiatives. As we look ahead, we will be shifting the focus and goals of our transformation plan to align with today's environment and needs as we work to mitigate the impact of the evolving tariff policies. Despite the increased uncertainty with respect to the macro environment, I remain confident in the business' long-term trajectory and our team's ability to adjust and react accordingly to deliver customers the product and experience they expect from us.' For the year, Vince had a net loss of $19 million, or $1.51 per share, compared to net income of $25.4 million, or $2.04 per diluted share, in the same period last year. Adjusted net income for fiscal 2024 was $2.4 million, or $19 cents per share, compared to an adjusted net loss of $7.7 million, or 62 cents per share, in the same period last year. Net sales increased 0.2 percent to $293.5 million compared to $292.9 million in fiscal 2023. This performance was driven by strength in the Vince wholesale channel, which offset softness in the Vince DTC channel. Excluding the extra week in fiscal 2023, total company sales increased approximately 1 percent compared to the prior year. Gross profit was $145.2 million, or 49.5 percent of net sales, compared to gross profit of $133.3 million, or 45.5 percent of net sales, in fiscal 2023. The increase in gross margin rate was driven by about 330 basis points related to lower promotional activity and discounting and about 320 basis points due primarily to lower product costing and freight costs. These factors were partially offset by about 150 basis points of royalty expenses associated with the licensing agreement. Authentic Brands Group controls the Vince brand, but Vince Holding still runs the business. Vince ended the quarter with 57 company-operated stores, a net decrease of six storessince the fourth quarter of fiscal 2023. Despite the macro uncertainties, Vince is proceeding with some store openings with units soon to launch in Sacramento, Calif. and Nashville, and a second store opening in London later this month. Best of WWD Macy's Is Closing 66 Stores in 2025 — Here's the List, Live Updates Inside the Demise of Lord & Taylor COVID-19 Spikes Elevate Retail Concerns
Axios
29-04-2025
- Business
- Axios
CaaStle hit with multiple lawsuits following fraud allegations
It's been one month since fashion tech company CaaStle told investors that they're likely victims of one of the largest financial frauds in U.S. history, with over $530 million up in smoke. Now the lawsuits are beginning to fly, and the company is doubling down on its caginess. Driving the news: CaaStle is being sued for fraud by P180, the fashion brand acquisition platform that was formed to leverage CaaStle's technology. P180 argues that it never would have done several transactions, including this past January's purchase of apparel company Vince, had it known the truth of CaaStle's business and financials. The complaint calls out CaaStle co-founder and former CEO Christine Hunsicker, who also was on the P180 board, and also current CaaStle board members George Goldenberg (CaaStle's interim CEO) and JP Singh (a computer science professor at Princeton). It claims that CaaStle's lies caused P180 to incur debts (some of which weren't memorialized) that would be used to "force an eventual merger" — a concept that Singh would later extol in a video call with CaaStle shareholders. In a statement to Axios, CaaStle says: "We take issue with some key factual assertions made by P180, we believe the claims are without merit and look forward to vigorously defending our position." But wait, there's more: CaaStle also is being sued by EXP Topco, which holds the IP for clothing brand Express. It claims that CaaStle infringed on EXP's trademarks by continuing to offer an Express-branded subscription service after EXP bought the IP. The two sides reached a settlement, but CaaStle never paid. Moreover, the settlement was reached after CaaStle knew of the fraud, which allegedly means it never had the funds it had promised. Coming attractions: There also are rumblings of a possible class action suit against an investment firm that funneled retail investors into CaaStle. Behind the scenes: CaaStle last week told shareholders, via an unsigned letter, that it had hired a restructuring expert named Monica Blacker of Force 10 Partners as an independent director. It was the only investor communication since April 7, when CaaStle claimed to have secured $2.75 million in bridge financing that would be used, in part, to plan for Chapter 11 process. There is no mention of Chapter 11 in the Blacker announcement. Nor did the company address it when asked by Axios, although a source says it may be close to hiring financial advisers. Two investors tell Axios that they've asked questions of CaaStle's board, via an email address designed for this purpose, but haven't received replies. The company says it's been "addressing shareholder inquiries on a regular basis."
Forbes
04-04-2025
- Business
- Forbes
This Fashion Startup Is At The Center Of A $500 Million Fraud Crisis
Axios reported earlier this week that fashion tech company Caastle is virtually broke and its founder, Christine Hunsicker, is being accused of financial misconduct, according to Axios' anonymous sources. Axios says the company told prospective investors that it generated $519 million in 2023 revenue and that the actual number was $15.7 million. If you haven't heard of Caastle, it presented as one of the most interesting startups in the fashion business. Here's how it worked: One of the biggest problems in retail fashion is markdowns. You get people into your store by showing them flashy fashion products. But when they come in and shop, they mostly buy basics. That leaves retailers with the need to create products that get attention, but those items often get left on the shelf. Caastle had an answer. It took control of unsold inventory and rented it out. After all, you might want an eye-catching garment for an event but you are less likely to want to wear that outfit on a regular basis. Caastle maintained that it could make a profit on the rented garments where the retailer would otherwise have had a loss. It had arrangements with Express, Ann Taylor, Bloomingdale's and other brands and retailers. According to Pitchbook, it also had over $180 million of investors' capital and was valued at an estimated $596 million. Axios said all Caastle employees have been furloughed for two weeks starting this week. The Wall Street Journal reports that investors included Peter Thiel, Bill Ackman and Henry Kravis. According to the Journal, Caastle sent a letter to its shareholders recently that said Hunsicker had 'provided certain investors with misstated financial statements and falsified audit opinions' and that the company was 'facing a severe and immediate liquidity problem.' When I asked Caastle about the accusations, they told me this: 'The Board is deeply disappointed by the conduct that has led to this moment. Our immediate focus is on addressing the company's challenges, supporting our employees, and preserving the value of our technology and business operations. We regret having to temporarily furlough our employees, but we believe this will best position the company to successfully recover from our current situation.' In hindsight, it's always easy to see that something was heading down a bad road. So how could sophisticated investors allow their money to go down the drain like that and be associated with such a big fraud and failure? If you've ever seen the deck for a startup, they're not long on financial details. A potential investor has to dig and ask a lot of questions in order to get into the weeds on the financials. Founders are often not so well versed in the financials, they are more commonly focused on building and the mission. It's easy to get caught up in their enthusiasm. One thing is almost always true about startups: having a lot of cash doesn't ensure success. But the opposite, not having enough cash, will ensure failure. It's often compelling to fuel a dream with more cash and listening to a founder that's driven to do something hard can be inspiring. So it's tempting to make an investment in a company with a mission. One thing that is puzzling about startups is that while they almost always predict eventual profitability, it can often be pushed further and further into the future. Investors are often tolerant of this approach because the payoff is so big. What we see in our merger and acquisitions business is that one of the most important things to watch is the cash inside a company. When you see companies reporting big profits but their borrowings are increasing, it's a sign that something might not be right, the company may be investing in assets that aren't performing or it may have losses it's not recognizing. Because the operations of startups are so often threadbare, reporting may not be up to snuff and it may be hard to get information. And just because cash is burning every month, it doesn't necessarily mean there's a fraud happening. But cash is always a source of truth. If you watch where the cash went, it usually reveals the condition of the company. In Amazon's early days, it burned an enormous amount of cash, many billions. And the company would say that profitability is eventually coming. Investors at that time were of two minds: one said you gotta believe. The other said, how big does a company need to get before you say they're never going to be profitable. Founders look at Amazon's story and it gives them inspiration. It also helps investors to have faith. I can't say what happened at Caastle and whether the allegations are true or not. Axios and The Wall Street Journal allege that the financials did not reflect the actual performance and condition of the company. But I know this: if the uses of cash had been better understood during the years in which Caastle was in business, a fraud is a lot less likely to happen. It's understandable that investors and board members can find it uncomfortable to press on issues when founders and staff are short of time. Due diligence is always annoying. Questions like those arising around Caastle point out that getting into details about where cash goes, is never a wasted effort.
Axios
02-04-2025
- Business
- Axios
Inside the numbers that led to CaaStle's fraud allegations
Christine Hunsicker, the founder and now-former CEO of fashion tech company CaaStle, isn't just being accused of fudging some numbers. It sounds like she may have built an entire Wonka factory. Zoom in: Axios has learned that Hunsicker last year told prospective investors that CaaStle generated $519 million in 2023 revenue. Audited financials sent on Saturday to shareholders show the actual revenue figure for the year ending Sept. 30, 2023 was only $15.7 million. But wait, there's more: Prospective investors also were told that fiscal 2022 revenue was $278 million, when it actually was $19.7 million. Projections for 2024 and 2025 revenue were $793 million and around $1 billion, respectively. Hunsicker also claimed that 2023 EBITDA was $91 million and virtually flat in 2022. The audited financials don't specifically include EBITDA, but do show a combined $135 million net loss for the two fiscal years with less than a combined $25 million for interest, depreciation, and amortization. Finally, prospective investors were told that CaaStle had hundreds of millions of dollars in cash as of mid-2024. If so, that's a heck of a trick. It ended Sept. 2023 with less than $1 million in cash and around $3 million in total assets, and then raised just under $60 million in subsequent funding. It's unclear if all prospective investors and shareholders received the same information, or if different data went to different audiences. Catch up quick: Axios on Monday was first to report that Hunsicker has resigned as CaaStl's CEO, after being accused by the board of financial misconduct. The company has raised over $530 million in venture capital, but now is nearly broke and just put all employees on a two-week furlough while it decides next steps. Meanwhile, P180 is trying to distance itself from Hunsicker, who recently co-founded the retail acquisition platform with industry vet Brendan Hoffman. In a statement, Hoffman says: "I am both shocked and saddened by the recent developments at CaaStle. Christine Hunsicker has stepped down as Chairman of P180 which operates as an independent entity. Our primary focus moving forward is to nurture and grow Vince Holding Corp. and support our investment in Altuzarra."
