UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 1, 2025
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-36212
VINCE HOLDING CORP.
(Exact name of registrant as specified in its charter)
Delaware
75-3264870
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
500 5th Avenue—20th Floor
New York, New York 10110
(Address of principal executive offices) (Zip code)
(323) 421-5980
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share
VNCE
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large
accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the
Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously
issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the
relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the registrant's Common Stock held by non-affiliates as of August 3, 2024, the last day of the registrant's most recently completed second quarter, was approximately $5.8 million
based on a closing price per share of $1.54 as reported on the New York Stock Exchange on August 2, 2024. As of April 21, 2025, there were 12,843,067 shares of the registrant's Common Stock outstanding.
Portions of the registrant's definitive proxy statement to be filed with the Securities and Exchange Commission in connection with the registrant's 2024 annual meeting of stockholders are incorporated by
reference into Part III of this Annual Report on Form 10-K.
2
Table of Contents
Page
Number
PART I
5
Item 1.
Business
5
Item 1A.
Risk Factors
9
Item 1B.
Unresolved Staff Comments
20
Item 1C.
Cybersecurity
20
Item 2.
Properties
21
Item 3.
Legal Proceedings
23
Item 4.
Mine Safety Disclosures
23
PART II
23
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
23
Item 6.
[Reserved]
23
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
23
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
36
Item 8.
Financial Statements and Supplementary Data
37
Item 9.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
37
Item 9A.
Controls and Procedures
37
Item 9B.
Other Information
38
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
38
PART III
39
Item 10.
Directors, Executive Officers and Corporate Governance
39
Item 11.
Executive Compensation
39
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
39
Item 13.
Certain Relationships and Related Transactions, and Director Independence
39
Item 14.
Principal Accountant Fees and Services
39
PART IV
39
Item 15.
Exhibits and Financial Statement Schedules
39
Item 16.
Form 10-K Summary
43
3
INTRODUCTORY NOTE
On November 27, 2013, Vince Holding Corp. ("VHC" or the "Company"), previously known as Apparel Holding Corp., closed an initial public offering ("IPO") of its
common stock and completed a series of restructuring transactions (the "Restructuring Transactions") through which Kellwood Holding, LLC acquired the non-Vince businesses,
which included Kellwood Company, LLC, from the Company. The Company continues to own and operate the Vince business, which includes V Opco, LLC (formerly, Vince,
LLC) ("V Opco").
Prior to the IPO and the Restructuring Transactions, VHC was a diversified apparel company operating a broad portfolio of fashion brands, which included the Vince
business. As a result of the IPO and Restructuring Transactions, the non-Vince businesses were separated from the Vince business, and the stockholders immediately prior to the
consummation of the Restructuring Transactions (the "Pre-IPO Stockholders") (through their ownership of Kellwood Holding, LLC) retained the full ownership and control of
the non-Vince businesses.
On April 21, 2023, V Opco, the Company's wholly owned indirect subsidiary, entered into an Intellectual Property Asset Purchase Agreement (the "Asset Purchase
Agreement"), by and among V Opco, ABG-Vince, LLC (f/k/a ABG-Viking, LLC) ("ABG Vince"), a newly formed indirect subsidiary of Authentic Brands Group, LLC, the
Company and ABG Intermediate Holdings 2 LLC, whereby V Opco sold its intellectual property assets related to the business operated under the Vince brand to ABG Vince at
closing (the "Asset Sale"). The Company closed the Asset Sale on May 25, 2023.
On January 22, 2025, P180 Vince Acquisition Co. ("P180"), a subsidiary of P180, Inc., a venture focused on accelerating growth and profitability in the luxury apparel
sector, acquired a majority stake in the Company (the “P180 Acquisition”) from affiliates of Sun Capital Partners, Inc. (collectively, “Sun Capital”).
For purposes of this Annual Report on Form 10-K (this "Annual Report"), the "Company," "we," and "our," refer to Vince Holding Corp. and our wholly owned
subsidiaries, including Vince Intermediate Holding, LLC ("Vince Intermediate") and V Opco. References to "Vince," "Rebecca Taylor" or "Parker" refer only to the referenced
brands. References to "Kellwood" refer, as applicable, to Kellwood Holding, LLC and its consolidated subsidiaries (including Kellwood Company, LLC) or the operations of the
non-Vince businesses after giving effect to the Restructuring Transactions and prior to the Kellwood Sale.
DISCLOSURES REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report, and any statements incorporated by reference herein, contain forward-looking statements under the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are indicated by words or phrases such as "may," "will," "should," "believe," "expect," "seek," "anticipate," "intend," "estimate," "plan," "target,"
"project," "forecast," "envision" and other similar phrases. Although we believe the assumptions and expectations reflected in these forward-looking statements are reasonable,
these assumptions and expectations may not prove to be correct and we may not achieve the results or benefits anticipated. These forward-looking statements are not guarantees
of actual results, and our actual results may differ materially from those suggested in the forward-looking statements.
These forward-looking statements involve a number of risks and uncertainties, some of which are beyond our control, including, without limitation: changes to and
unpredictability in the trade policies and tariffs imposed by the U.S. and the governments of other nations; our ability to maintain adequate cash flow from operations or
availability under our revolving credit facility to meet our liquidity needs; general economic conditions; restrictions on our operations under our credit facilities; our ability to
improve our profitability; our ability to maintain our larger wholesale partners; our ability to accurately forecast customer demand for our products; our ability to maintain the
license agreement with ABG Vince, a subsidiary of Authentic Brands Group; ABG Vince's expansion of the Vince brand into other categories and territories; ABG Vince's
approval rights and other actions; our ability to realize the benefits of our strategic initiatives; the execution of our customer strategy; our ability to make lease payments when
due; our ability to open retail stores under favorable lease terms and operate and maintain new and existing retail stores successfully; our operating experience and brand
recognition in international markets; our ability to remediate the identified material weakness in our internal control over financial reporting; our ability to comply with domestic
and international laws, regulations and orders; increased scrutiny regarding our approach to sustainability matters and environmental, social and governance practices;
competition in the apparel and fashion industry; the transition associated with the appointment of new chief executive officer and new chief financial officer; our ability to attract
and retain key personnel; seasonal and quarterly variations in our revenue and income; the protection and enforcement of intellectual property rights relating to the Vince brand;
our ability to successfully conclude remaining matters following the wind down of the Rebecca Taylor business; the extent of our foreign sourcing; our reliance on independent
manufacturers; our ability to ensure the proper operation of the distribution facilities by third-party logistics providers; fluctuations in the price, availability and quality of raw
materials; the ethical business and compliance practices of our independent manufacturers; our ability to mitigate system or data security issues, such as cyber or malware attacks,
as well as other major system failures; our ability to adopt, optimize and improve our information technology systems, processes and functions; our ability to comply with
privacy-related obligations; our ability to maintain a listing of our common stock on the New York Stock Exchange; our status as a “controlled company”; our status as a “smaller
reporting company”; and other factors as set forth from time to time in our Securities and Exchange Commission filings,
4
including those described in this Annual Report under the heading “Part I, Item 1A – Risk Factors”. We intend these forward-looking statements to speak only as of the date of
this Annual Report and we do not undertake to update or revise them as more information becomes available, except as required by law.
5
PART I
ITEM 1. BUSINESS.
Overview
We are a global retail company that operates the Vince brand women's and men's ready to wear business. Previously, the Company also owned and operated the Rebecca
Taylor and Parker brands until the sale of the respective intellectual property was completed, as discussed below under "Recent Developments". We serve our customers through
a variety of channels that reinforce the brand images.
We have a select number of wholesale partners who account for a significant portion of our net sales. In fiscal 2024 and fiscal 2023, sales to one wholesale partner,
Nordstrom Inc., accounted for more than ten percent of the Company's net sales. These sales represented 26% of fiscal 2024 and 20% of fiscal 2023 net sales, respectively.
We design our products in the U.S. and source the vast majority of our products from contract manufacturers outside the U.S., primarily in Asia.
The Company operates on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52 or 53-week period ending on the
Saturday closest to January 31.
•
References to "fiscal year 2024" or "fiscal 2024" refer to the fiscal year ended February 1, 2025; and
•
References to "fiscal year 2023" or "fiscal 2023" refer to the fiscal year ended February 3, 2024.
Fiscal year 2024 consisted of a 52-week period and fiscal year 2023 consisted of a 53-week period.
Our principal executive office is located at 500 5th Avenue, 20th Floor, New York, New York 10110, and our telephone number is (323) 421-5980. Our corporate website
address is www.vince.com.
Recent Developments
On May 3, 2024, V Opco completed a nominal sale (the "Transaction") for $1.00 (one dollar) of all outstanding shares of Rebecca Taylor, Inc., which held the Rebecca
Taylor business prior to the wind-down (defined below), to Nova Acquisitions, LLC. The Transaction was completed pursuant to a Stock Purchase Agreement (the “SPA”),
dated May 3, 2024, entered into between V Opco and Nova Acquisitions, LLC.
On January 22, 2025, P180 Vince Acquisition Co., a subsidiary of P180, Inc., a venture focused on accelerating growth and profitability in the luxury apparel sector,
acquired a majority stake in the Company (the “P180 Acquisition”) from affiliates of Sun Capital Partners, Inc. (collectively, “Sun Capital”). On the same day, V Opco
completed a partial pay-down of $20,000 of the subordinated debt (the “Sun Debt Facility”) with SK Financial Services, LLC, an affiliate of Sun Capital (the “Sun Debt
Paydown”).
See Part I, Item 1A. Risk Factors — "Risks Related to Our Business and Industry" for additional discussion regarding risks to our business associated with the P180
Acquisition.
The Brand
Vince
Vince Holding Corp. is a global retail company that operates the Vince brand women’s and men’s ready to wear business. Vince, established in 2002, is a leading global
luxury apparel and accessories brand best known for creating elevated yet understated pieces for every day effortless style. As of February 1, 2025, we operate 43 full-price retail
stores, 14 outlet stores, the e-commerce site, vince.com, and the subscription service Vince Unfold, vinceunfold.com. Vince is also available through premium wholesale channels
globally.
Our wholesale business is comprised of sales to major department stores and specialty stores in the U.S. and in select international markets. We have distribution
arrangements with a small number of wholesale partners for non-licensed product which has improved profitability in the wholesale business and enables us to focus on other
areas of growth for the brand, particularly in the direct-to-consumer business. We continue to collaborate with our wholesale partners in various areas, including merchandising
and logistics to build a more profitable and focused wholesale business.
Our direct-to-consumer business includes our company-operated retail and outlet stores and our e-commerce business. During fiscal 2024, we closed six net retail stores.
The direct-to-consumer business also includes our e-commerce website, vince.com, and our subscription service, Vince Unfold, vinceunfold.com.
6
The following table details the number of Vince retail stores we operated for the past two fiscal years:
Fiscal Year
2024
2023
Beginning of fiscal year
63
67
Net (closed) opened
(6)
(4)
End of fiscal year
57
63
Rebecca Taylor and Parker
Rebecca Taylor and Parker consisted of our operations to distribute Rebecca Taylor and Parker brand products to major department and specialty stores in the U.S. and
select international markets and directly to the consumer through their own branded e-commerce platforms, our Rebecca Taylor retail and outlet stores and through our
subscription service, Rebecca Taylor RNTD. On September 12, 2022, the Company announced its decision to wind down the Rebecca Taylor business. On December 22, 2022,
the Company's indirectly wholly owned subsidiary, Rebecca Taylor, Inc., completed the sale of its intellectual property and certain related ancillary assets to RT IPCO, LLC, an
affiliate of Ramani Group. Substantially all Rebecca Taylor inventory was liquidated as of January 28, 2023. Additionally, all Rebecca Taylor retail and outlet stores operated by
the Company were closed as of January 28, 2023 and the e-commerce site operated by the Company ceased in December 2022. A nominal sale of all outstanding shares of
Rebecca Taylor, Inc. to Nova Acquisitions, LLC was completed on May 3, 2024. On February 17, 2023, the Company's indirectly wholly owned subsidiary, Parker Lifestyle,
LLC, completed the sale of its intellectual property and certain related ancillary assets to Parker IP Co. LLC, an affiliate of BCI Brands.
Business Segments
We serve our customers through a variety of channels that reinforce the brand images. Our diversified channel strategy allows us to introduce our products to customers
through multiple distribution points that are presented in two reportable segments: Vince Wholesale and Vince Direct-to-consumer. As a result of the completion of the wind
down and sale, and the determination by the CODM that Parker would not be considered in the Company’s future operating plans, Rebecca Taylor and Parker is no longer an
operating segment of the Company.
Fiscal Year
(in thousands, except percentages)
2024
% of Total Net Sales
2023
% of Total Net Sales
Vince Wholesale
$
165,349
56.3%
$
149,603
51.1%
Vince Direct-to-consumer
128,103
43.7%
143,096
48.9%
Total reportable segment net sales
293,452
100.0%
292,699
99.9%
Rebecca Taylor and Parker
—
0.0%
191
0.1%
Total net sales
$
293,452
100.0%
$
292,890
100.0%
Our Vince Wholesale segment is comprised of sales to major department stores and specialty stores in the U.S. and in select international markets. Until the Asset Sale
closed, our Vince Wholesale segment also included our licensing business related to our licensing arrangements for our women's and men's footwear line, as well as soft
accessories and cold weather goods.
Our Vince Direct-to-consumer segment includes our Vince company-operated retail and outlet stores, our Vince e-commerce business and our subscription service, Vince
Unfold.
Products
We believe that the Vince brand's differentiated design aesthetic and strong attention to detail and fit allow us to maintain premium pricing, and that the combination of
quality and value positions us as an everyday luxury brand that encourages repeat purchases among our customers.
The Vince women's collection includes seasonal collections of luxurious cashmere sweaters, silk blouses, a leather and suede collection that encompasses all
classifications, and jackets, dresses, skirts, pants, t-shirts, footwear, outerwear, and accessories. The Vince men's collection includes cashmere sweaters, woven shirts, core and
fashion pants, blazers, outerwear, footwear and accessories.
7
Design and Merchandising
Our creative team is focused on developing and implementing the design direction for the Vince brand. Our design efforts are supported by well-established product
development and production teams. We believe continued collaboration between design and merchandising will ensure we respond to consumer preferences and market trends
with new innovative product offerings while maintaining the brand's fashion foundation.
Marketing, Advertising and Public Relations
We use marketing, advertising and public relations as critical tools to deliver a consistent and compelling message to consumers. The message and marketing strategies of
the Vince brand are cultivated by dedicated creative, design, marketing, visual merchandising, and public relations teams. These teams work closely together to develop and
execute campaigns that appeal to both our core and aspirational customers.
To execute our marketing strategies, we engage in a wide range of campaign tactics that include traditional media (such as direct mail, print advertising, cooperative
advertising with wholesale partners and outdoor advertising), digital media (such as email, search, social, and display) and experiential campaigns (such as events) to drive traffic,
brand awareness, conversion and ultimately sales across all channels. Our marketing strategies also include utilizing a customer data platform from which we are able to achieve
improved segmentation and personalization for an enhanced customer experience. In addition, we use social platforms such as Instagram and Facebook as we further invest in
leveraging micro and macro influencer networks to increase brand awareness, engage customers and create excitement about loyalty towards the Vince brand. The visits to
vince.com also provide an opportunity to grow our customer base and communicate directly with our customers both on line and in stores.
See Part I, Item 1A. Risk Factors — "Risks Related to Our Business and Industry — We may not be able to realize the benefits of our strategic initiatives."
Our public relations team conducts a wide variety of press activities to reinforce the brand image and create excitement around the Vince brand. Our apparel has appeared
in the pages of major fashion magazines such as Vogue, Harper's Bazaar, Elle, InStyle, GQ, Esquire and WSJ. Well-known trend setters in entertainment and fashion are also
regularly seen wearing the brand.
Sourcing and Manufacturing
We do not own or operate any manufacturing facilities. We contract for the purchase of finished goods with manufacturers who are responsible for the entire
manufacturing process, including the purchase of piece goods and trim. Although we do not have long-term written contracts with manufacturers, we have long-standing
relationships with a diverse base of vendors which we believe to be mutually satisfactory. We work with more than 30 manufacturers across 12 countries, with 66% of our
products produced in China in fiscal 2024. For cost and control purposes, we contract with select third-party vendors in the U.S. to produce a small portion of our merchandise.
All of our garments are produced according to our specifications, and we require that all of our manufacturers adhere to strict regulatory compliance and standards of
conduct. Our vendors' factories are monitored by our production team to ensure quality control, and they are monitored by independent third-party inspectors we employ for
compliance with local manufacturing standards and regulations on an annual basis. We also monitor our vendors' manufacturing facilities regularly, providing technical assistance
and performing in-line and final audits to ensure the highest possible quality.
Distribution Facilities
As of February 1, 2025, we operated out of three distribution centers, one located in the U.S., one in Hong Kong and one in Belgium.
Our warehouse in the U.S., located in California, is operated by a third-party logistics provider and includes dedicated space to fulfilling orders to support our wholesale
partners, retail locations and e-commerce business and utilizes a warehouse management system that is fully customer and vendor compliant.
Our warehouse in Hong Kong is operated by a third-party logistics provider and supports our wholesale orders for international customers located primarily in Asia and
the Middle East.
Our warehouse in Belgium is operated by a third-party logistics provider and supports our Vince wholesale orders for international customers located primarily in Europe
and our Vince UK store.
We believe we have sufficient capacity in our domestic and international distribution facilities to support our current and projected business.
8
Information Systems
During fiscal 2021, we completed the rollout of a new point of sale ("POS") system for the Vince brand to expand our omni-channel capabilities to promote direct-to-
consumer growth and enhance the customer engagement and shopping experience. During fiscal 2022, we completed the implementation of a customer data platform and the
front-end re-platforming of our Vince e-commerce website. In fiscal 2023 and 2024, we improved our cybersecurity environment through the implementation of true end-point
protection and improved network infrastructure. Our continued strategy includes investing in customer facing technologies to further expand our omni-channel capabilities and to
further consolidate systems over time to create operational efficiencies and to achieve a common platform across the Company.
See Part I, Item 1A. Risk Factors — "Risks Related to Our Information Technology and Security — We are continuing to adopt, optimize and improve our information
technology systems, processes and functions. If these systems, processes, and functions do not operate successfully, our business, financial condition, results of operations and
cash flows could be materially harmed" and Part II, Item 9A. "Controls and Procedures."
Seasonality
The apparel and fashion industry in which we operate is cyclical and, consequently, our revenues are affected by general economic conditions and the seasonal trends
characteristic to the apparel and fashion industry. Purchases of apparel are sensitive to a number of factors that influence the level of consumer spending, including economic
conditions and the level of disposable consumer income, consumer debt, interest rates and consumer confidence as well as the impact of adverse weather conditions. In addition,
fluctuations in the amount of sales in any fiscal quarter are affected by the timing of seasonal wholesale shipments and other events affecting direct-to-consumer sales. As such,
the financial results for any particular quarter may not be indicative of results for the fiscal year. We expect such seasonality to continue.
Competition
We face strong competition in each of the product categories and markets in which we compete on the basis of style, quality, price, and brand recognition. Some of our
competitors have achieved significant recognition for their brand names or have substantially greater financial, marketing, distribution and other resources compared to us.
However, we believe that we have established a sustainable and distinct position in the current marketplace, driven by a product assortment that combines classic and fashion-
forward styling, and a pricing strategy that offers customers accessible luxury.
Human Capital
As of February 1, 2025, we had 578 employees, of which 344 were employed in our company-operated retail stores. Except for 8 employees in France, who are covered
by collective bargaining agreements pursuant to French law, none of our employees are currently covered by a collective bargaining agreement and we believe our employee
relations are good.
Our key human capital measures include associate turnover, pay equity, and professional development as well as safety. We have programs in place to provide associates
with feedback on performance and professional development, including our formal annual performance review process. We frequently benchmark our compensation and benefits
practices against comparable peers and assess them, so we continue to attract and retain talent throughout our organization.
We strive to maintain an inclusive environment free from discrimination of any kind. Associates have multiple ways to report inappropriate behavior, including through a
confidential hotline. All reports of inappropriate behavior are promptly investigated with appropriate action taken to stop such behavior.
Trademarks and Licensing
On April 21, 2023, V Opco, the Company's wholly owned indirect subsidiary, entered into the Asset Purchase Agreement, by and among V Opco, ABG Vince, a newly
formed indirect subsidiary of Authentic Brands Group, LLC, the Company and ABG Intermediate Holdings 2 LLC, whereby V Opco sold its intellectual property assets related to
the business operated under the Vince brand to ABG Vince at closing. The Company closed the Asset Sale on May 25, 2023 (the “Closing”).
On May 25, 2023, in connection with the Closing, V Opco and ABG Vince entered into a License Agreement (the “License Agreement”), which provides V Opco with a
license to use the Licensed Property in the Territory, which is defined as the United States, Canada, Andorra, Austria, Germany, Switzerland, Belgium, Netherlands,
Luxembourg, France, Monaco, Liechtenstein, Italy, San Marino, Vatican City, Iceland, Norway, Denmark, Sweden, Finland, Spain, Portugal, Greece, Republic of Cyprus
(excluding Northern Cyprus), United Kingdom, Ireland, Australia, New Zealand, Mainland China, Hong Kong, Macau, Taiwan, Singapore, Japan and Korea (the "Core
Territory"), together with all other territories (the "Option Territory," together with the Core Territory, the
9
“Territory”), to the Approved Accounts (each as defined in the License Agreement). The Option Territory may be changed unilaterally by ABG Vince at any time after the
effective date of the License Agreement. The License Agreement also provides V Opco with a license to operate the Vince e-commerce site, www.vince.com, as well as to
operate all retail stores in the Territory. V Opco is required to operate and maintain a minimum of 45 Retail Stores and Shop-in-Shops in the Territory.
Additionally, the License Agreement provides V Opco with a license to use the Licensed Property in the Territory to design, manufacture, promote, market, distribute,
and sell ready-to-wear Sportswear Products and Outerwear Products (the "Core Products") and Baby Layettes (the "Option Products," together with the Core Products, the
"Licensed Products"), which Option Products may be changed unilaterally by ABG Vince at any time after the effective date of the License Agreement.
The initial term of the License Agreement began on May 25, 2023, the date on which the Closing actually occurred, and ends at the end of the Company's 2032 fiscal
year, unless sooner terminated pursuant to the terms of the License Agreement. V Opco has the option to renew the License Agreement on the terms set forth in the License
Agreement for eight consecutive periods of ten years each, unless the License Agreement is sooner terminated pursuant to its terms or V Opco is in material breach of the License
Agreement and such breach has not been cured within the specified cure period. V Opco may elect not to renew the term for a renewal term.
V Opco is required to pay ABG Vince a royalty on net sales of Licensed Products and committed to an annual guaranteed minimum royalty of $11,000 and annual
minimum net sales as specified in the License Agreement, in each case, during the initial term of the License Agreement, except that the guaranteed minimum royalty and
minimum net sales for the first contract year during the initial term will be prorated to the period beginning on the Closing Date and ending at the end of the Company's 2023
fiscal year. The annual guaranteed minimum royalty and annual minimum net sales for each subsequent renewal term will be the greater of (i) a percentage as set forth in the
License Agreement of the guaranteed minimum net royalty or the minimum net sales (as applicable) of the immediately preceding contract year, and (ii) the average of actual
Royalties (as defined in the License Agreement, with respect to the guaranteed minimum royalty) or actual Net Sales (as defined in the License Agreement, with respect to the
annual minimum net sales) during certain years as set forth in the License Agreement of the preceding initial term or renewal term (as applicable). V Opco is required to pay
royalties comprised of a low single digit percentage of net sales arising from retail and e-commerce sales of Licensed Products and a mid single digit percentage of net sales
arising from wholesale sales of such Licensed Products. In the event that the annual guaranteed minimum royalty paid to ABG Vince in any given contract year is greater than
the actual royalties earned by ABG Vince in the same contract year, the difference between the royalty actually earned and the annual guaranteed minimum royalty paid is
credited for the next two contract years against any amount of royalty earned by ABG Vince in excess of the annual guaranteed minimum royalty paid during each such contract
year, if any.
Available Information
We make available free of charge on our website, vince.com, copies of our Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K,
proxy and information statements and all amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as soon as reasonably practicable after filing such material electronically with, or otherwise furnishing it to, the SEC. The SEC maintains a website at
sec.gov that contains reports, proxy and information statements and other information regarding the Company and other companies that electronically file materials with the SEC.
The reference to our website address does not constitute incorporation by reference of the information contained on the website, and the information contained on the website is
not part of this Annual Report.
ITEM 1A. RISK FACTORS.
The following risk factors should be carefully considered when evaluating our business in addition to the forward-looking statements included elsewhere in this Annual
Report. See “Disclosures Regarding Forward-Looking Statements.” Any of the following factors could materially adversely affect our business, results of operations and financial
condition. Additional risks and uncertainties not currently known to us or that we currently view as immaterial may also materially adversely affect our business, results of
operations and financial condition. All amounts disclosed are in thousands except shares, per share amounts, percentages, stores, and number of leases.
Risks Related to Our Business and Industry
Changes to and unpredictability in the trade policies and tariffs imposed by the U.S. government and the governments of other nations could materially affect our financial
condition, liquidity and results of operations.
The United States recently announced changes to U.S. trade policy, which included increasing tariffs on imports, in some cases significantly, and potentially renegotiating
or terminating existing trade agreements. For example, in April 2025, the United States announced a new universal baseline tariff of 10%, plus additional country-specific tariffs
for select trading partners, including a 145%
10
tariff on substantially all products of Chinese origin, on all U.S. imports. These tariffs significantly raise the per-unit cost of our products. While to date our responses have
included further diversification of our sourcing base, strategic price increases, collaboration with partners across our network to help absorb increased costs, measured spending
across the organization, and other cost-mitigation measures, the situation surrounding the recently implemented tariffs remains uncertain and continues to evolve on a daily or
weekly basis as ongoing uncertainty relating to international trade policy and regulations as well as trade disputes, protectionist measures, and threat of a trade war persist.
Accordingly, the overall impact on our business will depend on multiple factors, including the duration and potential expansion of current tariffs, future changes to tariff rates,
scope, or enforcement, retaliatory measures by impacted exporting countries, inflationary effects and broader macroeconomic responses, changes to consumer purchasing
behavior, and the effectiveness of our responses in managing these challenges. Because we cannot predict future trade policy in the United States and other countries, there is no
assurance that we will be able to fully mitigate the financial and competitive impacts related to tariffs or other trade restrictions, any of which could have a material adverse effect
on our business, liquidity and financial results.
Our ability to continue to have the liquidity necessary to service our debt, meet contractual payment obligations, including royalty payments under the License Agreement (as
defined below), and fund our operations, particularly in light of the recently implemented tariffs, depends on many factors, including our ability to generate sufficient cash
flow from operations, maintain adequate availability under our 2023 Revolving Credit Facility (as defined below) or obtain other financing.
Our ability to timely service our indebtedness, meet contractual payment obligations, including royalty payments under the License Agreement, and to fund our
operations, particularly in light of the recently implemented tariffs, will depend on our ability to generate sufficient cash, either through cash flows from operations, borrowing
availability under the 2023 Revolving Credit Facility or other financing, and our ability to access the capital markets if other sources of financing are unavailable on acceptable
terms. While we expect to meet our monthly Excess Availability (as defined in the 2023 Revolving Credit Facility Agreement) covenant and believe that our other sources of
liquidity will generate sufficient cash flows to meet our obligations for the next twelve months, the foregoing expectation is dependent on a number of factors, including, among
others, our ability to generate sufficient cash flow from operations, our ongoing ability to manage our operating obligations, the ability of our partners to satisfy their payment
obligations to us when due, the results of any future inventory valuations and the potential borrowing restrictions imposed by our lenders based on their credit judgment, all of
which could be significantly and negatively impacted by the recently implemented and new retaliatory and/or reciprocal tariffs, as well as changing trade policies between the
U.S. and its trading partners, in addition to other macroeconomic factors. Any such negative impact could materially and negatively impact our borrowing capacity. In the event
that we are unable to timely service our debt, meet other contractual payment obligations or fund our other liquidity needs, we may need to refinance all or a portion of our
indebtedness before maturity, seek waivers of or amendments to our contractual obligations for payment, reduce or delay scheduled expansions and capital expenditures, liquidate
inventory through additional discounting, sell material assets or operations or seek other financing opportunities. There can be no assurance that these options would be readily
available to us and our inability to address our liquidity needs could materially and adversely affect our operations and jeopardize our business, financial condition and results of
operations, including a default under the 2023 Revolving Credit Facility which could result in all amounts outstanding under such facility becoming immediately due and payable.
See “— Changes to and unpredictability in the trade policies and tariffs imposed by the U.S. government and the governments of other nations could materially affect our
financial condition and results of operations.”
General economic conditions in the U.S. and other parts of the world, including a weakening of the economy and restricted credit markets, can affect consumer confidence
and consumer spending patterns.
The success of our operations depends on consumer spending. Consumer spending is impacted by a number of factors, including actual and perceived economic
conditions affecting disposable consumer income, customer traffic within shopping and selling environments, business conditions, interest rates and availability of credit and tax
rates in the general economy and in the international, regional and local markets in which our products are sold, including those resulting from inflation and other macroeconomic
pressures in the United States and the global economy, particularly in light of the financial impacts of recently implemented and new retaliatory and/or reciprocal tariffs, as well
as changing trade policies between the U.S. and its trading partners (including rising interest rates, fears of recession and continued market volatility and instability in the banking
sector), health epidemics or pandemics, climate change, catastrophic events, such as war (including the armed conflicts between Ukraine and Russia and in the Middle East and
the related governmental and non-governmental global responses to such conflict), terrorist attacks, civil unrest, and other acts of violence. A worsening of the economy may
negatively affect consumer and wholesale purchases of our products and could have a material adverse effect on our business, results of operations and financial conditions.
Our operations are restricted by our credit facilities.
Our credit facility contains significant restrictive covenants. The 2023 Revolving Credit Facility includes covenants that may impair our financing and operational
flexibility and make it difficult for us to react to market conditions and satisfy our ongoing capital needs and unanticipated cash requirements.
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Specifically, such covenants significantly restrict our ability and, if applicable, the ability of our subsidiaries to, among other things: incur additional debt; make certain
investments and acquisitions; enter into certain types of transactions with affiliates; use assets as security in other transactions; pay dividends; sell certain assets or merge with or
into other companies; guarantee the debt of others; enter into new lines of businesses; make capital expenditures; prepay, redeem, or exchange our debt; and form any joint
ventures or subsidiary investments.
Our ability to comply with the covenants and other terms of our debt obligations, particularly in light of the financial impacts of recently implemented and new retaliatory
and/or reciprocal tariffs, as well as changing trade policies between the U.S. and its trading partners, will depend on our future operating performance. If we fail to comply with
such covenants and terms, and are unable to cure such failure under the terms of our credit facilities, if applicable, we would be required to obtain additional waivers from our
lenders to maintain compliance with our debt obligations. If we are unable to obtain any necessary waivers and the debt is accelerated, a material adverse effect on our financial
condition and future operating performance would likely result.
We may be unable to improve our profitability.
We have enhanced our focus on driving profitability through disciplined inventory management, lower promotional activity, a pullback in the off-price channel, an
improved gross margin profile and an optimized expense structure, including through our transformation program. However, our profitability is impacted by multiple factors,
including royalty payments under the License Agreement as well as macroeconomic factors. In particular, in light of the financial impacts of recently implemented and new
retaliatory and/or reciprocal tariffs, as well as changing trade policies between the U.S. and its trading partners, our profitability could be significantly and adversely impacted.
See “— Changes to and unpredictability in the trade policies and tariffs imposed by the U.S. government and the governments of other nations could materially affect our
financial condition and results of operations.” As a result, there can be no assurance that we will continue to be successful in driving margin expansion and profitability to the
extent required to positively impact our financial results and our profitability may not improve as intended.
A substantial portion of our revenue is derived from a small number of large wholesale partners, and the loss of, or other changes with, any of these wholesale partners could
substantially reduce our total revenue.
We historically had and continue to have a small number of wholesale partners who account for a significant portion of our net sales. Our consolidated net sales to the
full-price, off-price and e-commerce operations of our largest wholesale partner comprised 26% of our total revenue for fiscal 2024. We do not have formal written agreements
with any of our wholesale partners and purchases generally occur on an order-by-order basis. A decision by any of our major wholesale partners, whether motivated by marketing
strategy, competitive conditions, financial difficulties or otherwise, to significantly decrease the amount of merchandise purchased from us, or to change their manner of doing
business with us, could substantially reduce our revenue and have a material adverse effect on our profitability. Furthermore, the foregoing could be exacerbated by the financial
impacts on our wholesale partners of recently implemented and new retaliatory and/or reciprocal tariffs, as well as changing trade policies between the U.S. and its trading
partners.
In addition, due to the concentration of and/or ownership changes in our wholesale partner base, our results of operations could be adversely affected if any of these
wholesale partners fails to satisfy its payment obligations to us when due or no longer takes part in the distribution arrangements. Moreover, continued consolidation in the retail
industry could further decrease the number of, or concentrate, our wholesale partner base, and financial difficulties of one of our major customers could result in reduced business
and higher credit risk with respect to that customer. All of these changes could also decrease our opportunities in the market and decrease our negotiating strength with our
wholesale partners. Furthermore, under the License Agreement, ABG Vince may remove any customer account that was pre-approved at the time of the closing of the Asset Sale
if it believes using its good faith, commercially reasonable judgment, that such account is no longer consistent with the brand positioning for the Licensed Property or reject at its
sole good faith discretion any new customer account we submit for its approval. If we lose any of our existing wholesale partners as a result of ABG Vince's decision to remove
them, or if we are unable to expand our wholesale partnership or any addition of new wholesale partners is rejected by ABG Vince, our results of operations could be significantly
and negatively impacted. These factors could have a material adverse effect on our business, financial condition, and operating results.
If we are unable to accurately forecast customer demand for our products, our results of operations could be materially impacted.
We stock our stores, and provide inventory to our wholesale partners, based on our or their estimates of future demand for particular products. Our inventory management
and planning team determines the number of pieces of each product that we will order from our manufacturers based upon past sales of similar products, sales trend information
and anticipated demand at our suggested retail prices. Our ability to accurately forecast demand for our products could be affected by many factors, including an increase or
decrease in demand for our products or for products of our competitors, product introductions by competitors, unanticipated changes in general market conditions (including the
recently implemented tariffs as discussed below), and weakening of economic conditions or consumer confidence in future economic conditions. We cannot guarantee that we
will be able to match supply with demand in all cases in the future, to produce sufficient levels of desirable product or to forecast demand accurately. In particular, the financial
and competitive impacts resulting from recently implemented and new retaliatory and/or reciprocal tariffs, as well as changing trade
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policies between the U.S. and its trading partners, could significantly impact our ability to procure desirable products in appropriate categories to meet consumer demand or at
prices that are satisfactory to customers. If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products. Inventory levels
in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would negatively impact our gross
margin, as was the case in fiscal 2022. Conversely, if we underestimate customer demand for our products, our manufacturers may not be able to deliver products to meet our
requirements, and this could harm our business. There can be no assurance that we will be able to successfully manage our inventory at a level appropriate for future customer
demand.
The failure to maintain our license agreement relating to the Vince brand would cause us to lose all our revenues.
On May 25, 2023, V Opco, the Company's wholly owned indirect subsidiary, sold all its intellectual property assets related to the business operated under the Vince brand
to ABG Vince, an indirect subsidiary of Authentic Brands Group, LLC (“Authentic”), pursuant to the Asset Purchase Agreement, entered into by and among V Opco, ABG
Vince, the Company and ABG Intermediate Holdings 2 LLC. Simultaneously with the Asset Sale, V Opco entered into a license agreement (as amended from time to time, the
“License Agreement”) with ABG Vince which provides us with a license to use the Licensed Property in the Territory (as defined in the License Agreement) in the Territory,
which is defined as the United States, Canada, Andorra, Austria, Germany, Switzerland, Belgium, Netherlands, Luxembourg, France, Monaco, Liechtenstein, Italy, San Marino,
Vatican City, Iceland, Norway, Denmark, Sweden, Finland, Spain, Portugal, Greece, Republic of Cyprus (excluding Northern Cyprus), United Kingdom, Ireland, Australia, New
Zealand, Mainland China, Hong Kong, Macau, Taiwan, Singapore, Japan and Korea (the “Core Territory”), together with all other territories (the “Option Territory,” together
with the Core Territory, the “Territory”), which Option Territory may be changed unilaterally by ABG Vince at any time after the effective date of the License Agreement.
Additionally, we may use in the Territory, the Licensed Property in the Territory to design, manufacture, promote, market, distribute, and sell ready-to-wear sportswear products
and outerwear products (the “Core Products”) and home décor and baby layettes (the “Option Products,” together with the Core Products, the “Licensed Products”), which Option
Products may be changed unilaterally by ABG Vince at any time after the effective date of the License Agreement. The License Agreement has an initial term of ten years with
eight options to renew for a ten-year period each.
Our revenues are generated solely from sales of products pursuant to the license granted under the License Agreement. We are required under the License Agreement,
among other things, to achieve specified minimum net sales, make specified royalty payments, spend specified advertising and promotion expenditures, and maintain a minimum
number of retail stores. If we do not satisfy any of the material requirements of the License Agreement, ABG Vince has the right to terminate the license or not renew the License
Agreement. The failure to maintain or renew the License Agreement will cause us to lose all our revenues and have a material adverse effect on our results of operations.
Our business is impacted by ABG Vince's expansion of the Vince brand into other categories and territories.
Under the License Agreement, ABG Vince may produce and sell Vince products other than the Licensed Products and operate the Vince brand in Option Territories into
which it may decide to enter in the future. ABG Vince may do so by granting additional licenses to other third parties. For example, in August 2023, ABG Vince granted to a
third party licensee a license to use the Licensed Property in the Territory to manufacture and distribute men’s tailored clothing and accessories across the US and Canada. We are
unable to control the business strategies of ABG Vince relating to the expansion of the Vince brand outside of the license granted to us under the License Agreement, including
how those strategies impact our own business strategies, the quality of products produced by other Vince brand licensees as well as how the overall Vince brand image may
evolve. If there is a change in the parameters of the Vince brand's design, pricing, distribution, target market or competitive set as a result of the brand's expansion into other
categories and territories, we may be unable to maintain our historical product design and marketing direction or appeal to the brand's customer base as originally intended and
our results of operations could be materially and adversely affected.
Our business is subject to ABG Vince's approval rights and other actions.
Under the License Agreement, ABG Vince has broad approval rights at its sole good faith discretion, including over, among other things, design direction of Licensed
Products and marketing strategies, as well as any addition of new customer accounts and new retail locations. In addition, ABG Vince may remove any customer account that was
pre-approved at the time of the closing of the Asset Sale if using its good faith, commercially reasonable judgment, it believes that such account is no longer consistent with the
brand positioning for the Licensed Property. If ABG Vince chooses to exercise any of these approval rights, we may be unable to operate our business as intended. Furthermore,
as part of the Asset Sale, our license agreements, including our e-commerce website domain name license, were sold to ABG Vince. ABG Vince will be required to maintain
such license agreements going forward, and its failure to do so could materially and adversely affect our business and operations. Lastly, V Opco's governance rights as a minority
equity holder of ABG Vince are limited and therefore, ABG Vince could choose to take corporate actions that would materially and negatively impact the results of operations of
ABG Vince, which could in turn adversely affect the amount of cash available for distribution to V Opco.
We may not be able to realize the benefits of our strategic initiatives.
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Our business growth depends on the successful execution of our strategic initiatives. However, the continued success of our strategic initiatives depends on a number of
factors, which historically included positioning our retail and e-commerce businesses for further strategic growth, particularly through enhancement of our customer data platform
to create improved segmentation and personalization for an enhanced customer experience, expanding our presence internationally including in Asia and Europe, growing men's
business, properly identifying appropriate future growth opportunities, and other macroeconomic impacts on our business. However, there can be no assurance that these strategic
initiatives will produce their intended positive results and, particularly in light of the financial impacts of recently implemented and new retaliatory and/or reciprocal tariffs, as
well as changing trade policies between the U.S. and its trading partners, some or all of our strategic initiatives may become operationally infeasible or impractical. If we are
unable to realize the benefits of the strategic initiatives, our financial conditions, results of operations and cash flows could be materially and adversely affected.
We are subject to risks associated with leasing retail and office space, which are historically subject to long-term non-cancellable leases and are required to make substantial
lease payments under our operating leases, and any failure to make these lease payments when due would likely harm our business, profitability and results of operations.
We do not own any of our stores or our offices, including our New York, Los Angeles or Paris offices and showroom spaces, but instead lease all of such space under
operating leases. Substantially all of our leases require a fixed annual rent, and most require the payment of additional rent if store sales exceed a negotiated amount. Most of our
leases are “net” leases, which require us to pay the cost of insurance, taxes, maintenance, and utilities. Some of our leases are subject to initial terms that are as long as 10 years,
and we generally cannot cancel these leases solely at our option. Additionally, certain of our leases allow the lessor to terminate the lease if we do not achieve a specified gross
sales threshold. There can be no assurance that we will be able to achieve these required thresholds and in the event we are not able to do so, we may be forced to find an
alternative store location and may not be successful in doing so. Any loss of our store locations due to underperformance may harm our results of operations, stock price and
reputation.
Payments under these leases account for a significant portion of our selling, general and administrative expenses. For example, as of February 1, 2025, we were a party to
61 operating leases associated with our retail stores and our office and showroom spaces requiring future minimum lease payments of $22,466 in the aggregate through fiscal
2025 and $109,209 thereafter. Any new retail stores leased by us under operating leases will further increase our operating lease expenses, and some of those stores may require
significant capital expenditures. We depend on cash flows from operations to pay our lease expenses and to fulfill our other cash needs. Particularly in light of the financial
impacts of recently implemented and new retaliatory and/or reciprocal tariffs, as well as changing trade policies between the U.S. and its trading partners, if our business does not
generate sufficient cash flow from operating activities, and sufficient funds are not otherwise available to us from borrowings under our credit facilities or from other sources, we
may not be able to service our operating lease expenses, grow our business, respond to competitive challenges or fund our other liquidity and capital needs, which would harm
our business. In addition, we may remain obligated under the applicable lease for, among other things, payment of the base rent for the remaining lease term, even after the space
is exited or otherwise closed (such as our temporary store closures resulting from the COVID-19 pandemic). Such costs and obligations related to the early or temporary closure
of our stores or termination of our leases could have a material adverse effect on our business, results of operations, and financial condition.
If an existing or future store is not profitable, and we decide to close it, we may nonetheless be committed to perform our obligations under the applicable lease including,
among others, paying the base rent for the balance of the lease term if we cannot negotiate a mutually acceptable termination payment. In fiscal 2025, 11 of our existing store
leases will expire, many for which we have already extended or secured an alternative location. As our leases expire, we may fail to negotiate renewals, either on commercially
acceptable terms or at all, or to find a suitable alternative location, which could cause us to close stores in desirable locations or in the case of office leases, incur costs in
relocating our office space.
We may be unable to open retail stores in select locations under favorable lease terms and operate and maintain our new and existing retail stores successfully, which could
materially and adversely affect our financial condition and results of operations.
We continue to seek retail opportunities in targeted streets or malls with desirable size and adjacencies, typically near luxury retailers that we believe are consistent with
our key customers' demographics and shopping preferences, and seek to negotiate favorable leases. The success of this strategy depends on a number of factors, including the
identification of suitable markets and sites, negotiation of acceptable lease terms while securing those favorable locations, including desired term, rent and tenant improvement
allowances, and if entering a new market, the timely achievement of brand awareness and proper evaluation of the market, affinity and purchase intent in that market, as well as
our business condition in funding the opening and operations of stores. In addition, under the License Agreement, we are required to maintain a minimum number of retail
locations as well as obtain prior approval from ABG Vince with respect to new retail locations which may be provided at its sole good faith discretion. We may be unable to open
new retail locations as intended if ABG Vince chooses to withhold such approval. Furthermore, we may not be able to maintain the successful operation of our retail stores if the
areas around our existing retail locations undergo changes that result in reductions in customer foot traffic or otherwise render the locations unsuitable, such as economic
downturns in the area (particularly in light of the financial impacts of recently implemented and new retaliatory and/or reciprocal tariffs, as well as changing trade policies
between the U.S. and its trading partners), changes in demographics and customer preferences, and the closing or decline in popularity of adjacent stores.
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As of February 1, 2025, we operated 57 stores, including 42 company-operated Vince full-price stores and 14 company-operated Vince outlet stores throughout the
United States and one company-operated Vince full price store in the United Kingdom.
Our limited operating experience and brand recognition in international markets may delay our expansion strategy and cause our business and growth to suffer.
We face risks with respect to our strategy to expand internationally, including our efforts to further expand our business in Asia and Europe through company-operated
locations, wholesale arrangements as well as with international partners. Our current operations are based largely in the U.S., with international wholesale sales representing
approximately 7% of net sales for fiscal 2024. Therefore, we have a limited number of customers and experience in operating outside of the U.S. We also do not have extensive
experience with regulatory environments and market practices outside of the U.S. and cannot guarantee that we will be able to penetrate or successfully operate in any market
outside of the U.S. Many of these markets also have different operational characteristics, including employment and labor regulations, transportation, logistics, real estate
(including lease terms) and local reporting or legal requirements, and the impact on the international markets remains unclear. In addition, changes in regulatory, geopolitical,
social or economic policies, particularly in light of the financial impacts of recently implemented and new retaliatory and/or reciprocal tariffs, as well as changing trade policies
between the U.S. and its trading partners, may present further barriers to expanding in international markets, including China and other neighboring countries in Asia.
Furthermore, pursuant to the License Agreement, our exclusive license to operate the Vince brand may be limited by the terms of the License Agreement. Some of the regions in
which we currently operate are designated as Option Territories, including the Middle East and Latin America. If Authentic chooses to operate in these Option Territories, we
become unable to directly operate in those areas.
We have identified a material weakness in our internal control over financial reporting that could, if not remediated, result in material misstatements in our financial
statements.
A material weakness continued to exist relating to our internal control over financial reporting which was previously identified in fiscal 2016. A material weakness is a
deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of an entity's
financial statements will not be prevented or detected on a timely basis. The material weakness will not be remediated until all necessary internal controls have been implemented,
tested and determined to be operating effectively. In addition, we may need to take additional measures to address such material weakness or modify the planned remediation
steps, and we cannot be certain that the measures we have taken, and expect to take, to improve our internal controls will be sufficient to address the issues identified, to ensure
that our internal controls are effective or to ensure that the identified material weakness will not result in a material misstatement of our consolidated financial statements.
Moreover, other material weaknesses or deficiencies may develop or be identified in the future. If we are unable to correct material weaknesses or deficiencies in internal controls
in a timely manner, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC,
will be adversely affected. This failure could negatively affect the market price and trading liquidity of our common stock, cause investors to lose confidence in our reported
financial information, subject us to civil and criminal investigations and penalties, and otherwise materially and adversely impact our business and financial condition.
For so long as we remain a “non-accelerated filer” under the rules of the Securities and Exchange Commission, our independent registered public accounting firm is not
required to deliver an annual attestation report on the effectiveness of our internal control over financial reporting. We will cease to be a non-accelerated filer if either (i) the
aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter (our “public
float”) is $75,000 or more and our annual revenues for the most recently completed fiscal year are $100,000 or more or (ii) our public float is $700,000 or more, in which case we
would become subject to the requirement for an annual attestation report by our independent registered public accounting firm on the effectiveness of our internal control over
financial reporting.
Failure to comply with laws and regulations could adversely impact our business.
We are subject to numerous domestic and international laws, regulations and advisories, including labor and employment, environmental, wage and hour, customs and
tariffs, truth- in-advertising, consumer protection, data and privacy protection, and zoning and occupancy laws and ordinances that regulate retailers generally or govern the
importation, promotion and sale of merchandise and the operation of stores and warehouse facilities, all of which may change from time to time. If these regulations were violated
by our management, employees, vendors, independent manufacturers or partners, the costs of certain goods could increase, or we could experience delays in shipments of our
products, be subject to fines or penalties, or suffer reputational harm, which could reduce demand for our merchandise and hurt our business and results of operations. In addition,
we are subject to laws and regulations related to us being a public company, including the rules and regulations of the SEC and the New York Stock Exchange ("NYSE"). Any
violation of or not meeting compliance standards under such laws and regulations could impact our status as a public company, including our ability to continue being listed on
the NYSE. Moreover, changes in product safety or other consumer protection laws could lead to increased costs to us for certain merchandise, or additional labor costs associated
with readying merchandise for sale. It is often difficult for us to
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plan and prepare for potential changes to applicable laws and future actions or payments related to such changes could be material to us.
Increased scrutiny from investors, regulators and others regarding our approach to sustainability matters and environmental, social and governance (“ESG”) practices could
result in additional costs or risks that adversely impact our business operations, including our reputation and our financial results.
Increasingly, regulators, customers, investors, employees and other stakeholders are focusing on sustainability matters and ESG practices and related disclosures. The
emergence of new and more stringent legislation, regulation and oversight related to sustainability and ESG practices (such as the marketing of goods and business practices, and
corresponding mandatory and voluntary public reporting and disclosures related to such practices, including the SEC’s recent climate-related reporting requirements) are likely to
result in increased costs and expenses and increased management time and attention spent monitoring, complying with or meeting sustainability and ESG-related requirements
and expectations, which could impact our business operations, including our financial results. For example, developing and acting on sustainability and ESG-related initiatives,
including design, sourcing and operations decisions, and collecting, measuring and reporting related data and metrics can be costly, difficult and time-consuming. Furthermore,
the Company’s approach to sustainability matters and ESG practices may be based on assumptions and standards for measuring progress that are still evolving, internal controls
and processes that are developing, and reporting standards that may be subject to change in the future. Failure or perceived failure to adapt to or sufficiently comply with
evolving or expanding regulatory requirements or stakeholder expectations and standards could further increase costs and expenses, including through potential regulatory
enforcement and consumer actions, and could negatively impact the Company’s reputation, consumer patronage and, in turn, our results of operations.
Intense competition in the apparel and fashion industry could reduce our sales and profitability.
As a fashion company, we face intense competition from other domestic and foreign apparel, footwear and accessories manufacturers and retailers. Competition has and
may continue to result in pricing pressures, reduced profit margins, lost market share or failure to grow our market share, any of which could substantially harm our business and
results of operations. Some of our competitors have more established relationships with a broader set of suppliers, greater brand recognition and greater financial, research and
development, marketing, distribution and other resources than we do. These capabilities of our competitors may allow one or more of them to better withstand downturns in the
economy or apparel and fashion industry. Any increased competition, or our failure to adequately address any of these competitive factors which we have seen from time to time,
could result in reduced sales, which could adversely affect our business, financial condition, and operating results.
Competition, along with such other factors as consolidation within the retail industry and changes in consumer spending patterns, could also result in significant pricing
pressure and cause the sales environment to be more promotional, as it has been in recent years, impacting our financial results. For instance, we operated through a highly
promotional sales environment during fiscal 2022 which had a negative impact on our operating results. If promotional pressure remains intense, either through actions of our
competitors or through customer expectations, this may cause a further reduction in our sales and gross margins and could have a material adverse effect on our business,
financial condition and operating results.
We may not successfully manage the transition associated with the appointment of a new Chief Executive Officer and Chief Financial Officer, which could have an adverse
impact on us.
On February 5, 2025, we announced that, in connection with the P180 Acquisition, we appointed Brendan Hoffman as our Chief Executive Officer, effective as of
February 6, 2025. David Stefko resigned from the position of Interim Chief Executive Officer, effective February 6, 2025, and remains a member of the Board. Additionally, on
March 28, 2025, John Szczepanski resigned from his position as Chief Financial Officer of the Company. In connection with Mr. Szczepanski’s resignation, effective April 14,
2025, the board appointed Yuji Okumura, the Company’s Interim Chief Financial Officer since March 2025 and Vice President, Controller since September 2020, as Chief
Financial Officer. The effectiveness of our new Chief Executive Officer and Chief Financial Officer and our senior leadership team generally, following the foregoing transitions,
could have a significant impact on our ability to operate the business effectively. The failure to ensure a smooth transition, including required knowledge transfers, could
negatively affect our results of operations and financial condition as well as our ability to execute our business strategies.
If we lose any key personnel, are unable to attract key personnel, or assimilate and retain our key personnel, we may not be able to successfully operate or grow our business.
Our continued success is dependent on our ability to attract, assimilate, retain, and motivate qualified management, designers, administrative talent, and sales associates to
support existing operations and future growth. Competition for qualified talent in the apparel and fashion industry is intense, and we compete for these individuals with other
companies that in many cases have greater financial and other resources. The loss of the services of any members of senior management or board of directors or the inability to
attract and retain qualified executives or members of our board of directors could have a material adverse effect on our business, results of operations and financial condition. In
addition, we will need to continue to attract, assimilate, retain, and motivate highly talented
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employees with a range of other skills and experience. Competition for employees in our industry, especially at the store management levels, is intense and we may from time to
time experience difficulty in retaining our associates or attracting the additional talent necessary to support the growth of our business. We will also need to attract, assimilate, and
retain other professionals across a range of disciplines, including design, production, sourcing, and international business, as we develop new product categories and continue to
expand our international presence.
Our operating results may be subject to seasonal and quarterly variations in our net revenue and income from operations.
The apparel and fashion industry in which we operate is cyclical and, consequently, our revenues are affected by general economic conditions and the seasonal trends
characteristic to the apparel and fashion industry. Purchases of apparel are sensitive to a number of factors that influence the level of consumer spending, including economic
conditions and the level of disposable consumer income, consumer debt, interest rates, consumer confidence as well as the impact from adverse weather conditions. In addition,
fluctuations in the amount of sales in any fiscal quarter are affected by the timing of seasonal wholesale shipments and other events affecting direct-to-consumer sales; as such,
the financial results for any particular quarter may not be indicative of results for the fiscal year. Any future seasonal or quarterly fluctuations in our results of operations may not
match the expectations of market analysts and investors to assess the longer- term profitability and strength of our business at any particular point, which could lead to increased
volatility in our stock price.
Our competitive position could suffer if the intellectual property rights relating to the Vince brand are not protected.
As a result of the Asset Sale, the intellectual property rights relating to the Vince brand will be protected and enforced by Authentic and we have no control over their
actions to do so. If Authentic does not protect the intellectual property rights of the Vince brand, we may become unable to operate our business as intended, which could harm
our business and cause our results of operations, liquidity, and financial condition to suffer.
We may be unable to successfully conclude remaining matters following the wind down of the Rebecca Taylor business.
On September 12, 2022, the Company announced its decision to wind down the Rebecca Taylor business. On December 22, 2022, the Company's indirectly wholly
owned subsidiary, Rebecca Taylor, Inc., completed the sale of its intellectual property and certain related ancillary assets to RT IPCO, LLC, an affiliate of Ramani Group.
Substantially all Rebecca Taylor inventory was liquidated as of January 28, 2023. All Rebecca Taylor retail and outlet stores operated by the Company were closed as of January
28, 2023 and the e-commerce site operated by the Company ceased in December 2022. On July 7, 2023, Rebecca Taylor, Inc. and Rebecca Taylor Retail Stores, LLC, each as an
assignor, made a General Assignment for the Benefit of the Creditors (the “Assignment”) to a respective assignee, an unaffiliated California limited liability company, pursuant to
California state law. The Assignment resulted in the residual rights and assets of each of Rebecca Taylor, Inc. and Rebecca Taylor Retail Stores, LLC being assigned and
transferred to such assignees. The wind down of the Rebecca Taylor business was completed on May 3, 2024 with the nominal sale of all outstanding shares of Rebecca Taylor,
Inc. to Nova Acquisitions, LLC. Following completion of the wind down, there remains certain risks and uncertainties surrounding the actions of vendors and other
counterparties, including legal risks associated with the wind down. As a result, the overall cost of the wind down may exceed our expectations and the Vince business may be
adversely impacted.
Risks Related to Our Supply Chain
The extent of our foreign sourcing may adversely affect our business.
In fiscal 2024 we worked with more than 30 manufacturers across 12 countries, with 66% of our costs related to products produced in China throughout fiscal 2024. A
manufacturing contractor's failure to ship products to us in a timely or cost-effective manner or to meet the required quality standards could cause us to miss the delivery date
requirements of our customers for those items. The failure to make timely deliveries may cause customers to cancel orders, refuse to accept deliveries or demand reduced prices,
any of which could have a material adverse effect on us. As a result of the magnitude of our foreign sourcing, our business is subject to the following additional risks:
•
imposition of duties, taxes, tariffs and other charges on imports, and regulations, quotas, bans and other trade restrictions relating to imports (particularly in
light of the financial impacts of recently implemented and new retaliatory and/or reciprocal tariffs, as well as changing trade policies between the U.S. and its
trading partners), as further discussed below;
•
imposition of regulations, quotas and other trade restrictions relating to imports, including quotas imposed by bilateral textile agreements between the U.S.
and foreign countries;
•
currency exchange rates, including decreases in the value of the U.S. dollar relative to foreign currencies, which could increase the cost of products we
purchase from foreign suppliers;
17
•
political and economic instability in countries or regions, especially Asia and in connection with armed conflict (such as conflicts between Ukraine and Russia
and in the Middle East), including heightened terrorism, diplomatic and other security concerns, which could subject imported or exported goods to additional
or more frequent inspections, leading to delays in deliveries or impoundment of goods;
•
increases in the costs of fuel, travel and transportation, both related and unrelated to the armed conflict between Ukraine and Russia and in the Middle East,
and demand for freight services at a time of reduced ocean freight capacity;
•
disease epidemics and health-related concerns, which could result in travel restrictions, closed factories, reduced workforces and higher labor costs, scarcity of
and increased prices for raw materials and scrutiny or embargoing of goods produced in infected areas;
•
labor union strikes at ports through which our products enter the U.S.;
•
labor shortages in countries where contractors and suppliers are located;
•
restrictions on the transfer of funds to or from foreign countries;
•
the migration and development of manufacturing contractors, which could affect where our products are or are planned to be produced;
•
reduced manufacturing flexibility because of geographic distance between our foreign manufacturers and us, increasing the risk that we may have to mark
down unsold inventory as a result of misjudging the market for a foreign-made product; and
•
violations by foreign contractors of labor and wage standards and resulting adverse publicity.
If these risks limit or prevent us from manufacturing products in any significant international market, prevent us from acquiring products from foreign suppliers, or
continue to significantly increase the cost of our products, our operations could be seriously disrupted until alternative suppliers are found or alternative markets are developed,
which could negatively and significantly impact our business.
Furthermore, to date, the current U.S. Administration has imposed, and continues to propose to impose, additional tariffs on all U.S. imports, which significantly
raises the per-unit cost of our products. While we have implemented certain strategies to mitigate such impact, including further diversification of our sourcing base to mitigate
some negative macroenvironmental impact of a particular region such as China, executing such diversification is and will be time consuming, may be difficult or impracticable
for many products, may result in further increases in our per-unit costs and/or may negatively impact the quality of our products. Any increase in the prices of our products
and/or decline in the quality of our products could in turn negatively impact the demand for our products and negatively impact our business and results of operations. See “—
Changes to and unpredictability in the trade policies and tariffs imposed by the U.S. government and the governments of other nations could materially affect our financial
condition and results of operations.”
Our reliance on independent manufacturers could cause delays or quality issues which could damage customer relationships.
We use independent manufacturers to assemble or produce all of our products, whether inside or outside the U.S. We are dependent on the ability of these independent
manufacturers to adequately finance the production of goods ordered, maintain sufficient manufacturing capacity, and otherwise provide products that are consistent with our
quality and ethical standards. We receive from time to time shipments of product that fail to conform to our quality control standards or products that are damaged during
shipment as they were not properly packed. Failures such as these in our quality control program may result in diminished product quality, which in turn may result in increased
order cancellations and returns, decreased consumer demand for our products, or product recalls, any of which may have a material adverse effect on our results of operations and
financial condition. In addition, products that fail to meet our standards, or other unauthorized products, could end up in the marketplace without our knowledge. This could
materially harm our brand and our reputation in the marketplace.
We generally do not have long-term written agreements with any independent manufacturers. As a result, any single manufacturing contractor could unilaterally terminate
its relationship with us at any time or attempt to change historical terms of engagement, such as demanding accelerated payment terms, all and any of such actions by a
manufacturing contractor could disrupt our supply chain strategies and our operations. Our top five manufacturers accounted for the production of approximately 59% of our
finished products during fiscal 2024. Supply disruptions from these manufacturers (or any of our other manufacturers) could have a material adverse effect on our ability to meet
customer demands if we are unable to source suitable replacement materials at acceptable prices or at all. Moreover, alternative manufacturers, if available, may not be able to
provide us with products or services of a comparable quality, at an acceptable price or on a timely basis.
Furthermore, as we pursue further diversification of our sourcing base, particularly in light of the financial impacts of recently implemented and new retaliatory and/or
reciprocal tariffs, as well as changing trade policies between the U.S. and its trading partners, we may replace one or more of our vendors and also enter into relationships with
new manufacturers. Identifying suitable suppliers is an involved process that requires us to become satisfied with their quality control, responsiveness and service, financial
stability and
18
labor and other responsible and/or ethical business practices. There can be no assurance that there will not be a disruption in the supply of our products from independent
manufacturers or that any new manufacturers will be successful in producing our products in a manner we expected, and as a result, our business and financial results could be
negatively affected.
Problems with our distribution process could materially harm our ability to meet customer expectations, manage inventory, complete sale transactions, and achieve targeted
operating efficiencies.
In the U.S., we rely on a distribution facility operated by a third-party logistics provider in California. Our ability to meet the needs of our wholesale partners and our own
direct-to-consumer business depends on the proper operation of this distribution facility. Because substantially all of our products are distributed from one state, our operations
could be interrupted by labor difficulties, by floods, fires, earthquakes or other natural disasters and health crises and pandemics, at or near such facility, or by the indirect effects
of macroeconomic events, such as recently implemented, new and retaliatory and/or reciprocal tariffs. For example, a majority of our ocean shipments go through the ports in
California, which are subject to significant processing delays, particularly in light of the financial impacts of recently implemented and new retaliatory and/or reciprocal tariffs, as
well as changing trade policies between the U.S. and its trading partners, which in turn results not only in shipment disruptions but also in significantly increased freight costs. We
also have warehouses overseas, including in Hong Kong and Belgium, operated by third-party logistics providers, supporting our wholesale orders for customers located
primarily in the nearby regions. Disruptions at any of these facilities located outside the U.S. (including disruptions related to tariff risks and the armed conflict between Ukraine
and Russia and in the Middle East) could also materially and negatively impact our business.
We maintain business interruption insurance. These policies, however, may not adequately protect us from the adverse effects that could result from significant
disruptions to our distribution system. If we encounter problems with any of our distribution processes, our ability to meet customer expectations, manage inventory, complete
sales, and achieve targeted operating efficiencies could be harmed. Any of the foregoing factors could have a material adverse effect on our business, financial condition, and
operating results.
Fluctuations in the price, availability and quality of raw materials could cause delays and increase costs and cause our operating results and financial condition to suffer.
Fluctuations in the price, availability and quality of the fabrics or other raw materials, particularly cotton, silk, leather and synthetics used in our manufactured apparel,
could have a material adverse effect on cost of sales or our ability to meet customer demands. The prices of fabrics depend largely on the market prices of the raw materials used
to produce them. The price and availability of the raw materials and, in turn, the fabrics used in our apparel may fluctuate significantly, depending on many factors, including
crop yields, weather patterns, labor costs and changes in oil prices as well as other economic factors, particularly in light of the financial impacts of recently implemented and
new retaliatory and/or reciprocal tariffs, as well as changing trade policies between the U.S. and its trading partners, and the armed conflict between Ukraine and Russia and in the
Middle East. We may not be able to create suitable design solutions that utilize raw materials with attractive prices or, alternatively, to pass higher raw materials prices and
related transportation costs on to our customers. We are not always successful in our efforts to protect our business from the volatility of the market price of raw materials, and
our business can be materially affected by dramatic movements in prices of raw materials. The ultimate effect of this change on our earnings cannot be quantified, as the effect of
movements in raw materials prices on industry selling prices are uncertain, but any significant increase in these prices could have a material adverse effect on our business,
financial condition and operating results.
If our independent manufacturers fail to use ethical business practices and comply with applicable laws and regulations, our business could be harmed due to negative
publicity.
We have established operating guidelines which promote responsible and ethical business practices such as fair wage practices, compliance with child labor laws and
other local laws. While we monitor compliance with those guidelines, we do not control our independent manufacturers or their business practices. Accordingly, we cannot
guarantee their compliance with our guidelines. From time to time, our audit results have revealed a lack of compliance in certain respects, including with respect to local labor,
safety, and environmental laws. Other fashion companies have faced criticism after highly publicized incidents or compliance issues have occurred or been exposed at factories
producing their products. To the extent our manufacturers do not bring their operations into compliance with such laws or resolve material issues identified in any of our audit
results, we may face similar criticism and negative publicity. In addition, other fashion companies have encountered organized boycotts of their products in such situations. If we,
or other companies in our industry, encounter similar problems in the future, it could harm our business, stock price and results of operations. In addition, a lack of demonstrated
compliance by our suppliers, and especially by any new suppliers with whom we may have little or no experience, could lead or require us to seek alternative suppliers, which
could increase our costs and result in delayed delivery of our products, product shortages or other disruptions of our operations. Furthermore, expectations of ethical business
practices continually evolve, may be substantially more demanding than applicable legal requirements and are driven in part by legal developments and by diverse groups active
in publicizing and organizing public responses to perceived ethical shortcomings. Accordingly, we cannot predict how
19
expectations of ethical business practices might develop in the future and cannot be certain that our guidelines would satisfy all parties who are active in monitoring and
publicizing perceived shortcomings in labor and other business practices worldwide.
Risks Related to Our Information Technology and Security
System or data security issues, such as cyber or malware attacks, as well as other major system failures could disrupt our internal operations or information technology
services, and any such disruption could negatively impact our net sales, increase our expenses and harm our reputation.
From time to time, we are subject to system or data security problems, including viruses and bugs as well as security issues created by third-party software and
applications, employee errors and malfeasance and other various causes. None of these incidents has resulted in any data or information breaches or any other material impact to
our financial results. There is no assurance, however, that we would not be subject to material security problems in the future, including cyber or malware attacks, including as an
indirect result of our ability to direct sufficient human and capital resources towards systems and data security, malicious actors using artificial intelligence to carry out more
sophisticated attacks and increasing the potential for harm, changes to domestic and international regulations or other policies or the armed conflicts between Ukraine and Russia
and in the Middle East, and we could incur significant expenses or disruptions of our operations in connection with resulting system failures or data and information breaches.
The increased use of smartphones, tablets, and other wireless devices, as well as the hybrid and remote work environments, and advancements in and increasing business
integration of artificial intelligence may also heighten these and other operational risks. The costs to us to eliminate or alleviate security problems, viruses and bugs could be
significant, and the efforts to address these problems could result in interruptions, delays or cessation of service that may impact our reputation and/or impede our sales,
distribution or other critical functions. Furthermore, any security issues that involve the compromise of personal information of our customers or employees could subject us to
litigation and/or penalties and harm our reputation, materially and adversely affecting our business and growth. We also do not control our third-party service providers and
cannot guarantee that no electronic or physical computer break-ins and security breaches will occur in the future, nor can we guarantee that any loss we experience can be
recovered from such third-party service providers. Lastly, in the case of a disaster affecting our information technology systems, we may experience delays in recovery of data,
inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support our operations and other breakdowns in normal
communication and operating procedures that could materially and adversely affect our financial condition and results of operations.
We are continuing to adopt, optimize and improve our information technology systems, processes, and functions. If these systems, processes, and functions do not operate
successfully, our business, financial condition, results of operations and cash flows could be materially harmed.
We continue to optimize and improve our information technology environment. For example, in fiscal 2022, we completed the implementation of a customer data
platform and the front-end re-platforming of our Vince e-commerce website and in fiscal 2023 and 2024, we improved our cybersecurity environment through the implementation
of true end-point protection and improved network infrastructure. We plan to progress these strategies, including investing in customer facing technologies to further expand our
omni-channel capabilities and to further consolidate systems over time to create operational efficiencies and to achieve a common platform across the Company. If we fail in our
efforts to continue adopting, optimizing and improving these systems, processes and functions as currently planned or fail to effectively utilize technological advancements in
areas such as artificial intelligence and data analytics, we could incur further disruptions to our business and operations, including lost e-commerce sales, a negative mobile
experience for our customers, deficiencies or weaknesses in our internal controls, as well as additional costs to replace those systems and functions.
Failure to comply with privacy‑related obligations, including privacy laws and regulations in the U.S. and internationally as well as other legal obligations, could materially
adversely affect our business.
A variety of laws and regulations, in the U.S. and internationally, govern the collection, use, retention, sharing, transfer and security of personally identifiable information
and data, including the European Union's General Data Protection Regulation (“GDPR”), which became effective during fiscal 2018, the California Consumer Privacy Act of
2018 (“CCPA”), which became effective on January 1, 2020 and the California Privacy Rights Act of 2020 (“CPRA”), which became effective January 1, 2023. Since the
enactment of the CCPA and CPRA, data security laws have been proposed in more than half of the U.S. states and in the U.S. Congress, reflecting a trend toward more stringent
privacy legislation in the U.S. Additionally, the Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws as
imposing standards for the online collection, use, dissemination, and security of data. It is possible that these laws, rules and regulations, which evolve frequently and may be
inconsistent from one jurisdiction to another, could be interpreted to conflict with our practices. In addition to the costs of compliance with and other burdens imposed by privacy
and data security laws and regulations, any failure or perceived failure by us or any third parties with whom we do business to comply with these laws, rules and regulations, or
with other obligations to which we may be or become subject, may result in actions against us by governmental entities, private claims and litigation, fines, penalties or
20
other liabilities. Any such action would be expensive to defend, could damage our reputation and could adversely affect our business and operating results.
Risks Related to Our Structure and Ownership
We may not be able to maintain a listing of our common stock on the NYSE.
Our common stock is currently listed on the NYSE, and we must meet certain financial and liquidity criteria to maintain our listing on NYSE. If we violate the continued listing
requirements set forth in the NYSE Listed Company Manual, which includes the requirement to maintain a 30-trading day average market capitalization of at least $50,000 or
$50,000 of stockholders’ equity, our common stock may be delisted. No assurance can be given that the Company will be able to maintain compliance with the NYSE’s
continued listing requirements. If the Company's common stock ultimately were to be suspended from trading and delisted for any reason, it could have adverse consequences
including, among others, reduced trading liquidity for our common stock, lower demand and market price for our common stock, adverse publicity and a reduced interest in the
Company from investors, analysts and other market participants. In addition, a suspension or delisting could impair the Company’s ability to raise additional capital through the
public markets and the Company’s ability to attract and retain employees by means of equity compensation.
We are a “controlled company,” controlled by investment funds advised by affiliates of P180, whose interests in our business may be different from yours.
On January 22, 2025, P180 acquired a majority stake of our outstanding common stock from affiliates of Sun Capital Partners, Inc. and as of April 21, 2025, P180 owned
approximately 56% of our outstanding common stock. Additionally, Brendan Hoffman, our Chief Executive Officer, also serves as chairman of the board of directors of P180,
Inc., which directly and wholly owns P180. P180 could control matters requiring stockholder approval, including the election of directors, amendments to our amended and
restated certificate of incorporation, and approval of significant corporate actions that require the vote of stockholders, and P180, as well as Mr. Hoffman, have significant
influence over our management and policies. While we believe we have taken steps to align the interests of P180 as well as Mr. Hoffman with the interests of the Company and/or
our other stockholders, it is possible that, in certain circumstances as P180 makes operational decisions for itself, including litigation activities and tax determinations, its interests
may conflict with our interests and the interests of our other stockholders, including you.
We are a “smaller reporting company” and intend to avail ourselves of reduced disclosure requirements applicable to smaller reporting companies, which could make our
common stock less attractive to investors.
We are a “smaller reporting company,” as defined in the Exchange Act, and we intend to take advantage of certain exemptions from various reporting requirements that
are applicable to other public companies that are not “smaller reporting companies,” including reduced disclosure obligations regarding executive compensation in our periodic
reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our
common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We intend to take advantage of
these reporting exemptions until we are no longer a “smaller reporting company.” We will remain a “smaller reporting company” until the aggregate market value of our
outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $250,000 or more and annual revenue as of
our most recently completed fiscal year is $100,000 or more, or the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of
our most recently completed second fiscal quarter is $700,000 or more, regardless of annual revenue.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 1C. CYBERSECURITY.
Cybersecurity Risk Management and Strategy
The Company is committed to, and recognizes the importance of, information security, cyber readiness, and data privacy protections to our business and reputation,
which includes assessing, identifying, and managing material risks associated with cybersecurity threats. Our cybersecurity program uses processes, technologies, and controls to
assist in our efforts to assess, identify, and manage material cybersecurity-related risks.
21
The Company employs a number of tools and services, such as network monitoring and vulnerability assessments to inform our risk identification and assessment
processes. We also maintain an incident response plan that outlines processes designed to triage, assess the severity of, escalate, contain, investigate, and remediate cybersecurity
incidents while also complying with relevant legal obligations. Our employees receive cybersecurity awareness and sensitive information protection training on a regular basis,
which we also periodically test for effectiveness through simulations, which may include simulated phishing emails and tabletop exercises. Additionally, the Company regularly
makes assessments related to the potential impact of a security incident at a third-party vendor, service provider or customer or otherwise implicating the third-party technology
and systems the Company uses. We also maintain cybersecurity risk insurance.
Our information security team serves as a first line of defense, including managing cyber risk strategy execution and owning the day-to-day management of these risks.
Our enterprise risk management function, which includes members of our executive leadership team, serves as a second line of defense, bringing holistic risk oversight while
serving as a partner to the business to help strategically manage risk. In particular, cybersecurity risks are monitored by a team composed of members of our executive team, who
in turn provides updates to the Audit Committee of our Board of Directors, who is responsible for assisting the Board of Directors with oversight over cybersecurity risks.
Through the processes described above, we did not identify risks from current or past cybersecurity incidents that have materially affected or are reasonably likely to
materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or
provide assurances that we have not experienced undetected cybersecurity incidents. See Part I, Item IA. Risk Factors – “Risks Related to Our Information Technology and
Security”.
Cybersecurity Governance
Our Board of Directors and Audit Committee are actively engaged in the oversight of our information security program, including the Company’s technology and
information security policies and practices, the internal controls relating to information security, and the steps taken by management to identify, monitor, and control any risk
exposures. Our management has general responsibility for day-to-day implementation of our information technology, cybersecurity, and privacy strategies and policies, including
deployment and use of security tools, applications, and employee training. Role or project specific employee training, as well as other training, may also occur, as needed. Our
cybersecurity risk management and strategy processes, which are discussed in greater detail above, are led by our Chief Information Officer (“CIO”), who is assisted by other
members of our senior management team. The team engaged in the cybersecurity risk management process, including the CIO, has risk management backgrounds, certifications,
and/or cyber experience in prior professional roles and at the Company. The team also maintains expertise on cyber risk management through third party consultants, external
training, and affiliations with relevant organizations.
Given the importance of information security to our customers, employees, suppliers and other partners, our Board and/or the Audit Committee receives reports as needed
from our CIO on cybersecurity-related matters, including the status of projects to strengthen our security systems and to improve our cyber threat readiness, as well as on the
existing and emerging cyber threat landscape and our program for managing these security risks.
ITEM 2. PROPERTIES.
The following table sets forth the location, use and size of our significant corporate facilities and showrooms as of February 1, 2025, all of which are leased under various
agreements expiring at various times through fiscal 2035, subject to renewal options.
Location
Use
Approximate Square
Footage
New York, NY
Corporate Office
49,492
Los Angeles, CA
Vince Design Studio
28,541
Paris, France
Vince Showroom
4,209
As of February 1, 2025, we leased 139,908 gross square feet related to our 57 company-operated Vince retail stores. Although certain recent leases are subject to shorter
terms as a result of the implementation of our strategy to pursue shorter lease terms when evaluating certain markets, some of our leases have initial terms of 10 years, and in
some instances, can be extended for an additional term. Substantially all of our leases require a fixed annual rent, and most require the payment of additional rent if store sales
exceed a negotiated amount. Most of our leases are "net" leases, which require us to pay all of the cost of insurance, taxes, maintenance, and utilities. Although we generally
cannot cancel these leases at our option, certain of our leases allow us, and in some cases, the lessor, to terminate the lease if we do not achieve a specified gross sales threshold.
The following store list shows the location, opening date, type, and size of our company-operated retail locations as of February 1, 2025:
22
Vince Locations
State
Opening Date
Type
Gross Square Feet
Selling Square Feet
Washington St. (New York)
NY
February 3, 2009
Street
1,850
1,150
Prince St. (Nolita - New York)
NY
July 25, 2009
Street
2,002
1,356
Geary Street (San Francisco)
CA
October 15, 2009
Street
1,895
1,408
East Oak Street (Chicago)
IL
October 1, 2010
Street
2,590
1,371
Madison Ave. (New York)
NY
August 3, 2012
Street
5,002
2,200
Westport (Westport)
CT
March 28, 2013
Street
1,801
1,344
Greenwich (Greenwich)
CT
July 19, 2013
Street
2,463
1,724
Mercer St. (Soho - New York)
NY
August 22, 2013
Street
4,500
3,080
Columbus Ave. (Upper West Side - New York)
NY
December 18, 2013
Street
4,465
3,126
Newbury St. (Boston)
MA
May 24, 2014
Street
4,124
3,100
Walnut St. (Philadelphia)
PA
August 4, 2014
Street
3,250
2,000
Abbot Kinney (Los Angeles)
CA
September 26, 2015
Street
1,990
1,815
Melrose (West Hollywood)
CA
October 15, 2017
Street
1,932
1,554
Draycott (London, United Kingdom)
September 18, 2019
Street
1,582
1,087
Fifth Ave. (New York)
NY
September 20, 2019
Street
2,820
1,948
East Hampton (East Hampton)
NY
February 6, 2021
Street
1,830
1,290
Knox Street (Dallas)
TX
September 17, 2021
Street
1,802
1,280
Total Street (17)
45,898
30,833
Malibu County Mart (Malibu)
CA
August 9, 2009
Lifestyle Center
1,298
1,070
Town Center at Boca Raton (Boca Raton)
FL
October 13, 2009
Mall
1,206
1,013
Phipps Plaza (Atlanta)
GA
April 16, 2010
Mall
1,643
1,356
Stanford Shopping Center (Palo Alto)
CA
September 17, 2010
Lifestyle Center
2,028
1,391
Fashion Island (Newport Beach)
CA
May 20, 2011
Lifestyle Center
2,317
1,642
Chestnut Hill (Chestnut Hill)
MA
July 25, 2014
Lifestyle Center
2,357
1,886
Merrick Park (Coral Gables)
FL
April 30, 2015
Lifestyle Center
2,022
1,482
DC City Center (Washington)
DC
April 30, 2015
Lifestyle Center
3,202
2,562
Scottsdale Quarter (Scottsdale)
AZ
May 15, 2015
Lifestyle Center
2,753
2,200
River Oaks (Houston)
TX
October 1, 2015
Lifestyle Center
2,154
1,626
Tyson's Galleria (McLean)
VA
April 29, 2016
Mall
2,668
1,705
The Grove (Los Angeles)
CA
May 23, 2016
Lifestyle Center
2,717
2,174
Somerset Collection (Troy)
MI
May 27, 2016
Mall
2,000
1,533
King of Prussia (King of Prussia)
PA
August 18, 2016
Mall
3,107
2,202
Fashion Valley (San Diego)
CA
August 25, 2016
Lifestyle Center
1,644
1,300
Hawaii (Honolulu)
HI
May 25, 2017
Mall
1,828
1,371
El Paseo Village (Palm Desert)
CA
April 26, 2018
Lifestyle Center
2,615
2,002
Waterside Shops (Naples)
FL
May 24, 2018
Mall
1,723
1,315
The Gardens Mall (Palm Beach Gardens)
FL
October 19, 2018
Mall
2,360
2,025
Aventura Mall (Aventura)
FL
April 5, 2019
Mall
1,873
1,280
Santana Row (San Jose)
CA
August 8, 2019
Lifestyle Center
2,295
1,517
The Shops at Riverside (Hackensack)
NJ
February 27, 2020
Mall
2,843
2,296
Southpark (Charlotte)
NC
May 21, 2021
Mall
2,588
1,875
Roosevelt Field (Garden City)
NY
August 6, 2021
Mall
2,987
1,921
Cherry Creek (Denver)
CO
August 20, 2021
Lifestyle Center
2,032
1,512
Boston Seaport (Boston)
MA
May 13, 2022
Lifestyle Center
1,820
1,386
Total Mall and Lifestyle Centers (26)
58,080
43,642
Total Full-Price (43)
103,978
74,475
Cabazon Premium (Cabazon)
CA
November 11, 2011
Outlet
3,250
2,000
Riverhead (Riverhead)
NY
November 30, 2012
Outlet
2,500
2,000
Fashion Outlets of Chicago (Rosemont)
IL
August 1, 2013
Outlet
3,485
2,599
Seattle Premium (Tulalip)
WA
August 30, 2013
Outlet
2,214
1,550
Las Vegas (Las Vegas)
NV
October 3, 2013
Outlet
2,028
1,420
San Marcos (San Marcos)
TX
October 10, 2014
Outlet
2,433
1,703
Carlsbad Premium (Carlsbad)
CA
October 24, 2014
Outlet
2,453
1,717
Wrentham Village Premium (Wrentham)
MA
September 29, 2014
Outlet
2,000
1,400
Camarillo Premium (Camarillo)
CA
February 1, 2015
Outlet
3,001
2,101
San Francisco Premium (Livermore)
CA
August 13, 2015
Outlet
2,485
1,753
Chicago Premium (Aurora)
IL
August 27, 2015
Outlet
2,300
1,840
Woodbury Commons (Central Valley)
NY
November 6, 2015
Outlet
2,289
1,831
Sawgrass Mills (Sunrise)
FL
December 4, 2015
Outlet
2,866
2,326
23
Leesburg (Leesburg)
VA
June 11, 2021
Outlet
2,626
2,042
Total Outlets (14)
35,930
26,282
Total Vince Stores (57)
139,908
100,757
ITEM 3. LEGAL PROCEEDINGS.
We are a party to legal proceedings, compliance matters, environmental, as well as wage and hour and other labor claims that arise in the ordinary course of our business.
Although the outcome of such items cannot be determined with certainty, we believe that the ultimate outcome of these items, individually and in the aggregate, will not have a
material adverse impact on our financial position, results of operations or cash flows.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our common stock trades on the New York Stock Exchange under the symbol "VNCE".
Record Holders
As of March 31, 2025, there were 6 holders of record of our common stock.
Dividends
We have never paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to fund the development and growth of
our business, and we do not anticipate paying any cash dividends in the foreseeable future. In addition, because we are a holding company, our ability to pay dividends depends
on our receipt of cash distributions from our subsidiaries. The terms of our indebtedness substantially restrict the ability to pay dividends. See "Item 7—Management's Discussion
and Analysis of Financial Condition and Results of Operations—Financing Activities" of this Annual Report for a description of the related restrictions.
Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital
requirements, restrictions contained in current and future financing instruments and other factors that our board of directors deems relevant.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
We did not repurchase any shares of common stock during the three months ended February 1, 2025.
Unregistered Sales of Equity Securities
None.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Our fiscal year ends on the Saturday closest to January 31. Fiscal years 2024 and 2023 ended on February 1, 2025 ("fiscal 2024") and February 3, 2024 ("fiscal 2023"),
respectively. Fiscal 2024 consisted of 52 weeks and fiscal 2023 consisted of 53 weeks.
24
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report. All
amounts disclosed are in thousands except store counts, share and per share data and percentages.
This discussion contains forward-looking statements involving risks, uncertainties and assumptions that could cause our results to differ materially from expectations. For
a discussion of the risks facing our business, see "Part I, Item 1A—Risk Factors" included in this Annual Report.
Executive Overview
We are a global retail company that operates the Vince brand women's and men's ready to wear business. We serve our customers through a variety of channels that
reinforces the brand image. Previously, we also owned and operated the Rebecca Taylor and Parker brands until the sale of the respective intellectual property was completed, as
discussed below.
Vince, established in 2002, is a leading global luxury apparel and accessories brand best known for creating elevated yet understated pieces for every day effortless style.
As of February 1, 2025, we operate 43 full-price retail stores, 14 outlet stores, the e-commerce site, vince.com, and the subscription service Vince Unfold, vinceunfold.com.
Vince is also available through premium wholesale channels globally.
On April 21, 2023 the Company entered into a strategic partnership ("Authentic Transaction") with Authentic Brands Group, LLC ("Authentic"), a global brand
development, marketing and entertainment platform, whereby the Company contributed its intellectual property to a newly formed Authentic subsidiary ("ABG Vince") for cash
consideration and a membership interest in ABG Vince. The Company closed the Asset Sale on May 25, 2023. On May 25, 2023, in connection with the Authentic Transaction,
V Opco, entered into a License Agreement (the "License Agreement") with ABG Vince, which provides V Opco with an exclusive, long-term license to use the Licensed
Property in the Territory to the Approved Accounts (each as defined in the License Agreement). See Note 2 "Recent Transactions" to the Consolidated Financial Statements in
this Annual Report for additional information.
On January 22, 2025, P180 Vince Acquisition Co., a subsidiary of P180, Inc., a venture focused on accelerating growth and profitability in the luxury apparel sector,
acquired a majority stake in the Company (the “P180 Acquisition”) from affiliates of Sun Capital Partners, Inc. (collectively, “Sun Capital”).
Rebecca Taylor, founded in 1996 in New York City, was a contemporary womenswear line lauded for its signature prints, romantic detailing and vintage inspired
aesthetic, reimagined for a modern era. On September 12, 2022, the Company announced its decision to wind down the Rebecca Taylor business. On December 22, 2022, the
Company's indirectly wholly owned subsidiary, Rebecca Taylor, Inc., completed the sale of its intellectual property and certain related ancillary assets to RT IPCO, LLC, an
affiliate of Ramani Group. On May 3, 2024, V Opco completed the sale of all outstanding shares of Rebecca Taylor, Inc. to Nova Acquisitions, LLC. See Note 2 "Recent
Transactions" within the notes to the Consolidated Financial Statements in this Annual Report for further information.
Parker, founded in 2008 in New York City, was a contemporary women's fashion brand that was trend focused. During the first half of fiscal 2020 the Company decided
to pause the creation of new products to focus resources on the operations of the Vince and Rebecca Taylor brands. On February 17, 2023, the Company's indirectly wholly
owned subsidiary, Parker Lifestyle, LLC, completed the sale of its intellectual property and certain related ancillary assets to Parker IP Co. LLC, an affiliate of BCI Brands. See
Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for further information.
The Company has identified two reportable segments: Vince Wholesale and Vince Direct-to-consumer. As a result of the completion of the wind down and sale, and the
determination by the CODM that Parker would not be considered in the Company’s future operating plans, Rebecca Taylor and Parker is no longer an operating segment of the
Company.
Transformation Program
On October 31, 2023, the Company announced its Transformation Program focused on driving enhanced profitability through an improved gross margin profile and an
optimized expense structure. The Transformation Program achieved its goal set out for fiscal 2024.
Given the evolving tariff policies, we are in the process of re-evaluating our goals under the Transformation Program as we expect to leverage the program infrastructure
to help mitigate the potential impact from tariffs.
25
Results of Operations
Comparable Sales
Comparable sales include our e-commerce sales in order to align with how we manage our brick-and-mortar retail stores and e-commerce online stores as a combined
single direct-to-consumer channel of distribution. As a result of our omni-channel sales and inventory strategy, as well as cross-channel customer shopping patterns, there is less
distinction between our brick-and-mortar retail stores and our e-commerce online stores and we believe the inclusion of e-commerce sales in our comparable sales metric is a
more meaningful representation of these results and provides a more comprehensive view of our year over year comparable sales metric.
A store is included in the comparable sales calculation after it has completed 13 full fiscal months of operations and includes stores, if any, that have been remodeled or
relocated within the same geographic market the Company served prior to the relocation. Non-comparable sales include new stores which have not completed 13 full fiscal
months of operations, sales from closed stores, and relocated stores serving a new geographic market. For 53-week fiscal years, we continue to adjust comparable sales to exclude
the additional week. There may be variations in the way in which some of our competitors and other retailers calculate comparable sales.
Fiscal 2024 Compared to Fiscal 2023
The following table presents, for the periods indicated, our operating results as a percentage of net sales as well as earnings (loss) per share data:
Fiscal Year
2024
2023
Variances
% of Net
% of Net
(in thousands, except per share data and percentages)
Amount
Sales
Amount
Sales
Amount
Percent
Statements of Operations:
Net Sales
$
293,452
100.0% $
292,890
100.0%
$
562
0.2%
Cost of products sold
148,273
50.5%
159,598
54.5%
(11,325)
(7.1)%
Gross profit
145,179
49.5%
133,292
45.5%
11,887
8.9%
Impairment of goodwill
31,973
10.9%
—
0.0%
31,973 *
Gain on sale of intangible assets
—
0.0%
(32,808)
(11.2)%
32,808 *
Gain on sale of subsidiary
(7,634)
(2.6)%
—
0.0%
(7,634) *
Selling, general and administrative expenses
138,016
47.0%
134,476
45.9%
3,540
2.6%
(Loss) income from operations
(17,176)
(5.9)%
31,624
10.8%
(48,800)
(154.3)%
Interest expense, net
6,569
2.2%
11,118
3.8%
(4,549)
(40.9)%
Other income, net
(344)
(0.1)%
—
—
(344) *
(Loss) income before income taxes and equity in net income of
equity method investment
(23,401)
(8.0)%
20,506
7.0%
(43,907)
(214.1)%
Benefit for income taxes
(3,642)
(1.3)%
(3,478)
(1.2)%
(164)
4.7%
(Loss) income before equity in net income of equity method
investment
(19,759)
(6.7)%
23,984
8.2%
(43,743)
(182.4)%
Equity in net income of equity method investment
712
0.2%
1,462
0.5%
(750)
(51.3)%
Net (loss) income
$
(19,047)
(6.5)% $
25,446
8.7%
$
(44,493)
(174.9)%
(Loss) earnings per share:
Basic (loss) earnings per share
$
(1.51)
$
2.05
Diluted (loss) earnings per share
$
(1.51)
$
2.04
(*) Not meaningful
Net sales for fiscal 2024 were $293,452, increasing $562, or 0.2%, versus $292,890 for fiscal 2023. The change was partly offset by the effect of the 53rd week in the
prior comparative period.
Gross profit increased $11,887, or 8.9%, to $145,179 in fiscal 2024 from $133,292 in fiscal 2023. As a percentage of sales, gross margin was 49.5%, compared with
45.5% in the prior year. The total gross margin rate increase was primarily driven by the following factors:
•
The favorable impact from lower promotional activity in the Direct-to-consumer segment and lower discounting, which contributed positively by approximately
330 basis points;
26
•
The favorable impact from lower product costing and freight costs, and higher pricing, which contributed positively by approximately 320 basis points; partially
offset by
•
The unfavorable impact from royalty expense associated with the License Agreement with ABG Vince, which contributed negatively by approximately 150 basis
points; and
•
The unfavorable impact of channel and product mix, which contributed negatively by approximately 80 basis points.
Impairment of goodwill for fiscal 2024 was $31,973. There was no impairment of goodwill in fiscal 2023.
Gain on sale of intangible assets for fiscal 2023 was $32,808, of which $32,043 is related to the sale of the Vince intellectual property and certain related ancillary assets
and $765 is related to the sale of the Parker intellectual property and certain ancillary assets. See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this
Annual Report for additional information.
Gain on sale of subsidiary for fiscal 2024 was $7,634 related to the sale of Rebecca Taylor. See Note 2 "Recent Transactions" to the Consolidated Financial Statements
in this Annual Report for additional information.
Selling, general and administrative ("SG&A") expenses for fiscal 2024 were $138,016, increasing $3,540, or 2.6%, versus $134,476 for fiscal 2023. SG&A expenses as a
percentage of sales were 47.0% and 45.9% for fiscal 2024 and fiscal 2023, respectively. The change in SG&A expenses compared to the prior year period was primarily due to:
•
$4,718 of increased rent expense primarily due to lease modifications effective in fiscal 2023;
•
$4,308 of increased compensation and benefits;
•
$703 of increased marketing and advertising costs; partly offset by
•
$5,030 decrease related to transaction related expenses associated with the Asset Sale in fiscal 2023;
•
$1,306 of decreased consulting and information technology costs; and
•
$504 net decrease in total SG&A expenses resulting from the wind down of the Rebecca Taylor brand;
Interest expense, net decreased $4,549, or 40.9%, to $6,569 in fiscal 2024 from $11,118 in fiscal 2023 primarily due to $1,755 write-off of deferred financing costs and a
$553 prepayment penalty both associated with the termination of the Term Loan Credit Facility (as defined below), as well as an $828 write-off of deferred financing costs
associated with the termination of the 2018 Revolving Credit Facility (as defined below). In addition, the decrease was attributable to an overall reduction of debt primarily
through the termination of the Term Loan Credit Facility in the second quarter of fiscal 2023 and lower levels of debt under the revolving credit facilities, partially offset by an
increase in interest expense related to the Third Lien Credit Facility.
Benefit for income taxes for fiscal 2024 was $3,642 as compared to $3,478 for fiscal 2023. Our effective tax rate for fiscal 2024 and fiscal 2023 was 15.6% and (17.0)%,
respectively. The effective tax rate for fiscal 2024 differed from the U.S. statutory rate of 21% primarily due to the tax benefits from the reversal of the non-cash deferred tax
liability associated with the goodwill impairment, which previously could not be used as a source of income to support the realization of certain deferred tax assets related to the
Company's net operating losses, and the reversal of a portion of the Company’s non-cash deferred tax liability associated with the equity method investment, which portion can
now be used as a source of income to support the realization of certain deferred tax assets related to the Company's net operating losses. These tax benefits were offset by the
current federal and state income tax expense.
The effective tax rate for fiscal 2023 differed from the U.S. statutory rate of 21% primarily due to the tax impacts associated with the Authentic Transaction, offset by
state and foreign taxes and tax expense related to a portion of the non-cash deferred tax liability related to the Company’s equity method investment, which cannot be used as a
source of income to support the realization of certain deferred tax assets related to the Company’s net operating losses. See Note 11 "Income Taxes" to the Consolidated
Financial Statements in this Annual Report for further information.
Equity in net income of equity method investment for the fiscal years 2024 and 2023 was $712 and $1,462, respectively, and consists of the Company's proportionate share
of ABG Vince's net income.
Performance by Segment
The Company has identified two reportable segments as further described below:
•
Vince Wholesale segment—consists of the Company's operations to distribute Vince brand products to major department stores and specialty stores in the United
States and select international markets; and
27
•
Vince Direct-to-consumer segment—consists of the Company's operations to distribute Vince brand products directly to the consumer through its Vince branded
full-price specialty retail stores, outlet stores, and e-commerce platform, and its subscription service Vince Unfold.
On September 12, 2022, the Company announced its decision to wind down the Rebecca Taylor business. On December 22, 2022, the Company's indirectly wholly
owned subsidiary, Rebecca Taylor, Inc., completed the sale of its intellectual property and certain related ancillary assets to RT IPCO, LLC, an affiliate of Ramani Group.
Substantially all Rebecca Taylor inventory was liquidated as of January 28, 2023. Additionally, all Rebecca Taylor retail and outlet stores operated by the Company were closed
as of January 28, 2023 and the e-commerce site operated by the Company ceased in December 2022.
On May 3, 2024, V Opco completed the sale of all outstanding shares of Rebecca Taylor, Inc., which held the Rebecca Taylor business prior to the wind down, to Nova
Acquisitions, LLC.
On February 17, 2023, the Company's indirectly wholly owned subsidiary, Parker Lifestyle, LLC, completed the sale of its intellectual property and certain related
ancillary assets to Parker IP Co. LLC, an affiliate of BCI Brands. See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for additional
information.
As a result of the completion of the wind down and sale, and the determination by the CODM that Parker would not be considered in the Company’s future operating
plans, Rebecca Taylor and Parker is no longer an operating segment of the Company.
Unallocated corporate expenses are related to the Vince brand and are comprised of SG&A expenses attributable to corporate and administrative activities (such as
marketing, design, finance, information technology, legal and human resource departments), and other charges that are not directly attributable to the Company's Vince Wholesale
and Vince Direct-to-consumer reportable segments. In addition, unallocated corporate includes the transaction related expenses associated with the Asset Sale. As the Company’s
goodwill is not allocated to the Company’s reportable segments in the measure of segment assets regularly reported to and used by our CODM, the corresponding impairment
charge associated with goodwill is not reflected in the operating results of the Company’s reportable segments.
Twelve Months Ended
February 1,
February 3,
(in thousands)
2025
2024
Net Sales:
Vince Wholesale
$
165,349
$
149,603
Vince Direct-to-consumer
128,103
143,096
Total segment net sales
293,452
292,699
Rebecca Taylor and Parker
—
191
Total net sales
$
293,452
$
292,890
Income (loss) from operations:
Vince Wholesale
$
57,905
$
43,416
Vince Direct-to-consumer
2,970
5,774
Total segment income from operations
60,875
49,190
Rebecca Taylor and Parker
7,633
2,443
Subtotal
68,508
51,633
Unallocated corporate
(85,684)
(20,009)
Total (loss) income from operations
$
(17,176)
$
31,624
(1) Activity for the Rebecca Taylor and Parker reconciling item for fiscal 2024 primarily consists of the gain recognized on the sale of Rebecca Taylor. Activity for fiscal 2023 includes a net benefit of $1,750 from the
wind down of the Rebecca Taylor business, primarily related to the release of operating lease liabilities as a result of lease terminations, a $765 gain associated with the sale of the Parker tradename and $150 of
transaction related expenses associated with the sale of the Parker tradename.
(2) Unallocated corporate includes the goodwill impairment charge of $31,973 for fiscal 2024 and the $32,043 gain related to the sale of the Vince intellectual property and certain related ancillary assets for fiscal 2023.
Vince Wholesale
Twelve Months Ended
(in thousands)
February 1, 2025
February 3, 2024
$ Change
Net sales
$
165,349
$
149,603
$
15,746
Income from operations
57,905
43,416
14,489
(1)
(2)
28
Net sales from our Vince Wholesale segment increased $15,746, or 10.5%, to $165,349 in fiscal 2024 from $149,603 in fiscal 2023, due primarily to higher full-price
shipments.
Income from operations from our Vince Wholesale segment increased $14,489, or 33.4%, to $57,905 in fiscal 2024 from $43,416 in fiscal 2023 primarily driven by
increased net sales and improved gross margin. This gross margin improvement was partially offset by the unfavorable impact of royalty expense associated with the License
Agreement with ABG Vince, as royalty expenses were not incurred for the full duration of the comparative period due to the commencement of the License Agreement occurring
in the second quarter of the prior fiscal year.
Vince Direct-to-consumer
Twelve Months Ended
(in thousands)
February 1, 2025
February 3, 2024
$ Change
Net sales
$
128,103
$
143,096
$
(14,993)
Income from operations
2,970
5,774
(2,804)
Net sales from our Vince Direct-to-consumer segment decreased $14,993, or 10.5%, to $128,103 in fiscal 2024 from $143,096 in fiscal 2023. Comparable sales,
including e-commerce, decreased $6,145, or 4.8%, primarily due to a decrease in promotional activity. Non-comparable sales, which includes new stores that have not completed
13 full fiscal months of operations and Vince Unfold, declined by $8,848, which includes $1,066 of sales attributable to the 53rd week of the prior year. Since the end of fiscal
2023, six net stores have closed, bringing our total retail store count to 57 (consisting of 43 full price stores and 14 outlet stores) as of February 1, 2025, compared to 63
(consisting of 48 full price stores and 15 outlet stores) as of February 3, 2024.
Our Vince Direct-to-consumer segment had income from operations of $2,970 in fiscal 2024 compared to income from operations of $5,774 in fiscal 2023. The change
was primarily driven by lower net sales and an increase in SG&A expenses, due mainly to lower rent expense in the prior comparative period related to lease modifications,
partially offset by lower expenses primarily related to staffing and an improved gross margin rate. This gross margin improvement was partially offset by the unfavorable impact
of royalty expense associated with the License Agreement with ABG Vince, as royalty expenses were not incurred for the full duration of the comparative period due to the
commencement of the License Agreement occurring in the second quarter of the prior fiscal year.
Liquidity and Capital Resources
The Company's sources of liquidity are cash and cash equivalents, cash flows from operations, if any, borrowings available under the 2023 Revolving Credit Facility (as
defined in Note 5 "Long-Term Debt and Financing Arrangements") and the Company's ability to access the capital markets, including the Sales Agreement entered into with
Virtu Americas LLC in June 2023 (see Note 9 "Stockholders' Equity" for further information). The Company's primary cash needs are funding working capital requirements,
including royalty payments under the License Agreement, meeting debt service requirements and capital expenditures for new stores and related leasehold improvements. The
most significant components of the Company's working capital are cash and cash equivalents, accounts receivable, inventories, accounts payable and other current liabilities.
The Company’s future financial results may be subject to substantial fluctuations, and may be impacted by business conditions and macroeconomic factors, particularly in
light of the recently implemented tariffs . While we expect to meet our monthly Excess Availability (as defined in the 2023 Revolving Credit Facility Agreement) covenant and
believe that our other sources of liquidity will generate sufficient cash flows to meet our obligations for the next twelve months from the date these financial statements are
issued, the foregoing expectation is dependent on a number of factors, including, among others, our ability to generate sufficient cash flow from a combination of tariff mitigating
initiatives, our ongoing ability to manage our operating obligations, the ability of our partners to satisfy their payment obligations to us when due, the results of the currently
ongoing inventory valuation and potential borrowing restrictions imposed by our lenders based on their credit judgment, all of which could be significantly and negatively
impacted by the recently implemented and new retaliatory and/or reciprocal tariffs, as well as changing trade policies between the U.S. and its trading partners, in addition to
other macroeconomic factors. Any material negative impact from these factors or others could require us to implement alternative plans to satisfy our liquidity needs which may
be unsuccessful. In the event that we are unable to timely service our debt, meet other contractual payment obligations or fund our other liquidity needs, we may need to refinance
all or a portion of our indebtedness before maturity, seek waivers of or amendments to our contractual obligations for payment, reduce or delay scheduled expansions and capital
expenditures liquidate inventory through additional discounting, sell material assets or operations or seek other financing opportunities. There can be no assurance that these
options would be readily available to us and our inability to address our liquidity needs could materially and adversely affect our operations and jeopardize our business, financial
condition and results of operations, as further discussed under “— Item 1A. Risk Factors—Risks Related to Our Business”.
29
Operating Activities
Twelve Months Ended
(in thousands)
February 1, 2025
February 3, 2024
Operating activities
Net (loss) income
$
(19,047)
$
25,446
Add (deduct) items not affecting operating cash flows:
Impairment of goodwill
31,973
—
Depreciation and amortization
4,006
4,939
Provision for bad debt
9
104
Gain on sale of intangible assets
—
(32,808)
Gain on sale of subsidiary
(7,634)
—
Loss on disposal of property and equipment
88
260
Amortization of deferred financing costs
312
758
Deferred income taxes
(4,282)
(4,021)
Share-based compensation expense
1,588
1,541
Capitalized PIK Interest
4,515
4,026
Loss on debt extinguishment
—
3,136
Equity in net income of equity method investment, net of distributions
2,683
(121)
Changes in assets and liabilities:
Receivables, net
(11,652)
(42)
Inventories
(376)
31,236
Prepaid expenses and other current assets
298
(655)
Accounts payable and accrued expenses
19,820
(23,994)
Other assets and liabilities
(242)
(8,165)
Net cash provided by operating activities
$
22,059
$
1,640
Net cash provided by operating activities during fiscal 2024 was $22,059, which consisted of a net loss of $19,047, impacted by non-cash items of $33,258 and cash
provided by working capital of $7,848. Net cash provided by working capital resulted from cash inflows in accounts payable and accrued expenses of $19,820, primarily due to
the timing of payments to vendors, offset by cash outflows in receivables of $11,652.
Net cash provided by operating activities during fiscal 2023 was $1,640 which consisted of net income of $25,446, impacted by non-cash items of $(22,186) and cash
used by working capital of $1,620. Net cash used by working capital resulted from cash outflows in accounts payable and accrued expenses of $23,994, primarily due to the
timing of payments to vendors, cash outflows in other assets and liabilities of $8,165 primarily related to lease activity, offset by reductions in inventory of $31,236 primarily
resulting from more efficient inventory management.
Investing Activities
Twelve Months Ended
(in thousands)
February 1, 2025
February 3, 2024
Investing activities
Payments for capital expenditures
$
(4,232)
$
(1,460)
Transaction costs related to equity method investment
—
(525)
Proceeds from sale of intangible assets
—
77,525
Net cash (used in) provided by investing activities
$
(4,232)
$
75,540
Net cash used in investing activities of $4,232 during fiscal 2024 represents capital expenditures primarily related to retail store buildouts, including leasehold
improvements and store fixtures.
Net cash provided by investing activities of $75,540 during fiscal 2023 primarily represents $76,500 of proceeds received from the sale of the Vince intangible assets and
$1,025 of proceeds received from the sale of the Parker intangible assets (see Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for
additional information).
30
Financing Activities
Twelve Months Ended
(in thousands)
February 1, 2025
February 3, 2024
Financing activities
Proceeds from borrowings under the Revolving Credit Facilities
$
211,213
$
245,116
Repayment of borrowings under the Revolving Credit Facilities
(214,027)
(289,387)
Repayment of borrowings under the Term Loan Facilities
—
(29,378)
Repayment of borrowings under the Third Lien Credit Facility
(15,000)
—
Tax withholdings related to restricted stock vesting
(264)
(142)
Proceeds from issuance of common stock under employee stock purchase plan
29
48
Financing fees
(332)
(3,336)
Net cash used in financing activities
$
(18,381)
$
(77,079)
Net cash used in financing activities was $18,381 during fiscal 2024, primarily consisting of $15,000 of the repayment of borrowings in connection with the P180
Acquisition (see Note 2 "Recent Transactions" for additional information) and $2,814 of net repayments of borrowings under the Company's revolving credit facilities.
Net cash used in financing activities was $77,079 during fiscal 2023, primarily consisting of $44,271 of net repayments of borrowings under the Company's revolving
credit facilities, the repayment of $29,378 of borrowings under the Term Loan Credit Facility, and financing fees of $3,336 (which includes a $553 prepayment penalty associated
with the termination of the Term Loan Credit Facility during fiscal 2023).
Term Loan Credit Facility
On September 7, 2021, V Opco entered into a $35,000 senior secured term loan credit facility (the "Term Loan Credit Facility") pursuant to a Credit Agreement (the
"Term Loan Credit Agreement"), as amended from time to time, by and among V Opco, as the borrower, the guarantors named therein, PLC Agent, LLC, as administrative agent
and collateral agent, and the other lenders from time to time party thereto. Vince Holding Corp. and Vince Intermediate Holding, LLC ("Vince Intermediate") were guarantors
under the Term Loan Credit Facility. The Term Loan Credit Facility would have matured on the earlier of September 7, 2026, and 91 days after the maturity date of the 2018
Revolving Credit Facility.
On May 25, 2023, utilizing proceeds from the Asset Sale, the Company repaid all outstanding amounts of $28,724, which included accrued interest and a prepayment
penalty of $553 (which is included within financing fees on the Consolidated Statements of Cash Flows), under the Term Loan Credit Facility. The Term Loan Credit Facility
was terminated. The Company also repaid $850 of fees due in accordance with an amendment entered into on September 30, 2022. Additionally, the Company recorded expense
of $1,755 during fiscal 2023 related to the write-off of the remaining deferred financing costs. Prior to May 25, 2023, on an inception to date basis, the Company had made
repayments of $7,335 on the Term Loan Credit Facility.
31
2023 Revolving Credit Facility
On June 23, 2023, V Opco, entered into a new $85,000 senior secured revolving credit facility (the "2023 Revolving Credit Facility") pursuant to a Credit Agreement (the
"2023 Revolving Credit Agreement") by and among V Opco, the guarantors named therein, Bank of America, N.A. ("BofA"), as Agent, the other lenders from time to time party
thereto, and BofA Securities, Inc., as sole lead arranger and sole bookrunner.
All outstanding amounts under the 2018 Revolving Credit Facility (as defined below) were repaid in full and such facility was terminated pursuant to the terms thereof as
a result of all parties completing their obligations under such facility.
The 2023 Revolving Credit Facility provides for a revolving line of credit of up to the lesser of (i) the Borrowing Base (as defined in the 2023 Revolving Credit
Agreement) and (ii) $85,000, as well as a letter of credit sublimit of $10,000. The 2023 Revolving Credit Agreement also permits V Opco to request an increase in aggregate
commitments under the 2023 Revolving Credit Facility of up to $15,000, subject to customary terms and conditions. The 2023 Revolving Credit Facility matures on the earlier of
June 23, 2028, and 91 days prior to the earliest maturity date of any Material Indebtedness (as defined in the 2023 Revolving Credit Agreement), including the subordinated
indebtedness pursuant to the Third Lien Credit Agreement.
Interest is payable on the loans under the 2023 Revolving Credit Facility, at Vince LLC's request, either at Term SOFR, the Base Rate, or SOFR Daily Floating Rate, in
each case, with applicable margins subject to a pricing grid based on an average daily excess availability calculation. The "Base Rate" means, for any day, a fluctuating rate per
annum equal to the highest of (i) the Federal Funds Rate for such day, plus 0.5%; (ii) the rate of interest in effect for such day as publicly announced from time to time by BofA
as its prime rate; (iii) the SOFR Daily Floating Rate on such day, plus 1.0%; and (iv) 1.0%. During the continuance of certain specified events of default, at the election of BofA
in its capacity as Agent, interest will accrue at a rate of 2.0% in excess of the applicable non-default rate.
The applicable margins for SOFR Term and SOFR Daily Floating Rate Loans are: (i) 2.0% when the average daily Excess Availability (as defined in the 2023 Revolving
Credit Agreement) is greater than 66.7% of the Loan Cap (as defined in the 2023 Revolving Credit Agreement); (ii) 2.25% when the average daily Excess Availability is greater
than or equal to 33.3% but less than or equal to 66.7% of the Loan Cap; and (iii) 2.5% when the average daily Excess Availability is less than 33.3% of the Loan Cap. The
applicable margins for Base Rate Loans are: (a) 1.0% when the average daily Excess Availability is greater than 66.7% of the Loan Cap; (b) 1.25% when the average daily Excess
Availability is greater than or equal to 33.3% but less than or equal to 66.7% of the Loan Cap; and (c) 1.5% when the average daily Excess Availability is less than 33.3% of the
Loan Cap. In accordance with the First Amendment, from the First Amendment Effective Date (January 21, 2025) until the first Adjustment Date occurring after the twelve (12)
month anniversary of the First Amendment Effective Date, the applicable margin will be 2.50% with respect to SOFR Term Loans and SOFR Daily Floating Rate Loans and
1.50% with respect to Base Rate Loans.
The 2023 Revolving Credit Facility contains a financial covenant requiring Excess Availability at all times to be no less than the greater of (i) 10.0% of the Loan Cap in
effect at such time and (ii) $7,500.
The 2023 Revolving Credit Facility contains representations and warranties, covenants and events of default that are customary for this type of financing, including
limitations on the incurrence of additional indebtedness, liens, burdensome agreements, investments, loans, asset sales, mergers, acquisitions, prepayment of certain other debt,
the repurchase of capital stock, transactions with affiliates, and the ability to change the nature of its business or its fiscal year. The 2023 Revolving Credit Facility generally
permits dividends in the absence of any default or event of default (including any event of default arising from a contemplated dividend), so long as (i) after giving pro forma
effect to the contemplated dividend and on a pro forma basis for the 30-day period immediately preceding such dividend, Excess Availability will be at least the greater of 20.0%
of the Loan Cap and $15,000 and (ii) after giving pro forma effect to the contemplated dividend, the Consolidated Fixed Charge Coverage Ratio (as defined in the 2023
Revolving Credit Agreement) for the 12 months preceding such dividend will be greater than or equal to 1.0 to 1.0. In accordance with the First Amendment, V Opco shall not
make certain Restricted Payments as defined in the Agreement until the earlier of (i) the date that is eighteen (18) month anniversary of the First Amendment Effective Date,
which date is July 21, 2026 and (ii) the first date following the twelve (12) month anniversary of the First Amendment Effective Date on which the Consolidated Fixed Charge
Coverage Ratio is greater than or equal to 1.0 to 1.0.
All obligations under the 2023 Revolving Credit Facility are guaranteed by the Company and Vince Intermediate and any future subsidiaries of the Company (other than
Excluded Subsidiaries as defined in the 2023 Revolving Credit Agreement) and secured by a lien on substantially all of the assets of the Company, V Opco and Vince
Intermediate and any future subsidiary guarantors, other than among others, equity interests in ABG Vince, as well as the rights of V Opco under the License Agreement.
The Company incurred a total of $466 (of which $458 were incurred in connection with the P180 Acquisition) and $1,150 of financing costs during fiscal years 2024 and
2023, respectively. In accordance with ASC Topic 470, "Debt", these financing costs were recorded as deferred debt issuance costs (which is presented within Other assets on the
Consolidated Balance Sheets) and are amortized over the term of the 2023 Revolving Credit Facility.
32
As of February 1, 2025, the Company was in compliance with applicable covenants. As of February 1, 2025, $39,820 was available under the 2023 Revolving Credit
Facility, net of the Loan Cap, and there were $11,413 of borrowings outstanding and $6,215 of letters of credit outstanding under the 2023 Revolving Credit Facility. The
weighted average interest rate for borrowings outstanding under the 2023 Revolving Credit Facility as of February 1, 2025 was 7.0%.
On January 22, 2025, V Opco, LLC entered into that certain First Amendment (the “First Amendment”) to the 2023 Revolving Credit Agreement. The First Amendment
amends the 2023 Revolving Credit Agreement to, among other things, (a) consent to the P180 Acquisition (see Note 2 "Recent Transactions" for additional information); (b)
provide that, until the first Adjustment Date following January 22, 2026, the applicable margin will be 2.50% with respect to SOFR Term Loans and SOFR Daily Floating Rate
Loans and 1.50% with respect to Base Rate Loans; (c) eliminate the ability to make certain Restricted Payments until the earlier of (i) the date that is eighteen (18) month
anniversary of the First Amendment Effective Date, which date is July 21, 2026 and (ii) the first date following the twelve (12) month anniversary of the First Amendment
Effective Date on which the Consolidated Fixed Charge Coverage Ratio is greater than or equal to 1.0 to 1.0; and (d) until January 22, 2026, modify the thresholds applicable for
the Agent’s rights to conduct field exams and inventory appraisals to Excess Availability being less than the greater of 25% of Loan Cap and $18,750 and, following January 24,
2026, such thresholds shall revert back to Excess Availability being less than the greater of 20% of Loan Cap and $15,000.
2018 Revolving Credit Facility
On August 21, 2018, V Opco entered into an $80,000 senior secured revolving credit facility (the "2018 Revolving Credit Facility") pursuant to a credit agreement, as
amended and restated from time to time, by and among V Opco, as the borrower, VHC and Vince Intermediate, as guarantors, Citizens Bank, N.A. ("Citizens"), as administrative
agent and collateral agent, and the other lenders from time to time party thereto. On January 31, 2023, the Company repaid $125 of fees due in accordance with an amendment
entered into on September 30, 2022. Upon the contemporaneous consummation of the Asset Sale, the lenders' commitments to extend credit was reduced to $70,000. The 2018
Revolving Credit Facility would have matured on June 30, 2024.
On June 23, 2023, all outstanding amounts under the 2018 Revolving Credit Facility were repaid in full and the 2018 Revolving Credit Facility was terminated pursuant
to the terms thereof as a result of all parties completing their obligations under the 2018 Revolving Credit Facility. The Company recorded expense of $828 during fiscal 2023,
related to the write-off of the remaining deferred financing costs. As of February 1, 2025, no letters of credit remained in place with Citizens that were secured with restricted
cash. Restricted cash is included in Prepaid Expenses and other current assets in the Consolidated Balance Sheets.
Third Lien Credit Facility
On December 11, 2020, V Opco entered into a $20,000 subordinated term loan credit facility (the "Third Lien Credit Facility") pursuant to a credit agreement (the "Third
Lien Credit Agreement"), as amended from time to time, dated December 11, 2020, by and among V Opco, as the borrower, VHC and Vince Intermediate, as guarantors, and SK
Financial Services, LLC ("SK Financial"), as administrative agent and collateral agent, and other lenders from time to time party thereto. The proceeds were received on
December 11, 2020 and were used to repay a portion of the borrowings outstanding under the 2018 Revolving Credit Facility.
SK Financial is an affiliate of Sun Capital Partners, Inc. ("Sun Capital"). The Third Lien Credit Facility was reviewed and approved by the Special Committee of the
Company's Board of Directors, consisting solely of directors not affiliated with Sun Capital, which committee was represented by independent legal advisors. Immediately prior
to the P180 Acquisition, the affiliates of Sun Capital owned approximately 67% of the Company's common stock.
Interest on loans under the Third Lien Credit Facility is payable in kind at a rate revised in connection with the Third Lien Third Amendment (as defined and discussed
below) to be equal to the Daily Simple SOFR, subject to a credit spread adjustment of 0.10% per annum, plus 9.0%. During the continuance of certain specified events of default,
interest may accrue on the loans under the Third Lien Credit Facility at a rate of 2.0% in excess of the rate otherwise applicable to such amount.
The Company had incurred $485 in deferred financing costs associated with the Third Lien Credit Facility, of which a $400 closing fee is payable in kind and was added
to the principal balance. These deferred financing costs were recorded as deferred debt issuance costs. In connection with the debt extinguishment (see below), unamortized debt
issuance costs of $179 were included in the calculation of the gain on extinguishment.
All obligations under the Third Lien Credit Facility are guaranteed by the Company, Vince Intermediate and the Company's existing material domestic restricted
subsidiaries as well as any future material domestic restricted subsidiaries and are secured on a junior basis relative to the 2023 Revolving Credit Facility by a lien on
substantially all of the assets of the Company, Vince Intermediate, V Opco and the Company's existing material domestic restricted subsidiaries as well as any future material
domestic restricted subsidiaries.
On April 21, 2023, V Opco entered into that certain Consent and Third Amendment to Credit Agreement (the "Third Lien Third Amendment"), which, among other
things, (a) permitted the sale of the intellectual property of the Vince Business contemplated in the
33
Asset Sale, (b) replaced LIBOR as an interest rate benchmark in favor of Daily Simple SOFR, subject to a credit spread adjustment of 0.10% per annum, plus 9.0% (c) amended
the Third Lien Credit Agreement's maturity date to the earlier of (i) March 30, 2025 and (ii) 180 days after the maturity date under the 2018 Revolving Credit Facility, (d) reduced
the capacity to incur indebtedness and liens, make investments, restricted payments and dispositions and repay certain indebtedness and (e) modified certain representations and
warranties, covenants and events of default in respect of documentation related to the Asset Sale. The Third Lien Third Amendment became effective upon the consummation of
the Asset Sale, the prepayment of the Term Loan Credit Facility in full and other transactions contemplated by the Asset Purchase Agreement.
On June 23, 2023, V Opco entered into the Fourth Amendment (the "Third Lien Fourth Amendment") to the Third Lien Credit Agreement which, among other things, (a)
extended the Third Lien Credit Agreement's maturity date to the earlier of (i) September 30, 2028 and (ii) 91 days prior to the earliest maturity date of any Material Indebtedness
(as defined therein) other than the 2023 Revolving Credit Facility and (b) modified certain representations and warranties, covenants and events of default in respect of
documentation conforming to the terms of the 2023 Revolving Credit Facility.
On January 22, 2025, V Opco entered into the Fifth Amendment (the “Third Lien Fifth Amendment”) to the Third Lien Credit Agreement which, among other things,
consents to the P180 Acquisition. On the same day, V Opco paid $15,000 to SK Financial Services, LLC using proceeds from the 2023 Revolving Credit Facility, which resulted
in a pay-down of $20,000 of the Third Lien Credit Facility (the “Sun Debt Paydown”). In addition, in connection with the P180 Acquisition, P180 acquired and assumed $7,000
of the Third Lien Credit Facility outstanding and immediately thereafter cancelled such $7,000 (the “P180 Debt Forgiveness”). Following the Sun Debt Paydown and P180 Debt
Forgiveness, the outstanding principal amount of the Third Lien Credit Facility was reduced by approximately $27,000 with $7,500 remaining outstanding, which will continue to
accrue payment-in-kind interest in accordance with, and otherwise be subject to, the terms and conditions therein.
The Company determined that modification to the Third Lien Credit Facility under the Fifth Amendment and the corresponding Sun Debt Paydown and P180 Debt
Forgiveness should be recorded as debt extinguishment of the Third Lien Credit Facility in accordance with ASC 470. The Company derecognized the old debt and recorded the
new debt at fair value in the amount of $7,713, and a gain upon extinguishment in the amount of $11,575. As Sun Capital and affiliates and P180 maintain an equity interest in the
Company, the gain on extinguishment was recorded as a capital contribution within equity.
Contractual Obligations
The following table summarizes our contractual obligations as of February 1, 2025:
Future payments due by fiscal year
(in thousands)
2025
2026-2027
2028-2029
Thereafter
Total
Unrecorded contractual obligations
Other contractual obligations
$
40,887
$
5,898
$
—
$
—
$
46,785
Guaranteed Minimum Royalty payments
11,000
22,000
22,000
33,000
88,000
Recorded contractual obligations
Operating lease obligations
22,466
37,159
32,442
39,608
131,675
Long-term debt obligations
—
—
7,743
—
7,743
Total
$
74,353
$
65,057
$
62,185
$
72,608
$
274,203
(1) Consists primarily of inventory purchase obligations and service contracts.
The summary above does not include the following items:
•
The Company has available the 2023 Revolving Credit Facility, which provides for a revolving line of credit of up to the lesser of (i) the Borrowing Base (as
defined in the 2023 Revolving Credit Agreement) and (ii) $85,000, as well as a letter of credit sublimit of $10,000. The 2023 Revolving Credit Agreement also
permits V Opco to request an increase in aggregate commitments under the 2023 Revolving Credit Facility of up to $15,000, subject to customary terms and
conditions. The 2023 Revolving Credit Facility matures on the earlier of June 23, 2028, and 91 days prior to the earliest maturity date of any Material
Indebtedness (as defined in the 2023 Revolving Credit Agreement), including the subordinated indebtedness pursuant to the Third Lien Credit Agreement.
•
Interest is payable under the 2023 Revolving Credit Facility, which is calculated either at Term SOFR, the Base Rate, or SOFR Daily Floating Rate, in each case,
with applicable margins subject to a pricing grid based on an average daily excess availability calculation. The "Base Rate" means, for any day, a fluctuating rate
per annum equal to the highest of (i) the Federal Funds Rate for such day, plus 0.5%; (ii) the rate of interest in effect for such day as publicly announced from
(1)
34
time to time by BofA as its prime rate; (iii) the SOFR Daily Floating Rate on such day, plus 1.0%; and (iv) 1.0%. During the continuance of certain specified
events of default, at the election of BofA in its capacity as Agent, interest will accrue at a rate of 2.0% in excess of the applicable non-default rate. In accordance
with the First Amendment, from the First Amendment Effective Date (January 21, 2025) until the first Adjustment Date occurring after the twelve (12) month
anniversary of the First Amendment Effective Date, the applicable margin will be 2.50% with respect to SOFR Term Loans and SOFR Daily Floating Rate Loans
and 1.50% with respect to Base Rate Loans. See Note 5 "Long-Term Debt and Financing Arrangements" to the Consolidated Financial Statements in this Annual
Report for additional information.
•
Interest on loans under the Third Lien Credit Facility is payable in kind at a rate revised in connection with the Third Lien Third Amendment to be equal to the
Daily Simple SOFR, subject to a credit spread adjustment of 0.10% per annum, plus 9.0%. During the continuance of certain specified events of default, interest
may accrue on the loans under the Third Lien Credit Facility at a rate of 2.0% in excess of the rate otherwise applicable to such amount. See Note 5 "Long-Term
Debt and Financing Arrangements" to the Consolidated Financial Statements in this Annual Report for additional information.
Seasonality
The apparel and fashion industry in which we operate is cyclical and, consequently, our revenues are affected by general economic conditions and the seasonal trends
characteristic to the apparel and fashion industry. Purchases of apparel are sensitive to a number of factors that influence the level of consumer spending, including economic
conditions and the level of disposable consumer income, consumer debt, interest rates and consumer confidence as well as the impact of adverse weather conditions. In addition,
fluctuations in the amount of sales in any fiscal quarter are affected by the timing of seasonal wholesale shipments and other events affecting direct-to-consumer sales; as such,
the financial results for any particular quarter may not be indicative of results for the fiscal year. We expect such seasonality to continue.
Critical Accounting Estimates
Management's discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of these financial statements requires estimates and
judgments that affect the reported amounts of our assets, liabilities, revenues and expenses. Management bases estimates on historical experience and other assumptions it
believes to be reasonable under the circumstances and evaluates these estimates on an on-going basis. Actual results may differ from these estimates under different assumptions
or conditions.
While our significant accounting policies are more fully described in Note 1 "Description of Business and Summary of Significant Accounting Policies” to the
Consolidated Financial Statements in this Annual Report, we believe the following discussion addresses our most critical accounting estimates, which involve significant
subjectivity and judgment, and changes to such estimates or assumptions could have a material impact on our financial condition or operating results. Therefore, we consider an
understanding of the variability and judgment required in making these estimates and assumptions to be critical in fully understanding and evaluating our reported financial
results. With respect to critical accounting estimates, even a relatively minor variance between actual and expected experience can potentially have a materially favorable or
unfavorable impact on subsequent consolidated results of operations. For more information on our accounting estimates and policies, please refer to the Notes to Consolidated
Financial Statements in this Annual Report.
Revenue Recognition and Reserves for Allowances
The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which generally occurs upon the
transfer of control in accordance with the contractual terms and conditions of the sale. Sales are recognized when the control of the goods are transferred to the customer for the
Company's wholesale business, upon receipt by the customer for the Company's e-commerce businesses, and at the time of sale to the consumer for the Company's retail business.
Sales are measured as the amount of consideration the Company expects to receive in exchange for transferring goods, which includes estimates for variable consideration.
Variable consideration mainly includes discounts, chargebacks, markdown allowances, cooperative advertising programs, and sales returns. Estimated amounts of discounts,
chargebacks, markdown allowances, cooperative advertising programs, and sales returns are accounted for as reductions of sales when the associated sale occurs. These estimated
amounts are adjusted periodically based on changes in facts and circumstances when the changes become known. On the Company's consolidated balance sheet, reserves for sales
returns are included within other accrued liabilities, and the value of inventory associated with reserves for sales returns are included in prepaid expenses and other current assets.
The Company continues to estimate the amount of sales returns based on known trends and historical return rates.
Accounts receivable are recorded net of allowances for expected future chargebacks and estimated margin support from wholesale partners. It is the nature of the apparel
and fashion industry that suppliers like us face significant pressure from wholesale partners in the retail industry to provide allowances to compensate for their margin shortfalls.
This pressure often takes the form of
35
customers requiring us to provide price concessions on prior shipments as a prerequisite for obtaining future orders. Pressure for these concessions is largely determined by
overall retail sales performance and, more specifically, the performance of our products at retail. To the extent our wholesale partners have more of our goods on hand at the end
of the season, there will be greater pressure for us to grant markdown concessions on prior shipments. Our accounts receivable balances are reported net of expected allowances
for these matters based on the historical level of concessions required and our estimates of the level of markdowns and allowances that will be required in the coming season. We
evaluate the allowance balances on a continual basis and adjust them as necessary to reflect changes in anticipated allowance activity.
At February 1, 2025, a hypothetical 1% change in the reserves for allowances would have resulted in a change of $69 in accounts receivable and net sales.
Inventory Valuation
Inventory values are reduced to net realizable value when there are factors indicating that certain inventories will not be sold on terms sufficient to recover their cost. Out-
of-season inventories may be sold to off-price retailers and other customers who serve a customer base that will purchase prior year fashions and may be liquidated through our
outlets and our e-commerce websites. The amount, if any, that these customers will pay for prior year fashions is determined by the desirability of the inventory itself as well as
the general level of prior year goods available to these customers. The assessment of inventory value, as a result, is highly subjective and requires an assessment of the seasonality
of the inventory, its future desirability, and future price levels in the off-price sector.
In our wholesale businesses, some of our products are purchased for and sold to specific customers' orders. For the remainder of our business, products are purchased in
anticipation of selling them to a specific customer based on historical trends. The loss of a major customer, whether due to the customer's financial difficulty or other reasons,
could have a significant negative impact on the value of the inventory expected to be sold to that customer. This negative impact can also extend to inventory in-transit for which
ownership has transferred to the Company. These obligations involve product to be received into inventory over the next one to six months.
At February 1, 2025, a hypothetical 1% change in the inventory obsolescence reserve would have resulted in a change of $25 in inventory, net of cost of products sold.
Fair Value Assessment of Goodwill
Goodwill is tested for impairment at least annually and in an interim period if a triggering event occurs.
An entity may elect to perform a qualitative impairment assessment for goodwill. If adverse qualitative trends are identified during the qualitative assessment that indicate
that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test is required. "Step one" of the quantitative
impairment test for goodwill requires an entity to determine the fair value of each reporting unit and compare such fair value to the respective carrying amount. If the estimated
fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired, and we are not required to perform further
testing. If the carrying amount of the reporting unit exceeds its estimated fair value, an impairment loss is recorded for the amount by which a reporting unit's carrying value
exceeds its fair value, not to exceed the carrying amount of goodwill. The goodwill impairment test is dependent on a number of factors, including estimates of projected
revenues, EBITDA margins, long-term growth rates, working capital, and discount rates. We base our estimates on assumptions we believe to be reasonable, but which are
unpredictable and inherently uncertain. Actual future results may differ from those estimates.
An entity may pass on performing the qualitative assessment for a reporting unit and directly perform the quantitative assessment. This determination can be made on an
asset by asset basis, and an entity may resume performing a qualitative assessment in subsequent periods.
In both fiscal 2024 and fiscal 2023, the Company performed its annual impairment test during the fourth quarter. In fiscal 2024, concurrent with the performance of the
annual impairment test, the P180 Acquisition was consummated (see Note 2 "Recent Transactions" for additional information). As the P180 Acquisition represented a change of
control transaction with an unrelated third party, the fair value of the Company’s Vince Wholesale reporting unit was estimated based on the transaction price of the P180
Acquisition. The estimated fair value of the Company implied by the P180 Acquisition was allocated to the Company’s reporting units, Vince Wholesale and Vince Direct-to-
consumer, using a market-based approach, considering the relative contributions of each reporting unit to the Company as well as appropriate valuation multiples for each
reporting unit relative to the implied P180 Acquisition multiple. The results of this quantitative test determined that the fair value of the Vince Wholesale reporting unit was
below its carrying value by an amount greater than its total goodwill balance. As a result, the Company recorded a goodwill impairment charge of $31,973 to write-off the
goodwill for the Vince Wholesale reporting unit. The charge was recorded within Impairment of goodwill on the Consolidated Statements of Operations and Comprehensive
Income (Loss) during the fourth quarter of fiscal 2024.
36
In fiscal 2023, the Company elected to perform a quantitative impairment test on goodwill allocated to the Company’s Vince Wholesale reporting unit. The results of the
quantitative test did not result in any impairment because the fair value of the Company’s Vince Wholesale reporting unit exceeded its carrying value.
Goodwill was $0 and $31,973 as of February 1, 2025 and February 3, 2024, respectively.
Property and Equipment, Operating Lease Assets and Other Finite-Lived Intangible Assets
The Company reviews its property and equipment, operating lease assets and finite-lived intangible assets for impairment when the existence of facts and circumstances
indicate that the useful life is shorter than previously estimated or that the carrying amount of the asset groups to which these assets relate may not be recoverable. The asset
group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our retail stores
is at the store level. Recoverability of these assets is evaluated by comparing the carrying value of the asset group with its estimated future undiscounted cash flows. If the
comparisons indicate that the value of the asset is not recoverable, an impairment loss is calculated as the difference between the carrying value and the fair value of the assets
within the asset group and the loss is recognized during that period. The estimates regarding recoverability and fair value can be affected by factors such as future store results,
real estate demand, store closure plans, and economic conditions that can be difficult to predict.
On April 21, 2023, the Company entered into the Authentic Transaction with Authentic and as a result, the Vince tradename and Vince customer relationships were
classified as held for sale and amortization of the Vince customer relationships ceased. The Company closed the Asset Sale on May 25, 2023, and therefore no longer carried
finite-lived intangible assets as of February 3, 2024.
See Note 2 "Recent Transactions" for further information.
Income taxes and Valuation Allowances
We account for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences of
temporary differences between the carrying amounts and tax bases of assets and liabilities at enacted rates. We assess the likelihood of the realization of deferred tax assets and
adjust the carrying amount of these deferred tax assets by a valuation allowance to the extent we believe it more likely than not that all or a portion of the deferred tax assets will
not be realized. We consider many factors when assessing the likelihood of future realization of deferred tax assets, including recent earnings results within taxing jurisdictions,
expectations of future taxable income, the carryforward periods available and other relevant factors. Changes in the required valuation allowance are recorded in income in the
period such determination is made. Significant judgment is required in determining the provision for income taxes. Changes in estimates may create volatility in our effective tax
rate in future periods for various reasons, including changes in tax laws or rates, changes in forecasted amounts of pretax income (loss), settlements with various tax authorities,
either favorable or unfavorable, the expiration of the statute of limitations on some tax positions and obtaining new information about particular tax positions that may cause
management to change its estimates. The ultimate tax outcome is uncertain for certain transactions. We recognize tax positions in our Consolidated Balance Sheets as the largest
amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with tax authorities assuming full knowledge of the position and all relevant facts.
Due to the uncertain nature of the realization of our deferred income tax assets, during the fourth quarter of fiscal 2016, we recorded valuation allowances within
Provision for income taxes on the Consolidated Statements of Operations and Comprehensive Income (Loss). During fiscal 2024 and fiscal 2023, the Company maintained a full
valuation allowance on all deferred tax assets that have a definite life as we do not believe it is more likely than not that such deferred tax assets will be recognized. Indefinite-
lived net operating losses have been recognized to the extent we believe they can be utilized against indefinite-lived deferred tax liabilities. This valuation allowance is subject to
periodic review, and if the allowance is reduced, the tax benefit will be recorded in the future operations as a reduction of our income tax expense.
Recent Accounting Pronouncements
For information on certain recently issued or proposed accounting standards which may impact the Company, please refer to the notes to Consolidated Financial
Statements in this Annual Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we are not required to provide the
information in this Item.
37
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See "Index to the Audited Consolidated Financial Statements," which is located on page F-1 appearing at the end of this Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Attached as exhibits to this Annual Report are certifications of our Chief Executive Officer and Chief Financial Officer. Rule 13a-14 of the Exchange Act requires that we
include these certifications with this report. This Controls and Procedures section includes information concerning the disclosure controls and procedures referred to in the
certifications. You should read this section in conjunction with the certifications.
Disclosure Controls and Procedures
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management has evaluated the effectiveness of the design
and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of February 1, 2025.
Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to the
material weakness in our internal control over financial reporting as described below.
As a result of the material weakness identified, we performed additional analysis, substantive testing and other post-closing procedures intended to ensure that our
consolidated financial statements were prepared in accordance with U.S. GAAP. Accordingly, management believes that the consolidated financial statements and related notes
thereto included in this Annual Report on Form 10-K fairly present, in all material respects, the Company's financial condition, results of operations and cash flows for the
periods presented.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), that occurred during the
fiscal quarter ended February 1, 2025 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Management's Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii)
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of February 1, 2025. In making this assessment, management used the criteria
established by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework (2013). Based on this assessment,
management has concluded that, as of February 1, 2025, our internal control over financial reporting was not effective, as management identified a deficiency in internal control
over financial reporting that was determined to rise to the level of a material weakness. A material weakness is a deficiency, or combination of deficiencies, in internal control
over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or
detected on a timely basis.
38
We previously disclosed in our Annual Report on Form 10-K for the period ended February 3, 2024, as well as in our Quarterly Reports on Form 10-Q for each interim
period in fiscal 2024, a material weakness in our internal control over financial reporting relating to the following:
IT general controls
We did not maintain adequate user access controls to ensure appropriate segregation of duties and to adequately restrict access to financial applications and data.
This material weakness did not result in a material misstatement to the annual or interim consolidated financial statements. However, this material weakness could impact
the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, along with the IT controls and
underlying data that support the effectiveness of system-generated data and reports) that could result in a misstatement impacting account balances or disclosures that would result
in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit
the company to provide only management's report in this Annual Report.
Remediation Efforts to Address the Material Weakness
To date, we made continued progress on our comprehensive remediation plan related to this material weakness by implementing the following controls and procedures:
•
The Company modified its system access rights to limit the use of generic ID's, particularly in instances where those ID's possessed privileged access rights
•
The Company effectively designed and implemented a full recertification of AX user access rights, and;
•
Improved operational processes around user provisioning and de-provisioning and enhanced general security controls and standards.
To fully address the remediation of deficiencies related to segregation of duties, we will need to fully remediate the deficiencies regarding systems access.
Management continues to follow a comprehensive remediation plan to fully address this material weakness. The remediation plan includes implementing and effectively
operating controls related to the routine reviews of user system access and user re-certifications, inclusive of those related to users with privileged access, as well as, to ensure
user's access rights to systems are removed timely upon termination.
While we have reported a material weakness that is not yet remediated, we believe we have made continued progress in addressing financial, compliance, and operational
risks and improving controls across the Company. Until the material weakness is remediated, we will continue to perform additional analysis, substantive testing, and other post-
closing procedures to ensure that our consolidated financial statements are prepared in accordance with U.S. GAAP.
Limitations on the Effectiveness of Disclosure Controls and Procedures
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Accordingly, our disclosure controls and procedures are
designed to provide reasonable, not absolute, assurance that the objectives of our disclosure system are met. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
ITEM 9B. OTHER INFORMATION.
None of our directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended
February 1, 2025.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
39
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The information required by this Item is incorporated herein by reference from the Company's definitive proxy statement to be filed with the Securities and Exchange
Commission in connection with our 2025 annual meeting of stockholders. Our definitive proxy statement will be filed on or before 120 days after the end of fiscal 2024.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated herein by reference from the Company's definitive proxy statement to be filed with the Securities and Exchange
Commission in connection with our 2025 annual meeting of stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The information required by this Item is incorporated herein by reference from the Company's definitive proxy statement to be filed with the Securities and Exchange
Commission in connection with our 2025 annual meeting of stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
The information required by this Item is incorporated herein by reference from the Company's definitive proxy statement to be filed with the Securities and Exchange
Commission in connection with our 2025 annual meeting of stockholders.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required by this Item is incorporated herein by reference from the Company's definitive proxy statement to be filed with the Securities and Exchange
Commission in connection with our 2025 annual meeting of stockholders.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)
Financial Statements and Financial Statement Schedules. See "Index to the Audited Consolidated Financial Statements" which is located on F-1 of this Annual
Report on Form 10-K.
(b)
Exhibits. See the Exhibit Index which is included herein.
Exhibit Index:
Exhibit
Number
Exhibit Description
3.1
Amended & Restated Certificate of Incorporation of Vince Holding Corp. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on
Form 8-K filed with the Securities and Exchange Commission on November 27, 2013).
3.2
Amended & Restated Bylaws of Vince Holding Corp. (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 27, 2013).
3.3
Certificate of Amendment of Amended & Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.01 to the Company's Current Report
on Form 8-K filed with the Securities and Exchange Commission on September 8, 2017).
3.4
Second Amended & Restated Bylaws of Vince Holding Corp. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed
with the Securities Exchange Commission on January 22, 2025).
3.5
Third Amended & Restated Bylaws of Vince Holding Corp. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed
with the Securities Exchange Commission on April 7, 2025).
40
Exhibit
Number
Exhibit Description
4.1
Form of Stock certificate (incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission on April 25, 2018).
4.2
Registration Agreement, dated as of February 20, 2008, among Apparel Holding Corp., Sun Cardinal, LLC, SCSF Cardinal, LLC and the Other Investors
party thereto (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-1 (File No. 333-191336) filed with the Securities
and Exchange Commission on September 24, 2013).
4.3
Description of Vince Holding Corp.'s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to
Exhibit 4.3 to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 11, 2020).
10.1
Intellectual Property Purchase Agreement, dated as of April 21, 2023, by and among ABG-Viking, LLC as Buyer, Vince, LLC as Seller, solely for purposes of
Sections 6.10, 6.13, 6.14, 9.13 and 9.15 thereof, the Company as Seller Guarantor and solely for purposes of Sections 5.5 and 9.16 thereof, ABG Intermediate
Holdings 2 LLC as Buyer Guarantor (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and
Exchange Commission on April 24, 2023).
10.2
Consulting Agreement, dated as of November 27, 2013, between Vince Holding Corp. and Sun Capital Partners Management V, LLC (incorporated by
reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on November 27, 2013).
10.3†
Form of Indemnification Agreement (for directors and officers not affiliated with Sun Capital Partners, Inc.) (incorporated by reference to Exhibit 10.7 to the
Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on November 27, 2013).
10.4†
Vince Holding Corp. Amended and Restated 2013 Omnibus Incentive Plan (incorporated by reference to Annex A to the Company's Information Statement
on Schedule 14C filed with the Securities and Exchange Commission on November 7, 2023).
10.5†
Form of Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.15 to the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 27, 2013).
10.6†
Form of Director Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.16 to the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 27, 2013).
10.7†
Vince Holding Corp. Amended and Restated 2013 Employee Stock Purchase Plan (incorporated by reference to Annex A to the Company's Information
Statement on Schedule 14C filed with the Securities and Exchange Commission on September 3, 2015).
10.8†
Employment Offer Letter, dated as of January 12, 2016, by and between Vince, LLC and David Stefko (incorporated by reference to Exhibit 10.44 to the
Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 14, 2016).
10.9†
Employment Offer Letter, dated as of January 10, 2017, by and between Vince, LLC and Marie Fogel (incorporated by reference to Exhibit 10.28 to the
Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 12, 2019).
10.10†
Amendment No. 1 to Employment Offer Letter, dated as of July 11, 2017, by and between Vince, LLC and Marie Fogel (incorporated by reference to Exhibit
10.29 to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 12, 2019).
10.11†
Amendment No. 2 to Employment Offer Letter, dated as of June 29, 2018, by and between Vince, LLC and Marie Fogel (incorporated by reference to Exhibit
10.30 to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 12, 2019).
10.12†
Amendment No. 3 to Employment Offer Letter, dated March 1, 2021, by and between Vince, LLC and Marie Fogel (incorporated by reference to Exhibit
10.26 to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 30, 2021).
10.13†
Form of Restricted Stock Unit Agreement with respect to RSUs granted pursuant to the Company's annual long-term incentive program (incorporated by
reference to Exhibit 10.34 to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 12, 2019).
41
Exhibit
Number
Exhibit Description
10.14
Equity Purchase Agreement, dated November 4, 2019 and effective November 3, 2019, by and between Vince, LLC and Contemporary Lifestyle Group, LLC
(incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed with the Securities Exchange Commission on November 5,
2019).
10.15†
Employment Offer Letter, dated May 23, 2019, by and between Vince, LLC and Lee Meiner (incorporated by reference to Exhibit 10.38 to the Company's
Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 11, 2020).
10.16†
Amendment No.1 to Employment Offer Letter, dated March 1, 2021, by and between Vince, LLC and Lee Meiner (incorporated by reference to Exhibit 10.43
to the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 30, 2021).
10.17†
Updated Terms to Employment, dated July 15, 2022, by and between Vince, LLC and Lee Meiner (incorporated by reference to Exhibit 10.34 to the
Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 28, 2023).
10.18
Credit Agreement, dated as of December 11, 2020, by and among Vince, LLC as the borrower and the guarantors named therein, SK Financial Services, LLC
as administrative agent and collateral agent, and the other lenders from time to time party thereto (incorporated by reference to Exhibit 10.44 to the
Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 30, 2021).
10.19†
Employment Agreement, dated March 8, 2021 by and between Vince, LLC and Jonathan "Jack" Schwefel (incorporated by reference to Exhibit 10.45 to the
Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 30, 2021).
10.20†
Employment Offer Letter, dated April 5, 2021, by and between Vince, LLC and Akiko Okuma (incorporated by reference to Exhibit 10.46 to the Company's
Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 30, 2021).
10.21
First Amendment to Credit Agreement, dated as of September 7, 2021, by and among Vince, LLC as the borrower, SK Financial Services, LLC, as agent, and
the other lenders from time to time party thereto (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed with the
Securities and Exchange Commission on September 9, 2021).
10.22
Second Amendment to Credit Agreement, dated as of September 30, 2022, by and among Vince, LLC as the borrower, SK Financial Services, LLC, as agent,
and the other lenders from time to time party thereto (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission on December 13, 2022).
10.23
Consent and Third Amendment to Credit Agreement, dated as of April 21, 2023, by and among Vince, LLC as the borrower, SK Financial Services, LLC, as
agent, and the other lenders from time to time party thereto (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed
with the Securities and Exchange Commission on June 13, 2023).
10.24
Amended and Restated Limited Liability Company Agreement of ABG-Vince LLC (f/k/a ABG-Viking, LLC), dated as of May 25, 2023, by and between
ABG Intermediate Holdings 2 LLC and Vince, LLC (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on May 25, 2023).
10.25
License Agreement, dated as of May 25, 2023, by and between ABG-Vince LLC (f/k/a ABG-Viking, LLC) as licensor and Vince, LLC as licensee
(incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 25,
2023).
10.26
Credit Agreement, dated as of June 23, 2023, by and among Vince, LLC, the guarantors named therein, Bank of America, N.A., as Agent, the other lenders
from time to time party thereto, and BofA Securities, Inc., as sole lead arranger and sole bookrunner (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 26, 2023.
10.27
Fourth Amendment to Credit Agreement, dated as of June 23, 2023, by and among Vince, LLC as the borrower, SK Financial Services, LLC, as agent and the
other lenders from time to time party thereto (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 26, 2023).
42
Exhibit
Number
Exhibit Description
10.28
Sales Agreement, dated as of June 30, 2023, between the Company and Virtu Americas LLC (incorporated by reference to Exhibit 1.1 to the Company's
Current Report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2023) (incorporated by reference to the Company’s Quarterly
Report on Form 10-Q filed with the Securities Exchange Commission on September 15, 2023).
10.29
Amendment No. 1 to License Agreement, dated as of July 25, 2023. (incorporated by reference to Exhibit 10.53 to the Company’s Annual Report on Form
10-K filed with the Securities Exchange Commission on May 2, 2024)
10.30
Amendment No. 2 to License Agreement, dated as of February 21, 2024. (incorporated by reference to Exhibit 10.54 to the Company’s Annual Report on
Form 10-K filed with the Securities Exchange Commission on May 2, 2024)
10.31†
Employment Offer Letter, dated November 6, 2023, by and between Vince, LLC and John Szczepanski. (incorporated by reference to Exhibit 10.58 to the
Company’s Annual Report on Form 10-K filed with the Securities Exchange Commission on May 2, 2024)
10.32
First Amendment to Credit Agreement, dated January 22, 2025, by and among V Opco, LLC, the guarantors named therein, Bank of America, N.A., as Agent,
and the other lenders from time to time party thereto. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the
Securities Exchange Commission on January 22, 2025).
10.33
Fifth Amendment to Credit Agreement, dated January 22, 2025, by and among V Opco, LLC, as the borrower, SK Financial Services, LLC, as agent and the
other lenders from time to time party thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the
Securities Exchange Commission on January 22, 2025).
10.34
Debt Forgiveness and Expense Reimbursement Letter, dated January 22, 2025, by and among the Company, P180 and P180, Inc. (incorporated by reference
to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities Exchange Commission on January 22, 2025).
10.35†
Employment Agreement, dated February 3, 2025, by and among V Opco, LLC, Vince Holding Corp. and Brendan Hoffman.
10.36†
Employment Offer Letter, dated March 12, 2025 by and between V Opco, LLC and Yuji Okumura.
10.37†
Updated Terms of Employment, dated April 10, 2025, by and between V Opco, LLC and Yuji Okumura.
10.38†
Confidential Severance Agreement and Release, dated March 26, 2024, by and between the Company and Jonathan Schwefel (incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 18, 2024).
10.39†
Employment Offer Letter, dated February 3, 2025, by and between V Opco, LLC and Jill Norton.
10.40†
Updated Terms of Employment, dated October 9, 2024, by and between V Opco, LLC and Akiko Okuma.
19.1
Vince Holding Corp. Insider Trading Policy.
21.1
List of subsidiaries of V Opco, LLC (formerly, Vince LLC).
23.1
Consent of PricewaterhouseCoopers LLP
31.1
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
97.1
Vince Holding Corp. Compensation Recovery Policy
101.INS
Inline XBRL Instance - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL
document.
101.SCH
Inline XBRL Taxonomy Extension Schema
43
Exhibit
Number
Exhibit Description
101.CAL
Inline XBRL Taxonomy Extension Calculation
101.PRE
Inline XBRL Taxonomy Extension Presentation
101.LAB
Inline XBRL Taxonomy Extension Labels
101.DEF
Inline XBRL Taxonomy Extension Definition
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
† Indicates exhibits that constitute management contracts or compensatory plans or arrangements.
ITEM 16. FORM 10-K SUMMARY.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: May 2, 2025
VINCE HOLDING CORP.
By:
/s/ Brendan Hoffman
Name:
Brendan Hoffman
Title:
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed by the following persons in the capacities and on the dates
listed.
Signature
Title
Date
/s/ Brendan Hoffman
Chief Executive Officer (Principal Executive Officer) (Director)
May 2, 2025
Brendan Hoffman
/s/ Yuji Okumura
Chief Financial Officer (Principal Financial and Accounting Officer)
May 2, 2025
Yuji Okumura
/s/ David Stefko
Director
May 2, 2025
David Stefko
/s/ Jerome Griffith
Director
May 2, 2025
Jerome Griffith
/s/ Robin Kramer
Director
May 2, 2025
Robin Kramer
/s/ Michael Mardy
Director
May 2, 2025
Michael Mardy
/s/ Eugenia Ulasewicz
Director
May 2, 2025
Eugenia Ulasewicz
/s/ Kelly Griffin
Director
May 2, 2025
Kelly Griffin
/s/ Simon Furie
Director
May 2, 2025
Simon Furie
F-1
INDEX TO THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements
Report of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm (PCAOB ID 238)
F-2
Consolidated Balance Sheets
F-4
Consolidated Statements of Operations and Comprehensive Income (Loss)
F-5
Consolidated Statements of Stockholders' Equity
F-6
Consolidated Statements of Cash Flows
F-7
Notes to Consolidated Financial Statements
F-8
Financial Statement Schedule
Schedule II—Valuation and Qualifying Accounts
F-33
F-2
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Vince Holding Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Vince Holding Corp. and its subsidiaries (the “Company”) as of February 1, 2025 and February 3,
2024, and the related consolidated statements of operations and comprehensive income (loss), of stockholders’ equity and of cash flows for the years then ended, including the
related notes and financial statement schedule listed in the index appearing on page F-1 for the years ended February 1, 2025 and February 3, 2024 (collectively referred to as the
“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
February 1, 2025 and February 3, 2024, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in
the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s consolidated
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required
to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it
relates.
Revenue Recognition
As described in Note 1 to the consolidated financial statements, the Company recognizes revenue when performance obligations identified under the terms of contracts
with its customers are satisfied, which generally occurs upon the transfer of control in accordance with the contractual terms and conditions of the sale. Sales are recognized when
the control of the goods are transferred to the customer for the Company's wholesale business, upon receipt by the customer for the Company's e-commerce business, and at the
time of sale to the consumer for the Company's retail business. The Company’s net sales were $293.5 million for the year ended February 1, 2025.
The principal consideration for our determination that performing procedures relating to revenue recognition is a critical audit matter is a high degree of auditor effort in
performing procedures related to the Company’s revenue recognition.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial
statements. These procedures included, among others, (i) testing revenue recognized for a sample of revenue transactions by obtaining and inspecting source documents, such as
sales orders, invoices, shipping and delivery documents, and payment receipts from customers and (ii) for the wholesale business, confirming a sample of outstanding customer
invoice balances
F-3
as of February 1, 2025 and, for confirmations not returned, obtaining and inspecting source documents, such as invoices, proof of shipment, and subsequent payment receipts.
/s/ PricewaterhouseCoopers LLP
New York, New York
May 2, 2025
We have served as the Company's auditor since 2012.
F-4
VINCE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
February 1,
February 3,
2025
2024
Assets
Current assets:
Cash and cash equivalents
$
607
$
357
Trade receivables, net of allowance for doubtful accounts $335 and $377 at February 1, 2025 and February 3, 2024,
respectively
32,927
20,671
Inventories, net
59,146
58,777
Prepaid expenses and other current assets
3,896
4,997
Total current assets
96,576
84,802
Property and equipment, net
7,378
6,972
Operating lease right-of-use assets, net
91,209
73,003
Goodwill
—
31,973
Equity method investment
23,464
26,147
Other assets
4,108
2,252
Total assets
$
222,735
$
225,149
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
35,090
$
31,678
Accrued salaries and employee benefits
8,709
3,967
Other accrued expenses
13,722
8,980
Short-term lease liabilities
16,025
16,803
Total current liabilities
73,546
61,428
Long-term debt
19,156
43,950
Long-term lease liabilities
87,180
67,705
Deferred income tax liability
631
4,913
Other liabilities
463
—
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock at $0.01 par value (100,000,000 shares authorized, 12,758,852 and 12,506,556 shares issued and
outstanding at February 1, 2025 and February 3, 2024, respectively)
128
125
Additional paid-in capital
1,158,279
1,144,740
Accumulated deficit
(1,116,681)
(1,097,634)
Accumulated other comprehensive income (loss)
33
(78)
Total stockholders' equity
41,759
47,153
Total liabilities and stockholders' equity
$
222,735
$
225,149
1 Includes receivables of $638 and $189 as of February 1, 2025 and February 3, 2024, respectively, which is with related parties.
2 Includes accrued royalty expense of $3,513 and $361 as of February 1, 2025 and February 3, 2024, respectively, which is with a related party.
3 Includes Third Lien Credit Facility of $29,982 as of February 3, 2024, which was with a former related party.
See accompanying notes to Consolidated Financial Statements.
1
2
3
F-5
VINCE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except share and per share data)
Fiscal Year
2024
2023
Net sales
$
293,452
$
292,890
Cost of products sold
148,273
159,598
Gross profit
145,179
133,292
Impairment of goodwill
31,973
—
Gain on sale of intangible assets
—
(32,808)
Gain on sale of subsidiary
(7,634)
—
Selling, general and administrative expenses
138,016
134,476
(Loss) income from operations
(17,176)
31,624
Interest expense, net
6,569
11,118
Other income
(344)
—
(Loss) income before income taxes and equity in net income of equity method investment
(23,401)
20,506
Benefit for income taxes
(3,642)
(3,478)
(Loss) income before equity in net income of equity method investment
(19,759)
23,984
Equity in net income of equity method investment
712
1,462
Net (loss) income
$
(19,047)
$
25,446
Other comprehensive income:
Foreign currency translation adjustments
111
3
Comprehensive (loss) income
$
(18,936)
$
25,449
(Loss) earnings per share:
Basic (loss) earnings per share
$
(1.51)
$
2.05
Diluted (loss) earnings per share
$
(1.51)
$
2.04
Weighted average shares outstanding:
Basic
12,579,588
12,442,781
Diluted
12,579,588
12,478,215
4 Includes $1,106 and $2,810 of net sales for the years ended February 1, 2025 and February 3, 2024, respectively, which is with a related party.
5 Includes royalty expense of $13,963 and $9,486 for the years ended February 1, 2025 and February 3, 2024, respectively, which is with a related party. Includes cost of products sold of $38 and
$1,299 for the years ended February 1, 2025 and February 3, 2024, respectively, which is with another related party.
6 Includes SG&A expenses of $625 and $1,288 for the years ended February 1, 2025 and February 3, 2024, respectively, which is with a related party.
7 Includes capitalized PIK interest with the Third Lien Credit Facility of $4,515 and $4,026 for the years ended February 1, 2025 and February 3, 2024, respectively, which was with a former related
party.
See accompanying notes to Consolidated Financial Statements.
4
5
6
7
F-6
VINCE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
Common Stock
Number of Shares
Outstanding
Par Value
Additional Paid-
In Capital
Accumulated
Deficit
Accumulated Other
Comprehensive Income
(Loss)
Total Stockholders'
Equity
Balance as of January 28, 2023
12,335,405 $
123 $
1,143,295 $
(1,123,080) $
(81) $
20,257
Comprehensive income:
Net income
—
—
—
25,446
—
25,446
Foreign currency translation adjustment
—
—
—
—
3
3
Share-based compensation expense
—
—
1,541
—
—
1,541
Restricted stock unit vestings
183,132
2
(2)
—
—
—
Tax withholdings related to restricted stock vesting
(28,886)
—
(142)
—
—
(142)
Issuance of common stock related to Employee Stock
Purchase Plan ("ESPP")
16,905
—
48
—
—
48
Balance as of February 3, 2024
12,506,556
125
1,144,740
(1,097,634)
(78)
47,153
Comprehensive (loss) income:
Net loss
—
—
—
(19,047)
—
(19,047)
Foreign currency translation adjustment
—
—
—
—
111
111
Deemed contribution in connection with debt
extinguishment
—
—
11,575
—
—
11,575
Contribution from principal stockholder
—
—
614
—
—
614
Share-based compensation expense
—
—
1,588
—
—
1,588
Restricted stock unit vestings
356,451
3
(3)
—
—
—
Tax withholdings related to restricted stock vesting
(117,189)
—
(264)
—
—
(264)
Issuance of common stock related to ESPP
13,034
—
29
—
—
29
Balance as of February 1, 2025
12,758,852 $
128 $
1,158,279 $
(1,116,681) $
33 $
41,759
See accompanying notes to Consolidated Financial Statements.
F-7
VINCE HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Twelve Months Ended
February 1, 2025
February 3, 2024
Operating activities
Net (loss) income
$
(19,047)
$
25,446
Add (deduct) items not affecting operating cash flows:
Impairment of goodwill
31,973
—
Depreciation and amortization
4,006
4,939
Allowance for doubtful accounts
9
104
Gain on sale of intangible assets
—
(32,808)
Gain on sale of subsidiary
(7,634)
—
Loss on disposal of property and equipment
88
260
Amortization of deferred financing costs
312
758
Deferred income taxes
(4,282)
(4,021)
Share-based compensation expense
1,588
1,541
Capitalized PIK Interest due to loan with former related party
4,515
4,026
Loss on debt extinguishment
—
3,136
Equity in net income of equity method investment, net of distributions
2,683
(121)
Changes in assets and liabilities:
Receivables, net
(11,652)
(42)
Inventories
(376)
31,236
Prepaid expenses and other current assets
298
(655)
Accounts payable and accrued expenses
19,820
(23,994)
Other assets and liabilities
(242)
(8,165)
Net cash provided by operating activities
22,059
1,640
Investing activities
Payments for capital expenditures
(4,232)
(1,460)
Transaction costs related to equity method investment
—
(525)
Proceeds from sale of intangible assets
—
77,525
Net cash (used in) provided by investing activities
(4,232)
75,540
Financing activities
Proceeds from borrowings under the Revolving Credit Facilities
211,213
245,116
Repayment of borrowings under the Revolving Credit Facilities
(214,027)
(289,387)
Repayment of borrowings under the Term Loan Facilities
—
(29,378)
Repayment of borrowings under the Third Lien Credit Facility
(15,000)
—
Tax withholdings related to restricted stock vesting
(264)
(142)
Proceeds from issuance of common stock under employee stock purchase plan
29
48
Financing fees
(332)
(3,336)
Net cash used in financing activities
(18,381)
(77,079)
(Decrease) increase in cash, cash equivalents, and restricted cash
(554)
101
Effect of exchange rate changes on cash, cash equivalents, and restricted cash
1
2
Cash, cash equivalents, and restricted cash, beginning of period
1,219
1,116
Cash, cash equivalents, and restricted cash, end of period
666
1,219
Less: restricted cash at end of period
59
862
Cash and cash equivalents per balance sheet at end of period
$
607
$
357
Supplemental Disclosures of Cash Flow Information
Cash payments for interest
$
1,784
$
6,400
Cash payments for income taxes, net of refunds
25
752
Supplemental Disclosures of Non-Cash Investing and Financing Activities
Non-cash equity method investment
—
25,500
Deemed contribution in connection with debt extinguishment
11,575
—
Capital expenditures in accounts payable and accrued liabilities
782
117
Contribution from principal stockholder in accounts receivable
614
—
Deferred financing fees in accrued liabilities
135
1
See accompanying notes to Consolidated Financial Statements.
F-8
VINCE HOLDING CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data and share amounts)
Note 1. Description of Business and Summary of Significant Accounting Policies
(A) Description of Business: The Company is a global retail company that operates the Vince brand women's and men's ready to wear business. Vince, established in
2002, is a leading global luxury apparel and accessories brand best known for creating elevated yet understated pieces for every day effortless style. Previously, the Company also
owned and operated the Rebecca Taylor and Parker brands until the sale of the respective intellectual property was completed, as discussed below.
On April 21, 2023 the Company entered into a strategic partnership ("Authentic Transaction") with Authentic Brands Group, LLC ("Authentic"), a global brand
development, marketing and entertainment platform, whereby the Company contributed its intellectual property to a newly formed Authentic subsidiary ("ABG Vince") for cash
consideration and a membership interest in ABG Vince. The Company closed the Asset Sale (as defined below) on May 25, 2023. On May 25, 2023, in connection with the
Authentic Transaction, V Opco, LLC (formerly, Vince, LLC) ("V Opco"), a wholly-owned subsidiary of the Company, entered into a License Agreement (the "License
Agreement") with ABG-Vince LLC, which provides V Opco with an exclusive, long-term license to use the Licensed Property in the Territory to the Approved Accounts (each as
defined in the License Agreement). See Note 2 "Recent Transactions" for additional information.
Rebecca Taylor, founded in 1996 in New York City, was a contemporary womenswear line lauded for its signature prints, romantic detailing and vintage inspired
aesthetic, reimagined for a modern era. On September 12, 2022, the Company announced its decision to wind down the Rebecca Taylor business. On December 22, 2022, the
Company's indirectly wholly owned subsidiary, Rebecca Taylor, Inc., completed the sale of its intellectual property and certain related ancillary assets to RT IPCO, LLC, an
affiliate of Ramani Group. On May 3, 2024, V Opco completed the sale of all outstanding shares of Rebecca Taylor, Inc., which held the Rebecca Taylor business prior to the
wind down, to Nova Acquisitions, LLC. See Note 2 "Recent Transactions" for further information.
Parker, founded in 2008 in New York City, was a contemporary women's fashion brand that was trend focused. During the first half of fiscal 2020 the Company decided
to pause the creation of new products for the Parker brand to focus resources on the operations of the Vince and Rebecca Taylor brands. On February 17, 2023, the Company's
indirectly wholly owned subsidiary, Parker Lifestyle, LLC, completed the sale of its intellectual property and certain related ancillary assets to Parker IP Co. LLC, an affiliate of
BCI Brands. See Note 2 "Recent Transactions" for additional information.
On January 22, 2025, P180, a venture focused on accelerating growth and profitability in the luxury apparel sector, acquired a majority stake in the Company (the “P180
Acquisition”) from affiliates of Sun Capital Partners, Inc. (collectively, “Sun Capital”). Simultaneously with the P180 Acquisition, V Opco amended its existing credit agreement
with Bank of America, N.A. (“BofA”). The amendment consented to, among other things, the change in control in connection with the P180 Acquisition, as well as a partial pay
down of the subordinated debt with SK Financial Services, LLC, an affiliate of Sun Capital, through increased borrowings under the credit agreement with BofA. On the same
day, V Opco paid $15,000 to SK Financial Services, LLC using proceeds from the credit facility, which resulted in a pay-down of $20,000 of the subordinated debt (the “Sun
Debt Paydown”).
In addition, in connection with the P180 Acquisition, P180 acquired and assumed $7,000 of the loans outstanding pursuant to the subordinated debt and immediately
thereafter cancelled such $7,000 (the “P180 Debt Forgiveness”). Following the Sun Debt Paydown and P180 Debt Forgiveness, the outstanding principal amount of subordinated
debt was reduced by approximately $27,000 with $7,500 remaining outstanding, which will continue to accrue payment-in-kind interest in accordance with, and otherwise be
subject to, the terms and conditions therein. See Note 2 "Recent Transactions" for additional information.
The Company reaches its customers through a variety of channels, specifically through major wholesale department stores and specialty stores in the United States
("U.S.") and select international markets, as well as through the Company's branded retail locations and the Company's websites. The Company designs products in the U.S. and
sources the vast majority of products from contract manufacturers outside the U.S., primarily in Asia. Products are manufactured to meet the Company's product specifications
and labor standards.
(B) Basis of Presentation: The accompanying consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles
("GAAP") and the rules and regulations of the U.S. Securities and Exchange Commission ("SEC").
The consolidated financial statements include the Company's accounts and the accounts of the Company's wholly-owned subsidiaries as of February 1, 2025. All
intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the financial statements contain all adjustments (consisting solely
of normal recurring adjustments) and disclosures necessary for a fair presentation.
F-9
(C) Fiscal Year: The Company operates on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52 or 53-week period
ending on the Saturday closest to January 31.
•
References to "fiscal year 2024" or "fiscal 2024" refer to the fiscal year ended February 1, 2025; and
•
References to "fiscal year 2023" or "fiscal 2023" refer to the fiscal year ended February 3, 2024.
Fiscal year 2024 consisted of a 52-week period and fiscal year 2023 consisted of a 53-week period.
(D) Sources and Uses of Liquidity: The Company's sources of liquidity are cash and cash equivalents, cash flows from operations, if any, borrowings available under the
2023 Revolving Credit Facility (as defined in Note 5 "Long-Term Debt and Financing Arrangements") and the Company's ability to access the capital markets, including the
Sales Agreement entered into with Virtu Americas LLC in June 2023 (see Note 9 "Stockholders' Equity" for further information). The Company's primary cash needs are funding
working capital requirements, including royalty payments under the License Agreement, meeting debt service requirements and capital expenditures for new stores and related
leasehold improvements. The most significant components of the Company's working capital are cash and cash equivalents, accounts receivable, inventories, accounts payable
and other current liabilities.
The Company’s future financial results may be subject to substantial fluctuations, and may be impacted by business conditions and macroeconomic factors, particularly in
light of the recently implemented tariffs . While we expect to meet our monthly Excess Availability (as defined in the 2023 Revolving Credit Facility Agreement) covenant and
believe that our other sources of liquidity will generate sufficient cash flows to meet our obligations for the next twelve months from the date these financial statements are
issued, the foregoing expectation is dependent on a number of factors, including, among others, our ability to generate sufficient cash flow from a combination of tariff mitigating
initiatives, our ongoing ability to manage our operating obligations, the ability of our partners to satisfy their payment obligations to us when due, the results of the currently
ongoing inventory valuation and potential borrowing restrictions imposed by our lenders based on their credit judgment, all of which could be significantly and negatively
impacted by the recently implemented and new retaliatory and/or reciprocal tariffs, as well as changing trade policies between the U.S. and its trading partners, in addition to
other macroeconomic factors. Any material negative impact from these factors or others could require us to implement alternative plans to satisfy our liquidity needs which may
be unsuccessful. In the event that we are unable to timely service our debt, meet other contractual payment obligations or fund our other liquidity needs, we may need to refinance
all or a portion of our indebtedness before maturity, seek waivers of or amendments to our contractual obligations for payment, reduce or delay scheduled expansions and capital
expenditures, liquidate inventory through additional discounting, sell material assets or operations, or seek other financing opportunities. There can be no assurance that these
options would be readily available to us and our inability to address our liquidity needs could materially and adversely affect our operations and jeopardize our business, financial
condition and results of operations.
(E) Use of Estimates: The preparation of consolidated financial statements in conformity with GAAP requires that management make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements which affect revenues and expenses
during the period reported. Estimates are adjusted when necessary to reflect actual experience. Significant estimates and assumptions may affect many items in the financial
statements. Actual results could differ from estimates and assumptions in amounts that may be material to the consolidated financial statements.
(F) Cash and cash equivalents: All demand deposits and highly liquid short-term deposits with original maturities of three months or less are considered cash
equivalents.
(G) Accounts Receivable and Concentration of Credit Risk: The Company maintains an allowance for accounts receivable estimated to be uncollectible. The
adjustments to the provision are recorded in Selling, general and administrative ("SG&A") expense. Substantially all of the Company's trade receivables are derived from sales to
retailers and are recorded at the invoiced amount and do not bear interest. The Company performs ongoing credit evaluations of its wholesale partners' financial condition and
requires collateral as deemed necessary. The past due status of a receivable is based on its contractual terms. Account balances are charged off against the allowance when it is
probable the receivable will not be collected.
Accounts receivable are recorded net of allowances including expected future chargebacks from wholesale partners and estimated margin support. It is the nature of the
apparel and fashion industry that suppliers similar to the Company face significant pressure from customers in the retail industry to provide allowances to compensate for
wholesale partner margin shortfalls. This pressure often takes the form of customers requiring the Company to provide price concessions on prior shipments as a prerequisite for
obtaining future orders. Pressure for these concessions is largely determined by overall retail sales performance and, more specifically, the performance of the Company's
products at retail. To the extent the Company's wholesale partners have more of the Company's goods on hand at the end of the season, there will be greater pressure for the
Company to grant markdown concessions on prior shipments. Accounts receivable balances are reported net of expected allowances for these matters based on the historical level
of concessions required and estimates of the level of markdowns and allowances that will be required in the coming season. The
F-10
Company evaluates the allowance balances on a continual basis and adjusts them as necessary to reflect changes in anticipated allowance activity. The Company also provides an
allowance for sales returns based on known trends and historical return rates.
In fiscal 2024 and 2023, sales to one wholesale partner accounted for more than ten percent of the Company's net sales. Sales to this partner represented 26% of fiscal
2024 net sales and 20% of fiscal 2023 net sales.
Two wholesale partners represented greater than ten percent of the Company's gross accounts receivable balances as of the end of both fiscal 2024 and fiscal 2023. One
partner represented 32% and 36% as of February 1, 2025 and February 3, 2024, respectively, and the other represented 24% and 22% as of February 1, 2025 and February 3,
2024, respectively. In addition, another wholesale partner represented greater than ten percent of the Company's gross accounts receivable balance as of February 1, 2025, with
14% of such balance.
(H) Inventories: Inventories are stated at the lower of cost or net realizable value. Cost is determined on the first-in, first-out basis. The cost of inventory includes
purchase cost as well as sourcing, transportation, duty, and other processing costs associated with acquiring, importing, and preparing inventory for sale. Inventory costs are
included in cost of products sold at the time of their sale. Product development costs are expensed in SG&A expense when incurred. Inventory values are reduced to net realizable
value when there are factors indicating that certain inventories will not be sold on terms sufficient to recover their cost. Inventories consist of finished goods. As of February 1,
2025 and February 3, 2024 finished goods, net of reserves were $59,146 and $58,777, respectively.
The Company has three major suppliers that accounted for approximately 16%, 16% and 13%, respectively, of inventory purchases for fiscal 2024. In fiscal 2023, the
Company had two major suppliers that accounted for approximately 18% and 17%, respectively, of inventory purchases. Amounts due to these suppliers were $4,021 as of
February 1, 2025 and $1,509 as of February 3, 2024, and were included in Accounts payable in the Consolidated Balance Sheets.
(I) Property and Equipment: Property and equipment are stated at cost. Depreciation is computed on the straight-line method over estimated useful lives of three to ten
years for furniture, fixtures, and equipment. Leasehold improvements are depreciated on the straight-line basis over the shorter of their estimated useful lives or the lease term,
excluding renewal terms. Capitalized software is depreciated on the straight-line basis over the estimated economic useful life of the software, generally three to seven years.
Maintenance and repair costs are charged to earnings while expenditures for major renewals and improvements are capitalized. Upon the disposition of property and equipment,
the accumulated depreciation is deducted from the original cost and any gain or loss is reflected in current earnings. Property and equipment consisted of the following:
February 1,
February 3,
(in thousands)
2025
2024
Leasehold improvements
$
30,009
$
32,694
Furniture, fixtures and equipment
9,716
9,748
Capitalized software
14,696
14,775
Construction in process
1,026
585
Total property and equipment
55,447
57,802
Less: accumulated depreciation
(48,069)
(50,830)
Property and equipment, net
$
7,378
$
6,972
Depreciation expense was $3,887 and $4,692 for fiscal 2024 and fiscal 2023, respectively.
(J) Impairment of Long-lived Assets: The Company reviews long-lived assets which consist of property and equipment and operating lease assets when the existence of
facts and circumstances indicate that the useful life is shorter than previously estimated or that the carrying amount of the asset groups to which these assets relate may not be
recoverable. The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets,
which for our retail stores is at the store level. Recoverability of these assets is evaluated by comparing the carrying value of the asset group with its estimated future
undiscounted cash flows. The recoverability assessment is dependent on a number of factors, including estimates of future growth and profitability, as well as other variables. If
the comparisons indicate that the value of the asset is not recoverable, an impairment loss is calculated as the difference between the carrying value and the fair value of the assets
within the asset group and the loss is recognized during that period. The fair value of the operating lease right-of-use assets is determined from the perspective of a market
participant considering various factors. The judgments and assumptions used in determining the fair value of the operating lease right-of-use assets are the current comparable
market rents for similar properties and a store discount rate. The fair value of the property and equipment is based on its estimated liquidation value. The estimates regarding
recoverability and fair value can be affected by factors such as future store results, real estate demand, store closure plans, and economic conditions that can be difficult to predict.
There were no impairment charges during fiscal 2024 and 2023.
F-11
(K) Goodwill and Other Intangible Assets: Goodwill is tested for impairment at least annually and in an interim period if a triggering event occurs.
Goodwill is not allocated to the Company's operating segments in the measure of segment assets regularly reported to and used by management; however, goodwill is
allocated to operating segments (goodwill reporting units) for the purpose of the annual impairment test for goodwill.
Goodwill represents the excess of the cost of acquired businesses over the fair market value of the identifiable net assets. As of January 28, 2023, the indefinite-lived
intangible asset was the Vince tradename. On April 21, 2023, the Company entered into the Authentic Transaction with Authentic and as a result, the Vince tradename and Vince
customer relationships were classified as held for sale and amortization of the Vince customer relationships ceased. The Company closed the Asset Sale on May 25, 2023. See
Note 2 "Recent Transactions" for further information.
On February 17, 2023, the Company completed the sale of the Parker tradename and certain related ancillary assets to Parker IP Co. LLC, an affiliate of BCI Brands. See
Note 2 "Recent Transactions" for further information.
An entity may elect to perform a qualitative impairment assessment for goodwill. If adverse qualitative trends are identified during the qualitative assessment that indicate
that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test is required. "Step one" of the quantitative
impairment test for goodwill requires an entity to determine the fair value of each reporting unit and compare such fair value to the respective carrying amount. If the estimated
fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired, and the Company is not required to perform
further testing. If the carrying amount of the reporting unit exceeds its estimated fair value, an impairment loss is recorded for the amount by which a reporting unit's carrying
value exceeds its fair value, not to exceed the carrying amount of goodwill.
An entity may pass on performing the qualitative assessment for a reporting unit and directly perform the quantitative assessment. An entity may resume performing a
qualitative assessment in subsequent periods.
Determining the fair value of goodwill is judgmental in nature and requires the use of significant estimates and assumptions, including, when a discounted cash flows
method is used, estimates of projected revenues, EBITDA margins, long-term growth rates, working capital, and discount rates. It is possible that estimates of future operating
results could change adversely and impact the evaluation of the recoverability of the carrying value of goodwill and that the effect of such changes could be material.
In fiscal 2024, the Company performed its annual impairment test during the fourth quarter. Concurrent with the performance of the annual impairment test, the P180
Acquisition was consummated. As the P180 Acquisition represented a change of control transaction with an unrelated third party, the fair value of the Company’s Vince
Wholesale reporting unit was estimated based on the transaction price of the P180 Acquisition. The estimated fair value of the Company implied by the P180 Acquisition was
allocated to the Company’s reporting units, Vince Wholesale and Vince Direct-to-consumer, using a market-based approach, considering the relative contributions of each
reporting unit to the Company as well as appropriate valuation multiples for each reporting unit relative to the implied P180 Acquisition multiple. The results of the quantitative
test determined that the fair value of the Vince Wholesale reporting unit was below its carrying value by an amount greater than its total goodwill balance and as a result, the
Company recorded a goodwill impairment charge of $31,973 to write-off the goodwill for the Vince Wholesale reporting unit. The charge was recorded within Impairment of
goodwill on the Consolidated Statements of Operations and Comprehensive Income (Loss) during the fourth quarter of fiscal 2024.
In fiscal 2023, the Company performed its annual impairment test during the fourth quarter. The fair value of the Company's Vince Wholesale reporting unit was
estimated using a combination of the income approach (the discounted cash flows method) and the market approach (guideline public company method). In fiscal 2023, the
Company elected to perform a quantitative impairment test on goodwill allocated to the Company's Vince Wholesale reporting unit. The results of the quantitative test did not
result in any impairment because the fair value of the Company's Vince Wholesale reporting unit exceeded its carrying value. Goodwill was $31,973 as of February 3, 2024.
See Note 3 "Goodwill and Intangible Assets" for more information on the details surrounding goodwill and intangible assets.
(L) Deferred Financing Costs: Deferred financing costs, such as underwriting, financial advisory, professional fees, and other similar fees are capitalized and recognized
in interest expense over the contractual life of the related debt instrument using the straight-line method, as this method results in recognition of interest expense that is materially
consistent with that of the effective interest method.
(M) Leases: The Company determines if a contract contains a lease at inception. The Company leases various office spaces, showrooms and retail stores. Although
certain recent leases are subject to shorter terms as a result of the implementation of the strategy to pursue shorter lease terms when evaluating certain markets, some of the
Company's leases have initial terms of 10 years, and in many instances can be extended for an additional term. The Company will not include renewal options in the underlying
lease
F-12
term unless the Company is reasonably certain to exercise the renewal option. Substantially all of the Company's leases require a fixed annual rent, and most require the payment
of additional rent if store sales exceed a negotiated amount. These percentage rent expenses are considered as variable lease costs and are recognized in the consolidated financial
statements when incurred. In addition, the Company's real estate leases may also require additional payments for real estate taxes and other occupancy-related costs which it
considers as non-lease components.
Operating lease right-of-use ("ROU") assets and operating lease liabilities are recognized based upon the present value of the future lease payments over the lease term.
As the Company's leases do not provide an implicit borrowing rate, the Company uses an estimated incremental borrowing rate based upon a combination of market-based
factors, such as market quoted forward yield curves and company specific factors, such as the Company's credit rating, lease size and duration to calculate the present value.
(N) Revenue Recognition: The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied,
which generally occurs upon the transfer of control in accordance with the contractual terms and conditions of the sale. Sales are recognized when the control of the goods are
transferred to the customer for the Company's wholesale business, upon receipt by the customer for the Company's e-commerce business, and at the time of sale to the consumer
for the Company's retail business. See Note 13 "Segment and Geographical Financial Information" for disaggregated revenue amounts by segment.
Revenue associated with gift cards is recognized upon redemption and unredeemed balances are considered a contract liability and recorded within Other accrued
expenses, which are subject to escheatment within the jurisdictions in which it operates. As of February 1, 2025 and February 3, 2024, the contract liability was $1,544 and
$1,628, respectively. In fiscal 2024, the Company recognized $265 of revenue that was previously included in the contract liability as of February 3, 2024.
Amounts billed to customers for shipping and handling costs are not material. Such shipping and handling costs are accounted for as a fulfillment cost and are included in
cost of products sold. Sales taxes that are collected by the Company from a customer are excluded from revenue.
Sales are measured as the amount of consideration the Company expects to receive in exchange for transferring goods, which includes estimates for variable
consideration. Variable consideration mainly includes discounts, chargebacks, markdown allowances, cooperative advertising programs, and sales returns. Estimated amounts of
discounts, chargebacks, markdown allowances, cooperative advertising programs, and sales returns are accounted for as reductions of sales when the associated sale occurs.
These estimated amounts are adjusted periodically based on changes in facts and circumstances when the changes become known. On the Company's consolidated balance sheet,
reserves for sales returns are included within other accrued liabilities, and the value of inventory associated with reserves for sales returns are included in prepaid expenses and
other current assets. The Company continues to estimate the amount of sales returns based on known trends and historical return rates.
(O) Cost of Products Sold: The Company's cost of products sold and gross margins may not necessarily be comparable to that of other entities as a result of different
practices in categorizing costs. The primary components of the Company's cost of products sold are as follows:
•
the cost of purchased merchandise, including raw materials;
•
the cost of inbound transportation, including freight;
•
the cost of the Company's production and sourcing departments;
•
other processing costs associated with acquiring and preparing the inventory for sale; and
•
shrink and valuation reserves.
(P) Marketing and Advertising: The Company provides cooperative advertising allowances to certain of its customers. These allowances are accounted for as reductions
in sales as discussed in "Revenue Recognition" above. Production expense related to company-directed advertising is deferred until the first time at which the advertisement runs.
All other expenses related to company-directed advertising are expensed as incurred. Marketing and advertising expense recorded in SG&A expenses was $12,532 and $11,843 in
fiscal 2024 and fiscal 2023, respectively. At February 1, 2025 and February 3, 2024, deferred production expenses associated with company-directed advertising were $792 and
$698, respectively.
(Q) Share-Based Compensation: New, modified and unvested share-based payment transactions with employees, such as stock options and restricted stock units, are
measured at fair value and recognized as compensation expense over the requisite service period and is included as a component of SG&A expenses in the Consolidated
Statements of Operations and Comprehensive Income (Loss). Forfeitures are accounted for as they occur.
F-13
(R) Income Taxes: The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for
the future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities at enacted rates. The Company assesses the likelihood of
the realization of deferred tax assets and adjusts the carrying amount of these deferred tax assets by a valuation allowance to the extent the Company believes it more likely than
not that all or a portion of the deferred tax assets will not be realized. Many factors are considered when assessing the likelihood of future realization of deferred tax assets,
including recent earnings results within taxing jurisdictions, expectations of future taxable income, the carryforward periods available and other relevant factors. Changes in the
required valuation allowance are recorded in income in the period such determination is made. The Company recognizes tax positions in the Consolidated Balance Sheets as the
largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with tax authorities assuming full knowledge of the position and all
relevant facts. Accrued interest and penalties related to unrecognized tax benefits are included in income taxes in the Consolidated Statements of Operations and Comprehensive
Income (Loss).
(S) Earnings (Loss) Per Share: Basic earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares of common stock
outstanding during the period. Except when the effect would be anti-dilutive, diluted earnings per share is calculated based on the weighted average number of shares of common
stock outstanding plus the dilutive effect of share-based awards calculated under the treasury stock method.
(T) Recent Accounting Pronouncements: Except as noted below, the Company has considered all recent accounting pronouncements and has concluded that there are
no recent accounting pronouncements that may have a material impact on its Consolidated Financial Statements, based on current information.
Recently Adopted Accounting Pronouncements
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07: Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment
expenses. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The amendments are effective for fiscal years
beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted this
pronouncement in fiscal 2024 and retrospectively to all prior periods using the significant segment expense categories identified. The impact of the adoption of the amendments
in this update was not material to the Company’s financial position and results of operations, as the requirements impact only segment reporting disclosures in the footnotes to the
Company’s financial statements.
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires expanded disclosure within the
rate reconciliation as well as disaggregation of annual taxes paid. This amendment is effective for annual periods beginning after December 15, 2024, and is applied
prospectively. Early adoption is permitted. The Company is currently evaluating the impact that this new guidance may have on its financial statement disclosures.
In November 2024, the FASB issued ASU No. 2024-03: Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):
Disaggregation of Income Statement Expenses. The ASU is intended to improve disclosures about a public business entity's expenses, primarily through additional disaggregation
of income statement expenses. The FASB further clarified the effective date in January 2025 with the issuance of ASU 2025-01: Income Statement-Reporting Comprehensive
Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The ASU is effective for fiscal years beginning after December 15, 2026, and
interim periods beginning after December 15, 2027, with early adoption permitted. The requirements of the ASU will be applied prospectively with the option for retrospective
application. We are currently evaluating the ASU to determine the impact on the Company's disclosures.
F-14
Note 2. Recent Transactions
Wind Down of Rebecca Taylor Business
On September 12, 2022, the Company announced its decision to wind down the Rebecca Taylor business. On September 30, 2022, the Company entered into
amendments to the Term Loan Credit Facility, the 2018 Revolving Credit Facility and the Third Lien Credit Facility (as defined in Note 5 "Long-Term Debt and Financing
Arrangements"), which in part, permitted the sale of the intellectual property of the Rebecca Taylor, Inc. and the Rebecca Taylor, Inc. liquidation. On December 22, 2022, the
Company's indirectly wholly owned subsidiary, Rebecca Taylor, Inc., completed the sale of its intellectual property and certain related ancillary assets to RT IPCO, LLC, an
affiliate of Ramani Group.
On July 7, 2023, Rebecca Taylor, Inc. and Rebecca Taylor Retail Stores, LLC, each as an assignor, made a General Assignment for the Benefit of the Creditors (the
"Assignment") to a respective assignee, an unaffiliated California limited liability company, pursuant to California state law. The Assignment resulted in the residual rights and
assets of each of Rebecca Taylor, Inc. and Rebecca Taylor Retail Stores, LLC being assigned and transferred to such assignees. As a result, Rebecca Taylor, Inc. and Rebecca
Taylor Retail Stores, LLC no longer held any assets.
On May 3, 2024, V Opco, LLC (formerly, Vince, LLC) ("V Opco") completed the sale of all outstanding shares of Rebecca Taylor, Inc., which held the Rebecca Taylor
business prior to the wind-down, to Nova Acquisitions, LLC. Nova Acquisitions, LLC is wholly owned by James Carroll, who served as the sole director and officer of Rebecca
Taylor, Inc. at the time of the Transaction, pursuant to a service agreement between Mr. Carroll and Rebecca Taylor, Inc. that was previously entered into in September 2022 in
connection with the wind-down. While serving as the sole director and officer of Rebecca Taylor, Inc., Mr. Carroll did not serve as an agent to the Company and was not a
related party to the Company. Following the completion of the Transaction, there exists no relationship or arrangement whatsoever between Mr. Carroll and the Company or any
of its affiliates. The Transaction was completed pursuant to the SPA, dated May 3, 2024, entered into between the Seller and Nova Acquisitions, LLC. The SPA contains
customary representations, warranties and covenants for a transaction of this nature, but does not include any indemnification provisions for the benefit of either party. Following
the completion of the Transaction, there is no ongoing involvement between the Company and Rebecca Taylor, Inc. As Rebecca Taylor Inc. was in a net liability position, as a
result of the Transaction the Company recognized a gain on sale of subsidiary of $7,634, which is presented in the Consolidated Statements of Operations and Comprehensive
Income (Loss) for fiscal 2024.
There were no Rebecca Taylor wind down related charges (benefits) for fiscal 2024. For fiscal 2023, the Company reported wind down related benefits of $1,750,
primarily related to the release of operating lease liabilities as a result of lease terminations.
Sale of Parker Intellectual Property
On February 17, 2023, the Company's indirectly wholly owned subsidiary, Parker Lifestyle, LLC, completed the sale of its intellectual property and certain related
ancillary assets to Parker IP Co. LLC, an affiliate of BCI Brands, for $1,025. The Company recognized a gain of $765 on the sale, which was recorded within Gain on sale of
intangible assets in the Consolidated Statements of Operations and Comprehensive Income (Loss) for fiscal 2023. Net cash proceeds from the sale were used to repay $838 of
borrowings under the Term Loan Credit Facility (as defined in Note 5 "Long-Term Debt and Financing Arrangements").
Sale of Vince Intellectual Property
On April 21, 2023 the Company entered into the Asset Purchase Agreement (defined below), pursuant to which V Opco agreed to sell and transfer to ABG-Vince LLC
(f/k/a ABG-Viking, LLC) ("ABG Vince"), an indirect subsidiary of Authentic, all intellectual property assets related to the business operated under the Vince brand in exchange
for total consideration of $76,500 in cash and a 25% membership interest in ABG Vince (the "Asset Sale"). The Asset Sale was consummated in accordance with the terms of the
Asset Purchase Agreement on May 25, 2023 (the "Closing Date"). Through the agreement, Authentic owns the majority stake of 75% membership interest in ABG Vince.
Upon the closing of the Asset Sale, the Company derecognized the intellectual property assets at their carrying amount of $69,957. In exchange for the Company's sale of
its intellectual property assets, which included the Vince tradename and Vince customer relationships, to ABG Vince, Authentic paid $76,500 in cash and a 25% interest in ABG
Vince valued at $25,500. As a result, the Company recognized a gain of $32,043, which was recorded within Gain on sale of intangible assets in the Consolidated Statements of
Operations and Comprehensive Income (Loss) during fiscal 2023. Additionally, during fiscal 2023, the Company incurred total transaction related costs of approximately $5,555.
Of these transaction costs, approximately $525 was incurred to acquire the investment in ABG Vince. As such, these costs were included in the initial measurement of the
investment and recorded as part of the equity method investment on the Consolidated Balance Sheets. The remaining transaction related costs were included in selling, general
and administrative ("SG&A") expense in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss) in fiscal 2023. The Company utilized the
net proceeds received to prepay in full the Term Loan Credit
F-15
Facility and to repay a portion of the outstanding borrowings under the 2018 Revolving Credit Facility (as defined in Note 5 "Long-Term Debt and Financing Arrangements").
See Note 5 "Long-Term Debt and Financing Arrangements" for further information.
Operating Agreement
On May 25, 2023, in connection with the closing (the "Closing") of the Asset Sale pursuant to the Intellectual Property Asset Purchase Agreement (the "Asset Purchase
Agreement"), dated as of April 21, 2023, by and among V Opco, ABG Vince, the Company and ABG Intermediate Holdings 2 LLC, V Opco and ABG Vince entered into an
Amended and Restated Limited Liability Company Agreement of ABG-Vince, LLC (the "Operating Agreement"), which, among other things, provides for the management of
the business and the affairs of ABG Vince, the allocation of profits and losses, the distribution of cash of ABG Vince among its members and the rights, obligations and interests
of the members to each other and to V Opco.
The Company accounts for its 25% interest in ABG Vince under the equity method. In applying the equity method, the Company recorded the initial investment at cost
and subsequently increases or decreases the carrying amount of the investment by the Company's proportionate share of net income or loss. Distributions received from ABG
Vince are recognized as a reduction of the carrying amount of the investment. The Company's proportionate share of ABG Vince's net income or loss is recorded within Equity in
net income of equity method investment on the Consolidated Statements of Operations and Comprehensive Income (Loss). The carrying value for the Company's investment in
ABG Vince is recorded within Equity method investment on the Consolidated Balance Sheets. The Company records its share of net income or loss using a one-month lag. This
convention does not materially impact the Company's results.
The Company reviews its investment in ABG Vince for impairment when events or changes in circumstances indicate that an other-than-temporary decline in value may
have occurred. If the carrying value of the investment exceeds its fair value and the loss in value is other than temporary, the investment is considered impaired and reduced to
fair value, and the impairment is recognized in the period identified. Factors providing evidence of such a loss include changes in ABG Vince's operations or financial condition,
significant continuing losses, and significant negative economic conditions, among others. During the fiscal years 2024 and 2023 there was no impairment of the investment in
ABG Vince.
License Agreement
On May 25, 2023, in connection with the Closing, V Opco and ABG Vince entered into a License Agreement (the "License Agreement"), which provides V Opco with a
license to use the Licensed Property in the Territory, which is defined as the United States, Canada, Andorra, Austria, Germany, Switzerland, Belgium, Netherlands,
Luxembourg, France, Monaco, Liechtenstein, Italy, San Marino, Vatican City, Iceland, Norway, Denmark, Sweden, Finland, Spain, Portugal, Greece, Republic of Cyprus
(excluding Northern Cyprus), United Kingdom, Ireland, Australia, New Zealand, Mainland China, Hong Kong, Macau, Taiwan, Singapore, Japan and Korea (the "Core
Territory"), together with all other territories (the "Option Territory"), to the Approved Accounts (each as defined in the License Agreement). V Opco is required to operate and
maintain a minimum of 45 Retail Stores and Shop-in-Shops in the Territory. The Option Territory may be changed unilaterally by ABG Vince at any time after the effective date
of the License Agreement.
Additionally, the License Agreement provides V Opco with a license to use the Licensed Property to design, manufacture, promote, market, distribute, and sell ready-to-
wear Sportswear Products and Outerwear Products (the "Core Products") and Home Décor and Baby Layettes (the "Option Products," together with the Core Products, the
"Licensed Products"), which Option Products may be changed unilaterally by ABG Vince at any time after the effective date of the License Agreement.
The initial term of the License Agreement began on May 25, 2023, the date on which the Closing actually occurred, and ends at the end of the Company's 2032 fiscal
year, unless sooner terminated pursuant to the terms of the License Agreement. V Opco has the option to renew the License Agreement on the terms set forth in the License
Agreement for eight consecutive periods of ten years each, unless the License Agreement is sooner terminated pursuant to its terms or V Opco is in material breach of the License
Agreement and such breach has not been cured within the specified cure period. V Opco may elect not to renew the term for a renewal term.
V Opco is required to pay ABG Vince a royalty on net sales of Licensed Products and committed to an annual guaranteed minimum royalty of $11,000 and annual
minimum net sales as specified in the License Agreement, in each case, during the initial term of the License Agreement, except that the guaranteed minimum royalty and
minimum net sales for the first contract year during the initial term was prorated to the period beginning on the Closing Date and ended at the end of the Company's 2023 fiscal
year. The annual guaranteed minimum royalty and annual minimum net sales for each subsequent renewal term is equal to the greater of (i) a percentage as set forth in the
License Agreement of the guaranteed minimum net royalty or the minimum net sales (as applicable) of the immediately preceding contract year, and (ii) the average of actual
Royalties (as defined in the License Agreement, with respect to the guaranteed minimum royalty) or actual Net Sales (as defined in the License Agreement, with respect to the
annual minimum net sales) during certain years as set forth in the License Agreement of the preceding initial term or renewal term (as applicable). V Opco
F-16
is required to pay royalties comprised of a low single digit percentage of net sales arising from retail and e-commerce sales of Licensed Products and a mid single digit percentage
of net sales arising from wholesale sales of such Licensed Products.
In the event that the annual guaranteed minimum royalty paid to ABG Vince in any given contract year is greater than the actual royalties earned by ABG Vince in the
same contract year, the difference between the royalty actually earned and the annual guaranteed minimum royalty paid is credited for the next two contract years against any
amount of royalty earned by ABG Vince in excess of the annual guaranteed minimum royalty paid during each such contract year, if any.
Royalty expense is included within Cost of product sold on the Consolidated Statements of Operations and Comprehensive Income (Loss).
P180 Acquisition
On January 22, 2025, P180 Vince Acquisition Co. (“P180”) purchased 8,481,318 shares of common stock of the Company, which constituted approximately 67% of the
Company’s outstanding common stock, from affiliates of Sun Capital in a privately negotiated stock purchase transaction (the “P180 Acquisition”) for approximately $19,800 in
cash. 1,262,933 of these purchased shares were held back at the closing by the affiliates of Sun Capital and all or a portion of such shares will be transferred to P180 in the event
the remaining outstanding obligations under the Sun Amended Credit Agreement are purchased by P180 (or any of its affiliates or designees) from SK Financial Services, or
otherwise repaid in full, prior to September 22, 2025. P180 will forfeit its right to, and such affiliates of Sun Capital will be entitled to retain, a portion of such held back shares if
such purchase or repayment occurs after January 24, 2025, and P180 will forfeit its right to all held back shares if such purchase or repayment does not occur on or prior to
September 22, 2025. The affiliates of Sun Capital agreed to various voting, transfer and other restrictions on the held back shares. As of February 1, 2025, the remaining
outstanding obligations under the Sun Amended Credit Agreement have not been repurchased by P180 (or any of its affiliates or designees) from SK Financial Services and
therefore 252,587 of the shares held back have been forfeited by P180 as of February 1, 2025. See Note 14 "Related Party Transactions" for additional information.
In connection with the P180 Acquisition, on January 22, 2025, V Opco entered into the First Amendment (the “First Amendment”) to its 2023 Revolving Credit Facility
or "ABL Credit Agreement", and, simultaneously with the entry into the First Amendment, entered into the Fifth Amendment (the “Third Lien Fifth Amendment”) to its Third
Lien Credit Facility or "Sun Credit Agreement" and paid $15,000 to SK Financial Services, LLC with the proceeds from additional borrowings under the 2023 Revolving Credit
Facility as repayment of $20,000 in outstanding principal amount of the loans outstanding under the Third Lien Credit Facility (such pay-down transaction, the “Sun Debt
Paydown”). In addition, in connection with the P180 Acquisition, P180 acquired and assumed from SK Financial Services LLC approximately $7,000 of the remaining
outstanding balance owed by the Company under the Third Lien Credit Facility. Immediately thereafter, P180 agreed to forgive and cancel such $7,000 (the “P180 Debt
Forgiveness”) such that there remained outstanding an aggregate of approximately $7,500 under the Third Lien Credit Facility, which will continue to accrue interest in
accordance with, and otherwise be subject to the terms and conditions set forth in, the Third Lien Credit Facility. In addition, pursuant to the Debt Forgiveness, P180 and its
parent company, P180, Inc., agreed to reimburse the Company for its fees and expenses associated with the transactions relating to the P180 Acquisition. See Note 5 "Long Term
Debt and Financing Arrangements" for additional discussion.
The Company determined that the changes to the 2023 Revolving Credit Facility under the First Amendment did not result in a change to the borrowing capacity of the
arrangement, and therefore $458 of costs incurred in connection with the First Amendment have been deferred and will be recognized over the term of the arrangement, which is
presented within Other assets on the Consolidated Balance Sheets.
The Company determined that modification to the Third Lien Credit Facility under the Fifth Amendment and the corresponding Sun Debt Paydown and P180 Debt
Forgiveness should be recorded as debt extinguishment of the Third Lien Credit Facility in accordance with ASC 470. The Company derecognized the old debt and recorded the
new debt at fair value in the amount of $7,713, and a gain upon extinguishment in the amount of $11,575. As Sun Capital and affiliates and P180 maintain an equity interest in the
Company, the gain on extinguishment was recorded as a capital contribution within equity.
SK Financial Services, LLC is an affiliate of Sun Capital Partners, Inc. (“Sun Capital”), whose affiliates owned approximately 67% of the Company’s outstanding
common stock prior to the P180 Acquisition. Immediately following the P180 Acquisition, affiliates of Sun Capital continued to own approximately 10% of the Company’s
outstanding common stock. In addition, the P180 Acquisition resulted in accelerated vesting of certain restricted stock units. See Note 7 "Share Based Compensation" for
additional information.
F-17
Note 3. Goodwill and Intangible Assets
Net goodwill balances and changes therein by segment were as follows:
(in thousands)
Vince Wholesale
Vince
Direct-to-consumer
Total Net Goodwill
Balance as of February 3, 2024
$
31,973 $
— $
31,973
Impairment charges
(31,973)
—
(31,973)
Balance as of February 1, 2025
$
— $
— $
—
The total carrying amount of goodwill was net of accumulated impairments of $133,818 as $101,845 as of February 1, 2025 and February 3, 2024, respectively.
In fiscal 2024, the Company performed its annual impairment test during the fourth quarter. Concurrent with the performance of the annual impairment test, the P180
Acquisition was consummated. As the P180 Acquisition represented a change of control transaction with an unrelated third party, the fair value of the Company’s Vince
Wholesale reporting unit was estimated based on the transaction price of the P180 Acquisition. The estimated fair value of the Company implied by the P180 Acquisition was
allocated to the Company’s reporting units, Vince Wholesale and Vince Direct-to-consumer, using a market-based approach, considering the relative contributions of each
reporting unit to the Company as well as appropriate valuation multiples for each reporting unit relative to the implied P180 Acquisition multiple. The results of the quantitative
test determined that the fair value of the Vince Wholesale reporting unit was below its carrying value by an amount greater than its total goodwill balance and as a result, the
Company recorded a goodwill impairment charge of $31,973 to write-off the goodwill for the Vince Wholesale reporting unit. The charge was recorded within Impairment of
goodwill on the Consolidated Statements of Operations and Comprehensive Income (Loss) during the fourth quarter of fiscal 2024.
There were no impairments recorded as a result of the Company's annual goodwill impairment test performed during fiscal 2023.
On April 21, 2023, the Company entered into the Authentic Transaction with Authentic and as a result, the Vince tradename and Vince customer relationships were
classified as held for sale and amortization of the Vince customer relationships ceased. The Company closed the Asset Sale on May 25, 2023. See Note 2 "Recent Transactions"
for further information.
On February 17, 2023, the Company's indirectly wholly owned subsidiary, Parker Lifestyle, LLC, completed the sale of its intellectual property and certain related
ancillary assets to Parker IP Co. LLC, an affiliate of BCI Brands. See Note 2 "Recent Transactions" for further information.
Amortization of identifiable intangible assets was $0 and $149 for fiscal 2024 and fiscal 2023, respectively, which is included in SG&A expenses on the Consolidated
Statements of Operations and Comprehensive Income (Loss).
Note 4. Fair Value Measurements
We define the fair value of a financial instrument as the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. We are responsible for the determination of the value of the investments carried at fair value and the supporting
methodologies and assumptions. The Company's financial assets and liabilities are to be measured using inputs from three levels of the fair value hierarchy as follows:
Level 1—
quoted market prices in active markets for identical assets or liabilities
Level 2—
observable market-based inputs (quoted prices for similar assets and liabilities in active markets and quoted prices for identical or similar assets or
liabilities in markets that are not active) or inputs that are corroborated by observable market data
Level 3—
significant unobservable inputs that reflect the Company's assumptions and are not substantially supported by market data
The Company did not have any non-financial assets or non-financial liabilities recognized at fair value on a recurring basis at February 1, 2025 or February 3, 2024. At
February 1, 2025 and February 3, 2024, the Company believes that the carrying values of cash and cash equivalents, receivables, and accounts payable approximate fair value,
due to the short-term maturity of these instruments. The Company's debt obligations with a carrying value of $19,156 and $44,209 as of February 1, 2025 and February 3,
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2024, respectively, are at variable interest rates. Borrowings under the Company's 2023 Revolving Credit Facility are recorded at carrying value, which approximates fair value
due to the frequent nature of such borrowings and repayments. The Company considers this as a Level 2 input. The carrying values of the Company's Third Lien Credit Facility as
of February 1, 2025 and February 3, 2024, approximate fair value, due to the variable rates associated with this obligation. The Company considers this a Level 3 input.
The Company's non-financial assets, which primarily consist of goodwill, operating lease right-of-use ("ROU") assets, and property and equipment, are not required to be
measured at fair value on a recurring basis and are reported at their carrying values. However, on a periodic basis whenever events or changes in circumstances indicate that their
carrying value may not be fully recoverable (and at least annually for goodwill), non-financial assets are assessed for impairment and, if applicable, written down to (and recorded
at) fair value.
The following table presents the non-financial assets of the Company measured at fair value on a non-recurring basis in fiscal 2024, based on such fair value hierarchy.
Net Carrying Value of
Impaired Assets as of
Fair Value Measured and Recorded at Reporting Date
Using:
Total Losses - Year
Ended
(in thousands)
February 1, 2025
Level 1
Level 2
Level 3
February 1, 2025
Goodwill
$
— $
— $
— $
— $
31,973
(1) Recorded within Impairment of goodwill on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Note 5. Long-Term Debt and Financing Arrangements
Debt obligations consisted of the following:
February 1,
February 3,
(in thousands)
2025
2024
Long-term debt:
Revolving Credit Facilities
$
11,413 $
14,227
Third Lien Credit Facility
7,743
29,982
Total debt principal
19,156
44,209
Less: deferred financing costs
—
259
Total long-term debt
$
19,156 $
43,950
Term Loan Credit Facility
On September 7, 2021, V Opco entered into a $35,000 senior secured term loan credit facility (the "Term Loan Credit Facility") pursuant to a Credit Agreement (the
"Term Loan Credit Agreement"), as amended from time to time, by and among V Opco, as the borrower, the guarantors named therein, PLC Agent, LLC, as administrative agent
and collateral agent, and the other lenders from time to time party thereto. Vince Holding Corp. and Vince Intermediate Holding, LLC ("Vince Intermediate") were guarantors
under the Term Loan Credit Facility. The Term Loan Credit Facility would have matured on the earlier of September 7, 2026, and 91 days after the maturity date of the 2018
Revolving Credit Facility.
On May 25, 2023, utilizing proceeds from the Asset Sale, the Company repaid all outstanding amounts of $28,724, which included accrued interest and a prepayment
penalty of $553 (which is included within financing fees on the Consolidated Statements of Cash Flows), under the Term Loan Credit Facility. The Term Loan Credit Facility
was terminated. The Company also repaid $850 of fees due in accordance with an amendment entered into on September 30, 2022. Additionally, the Company recorded expense
of $1,755 during fiscal 2023 related to the write-off of the remaining deferred financing costs. Prior to May 25, 2023, on an inception to date basis, the Company had made
repayments of $7,335 on the Term Loan Credit Facility.
(1)
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2023 Revolving Credit Facility
On June 23, 2023, V Opco, entered into a new $85,000 senior secured revolving credit facility (the "2023 Revolving Credit Facility") pursuant to a Credit Agreement (the
"2023 Revolving Credit Agreement") by and among V Opco, the guarantors named therein, Bank of America, N.A. ("BofA"), as Agent, the other lenders from time to time party
thereto, and BofA Securities, Inc., as sole lead arranger and sole bookrunner.
All outstanding amounts under the 2018 Revolving Credit Facility (as defined below) were repaid in full and such facility was terminated pursuant to the terms thereof as
a result of all parties completing their obligations under such facility.
The 2023 Revolving Credit Facility provides for a revolving line of credit of up to the lesser of (i) the Borrowing Base (as defined in the 2023 Revolving Credit
Agreement) and (ii) $85,000, as well as a letter of credit sublimit of $10,000. The 2023 Revolving Credit Agreement also permits V Opco to request an increase in aggregate
commitments under the 2023 Revolving Credit Facility of up to $15,000, subject to customary terms and conditions. The 2023 Revolving Credit Facility matures on the earlier of
June 23, 2028, and 91 days prior to the earliest maturity date of any Material Indebtedness (as defined in the 2023 Revolving Credit Agreement), including the subordinated
indebtedness pursuant to the Third Lien Credit Agreement.
Interest is payable on the loans under the 2023 Revolving Credit Facility, at Vince LLC's request, either at Term SOFR, the Base Rate, or SOFR Daily Floating Rate, in
each case, with applicable margins subject to a pricing grid based on an average daily excess availability calculation. The "Base Rate" means, for any day, a fluctuating rate per
annum equal to the highest of (i) the Federal Funds Rate for such day, plus 0.5%; (ii) the rate of interest in effect for such day as publicly announced from time to time by BofA
as its prime rate; (iii) the SOFR Daily Floating Rate on such day, plus 1.0%; and (iv) 1.0%. During the continuance of certain specified events of default, at the election of BofA
in its capacity as Agent, interest will accrue at a rate of 2.0% in excess of the applicable non-default rate.
The applicable margins for SOFR Term and SOFR Daily Floating Rate Loans are: (i) 2.0% when the average daily Excess Availability (as defined in the 2023 Revolving
Credit Agreement) is greater than 66.7% of the Loan Cap (as defined in the 2023 Revolving Credit Agreement); (ii) 2.25% when the average daily Excess Availability is greater
than or equal to 33.3% but less than or equal to 66.7% of the Loan Cap; and (iii) 2.5% when the average daily Excess Availability is less than 33.3% of the Loan Cap. The
applicable margins for Base Rate Loans are: (a) 1.0% when the average daily Excess Availability is greater than 66.7% of the Loan Cap; (b) 1.25% when the average daily Excess
Availability is greater than or equal to 33.3% but less than or equal to 66.7% of the Loan Cap; and (c) 1.5% when the average daily Excess Availability is less than 33.3% of the
Loan Cap. In accordance with the First Amendment, from the First Amendment Effective Date (January 21, 2025) until the first Adjustment Date occurring after the twelve (12)
month anniversary of the First Amendment Effective Date, the applicable margin will be 2.50% with respect to SOFR Term Loans and SOFR Daily Floating Rate Loans and
1.50% with respect to Base Rate Loans.
The 2023 Revolving Credit Facility contains a financial covenant requiring Excess Availability at all times to be no less than the greater of (i) 10.0% of the Loan Cap in
effect at such time and (ii) $7,500.
The 2023 Revolving Credit Facility contains representations and warranties, covenants and events of default that are customary for this type of financing, including
limitations on the incurrence of additional indebtedness, liens, burdensome agreements, investments, loans, asset sales, mergers, acquisitions, prepayment of certain other debt,
the repurchase of capital stock, transactions with affiliates, and the ability to change the nature of its business or its fiscal year. The 2023 Revolving Credit Facility generally
permits dividends in the absence of any default or event of default (including any event of default arising from a contemplated dividend), so long as (i) after giving pro forma
effect to the contemplated dividend and on a pro forma basis for the 30-day period immediately preceding such dividend, Excess Availability will be at least the greater of 20.0%
of the Loan Cap and $15,000 and (ii) after giving pro forma effect to the contemplated dividend, the Consolidated Fixed Charge Coverage Ratio (as defined in the 2023
Revolving Credit Agreement) for the 12 months preceding such dividend will be greater than or equal to 1.0 to 1.0. In accordance with the First Amendment, V Opco shall not
make certain Restricted Payments as defined in the Agreement until the earlier of (i) the date that is eighteen (18) month anniversary of the First Amendment Effective Date,
which date is July 21, 2026 and (ii) the first date following the twelve (12) month anniversary of the First Amendment Effective Date on which the Consolidated Fixed Charge
Coverage Ratio is greater than or equal to 1.0 to 1.0.
All obligations under the 2023 Revolving Credit Facility are guaranteed by the Company and Vince Intermediate and any future subsidiaries of the Company (other than
Excluded Subsidiaries as defined in the 2023 Revolving Credit Agreement) and secured by a lien on substantially all of the assets of the Company, V Opco and Vince
Intermediate and any future subsidiary guarantors, other than among others, equity interests in ABG Vince, as well as the rights of V Opco under the License Agreement.
The Company incurred a total of $466 (of which $458 were incurred in connection with the P180 Acquisition) and $1,150 of financing costs during fiscal years 2024 and
2023, respectively. In accordance with ASC Topic 470, "Debt", these financing costs were recorded as deferred debt issuance costs (which is presented within Other assets on the
Consolidated Balance Sheets) and are amortized over the term of the 2023 Revolving Credit Facility.
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As of February 1, 2025, the Company was in compliance with applicable covenants. As of February 1, 2025, $39,820 was available under the 2023 Revolving Credit
Facility, net of the Loan Cap, and there were $11,413 of borrowings outstanding and $6,215 of letters of credit outstanding under the 2023 Revolving Credit Facility. The
weighted average interest rate for borrowings outstanding under the 2023 Revolving Credit Facility as of February 1, 2025 was 7.0%.
On January 22, 2025, V Opco, LLC entered into that certain First Amendment (the “First Amendment”) to the 2023 Revolving Credit Agreement. The First Amendment
amends the 2023 Revolving Credit Agreement to, among other things, (a) consent to the P180 Acquisition (see Note 2 "Recent Transactions" for additional information); (b)
provide that, until the first Adjustment Date following January 22, 2026, the applicable margin will be 2.50% with respect to SOFR Term Loans and SOFR Daily Floating Rate
Loans and 1.50% with respect to Base Rate Loans; (c) eliminate the ability to make certain Restricted Payments until the earlier of (i) the date that is eighteen (18) month
anniversary of the First Amendment Effective Date, which date is July 21, 2026 and (ii) the first date following the twelve (12) month anniversary of the First Amendment
Effective Date on which the Consolidated Fixed Charge Coverage Ratio is greater than or equal to 1.0 to 1.0; and (d) until January 22, 2026, modify the thresholds applicable for
the Agent’s rights to conduct field exams and inventory appraisals to Excess Availability being less than the greater of 25% of Loan Cap and $18,750 and, following January 24,
2026, such thresholds shall revert back to Excess Availability being less than the greater of 20% of Loan Cap and $15,000.
2018 Revolving Credit Facility
On August 21, 2018, V Opco entered into an $80,000 senior secured revolving credit facility (the "2018 Revolving Credit Facility") pursuant to a credit agreement, as
amended and restated from time to time, by and among V Opco, as the borrower, VHC and Vince Intermediate, as guarantors, Citizens Bank, N.A. ("Citizens"), as administrative
agent and collateral agent, and the other lenders from time to time party thereto. On January 31, 2023, the Company repaid $125 of fees due in accordance with an amendment
entered into on September 30, 2022. Upon the contemporaneous consummation of the Asset Sale, the lenders' commitments to extend credit was reduced to $70,000. The 2018
Revolving Credit Facility would have matured on June 30, 2024.
On June 23, 2023, all outstanding amounts under the 2018 Revolving Credit Facility were repaid in full and the 2018 Revolving Credit Facility was terminated pursuant
to the terms thereof as a result of all parties completing their obligations under the 2018 Revolving Credit Facility. The Company recorded expense of $828 during fiscal 2023,
related to the write-off of the remaining deferred financing costs. As of February 1, 2025, no letters of credit remained in place with Citizens that were secured with restricted
cash. Restricted cash is included in Prepaid Expenses and other current assets in the Consolidated Balance Sheets.
Third Lien Credit Facility
On December 11, 2020, V Opco entered into a $20,000 subordinated term loan credit facility (the "Third Lien Credit Facility") pursuant to a credit agreement (the "Third
Lien Credit Agreement"), as amended from time to time, dated December 11, 2020, by and among V Opco, as the borrower, VHC and Vince Intermediate, as guarantors, and SK
Financial Services, LLC ("SK Financial"), as administrative agent and collateral agent, and other lenders from time to time party thereto. The proceeds were received on
December 11, 2020 and were used to repay a portion of the borrowings outstanding under the 2018 Revolving Credit Facility.
SK Financial is an affiliate of Sun Capital Partners, Inc. ("Sun Capital"). The Third Lien Credit Facility was reviewed and approved by the Special Committee of the
Company's Board of Directors, consisting solely of directors not affiliated with Sun Capital, which committee was represented by independent legal advisors. Immediately prior
to the P180 Acquisition, the affiliates of Sun Capital owned approximately 67% of the Company's common stock.
Interest on loans under the Third Lien Credit Facility is payable in kind at a rate revised in connection with the Third Lien Third Amendment (as defined and discussed
below) to be equal to the Daily Simple SOFR, subject to a credit spread adjustment of 0.10% per annum, plus 9.0%. During the continuance of certain specified events of default,
interest may accrue on the loans under the Third Lien Credit Facility at a rate of 2.0% in excess of the rate otherwise applicable to such amount.
The Company had incurred $485 in deferred financing costs associated with the Third Lien Credit Facility, of which a $400 closing fee is payable in kind and was added
to the principal balance. These deferred financing costs were recorded as deferred debt issuance costs. In connection with the debt extinguishment (see below), unamortized debt
issuance costs of $179 were included in the calculation of the gain on extinguishment.
All obligations under the Third Lien Credit Facility are guaranteed by the Company, Vince Intermediate and the Company's existing material domestic restricted
subsidiaries as well as any future material domestic restricted subsidiaries and are secured on a junior basis relative to the 2023 Revolving Credit Facility by a lien on
substantially all of the assets of the Company, Vince Intermediate, V Opco and the Company's existing material domestic restricted subsidiaries as well as any future material
domestic restricted subsidiaries.
On April 21, 2023, V Opco entered into that certain Consent and Third Amendment to Credit Agreement (the "Third Lien Third Amendment"), which, among other
things, (a) permitted the sale of the intellectual property of the Vince Business contemplated in the
F-21
Asset Sale, (b) replaced LIBOR as an interest rate benchmark in favor of Daily Simple SOFR, subject to a credit spread adjustment of 0.10% per annum, plus 9.0% (c) amended
the Third Lien Credit Agreement's maturity date to the earlier of (i) March 30, 2025 and (ii) 180 days after the maturity date under the 2018 Revolving Credit Facility, (d) reduced
the capacity to incur indebtedness and liens, make investments, restricted payments and dispositions and repay certain indebtedness and (e) modified certain representations and
warranties, covenants and events of default in respect of documentation related to the Asset Sale. The Third Lien Third Amendment became effective upon the consummation of
the Asset Sale, the prepayment of the Term Loan Credit Facility in full and other transactions contemplated by the Asset Purchase Agreement.
On June 23, 2023, V Opco entered into the Fourth Amendment (the "Third Lien Fourth Amendment") to the Third Lien Credit Agreement which, among other things, (a)
extended the Third Lien Credit Agreement's maturity date to the earlier of (i) September 30, 2028 and (ii) 91 days prior to the earliest maturity date of any Material Indebtedness
(as defined therein) other than the 2023 Revolving Credit Facility and (b) modified certain representations and warranties, covenants and events of default in respect of
documentation conforming to the terms of the 2023 Revolving Credit Facility.
On January 22, 2025, V Opco entered into the Fifth Amendment (the “Third Lien Fifth Amendment”) to the Third Lien Credit Agreement which, among other things,
consents to the P180 Acquisition. On the same day, V Opco paid $15,000 to SK Financial Services, LLC using proceeds from the 2023 Revolving Credit Facility, which resulted
in a pay-down of $20,000 of the Third Lien Credit Facility (the “Sun Debt Paydown”). In addition, in connection with the P180 Acquisition, P180 acquired and assumed $7,000
of the Third Lien Credit Facility outstanding and immediately thereafter cancelled such $7,000 (the “P180 Debt Forgiveness”). Following the Sun Debt Paydown and P180 Debt
Forgiveness, the outstanding principal amount of the Third Lien Credit Facility was reduced by approximately $27,000 with $7,500 remaining outstanding, which will continue to
accrue payment-in-kind interest in accordance with, and otherwise be subject to, the terms and conditions therein.
The Company determined that modification to the Third Lien Credit Facility under the Fifth Amendment and the corresponding Sun Debt Paydown and P180 Debt
Forgiveness should be recorded as debt extinguishment of the Third Lien Credit Facility in accordance with ASC 470. The Company derecognized the old debt and recorded the
new debt at fair value in the amount of $7,713, and a gain upon extinguishment in the amount of $11,575. As Sun Capital and affiliates and P180 maintain an equity interest in the
Company, the gain on extinguishment was recorded as a capital contribution within equity.
Note 6. Commitments and Contingencies
Contractual Cash Obligations
At February 1, 2025, the Company had contractual cash obligations of $134,785 which consisted primarily of Guaranteed Minimum Royalty payments (as described
below), inventory purchase obligations and service contracts.
On May 25, 2023, in connection with the Closing, V Opco and ABG Vince entered into the License Agreement. The initial term of the License Agreement began on May
25, 2023, the date on which the Closing actually occurred, and ends at the end of the Company's 2032 fiscal year, unless sooner terminated pursuant to the terms of the License
Agreement. V Opco is required to pay ABG Vince a royalty on net sales of Licensed Products and committed to an annual guaranteed minimum royalty of $11,000 during the
initial term of the License Agreement, except that the guaranteed minimum royalty for the first contract year during the initial term was prorated to the period beginning on the
Closing Date and ending at the end of the Company's 2023 fiscal year. See Note 2 "Recent Transactions" for further information.
In addition, see Note 12 "Leases" for a summary of the Company's future minimum rental payments under non-cancelable leases.
F-22
Litigation
The Company is a party to legal proceedings, compliance matters, environmental, as well as wage and hour and other labor claims that arise in the ordinary course of
business. Although the outcome of such items cannot be determined with certainty, management believes that the ultimate outcome of these items, individually and in the
aggregate, will not have a material adverse impact on the Company's financial position, results of operations or cash flows.
Note 7. Share-Based Compensation
Employee Stock Plans
Vince 2013 Incentive Plan
In connection with the IPO, the Company adopted the Vince 2013 Incentive Plan, which provides for grants of stock options, stock appreciation rights, restricted stock
and other stock-based awards. In May 2018, the Company filed a Registration Statement on Form S-8 to register an additional 660,000 shares of common stock available for
issuance under the Vince 2013 Incentive Plan. Additionally, in September 2020, the Company filed a Registration Statement on Form S-8 to register an additional 1,000,000
shares of common stock available for issuance under the Vince 2013 Incentive Plan. The aggregate number of shares of common stock which may be issued or used for reference
purposes under the Vince 2013 Incentive Plan or with respect to which awards may be granted may not exceed 2,000,000 shares. The shares available for issuance under the
Vince 2013 Incentive Plan may be, in whole or in part, either authorized and unissued shares of the Company's common stock or shares of common stock held in or acquired for
the Company's treasury. In general, if awards under the Vince 2013 Incentive Plan are canceled for any reason, or expire or terminate unexercised, the shares covered by such
award may again be available for the grant of awards under the Vince 2013 Incentive Plan. As of February 1, 2025, there were 635,312 shares under the Vince 2013 Incentive
Plan available for future grants. Options granted pursuant to the Vince 2013 Incentive Plan typically vest in equal installments over four years, subject to the employees'
continued employment and expire on the earlier of the tenth anniversary of the grant date or upon termination as outlined in the Vince 2013 Incentive Plan. Restricted stock units
("RSUs") granted vest in equal installments over a three-year period or vest in equal installments over four years, subject to the employees' continued employment. In November
2023, the Vince 2013 Incentive Plan was amended to, among others, extend the plan expiration date to November 2033.
Employee Stock Purchase Plan
The Company maintains an employee stock purchase plan ("ESPP") for its employees. Under the ESPP, all eligible employees may contribute up to 10% of their base
compensation, up to a maximum contribution of $10 per year. The purchase price of the stock is 90% of the fair market value, with purchases executed on a quarterly basis. The
plan is defined as compensatory, and accordingly, a charge for compensation expense is recorded to SG&A expense for the difference between the fair market value and the
discounted purchase price of the Company's common stock. During fiscal 2024 and fiscal 2023, 13,034 and 16,905 shares of common stock, respectively, were issued under the
ESPP. As of February 1, 2025, there were 30,636 shares available for future issuance under the ESPP.
Stock Options
There were no stock options outstanding, vested or exercisable as of February 1, 2025 and February 3, 2024, respectively. During fiscal 2024, there were no grants,
expirations or forfeitures, or exercises of stock options.
Restricted Stock Units
A summary of restricted stock unit activity for fiscal 2024 is as follows:
Restricted Stock Units
Weighted Average Grant
Date Fair Value
Non-vested restricted stock units at February 3, 2024
474,103 $
7.07
Granted
369,658 $
1.67
Vested
(394,100) $
6.18
Forfeited
(83,262) $
8.57
Non-vested restricted stock units at February 1, 2025
366,399 $
2.25
The total fair value of restricted stock units vested during fiscal 2024 and fiscal 2023 was $2,435 and $1,815, respectively.
F-23
At February 1, 2025, there was $585 of unrecognized compensation costs related to restricted stock units that will be recognized over a remaining weighted average
period of 1.4 years.
Share-Based Compensation Expense
During fiscal 2024, the Company recognized share-based compensation expense of $1,588, including expense of $324 related to non-employees, and related tax benefit
of $0. The fiscal 2024 compensation expense includes approximately $751 attributable to accelerated vesting due to the P180 Acquisition. During fiscal 2023, the Company
recognized share-based compensation expense of $1,541, including expense of $281 related to non-employees, and related tax benefit of $0.
Note 8. Defined Contribution Plan
The Company maintains a defined contribution plan for employees who meet certain eligibility requirements. As of March 8, 2021, all assets from the Rebecca Taylor,
Inc. 401(k) Plan were merged into the Vince Holding Corp. 401(k) Plan. Features of these plans allow participants to contribute to a plan a percentage of their annual
compensation, subject to IRS limitations. Certain plans also provide for discretionary matching contributions by the Company. The annual expense incurred by the Company for
the defined contribution plan was $518 and $514 in fiscal 2024 and fiscal 2023, respectively.
Note 9. Stockholders' Equity
Common Stock
The Company currently has authorized for issuance 100,000,000 shares of its voting common stock, par value of $0.01 per share.
As of February 1, 2025 and February 3, 2024, the Company had 12,758,852 and 12,506,556 shares issued and outstanding, respectively.
At-the-Market Offering
On June 30, 2023, the Company entered into a Sales Agreement (the “Virtu Sales Agreement”) with Virtu Americas LLC ("Virtu"), as sales agent and/or principal (the
"Virtu At-the-Market Offering") under which the Company was able to sell from time to time through Virtu shares of the Company's common stock, par value $0.01 per share,
having an offering price of up to $7,825, and any shares were to be issued pursuant to the Company's previously filed shelf registration statement on Form S-3, which was
declared effective on September 21, 2021 (the “2021 S-3 Registration Statement”). Under the 2021 S-3 Registration Statement, the Company was able to offer and sell up to
3,000,000 shares of common stock from time to time in one or more offerings at prices and terms to be determined at the time of the sale.
Following the expiration of the 2021 S-3 Registration Statement, on September 23, 2024, the Company filed a replacement shelf registration statement on Form S-3,
which was declared effective on October 3, 2024 (the "2024 S-3 Registration Statement"). Under the 2024 S-3 Registration Statement, the Company may offer and sell up to $10
million of shares of common stock from time to time in one or more offerings at prices and terms to be determined at the time of the sale. The 2024 S-3 Registration Statement
also included a prospectus supplement, whereby the Company may offer and sell from time to time under the Virtu Sales Agreement shares of the Company’s common stock, par
value $0.01 per share, having an aggregate offering price of up to $2,925.
During the year ended February 1, 2025, the Company did not make any offerings or sales of shares of common stock under the Virtu At-the-Market Offering. At
February 1, 2025, $2,925 was available under the Virtu At-the-Market Offering.
The Company previously entered into an Open Market Sale Agreement SM with Jefferies LLC ("Jefferies At-the-Market Offering"), under which the Company was able
to offer and sell, from time to time, up to 1,000,000 shares of common stock, par value $0.01 per share, which shares were included in the securities registered pursuant to the
2021 S-3 Registration Statement. Effective June 29, 2023, the Company terminated the Jefferies At-the-Market Offering. During the year ended February 3, 2024, the Company
did not make any offerings or sales of shares of common stock under the Jefferies At-the-Market Offering.
Dividends
The Company has not paid dividends, and the Company's current ability to pay such dividends is restricted by the terms of its debt agreements. The Company's future
dividend policy will be determined on a yearly basis and will depend on earnings, financial condition, capital requirements, and certain other factors. The Company does not
expect to declare dividends with respect to its common stock in the foreseeable future.
F-24
Note 10. (Loss) Earnings Per Share
Basic (loss) earnings per share is calculated by dividing net (loss) income by the weighted average number of shares of common stock outstanding during the period.
Except when the effect would be anti-dilutive, diluted earnings per share is calculated based on the weighted average number of shares of common stock outstanding plus the
dilutive effect of share-based awards calculated under the treasury stock method. In periods when the Company incurs a net loss, share-based awards are excluded from the
calculation of diluted earnings per share as their inclusion would have an anti-dilutive effect.
The following is a reconciliation of weighted average basic shares to weighted average diluted shares outstanding:
Fiscal Year
2024
2023
Weighted-average shares—basic
12,579,588
12,442,781
Effect of dilutive equity securities
—
35,434
Weighted-average shares—diluted
12,579,588
12,478,215
Because the Company incurred a net loss for the fiscal year ended February 1, 2025, weighted-average basic shares and weighted-average diluted shares outstanding are
equal for this period.
For the fiscal year ended February 3, 2024, 391,102 of weighted average shares were excluded from the computation of weighted average shares for diluted earnings per
share, as their effect would have been anti-dilutive.
Note 11. Income Taxes
The (benefit) provision for income taxes consisted of the following:
Fiscal Year
(in thousands)
2024
2023
Current:
Domestic:
Federal
$
103
$
—
State
508
514
Foreign
29
29
Total current
640
543
Deferred:
Domestic:
Federal
(1,854)
(2,017)
State
(2,428)
(2,004)
Foreign
—
—
Total deferred
(4,282)
(4,021)
Total benefit for income taxes
$
(3,642)
$
(3,478)
The sources of (loss) income before income taxes and equity in net income of equity method investment are from the United States, the Company's subsidiaries in the
United Kingdom and the Company's French branch. The Company files U.S. federal income tax returns and income tax returns in various state and local jurisdictions.
Current income taxes are the amounts payable under the respective tax laws and regulations on each year's earnings. Deferred income tax assets and liabilities represent
the tax effects of revenues, costs and expenses, which are recognized for tax purposes in different periods from those used for financial statement purposes.
The benefit for income taxes was $3,642 for the year ended February 1, 2025. This benefit was primarily driven by a tax benefit of $3,006 associated with the
impairment of goodwill primarily due to the reversal of the non-cash deferred tax liability previously created by the amortization of the Vince goodwill indefinite-lived intangible
asset recognized for tax, but not for book purposes, which previously could not be used as a source of income to support the realization of certain deferred tax assets related to the
Company's net operating losses. The tax benefit was also driven by a tax benefit of $1,276 related to the reversal of a portion of the non-cash deferred tax liability related to the
Company's equity method investment, which a portion can now be used as a source of income to support the realization of certain deferred tax assets related to the Company's net
operating losses. The tax benefit was offset primarily by the current federal and state tax expense of $611.
The benefit for income taxes was $3,478 for the year ended February 3, 2024. This benefit was primarily driven by a tax benefit of $5,523 associated with the Authentic
Transaction primarily due to the reversal of a portion of the non-cash deferred tax liability
F-25
previously created by the amortization of the Vince tradename indefinite-lived intangible asset recognized for tax, but not for book purposes, which previously could not be used
as a source to support the realization of certain deferred tax assets related to the Company's net operating losses. This benefit was offset by a portion of the non-cash deferred tax
liability related to the Company's equity method investment which cannot be used as a source of income to support the realization of certain deferred tax assets related to the
Company's net operating losses which resulted in deferred tax expense of $1,907.
A reconciliation of the federal statutory income tax rate to the effective tax rate is as follows:
Fiscal Year
2024
2023
Statutory federal rate
21.0%
21.0%
State taxes, net of federal benefit
(80.4)%
12.0%
NOL Adjustments
(267.3)%
6.7%
Sale of Rebecca Taylor
40.7%
0.0%
Release of uncertain tax provision
2.2%
0.0%
Cancellation of Debt Income
(6.1)%
0.0%
Deferred Adjustments
(2.9)%
3.6%
Valuation allowance
310.2%
(61.3)%
Return to provision adjustment
(1.1)%
0.2%
Transaction Costs
(0.6)%
0.0%
Non-deductible Officers Compensation
0.0%
0.3%
Rate Differential on Foreign Income
0.0%
0.4%
Other
(0.1)%
0.1%
Total
15.6%
(17.0)%
Deferred income tax assets and liabilities consisted of the following:
February 1,
February 3,
(in thousands)
2025
2024
Deferred tax assets:
Depreciation and amortization
$
2,221 $
2,706
Employee related costs
1,495
426
Allowance for asset valuations
1,670
1,664
Accrued expenses
213
317
Lease liability
27,140
22,601
Net operating losses
44,450
122,382
Tax credits
92
92
Interest expense
5,110
5,428
Other
322
288
Total deferred tax assets
82,713
155,904
Less: valuation allowances
(53,394)
(125,913)
Net deferred tax assets
29,319
29,991
Deferred tax liabilities:
Indefinite lived intangibles
—
(8,584)
ROU assets
(23,869)
(19,548)
Equity method investment
(6,081)
(6,772)
Total deferred tax liabilities
(29,950)
(34,904)
Net deferred tax (liability) asset
$
(631) $
(4,913)
Included in:
Deferred income tax asset
$
— $
—
Deferred income tax liability
(631)
(4,913)
Net deferred tax liability
$
(631) $
(4,913)
F-26
As of February 1, 2025, the Company had a gross federal net operating loss of $186,821 (federal tax effected amount of $39,232) that may be used to reduce future
federal taxable income. Federal net operating losses of 12,044 that were incurred in tax years that began before January 1, 2018 will expire through 2038. Net operating losses of
$174,777 incurred in tax years beginning after January 1, 2018 have an indefinite carryforward period.
As of February 1, 2025, the Company had gross state net operating loss carryforward of $175,240 (tax effected amount of $5,021) that may be used to reduce future state
taxable income. The net operating loss carryforwards for state income tax purposes expire at varying rates.
Section 382 of the Internal Revenue Code of 1986 (“IRC”) subjects the future utilization of net operating losses to an annual limitation in the event of certain ownership
changes, as defined. The Company determined that under Section 382, the P180 Acquisition resulted in an ownership change in January 2025. Due to the annual limitation of the
Company’s net operating losses, gross federal net operating losses of $232,595 (federal tax effected amount of $48,844) incurred in tax years beginning before January 1, 2018
will expire unused prior to becoming available and therefore, the Company recorded an adjustment to write off these net operating losses. A corresponding adjustment was
recorded to release the valuation allowance that was maintained on these net operating losses.
The valuation allowance for deferred tax assets was $53,394 and $125,913 as of February 1, 2025 and February 3, 2024, respectively. The valuation allowance
decreased by $72,519 during fiscal 2024. The decrease was due primarily to the adjustment to the valuation allowance from the P180 Acquisition as described above, and the
sale of Rebecca Taylor which resulted in the write-off of net operating losses for which a corresponding adjustment was recorded to release the valuation allowance. The
Company maintains a full valuation allowance on all deferred tax assets except to the extent that the indefinite lived deferred tax assets (related to interest expense and net
operating loss carryforwards) offset the future reversal of indefinite lived deferred tax liabilities. Adjustments to the valuation allowance are made when there is a change in
management's assessment of the amount of deferred tax assets that are realizable.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding interest and penalties, is as follows:
Fiscal Year
(in thousands)
2024
2023
Beginning balance
$
556 $
556
Decreases for tax positions in prior years
(556)
—
Ending balance
$
— $
556
As of February 1, 2025 and February 3, 2024, the Company had unrecognized tax benefits in the amount of $0 and $556, respectively. The reduction in the unrecognized
tax benefit resulted from the write-off of certain net operating losses under IRC section 382, whereby, the impact of the unrecognized tax benefit would no longer result in a
change to the realizable net operating loss carryforward of the Company.
The Company includes accrued interest and penalties on underpayments of income taxes in its income tax provision. As of February 1, 2025 and February 3, 2024, the
Company did not have any interest and penalties accrued on its Consolidated Balance Sheets and no related provision or benefit was recognized in each of the Company's
Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended February 1, 2025 and February 3, 2024. Interest is computed on the difference
between the tax position recognized net of any unrecognized tax benefits and the amount previously taken or expected to be taken in the Company's tax returns.
With limited exceptions, fiscal years January 29, 2022 through February 1, 2025 remain subject to examination. For years prior to fiscal year 2021, adjustments can be
made by the taxing authorities only to the extent of the net operating losses carried forward.
Note 12. Leases
The Company determines if a contract contains a lease at inception. The Company has operating leases for real estate (primarily retail stores, storage, and office spaces)
some of which have initial terms of 10 years, and in many instances can be extended for an additional term, while certain recent leases are subject to shorter terms as a result of
the implementation of the strategy to pursue shorter lease terms when evaluating certain markets. The Company will not include renewal options in the underlying lease term
unless the Company is reasonably certain to exercise the renewal option. Substantially all of the Company's leases require a fixed annual rent, and most require the payment of
additional rent if store sales exceed a negotiated amount. These percentage rent expenses are considered as variable lease costs and are recognized in the consolidated financial
statements when incurred. In addition, the
F-27
Company's real estate leases may also require additional payments for real estate taxes and other occupancy-related costs which it considers as non-lease components.
ROU assets and operating lease liabilities are recognized based upon the present value of the future lease payments over the lease term. As the Company's leases do not
provide an implicit borrowing rate, the Company uses an estimated incremental borrowing rate based upon a combination of market-based factors, such as market quoted forward
yield curves and company specific factors, such as the Company's credit rating, lease size and duration to calculate the present value. The Company does not have any finance
leases. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. The weighted-average remaining lease term and
weighted-average discount rate for our operating leases are 7 years and 7.15% as of February 1, 2025 and 6.3 years and 7.17% as of February 3, 2024.
Total lease cost is included in SG&A expense in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss) and is recorded net of
immaterial sublease income. Some leases have a non-cancelable lease term of less than one year and therefore, the Company has elected to exclude these short-term leases from
the ROU asset and lease liabilities. Short term lease costs were immaterial for the fiscal years ended February 1, 2025 and February 3, 2024. The Company's lease cost is
comprised of the following:
Fiscal Year
(in thousands)
2024
2023
Operating lease cost
$
22,372
$
18,482
Variable operating lease cost
270
390
Sublease income
(289)
—
Total lease cost
$
22,353
$
18,872
The operating lease cost for fiscal 2023 included a benefit of $779 for the correction of an error recorded within SG&A expenses related to a lease modification that
occurred during fiscal 2022 for a Vince retail store, leading to an overstatement of the ROU assets and an overstatement of the lease obligations in fiscal 2022.
Supplemental cash flow and non-cash information related to leases is as follows:
Fiscal Year
(in thousands)
2024
2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
$
24,080
$
24,766
Right-of-use assets obtained in exchange for operating lease liabilities
36,791
22,972
As of February 1, 2025, the future maturity of lease liabilities are as follows:
February 1,
(in thousands)
2025
Fiscal 2025
$
22,466
Fiscal 2026
20,155
Fiscal 2027
17,004
Fiscal 2028
16,610
Fiscal 2029
15,832
Thereafter
39,608
Total lease payments
131,675
Less: Imputed interest
(28,470)
Total operating lease liabilities
$
103,205
During fiscal 2024, the Company entered into a sublease with a third party for the 18th Floor of the Company’s corporate offices in New York, NY, for a period of three
years with no option to renew. In accordance with ASC Topic 842, the Company treated the sublease as a separate lease, as the Company was not relieved of the primary
obligation under the original lease. The Company continues to account for the corporate office lease as a lessee and in the same manner as prior to the commencement date of the
sublease. The Company accounted for the sublease as a lessor of the lease. The sublease was classified as an operating lease, as it
F-28
did not meet the criteria of a sales-type or direct financing lease. As of February 1, 2025, future minimum tenant operating lease payments remaining under this sublease were
approximately $2,500, with a remaining sublease term of 2.7 years.
The operating lease payments do not include any renewal options as such leases are not reasonably certain of being renewed as of February 1, 2025 and do not include
$6,521 legally binding minimum lease payments for leases signed but not yet commenced.
Note 13. Segment and Geographical Financial Information
The Company has identified two reportable segments based on the information used by its chief operating decision maker (“CODM”). The CODM has been identified as
the Chief Executive Officer. Management considered both similar and dissimilar economic characteristics, internal reporting and management structures, as well as products,
customers, and supply chain logistics to identify the following reportable segments:
•
Vince Wholesale segment—consists of the Company's operations to distribute Vince brand products to major department stores and specialty stores in the United
States and select international markets;
•
Vince Direct-to-consumer segment—consists of the Company's operations to distribute Vince brand products directly to the consumer through its Vince branded
full-price specialty retail stores, outlet stores, e-commerce platform, and its subscription service Vince Unfold.
As a result of the completion of the wind down and sale (see Note 2 "Recent Transactions"), and the determination by the CODM that Parker would not be considered in
the Company’s future operating plans, Rebecca Taylor and Parker is no longer an operating segment of the Company. The financial results of the historical Rebecca Taylor and
Parker reportable segment are included as an other reconciling item in the table below.
The accounting policies of the Company's reportable segments are consistent with those described in Note 1 "Description of Business and Summary of Significant
Accounting Policies."
The Company’s CODM evaluates segment performance based on several factors, including Income before equity in net income of equity method investment. The CODM
uses Income before equity in net income of equity method investment as the key performance measure of segment profitability because it excludes the impact of certain items that
our CODM believes do not directly reflect our underlying operations, including the impact of income taxes and equity in net income of equity method investment. The CODM
also considers budget-to-actual and period-over-period variances for this performance measure when making decisions about the allocation of operating and capital resources to
each segment. Unallocated corporate expenses are comprised of SG&A expenses attributable to corporate and administrative activities (such as marketing, design, finance,
information technology, legal and human resource departments), and other charges, including interest expense, that are not directly attributable to the Company's Vince
Wholesale and Vince Direct-to-consumer reportable segments. Unallocated corporate assets are comprised of the carrying values of the Company's goodwill, equity method
investment and other assets that will be utilized to generate revenue for the Company's Vince Wholesale and Vince Direct-to-consumer reportable segments. As the Company’s
goodwill is not allocated to the Company’s reportable segments in the measure of segment assets regularly reported to and used by our CODM, the corresponding impairment
charge associated with goodwill is not reflected in the operating results of the Company’s reportable segments.
F-29
A summary of financial information by reportable segment is as follows:
(in thousands)
Vince Wholesale
Vince Direct-to-consumer
Total
Fiscal Year 2024
Net Sales
$
165,349
$
128,103
$
293,452
Cost of Products Sold*
98,800
49,473
148,273
Staff and Personnel
4,218
23,796
28,014
Occupancy
380
26,115
26,495
Marketing and advertising
547
9,420
9,967
Other segment items
3,499
16,329
19,828
Total segment income before income taxes and equity in net income of
equity method investment
57,905
2,970
60,875
Unallocated Corporate
(91,909)
Rebecca Taylor and Parker
7,633
Total loss before income taxes and equity in net income of equity
method investment
$
(23,401)
Fiscal Year 2023
Total Segment Net Sales
$
149,603
$
143,096
$
292,699
Rebecca Taylor and Parker
191
Total Net Sales
292,890
Cost of Products Sold*
97,742
61,856
159,598
Staff and Personnel
3,860
26,400
30,260
Occupancy
249
23,223
23,472
Marketing and advertising
805
9,147
9,952
Other segment items
3,531
16,696
20,227
Total segment income before income taxes and equity in net income of
equity method investment
43,416
5,774
49,190
Unallocated Corporate
(31,127)
Rebecca Taylor and Parker
2,443
Total income before income taxes and equity in net income of equity
method investment
$
20,506
(1)
(4)
(2)
(3)
(1)
(4)
(3)
F-30
Fiscal Year
2024
2023
Depreciation and Amortization:
Vince Wholesale
$
119
$
248
Vince Direct-to-Consumer
3,005
2,931
Total Segment Depreciation and Amortization
3,124
3,179
Unallocated Corporate
882
1,760
Total Depreciation and Amortization
4,006
4,939
Capital Expenditures:
Vince Wholesale
530
127
Vince Direct-to-Consumer
3,274
1,191
Total Segment Capital Expenditures
3,804
1,318
Unallocated Corporate
428
142
Total Capital Expenditures
4,232
1,460
Total Assets:
Vince Wholesale
68,488
51,489
Vince Direct-to-Consumer
100,114
87,648
Total Segment Assets
168,602
139,137
Unallocated Corporate
54,133
86,012
Total Assets
222,735
225,149
(1) Other segment items primarily include various third party expenses, banking fees, depreciation and amortization, supplies, and commissions.
(2) Activity for the Rebecca Taylor and Parker reconciling item for fiscal 2024 primarily consists of the gain recognized on the sale of Rebecca Taylor. See Note 2 "Recent Transactions" for further information.
(3) Activity for Rebecca Taylor and Parker reconciling item for fiscal 2023 consisted of $191 of sales through wholesale distribution channels of residual revenue contracted prior to the sale of the Rebecca Taylor
tradename. In addition, activity also includes a $765 gain associated with the sale of the Parker tradename, a net benefit of $1,750 from the wind down of the Rebecca Taylor business, and $150 of transaction related
expenses associated with the sale of the Parker tradename. See Note 2 "Recent Transactions" for further information.
(4) Unallocated corporate includes the goodwill impairment charge of $31,973 for fiscal 2024 and the $32,043 gain related to the sale of the Vince intellectual property and certain related ancillary assets for fiscal 2023. See
Note 3 "Goodwill and Intangible Assets" and Note 2 "Recent Transactions" for further information.
* Cost of Products Sold for fiscal 2024 includes royalty expenses of $10,106 and $3,857 for the Wholesale and Direct-to-consumer segments, respectively. Cost of Products Sold for fiscal 2023 includes royalty expenses of
$6,388 and $3,098 for the Wholesale and Direct-to-consumer segments, respectively.
The Company is domiciled in the U.S. and as of February 1, 2025, had no significant international subsidiaries and therefore substantially all of the Company's sales
originate in the U.S. As a result, net sales by destination are not provided. Additionally, substantially all long-lived assets, including property and equipment, are located in the
U.S.
F-31
Note 14. Related Party Transactions
Operating Agreement
On May 25, 2023, V Opco and ABG Vince entered into the Operating Agreement, which, among other things, provides for the management of the business and the
affairs of ABG Vince, the allocation of profits and losses, the distribution of cash of ABG Vince among its members and the rights, obligations and interests of the members to
each other and to V Opco. See Note 2 "Recent Transactions" for further information. During fiscal 2024 and 2023, the Company received $3,395 and $1,341, respectively, of
cash distributions under the Operating Agreement.
License Agreement
On May 25, 2023, V Opco and ABG Vince entered into the License Agreement, whereby V Opco is required to pay ABG Vince a royalty on net sales of Licensed
Products and committed to an annual guaranteed minimum royalty of $11,000. See Note 2 "Recent Transactions" for further information. During fiscal 2024 and 2023, the
Company paid $10,811 and $6,945 under the License Agreement. As of February 1, 2025 and February 3, 2024, $3,513 and $361, respectively, of accrued royalty expense was
included within Other accrued expenses on the Consolidated Balance Sheets.
P180 Expense Reimbursement
In connection with the P180 Acquisition, P180 agreed to reimburse the Company for certain fees and expenses incurred in connection with such transactions, including
the Company’s legal fees as well as the consent fee to BofA. As of February 1, 2025, the Company had recorded approximately $614 of outstanding reimbursements with P180,
which are included in Trade receivables.
CaaStle Platform Services
On September 7, 2018, V Opco and CaaStle Inc. (“CaaStle”) entered into a platform services agreement, whereby CaaStle provided logistical services for the Company's
Vince Unfold clothing rental service. The agreement was amended on November 1, 2024. Prior to the P180 Acquisition, CaaStle was an unrelated party to the Company. Due to
CaaStle’s relationship with P180, as a result of the P180 Acquisition, CaaStle is considered a related party to the Company as of February 1, 2025. Subsequently, due to
organizational changes at CaaStle and P180, CaaStle is no longer considered a related party to the Company.
During fiscal 2024, the Company recognized $1,106 of net sales, $38 of cost of products sold and $625 of SG&A expenses from the arrangement. During fiscal 2023, the
Company recognized $2,810 of net sales, $1,299 of cost of products sold, and $1,288 of SG&A expenses from the arrangement. As of February 1, 2025 and February 3, 2024,
$24 and $189 of outstanding amounts due from CaaStle were included in Trade receivables on the Consolidated Balance Sheets.
On April 24, 2025, the Company terminated the Vince Unfold program and the platform services agreement in its entirety.
Third Lien Credit Agreement
On December 11, 2020, V Opco entered into the $20,000 Third Lien Credit Facility pursuant to the Third Lien Credit Agreement, by and among V Opco, as the
borrower, SK Financial, as agent and lender, and other lenders from time-to-time party thereto. The Third Lien Credit Facility was reviewed and approved by the Special
Committee of the Company's Board of Directors, consisting solely of directors not affiliated with Sun Capital, which committee was represented by independent legal advisors.
SK Financial is an affiliate of Sun Capital, whose affiliates, prior to the P180 Acquisition, owned approximately 67% of the Company's common stock. Subsequent to the P180
Acquisition, SK Financial is no longer a related party.
See Note 2 "Recent Transactions" and Note 5 "Long-Term Debt and Financing Arrangements" for additional information.
Sun Capital Consulting Agreement
On November 27, 2013, the Company entered into an agreement with Sun Capital Management to (i) reimburse Sun Capital Management Corp. ("Sun Capital
Management") or any of its affiliates providing consulting services under the agreement for out-of-pocket expenses incurred in providing consulting services to the Company and
(ii) provide Sun Capital Management with customary indemnification for any such services.
The initial term of the agreement expired on November 27, 2023, the tenth anniversary of the Company's IPO, and the agreement currently is automatically extended on a
year-to-year basis. Under the consulting agreement, the Company has no obligation to pay Sun Capital Management or any of its affiliates any consulting fees other than those
which are approved by a majority of the Company's directors that are not affiliated with Sun Capital. To the extent such fees are approved in the future, the Company will be
obligated to pay such fees in addition to reimbursing Sun Capital Management or any of its affiliates that provide the Company services under the consulting agreement for all
reasonable out-of-pocket fees and expenses incurred by such party in
F-32
connection with the provision of consulting services under the consulting agreement and any related matters. Reimbursement of such expenses shall not be conditioned upon the
approval of a majority of the Company's directors that are not affiliated with Sun Capital Management and shall be payable in addition to any fees that such directors may
approve.
Neither Sun Capital Management nor any of its affiliates are liable to the Company or the Company's affiliates, security holders or creditors for (1) any liabilities arising
out of, related to, caused by, based upon or in connection with the performance of services under the consulting agreement, unless such liability is proven to have resulted directly
and primarily from the willful misconduct or gross negligence of such person or (2) pursuing any outside activities or opportunities that may conflict with the Company's best
interests, which outside activities the Company consents to and approves under the consulting agreement, and which opportunities neither Sun Capital Management nor any of its
affiliates will have any duty to inform the Company of. In no event will the aggregate of any liabilities of Sun Capital Management or any of its affiliates exceed the aggregate of
any fees paid under the consulting agreement.
In addition, the Company is required to indemnify Sun Capital Management, its affiliates and any successor by operation of law against any and all liabilities, whether or
not arising out of or related to such party's performance of services under the consulting agreement, except to the extent proven to result directly and primarily from such person's
willful misconduct or gross negligence. The Company is also required to defend such parties in any lawsuits which may be brought against such parties and advance expenses in
connection therewith. In the case of affiliates of Sun Capital Management that have rights to indemnification and advancement from affiliates of Sun Capital, the Company agrees
to be the indemnitor of first resort, to be liable for the full amounts of payments of indemnification required by any organizational document of such entity or any agreement to
which such entity is a party, and that the Company will not make any claims against any affiliates of Sun Capital Partners for contribution, subrogation, exoneration or
reimbursement for which they are liable under any organizational documents or agreement. Sun Capital Management may, in its sole discretion, elect to terminate the consulting
agreement at any time. The Company may elect to terminate the consulting agreement if SCSF Cardinal, Sun Cardinal, or any of their respective affiliates' aggregate ownership of
the Company's equity securities falls below 30%.
During fiscal 2024 and fiscal 2023, the Company incurred expenses of $37 and $10, respectively, under the Sun Capital Consulting Agreement. Subsequent to the P180
Acquisition, Sun Capital is no longer a related party and the agreement is no longer operative per the terms thereof. See Note 2 "Recent Transactions" for additional information.
Indemnification Agreements
The Company has entered into indemnification agreements with each of its executive officers and directors. The indemnification agreements provide the executive
officers and directors with contractual rights to indemnification, expense advancement and reimbursement, to the fullest extent permitted under the Delaware General Corporation
Law.
Amended and Restated Certificate of Incorporation
The Company’s amended and restated certificate of incorporation provides that for so long as affiliates of Sun Capital own 30% or more of the Company’s outstanding
shares of common stock, Sun Cardinal, a Sun Capital affiliate, has the right to designate a majority of the Company’s Board of Directors. For so long as Sun Cardinal has the
right to designate a majority of the Company’s Board of Directors, the directors designated by Sun Cardinal are expected to constitute a majority of each committee of the
Company’s Board of Directors (other than the Audit Committee), and the chairperson of each of the committees (other than the Audit Committee) is expected to be a director
serving on the committee who is selected by affiliates of Sun Capital, provided that, at such time as the Company is not a “controlled company” under the NYSE corporate
governance standards, the Company’s committee membership will comply with all applicable requirements of those standards and a majority of the Company’s Board of
Directors will be “independent directors,” as defined under the rules of the NYSE, subject to any applicable phase in requirements.
Second and Third Amended and Restated Bylaws
On January 22, 2025, the Board approved an amendment and restatement of the Company’s bylaws (the “Second Amended and Restated Bylaws”) to provide P180,
following the P180 Acquisition, with the right to designate (i) a majority of the directors of the Board, (ii) the Chairman of the Board, and (iii) the chairman of each committee of
the Board, in each case for so long as P180 continues to beneficially own at least thirty percent (30%) of the Company’s outstanding common stock. Subsequently, on April 4,
2025, the Board approved an amendment and restatement of the Second Amended and Restated Bylaws to remove such rights granted to P180 under the Second Amended and
Restated Bylaws.
F-33
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Beginning of Period
Expense Charges,
net of Reversals
Deductions and
Write-offs, net of
Recoveries
End of Period
Sales Allowances
Fiscal 2024
$
(5,210)
$
(47,278)
$
45,634
$
(6,854)
Fiscal 2023
(8,106)
(48,854)
51,750
(5,210)
Allowance for Doubtful Accounts
Fiscal 2024
(377)
(9)
51
(335)
Fiscal 2023
(759)
(104)
486
(377)
Valuation Allowances on Deferred Income Taxes
Fiscal 2024
(125,913)
72,519 *
—
(53,394)
Fiscal 2023
(138,490)
12,577 **
—
(125,913)
* Includes reversal of valuation allowance associated with the P180 Acquisition and the sale of Rebecca Taylor. See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this
Annual Report for additional information on the P180 Acquisition.
**Includes reversal of valuation allowance associated with realization of NOLs related to the tax gain recognized for the Authentic Transaction. See Note 2 "Recent Transactions" to the
Consolidated Financial Statements in this Annual Report for additional information on the Authentic Transaction.
Exhibit 10.35
VOPCO,LLC EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") dated as of February 3, 2025, by and among V Opco, LLC, a Delaware limited
liability company (the "Company") and a wholly owned subsidiary of Vince Holding Corp., a Delaware corporation (the "Parent"), and Brendan
Hoffman (the "Executive").
WITNESSETH
WHEREAS, the Company desires to employ the Executive as the Chief Executive Officer of the Company; and
WHEREAS, the Company and the Executive desire to enter into this Agreement as to the terms of the Executive's employment with the
Company.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1.
POSITION AND DUTIES.
(a)GENERAL. During the Employment Term, the Executive shall serve as the Chief Executive Officer of the Company, the Parent and any
other direct and/or indirect subsidiaries of the Parent, as designated by the Board of Directors of the Parent (the "Board"). In this capacity, the
Executive shall have the duties, authorities and responsibilities commensurate with the duties, authorities and responsibilities of persons in similar
capacities in similarly sized companies, and such other duties, authorities and responsibilities as may reasonably be assigned to the Executive from
time to time that are not inconsistent with the Executive's position with the Company and the Parent. The Executive's principal place of employment
with the Company shall be in New York, New York, provided that the Executive understands and agrees that the Executive's position requires
frequent travel for business purposes, including to the Company's offices in Los Angeles, California. The Executive shall report directly to the Board.
(b)OTHER ACTIVITIES. During the Employment Term, the Executive shall devote all of the Executive's business time, energy, business
judgment, knowledge and skill and the Executive's best efforts to the performance of the Executive's duties with the Company; provided that the
foregoing shall not prevent the Executive from (i) continuing to serve on the board of directors of P-180, Inc. and P-180 Vince Acquisition Co.
(including any other parent, subsidiary and/or affiliate of each of these entities, collectively and individually, "P-180"), so long as such activities in the
aggregate do not interfere or conflict with the Executive's duties hereunder or create a potential business or fiduciary conflict; (ii) with prior written
notice to the Board, serving on the boards of directors (and board committees) of non-profit organizations, and, with the prior written approval of the
Board, other for profit companies, (iii) participating in charitable, civic, educational, professional, community or industry affairs, (iv) managing the
Executive's
passive personal investments, in each case so long as such activities in the aggregate do not interfere or conflict with the Executive's duties hereunder
or create a potential business or fiduciary conflict. Executive acknowledges that the Executive is subject to, and agrees to comply with, among other
policies adopted by Parent or the Company from time to time which may be applicable to Executive, (x) any policy regarding a "clawback" of
compensation in ce1tain circumstances, including the
Exhibit 10.35
clawback provided for in the Amended and Restated Vince Holding Corp. 2013 Omnibus Incentive Plan, as further amended or restated (the "2013
Incentive Plan"), as well as the Parent's existing clawback policy, (y) Parent's stock ownership policy applicable to senior executives, and (z) Parent's
policy regarding trading in Parent securities.
(c)BOARD SEAT. The Board shall take such action as may be necessary to appoint or elect the Executive as a member of the Board,
effective as of the Effective Date, with no additional compensation. Thereafter, during the Employment Term, the Board shall nominate the Executive
for re-election as a member of the Board at the expiration of the then current term, provided that the foregoing shall not be required to the extent
prohibited by legal or regulatory requirements.
2.
EMPLOYMENT TERM.
(a)The Company agrees to employ the Executive pursuant to the terms of this Agreement, and the Executive agrees to be so employed, for a
term commencing on February 6, 2025 (the "Effective Date") and ending on February 6, 2026 (the "Initial Term"). Following the Initial Term, the
term of this Agreement shall be automatically extended for successive one-year periods (each, a "Renewal Term"): provided, however, that either
party hereto may elect not to extend this Agreement by giving written notice to the other party at least sixty (60) days prior to the end of the Initial
Term or any Renewal Term. Notwithstanding the foregoing, the Executive's employment hereunder may be earlier terminated in accordance with
Section 6 hereof, subject to the provisions of Section 7 hereof. The period of time between the Effective Date and the termination of the Executive's
employment hereunder shall be referred to herein as the "Employment Term."
(b)It is acknowledged and agreed that if this Agreement is not renewed by the Company pursuant to Section 2(a) above, and not as a result
of Executive's Death, Disability, or Cause pursuant to Section 6(a). 6(b), or 6(c) below, such non-renewal by the Company will be deemed a
termination Without Cause pursuant to Section 6(d) below. In the event that Executive's employment with the Company ceases at the end of any term
because Executive (and not the
Company) has given a non-renewal notice set forth in Section 2(a) above, then such termination of employment shall be treated as a voluntary
termination by Executive.
3.BASE SALARY. During the Employment Term, the Company agrees to pay the Executive a base salary at an annual rate of $725,000,
payable in accordance with the regular payroll practices of the Company, but not less frequently than monthly. The Executive's Base Salary shall be
subject to annual review by the Board (or a committee thereof) and may be increased from time to time by and at the discretion of the Board. The base
salary as determined herein shall constitute "Base Salary" for purposes of this Agreement.
4.
ANNUAL BONUS AND LONG TERM INCENTIVES.
(a)ANNUAL BONUS. During the Employment Term, the Executive shall be eligible to receive an annual discretionary incentive payment
under the Company's discretionary annual bonus plan as may be in effect from time to time (the "Annual Bonus"), provided that such Annual Bonus
shall be subject to certain conditions, including achievement of performance metrics as established by the Compensation and Human Resources
Committee of the Parent's Board of Directors (the "Compensation Committee"), with target Annual Bonus opportunity at one hundred percent (100%)
of Base Salary (the "Target Bonus") and the maximum Annual Bonus oppo11unity set from time to time with the approval of the Board and/or the
Compensation Committee. Any Annual Bonus payable hereunder shall be paid at the same time annual bonuses are paid to other senior executives of
the Company, subject to the Executive's continued employment with the Company through the date of payment (except as otherwise provided in
Section 7 hereof).
Exhibit 10.35
(b)NO EQUITY GRANTS. Executive is not entitled to receive any equity grants or participate in any equity compensation program.
5.
EMPLOYEE BENEFITS.
(a)BENEFIT PLANS. During the Employment Term, the Executive shall be entitled to participate in any employee benefit plan that the
Company has adopted or may adopt, maintain or contribute to for the benefit of its employees generally, subject to satisfying the applicable eligibility
requirements, and except to the extent such plans are duplicative of the benefits otherwise provided hereunder. The Executive's participation will be
subject to the terms of the applicable plan documents and generally applicable Company policies. Notwithstanding the foregoing, the Company may
modify or terminate any employee benefit plan at any time.
(b)VACATION TIME. During the Employment Term, the Executive shall be entitled to five (5) weeks of paid vacation per calendar year
(as prorated for partial years) in accordance with the Company's policy on accrual and use applicable to employees as in effect from time to time.
Notwithstanding the foregoing, the Executive shall benefit from and participate in the Company's pilot flexible time off program, currently in effect
until September I, 2025, unless otherwise extended.
(c)BUSINESS AND TRAVEL EXPENSES. Upon presentation of reasonable substantiation and documentation as the Company may
specify from time to time, the Executive shall be reimbursed in accordance with the Company's expense reimbursement policy, for all reasonable out-
of-pocket business expenses incurred and paid by the Executive during the Employment Term and in connection with the performance of the
Executive's duties hereunder.
(d)INDEMNIFICATION; D&O INSURANCE. Both during and after the Employment Term, regardless of the reason for te1mination,
the Company hereby agrees to indemnify the Executive and hold the Executive harmless to the maximum extent permitted by the Company's
organizational documents against and in respect of any and all actions, suits, proceedings, investigations, claims, demands, judgments, costs, expenses
(including reasonable attorney's fees), losses, and damages resulting from the Executive's good faith performance of the Executive's duties and
obligations with the Company and Parent hereunder. The Company shall
cover the Executive under directors' and officers' liability insurance both during and, while potential liability exists, after the term of this Agreement
in the same amount and to the same extent as the Company covers its other active officers and directors. The foregoing obligations shall survive the
termination of the Executive's employment with the Company.
(e)FRINGE BENEFITS AND PERQUISITES. During the Employment Term, Executive shall be entitled to fringe benefits and
perquisites consistent with the practices of the Company and subject to governing program requirements, and to the extent the Company provides
similar benefits or perquisites (or both) to similarly situated executives of the Company.
6.TERMINATION. The Executive's employment and the Employment Term shall terminate on the first of the following to occur:
(a)DISABILITY. Upon ten (10) days' prior written notice by the Company to the Executive of a termination due to Disability. For purposes
of this Agreement, "Disability" shall be defined as the inability of the Executive to have performed the Executive's material duties hereunder after
reasonable accommodation due to a physical or mental injury, infirmity or incapacity for one hundred eighty (180) days (including weekends and
holidays) in any three hundred, sixty-five (365)-day period as determined by the Board in its reasonable discretion. The
Exhibit 10.35
Executive shall cooperate in all respects with the Company if a question arises as to whether the Executive has become disabled (including, without
limitation, submitting to reasonable examinations by one or more medical doctors and other health care specialists selected by the Company and
authorizing such medical doctors and other health care specialists to discuss the Executive's condition with the Company).
(b)
DEATH. Automatically upon the date of death of the Executive.
(c)CAUSE. Immediately upon written notice by the Company to the Executive of a termination for Cause. "Cause" shall mean:
(i)
the Executive's willful misconduct or gross negligence in the performance of the Executive's duties to the Company;
(ii)
the Executive's willful failure to substantially perform the executive's duties to the Company or to follow the lawful
directives of the Board (other than as a result of death or physical or mental incapacity);
(iii) the Executive's indictment for, conviction of, or pleading of guilty or nolo contendere to, a felony or any crime involving
moral turpitude;
(iv)
the Executive's performance of any material act of theft, embezzlement, fraud, dishonesty or misappropriation of the
Company's property;
(v)
the Executive's material breach of this Agreement or any other agreement with the Company or Parent, or a material
violation of the Company's or Parent's code of conduct or other written policy.
Any determination of Cause by the Company will be made by a resolution approved by a majority of the members of the Board (or the Audit
Committee of the Board, so long as P-180 has the right to designate the majority of the Board).
(d)
WITHOUT CAUSE. Immediately upon written notice by the Company to the Executive of an involuntary termination without
Cause (other than for death or Disability).
(e)
VOLUNTARY TERMINATION BY EXECUTIVE.
Upon sixty (60) days'
prior written notice by the Executive to the Company of the Executive's voluntary te1mination of employment (which the Company may, in its sole
discretion, make effective earlier than any notice date).
7.
CONSEQUENCES OF TERMINATION.
(a)
DEATH. In the event that the Executive's employment and the Employment Term ends on account of the Executive's death, the
Executive or the Executive's estate, as the case may be, shall be entitled to the following (with the amounts due under Sections 7(a)(i). 7(a)(iii) and
7(a)(iv) hereof to be paid within sixty (60) days following termination of employment, or such earlier date as may be required by applicable law):
(i)
any unpaid Base Salary through the date of termination;
(ii)
any Annual Bonus earned but unpaid with respect to a fiscal year ending on or preceding the date of termination, payable as
provided in Section 4 hereof (without regard to any continued employment requirement);
Exhibit 10.35
(iii) reimbursement for any unreimbursed business expenses incurred through the date of termination;
(iv)
any accrued but unused vacation time in accordance with Company policy;
and
(v)
all other accrued and vested payments, benefits or fringe benefits to which
the Executive is entitled in accordance with the terms and conditions of the applicable compensation or benefit plan, program or arrangement of the
Company (collectively, Sections 7(a)(1) through 7(a)(v) hereof shall be hereafter referred to as the "Accrued Benefits").
(b)DISABILITY. In the event that the Executive's employment and/or Employment Term ends on account of the Executive's Disability, the
Company shall pay or provide the Executive with the Accrued Benefits.
(c)TERMINATION FOR CAUSE. If the Executive's employment is terminated (i) by the Company for Cause or (ii) voluntarily by
Executive, the Company shall pay to the Executive the Accrued Benefits (other than the benefit described in Section 7(a)(ii) hereof).
(d)TERMINATION WITHOUT CAUSE. If the Executive's employment by the Company is terminated by the Company other than for
Cause, the Company shall pay or provide the Executive with the following:
(i)
the Accrued Benefits;
(ii) a pro rata portion of the Executive's Annual Bonus for the fiscal year in which the date of termination occurs, based on final,
audited actual results for such fiscal year, and pro-rated based on the number of days the Executive was employed during such fiscal year, with any
earned amounts to be payable at the same time that any Annual Bonus for such fiscal year would have been paid pursuant to Section 4(a):
(iii) subject to the Executive's continued compliance with the obligations in Sections 8, 9 and 10 hereof, the Company shall
continue to pay the Executive the Base Salary at the rate being paid at the termination date, for the earlier of twelve (12) months or until the executive
secures other employment equal to or greater than their Base Salary at such time (the "Severance Period"), provided, however, that in the event that
Executive obtains other employment which pays the Executive a base salary less than the Base Salary on the termination date, then the payments
under this clause (iii) shall immediately become subject to offset by the amount of the base salary and guaranteed compensation, if any, from such
other employment; and
(iv) if the Executive makes a timely election of continued health benefit coverage under the Consolidated Omnibus Budget
Reconciliation Act ("COBRA"), the Company will continue to pay the employer portion of the associated monthly premiums during the Severance
Period, with Executive responsible to pay the associated employee portion of the monthly premium as directed by the Company in order to be covered
by COBRA. Effective the first day of the month following the last date of the Company COBRA subsidy period, Executive will become responsible
to pay I 00% of the COBRA premium to continue healthcare insurance for the remainder of the applicable COBRA period. Notwithstanding the
foregoing, the Company shall not be obligated to provide the continuation coverage contemplated by this Section 7(d)(iv) if it would result in the
imposition of excise taxes on the Company for failure to comply with the nondiscrimination requirements of the Patient Protection and Affordable
Care Act of 20I 0, as amended, and the Health Care and Education Reconciliation Act of20 I 0, as amended (to the extent applicable).
Exhibit 10.35
Notwithstanding the foregoing, to the extent that the payment of any amount under this Section 7 constitutes "nonqualified deferred compensation"
for purposes of "Code Section 409A" (as defined in Section 21 hereof), any such payment scheduled to occur during the first sixty (60) days following
such termination shall not be paid until the sixtieth (60th) day following such termination and shall include payment of any amount that was otherwise
scheduled to be paid prior thereto; and Payments and benefits provided in this Section 7(d) shall be in lieu of any termination or severance payments
or benefits for which the Executive may be eligible under any of the plans, policies or programs of the Company or under the Worker Adjustment
Retraining Notification Act of 1988 or any similar state statute or regulation.
(e)OTHER OBLIGATIONS. Upon any termination of the Executive's employment with the Company, the Executive shall promptly
resign from any position as an officer, director or fiduciary of any Company-related entity, including without limitation as a member of the Board.
(f)EXCLUSIVE REMEDY. The amounts payable to the Executive following termination of employment and the Employment Term
hereunder pursuant to Sections 6 and 7 hereof shall be in full and complete satisfaction of the Executive's rights under this Agreement and any other
claims that the Executive may have in respect of the Executive's employment with the Company or any of its affiliates, and the Executive
acknowledges that such amounts are fair and reasonable, and are the Executive's sole and exclusive remedy, in lieu of all other remedies at law or in
equity, with respect to the termination of the Executive's employment hereunder or any breach of this Agreement, other than the Executive's rights as
an equity or security holder in the Company or its affiliates, which shall survive the Employment Term in accordance with the terms of the definitive
documentation related thereto.
(g)CODE SECTION 280G. To the extent that any amount payable to the Executive hereunder, as well as any other "parachute payment,"
as such term is defined under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), payable to the Executive in connection
with the Executive's employment by the Company, exceed the limitations of Section 280G of the Code such that an excise tax will be imposed under
Section 4999 of the Code (the "Excise Tax"), then such payments shall be either (x) reduced to the minimum extent necessary to avoid application of
the Excise Tax or (y) provided to the Executive in full, whichever of the foregoing amounts, when taking into account applicable federal, state, local
and foreign income and employment taxes, the Excise Tax and any other applicable taxes, results in the receipt by the Executive, on an after-tax basis,
of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under the Excise Tax. In the event of a
reduction in benefits hereunder, the reduction shall occur in the following order: (i) benefits valued as parachute payments, (ii) any cash severance
based on a multiple of Base Salary or Annual Bonus, (iii) any other cash amounts payable to the Executive, and (iv) acceleration of vesting of any
equity awards.
8.RELEASE; MITIGATION; SET-OFFS. Any and all amounts payable and benefits or additional rights provided pursuant to this
Agreement in connection with the Executive's termination of employment beyond the Accrued Benefits (other than the benefit described in Section
7(a)(ii) hereof) shall only be payable if the Executive delivers to the Company and does not revoke a general release of claims in favor of the
Company substantially in the form of Exhibit A attached hereto. Such release shall be executed and delivered (and no longer subject to revocation, if
applicable) within sixty (60) days following termination. Except as otherwise expressly provided in Section 7 hereof, in no event shall the Executive
be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement, and such amounts shall not be offset by any amount received by the Executive from any other source. Subject to the
provisions of Section 2l{b)(v)
Exhibit 10.35
hereof and the limitations of applicable wage laws, the Company's obligations to pay the Executive amounts hereunder shall be subject to set-off,
counterclaim or recoupment of amounts owed by the Executive to the Company or any of its affiliates.
9.
RESTRICTIVE COVENANTS.
(a)CONFIDENTIALITY. During the course of the Executive's employment with the Company, the Executive will have access to
Confidential Information. For purposes of this Agreement, "Confidential Information" means all data, information, ideas, concepts, discoveries, trade
secrets, inventions (whether or not patentable or reduced to practice), innovations, improvements, know-how, developments, techniques, methods,
processes, treatments, drawings, sketches, specifications, designs, patterns, models, plans and strategies, and all other confidential
or proprietary information or trade secrets in any form or medium (whether merely remembered or embodied in a tangible or intangible form or
medium) whether now or hereafter existing, relating to or arising from the past, current or potential business, activities and/or operations of the
Company or any of its affiliates, including, without limitation, any such information relating to or concerning finances, sales, marketing, advertising,
transition, promotions, pricing, personnel, customers, suppliers, vendors, partners and/or competitors. The Executive agrees that the Executive shall
not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any person, other than in the course of the Executive's
assigned duties and for the benefit of the Company, either during the period of the Executive's employment or at any time thereafter, any Confidential
Information or other confidential or proprietary information received from third parties subject to a duty on the Company's and its subsidiaries' and
affiliates' part to maintain the confidentiality of such information, and to use such information only for specified limited purposes, in each case, which
shall have been obtained by the Executive during the Executive's employment by the Company (or any predecessor). The foregoing shall not apply to
information that (i) was known to the public prior to its disclosure to the Executive; (ii) becomes generally known to the public subsequent to
disclosure to the Executive through no wrongful act of the Executive or any representative of the Executive; or (iii) the Executive is required to
disclose by applicable law, regulation or legal process (provided that the Executive provides the Company with prior notice of the contemplated
disclosure and cooperates with the Company at its expense in seeking a protective order or other appropriate protection of such information). Unless
this Agreement is otherwise required to be disclosed under applicable law, rule or regulation, the terms and conditions of this Agreement shall remain
strictly confidential, and the Executive hereby agrees not to disclose the terms and conditions hereof to any person or entity, other than immediate
family members, legal advisors or personal tax or financial advisors, or prospective future employers solely for the purpose of disclosing the
limitations on the Executive's conduct imposed by the provisions of this Section 9 who, in each case, agree to keep such information confidential.
Notwithstanding anything herein to the contrary, nothing in this Section 9(a) will (x) prohibit the Executive from making reports of possible violations
of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under any whistleblower
protection provisions of state or federal law or regulation, or (y) require notification or prior approval by the Company of any reporting described in
the foregoing clause (x).
(b)NONCOMPETITION. The Executive acknowledges that (i) the Executive will continue to perform services of a unique nature for the
Company that are irreplaceable, and that the Executive's performance of such services to a competing business will result in irreparable harm to the
Company, (ii) the Executive has had and will have access to Confidential Information which, if disclosed, would unfairly and inappropriately assist in
competition against the Company or any of its affiliates, (iii) in the course of the Executive's employment by a competitor, the Executive would
inevitably use or disclose such Confidential Information, and (iv) the Executive has generated and
Exhibit 10.35
will generate goodwill for the Company and its affiliates in the course of the Executive's employment. Accordingly, during the Executive's
employment hereunder and for a period of twelve (12) months thereafter, the Executive agrees that the Executive will not, directly or indirectly (other
than through the operations of P-180, subject to the Executive's compliance with Section I (b) hereof), own, manage, operate, control, be employed by
(whether as an employee, consultant, independent contractor or otherwise, and whether or not for compensation) or render services to any person,
firm, corporation or other entity, in whatever form, engaged in
the luxury and contemporary apparel business, including without limitation the following brands: ALC, Veronica Beard, Theory, Helmut Lang, DVF,
J Brand, James Perse, Joie and Rag and Bone. Notwithstanding the foregoing, nothing herein shall prohibit the Executive from being a passive owner
of not more than one percent (I%) of the equity securities of a publicly traded corporation engaged in a business that is in competition with the
Company or any of its direct affiliates, so long as the Executive has no active participation in the business of such corporation.
(c)NONSOLICITATION; NONINTERFERENCE. During the Executive's employment with the Company and for a period of twelve
(12) months thereafter, the Executive agrees that the Executive shall not, except in the furtherance of the Executive's duties hereunder, directly or
indirectly, individually or on behalf of any other person, firm, corporation or other entity, (i) solicit, aid or induce any customer of the Company to
change his, her or its business relationship with the Company (ii) solicit, aid or induce any employee, representative or agent of the Company or any
of its direct affiliates to leave such employment or retention or to accept employment with or render services to or with any other person, firm,
corporation or other entity unaffiliated with the Company, or hire or retain any such employee, representative or agent, or take any action to materially
assist or aid any other person, firm, corporation or other entity in identifying, hiring or soliciting any such employee, representative or agent, or (iii)
interfere, or aid or induce any other person or entity in interfering, with the relationship between the Company or any of its direct affiliates and any of
their respective vendors, joint venturers or licensors. An employee, representative or agent shall be deemed covered by this Section 9(c) while so
employed or retained and for a period of six (6) months thereafter. Notwithstanding the foregoing, the provisions of this Section 9(c) shall not be
violated by general advertising or solicitation not specifically targeted at Company-related persons or entities.
(d)NONDISPARAGEMENT. Both during the Employment Term and at all times thereafter, regardless of the reason for termination, the
Executive agrees not to make negative comments or otherwise disparage the Company or its officers, directors, employees, shareholders, members,
agents or products other than in the good faith performance of the Executive's duties to the Company while the Executive is employed by the
Company. The foregoing shall not be violated by truthful statements in response to legal process, required governmental testimony or filings, or
administrative or arbitral proceedings (including, without limitation, depositions in connection with such proceedings).
(e)INVENTIONS. (i) The Executive acknowledges and agrees that all ideas, methods, inventions, discoveries, improvements, work
products, developments, software, know how, processes, techniques, methods, works of authorship and other work product, whether patentable or
unpatentable, (A) that are reduced to practice, created, invented, designed, developed, contributed to, or improved with the use of any Company
resources and/or within the scope of the Executive's work with the Company or that relate to the business, operations or actual or demonstrably
anticipated research or development of the Company, and that are made or conceived by the Executive, solely or jointly with others, during the period
of the Executive's employment with the Company, or (B) suggested by any work that the Executive performs in connection with the Company, either
while performing the Executive's duties with the Company or on the
Exhibit 10.35
Executive's own time, but only insofar as the Inventions are related to the Executive's work as an employee or other service provider to the Company,
shall belong exclusively to the Company (or its designee), whether or not patent or other applications for intellectual property
protection are filed thereon (the "Inventions"). The Executive will keep full and complete written records (the "Records"), in the manner prescribed by
the Company, of all Inventions, and will promptly disclose all Inventions completely and in writing to the Company. The Records shall be the sole
and exclusive property of the Company, and the Executive will surrender them upon the termination of the Employment Term, or upon the Company's
request. The Executive will assign to the Company the Inventions and all patents or other intellectual property rights that may issue thereon in any and
all countries, whether during or subsequent to the Employment Term, together with the right to file, in the Executive's name or in the name of the
Company (or its designee), applications for patents and equivalent rights (the "Applications"). The Executive will, at any time during and subsequent
to the Employment Term, make such applications, sign such papers, take all rightful oaths, and perform all other acts as may be requested from time
to time by the Company to perfect, record, enforce, protect, patent or register the Company's rights in the Inventions, all without additional
compensation to the Executive from the Company. The Executive will also execute assignments to the Company (or its designee) of the Applications,
and give the Company and its attorneys all reasonable assistance (including the giving of testimony) to obtain the Inventions for the Company's
benefit, all without additional compensation to the Executive from the Company, but entirely at the Company's expense.
(ii) In addition, the Inventions will be deemed Work for Hire, as such term is defined under the copyright laws of the United
States, on behalf of the Company and the Executive agrees that the Company will be the sole·owner of the Inventions, and all underlying rights
therein, in all media now known or hereinafter devised, throughout the universe and in perpetuity without any further obligations to the Executive. If
the Inventions, or any portion thereof, are deemed not to be Work for Hire, or the rights in such Inventions do not otherwise automatically vest in the
Company, the Executive hereby irrevocably conveys, transfers and assigns to the Company, all rights, in all media now known or hereinafter devised,
throughout the universe and in perpetuity, in and to the Inventions, including, without limitation, all of the Executive's right, title and interest in the
copyrights (and all renewals, revivals and extensions thereof) to the Inventions, including, without limitation, all rights of any kind or any nature now
or hereafter recognized, including, without limitation, the unrestricted right to make modifications, adaptations and revisions to the Inventions, to
exploit and allow others to exploit the Inventions and all rights to sue at law or in equity for any infringement, or other unauthorized use or conduct in
derogation of the Inventions, known or unknown, prior to the date hereof, including, without limitation, the right to receive all proceeds and damages
therefrom. In addition, the Executive hereby waives any so-called "moral rights" with respect to the Inventions. To the extent that the Executive has
any rights in the results and proceeds of the Executive's service to the Company that cannot be assigned in the manner described herein, the Executive
agrees to unconditionally waive the enforcement of such rights. The Executive hereby waives any and all currently existing and future monetary rights
in and to the Inventions and all patents and other registrations for intellectual property that may issue thereon, including, without limitation, any rights
that would otherwise accrue to the Executive's benefit by virtue of the Executive being an employee of or other service provider to the Company.
(f)RETURN OF COMPANY PROPERTY. On the date of the Executive's termination of employment with the Company for any reason
(or at any time prior thereto at the Company's request), the Executive shall return all prope11y belonging to the Company or its affiliates (including,
but not limited to, any Company-provided laptops, computers, cell phones, wireless electronic mail devices or other equipment, or documents and
property belonging to the
Company). The Executive may retain the Executive's rolodex and similar address books provided
Exhibit 10.35
that such items only include contact information.
(g)REASONABLENESS OF COVENANTS. In signing this Agreement, the Executive gives the Company assurance that the Executive
has carefully read and considered all of the terms and conditions of this Agreement, including the restraints imposed under this Section 2_. The
Executive agrees that these restraints are necessary for the reasonable and proper protection of the Company and its affiliates and their Confidential
Information and that each and every one of the restraints is reasonable in respect of subject matter, length of time and geographic area, and that these
restraints, individually or in the aggregate, will not prevent the Executive from obtaining other suitable employment during the period in which the
Executive is bound by the restraints. The Executive covenants that the Executive will not challenge the reasonableness or enforceability of any of the
covenants set forth in this Section 9, and that the Executive will reimburse the Company and its affiliates for all costs (including reasonable attorneys'
fees) incurred in connection with any action to enforce any of the provisions of this Section 9 if either the Company and/or its affiliates prevails on
any material issue involved in such dispute or if the Executive challenges the reasonableness or enforceability of any of the provisions of this Section
9. It is also agreed that each of the Company's affiliates will have the right to enforce all of the Executive's obligations to that affiliate under this
Agreement, including without limitation pursuant to this Section 9.
(h)REFORMATION. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 9 is excessive
in duration or scope or is unreasonable or unenforceable under applicable law, it is the intention of the parties that such restriction may be modified or
amended by the court to render it enforceable to the maximum extent permitted by the laws of that state.
(i)TOLLING. In the event of any violation of the provisions of this Section 9, the Executive acknowledges and agrees that the post-
termination restrictions contained in this Section
2. shall be extended by a period of time equal to the period of such violation, it being the intention
of the parties hereto that the running of the applicable post-termination restriction period shall be tolled during any period of such violation.
G) SURVIVAL OF PROVISIONS. The obligations contained in Sections 9 and 10 hereof shall survive the termination or expiration of
the Employment Term and the Executive's employment with the Company and shall be fully enforceable thereafter.
10.COOPERATION. In connection with any termination of the Executive's employment with the Company, the Executive agrees to assist
the Company, as reasonably requested by the Company, in its succession planning efforts to facilitate a smooth transition of the Executive's job
responsibilities to the Executive's successor. In addition, upon the receipt of reasonable notice from the Company (including outside counsel), the
Executive agrees that while employed by the Company and thereafter, the Executive will respond and provide information with regard to matters in
which the Executive has knowledge as a result of the Executive's employment with the Company, and will provide reasonable assistance to the
Company, its affiliates and their respective representatives in defense of all claims that may be made against the Company or its affiliates, and will
assist the Company and its affiliates in the prosecution of all
claims that may be made by the Company or its affiliates, to the extent that such claims may relate to the period of the Executive's employment with
the Company. The Executive agrees to promptly inform the Company if the Executive becomes aware of any lawsuit involving such claims that may
be filed or threatened against the Company or its affiliates. The Executive also agrees to promptly inform the Company (to the extent that the
Executive is legally permitted to do so) if the Executive is asked to assist in any investigation of the Company or its affiliates (or their actions),
regardless of whether a lawsuit or other proceeding has then been filed against the Company or its affiliates
Exhibit 10.35
with respect to such investigation, and shall not do so unless legally required. Upon presentation of appropriate documentation, the Company shall
pay or reimburse the Executive for all reasonable out-of-pocket travel, duplicating or telephonic expenses incurred by the Executive in complying
with this Section 10.
11.
EQUITABLE
RELIEF AND
OTHER REMEDIES. The Executive
acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any of the provisions of Section 9 or Section 10
hereof would be inadequate and, in recognition of this fact, the Executive agrees that, in the event of such a breach or threatened breach, in addition to
any remedies at law, the Company shall be entitled to seek equitable relief in the form of specific performance, a temporary restraining order, a
temporary or permanent injunction or any other equitable remedy which may then be available, without the necessity of showing actual monetary
damages or the posting of a bond or other security. In the event of a violation by the Executive of Section 9 or Section 10 hereof, any severance being
paid to the Executive pursuant to this Agreement or otherwise shall immediately cease, and any severance previously paid to the Executive shall be
immediately repaid to the Company.
12.NO ASSIGNMENTS. This Agreement is personal to each of the parties hereto. Except as provided in this Section 12 or Section 7(a)
hereof, no party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other party hereto. The
Company shall assign this Agreement to any successor to all or substantially all of the business and/or assets of the Company; provided that the
Company shall require such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company and
any successor to its business and/or assets, which assumes and agrees to perform the duties and obligations of the Company under this Agreement by
operation of law or otherwise.
13.NOTICE. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given (a) on the date of delivery, if delivered by hand, (b) on the date of transmission, if delivered by electronic
mail, (c) on the first business day following the date of deposit, if delivered by guaranteed overnight delivery service, or (d) on the fou1th business day
following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
At the address (or to the facsimile number) shown in the books and records of the
Company.
If to the Company:
V Opco, LLC 500 Fifth Avenue
New York, NY 10110
Attention: General Counsel Email: legal@vince.com
or to such other address as either party may have furnished to the other in writing in accordance
Exhibit 10.35
herewith, except that notices of change of address shall be effective only upon receipt.
14.
SECTION HEADINGS; INCONSISTENCY. The section headings used in this Agreement are included solely for convenience
and shall not affect, or be used in connection with, the interpretation of this Agreement. In the event of any inconsistency between the terms of this
Agreement and any form, award, plan or policy of the Company, the terms of this Agreement shall govern and control.
15.SEVERABILITY. The provisions of this Agreement shall be deemed severable. The invalidity or unenforceability of any provision of
this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the
validity, legality or enforceability of any provision of this Agreement in any other jurisdiction, it being intended that all rights and obligations of the
parties hereunder shall be enforceable to the fullest extent permitted by applicable law.
16.COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all
of which together will constitute one and the same instrument.
17.GOVERNING LAW; JURISDICTION. This Agreement, the rights and obligations of the patties hereto, and all claims or disputes
relating thereto, shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the choice of law
provisions thereof. Each of the patties agrees that any dispute between the parties shall be resolved only in the courts of the State of Delaware or the
United States District Court for the District of Delaware and the appellate courts having jurisdiction of appeals in such courts. In that context, and
without limiting the generality of the foregoing, each of the parties hereto irrevocably and unconditionally (a) submits in any proceeding relating to
this Agreement or the Executive's employment by the Company or any affiliate, or for the recognition and enforcement of any judgment in respect
thereof (a "Proceeding"). to the exclusive jurisdiction of the cou1ts of the State of Delaware, the court of the United States of America for the District
of Delaware, and appellate courts having jurisdiction of appeals from any of the foregoing, and agrees that all claims in respect of any such
Proceeding shall be heard and determined in such Delaware State court or, to the extent permitted by law, in such federal court, (b) consents that any
such Proceeding may and shall be brought in such courts and waives any objection that the Executive or the Company may now or thereafter have to
the venue or jurisdiction of any such Proceeding in any such court or that such Proceeding was brought in an inconvenient court and agrees not to
plead or claim the same, (c)
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE EXECUTIVE'S EMPLOYMENT BY THE COMPANY OR ANY
AFFILIATE OF THE COMPANY, OR THE EXECUTIVE'S OR THE COMPANY'S PERFORMANCE UNDER, OR THE ENFORCEMENT OF,
THIS AGREEMENT, (d) agrees
that service of process in any such Proceeding may be effected by mailing a copy of such process by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to such party at the Executive's or the Company's address as provided in Section 13 hereof, and (e) agrees that
nothing in this Agreement shall affect the right to effect service of process in any other manner permitted by the laws of the State of Delaware. Except
as provided in Section 9(g) hereof, the parties acknowledge and agree that in connection with any dispute hereunder, each party shall pay all of its
own costs and expenses, including, without limitation, its own legal fees and expenses; provided, however, that if either the Executive or the Company
or its affiliates prevail on all material issues involved in such dispute, the non-prevailing party shall reimburse the prevailing party for all costs
(including reasonable attorneys' fees) incurred in connection with such dispute.
Exhibit 10.35
18.MISCELLANEOUS. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Executive and such officer or director of the Company as may be designated by the Board. No
waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement
to be performed by such other patty shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent
time. This Agreement together with all exhibits hereto (if any) sets forth the entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes any and all prior agreements or understandings between the Executive and the Company with respect to the subject
matter hereof; provided that the restrictive covenants and other obligations contained in Section 9 are independent of, supplemental to and do not
modify, supersede or restrict (and shall not be modified, superseded by or restricted by) any non-competition, non-solicitation, confidentiality or other
restrictive covenants in any other current or future agreement unless reference is made to the specific provisions hereof which are intended to be
superseded. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by
either party which are not expressly set forth in this Agreement.
19.REPRESENTATIONS. The Executive represents and warrants to the Company that (a) the Executive has the legal right to enter into
this Agreement and to perform all of the obligations on the Executive's part to be performed hereunder in accordance with its terms, and
(b) the Executive is not a party to any agreement or understanding, written or oral, and is not subject to any restriction, which, in either case, could
prevent the Executive from entering into this Agreement or performing all of the Executive's duties and obligations hereunder.
20.LEGAL FEES. The Company shall reimburse Executive for actual and documented legal fees incurred in connection with the
negotiation of this Agreement, provided that evidence of such fees shall be supplied to the Company and the amount of such reimbursement shall
be capped at $5,000.
21.
TAX MATTERS.
(a)
WITHHOLDING. The Company may withhold from any and all amounts payable under this Agreement or otherwise such federal,
state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
(b)
SECTION 409A COMPLIANCE.
(i)
The intent of the parties is that payments and benefits under this Agreement comply with Internal Revenue Code Section
409A and the regulations and guidance promulgated thereunder (collectively "Code Section 409A") and, accordingly, to the maximum extent
permitted, this Agreement shall be interpreted to be in compliance therewith. To the extent that any provision hereof is modified in order to comply
with Code Section 409A, such modification shall be made in good faith and shall, to the maximum extent reasonably possible, maintain the original
intent and economic benefit to the Executive and the Company of the applicable provision without violating the provisions of Code Section 409A.
Executive agrees and acknowledges that the Company makes no representations with respect to the application of Code Section 409A and other tax
consequences to any payments hereunder and, by entering into this Agreement, Executive agrees to accept the potential application of Code Section
409A and the other tax consequences of any payment made hereunder.
(ii)
A termination of employment shall not be deemed to have occurred for
Exhibit 10.35
purposes of any provision of this Agreement providing for the payment of any amount or benefit upon or following a termination of employment
unless such termination is also a "separation from service" within the meaning of Code Section 409A and, for purposes of any such provision of this
Agreement, references to a "termination," "termination of employment" or like terms shall mean "separation from service." Notwithstanding anything
to the contrary in this Agreement, if the Executive is deemed on the date of termination to be a "specified employee" within the meaning of that term
under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is considered "nonqualified deferred
compensation" under Code Section 409A payable on account of a "separation from service," such payment or benefit shall not be made or provided
until the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such "separation from service" of the
Executive, and (B) the date of the Executive's death, to the extent required under Code Section 409A. Upon the expiration of the foregoing delay
period, all payments and benefits delayed pursuant to this Section 2I(b)(ii) (whether they would have otherwise been payable in a single sum or in
installments in the absence of such delay) shall be paid or reimbursed to the Executive in a lump sum, and all remaining payments and benefits due
under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.
(iii) To the extent that reimbursements or other in-kind benefits under this Agreement constitute "nonqualified deferred
compensation" for purposes of Code Section 409A,
(A) all such expenses or other reimbursements hereunder shall be made on or prior to the last day of the taxable year following the taxable year in
which such expenses were incurred by the Executive, (B) any right to such reimbursement or in-kind benefits shall not be subject to liquidation or
exchange for another benefit, and (C) no such reimbursement, expenses eligible for
reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to
be provided, in any other taxable year.
(iv) For purposes of Code Section 409A, the Executive's right to receive installment payments pursuant to this Agreement shall
be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with
reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.
(v)
Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment or benefit under this
Agreement that constitutes "nonqualified deferred compensation" for purposes of Code Section 409A be subject to offset by any other amount unless
otherwise permitted by Code Section 409A.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
VINCE HOLDING CORP
V OPCO, LLC
By: /s/ Akiko Okuma
By: /s/ Akiko Okuma
Name: Akiko Okuma
Name: Akiko Okuma
Exhibit 10.35
Title: Chief Admin Officer & General Counsel
Title: Chief Admin Officer & General Counsel
EXECUTIVE
/s/ Brendan Hoffman_____________________
Signature
Employment Agreement Signature Page
EXHIBIT A
GENERAL RELEASE
I, Brendan Hoffman, in consideration of and subject to the performance by V Opco, LLC (together with its parent and subsidiaries, the
"Company"), of its obligations under the Employment Agreement dated as of February 3, 2025 (the "Agreement"), do hereby release and forever
discharge as of the date hereof the Company and its respective parent, affiliates, subsidiaries and direct or indirect parent entities and all present,
former and future directors, officers, agents, representatives, employees, successors and assigns of the Company and/or its respective affiliates,
subsidiaries and direct or indirect parent entities (collectively, the "Released Parties") to the extent
Exhibit 10.35
provided below (this "General Release"). The Released Parties are intended to be third-party beneficiaries of this General Release, and this General
Release may be enforced by each of them in accordance with the terms hereof in respect of the rights granted to such Released Parties hereunder.
Terms used herein but not otherwise defined shall have the meanings given to them in the Agreement.
I. I understand that any payments or benefits paid or granted to me under Section 7 of the Agreement represent, in part, consideration for
signing this General Release and are not salary, wages or benefits to which I was already entitled. I understand and agree that I will not receive certain
of the payments and benefits specified in Section 7 of the Agreement unless I execute this General Release and do not revoke this General Release
within the time period permitted hereafter. Such payments and benefits will not be considered compensation for purposes of any employee benefit
plan, program, policy or arrangement maintained or hereafter established by the Company or its affiliates.
2.Except as provided in paragraphs 4 and 5 below and except for the provisions of the Agreement which expressly survive the termination
of my employment with the Company, I knowingly and voluntarily (for myself, my heirs, executors, administrators and assigns) release and forever
discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions, causes of action, cross-claims,
counterclaims, demands, debts, compensatory damages, liquidated damages, punitive or exemplary damages, other damages, claims for costs and
attorneys' fees, or liabilities of any nature whatsoever in law and in equity, both past and present (through the date that this General Release becomes
effective and enforceable) and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties which I, my
spouse, or any of my heirs, executors, administrators or assigns, may have, by reason of any matter, cause, or thing whatsoever, from the beginning of
my initial dealings with the Company to the date of this General Release, and particularly, but without limitation of the foregoing general terms, any
claims arising from or relating in any way to my employment relationship with the Company, the tenns and conditions of that employment
relationship, and the termination of that employment relationship (including, but not limited to, any allegation, claim or violation, arising under: Title
VII of the Civil Rights Act of I 964, as amended; the Civil Rights Act of I 991; the Age Discrimination in Employment Act of 1967, as amended
(including the Older Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the
Family and Medical Leave Act of 1993; the Worker Adjustment Retraining and Notification Act; the Executive Retirement Income Security Act of
1974; any applicable Executive Order Programs; the Fair Labor Standards Act; or
B-1
their state or local counterparts; or under any other federal, state or local civil or human rights law, or under any other local, state, or federal law,
regulation or ordinance; or under any public policy, contract or tort, or under common law; or arising under any policies, practices or procedures of
the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or
other expenses, including attorneys' fees incurred in these matters) (all of the foregoing collectively referred to herein as the "Claims"). I understand
and intend that no reference herein to a specific form of claim, statute or type ofrelief is intended to limit the scope of this Release.
3.I represent that I have made no assignment or transfer of any right, claim, demand, cause of action, or other matter covered by paragraph 2
above.
Exhibit 10.35
4.I agree that this General Release does not waive or release any rights or claims that I may have under the Age Discrimination in
Employment Act of 1967 which arise after the date I execute this General Release. I acknowledge and agree that my separation from employment
with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation,
any claim under the Age Discrimination in Employment Act of 1967).
5.I agree that I hereby waive all rights to sue or obtain equitable, remedial or punitive relief from any or all Released Paities of any kind
whatsoever in respect of any Claim, including, without limitation, reinstatement, back pay, front pay, and any form of injunctive relief.
Notwithstanding the above, I further acknowledge that I am not waiving and am not being required to waive any right that cannot be waived under
law, including the right to file an administrative charge or participate in an administrative investigation or proceeding: provided, however, that I
disclaim and waive any right to share or participate in any monetary award resulting from the prosecution of such charge or investigation or
proceeding. Additionally, I am not waiving (i) any right to the Accrued Benefits or any severance benefits to which I am entitled under the Agreement,
(ii) any claim relating to directors' and officers' liability insurance coverage or any right of indemnification under the Company's organizational
documents, as provided under Section 5(d) of the Agreement, or otherwise, or (iii) my rights as an equity or security holder in the Company or its
affiliates.
6.In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims
hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its
express terms and provisions, including those relating to unknown and unsuspected Claims (notwithstanding any state or local statute that expressly
limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims
hereinabove mentioned or implied. I acknowledge and agree that this waiver is an essential and material term of this General Release and that without
such waiver the Company would not have agreed to the terms of the Agreement. I further agree that in the event I should bring a Claim seeking
damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my
behalf, this General Release shall serve as a complete defense to such Claims to the maximum extent permitted by law. I further agree that I am not
aware of any pending claim of the type described in paragraph 2 above as of the execution of this General Release.
7.
I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or
construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.
8.
I agree that if I violate this General Release by suing the Company or the other Released Parties, I will pay all costs and expenses of
defending against the suit incun-ed by the Released Parties, including reasonable attorneys' fees.
9.
I agree that, except to the extent that disclosure is otherwise required by applicable law, rule or regulation, this General Release and
the Agreement are confidential and agree not to disclose any information regarding the terms of this General Release or the Agreement, except to my
immediate family and any tax, legal or other counsel that I have consulted regarding the meaning or effect hereof or as required by law, and I will
instruct each of the foregoing not to disclose the same to anyone.
10.
Any non-disclosure provision in this General Release does not prohibit or restrict me (or my attorney) from responding to any
inquiry about this General Release or its underlying facts
Exhibit 10.35
and circumstances by the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), any other self-
regulatory organization or any governmental entity.
11.
I and the Company hereby acknowledge that Section 5(d), Sections 7 through 13, 15, 16, and 18 through 21 of the Agreement shall
survive my execution of this General Release.
12.
I represent that I am not aware of any claim by me other than the claims that are released by this General Release. I acknowledge
that I may hereafter discover claims or facts in addition to or different than those which I now know or believe to exist with respect to the subject
matter of the release set forth in paragraph I above and which, if known or suspected at the time of entering into this General Release, may have
materially affected this General Release and my decision to enter into it.
13.Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way
affect any rights or claims arising out of any breach by the Company or by any Released Party of the Agreement after the date hereof.
14.Whenever possible, each provision of this General Release shall be interpreted in, such manner as to be effective and valid under
applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General
Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained
herein.
BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:
I.
I HAVE READ IT CAREFULLY;
2.
I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING,
BUT NOT LIMITED TO, RIGHTS
UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF I 967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS
ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990, AND
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;
3.
I VOLUNTARILY CONSENT TO EVERYTHING IN IT;
4.
I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER
CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;
5.
I HAVE HAD AT LEAST [21][45] DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE TO CONSIDER IT, AND THE
CHANGES MADE SINCE MY RECEIPT OF THIS RELEASE ARE NOT MATERIAL OR WERE MADE AT MY REQUEST AND
WILL NOT RESTART THE REQUIRED [2I][45)-DA Y PERIOD;
6.
I UNDERSTAND THAT I HAVE SEVEN (7) DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT
THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;
Exhibit 10.35
7.
I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY
COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND
8.
I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAYNOT BE AMENDED, WAIVED, CHANGED OR
MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE
COMPANY AND BY ME.
SIGNED: /s/ Brendan Hoffman
DATED: 02/05/2025
Executive’s Signature
Exhibit 10.36
VOpCo
A Vince Operating Company
500 Fifth Avenue, 20th Floor, New York, NY 10110
March 6, 2025 Yuji Okumura
Dear Yuji,
Following are the updated terms associated with your position at V Opco, LLC.
Effective Date:
March 28, 2025
Title:
Interim Chief Financial Officer of V Opco, LLC and Vince Holding Corp. (and any other subsidiary or affiliate of Vince Holding Corp., as
directed by the Chief Executive Officer and/or the Board), subject to formal Board appointment.
You will be evaluated for a permanent Chief Financial Officer position based on your performance as well as needs of
the business.
Reports To:
Chief Executive Officer
Base Compensation: Your annual base salary while in this role will be $375,000. You will be paid on a bi-weekly basis (26 pay periods per year).
This position is classified as exempt. As such, you are not eligible for overtime pay for hours worked over 40 in a
week
Short-Term Incentive: You will continue to be eligible to participate in the Company’s Discretionary Annual Short-Term Incentive Plan (the “STI
Plan”). The STI Plan year is the same as Vince’s fiscal year. The target bonus opportunity while in this role under this
discretionary plan is 60% of your annual base salary, based upon annual performance targets established each fiscal
year as approved by the Board. Anticipated timing of payout under the STI Plan, if approved, is April of the following
year in which the bonus was achieved. Any bonus earned for Fiscal Year 2025 be prorated based on your prior
target percentage at the start of the year and your new target percentage based on your effective date. This
updated target percentage will remain in place while you remain in this capacity. You must be an active employee
of the company when this is paid out in order to receive any bonus earned.
Long-Term Incentive: At the effective date, and subject to Board approval, you will be granted 5,000 restricted stock units with the same vesting
terms applicable to similarly positioned executives. You will also continue to be eligible to participate in the ongoing
annual Long-Term Incentive Program at the discretion of the Board. The Board will determine the target amount
and terms (such as equity mix and vesting schedule) of the annual awards each year, based upon the Company’s
performance as well as market conditions and other factors
Merchandise Discount: While in this role, you and your immediate family are eligible to receive Vince’s
VIP merchandise discount of 75% off apparel and 50% off licensed merchandise in retail stores and online,
beginning on the effective date of your role.
Immediate family includes spouse/domestic partner and children. For your immediate family member to be eligible
for the discount, you, as the Vince associate, must be present at the time of purchase or must make the purchase
for the immediate family member. Discount amounts are subject to change at any time.
Clothing Allowance: While in this role, under Vince’s Clothing Allowance Policy, you are eligible to receive an allowance in the amount of $6,000
(pro-rated based on your effective date.) Your allowance will be calculated based on 75% off the retail price of each
item of clothing. Please note that receiving a clothing allowance is considered a taxable benefit and, as a result, the
applicable income taxes associated with receiving this benefit will be applied. Clothing allowance is determined by
your position, department’s function, and your frequency of customer-facing activity. The clothing allowance is a
discretionary benefit and is subject to change with or without notice.
Severance:
If your employment is terminated while in this role by the Company without “cause” (as such term is defined in the Company’s equity
plan), then subject to the execution of a satisfactory release by you, you will receive severance payments,
equivalent to your then current base rate of pay, for the next twelve
(12) months or until other employment is earlier secured. If you are, as of the termination date, enrolled in the
Company’s medical and dental plans, then you will continue to receive medical and dental coverage in accordance
with the Company’s plans that are then in place until the end of the salary continuation period or, at the Company’s
option, coverage under another medical and/or dental plan.
Restrictive Covenants: Notice Period Requirement
Should you voluntarily resign your employment, you shall provide the Company with a sixty (60) day working notice
period. During this notice period, you agree to continue performing all the functions and responsibilities of your
position, continue to give your full time and attention to such responsibilities, and assist the Company in preparing for
your departure.
Non-Compete
During your employment in this role and for a period of twelve(12) months thereafter (should your employment
terminate while in this role), you shall not directly or indirectly (i) source, manufacture, produce, design, develop,
promote, sell, license, distribute, or market anywhere in the world (the “Territory”) any contemporary apparel,
accessories or related products (“Competitive Products”) or (ii) own, manage, operate, be employed by, participate
in or have any interest in any other business or enterprise engaged in the design, production, distribution or sale of
Competitive Products anywhere in the Territory; provided, however, that nothing herein shall prohibit you from
being a passive owner of not more than five percent (5%) of the outstanding stock of any class of securities of a
corporation or other entity engaged in such business which is publicly traded, so long as you have no active
participation in the business of such corporation or other entity. This paragraph will not apply
and will not be enforced by the Company with respect to post-termination activity by you that occurs in California
or in any other state in which this prohibition is not enforceable under applicable law.
Non-solicit, Non-interference
During your employment in this role and for a period of twelve(12) months thereafter (should your employment
terminate while in this role), you shall not, except in furtherance of your duties during your employment with the
Company, directly or indirectly, individually or on behalf of any other person, firm, corporation or other entity, (A)
solicit or induce any employee, consultant, representative or agent of the Company or any of its affiliates, to leave
such employment or retention or to accept employment with or render services to or with any other person, firm,
corporation or other entity unaffiliated with the Company or hire or retain any such employee, consultant,
representative or agent, or take any action to materially assist or aid any other person, firm corporation or other
entity in identifying, hiring or soliciting any such employee, consultant, representative or agent, or (B) interfere, or
aid or induce any other person or entity in interfering, with the relationship between the Company or any of its
affiliates and their respective customers, suppliers, vendors, joint ventures, distribution partners, franchisees,
licensors, licensees or any other business relation of the Company or its affiliates. Any person described in
subparagraph (A) above shall be deemed covered by this paragraph while so employed or retained and for a period
of six (6) months thereafter unless such person’s employment has been terminated by the Company.
Non-disparagement
During your period of employment and thereafter, neither you nor the Company shall make any negative comments
or otherwise disparage the other party or, in the case of the Company’s or its affiliates’ officers, directors,
employees, shareholders, agents, products or business, or take any action, including making any public statements
or publishing or participating in the publication of any accounts or stories relating to any persons, entities, products
or businesses which negatively impacts or brings such person, entity, product or business into public ridicule or
disrepute except if testifying truthfully under oath pursuant to subpoena or other legal process, in which event you
agree to provide the Company, as appropriate, with notice of subpoena and opportunity to respond.
Compliance with Law: This letter is intended to comply with applicable law. Without limiting the foregoing, this letter is intended to comply with the
requirements of section 409A of the Internal Revenue Code ("409A"), and, specifically, with the separation pay and
short-term deferral exceptions of 409A. Notwithstanding
anything in the letter to the contrary, separation pay may only be made upon a "separation from service" under
409A and only in a manner permitted by 409A. For purposes of 409A, the right to a series of installment payments
under this letter shall be treated as a right to a series of separate payments. In no event may you, directly or
indirectly, designate the calendar year of a payment. All reimbursements and in-kind benefits provided in this letter
shall be made or
provided in accordance with the requirements of 409A (including, where applicable, the reimbursement rules set
forth in the regulations issued under 409A). If you are a "specified employee" of a publicly traded corporation on
your termination date (as determined by the Company in accordance with 409A), to the extent required by 409A,
separation pay due under this letter will be delayed for a period of six (6) months. Any separation pay that is
postponed because of 409A will be paid to you (or, if you die, your beneficiary) within 30 days after the end of the
six-month delay period.
This updated letter supersedes your original offer letter and the additional changes when you were promoted to VP, Controller. All other terms and
conditions of your employment apply, as stated in your original offer letter. The employment relationship remains at-will, meaning both you and the
Company have the right to terminate your employment at any time, for any reason, with or without cause, and without prior notice.
Yuji, Congratulations! We are confident that you will continue to make significant contributions to the Company. If you agree to the employment
terms listed, please sign this letter and return it via email to me at [email] as soon as possible.
Sincerely,
/s/ Brendan Hoffman
03/07/2025
Brendan Hoffman
Date
Chief Executive Officer
/s/ Lee Meiner
___ 3/7/25__
Lee Meiner
Date
Chief People Officer
I agree to the terms of the offer as outlined above.
/s/ Yuji Okumura_____ 3/7/2025__________
Yuji Okumura
Date
Exhibit 10.37
VOpCo
A Vince Operating Company
500 Fifth Avenue, 20th Floor, New York, NY 10110
April 10, 2025 Yuji Okumura
Dear Yuji,
Following are the updated terms associated with your position at V Opco, LLC.
Effective Date:
April 14, 2025
Title:
Chief Financial Officer of V Opco, LLC and Vince Holding Corp. (and any other subsidiary or affiliate of Vince Holding Corp., as directed by the
Chief Executive Officer and/or the Board)
Reports To: Chief Executive Officer
Base Compensation:
Your annual base salary while in this role will be $400,000. You will be paid on a bi-weekly basis (26 pay periods per year).
This position is classified as exempt. As such, you are not eligible for overtime pay for hours worked over 40 in a week
All other terms and conditions of your employment apply, as stated in your offer letter dated March 28th, 2025. The employment relationship remains at-
will, meaning both you and the Company have the right to terminate your employment at any time, for any reason, with or without cause, and without
prior notice.
Yuji, Congratulations! We are confident that you will continue to make significant contributions to the Company. If you agree to the employment terms
listed, please sign this letter and return it via email to [email] as soon as possible.
Sincerely,
/s/ Brendan Hoffman
_04/14/2025_____
Brendan Hoffman
Date
Chief Executive Officer
/s/ Lee Meiner 04/14/2025___
Lee Meiner
Date
Chief People Officer
I agree to the terms of the offer as outlined above.
_/s/ Yuji Okumura_____ 4/11/2025
Yuji Okumura Date
Exhibit 10.39
VOpCo
500 Fifth Avenue, 20th Floor, New York, NY 10110
A Vince Operating Company
February 3,2025 Jill Norton
Dear Jill,
In recognition of your contribution and dedication to the Company this past year, we are pleased to present you with this promotion!
Following are the terms associated with your new position:
Effective Date: February 6, 2025
Job Title:
Chief Commercial Officer
Reports To:
Chief Executive Officer
Base Compensation: Your annual base salary will be $600,000. You will be paid on a bi-weekly basis (26 pay periods per year). This position
is classified as exempt. As such, you are not eligible for overtime pay for hours worked over 40 in a week.
Short-Term Incentive: You will continue to be eligible to participate in the Company's Discretionary Annual Short-Term Incentive Plan (the "STI
Plan"). The full target bonus eligibility for this position is 70% of your base salary.
You must be actively employed on the date of the bonus payment to receive this incentive. Payout of the bonus
is anticipated in early Spring of the following year in which it is earned. The STI Plan is at the Company's
discretion and its terms are subject to change with or without notice.
Long-Term Incentive: You will continue to be eligible to participate in the ongoing annual Long Term Incentive Program at the same level as
other executives. The Board will determine the target amount and terms (such as equity mix and vesting
schedule) of the annual awards each year, based upon the Company's performance as well as market
conditions and other factors.
Vacation/Holiday:
As an exempt associate, you will be eligible for Flexible Time Off (FTO) as a part of a pilot program until September 1,
2025, where you will have the option to take unlimited time off for vacation, sickness, and/or personal matters in
conjunction with FTO policy guidelines. Time off will not accrue or expire and will offer a more flexible way to
utilize time off that meets the unique needs of our team members. You are also eligible to receive all
Exhibit 10.39
VOpCo
500 Fifth Avenue, 20th Floor, New York, NY 10110
A Vince Operating Company
Company paid holidays in accordance with the Company's standard holiday policies.
If for any reason, the current Flexible Time Off (FTO) policy is reversed, in your role you will accrue 5weeks of
vacation per annum (pro-rated for the first year of employment). Vacation time is accrued at 7.6923 hours per
pay period. All vacation time to be earned during the year is available to take as of January 1st each year even
though you actually earn it as the year proceeds.
Benefits:
As a full-time associate, you are eligible to continue to participate in the Company's healthcare benefits. The Company
provides you with a life insurance policy and short-term disability coverage at no cost to you.
Associates that participate in the medical plan can be reimbursed up to
$600 per year for gym memberships. For more information on your benefits, please reach out to Human
Resources.
Work Provided Tools: You are eligible to receive a $65/month data stipend in your paycheck to cover the Company's share of business-related
mobile service charges on your device.
Merchandise Discount: You and your immediate family members are eligible to receive an Executive Vince merchandise discount of 75% off
apparel and 50% off licensed merchandise in retail stores and online, beginning on your first day of employment.
Immediate family includes spouse/domestic partner and children. For your immediate family member to be
eligible for the discount, you must be present at the time of purchase. Discount amounts are subject to change
at any time. More information can be found in the Company's discount policy posted to ADP.
Clothing Allowance:
Under the Company's Clothing Allowance Policy, you are eligible to receive an allowance in the amount of $7,500.
Your allowance will be calculated based on 75% off the retail price of each item of clothing. Please note that
receiving a clothing allowance is considered a taxable benefit and, as a result, the applicable income taxes
associated with receiving this benefit will be applied. Clothing allowance is determined by your position,
department's function, and your frequency of customer-facing activity. The clothing allowance is a discretionary
benefit and is subject to change with or without notice.
Severance:
If your employment is terminated by the Company without "cause" (as such term is defined in the Company's equity plan),
then subject to the execution of a satisfactory release by you, you will receive severance payments, equivalent
to your then current base rate of pay, for the next twelve (12) months or until other employment is earlier
secured. If you are, as of the termination date, enrolled in the Company's medical and dental plans, then
Exhibit 10.39
VOpCo
500 Fifth Avenue, 20th Floor, New York, NY 10110
A Vince Operating Company
you will continue to receive medical and dental coverage in accordance with the
Company's plans that are then in
place until the end of the salary continuation period or, at the Company's option, coverage under another medical and/or
dental plan.
Restrictive Covenants: Notice Period Requirement
Should you voluntarily resign from your employment, you shall provide the Company with a sixty (60) day working
notice period. During this notice period, you agree to continue performing all the functions and responsibilities of your
position, continue to give your full time and attention to such responsibilities, and assist the Company in preparing for
your departure.
Non-Compete
During your employment and for a period of twelve (12) months thereafter, you shall not of employment and thereafter,
neither you nor the Company shall make any negative comments or otherwise disparage the other party or, in the case
of the Company's or its affiliates' officers, directors, employees, shareholders, agents, products or business, or take any
action, including making any public statements or publishing or participating in the publication of any accounts or
stories relating to any persons, entities, products or businesses which negatively impacts or brings such person, entity,
product or business into public ridicule or disrepute except if testifying truthfully under oath pursuant to subpoena or
other legal process, in which event you agree to provide the Company, as appropriate, with notice of subpoena and
opportunity to respond.
Compliance with Law: This letter is intended to comply with applicable law. Without limiting the foregoing, this letter is intended to comply with the
requirements of section 409A of the Internal Revenue Code ("409A"), and, specifically, with the separation pay and
short-term deferral exceptions of 409A. Notwithstanding anything in the letter to the contrary, separation pay may only
be made upon a "separation from service" under 409A and only in a manner permitted by 409A. For purposes of 409A,
the right to a series of installment payments under this letter shall be treated as a right to a series of separate
payments. In no event may you, directly or indirectly, designate the calendar year of a payment. All reimbursements
and in-kind benefits provided in this letter shall be made or provided in accordance with the requirements of 409A
(including, where applicable, the reimbursement rules set forth in the regulations issued under 409A). If you are a
"specified employee" of a publicly traded corporation on your termination date (as determined by the Company in
accordance with 409A), to the extent required by 409A, separation pay due under this letter will be delayed for a period
of six (6) months. Any separation pay that is postponed because of 409Awill be paid to you (or, if you die, your
beneficiary) within 30 days after the end of the six-month delay period.
Exhibit 10.39
VOpCo
500 Fifth Avenue, 20th Floor, New York, NY 10110
A Vince Operating Company
We are confident that you will continue to make significant contributions to V Opco LLC and Vince, and we look forward to your continued
success!
All other terms and conditions of your employment apply, as stated in your original offer letter. The employment relationship remains at-will,
meaning both you and the Company have the right to terminate your employment at any time, for any reason, with or without cause, and
without prior notice.
If you agree to the employment terms listed, please sign this letter, and return it via email to Lindsay Robinson on the HR team at [EMAIL].
Sincerely,
/s/ Brendan Hoffman
2/4/25____________
Brendan Hoffman Date
Chief Executive Officer
2/4/25
/s/ Lee Meiner 2/4/25___________
Lee Meiner Date
Chief People Officer
I agree to the terms of the offer as outlined above.
/s/ Jill Norton 2/4/25
Jill Norton Date
Exhibit 10.40
500 Fifth Avenue, 20th Floor, New York, NY 10110
VOpCo
A Vince Operating Company
October 9, 2024 Akiko Okuma
Dear Akiko,
In recognition of your contribution and dedication to Vince this past year, we are pleased to present you with this promotion!
Following are the terms associated with your new position:
Effective Date: October 9, 2024
Job Title: Chief Administrative Officer & General Counsel
We are confident that you will continue to make significant contributions to Vince, and we look forward to your continued success!
All other terms and conditions of your employment apply, as stated in your original offer letter. The employment relationship remains at-will, meaning both you
and the Company have the right to terminate your employment at any time, for any reason, with or without cause, and without prior notice.
If you agree to the employment terms listed, please sign this letter, and return it via email to Lindsay Robinson on the HR team at [email].
Sincerely,
/s/ David Stefko
October 9, 2024
David Stefko
Date
Interim Chief Executive Officer
/s/ Lee Meiner
October 9, 2024
Lee Meiner
Date
Chief People Officer
I agree to the terms of the offer as outlined above.
/s/ Akiko Okuma
October 9, 2024
Akiko Okuma
Date
Exhibit 19.1
VINCE HOLDING CORP.
Insider Trading Policy
Background
The board of directors of Vince Holding Corp. (together with its subsidiaries, the “Company”) has adopted this Insider Trading Policy (the
“Policy”) for members of our board of directors and our officers, associates and consultants, as well as their immediate family members (e.g.,
parents, siblings, spouses, children) and members of their household, with respect to the trading of the Company’s securities and the trading of
the securities of publicly traded companies with whom we have a business relationship.
In the course of your employment or other business relationship with the Company, you may become aware of information about the Company
that is not generally available to the public. Because of your relationship with the Company, you have certain responsibilities and obligations
under the federal and state securities laws with respect to that information and the trading of securities. Federal and state securities laws
prohibit the purchase or sale of a company’s securities by persons who are aware of material information about that company, which information
is not generally known or available to the public. These laws also prohibit persons who are aware of such material nonpublic information from
disclosing this information to others who may trade in securities. Companies and their controlling persons are also subject to liability if they fail
to take reasonable steps to prevent insider trading by company personnel.
It is important that you understand the breadth of activities that constitute illegal insider trading and the consequences, which can be severe.
Both the Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange (the “NYSE”) investigate and are very effective
at detecting insider trading. The SEC, together with the U.S. States Attorneys’ Officer pursue insider trading violations vigorously. Cases have
been successfully prosecuted against trading by associates through foreign accounts, trading by family members and friends and trading
involving only a small number of shares, with significant monetary and/or criminal consequences.
Whether information is obtained in the course of employment, from friends, relatives, acquaintances or strangers, or from overhearing the
conversations of others, trading while aware of material nonpublic information is prohibited and violates the law. Your failure to maintain the
confidentiality of material nonpublic information about the Company could damage the Company’s reputation and greatly harm the Company’s
ability to conduct and grow its business. You could be dismissed for disclosing or trading on material, nonpublic information. In addition, as
discussed below, you and the Company also could be exposed to significant civil penalties and criminal charges.
Please read this policy in its entirety and take the utmost care to comply with it at all times. This policy is designed to prevent insider trading or
allegations of insider trading, and to protect the Company’s reputation for integrity and ethical conduct. It is your obligation to understand and
comply with this policy. Should you have any questions regarding this policy, please contact the General Counsel.
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Penalties for Noncompliance
Civil and Criminal Penalties. Potential penalties for insider trading violations include (1) imprisonment for up to 20 years, (2) criminal fines of
up to $5 million, and (3) civil fines of up to three times the profit gained or loss avoided.
Controlling Person Liability. If the Company fails to take appropriate steps to prevent illegal insider trading, the Company may have
“controlling person” liability for a trading violation with civil penalties of up to the greater of $1 million and three times the profit gained or loss
avoided, as well as a criminal penalty of up to $25 million. The civil penalties can extend personal liability to the Company’s directors, officers
and other supervisory personnel if they fail to take appropriate steps to prevent insider trading.
Company Sanctions. Failure to comply with this Policy may also subject you to Company-imposed sanctions, including dismissal for cause,
whether or not your failure to comply with this policy results in a violation of law.
Scope of Policy
Persons Covered. As a member of the board of directors, officer, employee or consultant of the Company or its subsidiaries, this Policy applies
to you. The same restrictions that apply to you apply to your family members who reside with you, anyone else who lives in your household and
any family members who do not live in your household but whose transactions in Company securities are directed by you or are subject to your
influence or control (such as parents or children who consult with you before they trade in Company securities). You are responsible for making
sure that the purchase or sale of any security covered by this Policy by any such person complies with this Policy.
Companies Covered. The prohibition on insider trading in this Policy is not limited to trading in the Company’s securities. It includes trading in
the securities of other firms, such as customers or suppliers of the Company, or firms with which the Company may be negotiating major
transactions, such as an acquisition, investment or sale. Information that is not material to the Company may nevertheless be material to one of
those other firms.
Transactions Covered. Trading includes purchases and sales of stock, derivative securities (such as put and call options and convertible
debentures or preferred stock) and debt securities (debentures, bonds and notes). Trading also includes certain transactions under Company
plans, including the following.
•
Stock Option Exercises. This Policy’s trading restrictions generally do not apply to the exercise of a stock option. The trading
restrictions do apply, however, to any sale of the underlying stock or to a cashless exercise of the option through a broker, as this
entails selling a portion of the underlying stock to cover the costs of exercise.
•
Direct Stock Purchase Plan. At any time the Company has a direct stock purchase plan, this Policy’s trading restrictions will not apply
to purchases of Company stock in such plan resulting form your periodic payroll contributions to the plan under an election you made
at the time of enrollment in the plan. The trading restrictions do apply, however, to your sales of Company stock purchased under the
plan.
•
401(k) Plan. If the Company’s 401(k) plan permits the purchase of Company securities, then this
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Policy’s trading restrictions will apply to any elections you may make under the 401(k) plan to (a) increase or decrease the percentage
of your period contributions that will be allocated to the Company securities fund, (b) make an intra-plan transfer or an existing of an
existing account balance into or out of the Company securities fund, (c) borrow money against your 401(k) plan account if the loan will
result in a liquidation of some or all of your Company securities fund balance or (d) pre-pay a loan if the pre-payment will result in
allocation of loan proceeds to the Company securities fund. This Policy’s trading restrictions will not apply to any purchases of
Company securities in the 401(k) plan resulting from any periodic contribution of money to the plan pursuant to payroll deductions.
Statement of Policy
No Trading on Inside Information. You may not trade in the securities of the Company, directly or through family members or other persons or
entities, if you are aware of material nonpublic information relating to the Company. Similarly, you may not trade in the securities of any other
company if you are aware of material nonpublic information about that company which you obtained in the course of your employment with the
Company.
No Tipping. You may not pass material nonpublic information on to others or recommend to anyone, including family members, the purchase or
sale of any securities when you are aware of such information. This practice, known as “tipping,” also violates the securities laws and can result
in the same civil and criminal penalties that apply to insider trading, even though you did not trade and did not gain any benefit from another’s
trading. No person covered by this policy shall make recommendations, or express opinions, about trading in the Company’s securities on the
basis of material nonpublic information.
Confidentiality of Nonpublic Information. Nonpublic information relating to the Company is the property of the Company, and the
unauthorized disclosure of such information is prohibited. All unauthorized persons are prohibited from disclosing information about the
Company on the Internet, in forums such as chat rooms, Twitter, Facebook, Yahoo message boards, etc., or on blogs where companies and
their prospects are discussed, regardless of the situation.
No Exception for Hardship. The existence of a personal financial emergency does not excuse you from compliance with this policy. Every
director, officer, employee and consultant of the Company has the individual responsibility to comply with this Policy. From time to time, you
may have to forego a proposed transaction in the Company’s securities even if you planned to make the transaction before leaning of the
material nonpublic information and even though you believe that you may suffer from an economic loss.
Open Window, Blackout and Pre-Clearance Procedures. To help prevent inadvertent violations of the federal securities laws and to avoid
even the appearance of trading on the basis of inside information, the Company’s board of directors has adopted an Addendum to Insider
Trading Policy that applies to members of the board of directors, executive officers subject to Section 16 of the Securities Exchange Act of
1934, as amended (“Executive Officers”), and certain designated employees and consultants of the Company and its subsidiaries who have
access to material nonpublic information about the Company. The Company will notify you if you are subject to the Addendum.
The Addendum generally prohibits persons covered by it from trading in the Company’s securities at any time other than during the period
beginning on the second full business day following the release of the Company’s earnings for the prior quarter and ending on the day which is
fifteen days prior to the end of the third month of the quarter, as well as during certain event-specific blackouts. For example, if the Company
4
announces financial earnings before trading begins on a Tuesday, the first time you can buy or sell Company securities is the opening of the
market on Thursday (assuming you are not aware of other material nonpublic information at that time). However, if the Company announces
earnings after trading begins on that Tuesday, the first time you can buy or sell Company securities is the opening of the market on Friday.
Notwithstanding the foregoing, if you are subject to the Addendum, you must pre-clear all transactions in the Company’s securities with the
General Counsel.
Definition of Material Nonpublic Information
Inside information has two important elements—materiality and public availability.
Material Information. Information is material if there is a substantial likelihood that a reasonable investor would consider it important in deciding
whether to buy, hold or sell a security. Any information that could reasonably be expected to affect the price of the security is material. Common
examples of material information include:
•
projections of future earnings or losses, other earnings guidance;
•
earnings that are inconsistent with the consensus expectations of the investment community;
•
a pending or proposed merger, acquisition or tender offer or an acquisition or disposition of significant assets;
•
a change in management or a change in the health of management;
•
major events regarding the Company’s securities, including the declaration of a dividend, stock buyback program or stock split or the
public or private offering of additional securities;
•
a tender offer by the Company for another company’s securities or by the Company or a third party for the Company’s securities;
•
severe financial liquidity problems;
•
payout information related to the Company’s incentive plan;
•
gain or loss of a major customer or other significant business relationship;
•
actual or threatened major litigation or regulatory action, or the resolution of such litigation or regulatory action; and
•
new major contracts, orders, suppliers, customers or financing sources or the loss thereof.
Both positive and negative information can be material. It can be difficult to know whether information should be considered material. The
determination of whether information is material is almost always made after the fact, with the benefit of hindsight and when the effect of that
information on the market can be quantified. Although you may be aware of information about the Company that you do not consider to be
material, federal regulators and others may conclude (with the benefit of hindsight) that such information was material. As a result, trading in the
Company’s securities when you are aware of nonpublic information about the Company can be risky. When doubt exists, the information should
be presumed to be material and trading should be prohibited. If you are unsure whether information of which you are aware is material or
nonpublic, you should consult with the General Counsel.
Nonpublic Information. Nonpublic information is information that is not generally known or available to the public. One common misconception
is that material information loses its “nonpublic” status as soon
5
as a press release is issued disclosing the information. In fact, information is considered to be available to the public only when it has been
released broadly to the marketplace (such as by a press release or an SEC filing) and the investing public has had time to absorb the
information fully. As a general rule, information is considered nonpublic until at least the second full trading day after the information is released.
For example, if the Company announces financial earnings before trading begins on a Tuesday, the first time you can buy or sell Company
securities is the opening of the market on Thursday (assuming you are not aware of other material nonpublic information at that time). However,
if the Company announces earnings after trading begins on that Tuesday, the first time you can buy or sell Company securities is the opening of
the market on Friday.
Additional Guidance
The Company considers it improper and inappropriate for those employed by or associated with the Company to engage in short-term or
speculative transactions in the Company’s securities or in other transactions in the Company’s securities that may lead to inadvertent violations
of the insider trading laws. Accordingly, your trading in Company securities is subject to the following additional guidance.
Short Sales. You may not engage in short sales of the Company’s securities (sales of securities that are not then owned), including a “sale
against the box” (a sale of securities that are owned with delayed delivery).
Publicly Traded Options. You may not engage in transactions in publicly traded options, such as puts, calls and other derivative securities,
related to the Company’s securities on an exchange or in any other organized market.
Standing Orders. Standing orders should be used only for a very brief period of time. A standing order placed with a broker to sell or purchase
stock at a specified price leaves you with no control over the timing of the transaction. A standing order transaction executed by the broker
when you are aware of material nonpublic information and not in an “open window” may result in unlawful insider trading.
Margin Accounts and Pledges. Securities held in a margin account or pledged as collateral for a loan may be sold without your consent by the
broker if you fail to meet a margin call or by the lender in foreclosure if you default on the loan. Because a margin or foreclosure sale may occur
at a time when you are aware of material nonpublic information or otherwise are not permitted to trade in Company securities, you are
prohibited from holding Company securities in a margin account or pledging Company securities as collateral for a loan without seeking pre-
clearance from the General Counsel. An exception to this general prohibition may be granted where you clearly demonstrate the financial
capacity to repay the loan without resort to any pledged securities. If you wish to obtain an exception, you must submit a request for approval to
the General Counsel at least two weeks prior to the proposed execution of documents evidencing the proposed transaction.
Post-Termination Transactions
If you are aware of material nonpublic information when your employment or service relationship terminates, you may not trade in Company
securities until that information has become public or is no longer material (usually when the Company files its next quarterly or annual report
with the SEC).
Unauthorized Disclosure
Maintaining the confidentiality of Company information is essential for competitive, security and other
6
business reasons, as well as to comply with securities laws. You should treat all information you learn about the Company or its business plans
in connection with your employment as confidential and proprietary to the Company. Inadvertent disclosure of confidential or inside information
may expose the Company and you to significant risk of investigation and litigation.
The timing and nature of the Company’s disclosure of material information to outsiders is subject to legal rules, the breach of which could result
in substantial liability to you, the Company and its management. Accordingly, it is important that responses to inquiries about the Company by
the press, investment analysts or others in the financial community be made on the Company’s behalf only through authorized individuals.
Please consult the Company’s Code of Conduct for more details regarding the Company’s policy on speaking with the media, financial analysts,
investors and others.
Personal Responsibility
You should remember that the ultimate responsibility for adhering to this Policy and avoiding improper trading rests with you. If you violate this
Policy, the Company may take disciplinary action, including dismissal for cause.
Before material nonpublic information relating to the Company or its business has been disclosed to the general public, it must be kept in strict
confidence. Such information should be discussed only with persons who have a “need to know,” and should be confined to as small a group as
possible. The utmost care and caution must be exercised at all times. Therefore, conversations in public places, such as elevators, restaurants
and airplanes, should be limited to matters that do not involve information of a sensitive or confidential nature.
In addition, to avoid improper conduct, or the appearance of impropriety, directors, officers and other covered persons are subject to additional
restrictions and procedures that limit their ability to buy or sell the Company’s securities.
Company Assistance
Your compliance with this Policy is of the utmost importance both for you and for the Company. If you have any questions about this Policy or its
application to any proposed transaction you may obtain additional guidance from the General Counsel. Do not try to resolve uncertainties on
your own, as the rules relating to insider trading are often complex, not always intuitive and carry severe consequences.
Certification
All employees who certify their understanding of, and intent to comply with the Company’s Code of Conduct are deemed to certify their
understanding of, and intent to comply with, this Policy as well.
This Policy supersedes any previous policy of the Company concerning insider trading.
VINCE HOLDING CORP.
Addendum to Insider Trading Policy
7
Pre-clearance, Open Window and Blackout Procedures and Section 16 Compliance
To help prevent inadvertent violations of the federal securities laws and to avoid even the appearance of trading on inside information, the board
of directors of Vince Holding Corp. (together with its subsidiaries, the “Company”) has adopted this Addendum to Insider Trading Policy (this
“Addendum”). This Addendum applies to members of the board of directors, executive officers subject to Section 16 of the Securities Exchange
Act of 1934, as amended (the “Executive Officers”), and certain designated employees and consultants of the Company (“Covered Persons”)
who have access to material nonpublic information about the Company, as well as any Family Members of any individual who falls into one of
the categories set forth above. “Family Members” means children, stepchildren, parents, stepparents, spouses, siblings, mothers-in-law, fathers-
in-law, sons-in-law, daughters-in-law, brothers-in-law, or sisters-in-law and persons (other than tenants or employees) sharing a household.
The positions of the Covered Persons subject to this addendum are listed on the attached Schedule I. The Company may from time to time
designate other positions that are subject to this addendum and will amend Schedule I from time to time as necessary to reflect such changes
or the resignation or change of status of any individual.
This Addendum is in addition to and supplements the Company’s Insider Trading Policy.
Pre-clearance Procedures
All Covered Persons, including the Company’s Executive Officers and members of the board of directors (“Pre-clearance Members”), are
covered by the following pre-clearance procedures.
Pre-clearance Members, together with their Family Members, may not engage in any transaction involving the Company’s securities (including a
stock plan transaction such as an option exercise, or a gift, loan, pledge or hedge, contribution to a trust or any other transfer) at any time,
including during an open window, without first obtaining pre-clearance of the transaction from the General Counsel of the Company. A request
for pre-clearance should be submitted to the General Counsel at least two business days in advance of the proposed transaction. The General
Counsel is under no obligation to approve a trade submitted for pre-clearance, and may determine not to permit the trade. The General Counsel
himself or herself may not trade in Company securities unless the General Counsel has approved the trade(s) in accordance with the
procedures set forth in this addendum. If pre-clearance is denied, such denial must be kept confidential by the person requesting pre-clearance.
Unless otherwise provided, pre-clearance of a transaction is valid for three business days. If the transaction is not executed within that time, the
person requesting pre-clearance must request pre-clearance again.
Blackout Procedures
All Covered Persons, together with their Family Members, are subject to the following blackout procedures.
Quarterly Blackout Periods. The Company’s announcement of its quarterly financial results almost always has the potential to have a material
effect on the market for the Company securities. Therefore, to avoid even the appearance of trading on the basis of material nonpublic
information, regardless of whether or not you are aware of any material nonpublic information, you may not engage in any of the activities below
with respect to the Company’s securities at any time other than during the period beginning the day after the second full trading day following
the release of the Company’s earnings for the prior quarter and ending on the day which is fifteen days prior to the end of the third month of the
quarter. For example, if the
8
Company announces financial earnings before trading begins on a Tuesday, the first time you can buy or sell Company securities is the opening
of the market on Thursday (assuming you are not aware of other material nonpublic information at that time). However, if the Company
announces earnings after trading begins on that Tuesday, the first time you can buy or sell Company securities is the opening of the market on
Friday.
Transactions Prohibited During Blackout Periods
•
Open market purchase or sale of Company securities
•
Purchase or sale of Company securities through a broker
•
Exercise of stock options where all or a portion of the acquired stock is sold during the blackout period
•
New cash investments in any Company dividend reinvestment plan
As noted below, subject to any restrictions that may apply if you are aware of any material nonpublic information, you may engage in the
activities below with respect to the Company’s securities during blackout periods.
Transactions Allowed During Blackout Periods
•
Exercise of stock options where no Company stock is sold in the market to fund the option exercise
•
Regular and matching contributions to the Company stock fund in a benefit plan
•
Regular reinvestment in any Company dividend reinvestment plan
•
Gifts of Company stock, unless you have reason to believe the recipient intends to sell the shares during the current blackout period
or while you are aware of material nonpublic information
•
Transfers of Company stock to or from a trust
•
Transactions that comply with SEC Rule 10b5-1 pre-arranged written plans (which are discussed below)
It should be noted that even outside of a blackout period, any person possessing material, nonpublic information concerning the Company
should not engage in any transactions in the Company’s securities until 24 hours following the public disclosure of such information.
Although the Company may from time to time recommend that directors, officers, selected employees and others suspend trading outside of a
blackout period because of developments known to the Company and not yet disclosed to the public, each person is individually responsible at
all times for compliance with the prohibitions against insider trading. Trading in the Company’s securities outside of a blackout period should not
be considered a “safe harbor,” and all directors, officers and other persons should use good judgment at all times.
Interim Earnings Guidance and Event-Specific Blackouts. The Company may on occasion issue interim earnings guidance or other
potentially material information by means of a press release, SEC filing or other means designed to achieve widespread dissemination of the
information. You should anticipate that trading will be prohibited while the Company is in the process of assembling the information to be
released and until the information has been released and fully absorbed by the market. The General Counsel may designate additional blackout
periods to cover these events.
9
From time to time, an event may occur that is material to the Company and is known by only a few individuals. So long as the event remains
material and nonpublic, the persons who are aware of the event, as well as other persons designated by the General Counsel, may not trade in
the Company’s securities as follows. The existence of an event-specific blackout will not be announced, other than to those who are aware of
the event giving rise to the blackout. If, however, a person whose trades are subject to pre-clearance requests permission to trade in the
Company securities during an event-specific blackout, the General Counsel will inform the requesting person of the existence of a blackout
period, without disclosing the reason for the blackout. Any person made aware of the existence of an event-specific blackout should refrain from
trading in the Company’s securities and should not disclose the existence of the blackout to any other person. The failure of the General
Counsel to designate a person as being subject to an event-specific blackout will not relieve that person of the obligation not to trade while
aware of material nonpublic information.
Directors, Executive Officers and other Covered Persons may also be subject to event-specific blackouts pursuant to the SEC’s Regulation
Blackout Trading Restriction, which prohibits certain sales and other transfers by insiders during certain pension plan blackout periods.
Even if a blackout period is not in effect, at no time may you trade in Company securities if you are aware of material nonpublic information
about the Company.
Hardship Exceptions. A Covered Person who is subject to a blackout period and who has an unexpected and urgent need to sell Company
stock in order to generate cash may, in appropriate circumstances to be determined in the sole discretion of the Company, be permitted to sell
Company stock even during the blackout period. Hardship exceptions may be granted only by the General Counsel and must be requested at
least two days in advance of the proposed trade. A hardship exception may be granted only if the General Counsel concludes that the Company
is not in possession of material nonpublic information, including with respect to unanticipated earnings results. Under no circumstance will a
hardship exception be granted during an event- specific blackout period or to any Pre-Clearance Member.
Exception for Approved Rule 10b5-1 Plans
Rule 10b5-1 provides an affirmative defense from insider trading liability under the federal securities laws for trading plans that meet certain
requirements. In general, a Rule 10b5-1 plan must be entered into before you are aware of material nonpublic information. Once the plan is
adopted, you must not exercise any influence over the amount of securities to be traded, the price at which they are to be traded or the date of
the trade. The plan must either specify (including by formula) the amount, pricing and timing of transactions in advance or delegate discretion on
those matters to an independent third party.
The Company requires that all Rule 10b5-1 plans be approved in writing in advance by the General Counsel. Rule 10b5-1 plans generally may
not be adopted during a blackout period and may only be adopted before the person adopting the plan is aware of material nonpublic
information.
Trades by Covered Persons in the Company’s securities that are executed pursuant to an approved Rule 10b5-1 plan are not subject to the
prohibition on trading on the basis of material nonpublic information contained in the Insider Trading Policy or to the restrictions set forth above
relating to pre-clearance procedures and blackout periods. For further information about pre-arranged plans, please contact the General
Counsel.
Beneficial Ownership Forms Required by the SEC
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Section 16(a) of the Securities Exchange Act of 1934, as amended, and the SEC’s rules thereunder require all of the executive officers,
directors and greater than 10% stockholders of the Company to report their initial beneficial ownership of equity securities of the Company and
any subsequent changes in that ownership.
A Form 3 must be filed within 10 days of becoming an Executive Officer or director of the Company. This report discloses the reporting person’s
beneficial interest in Company securities and must be filed even if such person does not own any Company securities.
A Form 4 must be filed to report acquisitions and dispositions of Company securities, including, but not limited to, (a) any open market or private
sale or purchase of Company securities, (b) any grant, exercise or conversion of Company restricted stock or derivative securities (e.g., stock
options) and (c) any intra-plan transfers involving Company securities held under pension or retirement plans. A Form 4 must generally be filed
within two business days of the date of execution of the transaction (not the settlement date or subsequent closing or delivery date). The SEC
rules provide for a limited exception to the two business day filing requirement in the case of prearranged trading programs and any intra-plan
transfers involving Company securities held under the Company’s pension or retirement plans, in each case for which the executive officer or
director does not select the date of execution. In those cases, a Form 4 must be filed with the SEC within two business days following the date
on which the executive officer or director is notified of the transaction. However, if the Executive Officer or director does not receive notification
by the third business day following the actual trade date, then the third business day is deemed to be the date of execution. Consequently, it is
important that Executive Officers and directors ensure that their brokers and the plan administrator notify them promptly of any transaction. A
Form 4 must also be filed after a person ceases to be an Executive Officer or director of the Company if there is a non-exempt, “opposite-way”
transaction within six months of such person’s last transaction while an executive officer or director (e.g., an open market sale within six months
of a purchase).
A Form 5 must be filed within 45 days after the Company’s fiscal year-end by every person who was an executive officer or director at any time
during the fiscal year to report (i) certain acquisitions of Company securities not otherwise required to be reported on a Form 4, (ii) certain
miscellaneous transactions, such as gifts or inheritances not otherwise required to be reported on a Form 4 and (iii) any transaction during the
last fiscal year that was required to be reported on a Form 3 or Form 4 but was not reported. The regulations provide that, at the discretion of
the executive officer or director involved, transactions normally reported at fiscal year-end on a Form 5 may be reported earlier on a Form 4. If
there are no reportable transactions, or if all reportable transactions have already been reported on a Form 3 or Form 4, a Form 5 is not
required. The Company encourages the use of the Form 4 early reporting option to help prevent transactions from going unreported at fiscal
year-end and to help eliminate the need to file a Form 5.
Section 16 reports must be filed electronically with the SEC via EDGAR and promptly posted to the Company’s website. Under SEC rules, the
preparation and filing of Section 16 reports is the sole responsibility of the reporting person. However, the Company endeavors to assist
executive officers and directors in preparing and filing these forms. The Company can only facilitate compliance by executive officers and
directors to the extent they provide the Company with the information required. The Company does not assume any legal responsibility in this
regard.
Under Section 16(b) of the Securities Exchange Act of 1934, as amended, any “profit” (broadly defined) realized by a reporting person on a
“short-swing” transaction (i.e., a non-exempt purchase and sale, or sale and purchase, of the Company’s equity securities within a period of less
than six months) must be
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disgorged to the Company upon demand by the Company or a stockholder acting on the Company’s behalf. Liability under Section 16(b) is
imposed in a mechanical fashion without regard to intent. All that is necessary for a successful claim is to show that a reporting person realized
profits on a short-swing transaction. When computing recoverable profits on multiple purchases and sales within a six-month period, the courts
maximize the recovery by matching the lowest purchase price with the highest sale price, the next lowest purchase price with the next highest
sale price, and so on. The use of this method makes it possible in some instances for the Company to recover profits under Section 16(b) even
though the reporting person sustained a net loss on the transactions. For example, a purchase at $100, followed by a sale at $40, followed by a
purchase at $20, results in a Section 16(b) gain of $20.
Note that the beneficial ownership reporting requirements do not apply to all senior personnel of the Company. These requirements, as well as
the “short-swing” profit disgorgement provisions, apply only directors and “officers” of the Company. The term “officer” is specifically defined for
Section 16 purposes, and includes, among others, all of the executive officers of the Company and the principal accounting office of the
Company and may include officers of subsidiaries. Senior personnel with questions about their status for Section 16 reporting purposes should
consult with the General Counsel.
Hedging Transactions
Certain forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts, involve the establishment of a short
position in the Company’s securities and limit or eliminate your ability to profit from an increase in the value of the Company securities.
Therefore, you are prohibited from engaging in any hedging or monetization transactions involving Company securities.
Post-Termination Transactions
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If you are aware of material nonpublic information when you terminate employment or services, you may not trade in the Company’s securities
until that information has become public or is no longer material (usually when the Company files its next quarterly or annual report). In all other
respects, the procedures set forth in this Addendum will cease to apply to your transactions in Company securities upon the expiration of any
“blackout period” that is applicable to your transactions at the time of your termination of employment or services.
Company Assistance
Your compliance with this Addendum and the Company’s Insider Trading Policy is of the utmost importance both for you and for the Company.
If you have any questions about this Addendum, the Insider Trading Policy or their application to any proposed transaction, you may obtain
additional guidance from the General Counsel.
Certification
All members of the board of directors, officers and other employees and consultants subject to the procedures set forth in this Addendum must
annually certify their understanding of, and intent to comply with, the Company’s Insider Trading Policy and this Addendum on the form attached
to this Addendum. This Addendum supersedes any previous policy of the Company concerning insider trading restrictions.
LAST UPDATED: February 6, 2025
VINCE HOLDING CORP.
ADDENDUM TO INSIDER TRADING POLICY REGARDING PRECLEARANCE AND BLACKOUT PROCEDURES
ANNUAL CERTIFICATION
To Vince Holding Corp.
13
I
_________________________, have received and read a copy of the Vince Holding Corp. Insider Trading Policy and the Addendum to
Insider Trading Policy, each updated from time to time, regarding pre-clearance and blackout procedures. I hereby agree to comply with the
specific requirements of the policy and the Addendum in all respects during my employment or other service relationship with Vince Holding
Corp. I understand that my failure to comply in all respects with the policy and the Addendum is a basis for termination for cause of my
employment or other service relationship with Vince Holding Corp.
___________________________
(Signature)
___________________________
(Date)
Schedule I
Covered Persons
1.
Members of the Board of Directors
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2.
Section 16 Officers and all other Executive Vice Presidents, Senior Vice Presidents, Group President and Vice Presidents
3.
Employees in the Finance and Accounting Departments
4.
Employees in the Legal Department
5.
Administrative Assistants of Executive Officers and Covered Persons
6.
SEC reporting consultant and members of the disclosure committee
Exhibit 21.1
LIST OF SUBSIDIARIES OF VINCE HOLDING CORP.
Vince Intermediate Holding, LLC
Delaware
V Opco, LLC
V Opco, LLC Branch
V Opco SARL
V Opco Group UK LTD
Parker Holding, LLC
Parker Lifestyle, LLC
Delaware
France
France
England & Wales
Delaware
Delaware
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-282284) and Form S-8 (Nos. 333-192500, 333-225036, and 333-
248805) of Vince Holding Corp. of our report dated May 2, 2025 relating to the financial statements and financial statement schedule, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
New York, New York
May 2, 2025
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (15 U.S.C. SECTION 1350)
I, Brendan Hoffman, certify that:
1. I have reviewed this annual report on Form 10-K of Vince Holding Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize, and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ Brendan Hoffman
Brendan Hoffman
Chief Executive Officer
(principal executive officer)
May 2, 2025
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
(15 U.S.C. SECTION 1350)
I, Yuji Okumura, certify that:
1. I have reviewed this annual report on Form 10-K of Vince Holding Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial
reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize, and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ Yuji Okumura
Yuji Okumura
Chief Financial Officer
(principal financial and accounting officer)
May 2, 2025
Exhibit 32.1
CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Annual Report of Vince Holding Corp. (the “Company”), on Form 10-K for the year ended February 1, 2025 as filed with the Securities and Exchange
Commission (the “Report”), Brendan Hoffman, Chief Executive Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §
1350), that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company at the dates and for the periods
indicated in the Report.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed
form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.
/s/ Brendan Hoffman
Brendan Hoffman
Chief Executive Officer
(principal executive officer)
May 2, 2025
Exhibit 32.2
CERTIFICATIONS OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Annual Report of Vince Holding Corp. (the “Company”), on Form 10-K for the year ended February 1, 2025 as filed with the Securities and Exchange
Commission (the “Report”), Yuji Okumura, Chief Financial Officer of the Company, does hereby certify, pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. §
1350), that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company at the dates and for the periods
indicated in the Report.
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed
form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.
The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.
/s/ Yuji Okumura
Yuji Okumura
Chief Financial Officer
(principal financial and accounting officer)
May 2, 2025
Exhibit 97.1
VINCE HOLDING CORP.
REQUIRED COMPENSATION RECOVERY POLICY
Effective October 2, 2023
Policy
The Board of Directors (the “Board”) of Vince Holding Corp. (the “Company”) has adopted this Required Compensation Recovery Policy (this
“Policy”) pursuant to Rule 10D-1 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), the Securities and Exchange
Commission (“SEC”) regulations promulgated thereunder, and applicable New York Stock Exchange (“NYSE”) listing standards. Subject to and in
accordance with the terms of this Policy, upon a Recoupment Event, each Covered Executive shall be obligated to return to the Company, reasonably
promptly, the amount of Erroneously Awarded Compensation that was received by such Covered Executive during the Lookback Period.
Administration
This Policy will be administered by the Compensation Committee of the Board (the “Committee”). Any determinations made by the Committee
will be final and binding on all affected individuals.
Definitions
“Accounting Restatement” means an accounting restatement due to the material noncompliance of the Company with any financial reporting
requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is (a)
material to the previously issued financial statements (commonly referred to as a “Big R” restatement), or (b) would result in a material misstatement if the
error were corrected in the current period or left uncorrected in the current period (commonly referred to as a “little r” restatement).
“Covered Executive” means each of the Company’s current and former Section 16 Officers.
“Erroneously Awarded Compensation” means, with respect to each Covered Executive in connection with an Accounting Restatement, the
excess of the amount of Incentive-Based Compensation received by the Covered Executive during the Lookback Period over the amount of Incentive-
Based Compensation that otherwise would have been received had it been determined based on the restated amounts, computed without regard to any
taxes paid. For Incentive-Based Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded
Compensation is not subject to mathematical recalculation directly from the information in an Accounting Restatement: (a) the amount must be
based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or total shareholder return upon which the Incentive-
Based Compensation was received; and (b) the Company must maintain documentation of the determination of that reasonable estimate and provide
such documentation to NYSE.
“Financial Reporting Measures” are any measures that are determined and presented in accordance with the accounting principles used in
preparing the Company’s financial statements, and any measures derived wholly or in part from such measures. Stock price and total shareholder return
are also Financial Reporting Measures. A Financial Reporting Measure need not be presented within the financial statements or included in a filing with
the SEC.
2
“Incentive-Based Compensation” is any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a
Financial Reporting Measure.
“Lookback Period” means the three completed fiscal years immediately preceding the Required Restatement Date and any transition period (that
results from a change in the Company’s fiscal year) of less than nine months within or immediately following those three completed fiscal years.
A “Recoupment Event” occurs when the Company is required to prepare an Accounting Restatement.
“Required Restatement Date” means the earlier to occur of: (a) the date the Company’s Board, a committee of the Board, or the officer(s) of the
Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to
prepare an Accounting Restatement, or (b) the date a court, regulator, or other legally authorized body directs the Company to prepare an Accounting
Restatement.
“Section 16 Officer” is defined as an “officer” of the Company within the meaning of Rule 16a-1(f) of the Exchange Act.
“Section 409A” means Section 409A of the Internal Revenue Code and the regulations and guidance promulgated thereunder.
Amount Subject to Recovery
The Incentive-Based Compensation that is subject to recovery under this Policy includes such compensation that is received by a Covered
Executive (i) on or after October 2, 2023 (even if such Incentive-Based Compensation was approved, awarded or granted prior to this date), (ii) after the
individual began service as a Covered Executive, (iii) if the individual served as a Section 16 Officer at any time during the performance period for such
Incentive-Based Compensation, and (iv) while the Company has a class of securities listed on a national securities exchange or national securities
association.
The amount of Incentive-Based Compensation subject to recovery from a Covered Executive upon a Recoupment Event is the Erroneously
Awarded Compensation, which amount shall be determined by the Committee.
For purposes of this Policy, Incentive-Based Compensation is deemed “received” in the Company’s fiscal period during which the Financial
Reporting Measure specified in the Incentive-Based Compensation award is attained, even if the payment or grant of the Incentive-Based Compensation
occurs after the end of that period.
Recovery of Erroneously Awarded Compensation
Promptly following a Recoupment Event, the Committee will determine the amount of Erroneously Awarded Compensation for each Covered
Executive, and the Company will provide each such Covered Executive with a written notice of such amount and a demand for repayment or return. Upon
receipt of such notice, each affected Covered Executive shall promptly repay or return such Erroneously Awarded Compensation to the Company.
If such repayment or return is not made within a reasonable time, the Company shall recover Erroneously Awarded Compensation in a
reasonable and prompt manner using any lawful method determined by the Committee; provided that recovery of any Erroneously Awarded Compensation
must be made in compliance with Section 409A.
3
Limited Exceptions
Erroneously Awarded Compensation will be recovered in accordance with this Policy unless the Committee determines that recovery would be
impracticable and one of the following conditions is met:
•
the direct expense paid to a third party to assist in enforcing this Policy would exceed the amount to be recovered, provided the Company
has first made a reasonable effort to recover the Erroneously Awarded Compensation; or
•
the recovery would likely cause a U.S. tax-qualified retirement plan to fail to meet the requirements of Internal Revenue Code Sections
401(a)(13) and 411(a) and the regulations thereunder.
Reliance on either of the above exemptions will further comply with applicable listing standards, including without limitation, documenting the
reason for the impracticability and providing required documentation to NYSE.
No Insurance or Indemnification
Neither the Company nor any of its affiliates or subsidiaries may indemnify any Covered Executive against the loss of any Erroneously
Awarded Compensation (or related expenses incurred by the Covered Executive) pursuant to a recovery of Erroneously Awarded Compensation under this
Policy, nor will the Company nor any of its affiliates or subsidiaries pay or reimburse a Covered Executive for any insurance premiums on any insurance
policy obtained by the Covered Executive to protect against the forfeiture or recovery of any compensation pursuant to this Policy.
Interpretation
The Committee is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the
administration of this Policy. This Policy shall be applied and interpreted in a manner that is consistent with the requirements of Rule 10D-1 and any
applicable regulations, rules or standards adopted by SEC or the rules of any national securities exchange or national securities association on which the
Company’s securities are listed. In the event that this Policy does not meet the requirements of Rule 10D-1, the SEC regulations promulgated thereunder,
or the rules of any national securities exchange or national securities association on which the Company’s securities are listed, this Policy shall be deemed
to be amended to meet such requirements.
Indemnification of Policy Administrators
Any members of the Committee who participate in the administration of this Policy shall not be personally liable for any action, determination
or interpretation made with respect to this Policy and shall be fully indemnified by the Company to the fullest extent permitted under applicable law and
Company governing documents and policies with respect to any such action, determination or interpretation. The foregoing shall not limit any other rights
to indemnification of the members of the Committee under applicable law or Company governing documents and policies.
Amendment; Termination
The Board or the Committee may amend this Policy in its discretion and shall amend this Policy as it deems necessary to comply with the
regulations adopted by the SEC under Rule 10D-1 and the rules of any national securities exchange or national securities association on which the
Company’s securities are listed. The Board or the Committee may terminate this Policy at any time.
Notwithstanding anything herein to the contrary, no amendment or termination of this Policy shall be effective if that amendment or termination
would cause the Company to violate any federal securities
4
laws, SEC rules or the rules of any national securities exchange or national securities association on which the Company’s securities are listed.
Other Recoupment Rights
Any right of recoupment under this Policy is in addition to, and not in lieu of, any other remedies or rights of recoupment that may be available
to the Company pursuant to the terms of any similar provision in any employment agreement or other compensation plan or agreement and any other legal
remedies available to the Company. This Policy is in addition to any other clawback or compensation recovery, recoupment or forfeiture policy in effect or
that may be adopted by the Company from time to time, or any laws, rules or listing standards applicable to the Company, including without limitation, the
Company’s right to recoup compensation subject to Section 304 of the Sarbanes-Oxley Act of 2002. To the extent that application of this Policy would
provide for recovery of Erroneously Awarded Compensation that the Company recovers pursuant to another policy or provision, the amount that is
recovered will be credited to the required recovery under this Policy.
Successors
This Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators or other
legal representatives.
Applicable Law
This Policy and all rights and obligations hereunder shall be governed by and construed in accordance with the law of the State of Delaware
regardless of the application of rules of conflicts of laws that would apply to the laws of any other jurisdiction.
Venue
The jurisdiction and venue for any disputes arising under, or any action brought to enforce (or otherwise relating to), this Policy will be
exclusively in the courts of the State of Delaware or the United States District Court for the District of Delaware and the appellate courts having
jurisdiction of appeals in such courts. The parties consent to and submit to the personal jurisdiction and venue of courts of Delaware and irrevocably
waive any claim or argument that the courts in Delaware are an inconvenient forum.