Vince Holding 10Q 2025 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 2, 2024


☐	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 Exchange 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

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 30, 2024, the registrant had 12,609,630 shares of common stock, $0.01 par value per share, outstanding.

VINCE HOLDING CORP. AND SUBSIDIARIES

TABLE OF CONTENTS


			Page Number
PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements:		4

	a)	Unaudited Condensed Consolidated Balance Sheets at November 2, 2024 and February 3, 2024	4

	b)	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended November 2, 2024 and October 28, 2023	5

	c)	Unaudited Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended November 2, 2024 and October 28, 2023	6

	d)	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended November 2, 2024 and October 28, 2023	8

	e)	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		35

Item 4.	Controls and Procedures		35

PART II. OTHER INFORMATION			36

Item 1.	Legal Proceedings		36

Item 1A.	Risk Factors		36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		36

Item 3.	Defaults Upon Senior Securities		36

Item 4.	Mine Safety Disclosures		36

Item 5.	Other Information		36

Item 6.	Exhibits		37

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 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. 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. 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 a Stock Purchase Agreement (the “SPA”), dated May 3, 2024, entered into between V Opco and Nova Acquisitions, LLC.

For purposes of this Quarterly 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.

DISCLOSURES REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, 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: our ability to maintain the license agreement with ABG Vince; ABG Vince's expansion of the Vince brand into other categories and territories; ABG Vince's approval rights and other actions; our ability to maintain adequate cash flow from operations or availability under our revolving credit facility to meet our liquidity needs; our ability to realize the benefits of our strategic initiatives; our ability to execute and realize the enhanced profitability expectations of our transformation program; our ability to improve our profitability; the execution and management of our direct-to-consumer business growth plans; our ability to make lease payments when due; our ability to maintain our larger wholesale partners; 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; our ability to anticipate and/or react to changes in customer demand and attract new customers, including in connection with making inventory commitments; our ability to remain competitive in the areas of merchandise quality, price, breadth of selection and customer service; our ability to attract and retain key personnel; seasonal and quarterly variations in our revenue and income; general economic conditions; further impairment of our goodwill; our ability to mitigate system security risk issues, such as cyber or malware attacks, as well as other major system failures; our ability to optimize our systems, processes and functions; our ability to comply with privacy-related obligations; 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; commodity, raw material and other cost increases; the extent of our foreign sourcing; our reliance on independent manufacturers; other tax matters; and other factors as set forth from time to time in our Securities and Exchange Commission filings, including those described in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 2, 2024 (the "2023 Annual Report on Form 10-K") under the heading "Part I, Item 1A—Risk Factors" and any subsequently filed Quarterly Reports on Form 10-Q. We intend these forward-looking statements to speak only as of the date of this Quarterly Report on Form 10-Q and do not undertake to update or revise them as more information becomes available, except as required by law.

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

VINCE HOLDING CORP. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data, unaudited)


	November 2,			February 3,
	2024			2024
Assets
Current assets:
Cash and cash equivalents	$	892		$	357
Trade receivables, net of allowance for doubtful accounts of $291 and $377 at November 2, 2024 and February 3, 2024, respectively		29,445			20,671
Inventories, net		63,775			58,777
Prepaid expenses and other current assets		6,374			4,997
Total current assets		100,486			84,802
Property and equipment, net		6,784			6,972
Operating lease right-of-use assets, net		89,067			73,003
Goodwill		31,973			31,973
Equity method investment		23,554			26,147
Other assets		2,840			2,252
Total assets	$	254,704		$	225,149

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	27,024		$	31,678
Accrued salaries and employee benefits		6,667			3,967
Other accrued expenses1		9,830			8,980
Short-term lease liabilities		14,174			16,803
Total current liabilities		57,695			61,428
Long-term debt2		50,600			43,950
Long-term lease liabilities		85,275			67,705
Deferred income tax liability		3,567			4,913
Other liabilities		463			—

Commitments and contingencies (Note 10)

Stockholders' equity:
Common stock at $0.01 par value (100,000,000 shares authorized, 12,609,630 and 12,506,556 shares issued and outstanding at November 2, 2024 and February 3, 2024, respectively)		126			125
Additional paid-in capital		1,145,261			1,144,740
Accumulated deficit		(1,088,336	)		(1,097,634	)
Accumulated other comprehensive income (loss)		53			(78	)
Total stockholders' equity		57,104			47,153
Total liabilities and stockholders' equity	$	254,704		$	225,149

1 Includes accrued royalty expense of $432 as of November 2, 2024 and $361 as of February 3, 2024, which is with a related party.

2 Includes Third Lien Credit Facility, which is with a related party, of $33,437 and $29,982 as of November 2, 2024 and February 3, 2024, respectively.

See notes to unaudited condensed consolidated financial statements.

VINCE HOLDING CORP. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(in thousands, except share and per share data, unaudited)


	Three Months Ended					Nine Months Ended
	November 2,		October 28,			November 2,			October 28,
	2024		2023			2024			2023
Net sales	$	80,162	$	84,076		$	213,502		$	217,579
Cost of products sold3		40,104		46,891			108,400			118,454
Gross profit		40,058		37,185			105,102			99,125
Gain on sale of intangible assets		—		—			—			(32,808	)
Gain on sale of subsidiary		—		—			(7,634	)		—
Selling, general and administrative expenses		34,297		34,356			100,241			98,630
Income from operations		5,761		2,829			12,495			33,303
Interest expense, net4		1,691		1,993			4,984			9,420
Income before income taxes and equity in net income of equity method investment		4,070		836			7,511			23,883
Provision (benefit) for income taxes		—		509			(1,681	)		(5,368	)
Income before equity in net income of equity method investment		4,070		327			9,192			29,251
Equity in net income of equity method investment		279		656			106			863
Net income	$	4,349	$	983		$	9,298		$	30,114
Other comprehensive income (loss):
Foreign currency translation adjustments		1		(16	)		131			(11	)
Comprehensive income	$	4,350	$	967		$	9,429		$	30,103

Earnings per share:
Basic earnings per share	$	0.35	$	0.08		$	0.74		$	2.42
Diluted earnings per share	$	0.34	$	0.08		$	0.74		$	2.41
Weighted average shares outstanding:
Basic		12,604,528		12,492,278			12,560,720			12,420,991
Diluted		12,698,188		12,497,328			12,614,960			12,472,878

3 Includes royalty expense of $3,931 and $10,332 for the three and nine months ended November 2, 2024, respectively, and $4,018 and $6,253 for the three and nine months ended October 28, 2023, respectively, which is with a related party.

4 Includes capitalized PIK interest with the Third Lien Credit Facility of $1,177 and $3,455 for the three and nine months ended November 2, 2024, respectively, and $1,002 and $2,875 for the three and nine months ended October 28, 2023, respectively, which is with a related party.

See notes to unaudited condensed consolidated financial statements.

VINCE HOLDING CORP. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share amounts, unaudited)


	Common Stock
	Number of Shares Outstanding			Par Value		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
Balance as of February 3, 2024		12,506,556		$	125	$	1,144,740		$	(1,097,634	)	$	(78	)	$	47,153
Comprehensive income:
Net income		—			—		—			4,380			—			4,380
Foreign currency translation adjustment		—			—		—			—			123			123
Share-based compensation expense		—			—		(5	)		—			—			(5	)
Restricted stock unit vestings		1,486			—		—			—			—			—
Tax withholdings related to restricted stock vesting		(611	)		—		(2	)		—			—			(2	)
Issuance of common stock related to Employee Stock Purchase Plan ("ESPP")		2,484			—		7			—			—			7
Balance as of May 4, 2024		12,509,915		$	125	$	1,144,740		$	(1,093,254	)	$	45		$	51,656
Comprehensive income:
Net income		—			—		—			569			—			569
Foreign currency translation adjustment		—			—		—			—			7			7
Share-based compensation expense		—			—		255			—			—			255
Restricted stock unit vestings		119,053			1		(1	)		—			—			—
Tax withholdings related to restricted stock vesting		(30,804	)		—		(53	)		—			—			(53	)
Issuance of common stock related to ESPP		5,109			—		7			—			—			7
Balance as of August 3, 2024		12,603,273		$	126	$	1,144,948		$	(1,092,685	)	$	52		$	52,441
Comprehensive income:
Net income		—			—		—			4,349			—			4,349
Foreign currency translation adjustment		—			—		—			—			1			1
Share-based compensation expense		—			—		307			—			—			307
Restricted stock unit vestings		3,142			—		—			—			—			—
Tax withholdings related to restricted stock vesting		(436	)		—		(1	)		—			—			(1	)
Issuance of common stock related to ESPP		3,651			—		7			—			—			7
Balance as of November 2, 2024		12,609,630		$	126	$	1,145,261		$	(1,088,336	)	$	53		$	57,104

See notes to unaudited condensed consolidated financial statements.

VINCE HOLDING CORP. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share amounts, unaudited)


	Common Stock
	Number of Shares Outstanding			Par Value		Additional Paid-In Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
Balance as of January 28, 2023		12,335,405		$	123	$	1,143,295		$	(1,123,080	)	$	(81	)	$	20,257
Comprehensive loss:
Net loss		—			—		—			(381	)		—			(381	)
Foreign currency translation adjustment		—			—		—			—			(2	)		(2	)
Share-based compensation expense		—			—		420			—			—			420
Restricted stock unit vestings		34,983			1		—			—			—			1
Tax withholdings related to restricted stock vesting		(1,148	)		—		(8	)		—			—			(8	)
Issuance of common stock related to ESPP		1,885			—		14			—			—			14
Balance as of April 29, 2023		12,371,125		$	124	$	1,143,721		$	(1,123,461	)	$	(83	)	$	20,301
Comprehensive loss:
Net income		—			—		—			29,512			—			29,512
Foreign currency translation adjustment		—			—		—			—			7			7
Share-based compensation expense		—			—		393			—			—			393
Restricted stock unit vestings		134,995			1		(1	)		—			—			—
Tax withholdings related to restricted stock vesting		(23,695	)		—		(126	)		—			—			(126	)
Issuance of common stock related to ESPP		4,239			—		12			—			—			12
Balance as of July 29, 2023		12,486,664		$	125	$	1,143,999		$	(1,093,949	)	$	(76	)	$	50,099
Comprehensive income:
Net income		—			—		—			983			—			983
Foreign currency translation adjustment		—			—		—			—			(16	)		(16	)
Share-based compensation expense		—			—		342			—			—			342
Restricted stock unit vestings		11,146			—		—			—			—			—
Tax withholdings related to restricted stock vesting		(3,245	)		—		(7	)		—			—			(7	)
Issuance of common stock related to ESPP		7,778			—		11			—			—			11
Balance as of October 28, 2023		12,502,343		$	125	$	1,144,345		$	(1,092,966	)	$	(92	)	$	51,412

See notes to unaudited condensed consolidated financial statements.

VINCE HOLDING CORP. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)


	Nine Months Ended
	November 2, 2024			October 28, 2023
Operating activities
Net income	$	9,298		$	30,114
Add (deduct) items not affecting operating cash flows:
Depreciation and amortization		3,066			3,703
Allowance for doubtful accounts		(32	)		(17	)
Gain on sale of intangible assets		—			(32,808	)
Gain on sale of subsidiary		(7,634	)		—
Loss on disposal of property and equipment		40			230
Amortization of deferred financing costs		239			673
Deferred income taxes		(1,346	)		(5,905	)
Share-based compensation expense		557			1,155
Capitalized PIK Interest due to loan with related party		3,455			2,875
Loss on debt extinguishment		—			3,136
Equity in net income of equity method investment, net of distributions		2,593			(475	)
Changes in assets and liabilities:
Receivables, net		(8,742	)		(7,584	)
Inventories		(4,992	)		20,441
Prepaid expenses and other current assets		(2,072	)		(366	)
Accounts payable and accrued expenses		6,334			(23,921	)
Other assets and liabilities		(1,397	)		(4,372	)
Net cash used in operating activities		(633	)		(13,121	)
Investing activities
Payments for capital expenditures		(2,725	)		(920	)
Transaction costs related to equity method investment		—			(525	)
Proceeds from sale of intangible assets		—			77,525
Net cash (used in) provided by investing activities		(2,725	)		76,080
Financing activities
Proceeds from borrowings under the Revolving Credit Facilities		164,300			219,266
Repayment of borrowings under the Revolving Credit Facilities		(161,170	)		(248,387	)
Repayment of borrowings under the Term Loan Facilities		—			(29,378	)
Tax withholdings related to restricted stock vesting		(56	)		(141	)
Proceeds from stock option exercises, restricted stock vesting, and issuance of common stock under employee stock purchase plan		21			38
Financing fees		(8	)		(3,012	)
Net cash provided by (used in) financing activities		3,087			(61,614	)
(Decrease) increase in cash, cash equivalents, and restricted cash		(271	)		1,345
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		3			(7	)
Cash, cash equivalents, and restricted cash, beginning of period		1,219			1,116
Cash, cash equivalents, and restricted cash, end of period		951			2,454
Less: restricted cash at end of period		59			1,237
Cash and cash equivalents per balance sheet at end of period	$	892		$	1,217

Supplemental Disclosures of Cash Flow Information
Cash payments for interest	$	1,418		$	5,807
Cash payments for income taxes, net of refunds		245			437
Supplemental Disclosures of Non-Cash Investing and Financing Activities
Non-cash equity method investment		—			25,500
Capital expenditures in accounts payable and accrued liabilities		423			102
Deferred financing fees in accrued liabilities		—			323

See notes to unaudited condensed consolidated financial statements.

VINCE HOLDING CORP. AND SUBSIDIARIES

Notes to the Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

Note 1. Description of Business and Basis of Presentation

(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") 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.

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.

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 condensed 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 (the "SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. Therefore, these financial statements should be read in conjunction with VHC's audited financial statements for the fiscal year ended February 3, 2024, as set forth in the 2023 Annual Report on Form 10-K.

The condensed consolidated financial statements include the Company's accounts and the accounts of the Company's wholly-owned subsidiaries as of November 2, 2024. All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting solely of normal recurring adjustments) and disclosures necessary for a fair statement. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or the fiscal year as a whole.

(C) Use of Estimates: The preparation of 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 condensed consolidated financial statements.

(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 8 "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. Based on our current expectations, we believe that our sources of liquidity will generate sufficient cash flows to meet our obligations during the next twelve months from the date these financial statements are issued.

(E) 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 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 the Company operates. As of November 2, 2024 and February 3, 2024, the contract liability was $1,439 and $1,628, respectively. For the three months ended November 2, 2024, the Company recognized $37 of revenue that was previously included in the contract liability as of August 3, 2024. For the nine months ended November 2, 2024, the Company recognized $213 of revenue that was previously included in the contract liability as of February 3, 2024. In addition, the contract liability as of February 3, 2024 included approximately $78 that was related to Rebecca Taylor and was subsequently recognized as part of the gain on sale of subsidiaries (see Note 2 "Recent Transactions" for further information).

(F) 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 Issued Accounting Pronouncements and Disclosure Rules

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 amendments should be applied retrospectively to all prior periods presented in the financial statements. Other than additional disclosure, we do not expect a change to our consolidated statements of operations, financial position, or cash flows as a result of this ASU.

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 March 2024, the SEC adopted the final rule under SEC Release No. 33-11275: The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires new disclosures regarding information about a registrant’s climate-related risks that have materially impacted, or are reasonably likely to have a material impact on, its business strategy, results of operations, or financial condition. In addition, certain disclosures related to severe weather events and other natural conditions will also be required in a registrant’s audited financial statements. While the SEC voluntarily stayed the rules due to pending judicial review, based on our smaller reporting company and non-accelerated filer status, certain disclosures could be effective for fiscal years beginning after December 15, 2026, with certain remaining disclosures effective for fiscal years beginning after December 15, 2027. As a smaller reporting company, we are exempt from emissions disclosures and related assurance requirements. We will evaluate the SEC rule to determine its impact on our future financial reporting requirements and related 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 ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods within fiscal years 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.

Note 2. Recent Transactions

Wind Down and Sale 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 hold 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, during the quarter ended May 4, 2024, 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 the nine months ended November 2, 2024.

There were no Rebecca Taylor wind down related charges (benefits) for the three and nine months ended November 2, 2024. For the three and nine months ended October 28, 2023, the Company reported wind down related benefits of $0 and $1,750, respectively, 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 the nine months ended October 28, 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 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 (loss) of equity method investment on the Condensed 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 Condensed 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 three and nine months ended November 2, 2024 and October 28, 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

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 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

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		Rebecca Taylor and Parker		Total Net Goodwill
Balance as of February 3, 2024	$	31,973	$	—	$	—	$	31,973
Balance as of November 2, 2024	$	31,973	$	—	$	—	$	31,973

The total carrying amount of goodwill is net of accumulated impairments of $78,715.

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.

Amortization of identifiable intangible assets was $0 for the three and nine months ended November 2, 2024, respectively, and $0 and $149 for the three and nine months ended October 28, 2023, respectively.

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 November 2, 2024 or February 3, 2024. At November 2, 2024 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 $50,794 and $44,209 as of November 2, 2024 and February 3, 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 November 2, 2024 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. There was no impairment of non-financial assets during the three and nine months ended November 2, 2024 and October 28, 2023.

Determining the fair value of goodwill is judgmental in nature and requires the use of significant estimates and assumptions, including estimates of projected revenues, EBITDA margins, long-term growth rates, working capital and discount rates. The inputs used in determining the fair value of the ROU 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 measurement of fair value of these assets are considered Level 3 valuations as certain of these inputs are unobservable and are estimated to be those that would be used by market participants in valuing these or similar assets.

Note 5. Long-Term Debt and Financing Arrangements

Debt obligations consisted of the following:


	November 2,		February 3,
(in thousands)	2024		2024
Long-term debt:
Term Loan Facilities	$	—	$	—
Revolving Credit Facilities		17,357		14,227
Third Lien Credit Facility		33,437		29,982
Total debt principal		50,794		44,209
Less: current portion of long-term debt		—		—
Less: deferred financing costs		194		259
Total long-term debt	$	50,600	$	43,950

Term Loan Credit Facility

On September 7, 2021, V Opco, LLC (formerly, Vince, LLC) ("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 Condensed 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 $0 and $1,755 during the three and nine months ended October 28, 2023, respectively, 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.

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.

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.

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.

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 $0 and $8 of financing costs during the three and nine months ended November 2, 2024, respectively, and incurred $1,150 of financing costs during the fiscal year 2023 ($23 and $1,147 was incurred during the three and nine months ended October 28, 2023, respectively). In accordance with Accounting Standards Codification ("ASC") Topic 470, "Debt", these financing costs were recorded as deferred debt issuance costs (which is presented within Other assets on the Condensed Consolidated Balance Sheets) and are amortized over the term of the 2023 Revolving Credit Facility.

As of November 2, 2024, the Company was in compliance with applicable covenants. As of November 2, 2024, $44,078 was available under the 2023 Revolving Credit Facility, net of the Loan Cap, and there were $17,357 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 November 2, 2024 was 7.8%.

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 $0 and $828 during the three and nine months ended October 28, 2023, respectively, related to the write-off of the remaining deferred financing costs. As of November 2, 2024, 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 Condensed Consolidated Balance Sheets.

Third Lien Credit Facility

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"), whose affiliates own, as of November 2, 2024, approximately 67% of the Company's common stock. 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.

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 Third Lien Credit Facility contained representations, covenants, and conditions that were substantially similar to those under the 2018 Revolving Credit Facility.

The Company 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 are recorded as deferred debt issuance costs which will be amortized over the remaining term of the Third Lien Credit Facility.

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 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.

Note 6. Inventory

Inventories consisted of finished goods. As of November 2, 2024 and February 3, 2024, finished goods, net of reserves were $63,775 and $58,777, respectively.

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 November 2, 2024, there were 551,528 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 typically 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 the nine months ended November 2, 2024, 11,244 shares of common stock were issued under the ESPP. During the nine months ended October 28, 2023, 13,902 shares of common stock were issued under the ESPP. As of November 2, 2024, there were 32,426 shares available for future issuance under the ESPP.

Stock Options

There were no stock options outstanding, vested or exercisable as of November 2, 2024 and February 3, 2024, respectively. During the three and nine months ended November 2, 2024, there were no grants, expirations or forfeitures, or exercises of stock options.

Restricted Stock Units

A summary of restricted stock unit activity for the nine months ended November 2, 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		366,979		$	1.67
Vested		(122,570	)	$	8.92
Forfeited		(82,137	)	$	8.57
Non-vested restricted stock units at November 2, 2024		636,375		$	3.41

Share-Based Compensation Expense

The Company recognized share-based compensation expense of $307 and $342, including expense of $87 and $75 related to non-employees, during the three months ended November 2, 2024 and October 28, 2023, respectively. The Company recognized share-based compensation expense of $557 and $1,155 including expense of $237 and $196 related to non-employees, during the nine months ended November 2, 2024 and October 28, 2023, respectively.

Note 8. Stockholders' Equity

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 three and nine months ended November 2, 2024, the Company did not make any offerings or sales of shares of common stock under the Virtu At-the-Market Offering. At November 2, 2024, $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 nine months ended October 28, 2023, the Company did not make any offerings or sales of shares of common stock under the Jefferies At-the-Market Offering.

Note 9. Earnings 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 (loss) 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 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:


	Three Months Ended				Nine Months Ended
	November 2,		October 28,		November 2,		October 28,
	2024		2023		2024		2023
Weighted-average shares—basic		12,604,528		12,492,278		12,560,720		12,420,991
Effect of dilutive equity securities		93,660		5,050		54,240		51,887
Weighted-average shares—diluted		12,698,188		12,497,328		12,614,960		12,472,878

For the three and nine months ended November 2, 2024, 203,533 and 399,190 respectively, weighted average shares of share-based compensation were excluded from the computation of weighted average shares for diluted earnings per share, as their effect would have been anti-dilutive.

Note 10. Commitments and Contingencies

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 11. Income Taxes

The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year. In interim periods where the entity is experiencing losses, an entity must make assumptions concerning its future taxable income and determine whether the realization of future tax benefits is more likely than not. For the nine months ended November 2, 2024, the Company has year-to-date ordinary pre-tax losses for the interim period and is anticipating annual ordinary pre-tax income for the fiscal year. The Company has determined that it is more likely than not that the tax benefit of the year-to-date ordinary pre-tax loss will not be realized in the current or future years. As such, the Company did not record any tax expense for the three months ended November 2, 2024, as tax provisions for the interim periods should not be recognized until the Company has year-to-date ordinary pre-tax income.

The benefit for income taxes of $1,681 for the nine months ended November 2, 2024 represents the discrete tax benefit recorded during the first quarter of fiscal 2024 primarily recognized from 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 provision for income taxes of $509 for the three months ended October 28, 2023 resulted primarily from discrete tax expense associated with the Authentic Transaction. The provision for income taxes for the three months ended October 28, 2023 included a correction of an error of $499 related to discrete state tax expense associated with the Authentic Transaction that should have been recorded during the second quarter of fiscal 2023.

The benefit for income taxes of $5,368 for the nine months ended October 28, 2023 was due to a $6,022 discrete tax benefit resulting from the change in classification of the Company's Vince tradename indefinite-lived intangibles to Assets Held for Sale during the first quarter of fiscal 2023, partially offset by $499 of discrete state tax expense associated with the Authentic Transaction and tax expense from applying the Company's estimated effective tax rate for the fiscal year to the nine-month income (loss) before income taxes and equity in net income of equity method investment, excluding discrete items. The change in classification of the Company's Vince tradename indefinite-lived intangibles resulted in a reversal of the non-cash deferred tax liability previously created by the amortization of indefinite-lived tradename intangible asset recognized for tax, but not for book purposes, as this non-cash deferred tax liability can now be used as a source to support the realization of certain deferred tax assets related to the Company's net operating losses.

Each reporting period, the Company evaluates the realizability of its deferred tax assets and has maintained a full valuation allowance against its deferred tax assets. These valuation allowances will be maintained until there is sufficient positive evidence to conclude that it is more likely than not that these deferred tax assets will be realized.

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 the Company's more recent leases are subject to shorter terms as a result of the implementation of the strategy to pursue shorter lease terms. 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 condensed 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.

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.

Total lease cost is included in SG&A expense in the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) and is recorded net of 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 its ROU asset and lease liabilities. Short term

lease costs were immaterial for the nine months ended November 2, 2024 and October 28, 2023. The Company's lease cost is comprised of the following:


	Three Months Ended					Nine Months Ended
	November 2,			October 28,		November 2,			October 28,
(in thousands)	2024			2023		2024			2023
Operating lease cost	$	5,388		$	5,675	$	16,339		$	13,779
Variable operating lease cost		65			180		217			265
Sublease income		(72	)		—		(72	)		—
Total lease cost	$	5,381		$	5,855	$	16,484		$	14,044

The operating lease cost for the nine months ended October 28, 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.

As of November 2, 2024, the future maturity of lease liabilities are as follows:


	November 2,
(in thousands)	2024
Fiscal 2024		4,151
Fiscal 2025		21,771
Fiscal 2026		19,165
Fiscal 2027		15,989
Fiscal 2028		15,572
Thereafter		50,939
Total lease payments		127,587
Less: Imputed interest		(28,138	)
Total operating lease liabilities	$	99,449

During the three months ended November 2, 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 did not meet the criteria of a sales-type or direct financing lease.

As of November 2, 2024, future minimum tenant operating lease payments remaining under this sublease were approximately $2,700, with a remaining sublease term of 2.9 years.

The operating lease payments do not include any renewal options as such leases are not reasonably certain of being renewed as of November 2, 2024, and do not include $2,156 of legally binding minimum lease payments for leases signed but not yet commenced.

Note 13. Segment Financial Information

The Company has identified three reportable segments, as further described below. 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; and

•

Rebecca Taylor and Parker segment—consisted of the Company's operations to distribute Rebecca Taylor and Parker brand products to high-end department and specialty stores in the U.S. and select international markets, directly to the

consumer through their own branded e-commerce platforms and Rebecca Taylor retail and outlet stores, and through its 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.

The accounting policies of the Company's reportable segments are consistent with those described in Note 1 to the audited consolidated financial statements of VHC for the fiscal year ended February 3, 2024 included in the 2023 Annual Report on Form 10-K. 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. Unallocated corporate assets are related to the Vince brand and 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.

Summary information for the Company's reportable segments is presented below.


(in thousands)	Vince Wholesale		Vince Direct-to-consumer			Rebecca Taylor and Parker			Unallocated Corporate			Total
Three Months Ended November 2, 2024
Net Sales	$	48,765	$	31,397		$	—		$	—		$	80,162
Income (loss) before income taxes and equity in net income of equity method investment		18,223		614			—			(14,767	)		4,070

Three Months Ended October 28, 2023
Net Sales (1)	$	49,840	$	34,236		$	—		$	—		$	84,076
Income (loss) before income taxes and equity in net income of equity method investment (2)		15,167		(48	)		(6	)		(14,277	)		836

Nine Months Ended November 2, 2024
Net Sales	$	126,206	$	87,296		$	—		$	—		$	213,502
Income (loss) before income taxes and equity in net income of equity method investment (4)		45,070		(848	)		7,633			(44,344	)		7,511

Nine Months Ended October 28, 2023
Net Sales (1)	$	118,714	$	98,674		$	191		$	—		$	217,579
Income (loss) before income taxes and equity in net income of equity method investment (2)(3)		35,098		2,151			2,443			(15,809	)		23,883


(in thousands)	Vince Wholesale		Vince Direct-to-consumer		Rebecca Taylor and Parker		Unallocated Corporate		Total
November 2, 2024
Total Assets	$	59,766	$	107,881	$	—	$	87,057	$	254,704

February 3, 2024
Total Assets	$	51,489	$	87,648	$	—	$	86,012	$	225,149

(1) Net sales for the Rebecca Taylor and Parker reportable segment for the three and nine months ended October 28, 2023 consisted of $0 and $191, respectively, through wholesale distribution channels of residual revenue contracted prior to the sale of the Rebecca Taylor tradename.

(2) Unallocated Corporate for the three months ended October 28, 2023 includes $248 of transaction expenses associated with the Asset Sale. For the nine months ended October 28, 2023, Unallocated Corporate includes the $32,043 gain associated with the Asset Sale and $5,030 of transaction related expenses associated with the Asset Sale. See Note 2 "Recent Transactions" for further information.

(3) Rebecca Taylor and Parker reportable segment for the nine months ended October 28, 2023 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) Income (loss) before income taxes and equity in net income of equity method investment for the Rebecca Taylor and Parker reportable segment for the nine months ended November 2, 2024 primarily consists of the gain recognized on the sale of Rebecca Taylor. See Note 2 "Recent Transactions" for further information.

Note 14. Related Party Transactions

Operating Agreement

On May 25, 2023, V Opco, LLC (formerly, Vince, LLC) ("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 the three and nine months ended November 2, 2024, the Company received distributions of cash of $1,452 and $2,699 respectively, 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 the three and nine months ended November 2, 2024, the Company paid $2,750 and $10,261 under the License Agreement. At November 2, 2024, $432 of accrued royalty expense was included within Other accrued expenses on the Condensed Consolidated Balance Sheets.

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. SK Financial is an affiliate of Sun Capital, whose affiliates own, as of November 2, 2024, approximately 67% of the Company's common stock. 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.

See Note 5 "Long-Term Debt and Financing Arrangements" for additional information.

Tax Receivable Agreement

VHC entered into a Tax Receivable Agreement with the Pre-IPO Stockholders on November 27, 2013, which expired in November of 2023 with no outstanding obligations due from the Company. The Company and its former subsidiaries generated certain tax benefits (including net operating losses and tax credits) prior to the Restructuring Transactions consummated in connection with the Company's IPO and will generate certain section 197 intangible deductions (the "Pre-IPO Tax Benefits"), which would reduce the actual liability for taxes that the Company might otherwise be required to pay. The Tax Receivable Agreement provided for payments to the Pre-IPO Stockholders in an amount equal to 85% of the aggregate reduction in taxes payable realized by the

Company and its subsidiaries from the utilization of the Pre-IPO Tax Benefits. The Tax Receivable Agreement terminated per its terms on February 3, 2024, and the Company has no obligations under this agreement.

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.

During the three months ended November 2, 2024 and October 28, 2023, the Company incurred expenses of $6 and $1, respectively, under the Sun Capital Consulting Agreement. During the nine months ended November 2, 2024 and October 28, 2023, the Company incurred expenses of $17 and $4, respectively, under the Sun Capital Consulting Agreement.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion summarizes our consolidated operating results, financial condition and liquidity. The following discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (this "Quarterly Report"). All amounts disclosed are in thousands except store counts, share and per share data and percentages. See Note 1 "Description of Business and Basis of Presentation" within the notes to the Condensed Consolidated Financial Statements in this Quarterly Report for further information.

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 "Item 1A—Risk Factors" of this Quarterly Report as well as in our 2023 Annual Report on Form 10-K.

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 our 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. Vince operates 47 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 will contribute 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, LLC (formerly, Vince, LLC) ("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" within the notes to the Condensed Consolidated Financial Statements in this Quarterly Report for further 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. to Nova Acquisitions, LLC. See Note 2 "Recent Transactions" within the notes to the Condensed Consolidated Financial Statements in this Quarterly 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" within the notes to the Condensed Consolidated Financial Statements in this Quarterly Report for further information.

The Company has identified three reportable segments: Vince Wholesale, Vince Direct-to-consumer and Rebecca Taylor and Parker.

Transformation Program

Beginning in the current fiscal year, the Company has implemented a transformation program focused on driving enhanced profitability through an improved gross margin profile and optimized expense structure. The transformation program is focused on improving the Company’s gross margin profile and driving cost efficiencies. The Company expects to achieve these goals primarily through streamlining manufacturing and production operations, reducing promotional activity and optimizing the breadth and depth of markdowns, and enhancing efficiencies within store operations, corporate overhead and third-party spend.

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 store 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 store 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 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.

The following table presents, for the periods indicated, our operating results as a percentage of net sales, as well as earnings per share data:


	Three Months Ended										Nine Months Ended
	November 2, 2024					October 28, 2023					November 2, 2024						October 28, 2023
			% of Net					% of Net						% of Net						% of Net
	Amount		Sales			Amount		Sales			Amount			Sales			Amount			Sales
(in thousands, except per share data and percentages)
Statements of Operations:
Net sales	$	80,162		100.0	%	$	84,076		100.0	%	$	213,502			100.0	%	$	217,579			100.0	%
Cost of products sold		40,104		50.0	%		46,891		55.8	%		108,400			50.8	%		118,454			54.4	%
Gross profit		40,058		50.0	%		37,185		44.2	%		105,102			49.2	%		99,125			45.6	%
Gain on sale of intangible assets		—		0.0	%		—		0.0	%		—			0.0	%		(32,808	)		(15.1	)%
Gain on sale of subsidiary		—		0.0	%		—		0.0	%		(7,634	)		(3.6	)%		—			0.0	%
Selling, general and administrative expenses		34,297		42.8	%		34,356		40.9	%		100,241			47.0	%		98,630			45.3	%
Income from operations		5,761		7.2	%		2,829		3.4	%		12,495			5.9	%		33,303			15.3	%
Interest expense, net		1,691		2.1	%		1,993		2.4	%		4,984			2.3	%		9,420			4.3	%
Income before income taxes and equity in net income of equity method investment		4,070		5.1	%		836		1.0	%		7,511			3.5	%		23,883			11.0	%
Provision (benefit) for income taxes		—		0.0	%		509		0.6	%		(1,681	)		(0.8	)%		(5,368	)		(2.4	)%
Income before equity in net income of equity method investment		4,070		5.1	%		327		0.4	%		9,192			4.3	%		29,251			13.4	%
Equity in net income of equity method investment		279		0.3	%		656		0.8	%		106			0.0	%		863			0.4	%
Net income	$	4,349		5.4	%	$	983		1.2	%	$	9,298			4.4	%	$	30,114			13.8	%
Earnings per share:
Basic earnings per share	$	0.35				$	0.08				$	0.74					$	2.42
Diluted earnings per share	$	0.34				$	0.08				$	0.74					$	2.41

Three Months Ended November 2, 2024 Compared to Three Months Ended October 28, 2023

Net sales for the three months ended November 2, 2024 were $80,162, decreasing $3,914, or 4.7%, versus $84,076 for the three months ended October 28, 2023.

Gross profit increased 7.7% to $40,058 for the three months ended November 2, 2024 from $37,185 in the prior year third quarter. As a percentage of sales, gross margin was 50.0%, compared with 44.2% in the prior year third quarter. The total gross margin rate increase was primarily driven by the following factors:

•

The favorable impact from lower product costing, higher pricing, and lower freight costs which contributed positively by approximately 480 basis points;

•

The favorable impact from lower promotional activity in the Direct-to-consumer segment and lower discounting, which contributed positively by approximately 80 basis points; partially offset by

•

The unfavorable impact of channel mix of approximately 50 basis points.

Selling, general and administrative ("SG&A") expenses for the three months ended November 2, 2024 were $34,297, decreasing $59, or 0.2%, versus $34,356 for the three months ended October 28, 2023. SG&A expenses as a percentage of sales were 42.8% and 40.9% for the three months ended November 2, 2024 and October 28, 2023, respectively. The change in SG&A expenses compared to the prior fiscal year period was primarily due to:

•

$517 of decreased marketing and advertising expenses due primarily to lower spend in the current period;

•

$313 of decreased rent and occupancy costs; and

•

$248 decrease in total SG&A expenses resulting from transaction-related expenses associated with the Authentic Transaction in fiscal 2023; partially offset by

•

$810 of increased compensation and benefits due primarily to higher severance costs and bonuses.

Interest expense, net decreased $302, or 15.2%, to $1,691 in the three months ended November 2, 2024 from $1,993 in the three months ended October 28, 2023, primarily due to lower levels of debt under the revolving credit facilities, partially offset by an increase in interest expense related to the Third Lien credit facility.

Provision (benefit) for income taxes for the three months ended November 2, 2024 was $0, as the Company has year-to-date ordinary pre-tax losses for the interim period and is anticipating annual ordinary pre-tax income for the fiscal year. The Company has determined that it is more likely than not that the tax benefit of the year-to-date ordinary pre-tax loss will not be realized in the current or future years. As such, the Company did not record any tax expense for the three months ended November 2, 2024, as tax provisions for the interim periods should not be recognized until the Company has year-to-date ordinary pre-tax income.

The provision for income taxes was $509 for the three months ended October 28, 2023, which resulted primarily from discrete tax expense associated with the Authentic Transaction.

Equity in net income of equity method investment for the three months ended November 2, 2024 and October 28, 2023 was $279 and $656, respectively, and was related to the Company's 25% membership interest in ABG Vince.

Performance by Segment

The Company has identified three reportable segments as further described below:

•

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; and

•

Rebecca Taylor and Parker segment—consisted of the Company's operations to distribute Rebecca Taylor and Parker brand products to major department stores and specialty stores in the U.S. and select international markets, directly to the consumer through their own branded e-commerce platforms and Rebecca Taylor retail and outlet stores, and through its subscription service Rebecca Taylor RNTD.

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 Condensed Consolidated Financial Statements in this Quarterly Report for additional information.

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.


	Three Months Ended
	November 2,			October 28,
(in thousands)	2024			2023
Net Sales:
Vince Wholesale	$	48,765		$	49,840
Vince Direct-to-consumer		31,397			34,236
Rebecca Taylor and Parker		—			—
Total net sales	$	80,162		$	84,076

Income (loss) from operations:
Vince Wholesale	$	18,223		$	15,167
Vince Direct-to-consumer		614			(48	)
Rebecca Taylor and Parker		—			(6	)
Subtotal		18,837			15,113
Unallocated corporate		(13,076	)		(12,284	)
Total income from operations	$	5,761		$	2,829

Vince Wholesale


	Three Months Ended
(in thousands)	November 2, 2024		October 28, 2023		$ Change
Net sales	$	48,765	$	49,840	$	(1,075	)
Income from operations		18,223		15,167		3,056

Net sales from our Vince Wholesale segment decreased $1,075, or 2.2%, to $48,765 in the three months ended November 2, 2024 from $49,840 in the three months ended October 28, 2023, due primarily to lower international shipments, partially offset by increases in off-price shipments.

Income from operations from our Vince Wholesale segment increased $3,056, or 20.1%, to $18,223 in the three months ended November 2, 2024 from $15,167 in the three months ended October 28, 2023, primarily driven by improved gross margin.

Vince Direct-to-consumer


	Three Months Ended
(in thousands)	November 2, 2024		October 28, 2023			$ Change
Net sales	$	31,397	$	34,236		$	(2,839	)
Income (loss) from operations		614		(48	)		662

Net sales from our Vince Direct-to-consumer segment decreased $2,839, or 8.3%, to $31,397 in the three months ended November 2, 2024 from $34,236 in the three months ended October 28, 2023. Comparable sales, including e-commerce, decreased $888, or 2.9%, driven primarily by a decrease in retail stores traffic. Non-comparable sales, including Vince Unfold, declined $1,951. Since October 28, 2023, five net stores have closed bringing our total retail store count to 61 (consisting of 47 full price stores and 14 outlet stores) as of November 2, 2024, compared to 66 (consisting of 49 full price stores and 17 outlet stores) as of October 28, 2023.

Our Vince Direct-to-consumer segment had income from operations of $614 in the three months ended November 2, 2024 compared to a loss from operations of $48 in the three months ended October 28, 2023. The change was primarily driven by an increase in gross margin and lower operating costs driven by labor efficiencies.

Rebecca Taylor and Parker


	Three Months Ended
(in thousands)	November 2, 2024		October 28, 2023			$ Change
Net sales	$	—	$	—		$	—
Loss from operations		—		(6	)		6

As a result of the wind down of the Rebecca Taylor and Parker businesses, there were no net sales from our Rebecca Taylor and Parker segment for the three months ended November 2, 2024 and October 28, 2023.

Our Rebecca Taylor and Parker segment had no income from operations in the three months ended November 2, 2024 compared to a loss from operations of $6 in the three months ended October 28, 2023. The change was driven by the wind down and sale of the Rebecca Taylor business.

Nine Months Ended November 2, 2024 Compared to Nine Months Ended October 28, 2023

Net sales for the nine months ended November 2, 2024 were $213,502, decreasing $4,077, or 1.9%, versus $217,579 for the nine months ended October 28, 2023.

Gross profit increased 6.0% to $105,102 for the nine months ended November 2, 2024 from $99,125 in the nine months ended October 28, 2023. As a percentage of sales, gross margin was 49.2%, compared with 45.6% in the nine months ended October 28, 2023. 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 340 basis points;

•

The favorable impact from lower product costing and freight costs, and higher pricing, which contributed positively by approximately 340 basis points; partially offset by

•

The unfavorable impact from royalty expense associated with the License Agreement with ABG Vince, which contributed negatively by approximately 200 basis points; and

•

The unfavorable impact of channel and product mix, which contributed negatively by approximately 80 basis points.

Gain on sale of intangible assets for the nine months ended October 28, 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 Condensed Consolidated Financial Statements in this Quarterly Report for further information.

Gain on sale of subsidiary for the nine months ended November 2, 2024 was $7,634 related to the sale of Rebecca Taylor. See Note 2 "Recent Transactions" to the Condensed Consolidated Financial Statements in this Quarterly Report for further information.

SG&A expenses for the nine months ended November 2, 2024 were $100,241, increasing $1,611, or 1.6%, versus $98,630 for the nine months ended October 28, 2023. SG&A expenses as a percentage of sales were 47.0% and 45.3% for the nine months ended November 2, 2024 and October 28, 2023, respectively. The change in SG&A expenses compared to the prior fiscal year period was primarily due to:

•

$3,682 increase in rent and occupancy primarily due to lease modifications effective in the second quarter of fiscal 2023;

•

$3,173 of increased compensation and benefits due primarily to higher severance and bonuses; and

•

$310 of increased marketing and advertising costs; partially offset by

•

$5,030 decrease due to transaction-related expenses associated with the Asset Sale in fiscal 2023; and

•

$504 decrease in total SG&A expenses resulting from the wind down of the Rebecca Taylor brand.

Interest expense, net decreased $4,436, or 47.1%, to $4,984 in the nine months ended November 2, 2024 from $9,420 in the nine months ended October 28, 2023 primarily due to a $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 well as an $828 write-off of deferred financing costs associated with the termination of the 2018 Revolving Credit Facility, incurred in the prior quarter ended July 29, 2023. 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 the nine months ended November 2, 2024 was $1,681. The benefit represents the discrete tax benefit recorded during the first quarter of fiscal 2024 primarily recognized from 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 benefit for income taxes was $5,368 for the nine months ended October 28, 2023. This benefit was due to a $6,022 discrete tax benefit resulting from the change in classification of the Company's Vince tradename indefinite-lived intangibles to Assets Held for Sale during the first quarter of fiscal 2023, partially offset by $499 of discrete state tax expense associated with the Authentic Transaction and tax expense from applying the Company's estimated effective tax rate for the fiscal year to the nine-month income (loss) before income taxes and equity in net income of equity method investment, excluding discrete items. The change in classification of the Company's Vince tradename indefinite-lived intangibles resulted in a reversal of the non-cash deferred tax liability previously created by the amortization of indefinite-lived tradename intangible asset recognized for tax, but not for book purposes, as this non-cash deferred tax liability can now be used as a source to support the realization of certain deferred tax assets related to the Company's net operating losses.

Equity in net income of equity method investment for the nine months ended November 2, 2024 and October 28, 2023 was $106 and $863, respectively, and was related to the Company's 25% membership interest in ABG Vince.

Performance by Segment


	Nine Months Ended
	November 2,			October 28,
(in thousands)	2024			2023
Net Sales:
Vince Wholesale	$	126,206		$	118,714
Vince Direct-to-consumer		87,296			98,674
Rebecca Taylor and Parker		—			191
Total net sales	$	213,502		$	217,579

Income (loss) from operations:
Vince Wholesale	$	45,070		$	35,098
Vince Direct-to-consumer		(848	)		2,151
Rebecca Taylor and Parker		7,633			2,443
Subtotal		51,855			39,692
Unallocated corporate		(39,360	)		(6,389	)
Total income from operations	$	12,495		$	33,303

________

(1) Unallocated corporate for the nine months ended October 28, 2023 includes the $32,043 gain related to the sale of the Vince intellectual property and certain related ancillary assets.

Vince Wholesale


	Nine Months Ended
(in thousands)	November 2, 2024		October 28, 2023		$ Change
Net sales	$	126,206	$	118,714	$	7,492
Income from operations		45,070		35,098		9,972

Net sales from our Vince Wholesale segment increased $7,492, or 6.3%, to $126,206 in the nine months ended November 2, 2024 from $118,714 in the nine months ended October 28, 2023, primarily due to higher full-price shipments.

Income from operations from our Vince Wholesale segment increased $9,972, or 28.4%, to $45,070 in the nine months ended November 2, 2024 from $35,098 in the nine months ended October 28, 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


	Nine Months Ended
(in thousands)	November 2, 2024			October 28, 2023		$ Change
Net sales	$	87,296		$	98,674	$	(11,378	)
(Loss) income from operations		(848	)		2,151		(2,999	)

Net sales from our Vince Direct-to-consumer segment decreased $11,378, or 11.5%, to $87,296 in the nine months ended November 2, 2024 from $98,674 in the nine months ended October 28, 2023. Comparable sales, including e-commerce, decreased $5,637, or 6.4%, primarily due to a decrease in e-commerce volume. Non-comparable sales, including Vince Unfold, declined $5,741. Since October 28, 2023, five net stores have closed bringing our total retail store count to 61 (consisting of 47 full price stores and 14 outlet stores) as of November 2, 2024, compared to 66 (consisting of 49 full price stores and 17 outlet stores) as of October 28, 2023.

Our Vince Direct-to-consumer segment had a loss from operations of $848 in the nine months ended November 2, 2024 compared to income from operations of $2,151 in the nine months ended October 28, 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. 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.

Rebecca Taylor and Parker


	Nine Months Ended
(in thousands)	November 2, 2024		October 28, 2023		$ Change
Net sales	$	—	$	191	$	(191	)
Income from operations		7,633		2,443		5,190

Net sales from our Rebecca Taylor and Parker segment decreased $191, or 100.0%, to $0 in the nine months ended November 2, 2024 from $191 in the nine months ended October 28, 2023 primarily due to the wind down of the Rebecca Taylor and Parker businesses.

Our Rebecca Taylor and Parker segment had income from operations of $7,633 in the nine months ended November 2, 2024 compared to income from operations of $2,443 in the nine months ended October 28, 2023. The change was driven by the gain on sale of Rebecca Taylor. In addition, income from operations for the nine months ended October 28, 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.

Liquidity and Capital Resources

Our sources of liquidity are cash and cash equivalents, cash flows from operations, if any, borrowings available under the 2023 Revolving Credit Facility and our ability to access the capital markets, including our Sales Agreement entered into with Virtu Americas LLC in June 2023 (see Note 8 "Stockholders' Equity" to the Condensed Consolidated Financial Statements in this Quarterly Report for further information). Our primary cash needs are funding working capital requirements, including royalty payments under the License Agreement, meeting our debt service requirements, and capital expenditures for new stores and related leasehold improvements. The most significant components of our working capital are cash and cash equivalents, accounts receivable, inventories, accounts payable and other current liabilities. Based on our current expectations, we believe that our sources of liquidity will generate sufficient cash flows to meet our obligations during the next twelve months from the date these financial statements are issued.

Operating Activities


	Nine Months Ended
(in thousands)	November 2, 2024			October 28, 2023
Operating activities
Net income	$	9,298		$	30,114
Add (deduct) items not affecting operating cash flows:
Depreciation and amortization		3,066			3,703
Provision for bad debt		(32	)		(17	)
Gain on sale of intangible assets		—			(32,808	)
Gain on sale of subsidiary		(7,634	)		—
Loss on disposal of property and equipment		40			230
Amortization of deferred financing costs		239			673
Deferred income taxes		(1,346	)		(5,905	)
Share-based compensation expense		557			1,155
Capitalized PIK Interest		3,455			2,875
Loss on debt extinguishment		—			3,136
Equity in net income of equity method investment, net of distributions		2,593			(475	)
Changes in assets and liabilities:
Receivables, net		(8,742	)		(7,584	)
Inventories		(4,992	)		20,441
Prepaid expenses and other current assets		(2,072	)		(366	)
Accounts payable and accrued expenses		6,334			(23,921	)
Other assets and liabilities		(1,397	)		(4,372	)
Net cash used in operating activities	$	(633	)	$	(13,121	)

Net cash used in operating activities during the nine months ended November 2, 2024 was $633, which consisted of net income of $9,298, impacted by non-cash items of $938 and cash used in working capital of $10,869. Net cash used in working capital primarily resulted from cash outflows due to an increase in receivables driven by the timing of sales, an increase in inventories, and cash outflows in prepaid expenses and other current assets, partially offset by cash inflows in accounts payable and accrued expenses.

Net cash used in operating activities during the nine months ended October 28, 2023 was $13,121, which consisted of a net income of $30,114, impacted by non-cash items of $(27,433) and cash used in working capital of $15,802. Net cash used in working capital primarily resulted from cash outflows in accounts payable and accrued expenses of $23,921 primarily due to the timing of payments to vendors, and an increase in receivables driven by the timing of sales, partially offset by a reduction in inventory levels related to more efficient inventory management.

Investing Activities


	Nine Months Ended
(in thousands)	November 2, 2024			October 28, 2023
Investing activities
Payments for capital expenditures	$	(2,725	)	$	(920	)
Transaction costs related to equity method investment		—		$	(525	)
Proceeds from sale of intangible assets		—			77,525
Net cash (used in) provided by investing activities	$	(2,725	)	$	76,080

Net cash used in investing activities of $2,725 during the nine months ended November 2, 2024 represents capital expenditures primarily related to retail store buildouts, including leasehold improvements and store fixtures.

Net cash provided by investing activities of $76,080 during the nine months ended October 28, 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 Condensed Consolidated Financial Statements in this Quarterly Report for additional information).

Financing Activities


	Nine Months Ended
(in thousands)	November 2, 2024			October 28, 2023
Financing activities
Proceeds from borrowings under the Revolving Credit Facilities	$	164,300		$	219,266
Repayment of borrowings under the Revolving Credit Facilities		(161,170	)		(248,387	)
Repayment of borrowings under the Term Loan Facilities		—			(29,378	)
Tax withholdings related to restricted stock vesting		(56	)		(141	)
Proceeds from stock option exercises, restricted stock vesting, and issuance of common stock under employee stock purchase plan		21			38
Financing fees		(8	)		(3,012	)
Net cash provided by (used in) financing activities	$	3,087		$	(61,614	)

Net cash provided by financing activities was $3,087 during the nine months ended November 2, 2024, primarily consisting of $3,130 of net borrowings under the Company's revolving credit facilities.

Net cash used in financing activities was $61,614 during the nine months ended October 28, 2023, primarily consisting of $29,121 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 $3,012 (which includes a $553 prepayment penalty associated with the termination of the Term Loan Credit Facility during the nine months ended October 28, 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 Condensed 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 expenses of $0 and $1,755 during the three and nine months ended October 28, 2023, respectively, 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.

2023 Revolving Credit Facility

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 Company incurred a total of $0 and $8 of financing costs during the three and nine months ended November 2, 2024, respectively, and incurred $1,150 of financing costs during the fiscal year 2023 ($23 and $1,147 was incurred during the three and nine months ended October 28, 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 Condensed Consolidated Balance Sheets) and are amortized over the term of the 2023 Revolving Credit Facility.

2018 Revolving Credit Facility

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 $0 and $828 during the three and nine months ended October 28, 2023, respectively, related to the write-off of the remaining deferred financing costs As of November 2, 2024, 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 Condensed 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.

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 relies on our condensed consolidated financial statements, as set forth in Part I, Item 1 of this Quarterly Report, which are prepared based on certain critical accounting policies that require management to make judgments and estimates that are subject to varying degrees of uncertainty. While we believe that these accounting policies are based on reasonable measurement criteria, actual future events can and often do result in outcomes materially different from these estimates.

A summary of our critical accounting estimates, which includes the fair value assessment of goodwill, is included in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our 2023 Annual Report on Form 10-K. As of November 2, 2024, there have been no material changes to the critical accounting estimates contained therein.

In accordance with Financial Accounting Standards Board ASC Topic 350, "Intangibles-Goodwill and Other", goodwill is tested for impairment at least annually and in an interim period if a triggering event occurs. In the fourth quarter of fiscal 2023, the date of the Company’s last annual impairment test, the Company’s Vince Wholesale reporting unit exceeded its carrying value by 7.9%. Determining the fair value of goodwill is judgmental in nature and requires the use of significant estimates and

assumptions. Actual future results may differ from those estimates. Any changes in fair value could potentially result in the carrying amount of the Company’s Vince Wholesale reporting unit exceeding its estimated fair value, and therefore could require an impairment loss. There can be no assurances that the Company will not be required to record further charges in its financial statements, which would negatively impact the Company’s results of operations during the period in which any impairment of our goodwill is determined.

ITEM 3. 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.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Attached as exhibits to this Quarterly Report on Form 10-Q are certifications of our interim 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.

Under the supervision and with the participation of our interim 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 November 2, 2024.

Based upon that evaluation, our interim 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 condensed consolidated financial statements were prepared in accordance with U.S. GAAP. Accordingly, management believes that the condensed consolidated financial statements and related notes thereto included in this Quarterly Report on Form 10-Q fairly state, in all material respects, the Company's financial condition, results of operations and cash flows for the periods presented.

Material Weakness in Internal Control over Financial Reporting

As described in Management's Annual Report On Internal Control Over Financial Reporting in Part II, Item 9A of our Annual Report on Form 10-K for the year ended February 3, 2024, 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.

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; and

•

The Company effectively designed and implemented a full recertification of AX user access rights.

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.

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 November 2, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. 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 1A. RISK FACTORS

The risk factors disclosed in the Company's 2023 Annual Report on Form 10-K, in addition to the other information set forth in this Quarterly Report on Form 10-Q, could materially affect the Company's business, financial condition or results.

The Company’s risk factors have not changed materially from those disclosed in its 2023 Annual Report on Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. 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 November 2, 2024.

ITEM 6. EXHIBITS


Exhibit Number		Exhibit Description
31.1		CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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
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)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date		Vince Holding Corp.

December 12, 2024	By:	/s/ John Szczepanski
		John Szczepanski
		Chief Financial Officer
		(as duly authorized officer, and principal financial officer)

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Vince Holding (VNCE) 10-Q2025 Q3 Quarterly report

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