Fund 1 Investments, which owns about 10% of Vera Bradley (VRA) common stock, said in a letter to the company's board that it should begin considering strategic alternatives.
"It is clear to us that the best option for Vera Bradley and its shareholders is to commence a strategic alternatives process and pursue opportunities to fix the Company under the umbrella of a larger organization or in the private markets. We were pleased to hear the Board of Directors believes everything is on the table to maximize shareholder value and we are highly supportive of this," the equity firm said in the letter.
Fund 1 said that it believes Vera Bradley can be a much more valuable company and has a timely opportunity to return to its winning ways.
The firm expects a strategic or financial buyer to be able to complete a transaction at an attractive premium for shareholders.
"If a financial buyer provides the best opportunity, the Company should consider transaction structures that would enable existing stakeholders to participate in a transaction and maintain or increase their interests in the Company, which we would be willing to do," the firm added.
Fund 1 said it believes Vera Bradley is suffering from long-term value destruction, poor operational performance, a failed brand turnaround and negative sentiment for fashion brands across the board.
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