Shares of luxury fashion brand Vince tumbled as much as 40 percent Friday, after the company said it has "substantial doubt" about its ability to continue as a going concern for the next 12 months.
The stock closed down over 25 percent on Friday.
Its warning comes roughly one month after struggling department store Sears made the same statement in its annual filing with the Securities and Exchange Commission.
It also comes as the number of retail bankruptcies continues to climb toward a post-recession high, and as announced store closures head toward 3,300 in just four months.
A change in accounting regulations that went into effect during the first quarter now requires management teams to assess whether there are "conditions or events" that raise substantial doubt about their company's ability to stay in business for the next year.
"We remain focused on expanding our direct-to-consumer business, optimizing our wholesale channel, and growing our international presence over the long term," Vince CEO Brendan Hoffman said in a statement.
Vince's net sales declined 11.3 percent to $268.2 million in the year that ended Jan. 28. The company recorded a net loss of $162.7 million and ended the period with $21 million in cash and cash equivalents. It has $50.2 million in borrowings under its debt agreements.
The company noted that as of Jan. 28 it was in compliance with its financial covenants. Management plans to hold discussions with lenders and its majority shareholder on additional financing options that could improve its capital structure.
The company operates 54 stores and an e-commerce website. It also distributes its products to roughly 2,300 wholesale accounts.
As of Friday's close, shares of Vince were last changing hands at $1.00.
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