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What changed in VINCE HOLDING CORP.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of VINCE HOLDING CORP.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+302 added−345 removedSource: 10-K (2024-05-02) vs 10-K (2023-04-28)

Top changes in VINCE HOLDING CORP.'s 2024 10-K

302 paragraphs added · 345 removed · 200 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeITEM 1. B USINESS. Overview We are a global contemporary retailer, and during fiscal 2022 and fiscal 2021 we consisted of three brands: Vince, Rebecca Taylor, and Parker. We serve our customers through wholesale and direct-to-consumer channels that reinforce our brand images. We have a select number of wholesale partners who account for a significant portion of our net sales.
Biggest changeWe serve our customers through a variety of channels that reinforce the brand images. We have a select number of wholesale partners who account for a significant portion of our net sales. In fiscal 2023 and fiscal 2022, sales to one wholesale partner, Nordstrom Inc., accounted for more than ten percent of the Company's net sales.
Risk Factors — " Risks Related to Our Business and Industry — We may be unable to effectively execute our customer strategy ." Our public relations team conducts a wide variety of press activities to reinforce our brand image and create excitement around the Vince brand.
Risk Factors — " Risks Related to Our Business and Industry — We may be unable to effectively execute our customer strategy ." Our public relations team conducts a wide variety of press activities to reinforce the brand image and create excitement around the Vince brand.
Our apparel has appeared in the pages of major fashion magazines such as Vogue, Harper's Bazaar , Elle, InStyle, GQ , Esquire and WSJ . Well-known trend setters in entertainment and fashion are also regularly seen wearing our brand. Sourcing and Manufacturing We do not own or operate any manufacturing facilities.
Our apparel has appeared in the pages of major fashion magazines such as Vogue, Harper's Bazaar , Elle, InStyle, GQ , Esquire and WSJ . Well-known trend setters in entertainment and fashion are also regularly seen wearing the brand. Sourcing and Manufacturing We do not own or operate any manufacturing facilities.
During 7 fiscal 2022, we completed the implementation of a customer data platform and the front-end re-platforming of our Vince e-commerce website. Our continued strategy includes investing in customer facing technologies to further expand our omni-channel capabilities and to further consolidate systems over time to create operational efficiencies and to achieve a common platform across the Company.
During fiscal 2022, we completed the implementation of a customer data platform and the front-end re-platforming of our Vince e-commerce website. Our continued strategy includes investing in customer facing technologies to further expand our omni-channel capabilities and to further consolidate systems over time to create operational efficiencies and to achieve a common platform across the Company.
Products We believe that our differentiated design aesthetic and strong attention to detail and fit allow us to maintain premium pricing, and that the combination of quality and value positions us as an everyday luxury brand that encourages repeat purchases among our customers.
Products We believe that the Vince brand's differentiated design aesthetic and strong attention to detail and fit allow us to maintain premium pricing, and that the combination of quality and value positions us as an everyday luxury brand that encourages repeat purchases among our customers.
In addition, we use social platforms such as Instagram and Facebook as we further invest in leveraging micro and macro influencer networks to increase brand awareness, engage customers and create excitement about loyalty towards our Vince brand.
In addition, we use social platforms such as Instagram and Facebook as we further invest in leveraging micro and macro influencer networks to increase brand awareness, engage customers and create excitement about loyalty towards the Vince brand.
The following table details the number of Rebecca Taylor retail stores we operated for the past two fiscal years: Fiscal Year 2022 2021 Beginning of fiscal year 18 9 Net (closed) opened (18 ) 9 End of fiscal year — 18 Parker Parker, founded in 2008 in New York City, is a contemporary women's fashion brand that is trend focused.
The following table details the number of Rebecca Taylor retail stores we operated for the past two fiscal years: Fiscal Year 2023 2022 Beginning of fiscal year — 18 Net (closed) opened — (18 ) End of fiscal year — — Parker Parker, founded in 2008 in New York City, is a contemporary women's fashion brand that is trend focused.
Recent Development On April 21, 2023, Vince, LLC, the Company's wholly owned indirect subsidiary, entered into an Intellectual Property Asset Purchase Agreement (the "Asset Purchase Agreement"), by and among Vince, LLC, ABG-Viking, LLC ("ABG Vince"), a newly formed indirect subsidiary of Authentic Brands Group, LLC, the Company and ABG Intermediate Holdings 2 LLC, whereby Vince, LLC will sell its intellectual property assets related to the business operated under the VINCE brand to ABG Vince at closing (the "Asset Sale").
Recent Development On April 21, 2023, Vince, LLC, the Company's wholly owned indirect subsidiary, entered into an Intellectual Property Asset Purchase Agreement (the "Asset Purchase Agreement"), by and among Vince, LLC, 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 Vince, LLC sold its intellectual property assets related to the business operated under the Vince brand to ABG Vince at closing (the "Asset Sale").
On April 21, 2023, Vince, LLC, the Company's wholly owned indirect subsidiary, entered into the Asset Purchase Agreement, by and among Vince, LLC, ABG Vince, a newly formed indirect subsidiary of Authentic Brands Group, LLC, the Company and ABG 8 Intermediate Holdings 2 LLC, whereby Vince, LLC will sell its intellectual property assets related to the business operated under the VINCE brand to ABG Vince at closing.
Trademarks and Licensing On April 21, 2023, Vince, LLC, the Company's wholly owned indirect subsidiary, entered into the Asset Purchase Agreement, by and among Vince, LLC, ABG Vince, a newly formed indirect subsidiary of Authentic Brands Group, LLC, the Company and ABG Intermediate Holdings 2 LLC, whereby Vince, LLC sold its intellectual property assets related to the business operated under the Vince brand to ABG Vince at closing.
The Company operates on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52 or 53-week period ending on the Saturday closest to January 31. • References to "fiscal year 2022" or "fiscal 2022" refer to the fiscal year ended January 28, 2023; and • References to "fiscal year 2021" or "fiscal 2021" refer to the fiscal year ended January 29, 2022.
The Company operates on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52 or 53-week period ending on the Saturday closest to January 31. • References to "fiscal year 2023" or "fiscal 2023" refer to the fiscal year ended February 3, 2024; and • References to "fiscal year 2022" or "fiscal 2022" refer to the fiscal year ended January 28, 2023.
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. See Note 2 "Wind Down of the Rebecca Taylor Business" to the Consolidated Financial Statements in this Annual Report for additional information.
LLC, an affiliate of BCI Brands. 8 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. See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for additional information.
Except for 11 employees in France, who are covered by collective bargaining agreements pursuant to French law, none of our employees are currently covered by a collective bargaining agreement and we believe our employee relations are good. Our key human capital measures include associate turnover, pay equity, professional development as well as safety, particularly in light of the COVID-19 pandemic.
Except for 8 employees in France, who are covered by collective bargaining agreements pursuant to French law, none of our employees are currently covered by a collective bargaining agreement and we believe our employee relations are good. Our key human capital measures include associate turnover, pay equity, and professional development as well as safety.
Our Rebecca Taylor and Parker segment consisted of our operations to distribute Rebecca Taylor and Parker brand products to major department and specialty stores in the U.S. and select international markets and directly to the consumer through their own branded e-commerce platforms, our Rebecca Taylor retail and outlet stores and through our subscription service, Rebecca Taylor RNTD.
Our Vince Direct-to-consumer segment includes our Vince company-operated retail and outlet stores, our Vince e-commerce business and our subscription service, Vince Unfold. 5 Our Rebecca Taylor and Parker segment consisted of our operations to distribute Rebecca Taylor and Parker brand products to major department and specialty stores in the U.S. and select international markets and directly to the consumer through their own branded e-commerce platforms, our Rebecca Taylor retail and outlet stores and through our subscription service, Rebecca Taylor RNTD.
However, we believe that we have established a sustainable and distinct position in the current marketplace, driven by a product assortment that combines classic and fashion-forward styling, and a pricing strategy that offers customers accessible luxury. Human Capital As of January 28, 2023, we had 599 employees, of which 353 were employed in our company-operated retail stores.
However, we believe that we have established a sustainable and distinct position in the current marketplace, driven by a product assortment that combines classic and fashion-forward styling, and a pricing strategy that offers customers accessible luxury. 7 Human Capital As of February 3, 2024, we had 579 employees, of which 355 were employed in our company-operated retail stores.
Distribution Facilities As of January 28, 2023, we operated out of three distribution centers, one located in the U.S., one in Hong Kong and one in Belgium.
Distribution Facilities As of February 3, 2024, we operated out of three distribution centers, one located in the U.S., one in Hong Kong and one in Belgium.
Business Segments We serve our customers through a variety of channels that reinforce our brand images. Our diversified channel strategy allows us to introduce our products to customers through multiple distribution points that are presented in three reportable segments: Vince Wholesale, Vince Direct-to-consumer, and Rebecca Taylor and Parker.
Our diversified channel strategy allows us to introduce our products to customers through multiple distribution points that are presented in three reportable segments: Vince Wholesale, Vince Direct-to-consumer, and Rebecca Taylor and Parker.
Each of fiscal years 2022 and 2021 consisted of a 52-week period. Our principal executive office is located at 500 5 th Avenue, 20th Floor, New York, New York 10110, and our telephone number is (212) 944-2600. Our corporate website address is www.vince.com .
Fiscal year 2023 consisted of a 53-week period and fiscal year 2022 consisted of a 52-week period. Our principal executive office is located at 500 5 th Avenue, 20th Floor, New York, New York 10110, and our telephone number is (323) 421-5980. Our corporate website address is www.vince.com .
The following table details the number of Vince retail stores we operated for the past two fiscal years: Fiscal Year 2022 2021 Beginning of fiscal year 68 62 Net (closed) opened (1 ) 6 End of fiscal year 67 68 Rebecca Taylor Rebecca Taylor, founded in 1996 in New York City, is a contemporary womenswear line lauded for its signature prints, romantic detailing and vintage inspired aesthetic, reimagined for a modern era.
The direct-to-consumer business also includes our e-commerce website, vince.com , and our subscription service, Vince Unfold, vinceunfold.com . 4 The following table details the number of Vince retail stores we operated for the past two fiscal years: Fiscal Year 2023 2022 Beginning of fiscal year 67 68 Net (closed) opened (4 ) (1 ) End of fiscal year 63 67 Rebecca Taylor Rebecca Taylor, founded in 1996 in New York City, is a contemporary womenswear line lauded for its signature prints, romantic detailing and vintage inspired aesthetic, reimagined for a modern era.
Fiscal Year (in thousands, except percentages) 2022 % of Total Net Sales 2021 % of Total Net Sales Vince Wholesale $ 169,375 47.4 % $ 147,817 45.8 % Vince Direct-to-consumer 149,770 41.9 % 135,720 42.1 % Rebecca Taylor and Parker 38,297 10.7 % 39,146 12.1 % Total net sales $ 357,442 100.0 % $ 322,683 100.0 % Our Vince Wholesale segment is comprised of sales to major department stores and specialty stores in the U.S. and in select international markets.
Fiscal Year (in thousands, except percentages) 2023 % of Total Net Sales 2022 % of Total Net Sales Vince Wholesale $ 149,603 51.1 % $ 169,375 47.4 % Vince Direct-to-consumer 143,096 48.9 % 149,770 41.9 % Rebecca Taylor and Parker 191 0.0 % 38,297 10.7 % Total net sales $ 292,890 100.0 % $ 357,442 100.0 % Our Vince Wholesale segment is comprised of sales to major department stores and specialty stores in the U.S. and in select international markets.
The Rebecca Taylor collection was previously available through retail stores and outlet stores, through its branded e-commerce site and through its subscription service Rebecca Taylor RNTD, as well as through major department and specialty stores in the U.S. and in select international markets.
See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for additional information. The Rebecca Taylor collection was previously available through retail stores and outlet stores, through its branded e-commerce site and through its subscription service Rebecca Taylor RNTD, as well as through major department and specialty stores in the U.S. and in select international markets.
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 15 "Subsequent Events" to the Consolidated Financial Statements in this Annual Report for additional information.
On February 17, 2023, the Company's indirectly wholly owned subsidiary, Parker Lifestyle, LLC, completed the sale of its intellectual property and certain related ancillary assets to Parker IP Co. LLC, an affiliate of BCI Brands.
We design our products in the U.S. and source the vast majority of our products from contract manufacturers outside the U.S., primarily in Asia.
These sales represented 20% of fiscal 2023 and 16% of fiscal 2022 net sales, respectively. We design our products in the U.S. and source the vast majority of our products from contract manufacturers outside the U.S., primarily in Asia.
Associates have multiple ways to report inappropriate behavior, including through a confidential hotline. All reports of inappropriate behavior are promptly investigated with appropriate action taken to stop such behavior. Trademarks and Licensing We own the Vince trademark for the production, marketing, and distribution of our products in the U.S. and internationally.
Associates have multiple ways to report inappropriate behavior, including through a confidential hotline. All reports of inappropriate behavior are promptly investigated with appropriate action taken to stop such behavior.
Our Vince Wholesale segment also includes our licensing business related to our licensing arrangements for our women's and men's footwear line, as well as soft accessories and cold weather goods. Our Vince Direct-to-consumer segment includes our Vince company-operated retail and outlet stores, our Vince e-commerce business and our subscription service, Vince Unfold.
Until the Asset Sale closed, our Vince Wholesale segment also included our licensing business related to our licensing arrangements for our women's and men's footwear line, as well as soft accessories and cold weather goods.
The message and marketing strategies of our Vince brand are cultivated by dedicated creative, design, marketing, visual merchandising, and public relations teams. These teams work closely together to develop and execute campaigns that appeal to both our core and aspirational customers.
These teams work closely together to develop and execute campaigns that appeal to both our core and aspirational customers.
We work with more than 40 manufacturers across 13 countries, with 82% of our products produced in China in fiscal 2022. For cost and control purposes, we contract with select third-party vendors in the U.S. to produce a small portion of our merchandise.
For cost and control purposes, we contract with select third-party vendors in the U.S. to produce a small portion of our merchandise. 6 All of our garments are produced according to our specifications, and we require that all of our manufacturers adhere to strict regulatory compliance and standards of conduct.
Risk Factors — "Risks Related to Our Business and Industry — Our recently signed intellectual property asset sale to Authentic Brands Group, LLC may not close as anticipated" for additional discussion regarding risks to our business associated with the Asset Sale.
The Company closed the Asset Sale on May 25, 2023. See Part I, Item 1A. Risk Factors — "Risks Related to Our Business and Industry for additional discussion regarding risks to our business associated with the Asset Sale.
LLC, an affiliate of BCI Brands. See Note 15 "Subsequent Events" to the Consolidated Financial Statements in this Annual Report for additional information. 5 The Parker collection was previously available through major department stores and specialty stores worldwide as well as through its e-commerce website.
LLC, an affiliate of BCI Brands. The Parker collection was previously available through major department stores and specialty stores worldwide as well as through its e-commerce website. Business Segments We serve our customers through a variety of channels that reinforce the brand images.
We continue to evaluate other brand extension opportunities through both in-house development activities as well as through potential partnerships or licensing arrangements with third parties. Design and Merchandising Our creative team is focused on developing and implementing the design direction for the Vince brand. Our design efforts are supported by well-established product development and production teams.
Design and Merchandising Our creative team is focused on developing and implementing the design direction for the Vince brand. Our design efforts are supported by well-established product development and production teams. We believe continued collaboration between design and merchandising will ensure we respond to consumer preferences and market trends with new innovative product offerings while maintaining the brand's fashion foundation.
Our wholesale business is comprised of sales to major department stores and specialty stores in the U.S. and in select international markets.
As of February 3, 2024, we operate 48 full-price retail stores, 15 outlet stores, the e-commerce site, vince.com , and the subscription service Vince Unfold, vinceunfold.com . Vince is also available through premium wholesale channels globally. Our wholesale business is comprised of sales to major department stores and specialty stores in the U.S. and in select international markets.
We continue to collaborate with our wholesale partners in various areas, including merchandising and logistics to build a more profitable and focused wholesale business. Our wholesale business also includes our licensing business related to our licensing arrangements for our women's and men's footwear line, as well as soft accessories and cold weather goods.
We continue to collaborate with our wholesale partners in various areas, including merchandising and logistics to build a more profitable and focused wholesale business. Our direct-to-consumer business includes our company-operated retail and outlet stores and our e-commerce business. During fiscal 2023, we closed four net retail stores.
Risk Factors — " Risks Related to Our Business and Industry — The COVID-19 pandemic has adversely affected, and may continue to adversely affect, our business, financial condition, cash flow, liquidity and results of operations " for additional discussion regarding risks to our business associated with the COVID-19 pandemic. 4 Our Brands Vince 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.
The Brand Vince Vince Holding Corp. is a global retail company that operates the Vince brand women’s and men’s ready to wear business. Vince, established in 2002, is a leading global luxury apparel and accessories brand best known for creating elevated yet understated pieces for every day effortless style.
We believe continued collaboration between design and 6 merchandising will ensure we respond to consumer preferences and market trends with new innovative product offerings while maintaining our core fashion foundation. Marketing, Advertising and Public Relations We use marketing, advertising and public relations as critical tools to deliver a consistent and compelling brand message to consumers.
Marketing, Advertising and Public Relations We use marketing, advertising and public relations as critical tools to deliver a consistent and compelling message to consumers. The message and marketing strategies of the Vince brand are cultivated by dedicated creative, design, marketing, visual merchandising, and public relations teams.
Removed
In fiscal 2022 and fiscal 2021, sales to one wholesale partner, Nordstrom Inc., accounted for more than ten percent of the Company's net sales. These sales represented 16% of fiscal 2022 and 20% of fiscal 2021 net sales, respectively.
Added
ITEM 1. B USINESS. Overview We are a global retail company that operates the Vince brand women's and men's ready to wear business. Previously, the Company also owned and operated the Rebecca Taylor and Parker brands until the sale of the respective intellectual property was completed, as discussed below under "Recent Development".
Removed
See Note 15 "Subsequent Events" to the Consolidated Financial Statements in this Annual Report for additional information. The following description of the Company's business is presented on the basis that the closing of the Asset Sale has not yet occurred.
Added
On September 12, 2022, the Company announced its decision to wind down the Rebecca Taylor business. On December 22, 2022, Rebecca Taylor, Inc., the Company's indirectly wholly owned subsidiary, completed the sale of its intellectual property and certain related ancillary assets to RT IPCO, LLC, an affiliate of Ramani Group.
Removed
The Asset Sale is subject to the satisfaction or waiver of a number of conditions on or prior to the closing. See Part I, Item 1A.
Added
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.
Removed
COVID-19 The spread of the coronavirus ("COVID-19"), which was declared a pandemic by the World Health Organization in March 2020, remains highly volatile and continues to evolve.
Added
We work with more than 25 manufacturers across 10 countries, with 79% of our products produced in China in fiscal 2023.
Removed
In response, we implemented various measures to effectively manage our business as well as the impacts from the COVID-19 pandemic, including (i) serving our customers through our online e-commerce websites during the periods in which we were forced to shut down retail locations or operate with reduced shopping hours, alongside other retailers, including our wholesale partners, in accordance with state and local regulations related to the COVID-19 pandemic; (ii) engaging with our lenders to provide additional liquidity and increased operational flexibility; (iii) temporarily reducing retained employee salaries and suspending board retainer fees; (iv) engaging with our landlords to address the operating environment throughout the COVID-19 pandemic, including amending existing lease terms; and (v) streamlining our expense structure and carefully managing operational initiatives to align with the business environment and sales opportunities.
Added
The Company closed the Asset Sale on May 25, 2023 (the “Closing”).
Removed
The unpredictable nature of the COVID-19 pandemic could negatively affect the outcome of the measures intended to address its impact and/or our current expectations of our future business performance. See Part I, Item 1A.
Added
On May 25, 2023, in connection with the Closing, Vince, LLC and ABG Vince entered into a License Agreement (the “License Agreement”), which provides Vince, LLC with a license to use the Licensed Property in the Territory, which is defined as the United States, Canada, Andorra, Austria, Germany, Switzerland, Belgium, Netherlands, Luxembourg, France, Monaco, Liechtenstein, Italy, San Marino, Vatican City, Iceland, Norway, Denmark, Sweden, Finland, Spain, Portugal, Greece, Republic of Cyprus (excluding Northern Cyprus), United Kingdom, Ireland, Australia, New Zealand, Mainland China, Hong Kong, Macau, Taiwan, Singapore, Japan and Korea (the "Core Territory"), together with all other territories (the "Option Territory," together with the Core Territory, the “Territory”), to the Approved Accounts (each as defined in the License Agreement).
Removed
Known for its range of luxury products, Vince offers women's and men's ready-to-wear, footwear and accessories through 50 full-price retail stores, 17 outlet stores, its e-commerce site, vince.com , and through its subscription service Vince Unfold, vinceunfold.com , as well as through premium wholesale channels globally.
Added
The Option Territory may be changed unilaterally by ABG Vince at any time after the effective date of the License Agreement. The License Agreement also provides Vince, LLC with a license to operate the Vince e-commerce site, www.vince.com, as well as to operate all retail stores in the Territory.
Removed
The licensed products are sold in our own stores, on our e-commerce website, vince.com , and by our licensee to select wholesale partners. We earn a royalty based on net sales to the wholesale partners. Our direct-to-consumer business includes our company-operated retail and outlet stores and our e-commerce business. During fiscal 2022, we closed one net retail store.
Added
Vince, LLC is required to operate and maintain a minimum of 45 Retail Stores and Shop-in-Shops in the Territory.
Removed
The direct-to-consumer business also includes our e-commerce website, vince.com , and our subscription service, Vince Unfold, vinceunfold.com .
Added
Additionally, the License Agreement provides Vince, LLC with a license to use the Licensed Property in the Territory to design, manufacture, promote, market, distribute, and sell ready-to-wear Sportswear Products and Outerwear Products (the "Core Products") and Baby Layettes (the "Option Products," together with the Core Products, the "Licensed Products"), which Option Products may be changed unilaterally by ABG Vince at any time after the effective date of the License Agreement.
Removed
See Note 2 "Wind Down of the Rebecca Taylor Business" to the Consolidated Financial Statements in this Annual Report for additional information.
Added
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.
Removed
Unallocated corporate expenses are related to the Vince brand and are comprised of selling, general and administrative 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.
Added
Vince, LLC 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 Vince, LLC is in material breach of the License Agreement and such breach has not been cured within the specified cure period.
Removed
We also believe that we can expand our product assortments and distribute these expanded product assortments through our branded retail locations and our branded e-commerce platforms, as well as through our premier wholesale partners in the U.S. and select international markets.
Added
Vince, LLC may elect not to renew the term for a renewal term.
Removed
The Rebecca Taylor collection, prior to the wind down as discussed above, previously included seasonal collections of occasion-forward dresses, suiting, silk blouses, leather and tweed jackets, outerwear, jumpsuits, cotton dresses and blouses, denim, sweaters, pants, skirts and knit and woven tops.
Added
Vince, LLC is required to pay ABG Vince a royalty on net sales of Licensed Products and committed to an annual guaranteed minimum royalty of $11,000 and annual minimum net sales as specified in the License Agreement, in each case, during the initial term of the License Agreement, except that the guaranteed minimum royalty and minimum net sales for the first contract year during the initial term will be prorated to the period beginning on the Closing Date and ending at the end of the Company's 2023 fiscal year.
Removed
The Parker collection, prior to the pause in the creation of new products as discussed above, previously included seasonal collections of occasion-forward dresses, cotton dresses, jumpsuits, silk blouses, knit and woven tops, leather jackets, sweaters, pants, and skirts.
Added
The annual guaranteed minimum royalty and annual minimum net sales for each subsequent renewal term will be the greater of (i) a percentage as set forth in the License Agreement of the guaranteed minimum net royalty or the minimum net sales (as applicable) of the immediately preceding contract year, and (ii) the average of actual Royalties (as defined in the License Agreement, with respect to the guaranteed minimum royalty) or actual Net Sales (as defined in the License Agreement, with respect to the annual minimum net sales) during certain years as set forth in the License Agreement of the preceding initial term or renewal term (as applicable).
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All of our garments are produced according to our specifications, and we require that all of our manufacturers adhere to strict regulatory compliance and standards of conduct.
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Vince, LLC 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.
Removed
We have registered the trademark domestically and have registrations on file or pending in a number of foreign jurisdictions. We intend to continue to strategically register, both domestically and internationally, trademarks that we use today and those we develop in the future. We license the domain name for our website, vince.com , pursuant to a license agreement.
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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.
Removed
Under this license agreement, we have an exclusive, irrevocable license to use the vince.com domain name without restriction at a nominal annual cost. While we may terminate such license agreement at our discretion, the agreement does not provide for termination by the licensor. We also own unregistered copyright rights in our design marks.
Added
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.
Removed
See Note 15 "Subsequent Events" to the Consolidated Financial Statements in this Annual Report for additional information.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

69 edited+43 added−56 removed89 unchanged
Biggest changeThe success of our strategic initiatives depends on a number of factors, including our ability to position our retail and e-commerce businesses for further strategic growth, particularly through omni-channel initiatives, the effectiveness of our wholesale expansion efforts, our ability to properly identify appropriate future growth opportunities, and other macroeconomic impacts on our business, including the impact of the COVID-19 pandemic and armed conflict between Ukraine and Russia.
Biggest changeThe success of our strategic initiatives depends on a number of factors, including our ability to execute and realize the enhanced profitability expectations of our planned transformation program, position our retail and e-commerce businesses for further strategic growth, particularly through enhancement of our customer data platform to drive greater loyalty and conversion and capture broader customer base, expand our presence internationally including in Asia and Europe, grow men's business, our ability to properly identify appropriate future growth opportunities, and other macroeconomic impacts on our business.
Specifically, such covenants restrict our ability and, if applicable, the ability of our subsidiaries to, among other things: incur additional debt; make certain investments and acquisitions; enter into certain types of transactions with affiliates; use assets as security in other transactions; pay dividends; sell certain assets or merge with or into other companies; guarantee the debt of others; enter into new lines of businesses; make capital expenditures; prepay, redeem, or exchange our debt; and form any joint ventures or subsidiary investments.
Specifically, such covenants significantly restrict our ability and, if applicable, the ability of our subsidiaries to, among other things: incur additional debt; make certain investments and acquisitions; enter into certain types of transactions with affiliates; use assets as security in other transactions; pay dividends; sell certain assets or merge with or into other companies; guarantee the debt of others; enter into new lines of businesses; make capital expenditures; prepay, redeem, or exchange our debt; and form any joint ventures or subsidiary investments.
Other fashion companies have faced criticism after highly publicized incidents or compliance issues have occurred or been exposed at factories producing their products. To the extent our manufacturers do not bring their operations into compliance with such laws or resolve material issues identified in any of our audit results, we may face similar criticism and negative 19 publicity.
Other fashion companies have faced criticism after highly publicized incidents or compliance issues have occurred or been exposed at factories producing their products. To the extent our manufacturers do not bring their operations into compliance with such laws or resolve material issues identified in any of our audit results, we may face similar criticism and negative publicity.
A decision by any of our major wholesale partners, whether motivated by marketing strategy, competitive conditions, financial difficulties or otherwise, to significantly decrease the amount of merchandise purchased from us or our licensing partners, or to change their manner of doing business with us or our licensing partners, could substantially reduce our revenue and have a material adverse effect on our profitability.
A decision by any of our major wholesale partners, whether motivated by marketing strategy, competitive conditions, financial difficulties or otherwise, to significantly decrease the amount of merchandise purchased from us, or to change their manner of doing business with us, could substantially reduce our revenue and have a material adverse effect on our profitability.
We are subject to numerous domestic and international laws, regulations and advisories, including labor and employment, wage and hour, customs, truth-in-advertising, consumer protection, data and privacy protection, and zoning and occupancy laws and ordinances that regulate retailers generally or govern the importation, promotion and sale of merchandise and the operation of stores and warehouse facilities.
We are subject to numerous domestic and international laws, regulations and advisories, including labor and employment, environmental, wage and hour, customs, truth- in-advertising, consumer protection, data and privacy protection, and zoning and occupancy laws and ordinances that regulate retailers generally or govern the importation, promotion and sale of merchandise and the operation of stores and warehouse facilities.
Any such action would be expensive to defend, could damage our reputation and could adversely affect our business and operating results. 17 Risks Related to Our Supply Chain Problems with our distribution process could materially harm our ability to meet customer expectations, manage inventory, complete sale transactions, and achieve targeted operating efficiencies.
Any such action would be expensive to defend, could damage our reputation and could adversely affect our business and operating results. Risks Related to Our Supply Chain Problems with our distribution process could materially harm our ability to meet customer expectations, manage inventory, complete sale transactions, and achieve targeted operating efficiencies.
In 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 13 year.
In addition, fluctuations in the amount of sales in any fiscal quarter are affected by the timing of seasonal wholesale shipments and other events affecting direct-to-consumer sales; as such, the financial results for any particular quarter may not be indicative of results for the fiscal year.
Any failure on our part to effectively 14 execute on our strategy to enhance our customers' experience and realize the expected return on our investment in these initiatives could negatively affect sales as well as the reputation of our brands, which could adversely impact our growth and profitability.
Any failure on our part to effectively execute on our strategy to enhance our customers' experience and realize the expected return on our investment in these initiatives could negatively affect sales as well as the reputation of the brands, which could adversely impact our growth and profitability.
Identifying a suitable supplier is an involved process that requires us to become satisfied with their quality control, responsiveness and service, financial stability and labor and other responsible and/or ethical business practices.
Identifying a suitable supplier is an involved process that requires us to become satisfied with 18 their quality control, responsiveness and service, financial stability and labor and other responsible and/or ethical business practices.
The failure to make timely deliveries may cause customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on us.
The failure to make timely deliveries 17 may cause customers to cancel orders, refuse to accept deliveries or demand reduced prices, any of which could have a material adverse effect on us.
As a result of the magnitude of our foreign sourcing, our business is subject to the following risks: • political and economic instability in countries or regions, especially Asia and in connection with the armed conflict between Ukraine and Russia, including heightened terrorism, diplomatic and other security concerns, which could subject imported or exported goods to additional or more frequent inspections, leading to delays in deliveries or impoundment of goods; • imposition of regulations, quotas and other trade restrictions relating to imports, including the additional tariffs and bans imposed on certain imports from China (such as those imposed by the Uyghur Forced Labor Prevention Act), as well as other quotas imposed by bilateral textile agreements between the U.S. and foreign countries from time to time; • currency exchange rates; • imposition of increased duties, taxes, tariffs and other charges on imports; • increases in the costs of fuel, travel and transportation, both related and unrelated to the COVID-19 pandemic and the armed conflict between Ukraine and Russia, and demand for freight services at a time of reduced ocean freight capacity; 18 • disease epidemics and health-related concerns, including the COVID-19 pandemic, which could result in travel restrictions, closed factories, reduced workforces and higher labor costs, scarcity of and increased prices for raw materials and scrutiny or embargoing of goods produced in infected areas; • labor union strikes at ports through which our products enter the U.S.; • labor shortages in countries where contractors and suppliers are located; • restrictions on the transfer of funds to or from foreign countries; • the migration and development of manufacturing contractors, which could affect where our products are or are planned to be produced; • reduced manufacturing flexibility because of geographic distance between our foreign manufacturers and us, increasing the risk that we may have to mark down unsold inventory as a result of misjudging the market for a foreign-made product; and • violations by foreign contractors of labor and wage standards and resulting adverse publicity.
As a result of the magnitude of our foreign sourcing, our business is subject to the following risks: • political and economic instability in countries or regions, especially Asia and in connection with armed conflict (such as conflicts between Ukraine and Russia and in the Middle East), including heightened terrorism, diplomatic and other security concerns, which could subject imported or exported goods to additional or more frequent inspections, leading to delays in deliveries or impoundment of goods; • imposition of regulations, quotas and other trade restrictions relating to imports, including the additional tariffs and bans imposed on certain imports from China (such as those imposed by the Uyghur Forced Labor Prevention Act), as well as other quotas imposed by bilateral textile agreements between the U.S. and foreign countries from time to time; • currency exchange rates; • imposition of increased duties, taxes, tariffs and other charges on imports; • increases in the costs of fuel, travel and transportation, both related and unrelated to the armed conflict between Ukraine and Russia and in the Middle East, and demand for freight services at a time of reduced ocean freight capacity; • disease epidemics and health-related concerns, which could result in travel restrictions, closed factories, reduced workforces and higher labor costs, scarcity of and increased prices for raw materials and scrutiny or embargoing of goods produced in infected areas; • labor union strikes at ports through which our products enter the U.S.; • labor shortages in countries where contractors and suppliers are located; • restrictions on the transfer of funds to or from foreign countries; • the migration and development of manufacturing contractors, which could affect where our products are or are planned to be produced; • reduced manufacturing flexibility because of geographic distance between our foreign manufacturers and us, increasing the risk that we may have to mark down unsold inventory as a result of misjudging the market for a foreign-made product; and • violations by foreign contractors of labor and wage standards and resulting adverse publicity.
In fiscal 2022 a material weakness continued to exist relating to our internal control over financial reporting which was previously identified in fiscal 2016.
A material weakness continued to exist relating to our internal control over financial reporting which was previously identified in fiscal 2016.
If our independent manufacturers fail to use ethical business practices and comply with applicable laws and regulations, our brand images could be harmed due to negative publicity. We have established operating guidelines which promote responsible and ethical business practices such as fair wage practices, compliance with child labor laws and other local laws.
If our independent manufacturers fail to use ethical business practices and comply with applicable laws and regulations, our business could be harmed due to negative publicity. We have established operating guidelines which promote responsible and ethical business practices such as fair wage practices, compliance with child labor laws and other local laws.
Furthermore, due to the concentration of and/or ownership changes in our wholesale partner base, our results of operations could be adversely affected if any of these wholesale partners fails to satisfy its payment obligations to us when due or no longer takes part in the distribution arrangements.
In addition, due to the concentration of and/or ownership changes in our wholesale partner base, our results of operations could be adversely affected if any of these wholesale partners fails to satisfy its payment obligations to us when due or no longer takes part in the distribution arrangements.
Another of our strategic priorities is to utilize a customer data platform and marketing strategy from which we will be able to drive customer initiatives underpinned by data and technology, creating improved segmentation and personalization for an enhanced customer experience both domestically and internationally.
One of our strategic priorities is to utilize a customer data platform and marketing strategy from which we will be able to drive customer initiatives underpinned by data and technology, creating improved segmentation and personalization for an enhanced customer experience both domestically and internationally.
We intend to take advantage of these reporting exemptions until we are no longer a " smaller reporting company." We will remain a " smaller reporting company" until the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $250,000 or more and annual revenue as of our most recently completed fiscal year is $100,000 or more, or the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $700,000 or more, regardless of annual revenue.
We intend to take advantage of these reporting exemptions until we are no longer a "smaller reporting company." We will remain a "smaller reporting company" until the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $250,000 or more and annual revenue as of our most recently completed fiscal year is $100,000 or more, or the aggregate market value of our outstanding common stock held by non-affiliates as of the last business day of our most recently completed second fiscal quarter is $700,000 or more, regardless of annual revenue. 19 ITEM 1B.
The costs to us to eliminate or alleviate security problems, viruses and bugs could be significant, and the efforts to address these problems could result in interruptions, delays or cessation of service that may impede our sales, distribution or other critical functions.
The costs to us to eliminate or alleviate security problems, viruses and bugs could be significant, and the efforts to address these problems could result in interruptions, delays or cessation of service that may impact our reputation and/or impede our sales, distribution or other critical functions.
Our current operations are based largely in the U.S., with international wholesale sales representing approximately 8% of net sales for fiscal 2022. Therefore, we have a limited number of customers and experience in operating outside of the U.S.
Our current operations are based largely in the U.S., with international wholesale sales representing approximately 8% of net sales for fiscal 2023. Therefore, we have a limited number of customers and experience in operating outside of the U.S.
During fiscal 2022 and 2020, we recorded non-cash asset impairment charges of $1,880 and $13,026, respectively, within Impairment of long-lived assets on the Consolidated Statements of Operations and Comprehensive Income (Loss) related to the impairment of property and equipment and operating lease right-of-use assets of certain retail stores with carrying values that were determined not to be recoverable and exceeded their fair value.
During fiscal 2022, we recorded non-cash asset impairment charges of $1,880 within Impairment of long-lived assets on the Consolidated Statements of Operations and Comprehensive Income(Loss) related to the impairment of property and equipment and operating lease right-of-use assets of certain retail stores with carrying values that were determined not to be recoverable and exceeded their fair value.
There is no assurance, however, that we would not be subject to material security problems in the future, including cyber or malware attacks, including as an indirect result of the armed conflict between Ukraine and Russia, and we could incur significant expenses or disruptions of our operations in connection with resulting system failures or data and information breaches.
There is no assurance, however, that we would not be subject to material security problems in the future, including cyber or malware attacks, including as an indirect result of the armed conflicts between Ukraine and Russia and in the Middle East, and we could incur significant expenses or disruptions of our operations in connection with resulting system failures or data and information breaches.
Consumer spending is impacted by a number of factors, including actual and perceived economic conditions affecting disposable consumer income, customer traffic within shopping and selling environments, business conditions, interest rates and availability of credit and tax rates in the general economy and in the international, regional and local markets in which our products are sold, including those resulting from inflation and other macroeconomic pressures in the United States and the global economy (including rising interest rates, fears of recession and continued market volatility and instability in the banking sector), health epidemics or pandemics (including the COVID-19 pandemic), and catastrophic events, such as war (including the armed conflict between Ukraine and Russia and the related governmental and non-governmental global responses to such conflict), terrorist attacks, civil unrest, and other acts of violence.
Consumer spending is impacted by a number of factors, including actual and perceived economic conditions affecting disposable consumer income, customer traffic within shopping and selling environments, business conditions, interest rates and availability of credit and tax rates in the general economy and in the international, regional and local markets in which our products are sold, including those resulting from inflation and other macroeconomic pressures in the United States and the global economy (including rising interest rates, fears of recession and continued market volatility and instability in the banking sector), health epidemics or pandemics, climate change, and catastrophic events, such as war (including the armed conflicts between Ukraine and Russia and in the Middle East) and the related governmental and non-governmental global responses to such conflict), terrorist attacks, civil unrest, and other acts of violence.
In addition, other fashion companies have encountered organized boycotts of their products in such situations. If we, or other companies in our industry, encounter similar problems in the future, it could harm our brand images, stock price and results of operations.
In addition, other fashion companies have encountered organized boycotts of their products in such situations. If we, or other companies in our industry, encounter similar problems in the future, it could harm our business, stock price and results of operations.
Risks Related to Our Structure and Ownership We are a "controlled company," controlled by investment funds advised by affiliates of Sun Capital, whose interests in our business may be different from yours. Affiliates of Sun Capital owned approximately 69% of our outstanding common stock as of March 31, 2023.
Risks Related to Our Structure and Ownership We are a "controlled company," controlled by investment funds advised by affiliates of Sun Capital, whose interests in our business may be different from yours. Affiliates of Sun Capital owned approximately 68% of our outstanding common stock as of March 31, 2024.
We historically had and continue to have a small number of wholesale partners who account for a significant portion of our net sales. Our consolidated net sales to the full-price, off-price and e-commerce operations of our largest wholesale partner comprised 16% of our total revenue for fiscal 2022.
We historically had and continue to have a small number of wholesale partners who account for a significant portion of our net sales. Our consolidated net sales to the full-price, off-price and e-commerce operations of our largest wholesale partner comprised 20% of our total revenue for fiscal 2023.
The price and availability of the raw materials and, in turn, the fabrics used in our apparel may fluctuate significantly, depending on many factors, including crop yields, weather patterns, labor costs and changes in oil prices as well as other economic factors, such as those related to the COVID-19 pandemic and the armed conflict between Ukraine and Russia.
The price and availability of the raw materials and, in turn, the fabrics used in our apparel may fluctuate significantly, depending on many factors, including crop yields, weather patterns, labor costs and changes in oil prices as well as other economic factors, such as those related to the armed conflict between Ukraine and Russia and in the Middle East.
Determining the fair value of goodwill and indefinite-lived intangible assets is judgmental in nature and requires the use of significant estimates and assumptions, including projected revenues, EBITDA margins, long-term growth rates, working capital, discount rates and future market conditions, among others. We base our estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain.
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, among others. We base our estimates on assumptions we believe to be reasonable, but which are unpredictable and inherently uncertain.
Because substantially all of our products are distributed from one state, our operations could be interrupted by labor difficulties, or by floods, fires, earthquakes or other natural disasters and health crises, such as the COVID-19 pandemic, at or near such facility.
Because substantially all of our products are distributed from one state, our operations could be interrupted by labor difficulties, or by floods, fires, earthquakes or other natural disasters and health crises and pandemics, at or near such facility.
Many of these markets also have different operational characteristics, including employment and labor regulations, transportation, logistics, real estate (including lease terms) and local reporting or legal requirements, particularly in light of the COVID-19 pandemic, and the impact on the international markets remains unclear.
Many of these markets also have different operational characteristics, including employment and labor regulations, transportation, logistics, real estate (including lease terms) and local reporting or legal requirements, and the impact on the international markets remains unclear.
In fiscal 2022 we worked with more than 40 manufacturers across 13 countries, with 82% of our products produced in China throughout fiscal 2022. A manufacturing contractor's failure to ship products to us in a timely manner or to meet the required quality standards could cause us to miss the delivery date requirements of our customers for those items.
In fiscal 2023 we worked with more than 25 manufacturers across 10 countries, with 79% of our products produced in China throughout fiscal 2023. A manufacturing contractor's failure to ship products to us in a timely manner or to meet the required quality standards could cause us to miss the delivery date requirements of our customers for those items.
Our ability to continue to have the liquidity necessary to service our debt, meet contractual payment obligations and fund our operations depends on many factors, including our ability to generate sufficient cash flow from operations, maintain adequate availability under our 2018 Revolving Credit Facility or obtain other financing.
Our ability to continue to have the liquidity necessary to service our debt, meet contractual payment obligations, including royalty payments under the License Agreement, and fund our operations depends on many factors, including our ability to generate sufficient cash flow from operations, maintain adequate availability under our 2023 Revolving Credit Facility (as defined below) or obtain other financing.
We cannot assure 11 you that we will be able to achieve these required thresholds and in the event we are not able to do so, we may be forced to find an alternative store location and may not be successful in doing so.
There can be no assurance that we will be able to achieve these required thresholds and in the event we are not able to do so, we may be forced to find an alternative store location and may not be successful in doing so.
While we expect to maintain Excess Availability (as defined in the 2018 Revolving Credit Facility Agreement) minimally above the required threshold to meet our monthly Excess Availability covenant and believe that our other sources of liquidity will generate sufficient cash flows to meet our obligations for the next twelve months, the foregoing expectation is dependent on a number of factors, including, among others, our ability to generate sufficient cash flow from 9 operations, our ongoing ability to manage our operating obligations, the results of any future inventory valuations and the potential borrowing restrictions imposed by our lenders based on their credit judgment, which could materially and negatively impact our borrowing capacity, the wind down of the Rebecca Taylor business, as well as macroeconomic factors such as the rising costs and inflationary impacts on our customers, residual effect of the COVID-19 pandemic and the armed conflict between Ukraine and Russia.
While we expect to meet our monthly Excess Availability (as defined in the 2023 Revolving Credit Facility Agreement) covenant and believe that our other sources of liquidity will generate sufficient cash flows to meet our obligations for the next twelve months, the foregoing expectation is dependent on a number of factors, including, among others, our ability to generate sufficient cash flow from operations, our ongoing ability to manage our operating obligations, the results of any future inventory valuations and the potential borrowing restrictions imposed by our lenders based on their credit judgment, which could materially and negatively impact our borrowing capacity, the wind down of the Rebecca Taylor business, as well as macroeconomic factors.
Our ability to timely service our indebtedness, meet contractual payment obligations and to fund our operations will depend on our ability to generate sufficient cash, either through cash flows from operations, borrowing availability under the 2018 Revolving Credit Facility (as defined below) or other financing.
Our ability to timely service our indebtedness, meet contractual payment obligations, including royalty payments under the License Agreement, and to fund our operations will depend on our ability to generate sufficient cash, either through cash flows from operations, borrowing availability under the 2023 Revolving Credit Facility or other financing.
There can be no assurance that these options would be readily available to us and our inability to address our liquidity needs could materially and adversely affect our operations and jeopardize our business, financial condition and results of operations, including defaults under the Term Loan Facility (as defined below) or the 2018 Revolving Credit Facility which could result in all amounts outstanding under those credit facilities becoming immediately due and payable.
There can be no assurance that these options would be readily available to us and our inability to address our liquidity needs could materially and adversely affect our operations and jeopardize our business, financial condition and results of operations, including a default under the 2023 Revolving Credit Facility which could result in all amounts outstanding under such facility becoming immediately due and payable.
We also do not control our third-party service providers and cannot guarantee that no electronic or physical computer break-ins and security breaches will occur in the future.
We also do not control our third-party service providers and cannot guarantee that no electronic or physical computer break-ins and security breaches will occur in the future, nor can we guarantee that any loss we experience can be recovered from such third-party service providers.
If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products. Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would negatively impact our gross margin, as was the case in fiscal 2022.
Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would negatively impact our gross margin, as was the case in fiscal 2022.
Our ability to accurately forecast demand for our products could be affected by many factors, including an increase or decrease in demand for our products or for products of our competitors, product introductions by competitors, unanticipated changes in general market conditions such as those caused by the COVID-19 pandemic and the armed conflict between Ukraine and Russia, and weakening of economic conditions or consumer confidence in future economic conditions.
Our ability to accurately forecast demand for our products could be affected by many factors, including an increase or decrease in demand for our products or for products of our competitors, product introductions by competitors, unanticipated changes in general market conditions, and weakening of economic conditions or consumer confidence in future economic conditions.
We also have warehouses overseas, including in Hong Kong and Belgium, operated by third-party logistics providers, supporting our wholesale orders for customers located primarily in the nearby regions. Disruptions at any of these facilities located outside the U.S. (including disruptions related to COVID-19 and the armed conflict between Ukraine and Russia) could also materially and negatively impact our business.
We also have warehouses overseas, including in Hong Kong and Belgium, operated by third-party logistics providers, supporting our wholesale orders for customers located primarily in the nearby regions. Disruptions at any of these facilities located outside the U.S.
Supply disruptions from these manufacturers (or any of our other manufacturers) could have a material adverse effect on our ability to meet customer demands if we are unable to source suitable replacement materials at acceptable prices or at all.
Our top five manufacturers accounted for the production of approximately 54% of our finished products during fiscal 2023. Supply disruptions from these manufacturers (or any of our other manufacturers) could have a material adverse effect on our ability to meet customer demands if we are unable to source suitable replacement materials at acceptable prices or at all.
If we fail in our efforts to continue adopting, optimizing and improving these systems, processes and functions as currently planned, we could incur further disruptions to our business and operations, including lost e-commerce sales, a negative mobile experience for our customers, deficiencies or weaknesses in our internal controls, as well as additional costs to replace those systems and functions.
If we fail in our efforts to continue adopting, optimizing and improving these systems, processes and functions as currently planned, we could incur further disruptions to our business and operations, including lost e-commerce sales, a negative mobile experience for our customers, deficiencies or weaknesses in our internal controls, as well as additional costs to replace those systems and functions. 16 Failure to comply with privacy‑related obligations, including privacy laws and regulations in the U.S. and internationally as well as other legal obligations, could materially adversely affect our business.
On April 21, 2023, Vince, LLC, the Company's wholly owned indirect subsidiary, entered into an Intellectual Property Asset Purchase Agreement (the "Asset Purchase Agreement"), by and among Vince, LLC, ABG-Viking, LLC ("ABG Vince"), a newly formed indirect subsidiary of Authentic Brands Group, LLC, the Company and ABG Intermediate Holdings 2 LLC, whereby Vince, LLC will sell its intellectual property assets related to the business operated under the VINCE brand to ABG Vince.
On May 25, 2023, Vince, LLC, the Company's wholly owned indirect subsidiary, sold all its intellectual property assets related to the business operated under the Vince brand to ABG Vince, an indirect subsidiary of Authentic Brands Group, LLC ("Authentic”), pursuant to the Asset Purchase Agreement, entered into by and among Vince, LLC, ABG Vince, the Company and ABG Intermediate Holdings 2 LLC.
It is possible that our current estimates of future operating results could change adversely and impact the evaluation of the recoverability of the remaining carrying value of goodwill and intangible assets and that the effect of such changes could be material.
Actual future results may differ from those estimates. It is possible that our current estimates of future operating results could change adversely and impact the evaluation of the recoverability of the remaining carrying value of goodwill, the impact of which could be material.
Any of the foregoing factors could have a material adverse effect on our business, financial condition, and operating results. Fluctuations in the price, availability and quality of raw materials could cause delays and increase costs and cause our operating results and financial condition to suffer.
Fluctuations in the price, availability and quality of raw materials could cause delays and increase costs and cause our operating results and financial condition to suffer.
In addition, as our leases expire, we may fail to negotiate renewals, either on commercially acceptable terms or at all, or to find a suitable alternative location, which could cause us to close stores in desirable locations or in the case of office leases, incur costs in relocating our office space.
As our leases expire, we may fail to negotiate renewals, either on commercially acceptable terms or at all, or to find a suitable alternative location, which could cause us to close stores in desirable locations or in the case of office leases, incur costs in relocating our office space. 12 A substantial portion of our revenue is derived from a small number of large wholesale partners, and the loss of any of these wholesale partners could substantially reduce our total revenue.
The Acquired Businesses are guarantors under the Term Loan Facility. Our credit facilities contain significant restrictive covenants. These covenants may impair our financing and operational flexibility and make it difficult for us to react to market conditions and satisfy our ongoing capital needs and unanticipated cash requirements.
Our operations are restricted by our credit facilities. Our credit facility contains significant restrictive covenants. The 2023 Revolving Credit Facility includes covenants that may impair our financing and operational flexibility and make it difficult for us to react to market conditions and satisfy our ongoing capital needs and unanticipated cash requirements.
For example, as of January 28, 2023, we were a party to 77 operating leases associated with our retail stores and our office and showroom spaces requiring future minimum lease payments of $26,072 in the aggregate through fiscal 2023 and $86,851 thereafter.
For example, as of February 3, 2024, we were a party to 67 operating leases associated with our retail stores and our office and showroom spaces requiring future minimum lease payments of $22,006 in the aggregate through fiscal 2024 and $84,140 thereafter.
As further described in Part II, Item 9A in this Annual Report, the material weakness will not be remediated until all necessary internal controls have been implemented, tested and determined to be operating effectively.
The material weakness will not be remediated until all necessary internal controls have been implemented, tested and determined to be operating effectively.
Competition, along with such other factors as consolidation within the retail industry and changes in consumer spending patterns, could also result in significant pricing pressure and cause the sales environment to be more promotional, as it has been in recent years, impacting our financial results.
Any increased competition, or our failure to adequately address any of these competitive factors which we have seen from time to time, could result in reduced sales, which could adversely affect our business, financial condition, and operating results. 14 Competition, along with such other factors as consolidation within the retail industry and changes in consumer spending patterns, could also result in significant pricing pressure and cause the sales environment to be more promotional, as it has been in recent years, impacting our financial results.
We do not own any of our stores or our offices, including our New York, Los Angeles or Paris offices and showroom spaces, but instead lease all of such space under operating leases.
We do not own any of our stores or our offices, including our New York, Los Angeles or Paris offices and showroom spaces, but instead lease all of such space under operating leases. Substantially all of our leases require a fixed annual rent, and most require the payment of additional rent if store sales exceed a negotiated amount.
Our ability to comply with the covenants and other terms of our debt obligations, particularly in light of the COVID-19 pandemic and the armed conflict between Ukraine and Russia, will depend on our future operating performance.
Our ability to comply with the covenants and other terms of our debt obligations will depend on our future operating performance.
Further, we may face counterparty and/or operational risks as this joint venture arrangement makes us susceptible to the actions of our third-party partner.
We are in the initial stages of establishing this relationship and there can be no guarantee that it will materialize. Further, we may face counterparty and/or operational risks as this joint venture arrangement makes us susceptible to the actions of our third-party partner.
As of January 28, 2023, we operated 67 stores, including 49 company-operated Vince full-price stores and 17 company-operated Vince outlet stores throughout the United States and one company-operated Vince full price store in the United Kingdom.
As of February 3, 2024, we operated 63 stores, including 47 company-operated Vince full-price stores and 15 company-operated Vince outlet stores throughout the United States and one company-operated Vince full price store in the United Kingdom.
Moreover, although no additional material weakness was identified in fiscal 2022, other material weaknesses or deficiencies may develop or be identified in the future.
Moreover, other 13 material weaknesses or deficiencies may develop or be identified in the future.
These factors could have a material adverse effect on our business, financial condition, and operating results. We have identified a material weakness in our internal control over financial reporting that could, if not remediated, result in material misstatements in our financial statements.
A worsening of the economy may negatively affect consumer and wholesale purchases of our products and could have a material adverse effect on our business, results of operations and financial conditions. We have identified a material weakness in our internal control over financial reporting that could, if not remediated, result in material misstatements in our financial statements.
We cannot guarantee that we will be able to match supply with demand in all cases in the future, whether as a result of the COVID-19 pandemic, our inability to produce sufficient levels of desirable product or our failure to forecast demand accurately.
We cannot guarantee that we will be able to match supply with demand in all cases in the future, to produce sufficient levels of desirable product or to forecast demand accurately. If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products.
There can be no assurance that the strategic initiatives would produce intended positive results and if we are unable to realize the benefits of the strategic initiatives, our financial conditions, results of operations and cash flows could be materially and adversely affected. We may be unable to successfully implement and optimize our omni-channel strategy.
If we are unable to realize the benefits of the strategic initiatives, our financial conditions, results of operations and cash flows could be materially and adversely affected. We may be unable to improve our profitability.
There can be no assurances that we will not be required to record further charges in our financial statements, which would negatively impact our results of operations during the period in which any impairment of our goodwill or intangible assets is determined. We may not be able to realize the benefits of our strategic initiatives.
There can be no assurances that we will not be required to record further charges in our financial statements, which would negatively impact our results of operations during the period in which any impairment of our goodwill is determined. 15 Our competitive position could suffer if the intellectual property rights relating to the Vince brand are not protected.
If we are unable to obtain any necessary waivers and the debt is accelerated, a material adverse effect on our financial condition and future operating performance would likely result. We may be unable to successfully complete the wind down of the Rebecca Taylor business. On September 12, 2022, the Company announced its decision to wind down the Rebecca Taylor business.
If we are unable to obtain any necessary waivers and the debt is accelerated, a material adverse effect on our financial condition and future operating performance would likely result. 10 We may not be able to realize the benefits of our strategic initiatives. Our business growth depends on the successful execution of our strategic initiatives of our business.
We face risks with respect to our strategy to expand internationally, including our efforts to further expand our business in Canada, select European countries, Asia, including China, and the Middle East through company-operated locations, wholesale arrangements as well as with international partners.
Our limited operating experience and brand recognition in international markets may delay our expansion strategy and cause our business and growth to suffer. We face risks with respect to our strategy to expand internationally, including our efforts to further expand our business in Asia and Europe through company-operated locations, wholesale arrangements as well as with international partners.
Reliance on joint venture relationships and our partners exposes us to increased risk that our joint ventures will not be successful and will result in competitive harm to our brand image that could cause our expansion efforts, profitability and results of operations to suffer.
Reliance on joint venture relationships and our partners exposes us to increased risk that our joint ventures will not be successful and will result in competitive harm to the brand image that could cause our expansion efforts, profitability and results of operations to suffer. 11 One of our strategic initiatives is to focus on our direct-to-consumer business, which includes opening retail stores in select locations under more favorable and shorter lease terms and operating and maintaining our new and existing retail stores successfully.
A worsening of the economy may negatively affect consumer and wholesale purchases of our products and could have a material adverse effect on our business, results of operations and financial conditions. If we are unable to accurately forecast customer demand for our products, our results of operations could be materially impacted.
These factors could have a material adverse effect on our business, financial condition, and operating results. If we are unable to accurately forecast customer demand for our products, our results of operations could be materially impacted. We stock our stores, and provide inventory to our wholesale partners, based on our or their estimates of future demand for particular products.
This failure could negatively affect the market price and trading liquidity of our common stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and otherwise materially and adversely impact our business and financial condition. 12 For so long as we remain a "non-accelerated filer" under the rules of the SEC, our independent registered public accounting firm is not required to deliver an annual attestation report on the effectiveness of our internal control over financial reporting.
This failure could negatively affect the market price and trading liquidity of our common stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and otherwise materially and adversely impact our business and financial condition.
We maintain business interruption insurance. These policies, however, may not adequately protect us from the adverse effects that could result from significant disruptions to our distribution system. If we encounter problems with any of our distribution processes, our ability to meet customer expectations, manage inventory, complete sales, and achieve targeted operating efficiencies could be harmed.
If we encounter problems with any of our distribution processes, our ability to meet customer expectations, manage inventory, complete sales, and achieve targeted operating efficiencies could be harmed. Any of the foregoing factors could have a material adverse effect on our business, financial condition, and operating results.
The increased use of smartphones, tablets, and other wireless devices, as well as the continued need for a substantial portion of our corporate employees to work remotely during the COVID-19 pandemic, may also heighten these and other operational risks.
The increased use of smartphones, tablets, and other wireless devices, as well as the hybrid and remote work environments may also heighten these and other operational risks.
Substantially all of our leases require a fixed annual rent, and most require the payment of additional rent if store sales exceed a negotiated amount. Most of our leases are "net" leases, which require us to pay the cost of insurance, taxes, maintenance, and utilities, and we generally cannot cancel these leases solely at our option.
Most of our leases are “net” leases, which require us to pay the cost of insurance, taxes, maintenance, and utilities. Some of our leases are subject to initial terms that are as long as 10 years, and we generally cannot cancel these leases solely at our option.
In accordance with Financial Accounting Standards Board ASC Topic 350 Intangibles-Goodwill and Other ("ASC 350"), goodwill and other indefinite-lived intangible assets are tested for impairment at least annually during the fourth fiscal quarter and in an interim period if a triggering event occurs.
Our goodwill could become further impaired, which may require us to take significant non-cash charges against earnings. In accordance with Financial Accounting Standards Board ASC Topic 350 Intangibles-Goodwill and Other ("ASC 350"), goodwill is tested for impairment at least annually and in an interim period if a triggering event occurs.
In fiscal 2021, we commenced a strategy to expand our international retail and e-commerce presence in China and a select list of neighboring countries in Asia via a joint venture arrangement. We are in the initial stages of establishing this relationship and there can be no guarantee that it will be successful.
If Authentic chooses to operate in these Option Territories, we become unable to directly operate in those areas. In fiscal 2021, we commenced a strategy to expand our international retail and e-commerce presence in China and a select list of neighboring countries in Asia via a joint venture arrangement.
These changes could also decrease our opportunities in the market and decrease our negotiating strength with our wholesale partners. Furthermore, our wholesale partners have been significantly impacted by the COVID-19 pandemic, along with other wholesalers, and may become unable to continue business with us as they had pre-pandemic.
These changes could also decrease our opportunities in the market and decrease our negotiating strength with our wholesale partners.
If our omni-channel initiatives are not successful, our financial condition, results of operations and ability for future growth could be materially and adversely affected. We may be unable to effectively execute our customer strategy.
If we are unable to implement the strategy to drive margin expansion, we may not be able to offset the negative impact on our financial results and our profitability may not improve as intended. We may be unable to effectively execute our customer strategy.
Removed
On April 21, 2023, Vince, LLC, the Company's wholly owned indirect subsidiary, entered into an Intellectual Property Asset Purchase Agreement (the "Asset Purchase Agreement"), by and among Vince, LLC, ABG-Viking, LLC ("ABG Vince"), a newly formed indirect subsidiary of Authentic Brands Group, LLC, the Company and ABG Intermediate Holdings 2 LLC, whereby Vince, LLC will sell its intellectual property assets related to the business operated under the VINCE brand to ABG Vince at closing (the "Asset Sale").
Added
Risks Related to Our Business and Industry The failure to maintain our license agreement relating to the Vince brand would cause us to lose all our revenues.
Removed
See Note 15 "Subsequent Events" to the Consolidated Financial Statements in this Annual Report for additional information. The following description of the Company's risk factors is presented on the basis that the closing of the Asset Sale has not yet occurred.
Added
Simultaneously with the Asset Sale, Vince, LLC entered into a license agreement (as amended from time to time, the "License Agreement") with ABG Vince which provides us with a license to use the Licensed Property in the Territory (as defined in the License Agreement) in the Territory, which is defined as the United States, Canada, Andorra, Austria, Germany, Switzerland, Belgium, Netherlands, Luxembourg, France, Monaco, Liechtenstein, Italy, San Marino, Vatican City, Iceland, Norway, Denmark, Sweden, Finland, Spain, Portugal, Greece, Republic of Cyprus (excluding Northern Cyprus), United Kingdom, Ireland, Australia, New Zealand, Mainland China, Hong Kong, Macau, Taiwan, Singapore, Japan and Korea (the "Core Territory"), together with all other territories (the "Option Territory,” together with the Core Territory, the “Territory”), which Option Territory may be changed unilaterally by ABG Vince at any time after the effective date of the License Agreement.
Removed
The Asset Sale is subject to the satisfaction or waiver of a number of conditions on or prior to the closing. The Company anticipates to update its risk factors disclosure as appropriate once the closing of the Asset Sale has occurred.
Added
Additionally, we may use in the Territory, the Licensed Property in the Territory to design, manufacture, promote, market, distribute, and sell ready-to-wear sportswear products and outerwear products (the "Core Products") and home décor and baby layettes (the "Option Products," together with the Core Products, the "Licensed Products"), which Option Products may be changed unilaterally by ABG Vince at any time after the effective date of the License Agreement.
Removed
Risks Related to Our Business and Industry Our recently signed intellectual property asset sale to Authentic Brands Group, LLC may not close as anticipated.
Added
The License Agreement has an initial term of ten years with eight options to renew for a ten-year period each. Our revenues are generated solely from sales of products pursuant to the license granted under the License Agreement.
Removed
The Asset Sale is subject to the satisfaction or waiver of a number of conditions on or prior to the closing. See Note 15 "Subsequent Events" to the Consolidated Financial Statements in this Annual Report for additional information on the Asset Sale.
Added
We are required under the License Agreement, among other things, to achieve specified minimum net sales, make specified royalty payments, spend specified advertising and promotion expenditures, and maintain a minimum number of retail stores.
Removed
No assurance can be provided that the conditions to closing will be satisfied or that the closing of the Asset Sale will occur as anticipated or at all.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest change(New York) NY September 20, 2019 Street 2,820 1,948 East Hampton (East Hampton) NY February 6, 2021 Street 1,830 1,290 Knox Street (Dallas) TX September 17, 2021 Street 1,802 1,280 Total Street (17) 44,399 30,561 Malibu County Mart (Malibu) CA August 9, 2009 Lifestyle Center 1,298 1,070 Town Center at Boca Raton (Boca Raton) FL October 13, 2009 Mall 1,498 1,150 The Westchester (White Plains) NY November 6, 2009 Mall 2,486 1,775 Phipps Plaza (Atlanta) GA April 16, 2010 Mall 1,643 1,356 Stanford Shopping Center (Palo Alto) CA September 17, 2010 Lifestyle Center 2,028 1,391 Bellevue Square (Bellevue) WA November 5, 2010 Mall 1,460 1,113 Fashion Island (Newport Beach) CA May 20, 2011 Lifestyle Center 1,656 1,242 Chestnut Hill (Chestnut Hill) MA July 25, 2014 Lifestyle Center 2,357 1,886 Merrick Park (Coral Gables) FL April 30, 2015 Lifestyle Center 2,022 1,482 DC City Center (Washington) DC April 30, 2015 Lifestyle Center 3,202 2,562 Scottsdale Quarter (Scottsdale) AZ May 15, 2015 Lifestyle Center 2,753 2,200 River Oaks (Houston) TX October 1, 2015 Lifestyle Center 2,998 2,398 Forum Shops (Las Vegas) NV April 1, 2016 Mall 3,220 2,576 Tyson's Galleria (McLean) VA April 29, 2016 Mall 2,668 2,134 The Grove (Los Angeles) CA May 23, 2016 Lifestyle Center 2,717 2,174 Somerset Collection (Troy) MI May 27, 2016 Mall 2,000 1,533 King of Prussia (King of Prussia) PA August 18, 2016 Mall 3,107 2,202 Fashion Valley (San Diego) CA August 25, 2016 Lifestyle Center 2,817 2,254 Hawaii (Honolulu) HI May 25, 2017 Mall 1,828 1,371 Short Hills (Short Hills) NJ March 29, 2018 Mall 1,450 1,290 El Paseo Village (Palm Desert) CA April 26, 2018 Lifestyle Center 2,615 2,002 Waterside Shops (Naples) FL May 24, 2018 Mall 1,723 1,315 The Domain (Austin) TX June 28, 2018 Mall 1,719 1,375 Palisades Village (Pacific Palisades) CA October 4, 2018 Lifestyle Center 2,953 2,525 21 Vince Locations State Opening Date Type Gross Square Feet Selling Square Feet The Gardens Mall (Palm Beach Gardens) FL October 19, 2018 Mall 2,360 2,025 Aventura Mall (Aventura) FL April 5, 2019 Mall 1,873 1,280 Santana Row (San Jose) CA August 8, 2019 Lifestyle Center 2,295 1,517 The Shops at Riverside (Hackensack) NJ February 27, 2020 Mall 2,816 2,253 Southpark (Charlotte) NC May 21, 2021 Mall 1,630 1,040 Roosevelt Field (Garden City) NY August 6, 2021 Mall 1,678 1,214 Cherry Creek (Denver) CO August 20, 2021 Lifestyle Center 2,032 1,512 Pentagon City (Arlington) VA September 3, 2021 Mall 1,937 1,359 Boston Seaport (Boston) MA May 13, 2022 Lifestyle Center 1,820 1,386 Total Mall and Lifestyle Centers (33) 72,659 55,962 Total Full-Price (50) 117,058 86,523 Cabazon Premium (Cabazon) CA November 11, 2011 Outlet 3,250 2,000 Riverhead (Riverhead) NY November 30, 2012 Outlet 2,500 2,000 Fashion Outlets of Chicago (Rosemont) IL August 1, 2013 Outlet 3,485 2,599 Seattle Premium (Tulalip) WA August 30, 2013 Outlet 2,214 1,550 Las Vegas (Las Vegas) NV October 3, 2013 Outlet 2,028 1,420 San Marcos (San Marcos) TX October 10, 2014 Outlet 2,433 1,703 Carlsbad Premium (Carlsbad) CA October 24, 2014 Outlet 2,453 1,717 Wrentham Village Premium (Wrentham) MA September 29, 2014 Outlet 2,000 1,400 Camarillo Premium (Camarillo) CA February 1, 2015 Outlet 3,001 2,101 San Francisco Premium (Livermore) CA August 13, 2015 Outlet 2,485 1,753 Chicago Premium (Aurora) IL August 27, 2015 Outlet 2,300 1,840 Woodbury Commons (Central Valley) NY November 6, 2015 Outlet 2,289 1,831 Sawgrass Mills (Sunrise) FL December 4, 2015 Outlet 2,539 1,771 Orlando Vineland Premium (Orlando) FL November 24, 2020 Outlet 2,914 2,302 Leesburg (Leesburg) VA June 11, 2021 Outlet 2,626 2,042 Clarksburg (Clarksburg) MD June 18, 2021 Outlet 1,840 1,385 Houston Premium (Cypress) TX July 16, 2021 Outlet 3,034 2,203 Total Outlets (17) 43,391 31,617 Total Vince Stores (67) 160,449 118,140
Biggest change(New York) NY September 20, 2019 Street 2,820 1,948 East Hampton (East Hampton) NY February 6, 2021 Street 1,830 1,290 Knox Street (Dallas) TX September 17, 2021 Street 1,802 1,280 Total Street (17) 44,399 30,561 Malibu County Mart (Malibu) CA August 9, 2009 Lifestyle Center 1,298 1,070 Town Center at Boca Raton (Boca Raton) FL October 13, 2009 Mall 1,206 1,013 The Westchester (White Plains) NY November 6, 2009 Mall 2,486 1,775 Phipps Plaza (Atlanta) GA April 16, 2010 Mall 1,643 1,356 Stanford Shopping Center (Palo Alto) CA September 17, 2010 Lifestyle Center 2,028 1,391 Fashion Island (Newport Beach) CA May 20, 2011 Lifestyle Center 2,317 1,642 Chestnut Hill (Chestnut Hill) MA July 25, 2014 Lifestyle Center 2,357 1,886 Merrick Park (Coral Gables) FL April 30, 2015 Lifestyle Center 2,022 1,482 DC City Center (Washington) DC April 30, 2015 Lifestyle Center 3,202 2,562 Scottsdale Quarter (Scottsdale) AZ May 15, 2015 Lifestyle Center 2,753 2,200 River Oaks (Houston) TX October 1, 2015 Lifestyle Center 2,998 2,398 Tyson's Galleria (McLean) VA April 29, 2016 Mall 2,668 1,705 The Grove (Los Angeles) CA May 23, 2016 Lifestyle Center 2,717 2,174 Somerset Collection (Troy) MI May 27, 2016 Mall 2,000 1,533 King of Prussia (King of Prussia) PA August 18, 2016 Mall 3,107 2,202 Fashion Valley (San Diego)* CA August 25, 2016 Lifestyle Center 1,606 1,300 Hawaii (Honolulu) HI May 25, 2017 Mall 1,828 1,371 Short Hills (Short Hills) NJ March 29, 2018 Mall 1,450 1,290 El Paseo Village (Palm Desert) CA April 26, 2018 Lifestyle Center 2,615 2,002 Waterside Shops (Naples) FL May 24, 2018 Mall 1,723 1,315 The Domain (Austin) TX June 28, 2018 Mall 1,719 1,375 Palisades Village (Pacific Palisades) CA October 4, 2018 Lifestyle Center 2,953 2,525 The Gardens Mall (Palm Beach Gardens) FL October 19, 2018 Mall 2,360 2,025 Aventura Mall (Aventura) FL April 5, 2019 Mall 1,873 1,280 Santana Row (San Jose) CA August 8, 2019 Lifestyle Center 2,295 1,517 The Shops at Riverside (Hackensack) NJ February 27, 2020 Mall 2,843 2,296 Southpark (Charlotte) NC May 21, 2021 Mall 1,630 1,040 Roosevelt Field (Garden City) NY August 6, 2021 Mall 1,678 1,214 Cherry Creek (Denver) CO August 20, 2021 Lifestyle Center 2,032 1,512 Pentagon City (Arlington) VA September 3, 2021 Mall 1,937 1,359 Boston Seaport (Boston) MA May 13, 2022 Lifestyle Center 1,820 1,386 Total Mall and Lifestyle Centers (31) 67,164 51,196 Total Full-Price (48) 111,563 81,757 Cabazon Premium (Cabazon) CA November 11, 2011 Outlet 3,250 2,000 Riverhead (Riverhead) NY November 30, 2012 Outlet 2,500 2,000 Fashion Outlets of Chicago (Rosemont) IL August 1, 2013 Outlet 3,485 2,599 Seattle Premium (Tulalip) WA August 30, 2013 Outlet 2,214 1,550 Las Vegas (Las Vegas) NV October 3, 2013 Outlet 2,028 1,420 San Marcos (San Marcos) TX October 10, 2014 Outlet 2,433 1,703 Carlsbad Premium (Carlsbad) CA October 24, 2014 Outlet 2,453 1,717 Wrentham Village Premium (Wrentham) MA September 29, 2014 Outlet 2,000 1,400 Camarillo Premium (Camarillo) CA February 1, 2015 Outlet 3,001 2,101 San Francisco Premium (Livermore) CA August 13, 2015 Outlet 2,485 1,753 Chicago Premium (Aurora) IL August 27, 2015 Outlet 2,300 1,840 Woodbury Commons (Central Valley) NY November 6, 2015 Outlet 2,289 1,831 Sawgrass Mills (Sunrise) FL December 4, 2015 Outlet 2,866 2,326 22 Orlando Vineland Premium (Orlando) FL November 24, 2020 Outlet 2,914 2,302 Leesburg (Leesburg) VA June 11, 2021 Outlet 2,626 2,042 Total Outlets (15) 38,844 28,584 Total Vince Stores (63) 150,407 110,341 *As of February 3, 2024, this location is in the process of relocating to another store within the same Lifestyle Center.
The following store list shows the location, opening date, type, and size of our company-operated retail locations as of January 28, 2023: Vince Locations State Opening Date Type Gross Square Feet Selling Square Feet Washington St. (New York) NY February 3, 2009 Street 1,850 1,150 Prince St.
The following store list shows the location, opening date, type, and size of our company-operated retail locations as of February 3, 2024: 21 Vince Locations State Opening Date Type Gross Square Feet Selling Square Feet Washington St. (New York) NY February 3, 2009 Street 1,850 1,150 Prince St.
ITEM 2. PR OPERTIES. The following table sets forth the location, use and size of our significant corporate facilities and showrooms as of January 28, 2023, all of which are leased under various agreements expiring at various times through fiscal 2034, subject to renewal options.
ITEM 2. PR OPERTIES. The following table sets forth the location, use and size of our significant corporate facilities and showrooms as of February 3, 2024, all of which are leased under various agreements expiring at various times through fiscal 2034, subject to renewal options.
Location Use Approximate Square Footage New York, NY Corporate Office 37,113 Los Angeles, CA Vince Design Studio 28,541 Paris, France Vince Showroom 4,209 As of January 28, 2023, we leased 160,449 gross square feet related to our 67 company-operated Vince retail stores.
Location Use Approximate Square Footage New York, NY Corporate Office 49,492 Los Angeles, CA Vince Design Studio 28,541 Paris, France Vince Showroom 4,209 As of February 3, 2024, we leased 150,407 gross square feet related to our 63 company-operated Vince retail stores.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−1 removed1 unchanged
Biggest changeWe currently intend to retain all available funds and any future earnings to fund the development and growth of our business, and we do not anticipate paying any cash dividends in the foreseeable future. In addition, because we are a holding company, our ability to pay dividends depends on our receipt of cash distributions from our subsidiaries.
Biggest changeDividends We have never paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business, and we do not anticipate paying any cash dividends in the foreseeable future.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any shares of common stock during the three months ended January 28, 2023. Unregistered Sales of Equity Securities None. ITEM 6. [RESE RVED]
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any shares of common stock during the three months ended February 3, 2024. Unregistered Sales of Equity Securities None. 23 ITEM 6. [RESE RVED]
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock trades on the New York Stock Exchange under the symbol "VNCE".
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information Our common stock trades on the New York Stock Exchange under the symbol "VNCE". Record Holders As of March 29, 2024, there were 3 holders of record of our common stock.
The terms of our indebtedness substantially restrict the ability to pay dividends. See "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations—Financing Activities" of this Annual Report for a description of the related restrictions.
In addition, because we are a holding company, our ability to pay dividends depends on our receipt of cash distributions from our subsidiaries. The terms of our indebtedness substantially restrict the ability to pay dividends. See "Item 7—Management's Discussion and Analysis of Financial Condition and Results of Operations—Financing Activities" of this Annual Report for a description of the related restrictions.
Removed
Record Holders As of March 31, 2023, there were 3 holders of record of our common stock. 22 Dividends We have never paid cash dividends on our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

90 edited+42 added−70 removed58 unchanged
Biggest changeThere may be variations in the way in which some of our competitors and other retailers calculate comparable sales. 24 Fiscal 2022 Compared to Fiscal 2021 The following table presents, for the periods indicated, our operating results as a percentage of net sales as well as earnings (loss) per share data: Fiscal Year 2022 2021 Variances % of Net % of Net (in thousands, except per share data and percentages) Amount Sales Amount Sales Amount Percent Statements of Operations: Net sales $ 357,442 100.0 % $ 322,683 100.0 % $ 34,759 10.8 % Cost of products sold 219,472 61.4 % 176,113 54.6 % 43,359 24.6 % Gross profit 137,970 38.6 % 146,570 45.4 % (8,600 ) (5.9 )% Impairment of intangible assets 1,700 0.5 % — 0.0 % 1,700 * Impairment of long-lived assets 1,880 0.5 % — 0.0 % 1,880 * Gain on sale of intangible assets (1,620 ) (0.5 )% — 0.0 % (1,620 ) * Selling, general and administrative expenses 161,432 45.2 % 146,087 45.3 % 15,345 10.5 % (Loss) income from operations (25,422 ) (7.1 )% 483 0.1 % (25,905 ) * Interest expense, net 9,887 2.8 % 8,606 2.7 % 1,281 14.9 % Loss before income taxes (35,309 ) (9.9 )% (8,123 ) (2.5 )% (27,186 ) 334.7 % Provision for income taxes 3,037 0.8 % 4,581 1.4 % (1,544 ) (33.7 )% Net loss $ (38,346 ) (10.7 )% $ (12,704 ) (3.9 )% $ (25,642 ) 201.8 % Loss per share: Basic loss per share $ (3.14 ) $ (1.07 ) Diluted loss per share $ (3.14 ) $ (1.07 ) (*) Not meaningful Net sales for fiscal 2022 were $357,442, increasing $34,759, or 10.8%, versus $322,683 for fiscal 2021.
Biggest changeFiscal 2023 Compared to Fiscal 2022 The following table presents, for the periods indicated, our operating results as a percentage of net sales as well as earnings (loss) per share data: Fiscal Year 2023 2022 Variances % of Net % of Net (in thousands, except per share data and percentages) Amount Sales Amount Sales Amount Percent Statements of Operations: Net sales $ 292,890 100.0 % $ 357,442 100.0 % $ (64,552 ) (18.1 )% Cost of products sold 159,598 54.5 % 219,472 61.4 % (59,874 ) (27.3 )% Gross profit 133,292 45.5 % 137,970 38.6 % (4,678 ) (3.4 )% Impairment of intangible assets — 0.0 % 1,700 0.5 % (1,700 ) * Impairment of long-lived assets — 0.0 % 1,880 0.5 % (1,880 ) * Gain on sale of intangible assets (32,808 ) (11.2 )% (1,620 ) (0.5 )% (31,188 ) * Selling, general and administrative expenses 134,476 45.9 % 161,432 45.2 % (26,956 ) (16.7 )% Income (loss) from operations 31,624 10.8 % (25,422 ) (7.1 )% 57,046 (224.4 )% Interest expense, net 11,118 3.8 % 9,887 2.8 % 1,231 12.5 % Income (loss) before income taxes and equity in net income of equity method investment 20,506 7.0 % (35,309 ) (9.9 )% 55,815 (158.1 )% (Benefit) provision for income taxes (3,478 ) (1.2 )% 3,037 0.8 % (6,515 ) (214.5 )% Income (loss) before equity in net income of equity method investment 23,984 8.2 % (38,346 ) (10.7 )% 62,330 (162.5 )% Equity in net income of equity method investment 1,462 0.5 % — 0.0 % 1,462 * Net income (loss) $ 25,446 8.7 % $ (38,346 ) (10.7 )% $ 63,792 (166.4 )% Earnings (loss) per share: Basic earnings (loss) per share $ 2.05 $ (3.14 ) Diluted earnings (loss) per share $ 2.04 $ (3.14 ) (*) Not meaningful Net sales for fiscal 2023 were $292,890, decreasing $64,552, or 18.1%, versus $357,442 for fiscal 2022.
Performance by Segment The Company has identified three 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; • 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.
Performance by Segment The Company has identified three reportable segments as further described below: 26 • 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, 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.
Third Lien Credit Facility On December 11, 2020, Vince, LLC 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"), dated December 11, 2020, by and among Vince, LLC, 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.
Third Lien Credit Facility On December 11, 2020, Vince, LLC 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 Vince, LLC, 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 assessment of inventory value, as a result, is highly subjective and requires an assessment of the seasonality of the inventory, its future desirability, and future price levels in the off-price sector. In our wholesale businesses, some of our products are purchased for and sold to specific customers' orders.
The assessment of inventory value, as a result, is highly subjective and requires an assessment of the seasonality of the inventory, its future desirability, and future price levels in the off-price sector. 34 In our wholesale businesses, some of our products are purchased for and sold to specific customers' orders.
The finite-lived intangible assets as of January 28, 2023 is comprised of the Vince customer relationships which are being amortized on a straight-line basis over their useful lives of 20 years. On September 12, 2022, the Company announced its decision to wind down the Rebecca Taylor business.
The finite-lived intangible assets as of January 28, 2023 were comprised of the Vince customer relationships which were being amortized on a straight-line basis over their useful lives of 20 years. On September 12, 2022, the Company announced its decision to wind down the Rebecca Taylor business.
Accordingly, the Company recorded an impairment charge for the Rebecca Taylor tradename intangible asset of $1,700, which was recorded within Impairment of intangible assets on the Consolidated Statement of Operations and Comprehensive Income (Loss) in fiscal 2022. 36 In both fiscal 2022 and fiscal 2021, the Company performed its annual impairment test during the fourth quarter.
Accordingly, the Company recorded an impairment charge for the Rebecca Taylor tradename intangible asset of $1,700, which was recorded within Impairment of intangible assets on the Consolidated Statement of Operations and Comprehensive Income (Loss) in fiscal 2022. In both fiscal 2023 and fiscal 2022, the Company performed its annual impairment test during the fourth quarter.
The Tax Receivable Agreement provides 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 provides 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 (as defined therein).
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 2018 Revolving Credit Facility and the 2018 Term Loan Facility by a lien on substantially all of the assets of the Company, Vince Intermediate, Vince, LLC and the Company's existing material domestic restricted subsidiaries as well as any future material domestic restricted subsidiaries.
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, Vince, LLC and the Company's existing material domestic restricted subsidiaries as well as any future material domestic restricted subsidiaries.
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.
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.
The 2018 Revolving Credit Facility contains representations and warranties, other covenants and events of default that are customary for this type of financing, including covenants with respect to limitations on the incurrence of additional indebtedness, liens, burdensome agreements, guarantees, investments, loans, asset sales, mergers, acquisitions, prepayment of other debt, the repurchase of capital stock, transactions with affiliates, and the ability to change the nature of the Company's business or its fiscal year.
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.
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 a total consideration of $76,500 in cash and a 25% membership interest in ABG Vince.
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.
Impairment of intangible assets for fiscal 2022 was $1,700 related to the impairment of the Rebecca Taylor tradename. See Note 3 "Goodwill and Intangible Assets" to the Consolidated Financial Statements in this Annual Report for further information. There was no impairment of intangible assets taken in fiscal 2021.
Impairment of intangible assets for fiscal 2022 was $1,700 related to the impairment of the Rebecca Taylor tradename. See Note 3 "Goodwill and Intangible Assets" to the Consolidated Financial Statements in this Annual Report for further information.
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. Parker, founded in 2008 in New York City, is a contemporary women's fashion brand that is trend focused.
All Rebecca Taylor retail and outlet stores operated by the Company were closed as of January 28, 2023 and the ecommerce site operated by the Company ceased in December 2022. Parker, founded in 2008 in New York City, was a contemporary women's fashion brand that was trend focused.
Therefore, the Company determined that the indefinite life classification was no longer appropriate for the Rebecca Taylor tradename and began amortizing the Rebecca Taylor tradename in the third quarter of fiscal 2022. See Note 2 "Wind Down of the Rebecca Taylor Business" to the Consolidated Financial Statements in this Annual Report for additional information.
Therefore, the Company determined that the indefinite life classification was no longer appropriate for the Rebecca Taylor tradename and began amortizing the Rebecca Taylor tradename in the third quarter of fiscal 2022. See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for additional information.
The guideline public company method applies a representative market multiple derived from revenue and EBITDA for a group of comparable public companies to the Company's financial forecasts. Changes in these assumptions could have a significant impact on the valuation model. Goodwill was $31,973 as of both January 28, 2023 and January 29, 2022.
The guideline public company method applies a representative market multiple derived from revenue and EBITDA for a group of comparable public companies to the Company's financial forecasts. Changes in these assumptions could have a significant impact on the valuation model. Goodwill was $31,973 as of February 3, 2024 and January 28, 2023.
In fiscal 2021, the Company elected to perform a quantitative impairment test on goodwill allocated to the Company's Vince Wholesale reporting unit. The results of the quantitative test did not result in any impairment because the fair value of the Company's Vince Wholesale reporting unit exceeded its carrying value.
In fiscal 2023, the Company elected to perform a quantitative impairment test on goodwill allocated to the Company’s Vince Wholesale reporting unit. The results of the quantitative test did not result in any impairment because the fair value of the Company’s Vince Wholesale reporting unit exceeded its carrying value by 7.9%.
Vince, LLC entered into a new $35,000 senior secured term loan credit facility (the "Term Loan Credit Facility") pursuant to a Credit Agreement (the "Term Loan Credit Agreement") by and among Vince, LLC, 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.
Term Loan Credit Facility On September 7, 2021, Vince, LLC 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 Vince, LLC, 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.
Our primary cash needs are funding working capital requirements, 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.
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.
For the Vince retail store asset groups that did not pass the recoverability assessment, the Company recorded non-cash asset impairment charges of $1,014 related to property and equipment. The fair value of the property and equipment was based on its estimated liquidation value.
For the Rebecca Taylor retail store asset groups that did not pass the recoverability assessment, the Company recorded non-cash asset impairment charges of $866 related to property and equipment. The fair value of the property and equipment was based on its estimated liquidation value.
Critical Accounting Estimates Management's discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
We expect such seasonality to continue. 33 Critical Accounting Estimates Management's discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Our fiscal year ends on the Saturday closest to January 31. Fiscal years 2022 and 2021 ended on January 28, 2023 ("fiscal 2022") and January 29, 2022 ("fiscal 2021"), respectively. Fiscal 2022 and fiscal 2021 each consisted of 52 weeks.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Our fiscal year ends on the Saturday closest to January 31. Fiscal years 2023 and 2022 ended on February 3, 2024 ("fiscal 2023") and January 28, 2023 ("fiscal 2022"), respectively. Fiscal 2023 consisted of 53 weeks and fiscal 2022 consisted of 52 weeks.
The more significant assumptions used in projecting the discounted cash flows included: a discount rate of 18.5%, which was determined from relevant market comparisons and adjusted for company specific risks and projected EBITDA margins of low double-digits based upon our current and past performance as well as industry data.
The more significant assumptions used in projecting the discounted cash flows included: a discount rate of 35%, which was determined from relevant market comparisons and adjusted for company specific risks, projected EBITDA margins of low double-digits based upon our current and past performance as 35 well as industry data, and projected net sales for the discrete projection period ranging from low single-digits to high single-digits.
During the continuance of certain specified events of default, at the election of Citizens, interest will accrue at a rate of 2.0% in excess of the applicable non-default rate.
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 "Base Rate" means, for any day, a fluctuating rate per annum equal to the highest of (i) the rate of interest in effect for such day as publicly announced from time to time by Citizens as its prime rate; (ii) the Federal Funds Rate for such day, plus 0.5%; and (iii) the LIBOR Rate for a one month interest period as determined on such day, plus 1.00%.
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%.
The "Base Rate" means, for any day, a fluctuating rate per annum equal to the highest of (i) 34 the rate of interest in effect for such day as publicly announced from time to time by Citizens as its prime rate; (ii) the Federal Funds Rate for such day, plus 0.5%; and (iii) the LIBOR Rate for a one month interest period as determined on such day, plus 1.00%.
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%.
Vince Holding Corp. and Vince Intermediate Holding, LLC ("Vince Intermediate") are guarantors under the Term Loan Credit Facility. The Term Loan Credit Facility matures on the earlier of September 7, 2026 and 91 days after the maturity date of the 2018 Revolving Credit Facility (as defined below).
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.
Liquidity and Capital Resources Our sources of liquidity are cash and cash equivalents, cash flows from operations, if any, borrowings available under the 2018 Revolving Credit Facility (as amended and restated and as defined below) and our ability to access the capital markets, including our Open Market Sale Agreement SM entered into with Jefferies LLC in September 2021 (see Note 9 "Stockholders' Equity" to the Consolidated Financial Statements in this Annual Report for further information).
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 9 "Stockholders' Equity" to the Consolidated Financial Statements in this Annual Report for further information).
The 2018 Revolving Credit Facility generally permits dividends in the absence of any 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 for the 31 following six months Excess Availability will be at least the greater of 20.0% of the Loan Cap and $10,000 and (ii) after giving pro forma effect to the contemplated dividend, the Consolidated Fixed Charge Coverage Ratio for the 12 months preceding such dividend will be greater than or equal to 1.0 to 1.0 (provided that the Consolidated Fixed Charge Coverage Ratio may be less than 1.0 to 1.0 if, after giving pro forma effect to the contemplated dividend, Excess Availability for the six fiscal months following the dividend is at least the greater of 25.0% of the Loan Cap and $12,500).
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 ASC Topic 470, "Debt", the Company accounted for this amendment as a debt modification and therefore, these financing costs were recorded as deferred debt issuance costs (which is presented within Other assets on the Consolidated Balance Sheets) which will be amortized over the remaining term of the 2018 Revolving Credit Facility.
The Company incurred a total of $1,150 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.
At January 28, 2023, a hypothetical 1% change in the inventory obsolescence reserve would have resulted in a change of $65 in inventory, net of cost of products sold.
At February 3, 2024, a hypothetical 1% change in the inventory obsolescence reserve would have resulted in a change of $47 in inventory, net of cost of products sold.
Since the end of fiscal 2021, one net store has closed, bringing our total retail store count to 67 (consisting of 50 full price stores and 17 outlet stores) as of January 28, 2023, compared to 68 (consisting of 50 full price stores and 18 outlet stores) as of January 29, 2022.
Since the end of fiscal 2022, four net stores have closed, bringing our total retail store count to 63 (consisting of 48 full price stores and 15 outlet stores) as of February 3, 2024, compared to 67 (consisting of 50 full price stores and 17 outlet stores) as of January 28, 2023.
The Rebecca Taylor collection was previously available through retail stores and outlet stores, through its branded e-commerce site and through its subscription service Rebecca Taylor RNTD, as well as through major department and specialty stores in the U.S. and in select international markets.
See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for additional information. The Rebecca Taylor collection was previously available through retail stores and outlet stores, through its branded e-commerce site and through its subscription service Rebecca Taylor RNTD, as well as through major department and specialty stores in the U.S. and in select international markets.
On December 22, 2022, the Company completed the sale of the Rebecca Taylor tradename and certain related ancillary assets to RT IPCO, LLC, an affiliate of Ramani Group. See Note 2 "Wind Down of Rebecca Taylor Business" in this Annual Report for further information.
On December 22, 2022, the Company completed the sale of the Rebecca Taylor tradename and certain related ancillary assets to RT IPCO, LLC, an affiliate of Ramani Group. See Note 2 "Recent Transactions" in this Annual Report for further information. Additionally, during the third quarter of fiscal 2022, the Parker tradename was classified as held for sale and amortization ceased.
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. See Note 2 "Wind Down of the Rebecca Taylor Business" to the Consolidated Financial Statements in this Annual Report for additional information.
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.
The 2018 Revolving Credit Facility provides for a revolving line of credit of up to $80,000, subject to a Loan Cap, which is the lesser of (i) the Borrowing Base as defined in the credit agreement for the 2018 Revolving Credit Facility and (ii) the aggregate commitments, as well as a letter of credit sublimit of $25,000.
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.
LLC, an affiliate of BCI Brands. See Note 15 "Subsequent Events" to the Consolidated Financial Statements in this Annual Report for additional information. The Parker collection was previously available through major department stores and specialty stores worldwide as well as through its e-commerce website.
LLC, an affiliate of BCI Brands. See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for further information. The Parker collection was previously available through major department stores and specialty stores worldwide as well as through its e-commerce website. The Company has identified three reportable segments: Vince Wholesale, Vince Direct-to-consumer and Rebecca Taylor and Parker.
Our accounts receivable balances are reported net of expected allowances for these 35 matters based on the historical level of concessions required and our estimates of the level of markdowns and allowances that will be required in the coming season.
Our accounts receivable balances are reported net of expected allowances for these matters based on the historical level of concessions required and our estimates of the level of markdowns and allowances that will be required in the coming season. We evaluate the allowance balances on a continual basis and adjust them as necessary to reflect changes in anticipated allowance activity.
The fair value of the Company's Vince Wholesale reporting unit was estimated using a combination of the income approach (the discounted cash flows method) and the market approach (guideline public company method).
The fair value of the Company's Vince Wholesale reporting unit was estimated using a combination of the income approach (the discounted cash flows method) and the market approach (guideline public company method). The guideline public company method applies a representative market multiple derived from revenue and EBITDA for a group of comparable public companies to the Company's financial forecasts.
Impairment of long-lived assets for fiscal 2022 was $1,880 related to the impairment of property and equipment for certain Vince and Rebecca Taylor retail locations. There was no impairment of long-lived assets taken in fiscal 2021.
Impairment of long-lived assets for fiscal 2022 was $1,880 related to the impairment of property and equipment for certain Vince and Rebecca Taylor retail locations. See Note 1 "Description of Business and Summary of Significant Accounting Policies".
SK Financial is an affiliate of Sun Capital, whose affiliates own, as of January 28, 2023, approximately 69% 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.
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.
On February 17, 2023, the Company completed the sale of the Parker tradename and certain related ancillary assets to Parker IP Co. LLC, an affiliate of BCI Brands. See Note 15 "Subsequent Events" to the Consolidated Financial Statements in this Annual Report for further information.
On February 17, 2023, the Company's indirectly wholly owned subsidiary, Parker Lifestyle, LLC, completed the sale of its intellectual property and certain related ancillary assets to Parker IP Co. LLC, an affiliate of BCI Brands. See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for additional information.
It also provides for an increase in aggregate commitments of up to $20,000. Interest is payable on the loans under the 2018 Revolving Credit Facility at either the LIBOR or the Base Rate, in each case, with applicable margins subject to a pricing grid based on an average daily excess availability calculation.
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.
This negative impact can also extend to purchase obligations for goods that have not yet been received. These obligations involve product to be received into inventory over the next one to six months.
This negative impact can also extend to inventory in-transit for which ownership has transferred to the Company. These obligations involve product to be received into inventory over the next one to six months.
Gain on sale of intangible assets for fiscal 2022 was $1,620 related to the sale of the Rebecca Taylor intellectual property and certain related ancillary assets in fiscal 2022.
For fiscal 2022, there was a gain on sale of intangible assets of $1,620 related to the sale of the Rebecca Taylor intellectual property and certain related ancillary assets. See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for additional information.
For the Rebecca Taylor retail store asset groups that did not pass the recoverability assessment, the Company recorded non-cash asset impairment charges of $866 related to property and equipment.
During the fourth quarter of fiscal 2022, the Company determined the need to assess recoverability for certain Vince retail locations. For the Vince retail store asset groups that did not pass the recoverability assessment, the Company recorded non-cash asset impairment charges of $1,014 related to property and equipment.
See Note 5 "Long-Term Debt and Financing Arrangements" to the Consolidated Financial Statements in this Annual Report for additional information. Seasonality The apparel and fashion industry in which we operate is cyclical and, consequently, our revenues are affected by general economic conditions and the seasonal trends characteristic to the apparel and fashion industry.
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.
The total gross margin rate decrease was primarily driven by the following factors: • The unfavorable impact from an increase in promotional activity in the Direct-to-consumer segment which contributed negatively by approximately 440 basis points; • The unfavorable impact of year-over-year adjustments to inventory reserves contributed negatively by approximately 320 basis points; • The unfavorable impact from inventory write-downs and other liquidation efforts as a result of the wind down of the Rebecca Taylor business contributed negatively by approximately 270 basis points; which were partly offset by • The favorable impact from lower freight costs which contributed positively by approximately 200 basis points; and • The favorable impact of leveraging our distribution and other overhead costs contributed positively by approximately 140 basis points.
The total gross margin rate increase was primarily driven by the following factors: • The favorable impact from the wind down of the Rebecca Taylor business, which historically operated at a lower overall gross margin, contributed positively by approximately 310 basis points; 25 • The favorable impact from lower product costing, freight costs, and higher pricing which contributed positively by approximately 250 basis points; • The favorable impact of year-over-year adjustments to inventory reserves contributed positively by approximately 200 basis points; and • The favorable impact from lower promotional activity in the Direct-to-consumer segment which contributed approximately 140 basis points; partly offset by • The unfavorable impact from royalty expense associated with the License Agreement with ABG Vince contributed negatively by approximately 320 basis points.
Indefinite-lived net operating losses have been recognized to the extent we believe they can be 38 utilized against indefinite-lived deferred tax liabilities. This valuation allowance is subject to periodic review, and if the allowance is reduced, the tax benefit will be recorded in the future operations as a reduction of our income tax expense.
This valuation 37 allowance is subject to periodic review, and if the allowance is reduced, the tax benefit will be recorded in the future operations as a reduction of our income tax expense.
Net cash used in operating activities during fiscal 2021 was $221 which consisted of a net loss of $12,704, impacted by non-cash items of $17,319 and cash used by working capital of $4,836.
Net cash used in operating activities during fiscal 2022 was $19,261 which consisted of a net loss of $38,346, impacted by non-cash items of $19,936 and cash used by working capital of $851.
During fiscal 2022, the Company recorded additional valuation allowances in the amount of $11,850 and maintained a full valuation allowance on all deferred tax assets that have a definite life as we do not believe it is more likely than not that such deferred tax assets will be recognized.
During fiscal 2023, the Company maintained a full valuation allowance on all deferred tax assets that have a definite life as we do not believe it is more likely than not that such deferred tax assets will be recognized. Indefinite-lived net operating losses have been recognized to the extent we believe they can be utilized against indefinite-lived deferred tax liabilities.
See Note 2 "Wind Down of Rebecca Taylor Business" to the Consolidated Financial Statements in this Annual Report for further information. Substantially all Rebecca Taylor inventory was liquidated as of January 28, 2023.
See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for further information. 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.
During the continuance of certain specified events of default, interest will accrue on the overdue amount of any loan at a rate of 2.0% in excess of the rate otherwise applicable to such amount.
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.
Changes in these assumptions could have a significant impact on the valuation model. Indefinite-lived tradename intangible assets were $67,100 as of January 28, 2023 and $71,800 as of January 29, 2022, which is included within Intangible assets, net in our Consolidated Balance Sheets.
Indefinite-lived tradename intangible assets were $0 as of February 3, 2024 and $67,100 as of January 28, 2023, which is included within Intangible assets, net in our Consolidated Balance Sheets.
See Note 5 "Long-Term Debt and Financing Arrangements" to the Consolidated Financial Statements in this Annual Report for additional information. • Interest payable under the Third Lien Credit Facility is payable in kind at a rate equal to the 90-day LIBOR rate, or an alternate applicable reference rate in the event LIBOR is no longer available, plus 9.0% at all times.
See Note 5 "Long-Term Debt and Financing Arrangements" to the Consolidated Financial Statements in this Annual Report for additional information. • Interest on loans under the Third Lien Credit Facility is payable in kind at a rate revised in connection with the Third Lien Third Amendment to be equal to the Daily Simple SOFR, subject to a credit spread adjustment of 0.10% per annum, plus 9.0%.
Executive Overview We are a global contemporary retailer, and during fiscal 2022 and fiscal 2021 we consisted of three brands: Vince, Rebecca Taylor and Parker. 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, 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.
Inventory Valuation Inventory values are reduced to net realizable value when there are factors indicating that certain inventories will not be sold on terms sufficient to recover their cost.
At February 3, 2024, a hypothetical 1% change in the reserves for allowances would have resulted in a change of $52 in accounts receivable and net sales. Inventory Valuation Inventory values are reduced to net realizable value when there are factors indicating that certain inventories will not be sold on terms sufficient to recover their cost.
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.
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.
Gross profit decreased $8,600, or 5.9%, to $137,970 in fiscal 2022 from $146,570 in fiscal 2021. As a percentage of sales, gross margin was 38.6%, compared with 45.4% in the prior year.
As a percentage of sales, gross margin was 45.5%, compared with 38.6% in the prior year.
Rebecca Taylor, founded in 1996 in New York City, is 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.
See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for additional information. Rebecca Taylor, founded in 1996 in New York City, was a contemporary womenswear line lauded for its signature prints, romantic detailing and vintage inspired aesthetic, reimagined for a modern era.
Results of Operations Comparable Sales Comparable sales include our e-commerce sales in order to align with how we manage our brick-and-mortar retail stores and e-commerce online stores as a combined single direct-to-consumer channel of distribution.
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. 24 Results of Operations Comparable Sales Comparable sales include our e-commerce sales in order to align with how we manage our brick-and-mortar retail stores and e-commerce online stores as a combined single direct-to-consumer channel of distribution.
Through January 28, 2023, on an inception to date basis, the Company has made any repayments of $5,622 on the Term Loan Credit Facility. 2018 Revolving Credit Facility On August 21, 2018, Vince, LLC entered into an $80,000 senior secured revolving credit facility (the "2018 Revolving Credit Facility") pursuant to a credit agreement by and among Vince, LLC, as the borrower, VHC and Vince Intermediate, as guarantors, Citizens Bank, N.A.
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. 30 2023 Revolving Credit Facility On June 23, 2023, Vince, LLC, 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 Vince, LLC, the guarantors named therein, Bank of America, N.A.
("Citizens"), as administrative agent and collateral agent, and the other lenders from time to time party thereto.
("BofA"), as Agent, the other lenders from time to time party thereto, and BofA Securities, Inc., as sole lead arranger and sole bookrunner.
Interest expense, net increased $1,281, or 14.9%, to $9,887 in fiscal 2022 from $8,606 in fiscal 2021 primarily due to higher interest rates, which was partly offset by a $758 write-off of deferred financing costs and a $743 prepayment penalty, both associated with the termination of the 2018 Term Loan Facility during fiscal 2021.
Interest expense, net increased $1,231, or 12.5%, to $11,118 in fiscal 2023 from $9,887 in fiscal 2022 primarily due to $1,755 write-off of deferred financing costs and a $553 prepayment penalty both associated with the termination of the Term Loan Credit Facility (as defined below), as well as an $828 write-off of deferred financing costs associated with the termination of the 2018 Revolving Credit Facility (as defined below).
Net cash used in investing activities of $5,055 during fiscal 2021 represents capital expenditures primarily related to retail store buildouts, including leasehold improvements and store fixtures, as well as the investment in our information technology systems. 29 Financing Activities Fiscal Year (in thousands) 2022 2021 Financing activities Proceeds from borrowings under the Revolving Credit Facilities $ 402,652 $ 331,489 Repayment of borrowings under the Revolving Credit Facilities (378,778 ) (337,264 ) Repayment of borrowings under the Term Loan Facilities (5,622 ) (24,750 ) Proceeds from borrowings under the Term Loan Facilities — 35,000 Proceeds from common stock issuance, net of certain fees 825 150 Tax withholdings related to restricted stock vesting (213 ) (69 ) Proceeds from stock option exercises, restricted stock vesting, and issuance of common stock under employee stock purchase plan 75 114 Financing fees (1,128 ) (2,156 ) Net cash provided by financing activities $ 17,811 $ 2,514 Net cash provided by financing activities was $17,811 during fiscal 2022, primarily consisting of $23,874 of net proceeds from borrowings under the 2018 Revolving Credit Facility, partly offset by the repayment of $5,622 of borrowings under the Term Loan Credit Facility.
Net cash provided by investing activities of $1,468 during fiscal 2022 represents the proceeds received from the sale of intangible assets (see Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for further information), partly offset by capital expenditures primarily related to the investment in our e-commerce platforms, as well as retail store buildouts, including leasehold improvements and store fixtures. 29 Financing Activities Twelve Months Ended (in thousands) February 3, 2024 January 28, 2023 Financing activities Proceeds from borrowings under the Revolving Credit Facilities $ 245,116 $ 402,652 Repayment of borrowings under the Revolving Credit Facilities (289,387 ) (378,778 ) Repayment of borrowings under the Term Loan Facilities (29,378 ) (5,622 ) Proceeds from common stock issuance, net of certain fees — 825 Tax withholdings related to restricted stock vesting (142 ) (213 ) Proceeds from stock option exercises, restricted stock vesting, and issuance of common stock under employee stock purchase plan 48 75 Financing fees (3,336 ) (1,128 ) Net cash (used in) provided by financing activities $ (77,079 ) $ 17,811 Net cash used in financing activities was $77,079 during fiscal 2023, primarily consisting of $44,271 of net repayments of borrowings under the Company's revolving credit facilities, the repayment of $29,378 of borrowings under the Term Loan Credit Facility, and financing fees of $3,336 (which includes a $553 prepayment penalty associated with the termination of the Term Loan Credit Facility during fiscal 2023).
Tax Receivable Agreement In connection with the consummation of the IPO, we entered into a Tax Receivable Agreement with the Pre-IPO Stockholders.
See Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for further information. Tax Receivable Agreement In connection with the consummation of the IPO, we entered into a Tax Receivable Agreement with the Pre-IPO Stockholders.
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.
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 February 3, 2024, approximately 68% of the Company's common stock.
We estimate the fair value of our tradename intangible assets using a discounted cash flow valuation analysis, which is based on the "relief from royalty" methodology. This methodology assumes that in lieu of ownership, a third party would be willing to pay a royalty in order to exploit the related benefits of these types of assets.
Prior to the closing of the Asset Sale, we estimated the fair value of our tradename intangible assets using a discounted cash flow valuation analysis, which is based on the "relief from royalty" methodology.
Additionally, during the third quarter of fiscal 2022, the Parker tradename was classified as held for sale and amortization ceased. Prior to its classification as held for sale, the Parker tradename intangible asset was being amortized on a straight-line basis over 10 years.
Prior to its classification as held for sale, the Parker tradename intangible asset was being amortized on a straight-line basis over 10 years. On February 17, 2023, the Company completed the sale of the Parker tradename and certain related ancillary assets to Parker IP Co. LLC, an affiliate of BCI Brands.
Net cash provided by financing activities was $2,514 during fiscal 2021, primarily consisting of $35,000 of proceeds received from the Term Loan Credit Facility, partly offset by the repayment of $24,750 of borrowings under the 2018 Term Loan Facility, $5,775 net repayment of borrowings under the 2018 Revolving Credit Facility and financing fees of $2,156 (which includes a $743 prepayment penalty associated with the termination of the 2018 Term Loan Facility during fiscal 2021).
Net cash provided by financing activities was $17,811 during fiscal 2022, primarily consisting of $23,874 of net proceeds from borrowings under the 2018 Revolving Credit Facility, partly offset by the repayment of $5,622 of borrowings under the Term Loan Facility.
All obligations under the Term Loan Credit Facility are guaranteed by Vince Intermediate and the Company and any future material domestic restricted subsidiaries of Vince, LLC and secured by a lien on substantially all of the assets of the Company, Vince, LLC and Vince Intermediate and any future material domestic restricted subsidiaries.
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, Vince, LLC and Vince Intermediate and any future subsidiary guarantors, other than among others, equity interests in ABG Vince, as well as the rights of Vince, LLC under the License Agreement.
Comparable sales increased $12,258, or 9.5%, including e-commerce, primarily due to an increase in store traffic as the prior year reflected the impact from COVID-19. Non-comparable sales contributed $1,792 of sales growth, which includes new stores that have not completed 13 full fiscal months of operations and Vince Unfold.
Comparable sales decreased $5,444, or 3.8%, including e-commerce, primarily due to a decrease in e-commerce traffic. Non-comparable sales, which includes new stores that have not completed 13 full fiscal months of operations and Vince Unfold, declined by $2,296, offset by $1,066 of sales attributable to the 53rd week.
See Note 11 "Income Taxes" to the Consolidated Financial Statements in this Annual Report for further information.
See Note 11 "Income Taxes" to the Consolidated Financial Statements in this Annual Report for further information. Equity in net income of equity method investment of $1,462 consists of the Company's proportionate share of ABG Vince's net income for fiscal 2023. See Note 2 "Recent Transactions" for further information.
Alternatively, if we generate additional future taxable income beyond our current estimate, we would recognize additional liability related to benefits expected to be utilized. See Note 14 "Related Party Transactions" to the Consolidated Financial Statements in this Annual Report for additional information.
See Note 14 "Related Party Transactions" to the Consolidated Financial Statements in this Annual Report for additional information. Income taxes and Valuation Allowances We account for income taxes using the asset and liability method.
SG&A expenses as a percentage of sales were 45.2% and 45.3% for fiscal 2022 and fiscal 2021, respectively.
Selling, general and administrative ("SG&A") expenses for fiscal 2023 were $134,476, decreasing $26,956, or 16.7%, versus $161,432 for fiscal 2022. SG&A expenses as a percentage of sales were 45.9% and 45.2% for fiscal 2023 and fiscal 2022, respectively.
Interest on loans under the Third Lien Credit Facility is payable in kind at a rate equal to the LIBOR rate (subject to a floor of 1.0%) plus applicable margins subject to a pricing grid based on minimum Consolidated EBITDA (as defined in the Third Lien Credit Agreement).
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%.
Upon closing of the Authentic Transaction, and the consummation of the amendments in the Second Amendment to ABL Credit Agreement, as discussed above within "Executive Overview", the Company expects to strengthen its overall liquidity position and increase its working capital by prepaying in full the outstanding borrowings under Vince, LLC's Term Loan Credit Facility and to repay a portion of the outstanding borrowings under Vince, LLC's 2018 Revolving Credit Facility. 28 Operating Activities Fiscal Year (in thousands) 2022 2021 Operating activities Net loss $ (38,346 ) $ (12,704 ) Add (deduct) items not affecting operating cash flows: Impairment of intangible assets 1,700 — Impairment of long-lived assets 1,880 — Depreciation and amortization 8,334 6,496 Provision for bad debt 424 (273 ) Gain on sale of intangible assets (1,620 ) — Loss on disposal of property and equipment 121 12 Amortization of deferred financing costs 1,267 788 Deferred income taxes 2,866 4,380 Share-based compensation expense 2,095 2,076 Capitalized PIK Interest 2,869 2,339 Loss on debt extinguishment — 1,501 Changes in assets and liabilities: Receivables, net 8,787 2,202 Inventories (11,462 ) (10,341 ) Prepaid expenses and other current assets 1,198 2,677 Accounts payable and accrued expenses 2,704 6,024 Other assets and liabilities (2,078 ) (5,398 ) Net cash used in operating activities $ (19,261 ) $ (221 ) Net cash used in operating activities during fiscal 2022 was $19,261, which consisted of a net loss of $38,346, impacted by non-cash items of $19,936 and cash used by working capital of $851.
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. 28 Operating Activities Twelve Months Ended (in thousands) February 3, 2024 January 28, 2023 Operating activities Net income (loss) $ 25,446 $ (38,346 ) Add (deduct) items not affecting operating cash flows: Impairment of intangible assets — 1,700 Impairment of long-lived assets — 1,880 Depreciation and amortization 4,939 8,334 Provision for bad debt 104 424 Gain on sale of intangible assets (32,808 ) (1,620 ) Loss on disposal of property and equipment 260 121 Amortization of deferred financing costs 758 1,267 Deferred income taxes (4,021 ) 2,866 Share-based compensation expense 1,541 2,095 Capitalized PIK Interest 4,026 2,869 Loss on debt extinguishment 3,136 — Equity in net income of equity method investment, net of distributions (121 ) — Changes in assets and liabilities: Receivables, net (42 ) 8,787 Inventories 31,236 (11,462 ) Prepaid expenses and other current assets (655 ) 1,198 Accounts payable and accrued expenses (23,994 ) 2,704 Other assets and liabilities (8,165 ) (2,078 ) Net cash provided by (used in) operating activities $ 1,640 $ (19,261 ) Net cash provided by operating activities during fiscal 2023 was $1,640, which consisted of net income of $25,446, impacted by non-cash items of ($22,186) and cash used by working capital of $1,620.
See Note 5 "Long-Term Debt and Financing Arrangements" to the Consolidated Financial Statements in this Annual Report for additional information. • Interest payable under the 2018 Revolving Credit Facility (as amended and restated), which is calculated at either the LIBOR rate or the Base Rate, in each case, with applicable margins subject to a pricing grid based on an average daily excess availability calculation.
The 2023 Revolving Credit Facility matures on the earlier of June 23, 2028, and 91 days prior to the earliest maturity date of any Material Indebtedness (as defined in the 2023 Revolving Credit Agreement), including the subordinated indebtedness pursuant to the Third Lien Credit Agreement. • Interest is payable under the 2023 Revolving Credit Facility, which is calculated either at Term SOFR, the Base Rate, or SOFR Daily Floating Rate, in each case, with applicable margins subject to a pricing grid based on an average daily excess availability calculation.
Investing Activities Fiscal Year (in thousands) 2022 2021 Investing activities Payments for capital expenditures $ (2,782 ) $ (5,055 ) Proceeds from sale of intangible assets 4,250 — Net cash provided by (used in) investing activities $ 1,468 $ (5,055 ) Net cash provided by investing activities of $1,468 during fiscal 2022 represents the proceeds received from the sale of intangible assets (see Note 2 "Wind Down of Rebecca Taylor Business" to the Consolidated Financial Statements in this Annual Report for further information), partly offset by capital expenditures primarily related to the investment in our e-commerce platforms, as well as retail store buildouts, including leasehold improvements and store fixtures.
Investing Activities Twelve Months Ended (in thousands) February 3, 2024 January 28, 2023 Investing activities Payments for capital expenditures $ (1,460 ) $ (2,782 ) Transaction costs related to equity method investment (525 ) — Proceeds from sale of intangible assets 77,525 4,250 Net cash provided by investing activities $ 75,540 $ 1,468 Net cash provided by investing activities of $75,540 during fiscal 2023 primarily represents $76,500 of proceeds received from the sale of the Vince intangible assets and $1,025 of proceeds received from the sale of the Parker intangible assets (see Note 2 "Recent Transactions" to the Consolidated Financial Statements in this Annual Report for additional information).
Provision for income taxes for fiscal 2022 was $3,037 as compared to $4,581 for fiscal 2021. Our effective tax rate for fiscal 2022 and fiscal 2021 was (8.6)% and (56.4)%, respectively.
Our effective tax rate for fiscal 2023 and fiscal 2022 was (17.0)% and (8.6)%, respectively.
Net cash used by working capital resulted from a cash outflow in inventory of $10,341 primarily due to the timing of receipts and reduced inventory purchases in the prior year, partly offset by a cash inflow in accounts payable and accrued expenses of $6,024 primarily due to the timing of payments to vendors.
Net cash used by working capital resulted from cash outflows in accounts payable and accrued expenses of $23,994, primarily due to the timing of payments to vendors, cash outflows in other assets and liabilities of $8,165 primarily related to lease activity, offset by reductions in inventory of $31,236 primarily resulting from more efficient inventory management.

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