Vince Holding Corp.: Form 10-Q for the period ended Aug 2, 2025

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 2024 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 the brand image. Previously, we also owned and operated the Rebecca Taylor and Parker brands until the sale of the respective intellectual property was completed, as discussed below.

Vince, established in 2002, is a leading global luxury apparel and accessories brand best known for creating elevated yet understated pieces for every day effortless style. As of August 2, 2025, we operate 44 full-price retail stores, 14 outlet stores, and the e-commerce site, vince.com. Vince is also available through premium wholesale channels globally.

On April 21, 2023 the Company entered into a strategic partnership ("Authentic Transaction") with Authentic Brands Group, LLC ("Authentic"), a global brand development, marketing and entertainment platform, whereby the Company contributed its intellectual property to a newly formed Authentic subsidiary ("ABG Vince") for cash consideration and a membership interest in ABG Vince. The Company closed the Asset Sale on May 25, 2023. On May 25, 2023, in connection with the Authentic Transaction, V Opco, entered into a License Agreement (the "License Agreement") with ABG Vince, which provides V Opco with an exclusive, long-term license to use the Licensed Property in the Territory to the Approved Accounts (each as defined in the License Agreement). See Note 2 "Recent Transactions" to the Condensed Consolidated Financial Statements in this Quarterly Report for additional information.

On January 22, 2025, P180 Vince Acquisition Co., a subsidiary of P180, Inc., a venture focused on accelerating growth and profitability in the luxury apparel sector, acquired a majority stake in the Company (the “P180 Acquisition”) from affiliates of Sun Capital Partners, Inc. (collectively, “Sun Capital”).

Rebecca Taylor, founded in 1996 in New York City, was a contemporary womenswear line lauded for its signature prints, romantic detailing and vintage inspired aesthetic, reimagined for a modern era. On September 12, 2022, the Company announced its decision to wind down the Rebecca Taylor business. On December 22, 2022, the Company's indirectly wholly owned subsidiary, Rebecca Taylor, Inc., completed the sale of its intellectual property and certain related ancillary assets to RT IPCO, LLC, an affiliate of Ramani Group. On May 3, 2024, V Opco completed the sale of all outstanding shares of Rebecca Taylor, Inc. to Nova Acquisitions, LLC. See Note 2 "Recent Transactions" within the notes to the Condensed Consolidated Financial Statements in this Quarterly Report for additional 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.

The Company has identified two reportable segments: Vince Wholesale and Vince Direct-to-consumer.

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:

(in thousands, except per share data and percentages)

Three Months Ended August 2, 2025 Compared to Three Months Ended August 3, 2024

Net sales for the three months ended August 2, 2025 were $73,241, decreasing $928, or 1.3%, versus $74,169 for the three months ended August 3, 2024.

Gross profit increased 5.1% to $36,938 for the three months ended August 2, 2025 from $35,131 in the prior year second quarter. As a percentage of sales, gross margin was 50.4%, compared with 47.4% in the prior year second quarter. The total gross margin rate increase was primarily driven by the following factors:

• The favorable impact from lower product costing and higher pricing which contributed positively by approximately 340 basis points;
• The favorable impact of lower discounting which contributed positively by approximately 210 basis points; partly offset by
• The unfavorable impact from higher tariffs of approximately 170 basis points; and
• The unfavorable impact of increased freight costs of approximately 100 basis points.

Selling, general and administrative ("SG&A") expenses for the three months ended August 2, 2025 were $25,787, decreasing $8,214, or 24.2%, versus $34,001 for the three months ended August 3, 2024. SG&A expenses as a percentage of sales were 35.2% and 45.8% for the three months ended August 2, 2025 and August 3, 2024, respectively. The decrease in SG&A expenses compared to the prior fiscal year period was due primarily to approximately $7,200 of decreased compensation and benefits, due mainly to the ERC benefit of $5,613 which was recorded as an offset to compensation expense, and also a decrease in severance costs. Professional service fees also decreased by approximately $490 from the prior fiscal year period.

Interest expense, net decreased $798, or 48.5%, to $849 in the three months ended August 2, 2025 from $1,647 in the three months ended August 3, 2024, primarily due to lower levels of debt under the Third Lien credit facility.

Other (income) for the three months ended August 2, 2025 relates to receipt of interest in connection with the ERC benefit. See Note 9 "Commitments and Contingencies" for further information.

Provision (benefit) for income taxes for the three months ended August 2, 2025 was $58, which represents a discrete tax expense relating to interest received in connection with the ERC.

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 and as such, 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 was $794 for the three months ended August 3, 2024 due to the reversal of the $794 ordinary tax expense recorded during the first quarter of fiscal 2024 as the Company had year-to-date ordinary pre-tax losses for the interim period and was anticipating annual ordinary pre-tax income for the fiscal year. The Company had determined that it was more likely than not that the tax benefit of the year-to-date ordinary pre-tax loss would not be realized in the current or future years and as such, tax provisions for the interim periods should not be recognized until the Company has year-to-date ordinary pre-tax income.

Equity in net income (loss) of equity method investment for the three months ended August 2, 2025 and August 3, 2024 was $256 and $292, respectively, and consists of the Company's proportionate share of ABG Vince's net income (loss).

Performance by Segment

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

• Vince Wholesale segment—consists of the Company's operations to distribute Vince brand products to major department stores and specialty stores in the United States and select international markets; and
• 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.

During fiscal 2024, as a result of the completion of the wind down and sale (see Note 2 "Recent Transactions" to the Condensed Consolidated Financial Statements in this Quarterly Report for additional information), and the determination by the CODM that Parker would not be considered in the Company’s future operating plans, Rebecca Taylor and Parker was no longer determined to be an operating segment of the Company.

Unallocated corporate expenses are related to the Vince brand and are comprised of SG&A expenses attributable to corporate and administrative activities (such as marketing, design, finance, information technology, legal and human resource departments), and other charges that are not directly attributable to the Company's Vince Wholesale and Vince Direct-to-consumer reportable segments.

(in thousands)

(1) Unallocated corporate for the three months ended August 2, 2025 includes the ERC benefit of $5,613. See Note 9 "Commitments and Contingencies" for further information.

Vince Wholesale

(in thousands)

Net sales from our Vince Wholesale segment decreased $2,422, or 5.1%, to $44,762 in the three months ended August 2, 2025 from $47,184 in the three months ended August 3, 2024, due to lower full-price shipments, partially offset by an increase in shipments of off-price products.

Income from operations from our Vince Wholesale segment increased $395, or 2.4%, to $17,058 in the three months ended August 2, 2025 from $16,663 in the three months ended August 3, 2024, primarily driven by an improved gross margin and a decrease in SG&A expenses, partially offset by a decrease in net sales.

Vince Direct-to-consumer

(in thousands)

Net sales from our Vince Direct-to-consumer segment increased $1,494, or 5.5%, to $28,479 in the three months ended August 2, 2025 from $26,985 in the three months ended August 3, 2024. Comparable sales, including e-commerce, increased $1,950 or 8.1%, due to an increase in both e-commerce and retail stores volume. Non-comparable sales, including Vince Unfold, which was exited in the first quarter of fiscal 2025, declined $456. Since August 3, 2024, three net stores have closed bringing our total retail store count to 58 (consisting of 44 full price stores and 14 outlet stores) as of August 2, 2025, compared to 61 (consisting of 47 full price stores and 14 outlet stores) as of August 3, 2024.

Our Vince Direct-to-consumer segment had income from operations of $211 in the three months ended August 2, 2025 compared to a loss from operations of $1,398 in the three months ended August 3, 2024. The increase was primarily driven by an increase in net sales and an improved gross margin.

Six Months Ended August 2, 2025 Compared to Six Months Ended August 3, 2024

Net sales for the six months ended August 2, 2025 were $131,174, decreasing $2,166, or 1.6%, versus $133,340 for the six months ended August 3, 2024.

Gross profit increased 1.6% to $66,101 for the six months ended August 2, 2025 from $65,044 in the six months ended August 3, 2024. As a percentage of sales, gross margin was 50.4%, compared with 48.8% in the six months ended August 3, 2024. The total gross margin rate increase was primarily driven by the following factors:

• The favorable impact from lower product costing and higher pricing which contributed positively by approximately 330 basis points;
• The favorable impact of lower discounting which contributed positively by approximately 70 basis points; partly offset by
• The unfavorable impact of increased freight costs which contributed negatively by approximately 150 basis points; and
• The unfavorable impact from higher tariffs of approximately 100 basis points.

Gain on sale of subsidiary for the six months ended August 3, 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 six months ended August 2, 2025 were $59,388, decreasing $6,556, or 9.9%, versus $65,944 for the six months ended August 3, 2024. SG&A expenses as a percentage of sales were 45.3% and 49.5% for the six months ended August 2, 2025 and August 3, 2024, respectively. The decrease in SG&A expenses compared to the prior fiscal year period was due primarily to approximately $7,100 of decreased compensation and benefits, due mainly to the ERC benefit of $5,613 which was recorded as an offset to compensation expense, and also a decrease in severance costs. Professional service fees also decreased by approximately $480 from the prior fiscal year period. These decreases in SG&A expenses were partially offset by an increase in legal expenses of approximately $740.

Interest expense, net decreased $1,588, or 48.2%, to $1,705 in the six months ended August 2, 2025 from $3,293 in the six months ended August 3, 2024 primarily due to lower levels of debt under the Third Lien credit facility.

Other (income) for the six months ended August 2, 2025 relates to receipt of interest in connection with the ERC benefit. See Note 9 "Commitments and Contingencies" for further information.

Provision (benefit) for income taxes for the six months ended August 2, 2025 was $58 which represents a discrete tax expense recorded during the second quarter of fiscal 2025 relating to interest received in connection with the ERC.

For the six months ended August 2, 2025, 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 and as such, 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 was $1,681 for the six months ended August 3, 2024. 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.

Equity in net income (loss) of equity method investment for the six months ended August 2, 2025 and August 3, 2024 was income of $747 and a loss of $173, respectively, and was related to the Company's 25% membership interest in ABG Vince.

Performance by Segment

(in thousands)

(1) Activity for the Rebecca Taylor and Parker reconciling item for the six months ended August 3, 2024 primarily consists of the gain recognized on the sale of Rebecca Taylor.

(2) Unallocated corporate for the six months ended August 2, 2025 includes the ERC benefit of $5,613. See Note 9 "Commitments and Contingencies" for further information.

Vince Wholesale

(in thousands)

Net sales from our Vince Wholesale segment decreased $2,389, or 3.1%, to $75,052 in the six months ended August 2, 2025 from $77,441 in the six months ended August 3, 2024, primarily due to lower full-price shipments, partially offset by an increase in shipments of off-price products.

Income from operations from our Vince Wholesale segment decreased $392, or 1.5%, to $26,455 in the six months ended August 2, 2025 from $26,847 in the six months ended August 3, 2024, primarily driven by a decrease in net sales, partially offset by improved gross margin.

Vince Direct-to-consumer

(in thousands)

Net sales from our Vince Direct-to-consumer segment increased $223, or 0.4%, to $56,122 in the six months ended August 2, 2025 from $55,899 in the six months ended August 3, 2024. Comparable sales, including e-commerce, increased $2,650 or 5.5%, due to an increase in both e-commerce and retail stores volume. Non-comparable sales, including Vince Unfold, which was exited in the first quarter of fiscal 2025, declined $2,427. Since August 3, 2024, three net stores have closed bringing our total retail store count to 58 (consisting of 44 full price stores and 14 outlet stores) as of August 2, 2025, compared to 61 (consisting of 47 full price stores and 14 outlet stores) as of August 3, 2024.

Our Vince Direct-to-consumer segment had a loss from operations of $589 in the six months ended August 2, 2025 compared to a loss from operations of $1,462 in the six months ended August 3, 2024. The change was primarily driven by an improved gross margin.

Liquidity and Capital Resources

The Company's sources of liquidity are cash and cash equivalents, cash flows from operations, if any, borrowings available under the 2023 Revolving Credit Facility (as defined in Note 4 "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 7 "Stockholders' Equity" for further information). The Company's primary cash needs are funding working capital requirements, including royalty payments under the License Agreement, meeting debt service requirements and capital expenditures for new stores and related leasehold improvements. The most significant components of the Company's working capital are cash and cash equivalents, accounts receivable, inventories, accounts payable and other current liabilities.

The Company’s future financial results may be subject to substantial fluctuations, and may be impacted by business conditions and macroeconomic factors, particularly in light of the recently implemented tariffs. While we expect to meet our monthly Excess Availability (as defined in the 2023 Revolving Credit Facility Agreement) covenant and believe that our other sources of liquidity will generate sufficient cash flows to meet our obligations for the next twelve months from the date these financial statements are issued, the foregoing expectation is dependent on a number of factors, including, among others, our ability to generate sufficient cash flow from a combination of tariff mitigating initiatives, our ongoing ability to manage our operating obligations, the ability of our partners to satisfy their payment obligations to us when due, the results of the currently ongoing inventory valuation and potential borrowing restrictions imposed by our lenders based on their credit judgment, all of which could be significantly and negatively impacted by the recently implemented and new retaliatory and/or reciprocal tariffs, as well as changing trade policies between the U.S. and its trading partners, in addition to other macroeconomic factors. Any material negative impact from these factors or others could require us to implement alternative plans to satisfy our liquidity needs, which may be unsuccessful. In the event that we are unable to timely service our debt, meet other contractual payment obligations or fund our other liquidity needs, we may need to refinance all or a portion of our indebtedness before maturity, seek waivers of or amendments to our contractual obligations for payment, reduce or delay scheduled expansions and capital expenditures liquidate inventory through additional discounting, sell material assets or operations or seek other financing opportunities. There can be no assurance that these options would be readily available to us and our inability to address our liquidity needs could materially and adversely affect our operations and jeopardize our business, financial condition and results of operations.

Operating Activities

(in thousands)

Net cash used in operating activities during the six months ended August 2, 2025 was $7,615, which consisted of net income of $7,257, impacted by non-cash items of $3,811 and cash used in working capital of $18,683. Net cash used in working capital primarily resulted from cash outflows of $17,521 due to an increase in inventories related to the timing of inventory receipts and increased costs due primarily to the impact of tariffs, and cash outflows in accounts payable and accrued expenses due to mainly to inventory purchases, partially offset by a decrease in receivables due to timing of collections.

Net cash used in operating activities during the six months ended August 3, 2024 was $7,072, which consisted of net income of $4,949, impacted by non-cash items of $(2,793) consisting primarily of the gain on sale of subsidiary, and cash used in working capital of $9,228. 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 due to seasonal cadence, and cash outflows in prepaid expenses and other current assets, primarily due to prepaid royalty expenses, partially offset by an increase in accounts payable and accrued expenses, primarily due to seasonal increases in inventory.

Investing Activities

(in thousands)

Net cash used in investing activities of $3,530 and $1,421 during the six months ended August 2, 2025 and August 3, 2024, respectively, represents capital expenditures primarily related to retail store buildouts, including leasehold improvements and store fixtures.

Financing Activities

(in thousands)

Net cash provided by financing activities was $11,319 during the six months ended August 2, 2025, primarily consisting of $11,450 of net borrowings under the Company's revolving credit facilities.

Net cash provided by financing activities was $8,081 during the six months ended August 3, 2024, primarily consisting of $8,130 of net borrowings under the Company's revolving credit facilities.

2023 Revolving Credit Facility

On June 23, 2023, V Opco, entered into a new $85,000 senior secured revolving credit facility (the "2023 Revolving Credit Facility") pursuant to a Credit Agreement (the "2023 Revolving Credit Agreement") by and among V Opco, the guarantors named therein, Bank of America, N.A. ("BofA"), as Agent, the other lenders from time to time party thereto, and BofA Securities, Inc., as sole lead arranger and sole bookrunner.

All outstanding amounts under the 2018 Revolving Credit Facility (as defined below) were repaid in full and such facility was terminated pursuant to the terms thereof as a result of all parties completing their obligations under such facility.

The 2023 Revolving Credit Facility provides for a revolving line of credit of up to the lesser of (i) the Borrowing Base (as defined in the 2023 Revolving Credit Agreement) and (ii) $85,000, as well as a letter of credit sublimit of $10,000. The 2023 Revolving Credit Agreement also permits V Opco to request an increase in aggregate commitments under the 2023 Revolving Credit Facility of up to $15,000, subject to customary terms and conditions. The 2023 Revolving Credit Facility matures on the earlier of June 23, 2028, and 91 days prior to the earliest maturity date of any Material Indebtedness (as defined in the 2023 Revolving Credit Agreement), including the subordinated indebtedness pursuant to the Third Lien Credit Agreement.

Interest is payable on the loans under the 2023 Revolving Credit Facility, at Vince LLC's request, either at Term SOFR, the Base Rate, or SOFR Daily Floating Rate, in each case, with applicable margins subject to a pricing grid based on an average daily excess availability calculation. The "Base Rate" means, for any day, a fluctuating rate per annum equal to the highest of (i) the Federal Funds Rate for such day, plus 0.5%; (ii) the rate of interest in effect for such day as publicly announced from time to time by BofA as its prime rate; (iii) the SOFR Daily Floating Rate on such day, plus 1.0%; and (iv) 1.0%. During the continuance of certain specified events of default, at the election of BofA in its capacity as Agent, interest will accrue at a rate of 2.0% in excess of the applicable non-default rate.

The applicable margins for SOFR Term and SOFR Daily Floating Rate Loans are: (i) 2.0% when the average daily Excess Availability (as defined in the 2023 Revolving Credit Agreement) is greater than 66.7% of the Loan Cap (as defined in the 2023 Revolving Credit Agreement); (ii) 2.25% when the average daily Excess Availability is greater than or equal to 33.3% but less than or equal to 66.7% of the Loan Cap; and (iii) 2.5% when the average daily Excess Availability is less than 33.3% of the Loan Cap. The applicable margins for Base Rate Loans are: (a) 1.0% when the average daily Excess Availability is greater than 66.7% of the Loan Cap; (b) 1.25% when the average daily Excess Availability is greater than or equal to 33.3% but less than or equal to 66.7% of the Loan Cap; and (c) 1.5% when the average daily Excess Availability is less than 33.3% of the Loan Cap. In accordance with the First Amendment, from the First Amendment Effective Date (January 21, 2025) until the first Adjustment Date occurring after the twelve (12) month anniversary of the First Amendment Effective Date, the applicable margin will be 2.50% with respect to SOFR Term Loans and SOFR Daily Floating Rate Loans and 1.50% with respect to Base Rate Loans.

The 2023 Revolving Credit Facility contains a financial covenant requiring Excess Availability at all times to be no less than the greater of (i) 10.0% of the Loan Cap in effect at such time and (ii) $7,500.

The 2023 Revolving Credit Facility contains representations and warranties, covenants and events of default that are customary for this type of financing, including limitations on the incurrence of additional indebtedness, liens, burdensome agreements, investments, loans, asset sales, mergers, acquisitions, prepayment of certain other debt, the repurchase of capital stock, transactions with affiliates, and the ability to change the nature of its business or its fiscal year. The 2023 Revolving Credit Facility generally permits dividends in the absence of any default or event of default (including any event of default arising from a contemplated dividend), so long as (i) after giving pro forma effect to the contemplated dividend and on a pro forma basis for the 30-day period immediately preceding such dividend, Excess Availability will be at least the greater of 20.0% of the Loan Cap and $15,000 and (ii) after giving pro forma effect to the contemplated dividend, the Consolidated Fixed Charge Coverage Ratio (as defined in the 2023 Revolving Credit Agreement) for the 12 months preceding such dividend will be greater than or equal to 1.0 to 1.0. In accordance with the First Amendment, V Opco shall not make certain Restricted Payments as defined in the Agreement until the earlier of (i) the date that is eighteen (18) month anniversary of the First Amendment Effective Date, which date is July 21, 2026 and (ii) the first date following the twelve (12) month anniversary of the First Amendment Effective Date on which the Consolidated Fixed Charge Coverage Ratio is greater than or equal to 1.0 to 1.0.

All obligations under the 2023 Revolving Credit Facility are guaranteed by the Company and Vince Intermediate and any future subsidiaries of the Company (other than Excluded Subsidiaries as defined in the 2023 Revolving Credit Agreement) and secured by a lien on substantially all of the assets of the Company, V Opco and Vince Intermediate and any future subsidiary guarantors, other than among others, equity interests in ABG Vince, as well as the rights of V Opco under the License Agreement.

No financing costs were incurred during the three and six months ended August 2, 2025. The Company incurred $0 and $8 of financing costs during the three and six months ended August 3, 2024, respectively. In fiscal 2024, the Company incurred $466 (of which $458 were incurred in connection with the P180 Acquisition) of financing costs. In accordance with ASC Topic 470, "Debt", these financing costs were recorded as deferred debt issuance costs (which is presented within Other assets on the Consolidated Balance Sheets) and are amortized over the term of the 2023 Revolving Credit Facility.

As of August 2, 2025, the Company was in compliance with applicable covenants. As of August 2, 2025, $42,607 was available under the 2023 Revolving Credit Facility, net of the Loan Cap, and there were $22,862 of borrowings outstanding and $6,161 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 August 2, 2025 was 6.9%.

On January 22, 2025, V Opco, LLC entered into that certain First Amendment (the “First Amendment”) to the 2023 Revolving Credit Agreement. The First Amendment amends the 2023 Revolving Credit Agreement to, among other things, (a) consent to the P180 Acquisition (see Note 2 "Recent Transactions" for additional information); (b) provide that, until the first Adjustment Date following January 22, 2026, the applicable margin will be 2.50% with respect to SOFR Term Loans and SOFR Daily Floating Rate Loans and 1.50% with respect to Base Rate Loans; (c) eliminate the ability to make certain Restricted Payments until the earlier of (i) the date that is eighteen (18) month anniversary of the First Amendment Effective Date, which date is July 21, 2026 and (ii) the first date following the twelve (12) month anniversary of the First Amendment Effective Date on which the Consolidated Fixed Charge Coverage Ratio is greater than or equal to 1.0 to 1.0; and (d) until January 22, 2026, modify the thresholds applicable for the Agent’s rights to conduct field exams and inventory appraisals to Excess Availability being less than the greater of 25% of Loan Cap and $18,750 and, following January 24, 2026, such thresholds shall revert back to Excess Availability being less than the greater of 20% of Loan Cap and $15,000.

Third Lien Credit Facility

On December 11, 2020, V Opco entered into a $20,000 subordinated term loan credit facility (the "Third Lien Credit Facility") pursuant to a credit agreement (the "Third Lien Credit Agreement"), as amended from time to time, dated December 11, 2020, by and among V Opco, as the borrower, VHC and Vince Intermediate, as guarantors, and SK Financial Services, LLC ("SK Financial"), as administrative agent and collateral agent, and other lenders from time to time party thereto. The proceeds were received on December 11, 2020 and were used to repay a portion of the borrowings outstanding under the 2018 Revolving Credit Facility.

SK Financial is an affiliate of Sun Capital Partners, Inc. ("Sun Capital"). The Third Lien Credit Facility was reviewed and approved by the Special Committee of the Company's Board of Directors, consisting solely of directors not affiliated with Sun Capital, which committee was represented by independent legal advisors. Immediately prior to the P180 Acquisition, the affiliates of Sun Capital owned approximately 67% of the Company's common stock.

Interest on loans under the Third Lien Credit Facility is payable in kind at a rate revised in connection with the Third Lien Third Amendment (as defined and discussed below) to be equal to the Daily Simple SOFR, subject to a credit spread adjustment of 0.10% per annum, plus 9.0%. During the continuance of certain specified events of default, interest may accrue on the loans under the Third Lien Credit Facility at a rate of 2.0% in excess of the rate otherwise applicable to such amount.

The Company had incurred $485 in deferred financing costs associated with the Third Lien Credit Facility, of which a $400 closing fee is payable in kind and was added to the principal balance. These deferred financing costs were recorded as deferred debt issuance costs. In connection with the debt extinguishment (see below), unamortized debt issuance costs of $179 were included in the calculation of the gain on extinguishment.

All obligations under the Third Lien Credit Facility are guaranteed by the Company, Vince Intermediate and the Company's existing material domestic restricted subsidiaries as well as any future material domestic restricted subsidiaries and are secured on a junior basis relative to the 2023 Revolving Credit Facility by a lien on substantially all of the assets of the Company, Vince

Intermediate, V Opco and the Company's existing material domestic restricted subsidiaries as well as any future material domestic restricted subsidiaries.

On April 21, 2023, V Opco entered into that certain Consent and Third Amendment to Credit Agreement (the "Third Lien Third Amendment"), which, among other things, (a) permitted the sale of the intellectual property of the Vince Business contemplated in the Asset Sale, (b) replaced LIBOR as an interest rate benchmark in favor of Daily Simple SOFR, subject to a credit spread adjustment of 0.10% per annum, plus 9.0% (c) amended the Third Lien Credit Agreement's maturity date to the earlier of (i) March 30, 2025 and (ii) 180 days after the maturity date under the 2018 Revolving Credit Facility, (d) reduced the capacity to incur indebtedness and liens, make investments, restricted payments and dispositions and repay certain indebtedness and (e) modified certain representations and warranties, covenants and events of default in respect of documentation related to the Asset Sale. The Third Lien Third Amendment became effective upon the consummation of the Asset Sale, the prepayment of the Term Loan Credit Facility in full and other transactions contemplated by the Asset Purchase Agreement.

On June 23, 2023, V Opco entered into the Fourth Amendment (the "Third Lien Fourth Amendment") to the Third Lien Credit Agreement which, among other things, (a) extended the Third Lien Credit Agreement's maturity date to the earlier of (i) September 30, 2028 and (ii) 91 days prior to the earliest maturity date of any Material Indebtedness (as defined therein) other than the 2023 Revolving Credit Facility and (b) modified certain representations and warranties, covenants and events of default in respect of documentation conforming to the terms of the 2023 Revolving Credit Facility.

On January 22, 2025, V Opco entered into the Fifth Amendment (the “Third Lien Fifth Amendment”) to the Third Lien Credit Agreement which, among other things, consented to the P180 Acquisition. On the same day, V Opco paid $15,000 to SK Financial Services, LLC using proceeds from the 2023 Revolving Credit Facility, which resulted in a pay-down of $20,000 of the Third Lien Credit Facility (the “Sun Debt Paydown”). In addition, in connection with the P180 Acquisition, P180 acquired and assumed $7,000 of the Third Lien Credit Facility outstanding and immediately thereafter cancelled such $7,000 (the “P180 Debt Forgiveness”). Following the Sun Debt Paydown and P180 Debt Forgiveness, the outstanding principal amount of the Third Lien Credit Facility was reduced by approximately $27,000 with $7,500 remaining outstanding, which will continue to accrue payment-in-kind interest in accordance with, and otherwise be subject to, the terms and conditions therein.

The Company determined that modification to the Third Lien Credit Facility under the Fifth Amendment and the corresponding Sun Debt Paydown and P180 Debt Forgiveness should be recorded as debt extinguishment of the Third Lien Credit Facility in accordance with ASC 470. In the fourth quarter of fiscal 2024, the Company derecognized the old debt and recorded the new debt at fair value in the amount of $7,713, and a gain upon extinguishment in the amount of $11,575. As Sun Capital and affiliates and P180 maintained an equity interest in the Company, the gain on extinguishment was recorded as a capital contribution within equity.

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 is included in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our 2024 Annual Report on Form 10-K. As of August 2, 2025, there have been no material changes to the critical accounting estimates contained therein.

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.

Evaluation of Disclosure Controls and Procedures

Attached as exhibits to this Quarterly Report on Form 10-Q are certifications of our Chief Executive Officer and Chief Financial Officer. Rule 13a-14 of the Exchange Act requires that we include these certifications with this report. This Controls and Procedures section includes information concerning the disclosure controls and procedures referred to in the certifications. You should read this section in conjunction with the certifications.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of August 2, 2025.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to the material weakness in our internal control over financial reporting as described below.

As a result of the material weakness identified, we performed additional analysis, substantive testing and other post-closing procedures intended to ensure that our 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 1, 2025, 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;
• The Company effectively designed and implemented a full recertification of AX user access rights, and;
• Improved operational processes around user provisioning and de-provisioning and enhanced general security controls and standards.

To fully address the remediation of deficiencies related to segregation of duties, we will need to fully remediate the deficiencies regarding systems access.

Management continues to follow a comprehensive remediation plan to fully address this material weakness. The remediation plan includes implementing and effectively operating controls related to the routine reviews of user system access and user re-certifications, inclusive of those related to users with privileged access, as well as to ensure user's access rights to systems are removed timely upon termination.

While we have reported a material weakness that is not yet remediated, we believe we have made continued progress in addressing financial, compliance, and operational risks and improving controls across the Company. Until the material weakness is remediated, we will continue to perform additional analysis, substantive testing, and other post-closing procedures to ensure that our consolidated financial statements are prepared in accordance with U.S. GAAP.

Limitations on the Effectiveness of Disclosure Controls and Procedures

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure system are met. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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 August 2, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The risk factors disclosed in the Company's 2024 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 2024 Annual Report on Form 10-K, other than as set forth below. All dollar amounts disclosed in this Part II, Item 1A are in thousands, unless otherwise noted.

We may not be able to maintain a listing of our common stock on the NYSE.

Our common stock is currently listed on the NYSE, and we must meet certain financial and liquidity criteria to maintain our listing on NYSE. Failure to maintain the continued listing requirements set forth in the NYSE Listed Company Manual, which includes the requirement to maintain a 30-trading day average market capitalization of at least $50,000 or $50,000 of stockholders’ equity, could result in our common stock being delisted.

On May 6, 2025, we received a written notice (the "Notice") from the NYSE that the Company did not presently satisfy the NYSE's continued listing standards under Section 802.01B of the NYSE Listed Company Manual (the "Manual"), which requires the Company's 30-trading day average market capitalization to be not less than $50,000 or the Company's stockholders' equity to be not less than $50,000. As set forth in the Notice, as of May 5, 2025, the Company's 30-trading day average market capitalization was approximately $22,600 and the Company's last reported stockholders' equity as of February 1, 2025 was approximately $41,800.

In accordance with applicable NYSE procedures, within 45 days from receipt of the Notice, the Company must submit to the NYSE a business plan that demonstrates compliance with Section 802.01B of the Manual. The Listings Operations Committee of the NYSE will review the business plan and will either accept the plan, at which time the Company will be subject to ongoing quarterly monitoring for compliance with the business plan, or reject the business plan, at which time the Company will be subject to suspension and delisting proceedings.

The Company timely submitted such a business plan (the “Plan”) to the NYSE and on August 5, 2025, the NYSE notified the Company that the Plan had been accepted (the “Acceptance Letter”). In the Acceptance Letter, the NYSE granted the Company until November 6, 2026 (the “Plan Period”) to regain compliance with Section 802.01B of the Manual. During the Plan Period, the Company will be subject to periodic monitoring for compliance with the Plan. If the Company does not regain compliance with Section 802.01B of the Manual by the end of the Plan Period, or if the Company does not make progress consistent with the Plan, then the NYSE may initiate delisting proceedings. Pursuant to the NYSE rules, the Company’s common stock will continue to be listed and traded on the NYSE during the Plan Period, subject to the Company’s compliance with other applicable continued listing requirements in the Manual. The Acceptance Letter does not affect the Company’s ongoing business operations or its reporting requirements with the SEC.

No assurance can be given that the Company will be able to maintain compliance with the NYSE’s continued listing requirements. If the Company's common stock ultimately were to be suspended from trading and delisted for any reason, it could have adverse consequences including, among others, reduced trading liquidity for our common stock, lower demand and market price for our common stock, adverse publicity and a reduced interest in the Company from investors, analysts and other market participants. In addition, a suspension or delisting could impair the Company’s ability to raise additional capital through the public markets and the Company’s ability to attract and retain employees by means of equity compensation.