Vera Bradley (VRA) shares closed significantly higher on Monday, rising almost 9%, after its largest shareholder, Fund 1 Investments, called for the company to explore strategic alternatives, including a potential sale or privatization.

In an open letter to Vera Bradley executives and board members, Fund 1 Investments said the company is struggling to overcome several internal and external problems, including a failed brand turnaround, negative consumer sentiment and a weak market for smaller publicly traded companies.

Fund 1 said that Vera Bradley could achieve greater flexibility and cost savings by operating outside the public markets. It stated 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."

Fund 1, which owns 10% of Vera Bradley's outstanding shares and has economic exposure of 20%, said it was encouraged by recent discussions with company officials, who indicated they are considering all options.