As filed with the Securities and Exchange Commission on February 14, 2020

Registration No. 333-            

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Cole Haan, Inc.

(Exact name of registrant as specified in its charter)

Delaware	3021	46-1371438
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)

150 Ocean Road

Greenland, New Hampshire 03840

(603) 430-7800

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Laura W. Kelley

Senior Vice President, Legal, Human Resources & General Counsel

Cole Haan, Inc.

150 Ocean Road

Greenland, New Hampshire 03840

(603) 430-7800

(Name, address, including zip code, and telephone number, including area code, of registrant’s agent for service)

With copies to:

Kenneth B. Wallach, Esq. Sunny Cheong, Esq. Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, New York 10017 (212) 455-2000 Jason M. Licht, Esq. Stelios G. Saffos, Esq. Latham & Watkins LLP 555 Eleventh Street, NW Washington, D.C. 20004 (202) 637-2200

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☒

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee
Common Stock, $0.01 par value per share	$100,000,000	$12,980

(1) Includes                  shares of common stock that the underwriters have the option to purchase. See “Underwriting.”

(2) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) promulgated under the Securities Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities nor a solicitation of an offer to buy these securities in any jurisdiction where the offer and sale is not permitted.

Subject to completion, dated February 14, 2020

Prospectus

            Shares

COLE HAAN, INC.

Common Stock

This is the initial public offering of common stock of Cole Haan, Inc. The selling stockholders named in this prospectus are offering                  shares of our common stock. We will not be selling any shares in this offering and will not receive any proceeds from the sale of our common stock by the selling stockholders.

Prior to this offering, there has been no public market for our common stock. We expect that the initial public offering price of our common stock will be between $        and $        per share. We intend to apply to list our common stock on the NASDAQ Global Select Market, or NASDAQ, under the symbol “CLHN”.

We are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act of 1933, as amended, or the Securities Act, and, as such, we have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See “Summary—Implications of Being an Emerging Growth Company.” After the completion of this offering, funds advised by Apax Partners LLP and Apax Partners, L.P. will continue to own a majority, approximately     %, of the shares eligible to vote in the election of our directors. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of NASDAQ. See “Management—Controlled Company Exemption.”

Investing in our common stock involves risks. See “Risk Factors” beginning on page 19 to read about factors you should consider before buying shares of our common stock.

Neither the Securities and Exchange Commission, or the SEC, nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

	Per Share	Total
Initial public offering price	$	$
Underwriting discount(1)	$	$
Proceeds, before expenses, to the selling stockholders	$	$

(1) See “Underwriting” for additional information regarding underwriting compensation.

To the extent that the underwriters sell more than                  shares of our common stock, the underwriters have the option, for a period of 30 days from the date of this prospectus, to purchase up to             additional shares of our common stock from the selling stockholders at the initial public offering price, less the underwriting discount. We will not receive any proceeds from the sale of our common stock by the selling stockholders pursuant to any exercise of the underwriters’ option to purchase additional shares.

The underwriters expect to deliver the shares against payment in New York, New York on or about                     , 2020.

BofA Securities Morgan Stanley J.P. Morgan Goldman Sachs & Co. LLC

Jefferies Baird Cowen Piper Sandler Stifel

                    , 2020

COLE HAAN

Nearly a century in the making, Cole Haan stands for a simple and powerful idea—we all seek to live extraordinary lives on our own terms. Since our founding in 1928 by Trafton Cole and Eddie Haan, Cole Haan has been worn by extraordinary people—from artists and astronauts, to poets and presidents—who have given the brand its enduring values. Cole Haan transcends genders, generations, cultures and socioeconomic status. As a values-based brand, we deliver ground-breaking products and digital marketing that resonate and aim to inspire our customers to extraordinary living. To be fearless. To blaze trails and shatter boundaries. To earn what cannot be bought. The future isn’t making itself. So we’re building our vision into a reality. We know that the best way to honor a past like ours, is to thoughtfully, and passionately work to create an extraordinary tomorrow. For our customers, our partners, our investors, and ourselves. This is Cole Haan

Ground-breaking innovation WATERPROOF Waterproof premium leathers combine with considered WEATHER-READY construction to deliver the ultimate protection against An insulated lining keeps the the elements. heat inside and the chill at bay. IDEAL FIT An anatomically engineered footbed cradles the foot, for better weight distribution and TIMELESS DURABILITY supreme all-day comfort. A perimeter layer of rubberized material protects high-wear areas. STEADY TRACTION TPU outsole with a rugged tread pattern provides superior grip and durability. RESPONSIVE CUSHIONING Three tiers of GRANDFØAM start softest in the area of greatest impact and get firmer as they move outward, for comfort and stability that adapt to every step. 4.ZERØGRAND Hiker

Cole Haan at a glance
COLE HAAN
GRAND SHOP

$687M $33M 30% Revenue1 Net Income1 Sales from +14% vs FY18 +43% vs FY18 Digital Commerce1 64 360+ 450+ Countries of Stores Wholesale Distribution1 Globally1 Accounts Globally1 61M 400+ Visits to North America Patents Issued DTC Channels1 or Pending2 +31% vs FY18

TABLE OF CONTENTS

	Page
Industry and Market Data		ii
Trademarks, Tradenames and Service Marks		ii
Basis of Presentation		ii
Non-GAAP Financial Measures		iv
Letter from our CEO		v
Summary		1
Risk Factors		19
Forward-Looking Statements		53
Use of Proceeds		55
Dividend Policy		56
Capitalization		57
Selected Historical Consolidated Financial and Other Data		58
Management’s Discussion and Analysis of Financial Condition and Results of Operations		61
Business		87
Management		106
Certain Relationships and Related Party Transactions		126
Principal and Selling Stockholders		128
Description of Capital Stock		130
Description of Certain Indebtedness		138
Shares Eligible for Future Sale		143
Material United States Federal Income and Estate Tax Consequences to Non-U.S. Holders		145
Underwriting		149
Legal Matters		157
Experts		157
Where You Can Find More Information		157
Index to Financial Statements		F-1

You should rely only on the information contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. This prospectus is an offer to sell only the shares offered hereby, but only under the circumstances and in jurisdictions where it is lawful to do so. Neither we, the selling stockholders nor the underwriters have authorized anyone to provide you with different information. The information in this prospectus or in any applicable free writing prospectus is accurate only as of its date, regardless of the time of delivery of this prospectus, or any free writing prospectus, as the case may be, or any sale of shares of our common stock.

For investors outside the United States: The selling stockholders are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our common stock and the distribution of this prospectus outside the United States.

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INDUSTRY AND MARKET DATA

Within this prospectus, we reference information and statistics regarding the footwear and lifestyle accessories industries, as well as the consumer marketplace generally. We have obtained this information and statistics from various independent third-party sources, including independent industry publications, reports by market research firms and other independent sources, such as eMarketer (Oct. 2018), Euromonitor International Limited and The NPD Group/ Retail Tracking Service/ Dollar Sales Adjusted for Men’s and Women’s/ January-December 2016-2018. The industry data presented in this prospectus related to the size of the global footwear (excluding children’s footwear) and lifestyle accessories markets is based on data from Euromonitor International Limited’s Apparel and Footwear, 2019 edition, 2018 fixed exchange rates, and includes bags and eyewear data from Personal Accessories and Eyewear 2020 editions, 2019 fixed exchange rates. All market sizing data is based on retail sales in absolute dollar terms and reflects current prices by Euromonitor. The size of the international footwear market reflects Euromonitor’s men’s and women’s global footwear market (excluding children’s footwear), net of the U.S. and Canadian footwear markets. Some data and other information contained in this prospectus, such as those relating to use occasions, are also based on management’s estimates and calculations, which are derived from our review and interpretation of internal surveys and independent sources. Data regarding the industries in which we compete and our market position and market share within these industries are inherently imprecise and are subject to significant business, economic and competitive uncertainties beyond our control, but we believe they generally indicate size, position and market share within these industries. While we believe such information is reliable, we have not independently verified any third-party information. While we believe our internal company research and estimates are reliable, such research and estimates have not been verified by any independent source. In addition, assumptions and estimates of our and our industries’ future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause our future performance to differ materially from our assumptions and estimates. See “Forward-Looking Statements.” As a result, you should be aware that market, ranking and other similar industry data included in this prospectus, and estimates and beliefs based on that data, may not be reliable. Neither we, the selling stockholders nor the underwriters can guarantee the accuracy or completeness of any such information contained in this prospectus.

TRADEMARKS, TRADENAMES AND SERVICE MARKS

We own a number of registered and common law trademarks and pending applications for trademark registrations in the United States and other countries, primarily through our subsidiary Cole Haan LLC and its affiliates, including, for example: COLE HAAN, ZERØGRAND, 2.ZERØGRAND, 3.ZERØGRAND, ØRIGINALGRAND, STITCHLITE, GRANDSERIES, GRAND AMBITION AND GRANDPRØ. Unless otherwise indicated, all trademarks appearing in this prospectus are proprietary to us, our affiliates and/or licensors. This prospectus also contains trademarks, tradenames and service marks of other companies, which are the property of their respective owners. Solely for convenience, the trademarks, tradenames and service marks referred to in this prospectus may appear without the ^® and ^™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, tradenames and service marks. We do not intend our use or display of other parties’ trademarks, tradenames or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

BASIS OF PRESENTATION

The following terms are used in this prospectus unless otherwise noted or indicated by the context:

• “2013 Acquisition” means the acquisition of the Company by management and Apax Partners from Nike, Inc. in February 2013.

• “ABL Credit Facility” means the asset-based revolving credit facility pursuant to the ABL Credit Agreement, dated as of February 1, 2013, as amended by Amendment No. 1, dated as of November 23,

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2015, and Amendment No. 2, dated as of July 11, 2018, by and among Calceus MidCo, Inc., its subsidiary, Calceus Acquisition, Inc., as lead borrower, and its other subsidiaries party thereto, as borrowers, the lenders from time to time party thereto and Wells Fargo Bank, National Association, as administrative agent and collateral agent.

• “active DTC customers” mean customers whose data we have in our CRM database and that have transacted on our colehaan.com website and/or within our Company-operated stores in the United States and Canada during the last 12 months. In June 2019 we began to capture information in our CRM database for our International operations and do not currently have the CRM data required to determine the number of active DTC customers for our International segment for all the periods presented in this prospectus. As such, we do not disclose active DTC customers on a consolidated basis or for the International segment in this prospectus.

• “Apax Partners” means Apax Partners LLP, Apax Partners, L.P. and their respective affiliates.

• “Cole Haan,” the “Company,” “we,” “us” and “our” mean the business of Cole Haan, Inc. and its subsidiaries.

• “CRM” means customer relationship management.

• Our “customers” mean consumers who have purchased our products, directly from us and/or through our wholesale and distribution partners and licensees.

• “DTC” means direct-to-consumer, and is inclusive of digital commerce sales through our sites and sales at our Company-operated stores.

• “GAAP” means U.S. generally accepted accounting principles.

• “inline stores” mean full-price retail stores.

• “lifestyle accessories” mean handbags, small leather goods, hosiery, shoe care, eyewear, outerwear, suiting and cold weather goods.

• “LPA” means the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of February 1, 2013.

• “North America” means the United States and Canada.

• “North America DTC comparable sales growth (decline)” measures the increase or decrease in North America DTC comparable sales as described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—How We Assess the Performance of Our Business—North America DTC Comparable Sales Growth.”

• “Partnership” means Calceus TopCo, L.P.

• “sites” mean our websites and mobile applications.

• “Sponsor” means funds advised by Apax Partners.

• “Term Loan Facility” means the term loan credit facility pursuant to the Credit Agreement, dated as of February 12, 2019, by and among Calceus MidCo, Inc., Calceus Acquisition, Inc., as borrower, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative and collateral agent.

We operate on a fiscal calendar pursuant to which our fiscal year consists of 52 or 53 weeks, ending on the Saturday closest to May 31. Unless otherwise indicated or the context otherwise requires, all references to years and quarters relate to fiscal periods rather than calendar periods. Unless otherwise noted, store counts are as of June 1, 2019.

References to “fiscal year 2018” and “fiscal year 2019” relate to our fiscal years ended June 2, 2018 and June 1, 2019, respectively. References to “fiscal year 2020” relate to our fiscal year ending May 30, 2020.

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We adopted the Financial Accounting Standards Board’s, or FASB, Accounting Standards Codification, or ASC, No. 606, Revenue from Contracts with Customers, or Topic 606, effective June 3, 2018 using the modified retrospective method. The amounts reported in the consolidated statement of operations for fiscal year 2019 and the consolidated balance sheet as of June 1, 2019 reflect this adoption. According to the modified retrospective method, all financial information before June 3, 2018 was not conformed to the current period presentation. See Notes 2 and 3 to our audited consolidated financial statements included elsewhere in this prospectus for more information regarding our adoption of Topic 606.

We also adopted ASC No. 842, Leases, or Topic 842, effective June 2, 2019 using the modified retrospective method. The amounts reported in the consolidated statement of operations for the 26-week period ended November 30, 2019 and the consolidated balance sheet as of November 30, 2019 reflect this adoption. According to the modified retrospective method, all financial information before June 2, 2019 was not conformed to the current period presentation. See Notes 2 and 9 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for more information regarding our adoption of Topic 842.

Numerical figures included in this prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in various tables may not be arithmetic aggregations of the figures that precede them.

NON-GAAP FINANCIAL MEASURES

This prospectus contains “non-GAAP financial measures” that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with GAAP. Specifically, we make use of the non-GAAP financial measures “Adjusted EBITDA” and “Adjusted EBITDA margin.”

Adjusted EBITDA and Adjusted EBITDA margin have been presented in this prospectus as supplemental measures of financial performance that are not required by, or presented in accordance with, GAAP, because we believe they assist investors and analysts in comparing our operating performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. Management believes Adjusted EBITDA and Adjusted EBITDA margin are useful to investors in highlighting trends in our operating performance, while other measures can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which we operate and capital investments. Management uses Adjusted EBITDA and Adjusted EBITDA margin to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. Management supplements GAAP results with non-GAAP financial measures to provide a more complete understanding of the factors and trends affecting the business than GAAP results alone.

Adjusted EBITDA and Adjusted EBITDA margin are not recognized terms under GAAP and should not be considered as an alternative to net income as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. In addition, these measures are not intended to be a measure of free cash flow available for management’s discretionary use as they do not consider certain cash requirements such as interest payments, tax payments and debt service requirements. The presentations of these measures have limitations as analytical tools and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. For a discussion of the use of these measures and a reconciliation to the most directly comparable GAAP measures, see footnote (4) under “Summary—Summary Historical Consolidated Financial and Other Data.”

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LETTER FROM OUR CEO

We are advocates for extraordinary living.

Seven years ago, we began our journey as an independent company and set out to transform a classic domestic dress shoe company with a 90-year heritage into something even bigger—a global lifestyle brand serving always-connected, active professionals with innovative footwear and lifestyle accessories. Today, Cole Haan is a $1 billion global performance lifestyle brand at retail that connects with consumers primarily over digital platforms. And we’re just at the beginning of our journey.

Today’s Cole Haan was born out of a simple observation—that technology, which is reshaping our personal and professional lives in profound ways, would radically change what consumers need in footwear and lifestyle accessories in ways traditional dress footwear and accessories companies were not embracing.

Sure, people were talking about the way technology would impact the way we sell our products, but few, if any, were talking about how to reengineer those very products. We saw opportunity—in the marketplace and, specifically, with Cole Haan. And, our colleagues at Apax Partners shared in that vision. Why Cole Haan? Easy—it had a sterling reputation in a category ready for disruption.

So, in 2013, Cole Haan became an independent company for the first time in 25 years. Since then we have been successful in attracting active urban adventurers throughout the world whose lives require versatile, stylish and comfortable products that allow them to go from work-to-workout-to-weekend. These women and men have taught us a few things about how they see their lives—that no one seeks to be ordinary—that they can live extraordinary lives and impact the world in extraordinary ways if they choose.

Given this, our mission is to inspire our customers to live extraordinary lives by encouraging and supporting their personal and professional passions. We live this mission each and every day we come to work at Cole Haan. And, we make products that strive to exceed our customers’ expectations.

Our company culture is driven by a simple mantra: respect tradition enough to reinvent it. We refuse to be bound by convention when it comes to product creation and marketing at Cole Haan. Why should we? Our customers are not bound by convention when it comes to starting new businesses, finding new ways to express ideas or making human connections through new technology. This led us to the development and launch of our iconic ZERØGRAND label, which first debuted in 2014. This revolutionary idea was the first step for Cole Haan on its path to inventing a new category of performance lifestyle footwear and accessories.

Today, the Cole Haan brand is resonating across the globe. Our customers believe in the promise of our brand and are demonstrating increased demand for our breakthrough products. I am confident we are only at the beginning of our journey. With our foundational investments in place, Cole Haan is now a modern enterprise built for the digital future. I believe we have the scale and capabilities for sustainable and profitable growth. My colleagues and I are extremely proud to carry the Cole Haan legacy forward. As we move to our next chapter, we will always endeavor to do right by our customers, employees, partners, stakeholders and investors.

We encourage you to join us on our extraordinary journey.

Jack Boys

Chief Executive Officer

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SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before deciding to invest in our common stock. Before making an investment decision, you should read the entire prospectus carefully, including “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. This summary contains forward-looking statements that involve risks and uncertainties.

Our Brand Mission

We are advocates for extraordinary living—on the go, pushing forward, disrupting conventional thinking and shattering boundaries. Our mission is to inspire our consumers to live extraordinary lives and support their career-oriented dreams through lifestyle products, stories that inspire and digital experiences that connect and engage.

Who We Are

Cole Haan is a global lifestyle brand serving always-connected, active professionals with innovative footwear and lifestyle accessories. Recognizing a major cultural shift in consumer adoption of a more casual workplace, management and Apax Partners acquired Cole Haan from Nike, Inc. in February 2013 with a vision to disrupt the conventional dress footwear industry. Since then, we have pioneered new categories of footwear and lifestyle accessories that customers wear from work-to-workout-to-weekend, building upon our 90-year heritage and reputation for quality craftsmanship with innovation. Our brand resonates equally with women and men across multiple generations, with the focus of product creation and marketing towards our core 24- to 44-year-old customers. We market footwear and lifestyle accessories across the Dress, Casual, Outdoor and Sport use occasions—resulting in a broad portfolio that enables Cole Haan to own more share of our customers’ closets. We transformed Cole Haan to conduct business at the speed of digital and we connect directly to consumers using a digital-first approach. As a result, over 30% of our total sales come from digital commerce through our sites and our wholesale partners’ sites.

Cole Haan offers a four-season portfolio of lifestyle products for head-to-toe styling, led by footwear. Over the past several years, our footwear offering has broadened from a focus on the Dress use occasion to include a broader selection of Casual, Outdoor and Sport use occasions, which comprised 53% of our fiscal year 2019 footwear revenue. Our expansion into these use occasions has considerably expanded our addressable market in the fastest-growing segments of footwear. Our lifestyle accessories include an innovative selection of handbags, small leather goods, hosiery, shoe care, eyewear, outerwear, suiting and cold weather goods that complement our footwear portfolio. We market our footwear and lifestyle accessories across a broad range of premium price points that allow us to compete in multiple channels.

We believe we are the leader in our industry for engineering innovative products. Every product we make—from pumps to performance runners to handbags to outerwear—combines style with exceptional performance attributes built on our proprietary innovation platform, the Grand 36Ø Design & Engineering System. This system enables Cole Haan to create versatile, stylish and comfortable products that meet the demands of on-the-go consumers.

We acquire customers primarily using a digital-first marketing discipline that emphasizes media investments viewed on mobile devices, through digital media and social channels. Through our marketing channels, we create compelling native content that inspires consumers and increases the awareness of the Cole Haan brand. To amplify our reach, we partner with premier national and global editorial sources, such as Forbes,

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The Wall Street Journal and The New York Times. Once consumers demonstrate a desire to learn more about Cole Haan, we invest in targeted marketing to provide a seamless path toward purchase conversion.

We have built a global, multi-channel distribution network across 64 countries that includes our global digital flagship site, colehaan.com, 368 stores and over 450 diverse global wholesale accounts. Our North America segment comprises our DTC business, which includes our digital flagship site and 112 stores, and wholesale distribution to a diverse account base spanning digital pureplay, specialty retail, premium department store, sporting goods and family footwear accounts. A representative selection of our North American wholesale partners includes Nordstrom, Bloomingdale’s, Hibbett Sports, Amazon, Zappos and Stitch Fix.

Our International segment includes our wholly owned Japanese subsidiary and partnerships with leading regional distributors and wholesalers. In Japan, where we have operated for nearly 25 years, our footprint is primarily DTC consisting of 80 stores and our localized digital commerce site, colehaan.co.jp. Outside of Japan, the remainder of our international sales occur in over 60 countries. In these markets, we employ a capital-efficient model where our 37 regional distributors fund costs to build and operate 176 Cole Haan designed and branded stores. We have also successfully expanded our wholesale business in countries where we operate directly, including the United Kingdom and Japan.

How We Transformed Cole Haan for the Modern Digital Age

When Apax and management acquired Cole Haan in 2013, we became an independent company for the first time in 25 years. Since our 2013 Acquisition, we have completed over $100 million in transformational investments in technology, digital infrastructure, product innovation and other areas, which we believe have positioned the Company for growth. We have reinvented our corporate culture as a “90-year-old start-up.” Key initiatives have included:

• modernizing and amplifying the perception of the Cole Haan brand with consumers;

• transforming our innovation and product-creation capabilities to expand our total addressable market to over $700 billion and create a diverse portfolio of breakthrough footwear and lifestyle accessories;

• shifting the Company’s North American distribution focus toward a DTC model with a primary emphasis on building our digital commerce capabilities and rationalizing our store footprint, while accelerating our wholesale business;

• expanding the Company’s global footprint from eight countries in 2013 to 64 countries today, unlocking the substantial opportunity outside the United States and Canada that represents 78% of the global footwear market;

• upgrading the enterprise to do business at the speed of digital, from supply chain to customer experience; and

• building a diverse, multidisciplinary team to drive our growth agenda—nearly 90% of our employees have joined since 2013.

Recent Financial Performance

While we believe we are still in the early stages of realizing the benefits of our transformation, we have already accelerated our growth profile as evidenced by our following recent achievements:

• grew our base of active DTC customers from 1.058 million in fiscal year 2018 to 1.501 million in fiscal year 2019, representing year-over-year growth of 41.9%;

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• grew our revenue from $601.6 million in fiscal year 2018 to $686.6 million in fiscal year 2019, representing year-over-year growth of 14.1%;

• increased our net income from $23.1 million in fiscal year 2018 to $33.1 million in fiscal year 2019, representing year-over-year growth of 43.4%;

• grew our Adjusted EBITDA from $60.1 million in fiscal year 2018 to $94.8 million in fiscal year 2019, representing year-over-year growth of 57.8%; and

• increased our Adjusted EBITDA margin from 10.0% in fiscal year 2018 to 13.8% in fiscal year 2019.

For further information about how we calculate Adjusted EBITDA and Adjusted EBITDA margin, limitations of their use and a reconciliation of Adjusted EBITDA to net income, see “—Summary Historical Consolidated Financial and Other Data.”

Our Competitive Strengths

We believe the following competitive strengths have been instrumental to our success and position us for future growth:

A Powerful Brand that Inspires Extraordinary Living

Powerful ideas fuel global consumer brands. The Cole Haan brand stands for a simple and powerful idea—we all seek to live extraordinary lives on our own terms. Since our founding in 1928 by Trafton Cole and Eddie Haan, Cole Haan has been worn by extraordinary people—from artists and astronauts, to poets and presidents—who have infused the brand with enduring values that continue to connect consumers to our storied brand. It is a brand that transcends generations, socio-economic status, genders and cultures. As a values-based brand, we deliver ground-breaking products and digital marketing that resonate strongly with consumers and aim to inspire extraordinary living.

Deep Consumer Knowledge Drives Our Product Development and Marketing

Unlike many companies that prioritize designer-led inspiration to develop products, we use ongoing insights into consumers’ lives gathered through proprietary research, surveying, media use tracking and consumer analytics to inform product design and development. We believe this institutional discipline underpins our product creation and will enable us to continue earning additional share of our customers’ closets in the future. While the Cole Haan brand resonates with women and men across multiple generations, we focus our product design, development and marketing initiatives to meet the needs of our “First Best Customers.”

Who are they? Our First Best Customers are active women and men ages 24 to 44 who live in global urban centers. We target this group because of its large and fast-growing generational spending power. They are multi-faceted and see their potential for extraordinary—making a positive impact on the world—through their personal and professional passions. They are inspired by those extraordinary people across the cultural spectrum who “work for what they believe in.” Our First Best Customers:

• Dress casually in the workplace. Casualization of dress in the workplace continues to increase, with 50% of organizations in the United States allowing casual dress every day in 2018.

• Pursue an on-the-go-lifestyle. They prioritize experiences over possessions, extend business trips into leisure trips and work remotely on a flexible schedule.

• Are always connected digitally. 94% of U.S. millennials own a smartphone, according to eMarketer.

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• Prefer to shop online. 85% of U.S. millennials are expected to be digital shoppers in 2019, according to eMarketer.

We deliver on their expectations. We have pioneered a new category of products that combine versatility, style and comfort so our First Best Customers can live their on-the-go lives. We envisioned a collection of high-performance footwear and lifestyle accessories consumers could use from work-to-workout-to-weekend—our groundbreaking ZERØGRAND label. Originally launched in footwear in 2014, ZERØGRAND has grown into a multi-category label that encompasses footwear across multiple use occasions, including innovative new boots and all-day trainers, as well as bags, outerwear, hosiery and cold weather goods.

Proprietary Multi-Category Product Portfolio and Innovation Capabilities

Our deep consumer knowledge combined with our innovation capabilities support our leadership position and enable us to have a broader portfolio of products compared to our peers. There are two key components to our product-creation process:

• Multi-category lifestyle product architecture enables broad category penetration. Our customers are active women and men who are commuting, traveling and traversing throughout cities around the world. Consequently, they need versatile products that perform from work-to-workout-to-weekend. In response, we created a multi-category lifestyle product architecture, which includes all-year-round footwear and lifestyle accessories across Dress, Casual, Outdoor and Sport use occasions. Our expansive product portfolio enables us to capture an increased share of our customers’ closets. Within this architecture, we create products under two primary labels: ZERØGRAND and GRANDSERIES.

• ZERØGRAND invents products with overt design and innovation characteristics consumers can easily see. These products fuse athletic footwear engineering with modern styling.

• GRANDSERIES reinvents products with classic styling and innovation characteristics consumers can feel when they try them on.

MULTI-CATEGORY LIFESTYLE PRODUCT ARCHITECTURE^*

* Includes certain products, such as dresses, shirts, pants, skirts and luggage, that are not Cole Haan products.

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• Innovation differentiates our products. We built an Innovation Center in New Hampshire where team members with backgrounds in biomechanics, material science, engineered materials, advanced concept research and development, product development engineering, fit and performance testing and industrial design come together to employ state-of-the-art technology to invent breakthrough products. We created a revolutionary innovation system for solving consumer needs through specific enhancements, called the Grand 36Ø Design & Engineering System. This system focuses on specific performance principles to deliver holistic product solutions in a repeatable manner. We protect our industry-leading technology and designs with a growing portfolio of over 400 patents, issued or pending.

GRAND 36Ø DESIGN & ENGINEERING SYSTEM

Digital-First Commerce and Marketing Drives Customer Acquisition

We have focused our investments in digital commerce to build highly scalable, best-in-class capabilities from customer acquisition to transaction. These investments have enabled the rapid growth of digital sales through both our sites and our wholesale partners’ sites, which represent over 30% of our total sales. Our global digital platform is built upon three cloud-based technology platforms across demand generation (marketing), commerce and analytics. This combination enables our digital-first marketing funnel, creates enriching and frictionless experiences for customers and provides data we can leverage real-time to enhance site experience and drive purchase conversion.

To continuously improve our capabilities and drive digital sales, we recently completed the redesign and replatforming of our global digital flagship, colehaan.com. Our site offers the broadest assortment of our products and is the definitive resource for our brand storytelling to consumers, including the sharing of content, experiences and product detail. We specifically focused on improving our mobile commerce experience with the redesign, as nearly 70% of digital visits originated from mobile devices in fiscal year 2019.

Our marketing funnel is nearly 100% digitally driven and emphasizes using media investments to deliver branded content to mobile devices, through digital media and social channels. Unlike our competitors, we have

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eliminated almost all traditional media investments and instead invest across four phases of our digital market funnel to acquire customers and build our community:

• Inspire. We seek to acquire new customers through two complementary methodologies: native content and product and social media collaborations. We collaborate with traditional and new media partners to produce award-winning native content displayed on digital platforms. We also work with extraordinary cultural influencers and brands to create limited-edition products and messages for social media audiences who may be introduced to the Cole Haan brand for the first time or within a new context.

• Engage. We create targeted digital advertising and invest in media across an integrated landscape of media platforms and social channels, such as Facebook, Instagram, Twitter, YouTube and Snapchat, that consumers engage with many times throughout the day.

• Inform. When consumers demonstrate a desire to learn more about Cole Haan through digital search or by visiting our sites, we invest in targeted marketing to provide a seamless path toward purchase conversion.

• Transact. Our mobile-optimized site provides consumers with the information they need to make informed purchase decisions.

We believe our digital-first marketing approach is driving the success of our DTC business, as illustrated by the 61 million visits to colehaan.com and our North America stores in fiscal year 2019, a 31% increase from fiscal year 2018, and improvements in our mobile purchase conversion.

Operating Platform Built for Business at the Speed of Digital

As part of our transformation, we built a highly efficient, scalable operating platform for global commerce:

Go-to-Market Process. We have streamlined our product development process to allow us to introduce new products to the marketplace more quickly and on complementary development calendars. Our typical go-to-market process takes 12 to 15 months. Our most rapid internal development process, which we call “Quick Strike,” enables us to address new opportunities emerging in the marketplace within 90 days from consumer insight to product introduction. More complex innovation projects operate on an “Advanced Development” process calendar, which can take between 24 to 36 months to deliver new products to the market.

Sourcing and Supply Chain. We have modernized our manufacturing base with leading sourcing, development, commercialization and manufacturing capabilities, focusing on Vietnam and India as primary countries of origin. Less than 15% of the Company’s footwear and handbag products are manufactured in China and we intend to further reduce that percentage over time.

Global Operations. We manage our business on a fully integrated global basis across multiple operations functions, including product lifecycle management, inventory planning, commerce, distribution and technology. This approach allows us to be flexible in meeting consumer demand across geographies and channels. Furthermore, within our DTC channels we offer a seamless experience to our customers by managing operations with an integrated view of inventory and omni-channel fulfillment capabilities across in-store and online.

Visionary and Proven Management Team

Our seasoned management team is led by our CEO Jack A. Boys. Mr. Boys has successfully transformed multiple global lifestyle brands across the footwear, apparel and outdoor specialty industries, including Converse and The North Face.

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At Cole Haan, Mr. Boys has led our transformation and recruited a leadership team with diverse and relevant backgrounds from leading global consumer brands. We have assembled a team with talent from a broad set of industries, such as consumer retail, automotive design, software programming, materials engineering, digital commerce, data science and advertising. The members of our team have proven track records of understanding and marketing to millennials, designing best-in-class products and building scalable global operations. Our team has successfully transformed our business, created a culture of innovation that permeates the organization and driven financial momentum. We believe our management team has the vision and experience to successfully continue to drive our future growth and profitability.

Our Growth Strategies

We believe we are still in the early stages of realizing the benefits of our transformation and intend to leverage our competitive strengths and growth investments by pursuing the following strategies:

Earn More Share of Customers’ Closets

We intend to continue to grow our business by delivering innovative footwear and lifestyle accessories. We will leverage our strengths in consumer insight, lifestyle merchandising and product innovation to compete and win in three primary areas:

• Continue expanding core franchises. We believe we have a significant opportunity to further attract new customers to our iconic, multi-generation product franchises. In total unit count, we believe that many of these franchises, such as the ZERØGRAND Wingtip Oxford, have long runway for growth and we intend to continue driving sales of these products across our global distribution network.

• Expand our offerings through our multi-category lifestyle product architecture. The market for Casual, Outdoor and Sport use occasion footwear is growing at double the rate of the overall U.S. footwear market. We believe Cole Haan is underpenetrated in these market segments. Over the last several years, we have successfully extended into these use occasions with products such as our GrandPrø Tennis Sneaker and ZERØGRAND Explore Hiker Boot. We intend to continue developing a broader array of products for these use occasions, while continuing to grow our products for the Dress use occasion.

• Increase penetration of lifestyle accessories. We will continue to leverage our brand and customer satisfaction with our footwear products to gain more share of our customers’ closets with our lifestyle accessories offered and sold through our licensing partners and our sites and stores. We believe these categories are underrepresented in our business, accounting for 7.8% of our fiscal year 2019 revenue.

Acquire New Customers and Drive Long-Term Customer Relationships

We believe we have a significant opportunity to continue to grow our customer base. We intend to continue marketing almost exclusively via digital platforms, a strategy that resulted in a 41.9% year-over-year increase in the number of our active DTC customers in fiscal year 2019. Our digital marketing is resonating with consumers and we will continue to attract and engage consumers through extraordinary stories that feature our brand and our innovative products. We have inspirational stories to tell and intend to share them with more people. As a values-based brand, Cole Haan plans to continue partnering with digital media content creators and social media influencers, among others, to power our digital-first marketing strategy and attract younger customers.

We believe a focus on driving long-term customer relationships will strengthen brand awareness, customer acquisition and retention, and, ultimately, result in higher lifetime customer values. Our key initiatives include:

• creating full-funnel customer journeys, leveraging our competitive strengths in digital-first marketing;

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• launching a digital membership program, “Above and Beyond,” to retain customers, gain more share of our customers’ closets and encourage customer advocacy;

• driving further engagement by leveraging CRM data and leading-edge marketing technologies to deliver personalized brand messages and product recommendations; and

• developing a mechanism for customer-generated social sharing of extraordinary living to drive audience growth and amplify our brand mission.

Continue to Grow Our North America DTC Business

Our North America DTC channel allows us to create meaningful, direct relationships with customers and capture full retail margin. In fiscal year 2019, we drove North America DTC traffic of 61 million visits, a 31% increase from the prior fiscal year. We intend to build on the success of our North America DTC business by:

• increasing our number of active DTC customers across our sites and our stores;

• leveraging our investments in CRM and omni-channel technology to increase multi-channel customer relationships and engagement;

• offering a product assortment responsive to consumer preferences and design trends through continuous innovation across the product portfolio;

• increasing customer lifetime value by earning more share of our customers’ closets; and

• selectively growing our store fleet by opening highly productive, digitally connected small space stores that showcase our most innovative footwear and lifestyle accessories.

Expand Our North America Wholesale Business

We have created a growing wholesale business with diverse wholesale partners. We have driven growth through a rigorous approach to product segmentation within each channel, often on a retailer-by-retailer basis, by selling a price-appropriate, compelling assortment of our merchandise. To continue this growth, we intend to:

• Drive velocity within existing accounts. We believe we have ample runway for growth with our existing wholesale partners by increasing sales of our core products through increased brand and product awareness, expanding product assortments into additional footwear and lifestyle accessory categories, gaining market share with superior products and growing wholesale digital sales by employing our drop-ship capabilities.

• Accelerate digital pureplay partnerships. We expect to continue broadening our existing relationships in the United States with digital pureplays such as Amazon, Zappos, Stitch Fix and others, and will look to create relationships with new emerging players.

• Diversify into specialty channels in the United States. In order to further expand our wholesale partner mix, we intend to selectively add new specialty channels of distribution, such as sporting goods and premier independent boutiques.

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Grow Our International Business

We have a significant opportunity to leverage our international presence to drive growth. Our International segment represented just 14.3% of our total revenue for fiscal year 2019. To address this opportunity, we intend to:

• Grow our Japanese business. Japan is a leading global footwear and apparel market and our position in that market promotes brand awareness among international consumers. We expect to build upon our nearly 25-year market presence in Japan by:

^○  using our proven digital-first marketing discipline to inspire, engage and inform Japanese First Best Customers on our redesigned, replatformed site, colehaan.co.jp; and

^○  continuing to grow our premium wholesale sales following our recent debut at ABC-Mart, one of the leading footwear retailers in the country.

• Leverage our international distributor network and expand our wholesale presence. We have developed a successful and disciplined framework for connecting with consumers in leading international markets through regional distributors and wholesalers. We expect to continue to grow by:

^○  opening additional distributor stores in leading shopping districts and malls throughout the world, with a long-term target of doubling our international footprint;

^○  selectively expanding the wholesale business in the United Kingdom, Europe, the Middle East and Mexico; and

^○  continuing to open and accelerate relationships with digital pureplays in international markets, where our products are currently offered on sites including TMall, Zalando, Amazon and Souq.

• Enhance international customer experience on colehaan.com. We are planning to better serve our international customers on colehaan.com by deploying a global digital commerce solution that enables localized user experiences, pricing and ordering. We believe that creating a more frictionless experience for customers outside of the United States will enable us to grow our global digital sales.

Continue to Drive Operating Margin Expansion

As we continue to realize the benefits of the multi-year investments we have completed in systems, infrastructure and other improvements across the enterprise, we believe we have opportunities to grow our profitability faster than sales and expand our operating margin by:

• leveraging investments in digital functionality, CRM capability and marketing spend to drive traffic and customer acquisition;

• utilizing our global scale and product cost engineering to drive sourcing efficiencies and supply chain savings; and

• leveraging our fixed cost base to drive quality execution, efficiency and profitability.

Risks Related to Our Business and this Offering

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described in “Risk Factors” before making a decision to invest in our common stock. If any of these risks actually occurs, our business, results of operations and financial condition may be materially adversely affected. In such case, the trading price of our common stock may decline and you may lose part or all of your investment. Below is a summary of some of the principal risks we face:

• Our success depends in large part on the value and reputation of our brand, which is integral to our business and the implementation of our strategies for expanding our business. Maintaining and

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promoting our brand will depend largely on the success of our marketing and merchandising efforts and our ability to provide consistent, high-quality products and services, and may require us to make substantial investments. Consumers in new markets may not accept our brand image and maintaining and enhancing our brand may become increasingly difficult and expensive. Our brand and reputation may also be harmed by negative claims or publicity.

• If we fail to adequately continue to connect with our consumer base, it could have a material adverse effect on our business, results of operations and financial condition. If we fail to successfully develop and implement marketing, advertising and promotional strategies in new and existing markets, we may be unable to achieve and maintain brand awareness and consumer traffic to our sites and/or stores may be reduced.

• Our business depends on consumer demand for our products and, consequently, is sensitive to a number of factors that influence consumer confidence and spending. An overall decline in the health of the economy and other factors may affect consumer purchases, reduce demand for our products and materially harm our business, results of operations and financial condition.

• Our plans to improve and expand our product offerings may not be successful due to, among other things, delays in the introduction of new products, lack of acceptance of new products, their pricing or novel technologies incorporated into such products and limited effectiveness of our marketing strategies. Implementation of these plans may divert our operational, managerial and administrative resources, which could harm our competitive position and reduce our revenue and profitability.

• If we fail to introduce technical innovation in our products, we may not be able to generate sufficient consumer interest in our products to remain competitive, and if we experience problems with the quality of our products, we may incur substantial expense to remedy such issues and our brand may be adversely affected. Our results of operations would also suffer if our innovations do not respond to the needs of our consumers, are not appropriately timed with market opportunities or are not effectively brought to market.

• Our business is highly dependent upon our ability to identify and respond to new and changing consumer trends and translate them into appropriate, saleable product offerings in a timely, cost-efficient manner. Our failure to identify and react appropriately to trends or consumer preferences or to accurately forecast demand for certain product offerings could lead to, among other things, excess inventories or inventory shortages, higher markdowns and write-offs of unsold merchandise. This could have an adverse effect on the image and reputation of our brand and could adversely affect our gross margins.

• The footwear and lifestyle accessories markets are highly competitive and fragmented. Competition may result in pricing pressure, reduced profit margins or lost market share or a failure to grow our market share, any of which could substantially harm our business, results of operations and financial condition.

• As a digital commerce retailer, we encounter risks and difficulties frequently experienced by Internet-based businesses, such as uncertainties associated with our sites, including changes in required technology interfaces, technical failures, costs and issues, inadequate system capacity, security breaches and legal claims, credit or debit card fraud and payment processing issues and cybersecurity and consumer privacy concerns and regulations, among others. Our failure to successfully manage our digital commerce business could adversely impact our business and profitability.

• If we fail to open and operate new stores in a timely and cost-effective manner or fail to successfully enter new markets, our financial performance could be materially and adversely affected. In addition, there can be no assurance that newly opened stores will achieve sales or profitability levels comparable to those of our existing stores in the time periods estimated by us, or at all. We may not be able to maintain the levels of North America DTC comparable sales that we have experienced recently.

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• We are dependent on domestic and international wholesale partners for a significant portion of our sales. A decision by any of our major wholesale partners to decrease significantly 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 probability. If any disputes with our wholesale partners arose, if we were to lose any of our key wholesale partners or if any of our key wholesale partners consolidate and/or gain greater market power, our business, results of operations and financial condition may be materially adversely affected. In addition, we may be similarly adversely impacted if any of our key wholesale partners experience any operational or financial difficulties, close stores or generate less traffic.

• Our business is subject to risks associated with our international distribution partners. If we terminate an independent distributor, we may lose our customers who have been dealing with that distributor. Actions by independent distributors that are beyond our control could result in flat or declining sales in that geography, harm to our reputation or our products or legal liability. In addition, our failure to identify and maintain regional distributor relationships in new and existing geographies may adversely affect our growth and financial performance.

• Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations. We will require a significant amount of cash to service our debt, and our ability to generate cash depends on many factors beyond our control.

• After completion of this offering, we will be a “controlled company” within the meaning of the rules of NASDAQ and the rules of the SEC and, as a result, qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of other companies that are subject to such requirements.

• Our Sponsor controls us and its interests may conflict with yours in the future. In the ordinary course of their business activities, our Sponsor and its affiliates may engage in activities where their interests conflict with our interests or those of our stockholders. In addition, our Sponsor and its affiliates will be able to determine the outcome of all matters requiring stockholder approval and will be able to cause or prevent a change of control of the Company or a change in the composition of our board of directors and could preclude any acquisition of the Company.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements that are applicable to other companies that are not emerging growth companies. Accordingly, in this prospectus, we have (i) presented only two years of audited consolidated financial statements, selected financial data and management’s discussion and analysis of financial condition and results of operation disclosure; and (ii) have not included a compensation discussion and analysis of our executive compensation programs. In addition, for so long as we are an emerging growth company, among other exemptions, we will not be required to:

• engage an independent registered public accounting firm to report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act;

• comply with any requirement that may be adopted by the Public Company Accounting Oversight Board, or PCAOB, regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;

• disclose certain executive compensation-related items, such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation; or

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• submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes.”

We will remain an emerging growth company until the earliest to occur of:

• the last day of the fiscal year in which we have $1.07 billion or more in annual gross revenue;

• our becoming a “large accelerated filer,” with at least $700.0 million of equity securities held by non-affiliates;

• our issuance, in any three-year period, of more than $1.0 billion in non-convertible debt; and

• the fiscal year-end following the fifth anniversary of the completion of this initial public offering.

The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, also permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We are choosing to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

Our Sponsor

Apax Partners

Apax Partners is a leading global private equity advisory firm. Over its more than 40-year history, Apax Partners has raised and advised funds with aggregate commitments of approximately $50 billion. The Apax Funds invest in companies across four global sectors of Tech & Telco, Services, Healthcare and Consumer. These funds provide long-term equity financing to build and strengthen world-class companies. The Apax Funds have been a leading global investor in the consumer space over several decades, investing more than $8 billion in consumer businesses. Selected current and past consumer investments include Baltic Classified Group, MATCHESFASHION.COM, Idealista, wehkamp, Advantage Sales and Marketing, Tnuva Food Industries, Auto Trader Group, Tommy Hilfiger, Ollie’s Bargain Outlets, New Look Group and PVH in its acquisition of Calvin Klein.

Our Corporate Information

Calceus TopCo, Inc. was incorporated in Delaware on November 9, 2012. We changed our name to “Cole Haan, Inc.” on October 15, 2019. Our principal offices are located at 150 Ocean Road, Greenland, New Hampshire 03840. Our telephone number is (603) 430-7800. We maintain a website at www.colehaan.com. The reference to our website is intended to be an inactive textual reference only. The information contained on, or that can be accessed through, our website is not part of this prospectus and investors should not rely on such information in deciding whether to purchase shares of our common stock.

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The Offering

Issuer Cole Haan, Inc.

Common Stock Offered by the Selling Stockholders                     shares

Option to Purchase Additional Shares of Common Stock The selling stockholders have granted the underwriters a 30-day option from the date of this prospectus to purchase up to             additional shares of our common stock at the initial public offering price, less the underwriting discount.

Common Stock to be Outstanding Immediately After this Offering                     shares

Use of Proceeds We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders in this offering, including from any exercise by the underwriters of their option to purchase additional shares from the selling stockholders. The selling stockholders will receive all of the net proceeds and bear the underwriting discount attributable to their sale of our common stock. We will pay certain expenses associated with this offering. See “Principal and Selling Stockholders.”

Controlled Company Upon the closing of this offering, our Sponsor will own a majority of the shares eligible to vote in the election of our directors. We currently intend to avail ourselves of the controlled company exemption under the corporate governance standards of NASDAQ.

Dividend Policy We have no current plans to pay dividends on our common stock. Any decision to declare and pay dividends in the future will be made at the sole discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements, financial condition, contractual restrictions, including restrictions in the agreements governing our indebtedness, and other factors that our board of directors may deem relevant. See “Dividend Policy.”

Risk Factors Investing in shares of our common stock involves a high degree of risk. See “Risk Factors” for a discussion of factors you should carefully consider before investing in shares of our common stock.

NASDAQ Trading Symbol “CLHN”.

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The number of shares of our common stock to be outstanding immediately after the closing of this offering is based on                  shares of common stock outstanding as of                 , 2020. Unless we indicate otherwise or the context otherwise requires, this prospectus:

• reflects and assumes:

• no exercise of the underwriters’ option to purchase additional shares of our common stock;

• the filing and effectiveness of our amended and restated certificate of incorporation and the adoption of our amended and restated bylaws immediately prior to the consummation of this offering; and

• the                 -for-one stock split of our common stock, which we intend to effectuate immediately prior to the effectiveness of the registration statement of which this prospectus forms a part; and

• does not reflect                  shares of our common stock reserved for future issuance under our new Omnibus Incentive Plan, which we intend to adopt in connection with this offering. See “Management—Executive Compensation—Compensation Arrangements to be Adopted in Connection with this Offering.”

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

Set forth below is our summary historical consolidated financial and other data as of the dates and for the periods indicated. We have derived the summary historical consolidated statements of operations data and consolidated statements of cash flows data for the fiscal years ended June 2, 2018 and June 1, 2019 and the summary historical consolidated balance sheet data as of June 2, 2018 and June 1, 2019 from our audited historical consolidated financial statements included elsewhere in this prospectus. Our historical audited results are not necessarily indicative of the results that should be expected in any future period.

We have derived the summary historical condensed consolidated statements of operations data and condensed consolidated statements of cash flows data for the 26-week periods ended December 1, 2018 and November 30, 2019 and the summary historical condensed consolidated balance sheet data as of November 30, 2019 from our unaudited historical condensed consolidated financial statements included elsewhere in this prospectus. With the exception of the adoption of Topic 842, which we adopted on a modified retrospective basis on June 2, 2019, the first day of fiscal year 2020, our unaudited condensed consolidated financial statements were prepared on a basis consistent with the audited consolidated financial statements and have included all adjustments, consisting only of normal recurring adjustments that, in our opinion, are necessary to present fairly the financial information set forth in those statements. The results for any interim period are not necessarily indicative of the results that may be expected for the full year and our historical unaudited results are not necessarily indicative of the results that should be expected in any future period.

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You should read the following summary historical consolidated financial and other data below together with the information under “Capitalization,” “Selected Historical Consolidated Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our audited consolidated financial statements and related notes thereto and our unaudited condensed consolidated financial statements and related notes thereto, each included elsewhere in this prospectus.

	Fiscal Year Ended						26-Week Period Ended
	June 2, 2018			June 1, 2019			December 1, 2018			November 30, 2019
(In thousands, except share and per share amounts)
Consolidated Statements of Operations Data(1):
Revenue	$	601,566		$	686,576		$	351,462		$	403,083
Cost of sales		326,218			359,372			181,499			218,200
Gross profit		275,348			327,204			169,963			184,883
Selling, general and administrative expense		249,875			264,674			128,481			145,992
Operating income		25,473			62,530			41,482			38,891
Interest expense, net		20,854			21,893			10,344			12,106
Loss on debt modification and extinguishment		—			3,075			—			—
Other (income), net		(216	)		(342	)		(189	)		(127	)
Income before income taxes		4,835			37,904			31,327			26,912
Income tax (benefit) expense		(18,268	)		4,767			1,878			2,147
Net income	$	23,103		$	33,137		$	29,449		$	24,765
Per Share Data(2):
Net income per share attributable to common stockholders—basic and diluted	$	23,102.82		$	33,136.97		$	29,448.90		$	24,764.66
Weighted average common shares outstanding—basic and diluted		1,000			1,000			1,000			1,000

	Fiscal Year Ended						26-Week Period Ended
	June 2, 2018			June 1, 2019			December 1, 2018			November 30, 2019
(In thousands, except percentages)
Consolidated Balance Sheet Data (end of period)(1):
Cash	$	23,476		$	37,862					$	10,786
Total assets		538,649			587,858						737,029
Total debt(3)		300,847			280,247						277,396
Total stockholders’ equity		132,552			164,789						189,298
Consolidated Statements of Cash Flow Data(1):
Cash flows provided by (used in):
Operating activities	$	50,491		$	55,168		$	30,827		$	(12,829	)
Investing activities		(15,991	)		(17,745	)		(8,628	)		(10,580	)
Financing activities		(23,219	)		(22,929	)		(12,490	)		(3,625	)
Other Financial Data and Operational Data:
North America DTC comparable sales growth (decline)		(0.1	)%		13.0	%		13.1	%		3.0	%
Adjusted EBITDA(4)	$	60,072		$	94,774		$	57,117		$	62,370
Adjusted EBITDA margin(4)		10.0	%		13.8	%		16.3	%		15.5	%

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(1) See Notes 2 and 3 to our audited consolidated financial statements included elsewhere in this prospectus for additional information regarding the impact of our adoption of Topic 606 on our consolidated financial statements. See Notes 2 and 9 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for additional information regarding the impact of our adoption of Topic 842 on our unaudited condensed consolidated financial statements.

(2) See Note 18 to our audited consolidated financial statements and Note 14 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculations of net income per share attributable to common stockholders, basic and diluted.

(3) Total debt equals current and non-current portions of long-term debt, net of discount and debt issuance costs.

(4) We define Adjusted EBITDA as net income, plus interest expense, net, income tax (benefit) expense and depreciation and amortization, net, further adjusted to exclude impairment charges, (gain) loss on disposals of property and equipment, loss on debt modification and extinguishment, other (income), net and certain IPO costs. We describe these adjustments reconciling net income to Adjusted EBITDA in the table below. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue.

We present Adjusted EBITDA and Adjusted EBITDA margin because we believe they are useful indicators of our operating performance. Our management uses Adjusted EBITDA and Adjusted EBITDA margin principally as measures of our operating performance and believes that Adjusted EBITDA and Adjusted EBITDA margin are useful to investors because they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We also believe Adjusted EBITDA and Adjusted EBITDA margin are useful to our management and investors as a measure of comparative operating performance from period to period.

Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and should not be considered as alternatives to net income as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In evaluating Adjusted EBITDA and Adjusted EBITDA margin, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on our GAAP results in addition to using Adjusted EBITDA and Adjusted EBITDA margin as a supplement.

Our Adjusted EBITDA measures have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are:

• they do not reflect costs or cash outlays for capital expenditures or contractual commitments;

• they do not reflect changes in, or cash requirements for, our working capital needs;

• they do not reflect the interest expense, net or the cash requirements necessary to service interest or principal payments on our debt;

• they do not reflect period-to-period changes in taxes, income tax expense or the cash necessary to pay income taxes;

• they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and they do not reflect cash requirements for such replacements; and

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• other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.

Because of these limitations, Adjusted EBITDA and Adjusted EBITDA margin should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness.

The following table provides a reconciliation of net income to Adjusted EBITDA for the periods presented:

	Fiscal Year Ended				26-Week Period Ended
	June 2, 2018		June 1, 2019		December 1, 2018		November 30, 2019
(In thousands, except percentages)
Net income	$	23,103	$	33,137	$	29,449	$	24,765
Interest expense, net		20,854		21,893		10,344		12,106
Income tax (benefit) expense		(18,268)		4,767		1,878		2,147
Depreciation and amortization, net(a)		34,667		32,152		15,699		15,768
Impairment charges(b)		—		192		—		1,643
(Gain) loss on disposals of property and equipment(c)		(68)		(100)		(64)		(6)
Loss on debt modification and extinguishment(d)		—		3,075		—		—
Other (income), net(e)		(216)		(342)		(189)		(127)
IPO costs(f)		—		—		—		6,074
Adjusted EBITDA	$	60,072	$	94,774	$	57,117	$	62,370
Revenue	$	601,566	$	686,576	$	351,462	$	403,083
Adjusted EBITDA margin		10.0%		13.8%		16.3%		15.5%

(a) Excludes amortization included in interest expense, net.

(b) Represents non-cash store impairment charges.

(c) Represents the non-cash gain on disposals of property and equipment.

(d) Represents the loss on debt modification and extinguishment in connection with the refinancing of the Term Loan Facility in February 2019.

(e) Primarily represents foreign currency transaction (gains) and losses associated with our international subsidiaries and realized and unrealized (gains) and losses on our foreign currency forward contracts.

(f) Represents non-recurring expenses primarily composed of legal, accounting and professional fees incurred in connection with this offering, which are included within selling, general and administrative expenses.

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RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below and the other information set forth in this prospectus before deciding to invest in shares of our common stock. If any of the following risks actually occurs, our business, results of operations and financial condition may be materially adversely affected. In such case, the trading price of our common stock could decline and you may lose all or part of your investment.

Risks Related to Our Business

Our success depends on our ability to maintain the value and reputation of our brand.

Our success depends in large part on the value and reputation of our brand, which is integral to our business and the implementation of our strategies for expanding our business. Maintaining, promoting and positioning our brand will depend largely on the success of our marketing and merchandising efforts and our ability to provide consistent, high-quality products and services, and may require us to make substantial investments in areas such as research and development, store operations, community relations and employee training. Customer complaints or negative publicity about our products, product delivery times, our sites or in-store shopping experience, customer data handling and security practices or customer support, especially on blogs, social media platforms and our sites, could rapidly and severely diminish consumer, partner and supplier confidence in us and consumer use of our sites and result in harm to our brand and reduced demand for our products. As we expand into new markets and as the environment becomes increasingly competitive, consumers in these markets may not accept our brand image and maintaining and enhancing our brand may become increasingly difficult and expensive.

Our brand value also depends on our ability to maintain a positive consumer perception of our corporate integrity and culture. Negative claims or publicity involving us, our wholesale partners, our distributors or our products, or the production methods of any of our suppliers, could seriously damage our reputation and brand image, undermine consumer confidence in our brand and reduce long-term demand for our products, regardless of whether such claims or publicity are accurate. Social media, which accelerates and potentially amplifies the scope of negative claims or publicity, can increase the challenges of responding to negative claims or publicity. Social media influencers or other endorsers of our products or third parties with whom we maintain relationships or collaborate could engage in behavior, or use their platforms to communicate directly with consumers in a manner, that reflects poorly on our brand and may be attributed to us or otherwise adversely affect us. Any harm to our brand and reputation could adversely affect our business, results of operations and financial condition.

If we fail to adequately continue to connect with our consumer base, it could have a material adverse effect on our business, results of operations and financial condition.

Our marketing and promotional programs are important in capturing the interest of consumers and attracting them to our sites and/or stores and encouraging purchases by consumers. If we fail to successfully develop and implement marketing, advertising and promotional strategies in new and existing markets, we may be unable to achieve and maintain brand awareness and consumer traffic to our sites and/or stores may be reduced.

We believe that much of the growth in our customer base to date has originated from our marketing strategy, including social media and other digital marketing efforts. For example, we maintain Facebook, Instagram, Twitter, YouTube and Snapchat accounts. We also maintain relationships with social media influencers. If we are unable to cost-effectively use social media platforms as marketing tools, our ability to acquire new customers and our financial condition may suffer. Unauthorized or inappropriate use of our social media channels could result in harmful publicity or negative consumer experiences, which could have an adverse impact on the effectiveness of our marketing in these channels. In addition, substantial negative commentary by others on social media platforms could have an adverse impact on our ability to successfully connect with consumers. Furthermore, as laws and regulations rapidly evolve to govern the use of these platforms, the failure

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by us, our employees, our network of social media influencers or third parties acting at our direction to comply with applicable laws and regulations could subject us to regulatory investigations, lawsuits, including class actions, liability, fines or other penalties and could result in a material adverse effect on our business, results of operations and financial condition. In addition, an increase in the use of social media platforms for product promotion and marketing may cause an increase in our burden to monitor compliance of such platforms, and increase the risk that such materials could contain problematic product or marketing claims in violation of applicable regulations. For example, in some cases, the Federal Trade Commission, or the FTC, has sought enforcement action where an endorsement has failed to clearly and conspicuously disclose a financial relationship or material connection between an influencer and an advertiser. We do not prescribe what our influencers post, and if we were held responsible for the content of their posts or their actions, we could be forced to alter our practices, which could have an adverse impact on our business.

Moreover, we rely in part upon third parties, such as search engines and product reviewers, for both paid and unpaid services and we are unable to fully control their efforts. We obtain a significant amount of traffic via search engines and, therefore, rely on search engines such as Google to direct traffic to our sites. Search engines frequently update and change the algorithm that determines the placement and display of a user’s search results, such that the purchased or algorithmic placement of links to our site may be negatively affected. A search engine could, for competitive or other purposes, alter its algorithms or results in a manner that negatively affects our paid or non-paid search ranking and competitive dynamics, limiting the effectiveness of search engine marketing or search engine optimization.

As digital commerce and social networking continue to rapidly evolve, we must continue to establish relationships with these channels and may be unable to develop or maintain these relationships on acceptable terms. If we are unable to cost-effectively drive traffic to our stores and sites, our ability to acquire and retain customers and our financial condition would suffer.

Furthermore, we establish relationships with public figures to promote our products, as well as to establish product authenticity with consumers. However, as competition in our industry has evolved, the costs associated with establishing and retaining such relationships have increased. If we are unable to maintain our current associations with public figures, or to do so at a reasonable cost, we could lose the visibility associated with our products, and we may be required to modify and substantially increase our marketing investments. As a result, our brand, sales, expenses and profitability could be harmed. In addition, a failure to continue to correctly identify promising public figures to use and endorse our products or a failure to enter into cost-effective endorsement arrangements with prominent public figures could adversely affect our brand, sales and profitability.

Changes in the amount and degree of promotional intensity or merchandising strategy by our competitors could cause us to have difficulties in retaining existing customers and attracting new customers. If the efficacy of our marketing or promotional activities declines, if we are not able to cost-effectively manage our marketing expenses, if such activities of our competitors are more effective than ours, or if for any other reason we lose the loyalty of our customers, it could have a material adverse effect on our business, results of operations and financial condition.

An overall decline in the health of the economy and other factors impacting consumer spending, such as natural disasters and fluctuations in inflation and foreign currency exchange rates may affect consumer purchases, reduce demand for our products and materially harm our business, results of operations and financial condition.

Our business depends on consumer demand for our products and, consequently, is sensitive to a number of factors that influence consumer confidence and spending, such as general current and future economic and political conditions, consumer disposable income, energy and fuel prices, recession and fears of recession, unemployment, minimum wages, availability of consumer credit, consumer debt levels, conditions in the housing

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market, interest rates, tax rates and policies, inflation, war and fears of war, inclement weather, natural disasters, terrorism, active shooter situations, outbreak of viruses, widespread illness, infectious diseases, contagions and the occurrence of unforeseen epidemics (including the outbreak of the coronavirus and its potential impact on our financial results) and consumer perceptions of personal well-being and security.

Consumer purchases of discretionary items such as footwear, apparel and accessories, including our products, often decline during periods when economic or market conditions are unstable or weak. Reduced consumer confidence and spending cutbacks may result in reduced demand for our merchandise, which could result in lost sales and/or excessive markdowns. Reduced demand also may require increased selling and promotional expenses, impacting our profitability. Changes in areas around our store locations that result in reductions in consumer foot traffic or otherwise render the locations unsuitable could cause our sales to be less than expected. Prolonged or pervasive economic downturns could slow the pace of new store openings, reduce comparable sales or cause us to close certain stores, which could have a material negative impact on our financial performance. When the retail economy weakens or as consumer behavior shifts, retailers may be more cautious with orders. A slowing or changing economy in our key markets could adversely affect the financial health of our wholesale partners, which in turn could have an adverse effect on our results of operations and financial condition.

Our plans to improve and expand our product offerings may not be successful, and implementation of these plans may divert our operational, managerial and administrative resources, which could harm our competitive position and reduce our revenue and profitability.

We plan to grow our business by, among other things, scaling our core franchises, growing our offerings in Sport, Casual and Outdoor use occasions and expanding our lifestyle accessories products. The principal risks to our ability to successfully carry out our strategy are that:

• introduction of new products may be delayed, including due to interruptions or difficulties affecting the ability of our suppliers to timely manufacture, distribute and ship new products, which may allow our competitors to introduce similar products in a more timely fashion and hurt our goal to be viewed as a leader in product innovation;

• sales of our new products may not be as high as we anticipate due to lack of acceptance of the products themselves or their price, or limited effectiveness of our marketing strategies;

• we may experience a decrease in sales of certain existing products as a result of newly launched products;

• if our expanded product offerings fail to maintain and enhance our distinctive brand identity, our brand image may be diminished and our sales may decrease; and

• incorporation of novel technologies into our products may not be accepted by consumers or our wholesale partners or may be inferior to similar products offered by our competitors.

In addition, our ability to successfully carry out our plans to improve and expand our product offerings may be affected by economic and competitive conditions, changes in consumer spending patterns and changes in consumer preferences and style trends. These plans could be abandoned and could cost more than anticipated, any of which could impact our competitive position and reduce our revenue and profitability.

We rely on technical innovation and high-quality products to compete in the market for our products.

Technical innovation and quality control in the design and manufacturing process of footwear and lifestyle accessories is essential to the commercial success of our products. Research and development play a key role in technical innovation. If we fail to introduce technical innovation in our products, we may not be able to generate sufficient consumer interest in our products to remain competitive, and if we experience problems with the

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quality of our products, we may incur substantial expense to remedy such issues and our brand may be adversely affected. Our results of operations would also suffer if our innovations do not respond to the needs of our consumers, are not appropriately timed with market opportunities or are not effectively brought to market.

Our business is highly dependent upon our ability to identify and respond to new and changing consumer trends and preferences to accurately forecast demand.

Consumer tastes are volatile and can change rapidly. Our success depends in large part upon our ability to effectively identify and respond to changing consumer demands and to translate these trends and demands into appropriate, saleable product offerings in a timely, cost-efficient manner. In addition, we must create products at a range of price points that appeal to the consumers of both our sites and stores and our wholesale partners and distributors across our diverse geographic regions.

Our failure to identify and react appropriately to new and changing trends or consumer preferences or to accurately forecast demand for certain product offerings could lead to, among other things, excess inventories or inventory shortages, higher markdowns and write-offs of unsold merchandise. This could have an adverse effect on the image and reputation of our brand and could adversely affect our gross margins. If consumers no longer find our offerings appealing, or if we are unable to timely update our offerings to meet current trends and consumer demands, consumers may make fewer or less valuable purchases in the future. A decrease in the number of customers who make repeat purchases or a decrease in their spending could negatively impact our results of operations. Further, our future success will depend in part on our ability to increase sales to our existing customers over time and to attract new customers to our brand, and if we are unable to do so, our business, results of operations and financial condition may be materially adversely affected. If we fail to generate repeat purchases or maintain high levels of consumer engagement and average order value, our business, growth prospects, results of operations and financial condition could be materially adversely affected.

In addition, consumer preferences regarding the shopping experiences, including where and how they shop, continue to rapidly evolve. If we or our wholesale partners do not provide consumers with an attractive in-store experience or an engaging and user-friendly digital commerce platform, demand for our products may decrease and our brand image, business, results of operations and financial condition may be adversely affected.

We operate in highly competitive markets, and may lose market share if we do not compete successfully.

The footwear and lifestyle accessories markets are highly competitive and fragmented. We compete against a wide range of designers and manufacturers of footwear and lifestyle accessories, both domestic and international, across a wide range of retail price points. We also compete with other companies for the production capacity of suppliers that manufacture our products. See “Business—Our Competition.” Competition may result in pricing pressure, reduced profit margins or lost market share or a failure to grow our market share, any of which could substantially harm our business, results of operations and financial condition. The retail landscape is changing as a result of changes in consumers’ shopping habits, as well as technical innovation in the design and manufacturing process within the retail industry.

Some of our competitors are larger companies and have greater financial and operational resources, stronger brand recognition and broader geographic presence than we do. As a result, they may be able to engage in extensive and prolonged price promotions or otherwise offer more competitive prices than we do, which may adversely affect our business. They may also be able to spend more than we do for advertising and social media promotion. We may be at a substantial disadvantage to larger competitors with greater economies of scale. If our costs are greater compared to those of our competitors, the pricing of our products may not be as attractive, thus depressing sales or the profitability of our products. Our competitors may expand into markets in which we currently operate and we remain vulnerable to the marketing power and high level of consumer recognition of these larger competitors and to the risk that these competitors or others could attract our consumer base. In addition, if any of our competitors were to consolidate operations, such consolidation would exacerbate the aforementioned risks.

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In addition, retailers have limited resources and floor space, and we must compete with others to develop relationships with them. Increased competition by existing and future competitors could result in reductions in floor space in retail locations, reductions in sales or reductions in the prices of our products, and if retailers have better sell through or earn greater margins from our competitors’ products, they may favor the display and sale of those products.

Our failure to successfully manage our digital commerce business could adversely impact our business and profitability.

In addition to our product expansion strategy, we plan to continue to expand our digital platforms through marketing and other investments to drive new customer acquisition and retention and grow our sales to digital retailers.

As a digital commerce retailer, we encounter risks and difficulties frequently experienced by Internet-based businesses. The successful operation of our digital commerce business, as well as our ability to provide a positive shopping experience that will generate orders and drive subsequent visits, depends on operating an appealing digital platform and efficient and uninterrupted operation of our order-taking and distribution operations. Risks associated with our digital commerce businesses include:

• uncertainties associated with our sites, including changes in required technology interfaces, website/application downtime and other technical failures, costs and technical issues as we upgrade our software, inadequate system capacity, computer viruses, human error, security breaches and legal claims related to our digital commerce operations;

• disruptions in Internet and telephone service or power outages;

• reliance on third parties for computer hardware and software, as well as delivery of merchandise to our customers and wholesale partners;

• rapid technology changes;

• credit or debit card fraud and other payment processing related issues;

• changes in applicable federal, state and international regulations;

• liability for online content;

• cybersecurity and consumer privacy concerns and regulations; and

• natural disasters or adverse weather conditions.

We expect to keep up to date with competitive technology trends, which may include the use of new or improved technology, creative user interfaces and other digital commerce marketing tools such as paid search and mobile applications, among others. In addition, the number of people who access the Internet through devices other than personal computers, including mobile phones, smartphones, notebooks, tablets, video game consoles and television set-top devices, has increased dramatically in the past few years. The smaller screen size, functionality and memory associated with some alternative devices may make the use of our sites and purchasing our products more difficult. The versions of our sites developed for these devices may not be compelling to consumers. As new mobile devices and platforms are released, it is difficult to predict the problems we may encounter in developing applications for alternative devices and platforms and we may need to devote significant resources to the creation, support and maintenance of such applications. If we are unable to attract consumers to our sites through these devices or are slow to develop a version of our sites that is more compatible with alternative devices, we may fail to capture a significant share of consumers in the markets in which we operate, which could adversely affect our business. It is time consuming and costly to keep pace with rapidly changing and continuously evolving technology and our efforts may not increase sales or attract customers.

Our competitors, some of whom have greater resources than we do, may also be able to benefit from changes in digital commerce technologies, which could harm our competitive position. If we are unable to allow

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real-time and accurate visibility to product availability when consumers are ready to purchase, quickly and efficiently fulfill their orders using the distribution and payment methods they demand, provide a convenient and consistent experience for customers regardless of the ultimate sales channel or effectively manage our digital commerce sales, our ability to compete and our results of operations could be adversely affected.

Furthermore, if our digital commerce business and/or our sales to digital retailers successfully grow, they may do so in part by attracting existing customers, rather than new customers, who choose to purchase products from us or our wholesale partners online rather than from our brick and mortar stores, thereby detracting from the financial performance of our stores.

If we fail to open and operate new stores in a timely and cost-effective manner or fail to successfully enter new markets, our financial performance could be materially and adversely affected.

Our growth strategy depends on growing our store base and expanding our operations in existing and new geographic regions and operating our new stores successfully. We cannot assure you that our contemplated expansion will be successful.

Our ability to successfully open and operate new stores depends on many factors, including, among others, our ability to:

• identify suitable store locations, the availability of which is outside of our control;

• negotiate acceptable lease terms, including the ability to renew or extend upon favorable terms;

• address regulatory, competitive, merchandising, marketing, distribution and other challenges encountered in connection with expansion into new markets;

• hire, train and retain an expanded workforce of store managers and other personnel;

• maintain an adequate distribution footprint, information systems and other operational capabilities;

• successfully integrate new stores into our existing management structure and operations, including information system integration;

• source sufficient levels of inventory at acceptable costs;

• obtain necessary permits and licenses;

• construct and open our stores on a timely basis;

• generate sufficient levels of cash or obtain financing on acceptable terms to support our expansion;

• achieve and maintain brand awareness in new and existing markets; and

• identify and satisfy the merchandise and other preferences of our consumers.

Our failure to effectively address challenges such as these could adversely affect our ability to successfully open and operate new stores in a timely and cost-effective manner. Further, we will have pre-operating costs and we may have initial losses while new stores commence operations.

In addition, there can be no assurance that newly opened stores will achieve sales or profitability levels comparable to those of our existing stores in the time periods estimated by us, or at all. We may not be able to maintain the levels of North America DTC comparable sales that we have experienced recently. A variety of factors affect North America DTC comparable sales, including consumer trends, competition, current economic conditions, pricing, inflation, the timing of the release of new merchandise and promotional events, changes in our merchandise mix, the success of marketing programs and weather conditions. These factors may cause our North America DTC comparable sales results to be materially lower than recent periods and our expectations, which could harm our results of operations. If our stores fail to achieve, or are unable to sustain, acceptable total

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sales and profitability levels, our business may be materially harmed and we may incur significant costs associated with the early closure of such stores. Our plans to accelerate the growth of our store base may increase this risk.

Accordingly, we cannot assure you that we will achieve our planned growth or, even if we are able to grow our store base as planned, that our new stores will perform as expected. Our failure to implement our growth strategy and to successfully open and operate new stores in the time frames and at the costs estimated by us could have a material adverse effect on our business, results of operations and financial condition.

We are dependent on domestic and international wholesale partners for a significant portion of our sales.

We derive significant revenue from our network of domestic and international wholesale partners, consisting of digital pureplay retailers, specialty retailers and department stores, among others. A decision by any of our major wholesale partners, whether motivated by marketing strategy, competitive conditions, financial difficulties or otherwise, to decrease significantly 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. In addition, store closings by our wholesale partners shrink the number of doors carrying our products, while the remaining stores may purchase a smaller amount of our products and/or may reduce the retail floor space designated for our products. We also rely on our wholesale partners to train their employees with respect to our products and to ensure a successful consumer experience. If any disputes with our wholesale partners arose, if we were to lose any of our key wholesale partners or if any of our key wholesale partners consolidate and/or gain greater market power, our business, results of operations and financial condition may be materially adversely affected. In addition, we may be similarly adversely impacted if any of our key wholesale partners experience any operational difficulties or generate less traffic.

We enter into vendor agreements with our wholesale partners whereby we negotiate and agree on, among other things, packaging, delivery and cancellation terms. However, there is no minimum guaranty or commitment to purchase from our wholesale partners. As a result, we rely on our wholesale partners’ continuing demand for our products and our position in the market for all purchase orders. To assist in the scheduling of production and the shipping of our products, we offer our wholesale partners the opportunity to place orders five to six months ahead of delivery under our futures ordering program. These advance orders may be canceled under certain conditions, and the risk of cancellation may increase when dealing with financially unstable retailers or retailers struggling with economic uncertainty. In addition, certain of our wholesale partners, particularly those located in the United States, have become highly promotional and have aggressively marked down their merchandise. Such promotional activity could negatively impact our business. If our wholesale partners change their pricing and margin expectations, change their business strategies as a result of industry consolidation or otherwise, maintain and seek to grow their own private-label competitive offerings, reduce the number of brands they carry or amount of shelf space they allocate to our products, or allocate greater shelf space to, or increase their advertising or promotional efforts for, our competitors’ products, our sales could decrease and our business, results of operations and financial condition may be materially adversely affected.

Certain of our wholesale partners may from time to time experience financial difficulties, including bankruptcy or insolvency. If our wholesale partners suffer significant financial difficulty, they may reduce their orders from us or stop purchasing from us and/or be unable to pay the amounts due to us timely or at all, which could have a material adverse effect on our ability to collect on receivables and our results of operations. It is possible that wholesale partners may contest their contractual obligations to us under bankruptcy laws or otherwise. Further, we may have to negotiate significant discounts and/or extended financing terms with these wholesale partners in such a situation. If we are unable to collect upon our accounts receivable as they come due in an efficient and timely manner, our business, results of operations and financial condition may be materially adversely affected. In addition, product sales are dependent in part on high-quality merchandising and an appealing retail environment to attract consumers, which requires continuing investments by retailers. Retailers

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that experience financial difficulties may fail to make such investments or delay them, resulting in lower sales and orders for our products. We also face risk from international wholesale partners that file for bankruptcy protection in foreign jurisdictions, as the application of foreign bankruptcy laws may be more difficult to predict.

Consolidations among our wholesale partners would concentrate our credit risk with a relatively small number of retailers, and, if any of these retailers were to experience a shortage of liquidity or consumer behavior shifts away from traditional retail, it would increase the risk that their outstanding payables to us may not be paid. In addition, increasing market share concentration among one or a few retailers in a particular country or region increases the risk that if any one of them substantially reduces their purchases of our products, we may be unable to find a sufficient number of other retail outlets for our products to sustain the same level of sales and revenue.

Our business is subject to risks associated with our international distribution partners.

We rely on our international distributors to understand local market conditions, to diligently sell our products and to comply with local laws and regulations, including applicable anti-bribery and anti-corruption laws. The operation of local laws and our agreements with distributors can make it difficult for us to change quickly from a distributor who we feel is underperforming. If we do terminate an independent distributor, we may lose our customers who have been dealing with that distributor. We do not have local staff in many of the areas covered by independent distributors, which may make it difficult for us to monitor our distributors’ performance. Actions by independent distributors that are beyond our control could result in flat or declining sales in that geography, harm to our reputation or our products or legal liability. In addition, our international expansion depends on our ability to identify and maintain regional distributor relationships in new and existing geographies, and our failure to so identify and maintain such relationships may adversely affect our growth and financial performance.

We are subject to the risk our licensees may not generate expected sales or maintain the value of our brands.

We currently license, and expect to continue licensing, certain of our proprietary rights, such as trademarks, to third parties. If our licensees fail to successfully market and sell licensed products, or fail to obtain sufficient capital or effectively manage their business operations, customer relationships, labor relationships, supplier relationships or credit risks, it could adversely affect our revenue, both directly from reduced royalties received and indirectly from reduced sales of our other products.

We also rely on our licensees to help preserve the value of our brand. Although we attempt to protect our brand through approval rights over the design, production processes, quality, packaging, merchandising, distribution, advertising and promotion of our licensed products, we cannot completely control the use of our licensed brand by our licensees. Although we make efforts to police the use of our trademarks by our licensees, we cannot assure you that these efforts will be sufficient to ensure that our licensees abide by the terms of their licenses. In the event that our licensees fail to do so, our trademark rights could be harmed. Moreover, the misuse of our brand by, or negative publicity involving, a licensee could have a material adverse effect on our brand and on us.

We may not be able to adequately protect our intellectual property and we may be accused of infringing intellectual property or other proprietary rights of third parties, which could harm the value of our brand and adversely affect our business.

We rely on a combination of patents, trademarks, trade secrets and contractual provisions to protect our intellectual property. Patents and our other intellectual property rights are important to our business and our ability to compete effectively with other companies. Our efforts to protect our intellectual property and other proprietary rights may not be sufficient. We cannot be sure that:

• our pending patent applications will result in the issuance of patents;

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• patents issued or licensed to us in the past or in the future will not be challenged or circumvented by competitors or others;

• our patents will remain valid and enforceable or will be sufficient to preclude our competitors or others from introducing technologies and products similar to those covered by our patents and patent applications;

• our competitors will not independently develop products or technologies that are equivalent or superior to ours; or

• competitors will not otherwise gain access to or circumvent our trade secrets or other confidential information.

In addition, our ability to enforce and protect our intellectual property rights may be limited in certain countries outside the United States because of the differences in foreign laws concerning proprietary rights, which could make it easier for competitors to capture a market position in such countries by utilizing technologies and products that are similar to those developed or owned by or licensed to us.

We rely on our trademark registrations and common law trademark rights to distinguish our products from the products of our competitors, and have registered or applied to register many of our trademarks. We cannot assure you that our trademark applications will be approved. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition. Furthermore, there are jurisdictions that do not recognize common law trademark rights, and third parties in these jurisdictions may register marks similar or identical to our own and sue us to preclude our use of these trademarks. Moreover, common law trademarks may be more difficult to enforce than registered trademarks in the United States because they are not entitled to, among other things, a presumption of ownership and exclusive rights on a nationwide basis, and certain statutory remedies (including the right to record the marks with the U.S. Customs and Border Patrol to block importation of infringing goods from overseas). In addition, we cannot assure you that competitors will not infringe our trademarks, or that we will have adequate resources to fully enforce our trademarks.

Moreover, we cannot guarantee we will successfully enjoin infringers. We periodically discover counterfeit reproductions of our products or products that otherwise infringe our intellectual property rights. If we are unsuccessful in enforcing our intellectual property rights, continued sales of these products could adversely affect our sales and our brand and could result in a shift of consumer preference away from our products. Competitors also may harm our sales by designing products that mirror the capabilities of our products without infringing or otherwise violating our intellectual property rights. Confidentiality or other agreements to which we are a party may be breached, and the remedies thereunder may not be sufficient to protect our rights. Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition. Any litigation to enforce our rights could be costly, divert attention of management, and may not be successful.

We are also at risk of claims by others that we have infringed their copyrights, trademarks or patents, or improperly used or disclosed their trade secrets, or otherwise infringed or violated their proprietary rights, such as the right of publicity. The costs of supporting any litigation or disputes related to these claims can be considerable, and we cannot assure you that we will achieve a favorable outcome of any such claim. If any such claim is valid, we may be compelled to cease sale of certain products and/or our use of such proprietary rights, enter into royalty or licensing agreements in order to obtain the right to use a third-party’s intellectual property, pay damages or indemnify our wholesale partners, which could adversely affect our business, results of operations and financial condition. Even if such claims were not valid, defending them could be expensive and distracting.

We may not be able to successfully implement our growth strategies on a timely basis or at all.

Our future success depends, in large part, on our ability to implement our growth strategies, including expanding our product offerings to earn more share of customers’ closets, continuing to engage in customer

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acquisition and retention efforts that drive long-term customer relationships and continuing to grow our North America DTC, North America wholesale and International businesses. Our ability to implement these growth strategies depends, among other things, on our ability to:

• expand core franchises and expand our product offerings across use occasions and new lifestyle accessories categories;

• increase our brand recognition by effectively implementing our digital-first marketing strategy;

• increase customer engagement with our digital platform;

• increase our number of active DTC customers across our sites and stores;

• leverage our investments to drive traffic and customer acquisition;

• selectively grow our store fleet;

• expand and diversify our wholesale channel and accelerate partnerships with digital pureplay retailers; and

• enter into distribution and other strategic arrangements with potential distributors of our products.

We may not be able to successfully implement our growth strategies and may need to change them. If we fail to implement our growth strategies or if we invest resources in a growth strategy that ultimately proves unsuccessful, our business, results of operations and financial condition may be materially and adversely affected.

Our growth strategies could strain our existing resources and cause our performance to suffer.

We continue to experience rapid growth in our headcount and operations, which will continue to place significant demands on our management and our operational and financial resources. Our organizational structure may become more complex as we add additional staff, and as we continue to grow, we must effectively integrate, develop and motivate a large number of employees. To attract top talent, we have had to offer, and believe we will need to continue to offer, competitive compensation packages. Furthermore, we may not be able to hire new employees quickly enough to meet our needs. If we fail to effectively manage our hiring needs and successfully integrate our new hires, our efficiency and ability to meet our forecasts and our employee morale, productivity and retention could suffer, and our business and results of operations may be adversely affected.

In addition, if we do not effectively manage the growth of our business and operations, the quality of our products and the pace of innovation could suffer, which could negatively affect our brand, business, results of operations and financial condition. To effectively manage our growth, we will need to continue to improve our operational, financial and management controls, and our reporting systems and procedures, by, among other things:

• improving our technology infrastructure to maintain the effectiveness of our processes;

• enhancing information and communication systems to ensure that our employees and offices are well-coordinated and can effectively communicate with each other and our users and customers; and

• augmenting our internal controls to ensure timely and accurate reporting of all of our operations.

These systems enhancements and control improvements will require significant capital expenditures and allocation of valuable management and employee resources. If we fail to implement these improvements effectively, our ability to manage our growth and comply with the rules and regulations that are applicable to public companies will be impaired.

We will require significant capital to fund our expanding business. If we are unable to maintain sufficient levels of cash flow from our operations, we may not be able to execute or sustain our growth strategy or we may require additional financing, which may not be available to us on satisfactory terms or at all.

To support our expanding business and execute our growth strategy, we will need significant amounts of capital, including funds to pay our lease obligations, build out new store spaces, purchase inventory, expand our

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distribution and fulfillment network, pay personnel and further invest in our infrastructure and facilities. Further, our plans to grow our store base may create cash flow pressure if new locations do not perform as projected. In the past, we have primarily depended on cash flow from operations to fund our business and growth plans. Upon the closing of this offering, we expect that we will continue to primarily depend on cash flow from operations to fund our business and growth plans. If we do not generate sufficient cash flow from operations, we may need to obtain additional equity or debt financing. Tightening in the credit markets, low liquidity, volatility in the capital markets and lack of confidence in the equity market could result in diminished availability of credit and higher cost of borrowing, making it more difficult to obtain additional financing on terms that are favorable to us, if at all. If such financing is not available to us, or is not available on satisfactory terms, our ability to operate and expand our business could be curtailed and we may need to delay, limit or eliminate planned product expansion or introduction, marketing initiatives, store openings or operations, digital expansion or other elements of our growth strategy.

Our international business operations are subject to risks and uncertainties, including risks arising from currency exchange rate fluctuations, which could adversely affect our operating results.

Our operations outside the United States are subject to certain legal, regulatory, social, political and economic risks inherent in international business operations, including, without limitation:

• local product preferences and product requirements;

• different consumer demand dynamics, which may make the merchandise we offer less successful compared to the United States;

• more stringent regulations relating to privacy and data security and access to, or use of, commercial and personal information, particularly in Europe;

• less rigorous protection of intellectual property;

• competition from local incumbents that understand the local market and may operate more effectively;

• navigating shipping and returns in a more fragmented geography, particularly, if the European Union were to lose members or change its policies regarding the flow of goods across country borders;

• trade protection measures, sanctions, quotas, embargoes, import and export licensing requirements, duties, tariffs or surcharges;

• changes in foreign regulatory requirements and tax laws;

• alleged or actual violations of the Foreign Corrupt Practices Act of 1977, or the FCPA, the United Kingdom’s Bribery Act of 2010, or the Bribery Act, and other anti-bribery and anti-corruption laws, rules and regulations in the foreign jurisdictions in which we do business;

• difficulty in establishing, staffing and managing non-U.S. operations;

• differing labor regulations where labor laws may be more advantageous to employees as compared to the United States, as well as increased labor costs;

• complex tax and cash management issues;

• potential tax costs associated with repatriating cash from our non-U.S. subsidiaries;

• political and economic instability and inflation, recession or interest rate fluctuations; and

• longer-term receivables than are typical in the United States and greater difficulty of collecting receivables in certain foreign jurisdictions.

Doing business in multiple countries requires us to comply with the laws and regulations of the U.S. government and various non-U.S. jurisdictions. Our failure to comply with these rules and regulations may

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expose us to liabilities. These laws and regulations may apply to us, individual directors, officers, employees and agents, and may restrict our operations, trade practices, investment decisions and partnering activities. In particular, we are subject to the FCPA, the Bribery Act and other anti-bribery and anti-corruption laws, rules and regulations around the world. The anti-bribery laws generally prohibit covered entities and their intermediaries from engaging in bribery or making other prohibited payments, offers or promises to foreign officials for the purpose of obtaining or retaining business or other advantages. In addition, the FCPA and other anti-bribery and anti-corruption laws impose recordkeeping and internal controls requirements on publicly traded corporations and their foreign affiliates. We face significant risks if we fail to comply with the FCPA and other laws that prohibit improper payments, offers or promises of payment to foreign governments and their officials and political parties by us and other business entities for the purpose of obtaining or retaining business or other advantages. In many foreign countries, particularly in countries with developing economies, it may be a local custom that businesses operating in such countries engage in business practices that are prohibited by the FCPA or other similar laws and regulations. Despite our training and compliance programs, our internal control policies and procedures may not always protect us from violating anti-corruption laws or from acts committed by our employees or by third parties, including, but not limited to, our wholesale partners and distributors. Therefore, there can be no assurance that our employees, agents, wholesale partners and distributors have not and will not take actions that violate our policies or applicable laws, for which we may be ultimately held responsible. Any violation of anti-bribery and anti-corruption laws or allegation of such violations could result in severe criminal or civil sanctions, which could have a material adverse effect on our reputation, business, results of operations and financial condition.

We are also exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates. If the U.S. dollar strengthens in relation to the currencies of other countries where we sell our products, our U.S. dollar reported revenue and income will decrease. In addition, we incur significant costs in foreign currencies and a fluctuation in those currencies’ value can negatively impact manufacturing and selling costs. Changes in the relative values of currencies occur regularly and, in some instances, could have an adverse effect on our results of operations and financial condition.

In addition, certain of these risks may be heightened as a result of changing political climates. The U.S. government has threatened substantial changes to trade agreements and has raised the possibility of imposing significant increases on tariffs on goods imported into the United States, particularly from China. The imposition of additional tariffs by the United States could result in the adoption of tariffs by other countries, leading to a global trade war. For example, throughout 2018 and 2019, the United States and China have been levying tariffs on their respective imports. Such tariffs could have a significant impact on our business. While we may attempt to renegotiate prices with suppliers or diversify our supply chain in response to tariffs, such efforts may not yield immediate results or may be ineffective. We might also consider increasing prices to the end consumer; however, this could reduce the competitiveness of our products and adversely affect revenue. If we fail to manage these dynamics successfully, our gross margins and profitability could be adversely affected.

Further, the United Kingdom’s intended withdrawal from the European Union, or Brexit, has created political and economic uncertainty, particularly in the United Kingdom and the European Union, and this uncertainty may last for years. Our and our distributors’ and wholesale partners’ business could be affected during this period of uncertainty, and perhaps longer, by the impact of Brexit. In addition, our and our distributors’ and wholesale partners’ business could be negatively affected by new trade agreements between the United Kingdom and other countries, including the United States and by the possible imposition of trade or other regulatory barriers in the United Kingdom.

The outbreak, and threat or perceived threat of outbreak, of the coronavirus may negatively impact our sourcing and manufacturing operations and consumer spending, which could adversely affect our business, results of operations and financial condition.

The outbreak of the coronavirus in Greater China could adversely affect our business, results of operations and financial condition. The coronavirus outbreak may materially impact our sourcing and manufacturing

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operations as a portion of our products are manufactured in China and materials for our products are sourced in China by our manufacturers within Greater China and in other affected regions. Travel within China and into other countries may be restricted, which may impact our manufacturers’ ability to obtain necessary materials and inhibit travel of our and our manufacturers’ and material suppliers’ employees, which may in turn reduce our work force and that of our manufacturers and material suppliers. As a result of such reduced workforces, potential factory closures, inability to obtain materials, disruptions in the supply chain and potential disruption of transportation of goods produced in China or other countries adversely impacted by the coronavirus outbreak, or threat or perceived threat of such outbreak, we may be unable to obtain adequate inventory or samples sources from these regions, which could adversely affect our business, results of operations and financial condition. Furthermore, our existing suppliers, such as our suppliers located in India and Vietnam, or new suppliers or sources of materials may pass the increase in sourcing costs due to the coronavirus outbreak to us through price increases, thereby impacting our margins. Material changes in the pricing practices of our suppliers could negatively impact our profitability.

In addition, as of February 14, 2020, one of our distributors operates 18 stores in Greater China and has temporarily closed certain locations while its remaining locations are operating with reduced hours and experiencing significantly reduced consumer foot traffic, which we expect will result in lost sales. Moreover, our business, results of operations and financial condition could be further adversely affected if the coronavirus outbreak expands to other countries where we have a significant number of stores, partnerships with regional distributors and wholesalers and/or sourcing and manufacturing operations. If the retail economy weakens and/or consumer behavior shifts due to the coronavirus outbreak or threat or perceived threat of such outbreak, we or our distributors may need to significantly reduce or limit store operations and/or close additional stores and retailers may be more cautious with orders. A slowing or changing economy in the regions adversely affected by the coronavirus outbreak could adversely affect the financial health of our distributors and wholesale partners, which in turn could have an adverse effect on our business, results of operations and financial condition. While this global health emergency is expected to be temporary, the duration and intensity of the disruption is uncertain, including potential broader impacts outside of China if travel and tourist traffic is further restricted and there is a resulting decline in Chinese tourist spending in other regions.

Our products are subject to risks associated with sourcing and manufacturing.

We do not own or operate any of the manufacturing facilities for our products and rely on a concentrated number of international independent suppliers to manufacture all of the products we sell. We source our footwear and selected lifestyle accessories from 12 suppliers across Vietnam, India and China, with our largest supplier representing 27% of the total footwear units we purchased in fiscal year 2019. For our business to be successful, our suppliers must provide us with quality products in substantial quantities, in compliance with regulatory requirements, at acceptable costs and on a timely basis. Our ability to obtain a sufficient selection or volume of merchandise on a timely basis at competitive prices could suffer as a result of any deterioration or change in our supplier relationships or events that adversely affect our suppliers.

There can be no assurance we will be able to detect, prevent or fix all defects that may affect our products manufactured by our suppliers. Failure to detect, prevent or fix defects, or the occurrence of real or perceived quality or safety problems or material defects in our current and future products, could result in a variety of consequences, including a greater number of product returns than expected from customers and our wholesale partners, litigation, product recalls and credit, warranty or other claims, among others, which could harm our brand, results of operations and financial condition. Such problems could hurt our brand image, which is critical to maintaining and expanding our business. Any negative publicity or lawsuits filed against us related to the perceived quality and safety of our products could harm our brand and decrease demand for our products.

If one or more of our significant suppliers were to sever their relationship with us or significantly alter the terms of our relationship, including due to changes in applicable trade policies, we may not be able to obtain replacement products in a timely manner, which could have a material adverse effect on our business, results of operations and financial condition. In addition, if any of our primary suppliers fail to make timely shipments, do not meet our quality standards or otherwise fail to deliver us product in accordance with our plans, there could be a material adverse effect on our results of operations.

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Our contractors and suppliers buy raw materials and are subject to wage rates that are oftentimes regulated by the governments of the countries in which our products are manufactured. The raw materials used to manufacture our products are subject to availability constraints and price volatility. There could be a significant disruption in the supply of fabrics or raw materials from current sources or, in the event of a disruption, our suppliers might not be able to locate alternative suppliers of materials of comparable quality at an acceptable price or at all. Our business is dependent upon the ability of our unaffiliated suppliers to locate, train, employ and retain adequate personnel. Our unaffiliated suppliers have experienced, and may continue to experience in the future, unexpected increases in work wages, whether government-mandated or otherwise. Our suppliers may increase their pricing if their raw materials became more expensive. Our suppliers may pass the increase in sourcing costs to us through price increases, thereby impacting our margins. Material changes in the pricing practices of our suppliers could negatively impact our profitability.

In addition, we cannot be certain that our unaffiliated suppliers will be able to fill our orders in a timely manner. If we experience significant increases in demand, or reductions in the availability of materials, or need to replace an existing supplier, there can be no assurance additional supplies of fabrics or raw materials or additional manufacturing capacity will be available when required on terms acceptable to us, or at all, or that any supplier would allocate sufficient capacity to us in order to meet our requirements. In addition, even if we are able to expand existing or find new manufacturing or sources of materials, we may encounter delays in production and added costs as a result of the time it takes to train suppliers in our methods, products, quality control standards and labor, health and safety standards. Any delays, interruption or increased costs in labor or wages, or the supply of materials or manufacture of our products, could have an adverse effect on our ability to meet wholesale partner and customer and consumer demand for our products and result in lower revenue and net income both in the short and long term.

Events that adversely impact our suppliers could impair our ability to obtain adequate and timely supplies. Such events include, among others, difficulties or problems associated with our suppliers’ business, the financial instability and labor problems of suppliers, merchandise quality and safety issues, natural or man-made disasters, inclement weather conditions, war, acts of terrorism and other political instability, economic conditions, transportation delays and shipment issues. Our suppliers may be forced to reduce their production, shut down their operations or file for bankruptcy. Our suppliers may consolidate, increasing their market power. The occurrence of one or more of these events could impact our ability to get products to our customers and/or wholesale partners, result in disruptions to our operations, increase our costs and decrease our profitability.

Global sourcing and foreign trade involve numerous factors and uncertainties beyond our control, including:

• increased shipping costs;

• the imposition of additional import or trade restrictions;

• legal or economic restrictions on overseas suppliers’ ability to produce and deliver products;

• increased custom duties and tariffs;

• unforeseen delays in customs clearance of goods;

• more restrictive quotas;

• loss of a most favored nation trading status;

• currency exchange rates;

• transportation delays;

• port of entry issues; and

• foreign government regulations, political instability and economic uncertainties in the countries from which we or our suppliers source our products.

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Our sourcing operations may also be hurt by health concerns regarding the outbreak of viruses, widespread illness, infectious diseases, contagions and the occurrence of unforeseen epidemics (including the outbreak of the coronavirus and its potential impact on our financial results) in countries in which our merchandise is produced. Moreover, negative press or reports about internationally manufactured products may sway public opinion, and thus customer confidence, away from the products sold in our stores. Furthermore, changes in U.S. trade policies, including new restrictions, tariffs or other changes could lead to additional costs, delays in shipments, embargos and other uncertainties that could negatively impact our relationships with our international suppliers and materially adversely affect our business. These and other issues affecting our international suppliers or internationally manufactured merchandise could have a material adverse effect on our business, results of operations and financial condition.

In addition, some of our suppliers may not have the capacity to supply us with sufficient merchandise to keep pace with our growth plans, especially if we need significantly greater amounts of inventory. In such cases, our ability to pursue our growth strategy will depend in part upon our ability to develop new supplier relationships.

Failure of our suppliers or our licensees’ suppliers to use ethical business practices and comply with our code of conduct and laws and regulations could harm our business.

We work with contractors outside of the United States to manufacture our products, and we also have license agreements that permit unaffiliated parties to manufacture or contract for the manufacture of products using our intellectual property. We require the contractors that directly manufacture our products and our licensees that make products using our intellectual property (including, indirectly, their suppliers) to comply with a code of conduct and other environmental, health and safety standards for the benefit of workers. We also require these contractors to comply with applicable standards for product safety. We have partnered with Social Accountability International, a global non-governmental organization, and various third parties to develop a factory code of conduct and dual management systems and compliance audit programs based on local and international standards. Direct and licensee manufacturing partners are audited at least annually based on this standard, and the program is managed through the supply chain software, OSCA. However, we do not control our suppliers and manufacturers or their business, and notwithstanding their contractual obligations, from time to time contractors may not comply with such standards or applicable law or regulation or our licensees may fail to enforce such standards or applicable law or regulation on their contractors. Significant or continuing noncompliance with such standards and laws by one or more contractors could harm our reputation or result in a product recall and, as a result, could have an adverse effect on our sales and financial condition. In addition, we rely on our manufacturers’ and suppliers’ compliance reporting in order to comply with regulations applicable to our products. This is further complicated by the fact that expectations of ethical business practices continually evolve and may be substantially more demanding than applicable legal requirements. Ethical business practices are also driven in part by legal developments and by diverse groups active in publicizing and organizing public responses to perceived ethical shortcomings. Accordingly, we cannot predict how such regulations or expectations might develop in the future and cannot be certain that our guidelines or current practices would satisfy all parties who are active in monitoring our products or other business practices worldwide.

Negative publicity regarding production methods, alleged practices or workplace or related conditions of any of our suppliers, manufacturers or licensees could adversely affect our brand image and sales and force us to locate alternative suppliers, manufacturers or licenses, which could increase our costs and result in delayed delivery of our products, product shortages or other disruptions to our operations.

If we encounter problems with distribution, our or our customers’ ability to deliver our products to market could be adversely affected.

We rely on a limited number of distribution and fulfillment centers in the regions in which we operate. Substantially all of our inventory is shipped directly from our suppliers to our distribution center in New

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Hampshire and a network of fulfillment centers in the United States, Hong Kong and Japan that are managed by third-party vendors where the inventory is then processed, sorted and shipped to our stores, our customers, our wholesale partners or our distributors using third-party carriers. We depend in large part on the orderly operation of this receiving and distribution process, which depends, in turn, on adherence to shipping schedules and effective management of our distribution center and our vendors’ fulfillment centers. Any increase in transportation costs (including increases in fuel costs), increased shipping costs, issues with overseas shipments, supplier-side delays, reductions in the transportation capacity of carriers, labor strikes or shortages in the transportation industry, disruptions to the national and international transportation infrastructure and unexpected delivery interruptions or delays may increase the cost of, and adversely impact, our distribution process.

In addition, if we or our vendors change the transportation companies we or they use, we or they could face logistical difficulties that could adversely affect deliveries and we or they could incur costs and expend resources in connection with such change. We or our vendors also may not be able to obtain terms as favorable as those received from the third-party transportation providers we or they currently use, which could increase our or their costs. We also may not adequately anticipate changing demands on our distribution system, including the effect of any expansion we may need to implement in our distribution center or through our vendors’ fulfillment centers.

In addition, events beyond our control, such as disruptions in operations due to natural or man-made disasters, inclement weather conditions, accidents, system failures, power outages, political instability, physical or cyber break-ins, server failure, work stoppages, slowdowns or strikes by employees, acts of terrorism, the outbreak of viruses, widespread illness, infectious diseases, contagions and the occurrence of unforeseen epidemics (including the outbreak of the coronavirus and its potential impact on our financial results) and other unforeseen or catastrophic events, could damage our distribution center or our vendors’ fulfillment centers or render them inoperable, making it difficult or impossible for us or our vendors to process customer orders for an extended period of time. Such events may also result in delays in our or our vendors’ receipt of inventory and the delivery of merchandise between our customers, our stores and/or our partners and our distribution center and our vendors’ fulfillment centers. We or our vendors could also incur significantly higher costs and longer lead times associated with distributing inventory during the time it takes for us or our vendors to reopen or replace our distribution center or any of their fulfillment centers.

The inability to fulfill, or any delays in processing, customer orders through our distribution network or any quality issues could result in the loss of retail customers or wholesale partners or issuances of refunds or credits, and may also adversely affect our reputation. The success of our stores, our wholesale partners or our distributors depends on their timely receipt of products for sale and any repeated, intermittent or long-term disruption in, or failures of, the operations of our distribution center or our vendors’ fulfillment centers could result in lower sales and profitability, a loss of loyalty to our brand and excess inventory. The insurance we maintain for business interruption may not cover all risk, or be sufficient to cover all of our potential losses, and may not continue to be available to us on acceptable terms, if at all, and any insurance proceeds may not be paid to us in a timely manner.

We rely on third parties to provide us with services in connection with the administration of certain aspects of our business.

We have entered into agreements with third-party service providers, both domestically and internationally, to provide processing, information technology and administrative functions over a broad range of areas, including managing our supply chain and inventory, processing transactions in our stores, our financial accounting and reporting, compensating our employees and operating our digital commerce platform, and we may continue to do so in the future. These areas include digital commerce, information technology and distribution functions. Services provided by third parties could be interrupted as a result of many factors, including contract disputes, destruction of facilities, work stoppage or strike, or failure of essential equipment. Any failure by third parties to provide us with these services on a timely basis or within our service level

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expectations and performance standards could result in a disruption of our operations and could have a material adverse effect on our business, results of operations and financial condition. In addition, to the extent we are unable to maintain these arrangements, we would incur substantial costs in order to return these services in-house, including costs associated with hiring new employees, or to transition the services to other third parties.

We are subject to data security and privacy risks that could negatively impact our results of operations or reputation.

We collect, process, transmit and store personal, sensitive and confidential information, including our proprietary business information and that of consumers (including users of our sites) and our wholesale partners, distributors, employees, suppliers and business partners. The secure processing, maintenance and transmission of this information is critical to our operations. Consumers and our wholesale partners, distributors, employees, suppliers and business partners have a high expectation that we will adequately protect their information, including personal information, from cyber-attack or other security breaches, and may have claims against us if we are unable to do so. We may also have exposure to regulatory investigation and other compliance risks in the event of a cyber-attack or other security breach. Our wholesale partners, distributors and other business partners may have contractual rights of indemnification against us in the event that their customer or proprietary business information is released as a result of a breach of our information systems. In such an event, these business partners may also seek to terminate our contracts with them.

Our systems and those of our wholesale partners, distributors, third-party service providers and business partners may be vulnerable to security breaches, attacks by hackers, acts of vandalism, computer viruses, misplaced or lost data, human errors or other similar events. We have been subject to attempted cyber-attacks in the past and may continue to be subject to such attacks in the future. If unauthorized parties gain access to our networks or databases, or those of our wholesale partners, distributors, third-party service providers or business partners, they may be able to steal, publish, delete, use inappropriately or modify our private and sensitive third-party information, including credit card information and personal identification information. In addition, employees may intentionally or inadvertently cause data or security breaches that result in unauthorized release of personal or confidential information. Because the techniques used to circumvent security systems can be highly sophisticated, change frequently, are often not recognized until launched against a target and may originate from less regulated and remote areas around the world, we may be unable to proactively address all possible techniques or implement adequate preventive measures for all situations. Any such breach, attack, virus or other event could result in costly investigations and litigation exceeding applicable insurance coverage or contractual rights available to us, government enforcement actions, civil or criminal penalties, fines, operational changes or other response measures, loss of consumer confidence in our security measures, and negative publicity that could adversely affect our brand, business, results of operations and financial condition. These losses may not be adequately covered by insurance or other contractual rights available to us.

In addition, we must comply with increasingly complex and rigorous regulatory standards enacted to protect business and personal data in the United States, Europe and elsewhere. The regulatory environment surrounding information security and privacy is demanding, with the frequent imposition of new and changing requirements across our business. Various federal, state and foreign legislative and regulatory bodies, or self-regulatory organizations, may expand current laws or regulations, enact new laws or regulations or issue revised rules or guidance regarding privacy, data protection, information security and consumer protection. For example, California recently enacted the California Consumer Privacy Act, or the CCPA, which, among other things, requires new disclosures to California consumers, affords such consumers new abilities to opt out of certain sales of personal information and creates a new and potentially severe statutory damages framework for violations as it went into effect on January 1, 2020. The effects of the CCPA potentially are significant, however, and may require us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. Penalties for violations of the CCPA will include civil penalties. The interplay of federal and state laws may be subject to varying interpretations by courts and government agencies, creating complex compliance issues for us, consumers and our wholesale partners and distributors, and potentially exposing us to

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additional expense, adverse publicity and liability. As privacy and information security laws and regulations change, we may incur additional compliance costs.

In May 2018, the European Union’s new regulation governing data practices and privacy called the General Data Protection Regulation, or the GDPR, became effective. The law requires companies to meet more stringent requirements regarding the handling of personal data of individuals in the European Union than were required under predecessor requirements. The law also increases the penalties for non-compliance, which may result in monetary penalties of up to €20.0 million or 4% of a company’s worldwide annual revenue of the previous fiscal year, whichever is higher. The GDPR and other similar regulations require companies to give specific types of notice and in some cases seek consent from consumers and other data subjects before collecting or using their data for certain purposes, including some marketing activities. Outside of the European Union, many countries and territories have laws, regulations or other requirements relating to privacy, data protection, information security and consumer protection, and new countries and territories are adopting such legislation or other obligations with increasing frequency. Many of these laws may require consent from consumers for the use of data for various purposes, including marketing, which may reduce our ability to market our products. There is no harmonized approach to these laws and regulations globally. Consequently, we would increase our risk of non-compliance with applicable foreign data protection laws by expanding internationally. We may need to change and limit the way we use personal information in operating our business and may have difficulty maintaining a single operating model that is compliant.

Further, because we accept debit and credit cards for payment, we are subject to the Payment Card Industry Data Security Standard, or the PCI Standard, issued by the Payment Card Industry Security Standards Council, with respect to payment card information. The PCI Standard contains compliance guidelines with regard to our security surrounding the physical and electronic storage, processing and transmission of cardholder data. Compliance with the PCI Standard and implementing related procedures, technology and information security measures requires significant resources and ongoing attention. Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology, such as those necessary to achieve compliance with the PCI Standard or with maintenance or adequate support of existing systems could also disrupt or reduce the efficiency of our operations. Any material interruptions or failures in our payment-related systems could have a material adverse effect on our business, results of operations and financial condition. If there are amendments to the PCI Standard, the cost of re-compliance could also be substantial and we may suffer loss of critical data and interruptions or delays in our operations as a result. If we are unable to comply with the security standards established by banks and the payment card industry, we may be subject to fines, restrictions and expulsion from card acceptance programs, which could adversely affect our retail operations.

As a general matter, compliance with laws, regulations and any applicable rules or guidance from self-regulatory organizations relating to privacy, data protection, information security and consumer protection may result in substantial costs and may necessitate changes to our business practices, which may compromise our growth strategy, adversely affect our ability to acquire customers and otherwise adversely affect our business, results of operations and financial condition.

Any failure, inadequacy, interruption or breach of our information technology systems, whether owned by us or outsourced or managed by third parties, could harm our ability to effectively operate our business and could have a material adverse effect on our business, results of operations and financial condition.

We rely heavily on our information technology systems, including those maintained by us and those maintained and provided by third parties (for example, “software-as-a-service” and cloud solutions), for many functions across our operations, including managing our supply chain and inventory, processing transactions in our stores, our financial accounting and reporting, compensating our employees and operating our digital commerce platform. Our ability to effectively manage our business and coordinate the sourcing, distribution and sale of our products depends significantly on the reliability and capacity of these systems. Such systems are

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subject to damage or interruption from power outages or damages, telecommunications problems, data corruption, software errors, theft, design defects, network failures, security breaches, acts of war or terrorist attacks, fire, flood and natural disasters. Our servers or those maintained by third-party providers could be affected by physical or electronic break-ins, and computer viruses or similar disruptions may occur. A system outage may also cause the loss of important data. Our or our third-party providers’ existing safety systems, data backup, access protection, user management and information technology emergency planning may not be sufficient to prevent data loss or long-term network outages.

In addition, we may have to upgrade our existing information technology systems from time to time in order for such systems to withstand the increasing needs of our expanding business. We rely on certain hardware, telecommunications and software vendors to maintain and periodically upgrade many of these systems so that we can continue to support our business. Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of existing systems could disrupt or reduce the efficiency of our operations. We also depend on our information technology staff. If we cannot meet our staffing needs in this area, we may not be able to fulfill our technology initiatives while continuing to provide maintenance on existing systems.

We could be required to make significant capital expenditures to remediate any such failure, malfunction or breach with our information technology systems. Further, additional investment needed to upgrade and expand our information technology infrastructure will require significant investment of additional resources and capital, which may not always be available or available on favorable terms. Any material disruption or slowdown of our systems or those of our third-party providers, including those caused by our or their failure to successfully upgrade our or their systems, and our or their inability to convert to alternate systems in an efficient and timely manner could have a material adverse effect on our business, results of operations and financial condition.

If we fail to retain our existing senior management team or attract qualified new talent, such failure could have a material adverse effect on our business, financial condition and results of operations.

Our business requires disciplined execution at all levels of our organization. This execution requires an experienced and talented management team. If we were to lose the benefit of the experience, efforts and abilities of key executive personnel, it could have a material adverse effect on our business, results of operations and financial condition. Our success also depends on our ability to recruit, retain and motivate a sufficient number of qualified team members for our Innovation Center, qualified retail personnel and qualified technical and support roles for procurement, distribution, digital commerce and back office functions, both to maintain our current business and to execute our strategic initiatives. Competition for skilled and experienced management and qualified employees is intense and subject to high turnover, and requires us to pay higher wages to attract a sufficient number of suitable employees. We may not be successful in finding, attracting and retaining new qualified talent required to grow and operate our business profitably. In addition, shifts in U.S. immigration policy could negatively impact our ability to attract, hire and retain highly skilled employees who are from outside the United States.

Factors such as wage rate increases, inflation, cost increases, increases in raw material prices and energy prices could have a material adverse effect on our business, results of operations and financial condition.

Increases in compensation and other expenses for our employees may adversely affect our profitability. Wage and hour regulations, such as regulations issued in 2016 by the U.S. Department of Labor relating to minimum wages and overtime pay, can exacerbate this risk. Certain states have recently adopted legislation increasing minimum wages. Other future cost increases, such as increases in the cost of merchandise, shipping rates, raw material prices, freight costs and store occupancy costs, may also reduce our profitability. These cost increases may be the result of inflationary pressures that could further reduce our sales or profitability. Increases in other operating costs, including changes in energy prices and lease and utility costs, may increase our cost of sales or selling, general and administrative expense. Competitive pressures in the retail industry may inhibit our

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ability to reflect these increased costs in the prices of our products, in which case such increased costs could have a material adverse effect on our business, results of operations and financial condition.

Our profitability and cash flows may be negatively affected if we are not successful in managing our inventory.

Efficient inventory management is a key component of our success and profitability. To be successful, we must maintain sufficient inventory levels to meet our customers’ demands without allowing those levels to increase to such an extent that the costs to distribution center and stores to hold the goods unduly impacts our financial results. If we do not accurately predict customer trends or spending levels in general or at particular stores or if we inappropriately price products, we may have to take unanticipated markdowns and discounts to dispose of obsolete, aged or excess inventory or record potential write-downs relating to the value of obsolete, aged or excess inventory. Conversely, if we underestimate future demand for a particular product or do not respond quickly enough to replenish our best-performing products, we may have a shortfall in inventory of such products, likely leading to unfulfilled orders, reduced revenue and customer dissatisfaction.

Maintaining adequate inventory requires significant attention and monitoring of market trends, local markets, developments with suppliers and our distribution network, and it is not certain that we will be effective in our inventory management. We are subject to the risk of inventory loss or theft and we may experience higher rates of inventory shrinkage or incur increased security costs to combat inventory theft. In addition, any casualty or disruption to our distribution center, third-party fulfillment centers or our stores may damage or destroy our inventory located there. As we expand our operations, it may be more difficult to effectively manage our inventory. If we are not successful in managing our inventory balances, it could have a material adverse effect on our business, results of operations and financial condition.

Merchandise returns could harm our business.

We allow our customers to return products, subject to our return policy. From time to time our products are damaged in transit, which can increase return rates and harm our brand. If the rate of merchandise returns increases significantly or if merchandise return economics become less efficient, our business, results of operations and financial condition could be harmed. Further, we modify our policies relating to returns from time to time, which may result in customer dissatisfaction or an increase in the number of product returns.

Our results of operations and inventory levels fluctuate on a quarterly basis.

We experience quarterly fluctuations in our financial performance, including in our North America DTC comparable sales, as a result of a variety of factors, including the timing of the holiday shopping season (in particular, around Thanksgiving), the timing of store openings or closings and the sales generated by new stores or lost by closed stores, merchandise mix, the timing of new advertising and product introductions and the timing and level of inventory markdowns. In addition, adverse events, such as higher unemployment, deteriorating economic conditions, public transportation disruptions or unanticipated adverse weather or travel conditions can deter consumers from shopping. Unseasonal weather could also negatively impact sales of certain of our seasonal products, such as boots and sandals. As a result, historical period-to-period comparisons of our results of operations are not necessarily indicative of future period-to-period results. See “Business—Impact of Variability of Calendar on Comparability of Our Quarterly Results.”

In addition, in order to prepare for our peak shopping quarters, we must increase the staffing at our stores and order and keep in stock more merchandise than we carry during other parts of the year. This staffing increase and inventory build-up may require us to expend cash faster than is generated by our operations during this period. Any unanticipated decrease in demand for our products during such period could require us to sell excess inventory at a substantial markdown, which could have a material adverse effect on our business, results of operations and financial condition.

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We are subject to risks associated with leasing substantial amounts of space, including future increases in occupancy costs.

We lease all of the Company-operated store locations, our corporate headquarters and our distribution center. As a result, we are susceptible to changes in the property rental market and increases in our occupancy costs.

The success of our business depends, in part, on our ability to identify suitable premises for our stores and to negotiate acceptable lease terms. Our ability to effectively renew our existing store leases or obtain store leases to open new stores depends on the availability of store premises that meet our criteria for traffic, square footage, lease economics, demographics and other factors. We may not be able to renew or extend our existing store leases on acceptable terms, or at all, and may have to abandon desirable locations or renew leases on unfavorable terms. In addition, tenants at shopping centers in which we are located or have executed leases, or to which our locations are near, may fail to open or may cease operations. Decreases in total tenant occupancy in shopping centers in which we are located, or to which our locations are near, may affect traffic at our stores. All of these factors could have a material adverse impact on our operations.

Most leases for our stores provide for a minimum rent and typically include escalating rent increases over time. In certain circumstances, we pay a percentage rent based upon sales after certain minimum thresholds are achieved. The leases generally require us to pay insurance, utilities, real estate taxes and repair and maintenance expenses. Certain leases also provide that we cannot close or “go dark” even if we continue to pay rent. Our substantial lease obligations could have significant negative consequences, including:

• requiring that a substantial portion of our available cash be applied to pay our rental obligations, reducing cash available for other purposes and reducing our operating profitability;

• increasing our vulnerability to general adverse economic and industry conditions;

• limiting our flexibility in planning for, or reacting to changes in, our business or in the industry in which we compete;

• placing us at a disadvantage with respect to some of our competitors; and

• limiting our ability to obtain additional financing.

We depend on cash flows from operations to pay our lease expenses and to fulfill our other cash needs. If our business does not generate sufficient cash flow from operating activities, and sufficient funds are not otherwise available to us from borrowings or other sources, we may not be able to service our lease expenses, grow our business, respond to competitive changes or fund our other liquidity and capital needs, which could harm our business.

Further, the substantial majority of our leased sites are both currently and in the future expected to be subject to long-term, non-cancellable leases. If an existing or future store is not profitable and we decide to close it, we may nonetheless be obligated to perform our obligations under the applicable lease, including, among other things, paying the base rent and other charges for the balance of the lease term. Even if a lease has an early cancellation clause, we may not satisfy the contractual requirements for early cancellation under that lease.

As we expand our store base, particularly in certain markets that are more expensive, our lease expense and our cash outlays for rent under lease agreements may increase. Our inability to enter into new leases or renew existing leases on terms acceptable to us, or be released from our obligations under leases for stores that we close, could materially and adversely affect our business, results of operations and financial condition.

Changes in tax laws, adoption of new tax laws, unfavorable resolution of tax contingencies or exposure to additional tax liabilities could have a material impact on our results of operations or financial condition.

We are subject to income taxes and non-income based taxes in both the United States and various foreign jurisdictions. We are also subject to on-going tax audits in various jurisdictions. Tax authorities may disagree

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with certain positions we have taken and assess additional taxes. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision and have established contingency reserves for material, known tax exposures. However, the calculation of such tax exposures involves the application of complex tax laws and regulations in many jurisdictions, as well as interpretations as to the legality under European Union state aid rules of tax advantages granted in certain jurisdictions. Therefore, there can be no assurance that we will accurately predict the outcomes of these disputes or other tax audits or that issues raised by tax authorities will be resolved at a financial cost that does not exceed our related reserves, and the actual outcomes of these disputes and other tax audits could have a material impact on our results of operations or financial condition.

Changes in tax laws and regulations, or their interpretation and application, in the jurisdictions where we are subject to tax could materially impact our effective tax rate. The Tax Cuts and Jobs Act, which was enacted on December 22, 2017, included a number of significant changes to previous U.S. tax laws that impact us, including a reduction in the corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017, among other changes. The Tax Cuts and Jobs Act also transitions U.S. international taxation from a worldwide system to a modified territorial system and includes base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation.

The tax laws in the United States and other countries in which we do business could change on a prospective or retroactive basis, and any such changes could materially adversely affect our results of operations or financial condition.

We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs our customers would have to pay for our products and adversely affect our results of operations.

On June 21, 2018, the U.S. Supreme Court held in South Dakota v. Wayfair, Inc. that states could impose sales tax collection obligations on out-of-state retailers even if those retailers lack any physical presence within the states imposing sales taxes. An increasing number of states, both before and after the Supreme Court’s ruling, have considered or adopted laws that attempt to impose sales tax collection obligations on out-of-state retailers. The Supreme Court’s Wayfair decision has removed a significant impediment to the enactment of these laws, and it is possible that states may seek to tax out-of-state retailers, including for prior tax years. Although we believe that we currently collect sales taxes in all states that have adopted laws imposing sales tax collection obligations on out-of-state retailers since Wayfair was decided, a successful assertion by one or more states requiring us to collect sales taxes where we presently do not do so, or to collect more taxes in a jurisdiction in which we currently do collect some sales taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. The imposition by state governments of sales tax collection obligations on out-of-state retailers in jurisdictions where we do not currently collect sales taxes, whether for prior years or prospectively, could also create additional administrative burdens for us, put us at a competitive disadvantage if they do not impose similar obligations on our competitors and decrease our future sales, which could have a material adverse impact on our business, results of operations and financial condition.

Adverse litigation judgments or settlements resulting from legal proceedings relating to our business operations could materially adversely affect our business, results of operations and financial condition.

From time to time, we are subject to allegations, and may be party to legal claims and regulatory proceedings, relating to our business operations. Such allegations, claims and proceedings may be brought by third parties, including consumers, customers, partners, employees, governmental or regulatory bodies or competitors, and may include class actions. Defending against such claims and proceedings is costly and time consuming and may divert management’s attention and personnel resources from our normal business operations, and the outcome of many of these claims and proceedings cannot be predicted. If any of these claims or proceedings were to be determined adversely to us, a judgment, fine or settlement involving a payment of a material sum of money were to occur or injunctive relief were issued against us, our business, results of operations and financial condition could be materially adversely affected.

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Our operations are subject to environmental and workplace safety requirements, and costs or claims related to these requirements or to contamination could adversely affect us.

Our operations are subject to various federal, state and local requirements relating to the protection of the environment, including those governing the discharge of pollutants into the air, soil and water, the management and disposal of solid and hazardous materials and wastes, employee exposure to hazards in the workplace and the investigation and remediation of contamination resulting from releases of hazardous materials. If we fail to comply with such legal requirements we could be subject to enforcement actions, fines and liability. We use small quantities of hazardous substances in our operations. Our workers may also be subject to workplace hazards associated with our distribution operations. In addition, although we no longer manufacture shoes, we at one time operated several former manufacturing facilities. We may incur investigation, remediation or other costs related to releases of hazardous materials or other environmental conditions at locations where wastes from our facilities have been treated or disposed of, as well as at our currently or formerly owned or operated properties, regardless of whether we caused or contributed to such conditions, or those conditions were caused by former owners or operators or other third parties.

Goodwill and intangible assets, net represent a significant portion of our total assets, and any impairment of these assets could materially adversely affect our results of operations and financial condition.

Goodwill and intangible assets, net accounted for 52.9% and 40.8% of our total assets as of June 1, 2019 and November 30, 2019, respectively. We monitor the recoverability of our indefinite-lived intangible assets, which are our trademarks and tradenames, and evaluate goodwill and indefinite-lived intangible assets annually to determine if impairment has occurred. We also review the carrying value of our goodwill and intangible assets, both indefinite- and definite-lived, for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be fully recoverable. Such indicators are based on market conditions and the operational performance of our business. If the testing performed indicates that impairment has occurred, we are required to record a non-cash impairment charge for the difference between the carrying value of the intangible assets or goodwill and the fair value of the intangible assets and the implied fair value of the goodwill, respectively, in the period the determination is made. The testing of goodwill and intangible assets for impairment requires us to make estimates that are subject to significant assumptions about our future sales, profitability, cash flow, fair value of assets and liabilities and weighted average cost of capital, as well as other assumptions. Changes in these estimates, or changes in actual performance compared with these estimates, may affect the fair value of intangible assets or goodwill, which may result in an impairment charge.

We may recognize impairment charges in the future based on such assumptions. We cannot accurately predict the amount or timing of any impairment of assets. If we determine that a significant impairment has occurred, we will be required to write off the impaired portion of intangible assets and goodwill. If a significant amount of our goodwill and intangible assets were deemed to be impaired, our business, results of operations and financial condition could be materially adversely affected.

Risks Related to Our Indebtedness

Our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry and prevent us from meeting our obligations.

We have a significant amount of indebtedness. As of November 30, 2019, we had $277.4 million of indebtedness outstanding, all of which was secured indebtedness, and an additional $115.0 million of availability under the ABL Credit Facility, which was undrawn.

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Our substantial level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness. Our substantial indebtedness could have other important consequences to us, including:

• increasing our vulnerability to adverse changes in general economic, industry and competitive conditions;

• requiring us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

• limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• requiring us to repatriate cash from our foreign subsidiaries to accommodate debt service payments;

• exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates;

• restricting us from capitalizing on business opportunities;

• making it more difficult to satisfy our other financial obligations;

• placing us at a competitive disadvantage compared to our competitors that have less debt; and

• limiting our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business strategy or other general corporate purposes.

In addition, the credit agreements governing the Term Loan Facility and ABL Credit Facility contain, and the agreements governing future indebtedness may contain, restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all of our indebtedness.

We may be able to incur significant additional indebtedness in the future. Although the credit agreements governing the Term Loan Facility and ABL Credit Facility contain restrictions on the incurrence of additional indebtedness by us, such restrictions are subject to a number of qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. Also, these restrictions do not prohibit us from incurring obligations that do not constitute “Indebtedness” as defined therein. To the extent that we incur additional indebtedness or such other obligations, the risk associated with our substantial indebtedness described above will increase.

We will require a significant amount of cash to service our debt, and our ability to generate cash depends on many factors beyond our control. Any failure to meet our debt service obligations could materially adversely affect our business, results of operations and financial condition.

Our ability to make payments on and to refinance our indebtedness and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control.

If our business does not generate sufficient cash flow from operations, or if future borrowings are not available to us in an amount sufficient to enable us to service our indebtedness or to fund our other liquidity needs, we may need to refinance all or a portion of our indebtedness on or before the maturity thereof, sell assets, reduce or delay capital investments or seek to raise additional capital, any of which could have a material adverse effect on our operations. In addition, we may not be able to effect any of these actions, if necessary, on commercially reasonable terms or at all. Our ability to restructure or refinance our indebtedness will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could

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be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments, including the credit agreements governing the Term Loan Facility and ABL Credit Facility, may limit or prevent us from taking any of these actions. In addition, any failure to make scheduled payments of interest and principal on our outstanding indebtedness would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness on commercially reasonable terms or at all. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on commercially reasonable terms or at all, would have an adverse effect, which could be material, on our business, results of operations and financial condition, as well as on our ability to satisfy our obligations in respect of the Term Loan Facility and ABL Credit Facility.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under the Term Loan Facility and ABL Credit Facility are at variable rates of interest and expose us to interest rate risk. If interest rates were to increase, our debt service obligations on variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. We have entered into, and may enter into in the future, interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all or any of our variable rate indebtedness, and any swaps we enter into may not fully mitigate our interest rate risk.

LIBOR and other interest rates that are indices deemed to be “benchmarks” are the subject of recent and ongoing national, international and other regulatory guidance and proposals for reform. Some of these reforms are already effective, while others are still to be implemented. These reforms may cause such benchmarks to perform differently than in the past, or to disappear entirely, or have other consequences that cannot be predicted. Any such consequence could have a material adverse effect on our existing facilities, our interest rate swap agreement or our future debt linked to such a “benchmark” and our ability to service debt that bears interest at floating rates of interest.

Our debt instruments restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

The credit agreements governing the Term Loan Facility and ABL Credit Facility impose significant operating and financial restrictions and limit our ability to:

• incur additional indebtedness and guarantee indebtedness;

• pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

• prepay, redeem or repurchase certain debt;

• make acquisitions, investments, loans and advances;

• sell or otherwise dispose of assets;

• incur liens;

• enter into transactions with affiliates;

• enter into agreements restricting our subsidiaries’ ability to pay dividends;

• consolidate, merge or sell all or substantially all of our assets; and

• engage in certain fundamental changes, including changes in the nature of our business.

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As a result of these covenants and restrictions, we are and will be limited in how we conduct our business, and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. In addition, we are required to maintain specified financial ratios and satisfy other financial condition tests. The terms of any future indebtedness we may incur could include more restrictive covenants. We cannot guarantee that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to cure such non-compliance, obtain waivers from the lenders and/or amend the covenants.

Our failure to comply with the restrictive covenants described above, as well as others contained in our future debt instruments from time to time, could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date.

Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of events beyond our control, could result in an event of default that could materially adversely affect our business, results of operations and financial condition.

If there were an event of default under any of the agreements relating to our outstanding debt, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. Our assets or cash flow may not be sufficient to fully repay borrowing under our outstanding debt instruments if accelerated upon an event of default. Further, if we are unable to repay, refinance or restructure our secured debt, the holders of such debt could proceed against the collateral securing such debt. In addition, any event of default or declaration of acceleration under one debt instrument could result in an event of default under one or more of our other debt instruments. As a result, any default by us on our debt could have a materially adverse effect on our business, results of operations and financial condition.

Risks Related to this Offering and Ownership of Our Common Stock

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in Section 2(a)(19) of the Securities Act, and we may take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” In particular, while we are an “emerging growth company,” among other exemptions:

• we will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act,

• we will be subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and

• we will not be required to hold nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments not previously approved.

We may remain an “emerging growth company” until the fiscal year-end following the fifth anniversary of the completion of this initial public offering, though we may cease to be an “emerging growth company” earlier under certain circumstances, including (1) if our gross revenue exceeds $1.07 billion in any fiscal year, (2) if we become a large accelerated filer, with at least $700.0 million of equity securities held by non-affiliates, or (3) if we issue more than $1.0 billion in non-convertible notes in any three-year period.

We cannot predict if investors may find our common stock less attractive if we rely on the exemptions and relief granted by the JOBS Act. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline and/or become more volatile.

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We will be a “controlled company” within the meaning of the rules of NASDAQ and the rules of the SEC and, as a result, qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of other companies that are subject to such requirements.

After completion of this offering, our Sponsor will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of NASDAQ. Under these rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including the requirement that:

• a majority of our board of directors consist of “independent directors” as defined under the rules of NASDAQ;

• our director nominees be selected, or recommended for our board of directors’ selection, by a nominating/governance committee comprised solely of independent directors; and

• the compensation of our executive officers be determined, or recommended to our board of directors for determination, by a compensation committee comprised solely of independent directors.

Following this offering, we intend to utilize these exemptions. As a result, we may not have a majority of independent directors, our compensation committee and nominating and governance committee may not consist entirely of independent directors. Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements of NASDAQ.

Our Sponsor controls us and its interests may conflict with yours in the future.

Immediately following this offering, our Sponsor will beneficially own     % of our common stock, or     % if the underwriters exercise in full their option to purchase additional shares. Our Sponsor will be able to control the election and removal of our directors and thereby determine our corporate and management policies, including potential mergers or acquisitions, payment of dividends, asset sales, amendment of our certificate of incorporation or bylaws and other significant corporate transactions, for so long as our Sponsor and its affiliates retain significant ownership of us. This concentration of our ownership may delay or deter possible changes in control of the Company, which may reduce the value of an investment in our common stock. So long as our Sponsor continues to own a significant amount of our combined voting power, even if such amount is less than 50%, our Sponsor will continue to be able to strongly influence or effectively control our decisions and, so long as our Sponsor and its affiliates and certain of their transferees collectively own at least 5% of all outstanding shares of our stock entitled to vote generally in the election of directors, our Sponsor will be able to appoint individuals to our board of directors under the stockholders agreement to be entered into in connection with this offering. In addition, the stockholders agreement will grant to our Sponsor and its affiliates and certain of their transferees certain governance rights for as long as our Sponsor and its affiliates and certain of their transferees maintain ownership of at least 25% of our outstanding common stock, including rights of approval over certain corporate and other transactions and the appointment of our chief executive officer. See “Certain Relationships and Related Party Transactions—Stockholders Agreement.” The interests of our Sponsor may not coincide with the interests of other holders of our common stock.

In the ordinary course of their business activities, our Sponsor and its affiliates may engage in activities where their interests conflict with our interests or those of our stockholders. Our certificate of incorporation will provide that our Sponsor, any of its affiliates or any director who is not employed by us (including any non-employee director who serves as one of our officers in both his director and officer capacities) or his or her affiliates will not have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Our Sponsor also may pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. In addition, our Sponsor may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you.

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In addition, our Sponsor and its affiliates will be able to determine the outcome of all matters requiring stockholder approval and will be able to cause or prevent a change of control of the Company or a change in the composition of our board of directors and could preclude any acquisition of the Company. This concentration of voting control could deprive you of an opportunity to receive a premium for your shares of common stock as part of a sale of the Company and ultimately might affect the market price of our common stock.

We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a public company, and our management will be required to devote substantial time to new compliance matters, which could lower our profits or make it more difficult to run our business.

As a public company, we will incur significant legal, regulatory, finance, accounting, investor relations and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements and costs of recruiting and retaining non-executive directors. We also have incurred and will incur costs associated with the Sarbanes-Oxley Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and related rules implemented by the SEC and NASDAQ. The expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. Our management will need to devote a substantial amount of time to ensure that we comply with all of these requirements, diverting the attention of management away from revenue-producing activities. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory actions and potentially civil litigation.

Failure to comply with requirements to design, implement and maintain effective internal controls could have a material adverse effect on our business and stock price. We currently have a material weakness in our internal control over financial reporting.

As a privately held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act, or Section 404.

As a public company, we will have significant requirements for enhanced financial reporting and internal controls. The process of designing and implementing effective internal controls is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a system of internal controls that is adequate to satisfy our reporting obligations as a public company. If we are unable to establish or maintain appropriate internal financial reporting controls and procedures, it could cause us to fail to meet our reporting obligations on a timely basis, result in material misstatements in our consolidated financial statements and harm our operating results. In addition, we will be required, pursuant to Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting in the second annual report following the completion of this offering. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. Testing and maintaining internal controls may divert our management’s attention from other matters that are important to our business. If we are no longer an “emerging

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growth company,” our auditors will be required to issue an attestation report on the effectiveness of our internal controls on an annual basis.

In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, we may encounter problems or delays in completing the remediation of any deficiencies identified by our independent registered public accounting firm in connection with the issuance of their attestation report. Our testing, or the subsequent testing (if required) by our independent registered public accounting firm, may reveal deficiencies in our internal control over financial reporting that are deemed to be material weaknesses. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected on a timely basis. Any material weaknesses could result in a material misstatement of our annual or quarterly consolidated financial statements or disclosures that may not be prevented or detected. The existence of any material weakness would require management to devote significant time and incur significant expense to remediate any such material weakness and management may not be able to remediate any such material weakness in a timely manner.

We identified a material weakness in our internal control over financial reporting related to our Japan subsidiary, as we did not design and maintain effective controls over the review of journal entries and account reconciliations. Specifically, we did not design and maintain effective controls to ensure that journal entries and account reconciliations were (i) properly prepared with sufficient supporting documentation or (ii) reviewed and approved to ensure accuracy and completeness. This material weakness did not result in a misstatement to our financial statements. The material weakness could result in a misstatement that would result in a material misstatement of our financial statements that would not be prevented or detected and, accordingly, we determined that these control deficiencies constitute a material weakness.

We are implementing process and control improvements to address this material weakness. If we are unable to remediate this material weakness in a timely manner, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404, or our independent registered public accounting firm may not issue an unqualified opinion (to the extent it is required to issue a report). If either we are unable to conclude that we have effective internal control over financial reporting or our independent registered public accounting firm is unable to provide us with an unqualified report (to the extent it is required to issue a report), investors could lose confidence in our reported financial information, which could have a material adverse effect on our business or the trading price of our common stock.

There may not be an active, liquid trading market for shares of our common stock, which may cause shares of our common stock to trade at a discount from the initial offering price and make it difficult to sell the shares of common stock you purchase.

Prior to this offering, there has not been a public trading market for shares of our common stock. We cannot predict the extent to which investor interest in us will lead to the development of a trading market or how active and liquid that market may become. If an active and liquid trading market does not develop or continue, you may have difficulty selling your shares of our common stock at an attractive price or at all. The initial public offering price per share of common stock will be determined by agreement among us, the selling stockholders and the representatives of the underwriters, and may not be indicative of the price at which shares of our common stock will trade in the public market after this offering. The market price of our common stock may decline below the initial offering price and you may not be able to sell your shares of our common stock at or above the price you paid in this offering, or at all.

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Our stock price may change significantly following this offering, you may not be able to resell shares of our common stock at or above the price you paid or at all and you could lose all or part of your investment as a result.

Even if a trading market develops, the market price of our common stock may be highly volatile and could be subject to wide fluctuations. You may not be able to resell your shares at or above the initial public offering price due to a number of factors, such as those listed elsewhere in this “Risk Factors” section and the following:

• results of operations that vary from the expectations of securities analysts and investors;

• results of operations that vary from those of our competitors;

• changes in expectations as to our future financial performance, including financial estimates and investment recommendations by securities analysts and investors;

• changes in general economic or market conditions or trends in our industry or the economy as a whole;

• changes in market valuations of, or earnings and other announcements by, companies in our industry;

• declines in the market prices of stocks generally, particularly those of footwear and lifestyle accessories companies;

• additions or departures of key management personnel;

• strategic actions by us or our competitors;

• announcements by us, our competitors, our suppliers or our distributors of significant contracts, price reductions, new products or technologies, acquisitions, dispositions, joint marketing relationships, joint ventures, other strategic relationships or capital commitments;

• changes in preference of our customers and our market share;

• changes in business or regulatory conditions;

• future sales of our common stock or other securities;

• investor perceptions of, or the investment opportunity associated with, our common stock relative to other investment alternatives;

• the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;

• changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business;

• announcements relating to litigation or governmental investigations;

• guidance, if any, that we provide to the public, any changes in this guidance or our failure to meet this guidance;

• the development and sustainability of an active trading market for our stock;

• changes in accounting principles; and

• other events or factors, including those resulting from information technology system failures and disruptions, natural disasters, war, acts of terrorism or responses to these events.

Furthermore, the stock market may experience extreme volatility that, in some cases, may be unrelated or disproportionate to the operating performance of particular companies. These broad market and industry fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low.

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In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were to become involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

You may be diluted by the future issuance of additional common stock in connection with our incentive plans, acquisitions or otherwise.

After this offering we will have approximately                  shares of common stock authorized but unissued. Our amended and restated certificate of incorporation to become effective immediately prior to the consummation of this offering will authorize us to issue these shares of common stock and options relating to common stock for the consideration, and on the terms and conditions, established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise. We have reserved shares for issuance under our new Omnibus Incentive Plan. See “Management—Executive Compensation—Compensation Arrangements to be Adopted in connection with this Offering.” Any common stock that we issue, including under our new Omnibus Incentive Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the investors who purchase common stock in this offering. In the future, we may also issue our securities in connection with investments or acquisitions. The amount of shares of our common stock issued in connection with an investment or acquisition could constitute a material portion of our then-outstanding shares of our common stock. Any issuance of additional securities in connection with investments or acquisitions may result in additional dilution to you.

Because we have no current plans to pay cash dividends on our common stock, you may not receive any return on investment unless you sell your common stock for a price greater than that which you paid for it.

We have no current plans to pay cash dividends on our common stock. The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors, and will depend on, among other things, general and economic conditions, our results of operations and financial condition, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, including restrictions under the Term Loan Facility and ABL Credit Facility and other indebtedness we may incur, and such other factors as our board of directors may deem relevant. See “Dividend Policy.”

As a result, you may not receive any return on an investment in our common stock unless you sell our common stock for a price greater than your purchase price.

Cole Haan, Inc. is a holding company and depends on its subsidiaries for cash to fund its operations and expenses, including future dividend payments, if any.

Our operations are conducted through our wholly owned subsidiaries and our ability to generate cash to meet our debt service obligations or to make future dividend payments, if any, is highly dependent on the earnings of, and the receipt of funds from, our subsidiaries via dividends or intercompany loans. We do not currently expect to declare or pay dividends on our common stock for the foreseeable future; however, to the extent that we determine in the future to pay dividends on our common stock, the agreements governing our indebtedness may restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us. In addition, Delaware law may impose requirements that may restrict our ability to pay dividends to holders of our common stock.

Future sales, or the perception of future sales, by us or our existing stockholders in the public market following this offering could cause the market price for our common stock to decline.

The sale of substantial amounts of shares of our common stock in the public market, or the perception that such sales could occur, including sales by our Sponsor, could harm the prevailing market price of shares of our

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common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon completion of this offering we will have a total of                  shares of our common stock outstanding. Of the outstanding shares, the                  shares sold in this offering (or                  shares if the underwriters exercise their option to purchase additional shares) will be freely tradable without restriction or further registration under the Securities Act, except that any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act, or Rule 144, including our directors, executive officers and other affiliates (including our Sponsor), may be sold only in compliance with the limitations described in “Shares Eligible for Future Sale.”

The remaining outstanding                  shares of common stock held by our existing stockholders after this offering will be subject to certain restrictions on resale. We, our executive officers, our directors and certain of our significant stockholders, including the selling stockholders, will sign lock-up agreements with the underwriters that will, subject to certain customary exceptions, restrict the sale of the shares of our common stock and certain other securities held by them for 180 days following the date of this prospectus. BofA Securities, Inc. and Morgan Stanley & Co. LLC may, in their sole discretion and at any time without notice, release all or any portion of the shares or securities subject to any such lock-up agreements. See “Underwriting” for a description of these lock-up agreements.

Upon the expiration of the lock-up agreements described above, all of such                  shares (or                  shares if the underwriters exercise in full their option to purchase additional shares) will be eligible for resale in a public market, subject, in the case of shares held by our affiliates, to volume, manner of sale and other limitations under Rule 144. We expect that our Sponsor will be considered an affiliate upon the expiration of the lock-up period based on its expected share ownership (consisting of                  shares), as well as its board nomination rights. Certain other of our stockholders, including our directors and executive officers, may also be considered affiliates at that time. The stockholders agreement will impose significant restrictions on transfers of shares of our common stock held by management and director stockholders. See “Certain Relationships and Related Party Transactions—Stockholders Agreement.”

In addition, pursuant to the stockholders agreement, our Sponsor has the right, subject to certain conditions, to require us to register the sale of their shares of our common stock under the Securities Act. See “Certain Relationships and Related Party Transactions—Stockholders Agreement.” By exercising its registration rights and selling a large number of shares, our Sponsor could cause the prevailing market price of our common stock to decline. Certain of our other stockholders have “piggyback” registration rights with respect to future registered offerings of our common stock. Following completion of this offering, the shares covered by registration rights would represent approximately     % of our total common stock outstanding (or     % if the underwriters exercise in full their option to purchase additional shares). Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the applicable registration statement. See “Shares Eligible for Future Sale.”

We intend to file one or more registration statements on Form S-8 under the Securities Act to register shares of our common stock or securities convertible into or exchangeable for shares of our common stock issued pursuant to our new Omnibus Incentive Plan. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market. We expect that the initial registration statement on Form S-8 will cover                  shares of our common stock.

As restrictions on resale end, or if existing stockholders exercise their registration rights, the market price of our shares of common stock could drop significantly if the holders of these restricted shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of common stock or other securities.

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If securities analysts do not publish research or reports about our business or if they downgrade our stock or our sector, our stock price and trading volume could decline.

The trading market for our common stock will rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts. If one or more of the analysts who cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business, the price of our common stock could decline. If one or more of these analysts ceases coverage of the Company or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.

Anti-takeover provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt, or other change of control transaction that a stockholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.

These provisions will provide for, among other things:

• a classified board of directors, as a result of which our board of directors will be divided into three classes, with each class serving for staggered three-year terms;

• the ability of our board of directors to issue one or more series of preferred stock;

• advance notice requirements for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings;

• certain limitations on convening special stockholder meetings;

• the removal of directors only for cause and only upon the affirmative vote of the holders of at least 66²/₃% of the shares of common stock entitled to vote generally in the election of directors if our Sponsor and its affiliates cease to beneficially own at least 40% of the shares of common stock entitled to vote generally in the election of directors; and

• that certain provisions may be amended only by the affirmative vote of at least 66²/₃% of the shares of common stock entitled to vote generally in the election of directors if our Sponsor and its affiliates cease to beneficially own at least 40% of the shares of common stock entitled to vote generally in the election of directors.

These anti-takeover provisions could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain a premium for their shares. See “Description of Capital Stock.”

Our board of directors will be authorized to issue and designate shares of our preferred stock in additional series without stockholder approval.

Our amended and restated certificate of incorporation will authorize our board of directors, without the approval of our stockholders, to issue                  shares of our preferred stock, subject to limitations prescribed by applicable law, rules and regulations and the provisions of our amended and restated certificate of incorporation, as shares of preferred stock in series, to establish from time to time the number of shares to be included in each such series and to fix the designation, powers, preferences and rights of the shares of each such series and the qualifications, limitations or restrictions thereof. The powers, preferences and rights of these additional series of preferred stock would be senior to our common stock, which may reduce the value of our common stock.

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Our amended and restated certificate of incorporation will provide, subject to limited exceptions, that state and federal courts (as appropriate) located within the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.

Our amended and restated certificate of incorporation will provide, subject to limited exceptions, that unless we consent to the selection of an alternative forum, the state or federal courts (as appropriate) located within the State of Delaware shall, to the fullest extent permitted by law, be the sole and exclusive forum for any (i) derivative action or proceeding brought on our behalf, (ii) action asserting a claim of breach of a fiduciary duty owed by any director, officer, or other employee or stockholder of ours to the Company or our stockholders, creditors or other constituents, (iii) action asserting a claim against the Company or any director or officer of the Company arising pursuant to any provision of the Delaware General Corporation Law, or the DGCL, or our amended and restated certificate of incorporation or our amended and restated bylaws, or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware, (iv) action asserting a claim against the Company or any director or officer of the Company governed by the internal affairs doctrine or (v) action against us or any of our directors or officers involving a claim or defense arising pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, or the Securities Act. The enforceability of similar forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be unenforceable in whole or in part. Our exclusive forum provision will not relieve the Company of its duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.

Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and consented to the forum provisions in our amended and restated certificate of incorporation. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

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FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements that reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. These forward-looking statements are included throughout this prospectus, including in the sections entitled “Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” and relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative version of these words or similar terms and phrases to identify forward-looking statements in this prospectus.

The forward-looking statements contained in this prospectus are based on management’s current expectations and are not guarantees of future performance. The forward-looking statements are subject to various risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management’s expectations, beliefs and projections will result or be achieved. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. We believe that these factors include but are not limited to those described under “Risk Factors” and the following:

• our ability to maintain the value and reputation of our brand;

• our failure to adequately continue to connect with our consumer base;

• an overall decline in the health of the economy and other factors impacting consumer spending;

• our ability to improve and expand our product offerings;

• our reliance on technical innovation and high-quality products to compete in the market for our products;

• our ability to identify and respond to new and changing consumer trends and preferences to accurately forecast demand;

• our ability to compete successfully in highly competitive markets;

• our failure to successfully manage our digital commerce business;

• our failure to open and operate new stores in a timely and cost-effective manner, or to successfully enter new markets;

• our dependence on our wholesale partners;

• risks associated with our international distribution partners;

• failure of our licensees to generate expected sales or maintain the value of our brands;

• our inability to adequately protect our intellectual property and allegations that we have infringed the intellectual property or other proprietary rights of third parties;

• our ability to successfully implement our growth strategies on a timely basis or at all;

• our growth strategies straining our existing resources and causing our performance to suffer;

• our ability to maintain sufficient levels of cash flow from our operations to fund our expanding business;

• risks associated with our international business operations;

• the impact of the outbreak, and threat or perceived threat of outbreak, of the coronavirus on our sourcing and manufacturing operations and consumer spending;

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• risks associated with sourcing and manufacturing;

• failure of our suppliers or our licensees’ suppliers to use ethical business practices and comply with our code of conduct and laws and regulations;

• problems with distribution and our or our customers’ ability to deliver our products;

• our reliance on third parties to provide us with services in connection with the administration of certain aspects of our business;

• data security and privacy risks;

• any failure, inadequacy, interruption, security failure or breach of our information technology systems, whether owned by us or outsourced or managed by third parties;

• our failure to retain our existing senior management team or attract qualified new talent;

• the impact of wage rate increases, inflation, cost increases, increases in raw material prices and energy prices;

• our ability to successfully manage our inventory;

• the impact of a significant increase in the rate of merchandise returns;

• quarterly fluctuations in our results of operations and inventory levels;

• risks associated with leasing substantial amounts of space;

• the impact of any changes in tax laws, adoption of new tax laws, unfavorable resolution of tax contingencies, or exposure to additional tax liabilities;

• the impact of additional sales taxes or other tax liabilities that may increase the costs our customers would have to pay for our products;

• the impact of any adverse litigation judgments or settlements resulting from legal proceedings relating to our business operations;

• the impact of environmental and workplace safety requirements, and costs or claims related to these requirements or to contamination; and

• the impact of any impairment of goodwill and intangible assets, net as such assets represent a significant portion of our total assets.

These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or other strategic transactions we may make.

Any forward-looking statement made by us in this prospectus speaks only as of the date of this prospectus and is expressly qualified in its entirety by the cautionary statements included in this prospectus. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable laws. You should not place undue reliance on our forward-looking statements.

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USE OF PROCEEDS

We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders in this offering, including from any exercise by the underwriters of their option to purchase additional shares from the selling stockholders. The selling stockholders will receive all of the net proceeds and bear the underwriting discount, if any, attributable to their sale of our common stock. We will pay certain expenses associated with this offering. See “Principal and Selling Stockholders.”

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DIVIDEND POLICY

We currently expect to retain all future earnings for use in the operation and expansion of our business and have no current plans to pay dividends on our common stock. The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors, and will depend on, among other things, general and economic conditions, our results of operations and financial condition, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our stockholders or by our subsidiaries to us, including restrictions under the Term Loan Facility and ABL Credit Facility and other indebtedness we may incur, and such other factors as our board of directors may deem relevant. If we elect to pay such dividends in the future, we may reduce or discontinue entirely the payment of such dividends at any time.

Because we are a holding company, our ability to pay dividends depends on our receipt of cash from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their jurisdiction of organization, agreements of our subsidiaries or covenants under any existing and future outstanding indebtedness we or our subsidiaries incur. Certain of our subsidiaries are subject to the Term Loan Facility and ABL Credit Facility, which contain covenants that limit such subsidiaries’ ability to make restricted payments, including dividends, and take on additional indebtedness. See “Description of Certain Indebtedness” for a description of the restrictions on our ability to pay dividends.

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CAPITALIZATION

The following table sets forth our cash and our capitalization as of November 30, 2019.

You should read this table in conjunction with the information contained in “Use of Proceeds,” “Selected Historical Consolidated Financial and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Certain Indebtedness” as well as our audited consolidated financial statements and related notes thereto and our unaudited condensed consolidated financial statements and related notes thereto, each included elsewhere in this prospectus.

	As of November 30, 2019
(In thousands, except share and per share data)
Cash	$	10,786
Debt:
Term Loan Facility(1)	$	284,563
ABL Credit Facility(2)		—
Unamortized discount and debt issuance costs		(7,167	)
Total debt, net of discount and debt issuance costs	$	277,396
Stockholders’ equity:
Preferred stock, $0.01 par value per share, no shares authorized, issued and outstanding	$	—
Common stock, $0.01 par value per share, 1,000 shares authorized, issued and outstanding		—
Additional paid-in capital		238,330
Accumulated deficit		(45,988	)
Accumulated other comprehensive loss		(3,044	)
Total stockholders’ equity		189,298
Total capitalization	$	466,694

(1) For a further description of the Term Loan Facility, see “Description of Certain Indebtedness.”

(2) For a further description of the ABL Credit Facility, see “Description of Certain Indebtedness.” As of November 30, 2019, we had no borrowings and had $115.0 million of availability under the ABL Credit Facility.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

Set forth below is our selected historical consolidated financial and other data as of the dates and for the periods indicated. We have derived the selected historical consolidated statements of operations data and consolidated statements of cash flows data for the fiscal years ended June 2, 2018 and June 1, 2019 and the selected historical consolidated balance sheet data as of June 2, 2018 and June 1, 2019 from our audited historical consolidated financial statements included elsewhere in this prospectus. Our historical audited results are not necessarily indicative of the results that should be expected in any future period.

We have derived the selected historical condensed consolidated statements of operations data and condensed consolidated statements of cash flows data for the 26-week periods ended December 1, 2018 and November 30, 2019 and the selected historical condensed consolidated balance sheet data as of November 30, 2019 from our unaudited historical condensed consolidated financial statements included elsewhere in this prospectus. With the exception of the adoption of Topic 842, which we adopted on a modified retrospective basis on June 2, 2019, the first day of fiscal year 2020, our unaudited condensed consolidated financial statements were prepared on a basis consistent with the audited consolidated financial statements and, have included all adjustments, consisting only of normal recurring adjustments that, in our opinion, are necessary to present fairly the financial information set forth in those statements. The results for any interim period are not necessarily indicative of the results that may be expected for the full year and our historical unaudited results are not necessarily indicative of the results that should be expected in any future period.

You should read the following selected historical consolidated financial and other data below together with the information under “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our audited consolidated financial statements and related notes thereto and our unaudited condensed consolidated financial statements and related notes thereto, each included elsewhere in this prospectus.

	Fiscal Year Ended						26-Week Period Ended
	June 2, 2018			June 1, 2019			December 1, 2018			November 30, 2019
(In thousands, except share and per share amounts)
Consolidated Statements of Operations Data(1):
Revenue	$	601,566		$	686,576		$	351,462		$	403,083
Cost of sales		326,218			359,372			181,499			218,200
Gross profit		275,348			327,204			169,963			184,883
Selling, general and administrative expense		249,875			264,674			128,481			145,992
Operating income		25,473			62,530			41,482			38,891
Interest expense, net		20,854			21,893			10,344			12,106
Loss on debt modification and extinguishment		—			3,075			—			—
Other (income), net		(216	)		(342	)		(189	)		(127	)
Income before income taxes		4,835			37,904			31,327			26,912
Income tax (benefit) expense		(18,268	)		4,767			1,878			2,147
Net income	$	23,103		$	33,137		$	29,449		$	24,765
Per Share Data(2):
Net income per share attributable to common stockholders—basic and diluted	$	23,102.82		$	33,136.97		$	29,448.90		$	24,764.66
Weighted average common shares outstanding—basic and diluted		1,000			1,000			1,000			1,000

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	Fiscal Year Ended						26-Week Period Ended
	June 2, 2018			June 1, 2019			December 1, 2018			November 30, 2019
(In thousands, except percentages)
Consolidated Balance Sheet Data (end of period)(1):
Cash	$	23,476		$	37,862					$	10,786
Total assets		538,649			587,858						737,029
Total debt(3)		300,847			280,247						277,396
Total stockholders’ equity		132,552			164,789						189,298
Consolidated Statements of Cash Flow Data(1):
Cash flows provided by (used in):
Operating activities	$	50,491		$	55,168		$	30,827		$	(12,829	)
Investing activities		(15,991	)		(17,745	)		(8,628	)		(10,580	)
Financing activities		(23,219	)		(22,929	)		(12,490	)		(3,625	)
Other Financial Data and Operational Data:
North America DTC comparable sales growth (decline)		(0.1	)%		13.0	%		13.1	%		3.0	%
Adjusted EBITDA(4)	$	60,072		$	94,774		$	57,117		$	62,370
Adjusted EBITDA margin(4)		10.0	%		13.8	%		16.3	%		15.5	%

(1) See Notes 2 and 3 to our audited consolidated financial statements included elsewhere in this prospectus for additional information regarding the impact of our adoption of Topic 606 on our consolidated financial statements. See Notes 2 and 9 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for additional information regarding the impact of our adoption of Topic 842 on our unaudited condensed consolidated financial statements.

(2) See Note 18 to our audited consolidated financial statements and Note 14 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for an explanation of the calculations of net income per share attributable to common stockholders, basic and diluted.

(3) Total debt equals current and non-current portions of long-term debt, net of discount and debt issuance costs.

(4) We define Adjusted EBITDA as net income, plus interest expense, net, income tax (benefit) expense and depreciation and amortization, net, further adjusted to exclude impairment charges, (gain) loss on disposals of property and equipment, loss on debt modification and extinguishment, other (income), net and certain IPO costs. We describe these adjustments reconciling net income to Adjusted EBITDA in the table below. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue.

We present Adjusted EBITDA and Adjusted EBITDA margin because we believe they are useful indicators of our operating performance. Our management uses Adjusted EBITDA and Adjusted EBITDA margin principally as measures of our operating performance and believes that Adjusted EBITDA and Adjusted EBITDA margin are useful to investors because they are frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We also believe Adjusted EBITDA and Adjusted EBITDA margin are useful to our management and investors as a measure of comparative operating performance from period to period.

Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and should not be considered as alternatives to net income as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and they should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In evaluating Adjusted EBITDA and Adjusted EBITDA margin, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA and Adjusted EBITDA margin should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on our GAAP results in addition to using Adjusted EBITDA and Adjusted EBITDA margin as a supplement.

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Our Adjusted EBITDA measures have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are:

• they do not reflect costs or cash outlays for capital expenditures or contractual commitments;

• they do not reflect changes in, or cash requirements for, our working capital needs;

• they do not reflect the interest expense, net or the cash requirements necessary to service interest or principal payments on our debt;

• they do not reflect period-to-period changes in taxes, income tax expense or the cash necessary to pay income taxes;

• they do not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations;

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and they do not reflect cash requirements for such replacements; and

• other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.

Because of these limitations, Adjusted EBITDA and Adjusted EBITDA margin should not be considered as measures of discretionary cash available to invest in business growth or to reduce indebtedness.

The following table provides a reconciliation of net income to Adjusted EBITDA for the periods presented:

	Fiscal Year Ended						26-Week Period Ended
	June 2, 2018			June 1, 2019			December 1, 2018			November 30, 2019
(In thousands, except percentages)
Net income	$	23,103		$	33,137		$	29,449		$	24,765
Interest expense, net		20,854			21,893			10,344			12,106
Income tax (benefit) expense		(18,268	)		4,767			1,878			2,147
Depreciation and amortization, net(a)		34,667			32,152			15,699			15,768
Impairment charges(b)		—			192			—			1,643
(Gain) loss on disposals of property and equipment(c)		(68	)		(100	)		(64	)		(6	)
Loss on debt modification and extinguishment(d)		—			3,075			—			—
Other (income), net(e)		(216	)		(342	)		(189	)		(127	)
IPO costs(f)		—			—			—			6,074
Adjusted EBITDA	$	60,072		$	94,774		$	57,117		$	62,370
Revenue	$	601,566		$	686,576		$	351,462		$	403,083
Adjusted EBITDA margin		10.0	%		13.8	%		16.3	%		15.5	%

(a) Excludes amortization included in interest expense, net.

(b) Represents non-cash store impairment charges.

(c) Represents the non-cash gain on disposals of property and equipment.

(d) Represents the loss on debt modification and extinguishment in connection with the refinancing of the Term Loan Facility in February 2019.

(e) Primarily represents foreign currency transaction (gains) and losses associated with our international subsidiaries and realized and unrealized (gains) and losses on our foreign currency forward contracts.

(f) Represents non-recurring expenses primarily composed of legal, accounting and professional fees incurred in connection with this offering, which are included within selling, general and administrative expenses.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Summary—Summary Historical Consolidated Financial and Other Data,” “Selected Historical Consolidated Financial and Other Data” and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. The following discussion contains forward-looking statements that reflect our plans, estimates and assumptions. Our actual results could differ materially from those discussed in any forward-looking statements. Factors that could cause such differences are discussed in the sections of this prospectus titled “Risk Factors” and “Forward-Looking Statements.”

We conduct substantially all of our activities through our direct wholly owned subsidiary, Cole Haan LLC, and its subsidiaries. We operate on a 52 or 53-week fiscal year that ends on the Saturday closest to May 31 of that year. In a 52-week fiscal year, each quarter contains 13 weeks of operations, and in the years with 53 weeks, the fourth quarter contains 14 weeks of operations. References to fiscal year 2018 and fiscal year 2019 relate to our fiscal years ended June 2, 2018 and June 1, 2019, respectively, each a 52-week period.

Overview

Cole Haan is a global lifestyle brand serving always-connected, active professionals with innovative footwear and lifestyle accessories. We market footwear and lifestyle accessories across the Dress, Casual, Outdoor and Sport use occasions. Over the past several years, our footwear offering has broadened from a focus on the Dress use occasion to include a broader selection of Casual, Outdoor and Sport use occasions, which comprised 53% of our fiscal year 2019 footwear revenue. We have built a global, multi-channel distribution network across 64 countries that includes our global digital flagship site, colehaan.com, 368 stores and over 450 diverse global wholesale accounts.

Since our 2013 Acquisition, we have completed over $100.0 million in transformational investments in technology, digital infrastructure, product innovation and other areas, which we believe have positioned us for growth. We plan to grow our business by expanding our product offerings to earn more share of our customers’ closets, continuing to engage in customer acquisition and retention efforts that drive long-term customer relationships, and continuing to grow our North America DTC, North America Wholesale and International businesses.

Our Segments

Our business is operated through two geographic regions that comprise our two reportable segments. We measure each operating segment’s performance based on revenue and Segment Adjusted EBITDA.

Our North America segment comprises our DTC business, which includes our digital flagship site, colehaan.com, and 112 stores in the United States and Canada, and wholesale distribution in the United States to a diverse account base spanning digital pureplay, specialty retail, premium department store, sporting goods and family footwear accounts. Over 96% of our North America segment revenue was generated from the United States in each of fiscal year 2018 and fiscal year 2019 and the 26-week period ended December 1, 2018 and the 26-week period ended November 30, 2019. In Canada, in addition to our DTC sales, we generate revenue by selling our products to a distributor who then sells to regional wholesale accounts. In addition, we license to third parties the design, development and distribution of certain product categories, including small leather goods, eyewear, outerwear, hosiery, suiting and cold weather goods. Our North America segment represented 84.3% and 85.7% of our revenue for fiscal year 2018 and fiscal year 2019, respectively, and 86.7% and 86.1% of our revenue for the 26-week period ended December 1, 2018 and the 26-week period ended November 30, 2019, respectively.

Our International segment includes our wholly owned Japanese subsidiary and partnerships with leading regional distributors and wholesalers. In Japan, where we have operated for nearly 25 years, our footprint is

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primarily DTC, consisting of 80 stores and our localized digital commerce site, colehaan.co.jp. Outside of Japan, the remainder of our International sales occur in over 60 countries. In these markets, we employ a capital-efficient model where our 37 regional distributors fund the cost to build and operate 176 Cole Haan designed and branded stores. Typically, we retain digital commerce rights, while our distributors have local distribution rights. We have also successfully expanded our wholesale business in countries where we operate directly, including the United Kingdom and Japan. Our International segment represented 15.7% and 14.3% of our revenue for fiscal year 2018 and fiscal year 2019, respectively, and 13.3% and 13.9% of our revenue for the 26-week period ended December 1, 2018 and the 26-week period ended November 30, 2019, respectively.

The following table sets forth, for the periods indicated, our revenue and Segment Adjusted EBITDA:

	Fiscal Year Ended				26-Week Period Ended
	June 2, 2018		June 1, 2019		December 1, 2018		November 30, 2019
(In thousands)
Revenue:
North America	$	506,904	$	588,174	$	304,604	$	346,989
International		94,662		98,402		46,858		56,094
Total revenue	$	601,566	$	686,576	$	351,462	$	403,083
Segment Adjusted EBITDA:
North America	$	47,764	$	77,182	$	48,344	$	48,771
International		12,308		17,592		8,773		13,599

Factors Affecting Our Business

We believe that our business and growth depend on a number of factors that present significant opportunities for us and may pose risks and challenges, including those discussed below and under “Risk Factors.”

• Growth in DTC Sales. Our DTC sales have driven our growth and we expect it to continue to be a key driver of our future growth and profitability. Globally, we will seek to continue to expand our DTC sales by increasing the number of active DTC customers across our sites and stores, leveraging our investments in CRM and omni-channel technology to strengthen our customer relationships and engagement, and selectively growing our store fleet with highly productive, digitally connected small space locations. We expect that the change in our number of active DTC customers may not directly correspond to the change in our DTC sales because we only record active DTC customers once certain of their data is captured in our CRM database, and such customers may have previously made DTC purchases without sharing their customer data such that they would not be previously identified as an active DTC customer.

• Expanding Existing Products and Adding New Products. Scaling of our core footwear franchises, growth into Sport, Casual and Outdoor footwear use occasions and expansion of our lifestyle accessories products have contributed meaningfully to our performance. Our success has been enabled by the breadth of our product portfolio, our consumer-insight driven approach to product creation and our leading innovation capabilities. We intend to increase our market share in our existing products and continue investing in the development and introduction of new products, which we expect will help us to earn more share of our customers’ closets and support future growth.

• Global Wholesale and Distributor Expansion. We seek to maintain a diverse multi-channel distribution network and plan to continue growing our wholesale and distribution partnerships. In North America, we plan to continue growing sales of our products to our existing wholesale partners across store and digital commerce formats, and continue to diversify our U.S. wholesale account base. We also expect to leverage our wholesale partners’ investments in digital commerce and our drop-ship capabilities to

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offer their customers an expanded selection of Cole Haan products on their websites. In our International segment, we intend to leverage existing distributor relationships to increase the number of distributor-operated stores globally, and selectively expand our wholesale presence across regions.

• Macroeconomic Trends. Macroeconomic factors may affect consumer spending patterns and thereby our results of operations. These factors include general economic conditions, consumer confidence, employment rates, business conditions, changes in the housing market, the availability of credit, interest rates, tax rates and fuel and energy costs. Factors that impact consumer discretionary spending, which remains volatile globally, continue to create a complex and challenging retail environment for us and our wholesale and distribution partners.

• Increased Competition. The global footwear and lifestyle accessories markets are highly competitive and fragmented. We compete against a wide range of designers and manufacturers of footwear and lifestyle accessories, both domestic and international, across a wide range of retail price points. Some of our competitors may be significantly larger and have substantially greater resources than us. Our competitive set includes both established companies that are seeking to expand their market share and new entrants to the market.

• Sourcing and Supply Chain Management. For our business to be successful, our suppliers must provide us with quality products in substantial quantities, in compliance with regulatory requirements, at acceptable costs and on a timely basis. Competition for resources throughout the supply chain, such as production and transportation capacities, has increased. Trends affecting the supply chain include the impact of fluctuating prices of labor and raw materials on our suppliers. In addition, the announcement or imposition of any new or increased tariffs, duties or taxes as a result of trade or political tensions between the United States and other countries or otherwise could adversely affect our supply chain.

We are also carefully monitoring the ongoing coronavirus health crisis in Greater China, which developed ahead of a peak traveling and shopping season around the Lunar New Year on January 25, 2020. The outbreak of the coronavirus in Greater China could adversely affect our business, results of operations and financial condition. The coronavirus outbreak may materially impact our sourcing and manufacturing operations as a portion of our products are manufactured in China and materials for our products are sourced in China by our manufacturers within Greater China and in other affected regions. Travel within China and into other countries may be restricted, which may impact our manufacturers’ ability to obtain necessary materials and inhibit travel of our and our manufacturers’ and material suppliers’ employees, which may in turn reduce our work force and that of our manufacturers and material suppliers. As a result of such reduced workforces, potential factory closures, inability to obtain materials, disruptions in the supply chain and potential disruption of transportation of goods produced in China or other countries adversely impacted by the coronavirus outbreak, or threat or perceived threat of such outbreak, we may be unable to obtain adequate inventory or samples sources from these regions, which could adversely affect our business, results of operations and financial condition. Furthermore, our existing suppliers, such as our suppliers located in India and Vietnam, or new suppliers or sources of materials may pass the increase in sourcing costs due to the coronavirus outbreak to us through price increases, thereby impacting our margins. Material changes in the pricing practices of our suppliers could negatively impact our profitability.

In addition, as of February 14, 2020, one of our distributors operates 18 stores in Greater China and has temporarily closed certain locations while its remaining locations are operating with reduced hours and experiencing significantly reduced consumer foot traffic, which we expect will result in lost sales. Moreover, our business, results of operations and financial condition could be further adversely affected if the coronavirus outbreak expands to other countries where we have a significant number of stores, partnerships with regional distributors and wholesalers and/or sourcing and manufacturing operations. If the retail economy weakens and/or consumer behavior shifts due to the coronavirus outbreak or threat or perceived threat of such outbreak, we or our distributors may need to significantly reduce or limit store operations and/or close additional stores and retailers may be more cautious with orders. A slowing or changing economy in the regions adversely affected by the coronavirus outbreak could adversely affect the financial health of our distributors and wholesale partners, which in turn could have an adverse effect on our business, results of operations and financial condition. While

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this global health emergency is expected to be temporary, the duration and intensity of the disruption is uncertain, including potential broader impacts outside of China if travel and tourist traffic is further restricted and there is a resulting decline in Chinese tourist spending in other regions. The dynamic nature and uncertainty of these circumstances may have adverse consequences on our results of operations for the fourth quarter of fiscal year 2020 and may negatively impact future fiscal periods in the event of prolonged disruptions associated with the outbreak.

Impact of Variability of Calendar on Comparability of Our Quarterly Results

Our fiscal year ends on the Saturday closest to May 31 and, consequently, our interim fiscal quarters typically end on the Saturday closest to the last calendar day of August, November and February. The following table sets forth the percentage of our total revenue represented by each of our fiscal quarters over the last two fiscal years:

Percentage of Annual Revenue	Q1			Q2			Q3			Q4
Fiscal Year 2018		20.8	%		30.1	%		23.0	%		26.1	%
Fiscal Year 2019		22.5	%		28.7	%		23.1	%		25.7	%

Many major holidays typically occur near the end of our fiscal quarters and the exact timing of these holidays may impact our results in a given quarter. As a result of the variability of when holidays occur in the calendar, comparing the results of our fiscal quarters to the comparable period of prior fiscal years may not be indicative of our underlying performance.

For example, we typically generate a significant amount of North America segment revenue during the holiday shopping period extending generally from Thanksgiving to Christmas. Our second fiscal quarter usually ends on the Saturday closest to November 30, so the timing of Thanksgiving in a given year determines how much of the holiday shopping period is included in the second quarter compared to the third quarter of our fiscal year. As a result, our second and third quarter results for fiscal years in which Thanksgiving falls later in November may not be comparable to our second and third quarter results for fiscal years in which Thanksgiving falls earlier in November.

In fiscal year 2018 and fiscal year 2019, Thanksgiving fell on November 23, 2017 and November 22, 2018, respectively, which had the effect of including nine days of the holiday shopping period in the second quarter of each fiscal year. However, due to Thanksgiving occurring on November 28, 2019 in fiscal year 2020, we expect more holiday shopping period sales to occur in the third quarter of fiscal year 2020.

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How We Assess the Performance of Our Business

Our management considers a number of financial and operating metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, determine the allocation of resources, make decisions regarding corporate strategies and evaluate projections. These metrics include operational measures and non-GAAP metrics supplemental to our GAAP results. The following table sets forth our key performance metrics for the periods presented, which are further discussed below:

	Fiscal Year Ended						26-Week Period Ended
	June 2, 2018			June 1, 2019			December 1, 2018			November 30, 2019
(In thousands, except percentages and store data)
North America DTC Comparable Sales Growth (Decline)		(0.1	)%		13.0	%		13.1	%		3.0	%
Category Sales:
Footwear	$	542,441		$	632,707		$	322,965		$	378,289
Lifestyle Accessories	$	59,125		$	53,869		$	28,497		$	24,794
Global Store Count (at period end)		284			368			302			385
Adjusted EBITDA	$	60,072		$	94,774		$	57,117		$	62,370
Segment Adjusted EBITDA:
North America	$	47,764		$	77,182		$	48,344		$	48,771
International	$	12,308		$	17,592		$	8,773		$	13,599

North America DTC Comparable Sales Growth (Decline)

North America DTC comparable sales growth allows us to evaluate how our store base and sites are performing on a comparable basis. We calculate North America DTC comparable sales as follows: (i) sales from our digital flagship site, colehaan.com, and our directly operated stores in the United States and Canada are included, excluding the impact of foreign exchange; (ii) stores are added to the calculation in their 13th full fiscal month of operation; (iii) sales for stores that are closed or shut down are removed from the calculation for time periods that are not comparable; (iv) sales from partial months of operation are ignored when stores do not open or close on the first day of the month; (v) sales for stores that are either relocated, remodeled or generally closed for 30 or more consecutive days for renovation are also excluded until such stores have been operating in their new location or in their newly renovated state for at least 13 full fiscal months; and (vi) when applicable, we adjust for the effect of the 53rd week. Our calculation of North America DTC comparable sales may not be comparable to similar data made available by other retailers. We measure North America DTC comparable sales growth as the increase or decrease in North America DTC comparable sales for a reporting period, compared to the prior reporting period.

Category Sales

We assess our revenue by major product categories—footwear and lifestyle accessories—in order to evaluate the performance of each of our product categories and inform our product development process.

Global Store Count

The total number of stores that sell our products directly to customers globally, including both Company-operated stores in the United States, Canada and Japan and distributor-operated stores in international markets, as well as the timing of store openings and closings, have, and will continue to have, an impact on our performance. In fiscal year 2018, we opened five Company-operated stores and closed ten Company-operated stores, and our distributors opened 35 stores and closed 21 stores. In fiscal year 2019, we opened 17 Company-operated stores and closed eight Company-operated stores, and our distributors opened 98 stores and closed 23 stores. In the 26-week period ended December 1, 2018, we opened four Company-operated stores and closed two Company-

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operated stores, and our distributors opened 25 stores and closed nine stores. In the 26-week period ended November 30, 2019, we opened four Company-operated stores and closed one Company-operated store, and our distributors opened 23 stores and closed nine stores.

Adjusted EBITDA

We use Adjusted EBITDA to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to establish discretionary annual incentive compensation and to compare our performance against that of other peer companies using similar measures. We define Adjusted EBITDA as net income, as adjusted to exclude (i) interest expense, net; (ii) income tax (benefit) expense; (iii) depreciation and amortization, net; (iv) impairment charges; (v) (gain) loss on disposals of property and equipment; (vi) loss on debt modification and extinguishment; (vii) other (income), net; and (viii) certain IPO costs. Our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies. For a discussion of Adjusted EBITDA and the limitation on its use, and the reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP financial measure, see “—Non-GAAP Financial Measures” below.

Segment Adjusted EBITDA

Our Chief Executive Officer has been identified as the chief operating decision maker, or CODM. We determined that our measure of segment profitability is Adjusted EBITDA of each reportable segment. Accordingly, our CODM evaluates the performance of each of our segments based primarily on Segment Adjusted EBITDA. Our CODM also, in part, allocates resources based on Segment Adjusted EBITDA. Segment Adjusted EBITDA excludes from net income: (i) interest expense, net; (ii) income tax (benefit) expense; (iii) depreciation and amortization, net; (iv) impairment charges; (v) (gain) loss on disposals of property and equipment; (vi) loss on debt modification and extinguishment; (vii) other (income), net; and (viii) certain IPO costs. The costs of all corporate departments that serve the respective segment are fully allocated. We do not allocate amounts reported below operating income to our reportable segments. Our definition of Segment Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

Components of Our Results of Operations

Revenue

We derive our revenue from the sale of footwear and lifestyle accessories, including handbags, small leather goods, hosiery, shoe care, eyewear, outerwear, suiting and cold weather goods. Our sales include direct sales to customers at our sites and stores and sales to wholesale partners and distributors. Our licensing revenue primarily consists of sales-based royalties paid to us from licensees in exchange for the use of our trademarks in connection with the design, development and distribution of selected lifestyle accessories, including small leather goods, eyewear, outerwear, hosiery, suiting and cold weather goods. All revenue transactions involving a third party are presented on a gross basis.

Our revenue transactions generally comprise a single performance obligation, which consists of the sale of products to customers, and we satisfy the performance obligation and record revenue when transfer of control has passed to the customer. Transfer of control passes to wholesale partners and digital commerce customers upon shipment and to retail store customers at the time of sale. Our licensing revenue is recognized over the license period. Gift card revenue recognition occurs when the gift card is redeemed by the consumer. Provisions for sales discounts, returns and miscellaneous claims from customers are made at the time of sale, and reflect the most likely amount we anticipate being entitled to receive based on historical experience and current trends, and are recorded as a reduction of revenue. See “—Critical Accounting Policies and Significant Estimates—Revenue Recognition.”

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Cost of Sales

Cost of sales includes all costs to make products saleable, such as design, product development and tooling costs, materials, inbound freight, customs charges and duties, purchasing and receiving costs, depreciation and warehousing and distribution costs, including digital commerce fulfillment fees. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs as incurred and are included in cost of sales when the related revenue is recognized. The components of our cost of sales may not be comparable to other retailers. The changes in our cost of sales generally correspond with the changes in revenue and may be impacted by any significant fluctuations in the components of our cost of sales.

Gross Profit and Gross Profit Margin

Gross profit is calculated as revenue less cost of sales. Gross profit margin is calculated as gross profit divided by revenue. Gross profit margin is dependent upon a variety of factors, including changes in the relative sales mix among our sales channels, changes in the mix of products sold, the average price of our products, the timing and level of promotional activities, increases or decreases in inventory sell-through levels, the impact of fluctuations in material and labor costs on our suppliers and changes in transportation costs, tariffs and foreign currency exchange rates. These factors, among others, may cause gross profit margin to fluctuate from period to period. In the near term, we expect a change in sales mix among channels, a reduction in inventory sell through of certain products and the impact of tariffs that went into effect in September 2019 will negatively affect our gross profit margins.

Selling, General and Administrative Expense

Selling, general and administrative expense, or SG&A, consists of all operating costs not otherwise included in cost of sales. These expenses include corporate and store-level compensation and benefits expense, including stock-based compensation, rent and occupancy costs, insurance costs, professional fees, corporate facility costs, depreciation and amortization expense for tangible and intangible assets, information technology costs and other professional service costs. SG&A also includes marketing expenses, which consist of advertising and promotional costs, including costs of digital media and print advertising, public relations, brand events and retail brand presentation.

Selling costs generally correlate to revenue timing and therefore experience similar variability. As a percentage of sales, we believe these selling costs will decrease over time as our business continues to scale. In the past, our general and administrative expense has increased as we have made targeted investments in talent and infrastructure. Going forward, we anticipate limited additional investments in these areas, including investments to operate as a public company.

We expect to incur transaction costs and stock-based compensation expense in connection with this offering and we anticipate a significant increase in accounting, legal and professional fees, corporate governance and financial compliance costs associated with being a public company. We estimate our annual ongoing public company costs, including additions to headcount but excluding stock-based compensation expense, will be between $15 million and $17 million. We began to incur such costs in the 26-week period ended November 30, 2019.

Interest Expense, Net

Interest expense, net consists primarily of cash and non-cash interest on borrowings under the Term Loan Facility and ABL Credit Facility, partially offset by interest earned on our cash.

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Other (Income), Net

Other (income), net consists primarily of foreign currency transaction gains and losses associated with our international subsidiaries that are denominated in currencies other than our foreign subsidiaries’ functional currencies and realized and unrealized gains and losses on our foreign currency forward contracts.

Income Taxes

We are subject to income taxes in the jurisdictions in which we operate and, consequently, income tax expense is a function of the allocation of taxable income by jurisdiction and the various activities that impact the timing of taxable events. The primary regions that are applicable to the determination of our effective tax rate are the United States, the Netherlands, Japan and Canada. Our effective tax rate will vary depending upon the relative proportion of foreign to U.S. earnings, changes in the value and realizability of our deferred tax assets and liabilities, changes in indemnified taxes and changes to tax laws and rulings in the jurisdictions in which we do business.

Results of Operations

The following table sets forth our results of operations for the periods presented:

	Fiscal Year Ended						26-Week Period Ended
	June 2, 2018			June 1, 2019			December 1, 2018			November 30, 2019
(In thousands)
Consolidated Statement of Operations Data:
Revenue	$	601,566		$	686,576		$	351,462		$	403,083
Cost of sales		326,218			359,372			181,499			218,200
Gross profit		275,348			327,204			169,963			184,883
Selling, general and administrative expense		249,875			264,674			128,481			145,992
Operating income		25,473			62,530			41,482			38,891
Interest expense, net		20,854			21,893			10,344			12,106
Loss on debt modification and extinguishment		—			3,075			—			—
Other (income), net		(216	)		(342	)		(189	)		(127	)
Income before income taxes		4,835			37,904			31,327			26,912
Income tax (benefit) expense		(18,268	)		4,767			1,878			2,147
Net income	$	23,103		$	33,137		$	29,449		$	24,765

The following table sets forth our results of operations as a percentage of revenue for the periods presented:

	Fiscal Year Ended						26-Week Period Ended
	June 2, 2018			June 1, 2019			December 1, 2018			November 30, 2019
Consolidated Statement of Operations Data:
Cost of sales		54.2	%		52.3	%		51.6	%		54.1	%
Gross profit		45.8	%		47.7	%		48.4	%		45.9	%
Selling, general and administrative expense		41.5	%		38.5	%		36.6	%		36.2	%
Operating income		4.2	%		9.1	%		11.8	%		9.6	%
Interest expense, net		3.5	%		3.2	%		2.9	%		3.0	%
Loss on debt modification and extinguishment		—			0.4	%		—			—
Other (income), net		—			—			(0.1	)%		—
Income before income taxes		0.8	%		5.5	%		8.9	%		6.7	%
Income tax (benefit) expense		(3.0	)%		0.7	%		0.5	%		0.5	%
Net income		3.8	%		4.8	%		8.4	%		6.1	%

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The 26-Week Period Ended November 30, 2019 Compared to the 26-Week Period Ended December 1, 2018

Revenue

Revenue increased by $51.6 million, or 14.7%, to $403.1 million for the 26-week period ended November 30, 2019 from $351.5 million for the 26-week period ended December 1, 2018. The increase in revenue was driven by our North America and International segments. Our revenue in our North America DTC business was partially impacted by a shift in the post-Thanksgiving holiday selling period, which had the effect of including nine days of the shopping period in the second quarter of fiscal year 2019, compared to two days of such period in the second quarter of fiscal year 2020. Footwear revenue for the 26-week period ended November 30, 2019 increased by 17.1%, compared to the 26-week period ended December 1, 2018, led by growth across use occasions and in both men’s and women’s. Lifestyle accessories revenue for the 26-week period ended November 30, 2019 decreased by 13.0% compared to the 26-week period ended December 1, 2018, primarily due to the repositioning of certain previously licensed categories, including handbags, as part of a strategic decision to manage them under an in-house model during fiscal year 2020.

Segment Revenue

The following table sets forth, for the periods presented, revenue for our segments, types of channels and the percentage changes between the periods:

	26-Week Period Ended
	December 1, 2018		November 30, 2019		% Change
(In thousands, except percentages)
North America:
North America—DTC	$	176,840	$	185,393		4.8%
North America—Wholesale and Licensing(1)		127,764		161,596		26.5%
Total North America		304,604		346,989		13.9%
International:
International—DTC		32,063		33,017		3.0%
International—Wholesale and Distributors		14,795		23,077		56.0%
Total International		46,858		56,094		19.7%
Total revenue	$	351,462	$	403,083		14.7%

(1) Includes sales to a distributor in Canada.

North America

Revenue in our North America segment for the 26-week period ended November 30, 2019 increased by $42.4 million, or 13.9%, compared to the 26-week period ended December 1, 2018. The increase in revenue in our North America segment was driven by increases in both our DTC and Wholesale and Licensing revenue. Our North America DTC revenue for the 26-week period ended November 30, 2019 increased by $8.6 million, or 4.8%, compared to the 26-week period ended December 1, 2018. This increase reflected North America DTC comparable sales growth of 3.0%, driven by increased unit sales and a net increase of two Company-operated stores as of November 30, 2019, compared to December 1, 2018. The increase in North America DTC comparable sales was primarily led by strong performance in digital commerce, driven by increased traffic on colehaan.com. As discussed above, our revenue and comparable sales were partially impacted by a shift in the post-Thanksgiving holiday selling period. Our North America Wholesale and Licensing revenue for the 26-week period ended November 30, 2019 increased by $33.8 million, or 26.5%, compared to the 26-week period ended

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December 1, 2018. This increase was primarily due to sales growth to our wholesale partners of 27.1%, driven by selling performance of our products and partially benefitted from a shift in the timing of quarterly shipments. The sales increase in the 26-week period ended November 30, 2019 also reflected increased growth to our wholesale digital partners.

International

Revenue in our International segment for the 26-week period ended November 30, 2019 increased by $9.2 million, or 19.7%, compared to the 26-week period ended December 1, 2018. The increase in International revenue was driven primarily by an increase in our Wholesale and Distributors revenue, driven by an increase in sales to our distributors, due to a net increase in distributor-operated stores. Our DTC business in Japan also contributed to the growth in revenue, primarily led by growth in digital sales.

Gross Profit and Gross Profit Margin

The following table sets forth our gross profit and gross profit margin for the periods presented:

	26-Week Period Ended
	December 1, 2018			November 30, 2019
(In thousands, except percentages)
Gross profit	$	169,963		$	184,883
Gross profit margin		48.4	%		45.9	%

Gross profit for the 26-week period ended November 30, 2019 increased by $14.9 million, or 8.8%, compared to the 26-week period ended December 1, 2018, reflecting the increase in our revenue. Gross profit margin was 45.9% in the 26-week period ended November 30, 2019 and 48.4% for the 26-week period ended December 1, 2018. Our gross profit margin decline primarily reflected the impact of a change in channel sales mix due to a shift in the post-Thanksgiving holiday selling period described above, and, to a lesser extent, increased sales in certain channels, which generally carry lower gross profit margin rates, and the impact of the tariffs that went into effect in September 2019. The decline in gross profit margin was partially offset by improved product costing as we gained scale and realized product engineering benefits.

Selling, General and Administrative Expense

The following table sets forth our SG&A and the percentage relationship to revenue for the periods presented:

	26-Week Period Ended
	December 1, 2018			November 30, 2019
(In thousands, except percentages)
Selling, general and administrative expense	$	128,481		$	145,992
As a percentage of revenue		36.6	%		36.2	%

SG&A for the 26-week period ended November 30, 2019 increased by $17.5 million, or 13.6%, compared to the 26-week period ended December 1, 2018, primarily due to an increase in expenses associated with our strategic priorities and growth initiatives. Our SG&A for the 26-week period ended November 30, 2019 reflected $9.6 million of IPO and public company costs, including $6.1 million of nonrecurring costs incurred to prepare for this offering. We did not incur any such costs in the 26-week period ended December 1, 2018. The increase in SG&A compared to the 26-week period ended December 1, 2018 also reflected an increase in marketing expense to support our digital marketing strategy, primarily consisting of performance marketing initiatives.

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SG&A as a percentage of revenue decreased from 36.6% for the 26-week period ended December 1, 2018 to 36.2% for the 26-week period ended November 30, 2019, as our growth in revenue, which partially benefitted from the shift in timing of wholesale shipments, outpaced the increase in SG&A.

Interest Expense, Net

Interest expense, net for the 26-week period ended November 30, 2019 increased by $1.8 million, or 17.0%, compared to the 26-week period ended December 1, 2018. The increase in interest expense, net during the 26-week period ended November 30, 2019 compared to the 26-week period ended December 1, 2018 was primarily related to a higher effective interest rate on the Term Loan Facility, which was refinanced in February 2019.

Income Tax Expense

Income tax expense for the 26-week period ended November 30, 2019 increased by $0.3 million compared to the 26-week period ended December 1, 2018. Our effective income tax rate was 8.0% for the 26-week period ended November 30, 2019 and 6.0% for the 26-week period ended December 1, 2018. During the 26-week period ended November 30, 2019, we continued to record a valuation allowance on deferred tax assets in certain jurisdictions due to our inability to carry back tax losses or credits. The change in our effective tax rate for the 26-week period ended November 30, 2019 compared to the 26-week period ended December 1, 2018 reflected an increase in current tax on operations in certain jurisdictions.

Net Income

As a result of the factors above, net income for the 26-week period ended November 30, 2019 decreased by $4.7 million, or 15.9%, compared to the 26-week period ended December 1, 2018.

Segment Adjusted EBITDA

The following table sets forth our Segment Adjusted EBITDA for the periods presented:

	26-Week Period Ended
	December 1, 2018			November 30, 2019
(In thousands)
Reportable Segments Adjusted EBITDA:
North America	$	48,344		$	48,771
International		8,773			13,599
Total Reportable Segments Adjusted EBITDA		57,117			62,370
Reconciling items:
Interest expense, net		10,344			12,106
Income tax expense		1,878			2,147
Depreciation and amortization, net(1)		15,699			15,768
Impairment charges		—			1,643
(Gain) on disposals of property and equipment		(64	)		(6	)
Other (income), net		(189	)		(127	)
IPO costs(2)		—			6,074
Net income	$	29,449		$	24,765

(1) Excludes amortization included in interest expense, net.

(2) Represents non-recurring expenses primarily composed of legal, accounting and professional fees incurred in connection with this offering, which are included within SG&A.

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North America Segment Adjusted EBITDA was $48.8 million for the 26-week period ended November 30, 2019, an increase of $0.4 million, or 0.9%, from the 26-week period ended December 1, 2018. The increase in North America Segment Adjusted EBITDA reflected increased gross profit driven by our growth in sales, partially offset by an increase in SG&A to support our strategic priorities and growth initiatives.

International Segment Adjusted EBITDA was $13.6 million for the 26-week period ended November 30, 2019, an increase of $4.8 million, or 55.0%, from the 26-week period ended December 1, 2018. The increase in International Segment Adjusted EBITDA primarily reflected increased gross profit, driven by growth in sales.

The Fiscal Year Ended June 1, 2019 Compared to the Fiscal Year Ended June 2, 2018

Revenue

Revenue increased by $85.0 million, or 14.1%, to $686.6 million for fiscal year 2019 from $601.6 million for fiscal year 2018. The increase in revenue was driven by our North America and International segments. Footwear revenue for fiscal year 2019 increased by 16.6% compared to fiscal year 2018, led by growth across use occasions and in both men’s and women’s. Lifestyle accessories revenue for fiscal year 2019 decreased by 8.9%, compared to fiscal year 2018, primarily due to the repositioning of certain previously licensed categories, including handbags, as part of a strategic decision to manage them under an in-house model during fiscal year 2020.

Segment Revenue

The following table sets forth, for the periods presented, revenue for our segments, types of channels and the percentage changes between the periods:

	Fiscal Year Ended
	June 2, 2018		June 1, 2019		% Change
(In thousands, except percentages)
North America:
North America—DTC	$	305,107	$	341,820		12.0	%
North America—Wholesale and Licensing(1)		201,797		246,354		22.1	%
Total North America		506,904		588,174		16.0	%
International:
International—DTC		63,559		64,899		2.1	%
International—Wholesale and Distributors		31,103		33,503		7.7	%
Total International		94,662		98,402		4.0	%
Total revenue	$	601,566	$	686,576		14.1	%

(1) Includes sales to a distributor in Canada.

North America

Revenue in our North America segment for fiscal year 2019 increased by $81.3 million, or 16.0%, compared to fiscal year 2018. The increase in revenue in our North America segment was driven by increases in both our DTC and Wholesale and Licensing revenue. Our North America DTC revenue for fiscal year 2019 increased by $36.7 million, or 12.0%, compared to fiscal year 2018. This increase was driven by North America DTC comparable sales growth of 13.0%, led by increased unit sales, as well as a net increase of five stores in operation as of June 1, 2019 compared to June 2, 2018. The increase in North America DTC comparable sales was primarily led by strong performance in digital commerce, driven by increased traffic on colehaan.com. Our North America Wholesale and Licensing revenue for fiscal year 2019 increased by $44.6 million, or 22.1%,

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compared to fiscal year 2018. This increase was primarily driven by sales growth to our wholesale partners of 21.6%, driven by sales of our expanded product assortment and selling performance of our products. The fiscal year 2019 sales increase also reflected increased growth to our wholesale digital partners.

International

Revenue in our International segment for fiscal year 2019 increased by $3.7 million, or 4.0%, compared to fiscal year 2018. The increase in International revenue was driven primarily by an increase in our Wholesale and Distributors revenue, driven by an increase in sales to our distributors, due to a net increase in distributor-operated stores and increased DTC sales in Japan, primarily led by growth in digital sales.

Gross Profit and Gross Profit Margin

The following table sets forth our gross profit and gross profit margin for the periods presented:

	Fiscal Year Ended
	June 2, 2018			June 1, 2019
(In thousands, except percentages)
Gross profit	$	275,348		$	327,204
Gross profit margin		45.8	%		47.7	%

Gross profit for fiscal year 2019 increased by $51.9 million, or 18.8%, compared to fiscal year 2018, reflecting the increase in our revenue. Gross profit margin was 47.7% in fiscal year 2019 and 45.8% for fiscal year 2018. Our gross margin expansion reflected improved product costing as we gained scale and realized product engineering benefits and a higher proportion of digital commerce sales within our North America DTC sales, which generally carry higher gross profit margins.

Selling, General and Administrative Expense

The following table sets forth our SG&A and the percentage relationship to revenue for the periods presented:

	Fiscal Year Ended
	June 2, 2018			June 1, 2019
(In thousands, except percentages)
Selling, general and administrative expense	$	249,875		$	264,674
As a percentage of revenue		41.5	%		38.5	%

SG&A for fiscal year 2019 increased by $14.8 million, or 5.9%, compared to fiscal year 2018, primarily due to increased marketing expense and compensation and benefit expense. Marketing expense increased by $8.1 million from $26.8 million in fiscal year 2018 to $34.9 million in fiscal year 2019, driven by an increase in marketing spend to support our digital marketing strategy, primarily consisting of performance marketing initiatives. The remainder of SG&A increased by $6.7 million compared to fiscal year 2018, primarily due to increased corporate and store-level compensation and benefit expense to support business growth and strategic priorities.

SG&A as a percentage of revenue decreased from 41.5% for fiscal year 2018 to 38.5% for fiscal year 2019, as our growth in revenue outpaced the increase in SG&A.

Interest Expense, Net

Interest expense, net for fiscal year 2019 increased by $1.0 million, or 5.0%, compared to fiscal year 2018. The increase in interest expense, net was primarily related to a higher effective interest rate during fiscal year 2019 on the Term Loan Facility, which was refinanced in February 2019, compared to fiscal year 2018.

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Loss on Debt Modification and Extinguishment

In February 2019, we recognized a loss of $3.1 million in connection with the refinancing of the Term Loan Facility, including debt modification costs of $2.2 million and a $0.9 million non-cash write-off of debt issuance costs.

Income Tax (Benefit) Expense

Income tax expense for fiscal year 2019 increased by $23.0 million compared to fiscal year 2018, primarily due to the recognition of a $23.2 million benefit in fiscal year 2018 associated with the Tax Cuts and Jobs Act, which comprised an $11.8 million net reduction of the valuation allowance on U.S. net deferred tax assets and a net benefit of $11.4 million for the remeasurement of deferred taxes. During fiscal year 2019 and fiscal year 2018, we continued to record a valuation allowance on deferred tax assets in certain jurisdictions due to our inability to carry back tax losses or credits. Our effective income tax rate was 12.6% for fiscal year 2019 and (377.9)% for fiscal year 2018. Our increase in tax rate for fiscal year 2019 as compared with fiscal year 2018 is primarily the result of the impact of the Tax Cuts and Jobs Act that became effective in fiscal year 2018, including the provision to indefinitely carry forward net operating losses generated in years ending in calendar year 2018 and later and allowing for the use of indefinite-lived deferred tax liabilities as a source of income for those indefinite-lived assets, which resulted in a partial release of the valuation allowance on the U.S. deferred tax assets.

Net Income

As a result of the factors above, net income for fiscal year 2019 increased by $10.0 million, or 43.4%, compared to fiscal year 2018.

Segment Adjusted EBITDA

The following table sets forth our Segment Adjusted EBITDA for the periods presented:

	Fiscal Year Ended
	June 2, 2018			June 1, 2019
(In thousands)
Reportable Segments Adjusted EBITDA:
North America	$	47,764		$	77,182
International		12,308			17,592
Total Reportable Segments Adjusted EBITDA		60,072			94,774
Reconciling items:
Interest expense, net		20,854			21,893
Income tax (benefit) expense		(18,268	)		4,767
Depreciation and amortization, net(1)		34,667			32,152
Impairment charges		—			192
(Gain) on disposals of property and equipment		(68	)		(100	)
Loss on debt modification and extinguishment		—			3,075
Other (income), net		(216	)		(342	)
IPO costs(2)		—			—
Net income	$	23,103		$	33,137

(1) Excludes amortization included in interest expense, net.

(2) Represents non-recurring expenses primarily composed of legal, accounting and professional fees incurred in connection with this offering, which are included within SG&A.

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North America Segment Adjusted EBITDA was $77.2 million for fiscal year 2019, an increase of $29.4 million, or 61.6%, from fiscal year 2018. The increase in North America Segment Adjusted EBITDA reflected increased gross profit driven by our growth in sales volume, partially offset by an increase in SG&A to support our growth initiatives and strategic priorities, including our digital marketing efforts to drive DTC expansion.

International Segment Adjusted EBITDA was $17.6 million for fiscal year 2019, an increase of $5.3 million, or 42.9%, from fiscal year 2018. The increase in International Segment Adjusted EBITDA primarily reflected increased gross profit, driven by growth in sales.

Non-GAAP Financial Measures

We present Adjusted EBITDA because we believe it is a useful indicator of our comparative operating performance from period to period. We believe that Adjusted EBITDA is useful to investors because it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry.

Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to net income as a measure of financial performance or cash provided by operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP, and it should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed to imply that our future results will be unaffected by any such adjustments. Management compensates for these limitations by primarily relying on our GAAP results, while using Adjusted EBITDA as a supplement to the corresponding GAAP financial measures. In addition, other companies, including companies in our industry, may calculate Adjusted EBITDA differently or not at all, which reduces the usefulness of Adjusted EBITDA as a tool for comparison.

The following table provides a reconciliation of our net income to Adjusted EBITDA for the periods presented:

	Fiscal Year Ended						26-Week Period Ended
	June 2, 2018			June 1, 2019			December 1, 2018			November 30, 2019
(In thousands)
Net income	$	23,103		$	33,137		$	29,449		$	24,765
Interest expense, net		20,854			21,893			10,344			12,106
Income tax (benefit) expense		(18,268	)		4,767			1,878			2,147
Depreciation and amortization, net(a)		34,667			32,152			15,699			15,768
Impairment charges(b)		—			192			—			1,643
(Gain) on disposals of property and equipment(c)		(68	)		(100	)		(64	)		(6	)
Loss on debt modification and extinguishment(d)		—			3,075			—			—
Other (income), net(e)		(216	)		(342	)		(189	)		(127	)
IPO costs(f)		—			—			—			6,074
Adjusted EBITDA	$	60,072		$	94,774		$	57,117		$	62,370

(a) Excludes amortization included in interest expense, net.

(b) Represents non-cash store impairment charges.

(c) Represents the non-cash gain on disposals of property and equipment.

(d) Represents the loss on debt modification and extinguishment in connection with the refinancing of the Term Loan Facility in February 2019.

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(e) Primarily represents foreign currency transaction (gains) and losses associated with our international subsidiaries and realized and unrealized (gains) and losses on our foreign currency forward contracts.

(f) Represents non-recurring expenses primarily composed of legal, accounting and professional fees incurred in connection with this offering, which are included within SG&A.

Liquidity and Capital Resources

Our primary uses of cash are working capital requirements, funding our SG&A, debt service requirements and capital expenditures. Working capital is required principally to finance accounts receivable and inventory. Our working capital requirements vary from period to period depending on various factors, such as the timing of shipments and the payment cycles of our wholesale partners. Our cash needs include payroll, store rent, capital expenditures associated with new stores and updating existing stores, as well as information technology and infrastructure, including our corporate office and distribution center, and public company costs.

We principally rely on cash flows from operations as our primary source of liquidity and if, needed, up to $115.0 million in revolving loans under the ABL Credit Facility (subject to the borrowing base). We anticipate that cash generated from operations together with amounts available under the ABL Credit Facility will be sufficient to meet our future working capital requirements, capital expenditures and debt service obligations as they become due for the foreseeable future. To the extent additional funds are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds. In the event that we need access to additional cash, we may not be able to access the credit markets on commercially acceptable terms or at all. Our ability to fund future operating expenses and capital expenditures and our ability to meet future debt service obligations or refinance our indebtedness will depend on our future operating performance, which will be affected by general economic, financial and other factors beyond our control, including those described under “Risk Factors.”

As of November 30, 2019, we had $10.8 million of cash, $277.4 million of indebtedness outstanding and an additional $115.0 million of availability under our ABL Credit Facility, which was undrawn. As of November 30, 2019, $8.0 million of our cash was held by our foreign subsidiaries. In accordance with our policy, the undistributed earnings of our non-U.S. subsidiaries remain indefinitely reinvested outside of the United States as they are required to fund needs outside the United States. In the event funds from foreign operations are needed to fund operations in the United States and if U.S. tax has not already been previously provided for, we may be required to accrue and pay additional U.S. taxes in order to repatriate these funds.

We and/or our Sponsor may from time to time seek to retire or purchase our outstanding debt through open-market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases or exchanges, if any, may involve the use of cash and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors that could materially affect our liquidity.

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Cash Flows

The following table presents the major components of our net cash flows provided by (used in) operating, investing and financing activities for the periods presented:

	Fiscal Year Ended						26-Week Period Ended
	June 2, 2018			June 1, 2019			December 1, 2018			November 30, 2019
(In thousands)
Net cash provided by (used in):
Operating activities	$	50,491		$	55,168		$	30,827		$	(12,829	)
Investing activities		(15,991	)		(17,745	)		(8,628	)		(10,580	)
Financing activities		(23,219	)		(22,929	)		(12,490	)		(3,625	)
Effect of foreign exchange rate changes on cash		110			(108	)		(177	)		(42	)
Net increase (decrease) in cash	$	11,391		$	14,386		$	9,532		$	(27,076	)

The 26-Week Period Ended November 30, 2019 Compared to the 26-Week Period Ended December 1, 2018

Cash Provided By (Used In) Operating Activities

Net cash used in operating activities for the 26-week period ended November 30, 2019 was $12.8 million, resulting from net cash used by changes in our operating assets and liabilities of $56.8 million, partially offset by $24.8 million in our net income and $19.2 million in net non-cash charges. Net cash used by changes in our operating assets and liabilities for the 26-week period ended November 30, 2019 consisted primarily of a $45.0 million increase in accounts receivable, a $12.1 million increase in inventories and a $3.8 million decrease in accounts payable, partially offset by a $6.7 million increase in accrued liabilities. The increase in accounts receivable was due to revenue growth during the period. The increase in inventories was due to growth in operations. The decrease in accounts payable was due to the timing of payments. The increase in accrued liabilities was due to increased inventory purchases to support growth initiatives and personnel-related accrued liabilities, such as accrued salaries and bonuses, due to our improved performance and, to a lesser extent, growth in headcount.

Net cash provided by operating activities for the 26-week period ended December 1, 2018 was $30.8 million, resulting from our net income of $29.4 million and net non-cash charges of $19.8 million, partially offset by net cash used by changes in our operating assets and liabilities of $18.4 million. Net cash used by changes in our operating assets and liabilities for the 26-week period ended December 1, 2018 consisted primarily of a $24.7 million increase in accounts receivable, a $13.4 million increase in inventories and a $6.8 million decrease in accounts payable, partially offset by a $25.7 million increase in accrued liabilities. The increase in inventories was due to growth in operations. The increase in accounts receivable was due to the increased sales, as well as timing of receipts of cash payments from wholesalers. The increase in accounts payable was due to the timing of payments. The increase in accrued liabilities was due to increased inventory purchases to support growth initiatives and personnel-related accrued liabilities, such as accrued salaries and bonuses, associated with our improved performance and, to a lesser extent, growth in headcount.

Cash Used In Investing Activities

During the 26-week period ended November 30, 2019, net cash used in investing activities was $10.6 million, consisting primarily of purchases of property and equipment of $10.1 million, including enhancements to our information technology infrastructure, product innovation and new stores.

During the 26-week period ended December 1, 2018, net cash used in investing activities was $8.6 million, consisting primarily of purchases of property and equipment of $8.4 million, including enhancements to our information technology infrastructure and new stores.

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Cash Used In Financing Activities

During the 26-week period ended November 30, 2019, net cash used in financing activities was $3.6 million, consisting of principal repayments under the Term Loan Facility.

During the 26-week period ended December 1, 2018, net cash used in financing activities was $12.5 million, consisting of principal repayments under the Term Loan Facility of $12.2 million and the payment of financing costs associated with the ABL Credit Facility of $0.3 million.

The Fiscal Year Ended June 1, 2019 Compared to the Fiscal Year Ended June 2, 2018

Cash Provided By Operating Activities

Net cash provided by operating activities was $55.2 million for fiscal year 2019, resulting from our net income of $33.1 million and net non-cash charges of $35.9 million, partially offset by net cash used by changes in our operating assets and liabilities of $13.9 million. The net cash used by changes in our operating assets and liabilities for fiscal year 2019 consisted primarily of a $38.6 million increase in inventories, a $7.2 million increase in accounts receivable, a $4.5 million decrease in accounts payable and a $2.3 million increase in prepaid expenses and other current assets, partially offset by a $36.1 million increase in accrued liabilities and a $2.4 million increase in taxes payable. The increase in inventories was to support our first quarter 2020 product launches and anticipated sales growth, and the increase in accounts receivable was due to higher revenue in the fourth quarter of fiscal year 2019, partially offset by timing of the related collections. The decrease in accounts payable was due to the timing of payments. The increase in prepaid expenses and other current assets was due to timing of prepayments and the increase in accrued liabilities was due to increased inventory purchases to support growth initiatives and personnel-related accrued liabilities, such as accrued salaries and bonuses, due to our improved performance and, to a lesser extent, growth in headcount. The increase in taxes payable was primarily due to additional income taxes associated with the Tax Cuts and Jobs Act.

Net cash provided by operating activities was $50.5 million for fiscal year 2018, resulting from our net income of $23.1 million, net non-cash charges of $17.6 million and net cash provided by changes in our operating assets and liabilities of $9.8 million. The net cash provided by changes in our operating assets and liabilities was primarily due to a $13.7 million increase in accrued liabilities, a $4.5 million decrease in accounts receivable and a $3.3 million increase accounts payable, partially offset by a $7.4 million increase in inventories and a $2.6 million decrease in taxes payable. The increase in accrued liabilities was due to increased inventory purchases to support growth initiatives. The decrease in accounts receivable was due to a shift in timing of wholesale shipments, as well as the timing of collections at the end of fiscal year 2018. The increase in accounts payable was due to the timing of payments, and the increase in inventories was to support our first quarter 2019 product launches and anticipated sales growth. The decrease in taxes payable was primarily related to a reduction in indirect tax payments.

Cash Used In Investing Activities

During fiscal year 2019, net cash used in investing activities was $17.7 million, consisting primarily of purchases of property and equipment of $17.1 million, including enhancements to our information technology infrastructure, product innovation and new stores.

During fiscal year 2018, net cash used in investing activities was $16.0 million, consisting primarily of purchases of property and equipment of $15.5 million, including enhancements to our information technology infrastructure, product innovation and store improvements.

Cash Used In Financing Activities

During fiscal year 2019, net cash used in financing activities was $22.9 million, consisting of principal repayments under the Term Loan Facility of $306.1 million and the payment of financing costs associated with

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the Term Loan Facility and ABL Credit Facility of $3.2 million, partially offset by net proceeds from borrowings under the Term Loan Facility of $286.4 million.

During fiscal year 2018, net cash used in financing activities was $23.2 million, consisting primarily of principal repayments under the ABL Credit Facility of $70.5 million, partially offset by net proceeds from borrowings under the ABL Credit Facility of $47.4 million.

Financing Obligations

The following table sets forth the amounts owed under the ABL Credit Facility and the Term Loan Facility, the effective interest rates on such outstanding amounts and the amount available for additional borrowing, in each case, as of November 30, 2019:

	Maturity Date		Effective Interest Rate			Amount Outstanding			Amount Available for Additional Borrowing
(In thousands)
ABL Credit Facility		July 2023		2.9	%	$	—		$	115,000
Term Loan Facility		February 2025		7.2	%		284,563			—
Unamortized discount and debt issuance costs							(7,167	)		—
Total						$	277,396		$	115,000

ABL Credit Facility

On February 1, 2013, our wholly owned subsidiary, Calceus MidCo, Inc., and its wholly owned subsidiary, Calceus Acquisition, Inc., as lead borrower, and its other subsidiaries party thereto as borrowers, entered into the ABL Credit Agreement (as amended by Amendment No. 1, dated as of November 23, 2015, and Amendment No. 2, dated as of July 11, 2018), with Wells Fargo Bank. The ABL Credit Facility provides for an aggregate principal amount of $115.0 million (subject to the borrowing base), of which up to $20.0 million is available through a subfacility in the form of letters or credit and up to $10.0 million is available through a subfacility for swing line loans, in each case subject to customary conditions and limitations. In addition, the borrowers under the ABL Credit Facility may request one or more incremental increases to the available revolving credit commitments under the ABL Credit Facility in an aggregate amount not to exceed $35.0 million. The lenders under the ABL Credit Facility are not under any obligation to provide any such incremental commitments. See “Description of Certain Indebtedness.”

Term Loan Facility

On February 12, 2019, Calceus MidCo, Inc. and Calceus Acquisition, Inc., as term loan borrower, entered into the Credit Agreement with JPMorgan Chase Bank, N.A., as administrative and collateral agent. The Term Loan Facility provides for a term loan in an aggregate principal amount of $290.0 million. In addition, the term loan borrower may request to add one or more additional tranches of term loans and/or increase the principal amount of term loans under the Term Loan Facility, subject to certain conditions and limitations. The lenders under the Term Loan Facility are not under any obligation to provide any such incremental indebtedness. See “Description of Certain Indebtedness.”

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Contractual Obligations

The following table summarizes our contractual obligations as of June 1, 2019 for each of the periods indicated:

	Payments Due by Period
	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
(In thousands)
Term Loan Facility	$	7,250	$	16,313	$	29,000	$	235,625	$	288,188
ABL Credit Facility(1)		—		—		—		—		—
Interest on long-term debt obligations(2)		22,571		41,908		41,817		12,808		119,104
Operating lease obligations(3)		36,828		59,125		46,377		27,505		169,835
Purchase obligations		170,853		—		—		—		170,853
Pension obligations		229		383		626		2,205		3,443
Other long-term obligations(4)		538		478		255		174		1,445
Total(5)	$	238,269	$	118,207	$	118,075	$	278,317	$	752,868

(1) Amounts assume that the ABL Credit Facility remains undrawn, which may or may not reflect future events.

(2) Assumes an interest rate of 7.6% per annum, consistent with the interest rate on the Term Loan Facility at June 1, 2019.

(3) Includes $1.4 million of minimum lease payments which had not commenced as of June 1, 2019.

(4) Primarily consists of asset retirement obligations.

(5) We have excluded the amount of the liability for uncertain tax benefits as of June 1, 2019 in the table above. As of June 1, 2019, we had $2.8 million of uncertain tax benefits, excluding interest and penalties, related to uncertain tax positions. The timing of future cash outflows associated with our liabilities for uncertain tax benefits is highly uncertain. As such, we are unable to make reasonably reliable estimates of the period of cash settlement with the respective tax authority.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Policies and Significant Estimates

Our discussion of results of operations and financial condition is based upon our audited consolidated financial statements and unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions about future events that affect the classification and amounts reported in our consolidated financial statements and accompanying notes, including revenue and expenses, assets and liabilities and the disclosure of contingent assets and liabilities. These estimates and assumptions are based on our historical results as well as management’s judgment. Although management believes the judgment applied in preparing estimates is reasonable based on circumstances and information known at the time, actual results could vary materially from estimates based on assumptions used in the preparation of our consolidated financial statements.

The most significant accounting estimates involve a high degree of judgment or complexity. Management believes the estimates and judgments most critical to the preparation of our consolidated financial statements and to the understanding of our reported financial results include those made in connection with estimates to develop the sales returns reserve; impairment assessments for goodwill, intangible assets and long-lived assets; income taxes, including estimating the valuation allowance and uncertain tax positions; and estimating stock-based compensation expense. Management evaluates its policies and assumptions on an ongoing basis. Our significant

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accounting policies related to these accounts in the preparation of our consolidated financial statements are described below. See Note 2 to our audited consolidated financial statements and our unaudited condensed consolidated financial statements included elsewhere in this prospectus for additional information regarding our critical accounting policies.

Revenue Recognition

At the beginning of fiscal year 2019, we adopted Topic 606 using the modified retrospective method. Revenue transactions associated with the sale of our footwear, handbags, accessories and outerwear generally comprise a single performance obligation, which consists of the sale of products to customers either through wholesale or DTC channels. We recognize wholesale and digital commerce revenue when the transfer of control has passed to the customer, based on the terms of sale. Our customers are considered to have obtained control once they are able to direct the use and receive substantially all of the benefits of the product. Transfer of control passes to wholesale partners upon shipment or upon receipt, depending on the country of the sale and the agreement with the customer. Control passes to retail store customers at the time of sale and to digital commerce customers upon shipment. The transaction price for wholesale revenue is determined based upon the invoiced sales price, less anticipated sales returns, discounts, certain vendor allowances, and miscellaneous claims from customers. The transaction price for DTC revenue is determined based upon invoiced sales price, less anticipated sales returns and discounts.

Consideration for trademark licensing contracts is earned through sales-based royalty arrangements and the associated revenue is recognized over the license period at such time that the subsequent sales of the licensed products occur.

We sell gift cards to customers in our stores and through our sites. Gift cards do not have expiration dates, inactivity fees or administrative fees. Revenue recognition occurs when the gift card is redeemed by the consumer. Revenue is not recognized for amounts subject to escheatment laws. Gift card breakage income is recognized based upon historical redemption patterns for the balance of gift cards that we believe the likelihood of redemption by the customer is remote. We review our gift card liability on an ongoing basis and recognize our estimate of the unredeemed gift card liability on a ratable basis over the estimated period of redemption. Our historical experience has not varied significantly from amounts historically recorded and we believe our assumptions are reasonable.

At the time sales revenue is recognized, we record provisions for sales discounts, returns and miscellaneous claims from customers, and reflects the most likely amount we anticipate being entitled to receive based upon historical experience and current trends, taking into consideration the type of customer, transaction, and specifics of each arrangement. We do not believe there is a reasonable likelihood that there will be a material change in the assumptions used to calculate these reserves. However, if the actual cost of sales returns is significantly different than the estimated allowance, our results of operations could be materially affected. We do not provide express warranties on our products, but occasionally will repair or take a return in the event that a product does not meet our standards. The impact of such warranties is not material and is considered in our process for estimating our sales returns reserve.

We have determined that the costs to fulfill our contracts, including sales commissions, do not generate or enhance our resources that will be used in satisfying (or in continuing to satisfy) performance obligations in the future. As the amortization period over which any asset would be recorded is less than one year, we have elected the practical expedient to expense such costs as incurred.

We evaluate the presentation of revenue on a gross versus net basis. In this evaluation, we consider if we obtain control of the specified goods or services before they are transferred to our customer, as well as other indicators such as the party primarily responsible for fulfillment, inventory risk, and discretion in establishing price. We have determined gross presentation is appropriate for our revenue transactions involving a third party.

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Impairment of Long-Lived Assets, Goodwill and Indefinite-Lived Assets

Long-Lived Assets

Long-lived assets, including property and equipment and definite-lived intangible assets, are evaluated for impairment whenever events or circumstances indicate that the carrying value of the assets may not be recoverable. Conditions that may indicate impairment include, but are not limited to, a significant decrease in the market price of an asset, a significant adverse change in the extent or manner in which an asset is being used or a significant decrease in its physical condition, and operating or cash flow performance that demonstrates continuing losses associated with an asset or asset group.

When such events occur, we compare the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group to the carrying amount of the long-lived asset or asset group.

The cash flows are based on the best estimate of future cash flows derived from the most recent business projections.

A potential impairment has occurred if the projected future undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group are less than the carrying value of the asset or asset group. If the carrying value exceeds the sum of the undiscounted cash flows, an impairment charge is recorded equal to the excess of the asset or asset group’s carrying value over its fair value. Fair value is measured using appropriate valuation methodologies that would typically include a projected discounted cash flow model using a discount rate we believe is commensurate with the risk inherent in its business. Current and expected operating results and cash flows and other factors are considered in connection with determining the fair value. We recognized aggregate non-cash impairment charges of $1.6 million and $0.2 million during the 26-week period ended November 30, 2019 and fiscal year 2019, respectively. No impairment charge was recognized during fiscal year 2018.

Determining the fair value of long-lived assets requires management judgment and relies upon the use of significant estimates and assumptions, including future sales, our margins and cash flows, current and future market conditions, discount rates applied, useful lives and other factors. We believe our assumptions are reasonable based on available information, our experience, knowledge and judgments. These estimates can be affected by factors that are difficult to predict including future revenue, operating results and economic conditions. Changes in assumptions and estimates used in the impairment analysis, or future results that vary from assumptions used in the analysis, could affect the estimated fair value of long-lived intangible assets and could result in impairment charges in a future period.

Goodwill

We evaluate goodwill for impairment at least annually, or more frequently when events or changes in circumstances indicate that the carrying value may not be recoverable. We assess goodwill at the reporting unit level and have three reporting units: North America Wholesale and Licensing, North America DTC and International. We have selected the fourth fiscal quarter to perform our annual goodwill impairment testing.

We evaluate goodwill for impairment at least annually on the last day of the fiscal year. We may assess our goodwill for impairment initially using a qualitative approach, or step zero, to determine whether conditions exist to indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. The qualitative assessment requires significant judgments by management about economic conditions including the entity’s operating environment, its industry and other market considerations, entity-specific events related to financial performance or loss of key personnel and other events that could impact the reporting unit. If management concludes, based on assessment of relevant events, facts and circumstances, that it is more likely than not that a reporting unit’s fair value is greater than its carrying value, no further impairment testing is required.

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If our assessment of qualitative factors indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then a two-step quantitative assessment is performed. We may also elect to initially perform a quantitative analysis instead of starting with step zero. “Step one” requires comparing the carrying value of a reporting unit, including goodwill, to its fair value. If the fair value of the respective reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and no further testing is required. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is to measure the amount of impairment loss, if any. “Step two” compares the implied fair value of goodwill to the carrying amount of goodwill. If the carrying amount of goodwill exceeds the implied fair value, an impairment charge is recorded to write down goodwill to its implied fair value.

To estimate the fair value of our reporting units we consider the fair values derived from both a market approach and an income approach and which are weighted on a proportionate basis to arrive at our reporting unit fair value. Under the market approach, fair value is estimated using the guideline public company method. The guideline public company method uses a peer group of publicly traded companies determined by various factors including industry similarity, product offering, markets, financial performance, availability of adequate financial data, and an actively traded stock price. After selection of the guideline public companies, factors such as size, growth, risk and profitability were analyzed to assess the market multiples to apply such as forward revenue and EBITDA. The income approach uses a discounted cash flow analysis, which involves applying appropriate discount rates to estimated future cash flows based on forecasts of sales, costs and capital requirements. The most significant estimates and assumptions inherent in the income approach are the enterprise value based on the estimated present value of future net cash flows the business is expected to generate over a forecasted period and an estimate of the present value of cash flows beyond that period, which is referred to as the terminal value. The estimated present value is calculated using a discount rate known as the weighted-average cost of capital, which accounts for the time value of money and the appropriate degree of risks inherent in the business. We estimate future sales growth using a number of critical factors, including among others, our nature and our history, financial and economic conditions affecting us, our industry and the general company, past results and our current operations and future prospects. Forecasts of future operations are based, in part, on operating results and our expectations as to future market conditions. We deem the discount rate used in our analysis to be commensurate with the underlying uncertainties associated with achieving the estimated cash flows we project. This analysis contains uncertainties because it requires us to make assumptions and to apply judgments to estimate industry economic factors and the profitability of future business strategies. If actual results are not consistent with our estimates and assumptions, we may be exposed to future impairment losses that could be material. During fiscal year 2018 and fiscal year 2019, we did not recognize any goodwill impairment charges.

Indefinite-Lived Intangible Assets

We evaluate indefinite–lived intangible assets for impairment at least annually, or more frequently when events or changes in circumstances indicate that the carrying value may not be recoverable. We consider our trademarks and tradenames to be indefinite-lived intangible assets, as we currently anticipate that they will contribute cash flows to us indefinitely. In testing indefinite-lived intangibles for impairment, we have the option to first assess qualitative factors to determine whether the existences or circumstances would indicate that it is more likely than not that the fair value of our indefinite-lived intangible assets is less than its carrying amount, or we can perform a quantitative impairment analysis to determine the fair value of the indefinite-lived intangible assets without performing a qualitative assessment. Under either approach, if the fair value of the indefinite-lived intangible asset is less than its carrying amount, we would be required to record an impairment charge.

Calculating the fair value requires significant judgment. We determine the fair value of our trademarks and tradenames using the relief from royalty method, a variation of the income approach. The use of different assumptions, estimates or judgments, such as the estimated future cash flows, the discount rate used to discount such cash flows or the estimated royalty rate, could significantly increase or decrease the estimated fair value of the intangible assets. We have selected the fourth fiscal quarter to perform our annual intangible asset impairment testing. During fiscal year 2018 and fiscal year 2019, we did not recognize any impairment charges related to our indefinite-lived intangible assets.

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Income Taxes

Deferred tax assets and liabilities are determined based on temporary differences resulting from the different treatment of items for tax and financial reporting purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent we believe it is not more likely than not to be realized. The determination of whether a deferred tax asset will be realized is made on both a jurisdictional basis and the use of our estimate of the recoverability of the deferred tax asset. In evaluating whether a valuation allowance is required under such rules, we consider all available positive and negative evidence, including our prior operating results, the nature and reason for any losses, our forecast of future taxable income in each respective tax jurisdiction and the dates on which any deferred tax assets are expected to expire. These assumptions require a significant amount of judgment, including estimates of future taxable income. We determined that we would not be able to fully realize the benefits of all our state deferred tax assets. As of June 1, 2019 and June 2, 2018, a cumulative valuation allowance of $23.1 million, and $27.3 million, respectively, was recorded. We continue to assess whether any significant changes in circumstances or assumptions have occurred that could materially affect our ability to realize deferred tax assets. We expect to release the valuation allowance when we have sufficient positive evidence, including but not limited to, the magnitude and duration of our historical losses as compared to recent profits within taxing jurisdictions to overcome such negative evidence.

We record the financial statement impact for uncertain income tax positions based on a two-step process. The first step is recognition, where an individual tax position is evaluated as to whether it has a likelihood of greater than 50% of being sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation processes. For tax positions that are currently estimated to have less than a 50% likelihood of being sustained, no tax benefit is recorded. For tax positions that have met the recognition threshold in the first step, we perform the second step of measuring the benefit to be recorded. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. Our policy is to classify interest and penalties related to unrecognized tax benefits as a component of income tax expense (benefit).

Although we believe that we have adequately reserved for our uncertain tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. In future periods, changes in facts, circumstances and new information may require us to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in income tax expense and liability in the period in which such changes occur.

Stock-Based Compensation

Calceus TopCo, L.P., or Calceus TopCo, maintains Unit Purchase and Grant Agreements or Unit Grant Agreements with certain of our senior executives that allows Calceus TopCo to grant restricted share units awards in the form of Class B Units. Vesting of the Class B Units are contingent upon the occurrence of a liquidity event or a distribution of a specified amount to stockholders, both of which are performance conditions, and the achievement of a specified internal rate of return, which is a market condition. As the Class B Units are classified as equity awards and contain both performance and market conditions, compensation expense recognized for the awards will be equal to the grant date fair value of all awards for which the performance condition is met and the requisite service period is satisfied regardless of whether the market conditions are ultimately satisfied. No compensation expense will be recognized until satisfaction of the performance condition is deemed probable. At that time, we will account for the compensation expense related to the Class B Units, as the costs are deemed to be for our benefit, by recognizing the expense within selling, general and administrative expense in our consolidated statements of operations.

During the periods presented, Calceus TopCo’s Class B Units were not publicly traded. As there has been no public market for Calceus TopCo’s Class B Units to date, the estimated fair value of the Class B Units has

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been determined with input from management, considering as one of the factors the most recently available third-party valuations of common stock and an assessment of additional objective and subjective factors that were relevant and which may have changed from the date of the most recent valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.

Calceus TopCo’s Class B Units valuation was prepared using the option-pricing method, or OPM. Under the OPM methodology, we utilized a Contingent Claims Analysis where each class of security is modeled as a call option with the unique claim on the assets of Calceus TopCo. The Contingent Claims Analysis model uses the risk-free rate, expected term, volatility and dividend yield as inputs. The characteristics of each class of stock determine the uniqueness of each class of stock’s claim on our assets, and these characteristics are modeled as distinct call options. Under this method, the equity unit has value only if the funds available for distribution to stockholders exceed the value of the liquidation preferences at the time of a liquidity event. A discount for lack of marketability of the equity unit is then applied to arrive at an indication of value for the equity unit. The OPM uses the Black-Scholes formula to price the call options. This model defines the fair values of equity units as functions of the current fair value of a company and uses assumptions such as the anticipated timing of a potential liquidity event and the estimated volatility of the equity units.

The assumptions underlying these valuations represent management’s best estimates, which involve inherent uncertainties and the application of management judgment. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our stock-based compensation expense could be materially different.

Following the closing of this offering, the fair value of our common stock will be determined based on the quoted market price of our common stock.

Recently Issued Accounting Standards

See Note 2 to our audited consolidated financial statements and Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this prospectus for information regarding recently issued accounting pronouncements.

Emerging Growth Company Status

Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Section 107 of the JOBS Act provides that any decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable. We are choosing to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the potential loss that may result from market changes associated with our business or with an existing or forecasted financial transaction. The value of a financial instrument may change as a result of changes in interest rates, exchange rates, commodity prices, equity prices and other market changes. We are exposed to various market risks, including variability in currency exchange rates and fluctuations in interest rates. We do not use derivative financial instruments for speculative or trading purposes. We maintain an interest rate swap, which is designated as an accounting hedge, to mitigate the variability in cash flows on our debt-related interest payments. From time to time, we have entered into, and in the future expect to continue to enter into, foreign currency forward contracts to manage certain of the risks described herein.

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Foreign Currency Exchange Risk

We are a global enterprise subject to the risk of foreign currency fluctuations. Although our products are offered in 64 countries and 17.1% of our total fiscal year 2019 revenue was generated outside the United States, substantially all of that revenue is transacted in U.S. dollars, Japanese Yen or Canadian dollars.

Most of our foreign businesses operate in functional currencies other than the U.S. dollar. In periods where the U.S. dollar strengthens relative to the Japanese Yen, or, to a lesser extent, the Canadian dollar or other foreign currencies where we have operations, there is a negative impact on our operating results upon translation of those foreign operating results into the U.S. dollar. The reported values of assets and liabilities in these foreign businesses are subject to fluctuations in foreign currency exchange rates. We use financial instruments to reduce the impact of changes in foreign currency exchange rates. The principal financial instruments we enter into on a routine basis are foreign currency forward contracts related to the Japanese Yen. The objective of these practices is to economically hedge the impact of foreign currency fluctuations on our inventory purchases. The periods of the foreign currency forward contracts correspond to the periods of the forecasted transactions, which typically are less than 18 months subsequent to the latest balance sheet date.

The gross U.S. dollar equivalent notional amount of all foreign currency contracts outstanding at June 1, 2019 was $11.0 million, representing a net settlement liability of $0.03 million. Gains and losses on the foreign currency forward contracts are recognized in current period earnings within other (income), net. As of June 1, 2019, a sensitivity analysis of changes in foreign currencies when measured against the U.S. dollar indicates that, if the U.S. dollar had uniformly weakened by 10.0% against all of our U.S. dollar denominated foreign exchange derivatives, the fair value of the instruments would have decreased by $1.2 million. Conversely, if the U.S. dollar uniformly strengthened by 10.0% against all of our U.S. dollar denominated foreign exchange derivatives, the fair value of these instruments would have increased by $1.0 million. Any resulting changes in the fair value of the hedged instruments may be partially offset by changes in the fair value of certain balance sheet positions impacted by the change in the foreign currency rate. The ability to reduce the exposure of currencies on earnings depends on the magnitude of the derivatives compared to the balance sheet positions during each reporting cycle. Our analysis does not consider the implications that such fluctuations could have on the overall economic activity that could exist in such an environment in the United States or such foreign countries or on the results of operations of our foreign entities.

The financial markets and currency volatility may limit our ability to cost-effectively mitigate these exposures. The counterparties to derivative contracts are major financial institutions. We assess credit risk of the counterparties on an ongoing basis.

Interest Rate Risk

Substantially all of our borrowings carry variable interest rates. An increase in interest rates could have a material impact on our cash flows. We use an interest rate swap to manage such risk.

As of June 1, 2019, all of our $288.2 million in term loans were subject to variable interest rates, with a weighted average borrowing rate of 7.6%. After inclusion of the notional amount of $100.0 million of our interest rate swap fixing a portion of the variable rate debt, $188.2 million, or 65.3%, of our debt is subject to variable rates. Our interest rate swap expired in January 2020, at which time all of our debt became subject to variable rates. Assuming an increase to market rates of 1.0% as of June 1, 2019, we would incur an annual increase to interest expense of approximately $2.2 million related to our variable-rate debt.

Impact of Inflation

Our results of operations and financial condition are presented based on historical cost. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe the effects of inflation, if any, on our results of operations and financial condition have been immaterial. We cannot assure you our business will not be affected in the future by inflation.

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BUSINESS

Our Brand Mission

We are advocates for extraordinary living—on the go, pushing forward, disrupting conventional thinking and shattering boundaries. Our mission is to inspire our consumers to live extraordinary lives and support their career-oriented dreams through lifestyle products, stories that inspire and digital experiences that connect and engage.

Who We Are

Cole Haan is a global lifestyle brand serving always-connected, active professionals with innovative footwear and lifestyle accessories. Recognizing a major cultural shift in consumer adoption of a more casual workplace, management and Apax Partners acquired Cole Haan from Nike, Inc. in February 2013 with a vision to disrupt the conventional dress footwear industry. Since then, we have pioneered new categories of footwear and lifestyle accessories that customers wear from work-to-workout-to-weekend, building upon our 90-year heritage and reputation for quality craftsmanship with innovation. Our brand resonates equally with women and men across multiple generations, with the focus of product creation and marketing towards our core 24- to 44-year-old customers. We market footwear and lifestyle accessories across the Dress, Casual, Outdoor and Sport use occasions—resulting in a broad portfolio that enables Cole Haan to own more share of our customers’ closets. We transformed Cole Haan to conduct business at the speed of digital and we connect directly to consumers using a digital-first approach. As a result, over 30% of our total sales come from digital commerce through our sites and our wholesale partners’ sites.

Cole Haan offers a four-season portfolio of lifestyle products for head-to-toe styling, led by footwear. Over the past several years, our footwear offering has broadened from a focus on the Dress use occasion to include a broader selection of Casual, Outdoor and Sport use occasions, which comprised 53% of our fiscal year 2019 footwear revenue. Our expansion into these use occasions has considerably expanded our addressable market in the fastest-growing segments of footwear. Our lifestyle accessories include an innovative selection of handbags, small leather goods, hosiery, shoe care, eyewear, outerwear, suiting and cold weather goods that complement our footwear portfolio. We market our footwear and lifestyle accessories across a broad range of premium price points that allow us to compete in multiple channels.

We believe we are the leader in our industry for engineering innovative products. Every product we make—from pumps to performance runners to handbags to outerwear—combines style with exceptional performance attributes built on our proprietary innovation platform, the Grand 36Ø Design & Engineering System. This system enables Cole Haan to create versatile, stylish and comfortable products that meet the demands of on-the-go consumers.

We acquire customers primarily using a digital-first marketing discipline that emphasizes media investments viewed on mobile devices, through digital media and social channels. Through our marketing channels, we create compelling native content that inspires consumers and increases the awareness of the Cole Haan brand. To amplify our reach, we partner with premier national and global editorial sources, such as Forbes, The Wall Street Journal and The New York Times. Once consumers demonstrate a desire to learn more about Cole Haan, we invest in targeted marketing to provide a seamless path toward purchase conversion.

We have built a global, multi-channel distribution network across 64 countries that includes our global digital flagship site, colehaan.com, 368 stores and over 450 diverse global wholesale accounts. Our North America segment comprises our DTC business, which includes our digital flagship site and 112 stores, and wholesale distribution to a diverse account base spanning digital pureplay, specialty retail, premium department store, sporting goods and family footwear accounts. A representative selection of our North American wholesale partners includes Nordstrom, Bloomingdale’s, Hibbett Sports, Amazon, Zappos and Stitch Fix.

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Our International segment includes our wholly owned Japanese subsidiary and partnerships with leading regional distributors and wholesalers. In Japan, where we have operated for nearly 25 years, our footprint is primarily DTC consisting of 80 stores and our localized digital commerce site, colehaan.co.jp. Outside of Japan, the remainder of our international sales occur in over 60 countries. In these markets, we employ a capital-efficient model where our 37 regional distributors fund costs to build and operate 176 Cole Haan designed and branded stores. Typically, we retain digital commerce rights, while our distributors have local distribution rights. We have also successfully expanded our wholesale business in countries where we operate directly, including the United Kingdom and Japan.

How We Transformed Cole Haan for the Modern Digital Age

When Apax and management acquired Cole Haan in 2013, we became an independent company for the first time in 25 years. Since our 2013 Acquisition, we have completed over $100 million in transformational investments in technology, digital infrastructure, product innovation and other areas, which we believe have positioned the Company for growth. We have reinvented our corporate culture as a “90-year-old start-up.” Key initiatives have included:

• modernizing and amplifying the perception of the Cole Haan brand with consumers;

• transforming our innovation and product-creation capabilities to expand our total addressable market to over $700 billion and create a diverse portfolio of breakthrough footwear and lifestyle accessories;

• shifting the Company’s North American distribution focus toward a DTC model with a primary emphasis on building our digital commerce capabilities and rationalizing our store footprint, while accelerating our wholesale business;

• expanding the Company’s global footprint from eight countries in 2013 to 64 countries today, unlocking the substantial opportunity outside the United States and Canada that represents 78% of the global footwear market;

• upgrading the enterprise to do business at the speed of digital, from supply chain to customer experience; and

• building a diverse, multidisciplinary team to drive our growth agenda—nearly 90% of our employees have joined since 2013.

Recent Financial Performance

While we believe we are still in the early stages of realizing the benefits of our transformation, we have already accelerated our growth profile as evidenced by our following recent achievements:

• grew our base of active DTC customers from 1.058 million in fiscal year 2018 to 1.501 million in fiscal year 2019, representing year-over-year growth of 41.9%;

• grew our revenue from $601.6 million in fiscal year 2018 to $686.6 million in fiscal year 2019, representing year-over-year growth of 14.1%;

• increased our net income from $23.1 million in fiscal year 2018 to $33.1 million in fiscal year 2019, representing year-over-year growth of 43.4%;

• grew our Adjusted EBITDA from $60.1 million in fiscal year 2018 to $94.8 million in fiscal year 2019, representing year-over-year growth of 57.8%; and

• increased our Adjusted EBITDA margin from 10.0% in fiscal year 2018 to 13.8% in fiscal year 2019.

For further information about how we calculate Adjusted EBITDA and Adjusted EBITDA margin, limitations of their use and a reconciliation of Adjusted EBITDA to net income, see “Summary—Summary Historical Consolidated Financial and Other Data.”

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Our Competitive Strengths

We believe the following competitive strengths have been instrumental to our success and position us for future growth:

A Powerful Brand that Inspires Extraordinary Living

Powerful ideas fuel global consumer brands. The Cole Haan brand stands for a simple and powerful idea—we all seek to live extraordinary lives on our own terms. Since our founding in 1928 by Trafton Cole and Eddie Haan, Cole Haan has been worn by extraordinary people—from artists and astronauts, to poets and presidents—who have infused the brand with enduring values that continue to connect consumers to our storied brand. It is a brand that transcends generations, socio-economic status, genders and cultures. As a values-based brand, we deliver ground-breaking products and digital marketing that resonate strongly with consumers and aim to inspire extraordinary living.

Deep Consumer Knowledge Drives Our Product Development and Marketing

Unlike many companies that prioritize designer-led inspiration to develop products, we use ongoing insights into consumers’ lives gathered through proprietary research, surveying, media use tracking and consumer analytics to inform product design and development. We believe this institutional discipline underpins our product creation and will enable us to continue earning additional share of our customers’ closets in the future. While the Cole Haan brand resonates with women and men across multiple generations, we focus our product design, development and marketing initiatives to meet the needs of our “First Best Customers.”

Who are they? Our First Best Customers are active women and men ages 24 to 44 who live in global urban centers. We target this group because of its large and fast-growing generational spending power. They are multi-faceted and see their potential for extraordinary—making a positive impact on the world—through their personal and professional passions. They are inspired by those extraordinary people across the cultural spectrum who “work for what they believe in.” Our First Best Customers:

• Dress casually in the workplace. Casualization of dress in the workplace continues to increase, with 50% of organizations in the United States allowing casual dress every day in 2018.

• Pursue an on-the-go-lifestyle. They prioritize experiences over possessions, extend business trips into leisure trips and work remotely on a flexible schedule.

• Are always connected digitally. 94% of U.S. millennials own a smartphone, according to eMarketer.

• Prefer to shop online. 85% of U.S. millennials are expected to be digital shoppers in 2019, according to eMarketer.

We deliver on their expectations. We have pioneered a new category of products that combine versatility, style and comfort so our First Best Customers can live their on-the-go lives. We envisioned a collection of high-performance footwear and lifestyle accessories consumers could use from work-to-workout-to-weekend—our groundbreaking ZERØGRAND label. Originally launched in footwear in 2014, ZERØGRAND has grown into a multi-category label that encompasses footwear across multiple use occasions, including innovative new boots and all-day trainers, as well as bags, outerwear, hosiery and cold weather goods.

Proprietary Multi-Category Product Portfolio and Innovation Capabilities

Our deep consumer knowledge combined with our innovation capabilities support our leadership position and enable us to have a broader portfolio of products compared to our peers. There are two key components to our product-creation process:

• Multi-category lifestyle product architecture enables broad category penetration. Our customers are active women and men who are commuting, traveling and traversing throughout cities around the

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world. Consequently, they need versatile products that perform from work-to-workout-to-weekend. In response, we created a multi-category lifestyle product architecture, which includes all-year-round footwear and lifestyle accessories across Dress, Casual, Outdoor and Sport use occasions. Our expansive product portfolio enables us to capture an increased share of our customers’ closets. Within this architecture, we create products under two primary labels: ZERØGRAND and GRANDSERIES.

• ZERØGRAND invents products with overt design and innovation characteristics consumers can easily see. These products fuse athletic footwear engineering with modern styling.

• GRANDSERIES reinvents products with classic styling and innovation characteristics consumers can feel when they try them on.

MULTI-CATEGORY LIFESTYLE PRODUCT ARCHITECTURE^*

* Includes certain products, such as dresses, shirts, pants, skirts and luggage, that are not Cole Haan products.

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• Innovation differentiates our products. We built an Innovation Center in New Hampshire where team members with backgrounds in biomechanics, material science, engineered materials, advanced concept research and development, product development engineering, fit and performance testing and industrial design come together to employ state-of-the-art technology to invent breakthrough products. We created a revolutionary innovation system for solving consumer needs through specific enhancements, called the Grand 36Ø Design & Engineering System. This system focuses on specific performance principles to deliver holistic product solutions in a repeatable manner. We protect our industry-leading technology and designs with a growing portfolio of over 400 patents, issued or pending.

GRAND 36Ø DESIGN & ENGINEERING SYSTEM

Digital-First Commerce and Marketing Drives Customer Acquisition

We have focused our investments in digital commerce to build highly scalable, best-in-class capabilities from customer acquisition to transaction. These investments have enabled the rapid growth of digital sales through both our sites and our wholesale partners’ sites, which represent over 30% of our total sales. Our global digital platform is built upon three cloud-based technology platforms across demand generation (marketing), commerce and analytics. This combination enables our digital-first marketing funnel, creates enriching and frictionless experiences for customers and provides data we can leverage real-time to enhance site experience and drive purchase conversion.

To continuously improve our capabilities and drive digital sales, we recently completed the redesign and replatforming of our global digital flagship, colehaan.com. Our site offers the broadest assortment of our products and is the definitive resource for our brand storytelling to consumers, including the sharing of content, experiences and product detail. We specifically focused on improving our mobile commerce experience with the redesign, as nearly 70% of digital visits originated from mobile devices in fiscal year 2019.

Our marketing funnel is nearly 100% digitally driven and emphasizes using media investments to deliver branded content to mobile devices, through digital media and social channels. Unlike our competitors, we have eliminated almost all traditional media investments and instead invest across four phases of our digital market funnel to acquire customers and build our community:

• Inspire. We seek to acquire new customers through two complementary methodologies: native content and product and social media collaborations. We collaborate with traditional and new media partners to produce award-winning native content displayed on digital platforms. We also work with extraordinary

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cultural influencers and brands to create limited-edition products and messages for social media audiences who may be introduced to the Cole Haan brand for the first time or within a new context.

• Engage. We create targeted digital advertising and invest in media across an integrated landscape of media platforms and social channels, such as Facebook, Instagram, Twitter, YouTube and Snapchat, that consumers engage with many times throughout the day.

• Inform. When consumers demonstrate a desire to learn more about Cole Haan through digital search or by visiting our sites, we invest in targeted marketing to provide a seamless path toward purchase conversion.

• Transact. Our mobile-optimized site provides consumers with the information they need to make informed purchase decisions.

We believe our digital-first marketing approach is driving the success of our DTC business, as illustrated by the 61 million visits to colehaan.com and our North America stores in fiscal year 2019, a 31% increase from fiscal year 2018, and improvements in our mobile purchase conversion.

Operating Platform Built for Business at the Speed of Digital

As part of our transformation, we built a highly efficient, scalable operating platform for global commerce:

Go-to-Market Process. We have streamlined our product development process to allow us to introduce new products to the marketplace more quickly and on complementary development calendars. Our typical go-to-market process takes 12 to 15 months. Our most rapid internal development process, which we call “Quick Strike,” enables us to address new opportunities emerging in the marketplace within 90 days from consumer insight to product introduction. More complex innovation projects operate on an “Advanced Development” process calendar, which can take between 24 to 36 months to deliver new products to the market.

Sourcing and Supply Chain. We have modernized our manufacturing base with leading sourcing, development, commercialization and manufacturing capabilities, focusing on Vietnam and India as primary countries of origin. Less than 15% of the Company’s footwear and handbag products are manufactured in China and we intend to further reduce that percentage over time.

Global Operations. We manage our business on a fully integrated global basis across multiple operations functions, including product lifecycle management, inventory planning, commerce, distribution and technology. This approach allows us to be flexible in meeting consumer demand across geographies and channels. Furthermore, within our DTC channels we offer a seamless experience to our customers by managing operations with an integrated view of inventory and omni-channel fulfillment capabilities across in-store and online.

Visionary and Proven Management Team

Our seasoned management team is led by our CEO Jack A. Boys. Mr. Boys has successfully transformed multiple global lifestyle brands across the footwear, apparel and outdoor specialty industries, including Converse and The North Face.

At Cole Haan, Mr. Boys has led our transformation and recruited a leadership team with diverse and relevant backgrounds from leading global consumer brands. We have assembled a team with talent from a broad set of industries, such as consumer retail, automotive design, software programming, materials engineering, digital commerce, data science and advertising. The members of our team have proven track records of understanding and marketing to millennials, designing best-in-class products and building scalable global operations. Our team has successfully transformed our business, created a culture of innovation that permeates the organization and driven financial momentum. We believe our management team has the vision and experience to successfully continue to drive our future growth and profitability.

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Our Growth Strategies

We believe we are still in the early stages of realizing the benefits of our transformation and intend to leverage our competitive strengths and growth investments by pursuing the following strategies:

Earn More Share of Customers’ Closets

We intend to continue to grow our business by delivering innovative footwear and lifestyle accessories. We will leverage our strengths in consumer insight, lifestyle merchandising and product innovation to compete and win in three primary areas:

• Continue expanding core franchises. We believe we have a significant opportunity to further attract new customers to our iconic, multi-generation product franchises. In total unit count, we believe that many of these franchises, such as the ZERØGRAND Wingtip Oxford, have long runway for growth and we intend to continue driving sales of these products across our global distribution network.

• Expand our offerings through our multi-category lifestyle product architecture. The market for Casual, Outdoor and Sport use occasion footwear is growing at double the rate of the overall U.S. footwear market. We believe Cole Haan is underpenetrated in these market segments. Over the last several years, we have successfully extended into these use occasions with products such as our GrandPrø Tennis Sneaker and ZERØGRAND Explore Hiker Boot. We intend to continue developing a broader array of products for these use occasions, while continuing to grow our products for the Dress use occasion.

• Increase penetration of lifestyle accessories. We will continue to leverage our brand and customer satisfaction with our footwear products to gain more share of our customers’ closets with our lifestyle accessories offered and sold through our licensing partners and our sites and stores. We believe these categories are underrepresented in our business, accounting for 7.8% of our fiscal year 2019 revenue.

Acquire New Customers and Drive Long-Term Customer Relationships

We believe we have a significant opportunity to continue to grow our customer base. We intend to continue marketing almost exclusively via digital platforms, a strategy that resulted in a 41.9% year-over-year increase in the number of our active DTC customers in fiscal year 2019. Our digital marketing is resonating with consumers and we will continue to attract and engage consumers through extraordinary stories that feature our brand and our innovative products. We have inspirational stories to tell and intend to share them with more people. As a values-based brand, Cole Haan plans to continue partnering with digital media content creators and social media influencers, among others, to power our digital-first marketing strategy and attract younger customers.

We believe a focus on driving long-term customer relationships will strengthen brand awareness, customer acquisition and retention, and, ultimately, result in higher lifetime customer values. Our key initiatives include:

• creating full-funnel customer journeys, leveraging our competitive strengths in digital-first marketing;

• launching a digital membership program, “Above and Beyond,” to retain customers, gain more share of our customers’ closets and encourage customer advocacy;

• driving further engagement by leveraging CRM data and leading-edge marketing technologies to deliver personalized brand messages and product recommendations; and

• developing a mechanism for customer-generated social sharing of extraordinary living to drive audience growth and amplify our brand mission.

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Continue to Grow Our North America DTC Business

Our North America DTC channel allows us to create meaningful, direct relationships with customers and capture full retail margin. In fiscal year 2019, we drove North America DTC traffic of 61 million visits, a 31% increase from the prior fiscal year. We intend to build on the success of our North America DTC business by:

• increasing our number of active DTC customers across our sites and our stores;

• leveraging our investments in CRM and omni-channel technology to increase multi-channel customer relationships and engagement;

• offering a product assortment responsive to consumer preferences and design trends through continuous innovation across the product portfolio;

• increasing customer lifetime value by earning more share of our customers’ closets; and

• selectively growing our store fleet by opening highly productive, digitally connected small space stores that showcase our most innovative footwear and lifestyle accessories.

Expand Our North America Wholesale Business

We have created a growing wholesale business with diverse wholesale partners. We have driven growth through a rigorous approach to product segmentation within each channel, often on a retailer-by-retailer basis, by selling a price-appropriate, compelling assortment of our merchandise. To continue this growth, we intend to:

• Drive velocity within existing accounts. We believe we have ample runway for growth with our existing wholesale partners by increasing sales of our core products through increased brand and product awareness, expanding product assortments into additional footwear and lifestyle accessory categories, gaining market share with superior products and growing wholesale digital sales by employing our drop-ship capabilities.

• Accelerate digital pureplay partnerships. We expect to continue broadening our existing relationships in the United States with digital pureplays such as Amazon, Zappos, Stitch Fix and others, and will look to create relationships with new emerging players.

• Diversify into specialty channels in the United States. In order to further expand our wholesale partner mix, we intend to selectively add new specialty channels of distribution, such as sporting goods and premier independent boutiques.

Grow Our International Business

We have a significant opportunity to leverage our international presence to drive growth. Our International segment represented just 14.3% of our total revenue for fiscal year 2019. To address this opportunity, we intend to:

• Grow our Japanese business. Japan is a leading global footwear and apparel market and our position in that market promotes brand awareness among international consumers. We expect to build upon our nearly 25-year market presence in Japan by:

• using our proven digital-first marketing discipline to inspire, engage and inform Japanese First Best Customers on our redesigned, replatformed site, colehaan.co.jp; and

• continuing to grow our premium wholesale sales following our recent debut at ABC-Mart, one of the leading footwear retailers in the country.

• Leverage our international distributor network and expand our wholesale presence. We have developed a successful and disciplined framework for connecting with consumers in leading international markets through regional distributors and wholesalers. We expect to continue to grow by:

• opening additional distributor stores in leading shopping districts and malls throughout the world, with a long-term target of doubling our international footprint;

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• selectively expanding the wholesale business in the United Kingdom, Europe, the Middle East and Mexico; and

• continuing to open and accelerate relationships with digital pureplays in international markets, where our products are currently offered on sites including TMall, Zalando, Amazon and Souq.

• Enhance international customer experience on colehaan.com. We are planning to better serve our international customers on colehaan.com by deploying a global digital commerce solution that enables localized user experiences, pricing and ordering. We believe that creating a more frictionless experience for customers outside of the United States will enable us to grow our global digital sales.

Continue to Drive Operating Margin Expansion

As we continue to realize the benefits of the multi-year investments we have completed in systems, infrastructure and other improvements across the enterprise, we believe we have opportunities to grow our profitability faster than sales and expand our operating margin by:

• leveraging investments in digital functionality, CRM capability and marketing spend to drive traffic and customer acquisition;

• utilizing our global scale and product cost engineering to drive sourcing efficiencies and supply chain savings; and

• leveraging our fixed cost base to drive quality execution, efficiency and profitability.

Our Market Opportunity

Our core opportunity is the approximately $317 billion global footwear market. Our further expansion into lifestyle accessories considerably expands our global market potential to over $700 billion.

Footwear

According to Euromonitor, the global footwear market, excluding Children’s footwear in which we do not participate, recorded $317 billion of retail sales in 2018, and grew at a 4.0% compound annual growth rate, or CAGR, from 2014 through 2018. As a brand that resonates equally with men and women, we access both the women’s and men’s footwear markets, which grew at a 3.4% and 4.9% CAGR, respectively, from 2014 through 2018. We have also increased our exposure to the Casual, Outdoor and Sport use occasions, which grew two times faster than the overall U.S. footwear market from 2016 to 2018, according to NPD’s Retail Tracking Service.

We see tremendous potential to further expand our business globally. According to Euromonitor, the footwear market was $246 billion in 2018, or 78%, outside the United States and Canada, and our International segment represented only 14.3% of revenue in fiscal year 2019.

Lifestyle Accessories

Our lifestyle accessories include a selection of handbags, small leather goods, hosiery, shoe care, eyewear, outerwear, suiting and cold weather goods that complement our footwear portfolio. These categories collectively represented a $466 billion retail sales market in 2018, and grew at a 3.7% CAGR from 2014 through 2018, according to Euromonitor.

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Our Products

We offer a broad range of products, including footwear and lifestyle accessories for four seasons across Dress, Casual, Outdoor and Sport use occasions.

• Footwear. Our multi-category footwear offering includes sneakers, oxfords, pumps, loafers, drivers, sandals, boots, chukkas and flats. Price points range from $60 to $400 across channels, with the majority of our products priced between $100 and $200. Our footwear products represented 92.2% of our revenue in fiscal year 2019.

• Lifestyle Accessories. We offer an innovative selection of handbags, small leather goods, hosiery, shoe care, eyewear, outerwear, suiting and cold weather goods across a broad range of premium price points. Our lifestyle accessories products represented 7.8% of our revenue in fiscal year 2019.

We create footwear and lifestyle accessories primarily under two labels, ZERØGRAND and GRANDSERIES. ZERØGRAND products feature overt design and innovation characteristics consumers can easily see, fusing athletic footwear engineering with modern styling. GRANDSERIES products combine classic styling and innovation characteristics consumers can feel when they try them on. We also market and sell footwear under other labels, including ØRIGINALGRAND.

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REPRESENTATIVE FOOTWEAR AND LIFESTYLE ACCESSORIES

Innovation at the Heart of Product Creation

We have established leading innovation and product-creation capabilities to build a diverse portfolio of breakthrough footwear and lifestyle accessories. Every product we make—from pumps to performance runners

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to handbags to outerwear—combines style with exceptional performance attributes built on our proprietary innovation platform, the Grand 36Ø Design & Engineering System. This system enables Cole Haan to create versatile, stylish and comfortable products that meet the demands of on-the-go consumers.

We built an Innovation Center in 2015 in Greenland, New Hampshire where talented team members with backgrounds in biomechanics, material science, engineered materials, advanced concept research and development, product development engineering, fit and performance testing and industrial design come together to employ state-of-the-art technology to invent breakthrough products. We have invested in 3-D modelling and printing capabilities along with a suite of new tools to extend the team’s capabilities and increase prototyping efficiency. Our Innovation Center allows us to continually deliver new products that meet and exceed our consumers’ expectations, develop a robust technology portfolio to protect us from imitators and increase our speed to market.

We created our revolutionary Grand 36Ø Design & Engineering System to solve consumer needs for versatile, stylish and comfortable products. This system focuses on specific performance principles such as ideal fit, lightweight construction, responsive cushioning, natural flexibility, modern craft, enhanced breathability, steady traction, energy return and weather readiness to deliver holistic product solutions in a repeatable manner. We protect our industry-leading technology and designs with a growing portfolio of over 400 patents, issued or pending.

We build on successful product collections by incorporating new styles and additional performance features, and also bringing new innovative product collections to market throughout the year. Our product development process allows us to introduce new products to the marketplace quickly and on complementary development calendars. Our typical go-to-market process takes 12 to 15 months. Our most rapid internal development process, which we call “Quick Strike,” enables us to address new opportunities emerging in the marketplace within 90 days from consumer insight to product introduction. More complex innovation projects operate on an “Advanced Development” process calendar, which can take between 24 months and 36 months to deliver new products to the market.

Marketing

We have modernized our marketing strategy, taking a “digital-first” approach from how we attract customers and drive interest in the brand to how we convert those consumers to purchase. Unlike our competitors, we have eliminated almost all traditional media investments and our marketing funnel is nearly 100% digitally driven and focused on mobile, consisting of differentiated native content and social media collaborations.

We believe we have significant capacity to increase our marketing investment while maintaining attractive returns. We believe we are in the early stages of capitalizing on our capabilities in performance marketing, and have ample runway to increase marketing investments, gain further share of voice with our customers and generate increased demand.

Our digital marketing effort interacts with consumers across the following three phases:

• Inspire. We seek to acquire new customers through two complementary ongoing methodologies:

^○  Native Content. We collaborate with progressive traditional media partners to produce award-winning and differentiated native content that is displayed on digital platforms for their readers. We partner with them to define a target audience, messaging strategy and creative production to deliver inspiring and informative stories of extraordinary lives. Examples of this include the Changemakers series on the Forbes BrandVoice platform; a story of several members of the New York City Ballet, called Grit & Grace, with The New York Times; and a forthcoming podcast with The New York Times—a first for this media partner—to debut in Spring 2020. In addition, we create native content on new media platforms such as Axios, The Infatuation and The Skimm to deliver targeted messages of extraordinary to millennial audiences from authentic sources.

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^○  Product and Social Media Collaborations. We selectively partner with cultural influencers and brands to create limited-edition products and inspirational messages for their social media audiences to introduce the Cole Haan brand to new audiences and existing customers with a new context. Examples of this include our recent collaborations with the streetwear brand and design studio Chinatown Market, as well as the luxury brand Rodarte. In our collaboration with Rodarte, we profiled the story of the label’s co-founders, sisters Kate and Laura Mulleavy, to build awareness of our shared brand values and inspire our female customer base. In both cases we made multiple products, created assets for distribution on their social channels and integrated them into our social channels, sites, paid media and native content stories.

• Engage. We create targeted digital advertising and invest in media across an integrated landscape of media platforms to engage with our consumer cohorts many times throughout the day. This includes:

^○  paid placements of our inspirational content in “snackable” formats meant for mobile phones through programmatic display advertising, syndicated across many platforms;

^○  paid advertising, or “whitelisting,” of social influencer posts to increase reach and engagement with their custom Instagram audiences;

^○  social prospecting, delivering both inspirational extraordinary stories and product-specific messages to targeted audiences on social platforms such as Facebook, Instagram, Twitter, YouTube and Snapchat; and

^○  dynamic re-targeting of consumers who have engaged with our native content or sites through social media and via syndicated banner placements.

• Inform. When inspired and engaged consumers demonstrate a desire to learn more about Cole Haan through digital search or by visiting colehaan.com, we invest in several mechanisms to ensure we connect them with the product information they need to make a purchase decision and drive purchase conversion. We accomplish this through search engine optimization, paid listings and partnerships with our wholesale partners.

We partner closely with our wholesale partners to create digital shop-in-shop environments on their sites with a consistent brand experience, tailored product stories and a carefully curated assortment. We also coordinate with wholesale partners on marketing content and events, as well as optimizing search and other data analyses to drive higher traffic and conversion for our brand.

Our marketing organization includes both global and regional marketing teams. Our global marketing team is responsible for developing a toolkit of marketing assets and brand guidelines to be applied across all marketing activities. Our regional marketing teams adapt global tools for local relevance and execute marketing strategies within the markets where we operate. In addition to our primary showroom in New York City, we maintain regional showrooms in Tokyo, Hong Kong, London and Amsterdam.

We believe our differentiated marketing efforts are driving the success of our DTC business, as we had 61 million visits to colehaan.com and our North America stores in fiscal year 2019, a 31% increase from fiscal year 2018, and nearly 70% of digital visits coming from mobile devices in fiscal year 2019. A key component of our future marketing strategy is strengthening our long-term customer relationship through retention activities such as a digital membership program, customized experiences and product marketing tailored for individual customer preferences. We believe we are at the early stages of building this increased intimacy with our customers, which we expect will allow us to gain more share of our customers’ closets and encourage brand advocacy.

Our Multi-Channel Distribution Network

We have built a global, multi-channel distribution network across 64 countries that includes our global digital flagship site, colehaan.com, 368 stores and over 450 diverse global wholesale accounts. We provide a

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seamless brand experience globally and strive to be everywhere consumers want to shop. We operate across two segments: North America (85.7% of fiscal year 2019 revenue), which includes our North America DTC and North America Wholesale and Licensing businesses, and International (14.3% of fiscal year 2019 revenue), which includes our Japan business and our partnerships with best-in-class regional distributors and wholesalers. Across all geographies in our network, DTC channels represented 59.2% of our fiscal year 2019 revenue and wholesale channels represented 40.8% of our fiscal year 2019 revenue.

COLE HAAN CHANNEL OVERVIEW*

* Represents a selection of our wholesale partners. Shaded yellow columns denote our DTC business.

North America

North America DTC

Our North America DTC channel is led by our digital flagship site, colehaan.com, and is complemented by a focused footprint of 112 stores that allow for controlled brand messaging and a consistent customer experience across all touchpoints.

Digital. Our global flagship website, colehaan.com, offers the broadest assortment of products, is the definitive resource for brand storytelling to consumers and is available in multiple formats, including desktop, tablet and mobile. Our website delivers distinct and immersive brand experiences, enhanced shopping experiences and digital content, such as suggested use occasions and product-specific Q&A, that drives consumer

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engagement and purchase conversion. Features available to consumers on our sites include omni-channel shopping options (such as buy online and return in store, and ship from store), predictive sizing tools and checkout ability across six different payment platforms. Our platform is built upon three cloud-based technology platforms across demand generation (marketing), commerce and analytics.

Stores. We operate 112 stores, including 31 inline and 81 outlet stores, located in premium locations in key metro markets in the United States and Canada. Our inline store locations showcase our most innovative styles and products in an atmosphere reflecting the distinctive image of our brand. At our outlet locations, most of our products are made for outlet with the balance comprising past season merchandise. Our stores average approximately 3,150 gross square feet in size. We operate a healthy store base with attractive margins across our fleet and nearly all of our locations are profitable. We plan to selectively grow our store footprint with highly productive, digitally connected smaller square footage locations, averaging approximately 2,000 square feet.

North America Wholesale and Licensing

We have a diverse wholesale distribution platform in North America partnering with more than 350 leading accounts across the digital pureplay, specialty retail, premium department store, sporting goods and family footwear accounts. Our partnerships with these accounts extend the brand’s reach to customers not currently served by our own sites and stores and showcase merchandise in different formats.

Our products are sold to our wholesale partners primarily by our own sales force in our showrooms. We employ a rigorous approach to product segmentation, often on a retailer-by-retailer basis, by selling a price-appropriate, compelling assortment of our merchandise. Our segmentation strategy allows us to engage a broad set of accounts, while minimizing channel conflict and maximizing profitability. To manage our DTC channels, we engage in retail and digital agreements with top customers. We also enforce a minimum advertised pricing policy to prevent channel price conflicts.

A representative selection of our wholesale partners includes Nordstrom, Bloomingdale’s, Hibbett Sports, Amazon, Zappos and Stitch Fix. Nordstrom and its subsidiaries accounted for 12.1% of our fiscal year 2019 revenue. We sell through both our wholesale partners’ most productive locations as well as through their respective digital commerce platforms, leveraging our drop-ship capabilities to offer a broader digital commerce product assortment. Digital sales, which account for approximately one-third of our wholesale business, include sales to both digital pureplays and websites of our wholesale partner accounts (such as Nordstrom.com and Bloomingdales.com).

Within the North America Wholesale and Licensing channel, we generate royalty income from our licensing partners who manufacture a portion of our lifestyle accessories, including select outerwear, hosiery, eyewear, cold weather goods and small leather goods. We also purchase these products from our partners at a favorable price for assortment in our DTC channels in North America and Japan.

International

Our International segment includes our wholly owned Japanese subsidiary and partnerships with leading regional distributors and wholesalers.

Japan DTC and Wholesale

We have operated in Japan for nearly 25 years and maintain a premium position in the marketplace. Our products are distributed through our Company-operated stores, local digital site and wholesale partners. We operate 80 stores consisting of three freestanding locations, 52 concessions and 25 outlets. We believe our store presence in Japan, led by our global flagship Ginza location in Tokyo, serves as a gateway that builds awareness among international consumers and leading wholesale partners. We are primarily focused on growing our digital and wholesale channels in Japan, which we believe are relatively underpenetrated as a percentage of our sales.

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International Distributors and Wholesale Partners

We have established relationships with 37 premier global distributors who distribute our products in over 60 countries in our International segment. Our distributors mainly retail our products through 176 Cole Haan stores (composed of concession, freestanding and outlet stores) across Asia, the Middle East, Europe, South America and Central America. We employ an attractive, capital-efficient model where our distributors fund store build out and marketing costs in exchange for exclusive regional distribution rights, typically excluding digital commerce rights that we retain. Our distributors purchase product from us at a discounted wholesale price. We approve all distributor-operated new store locations, and partners work closely with our store design team on the design of all locations so that the brand presentation is consistent across markets.

We are also in the early stages of expanding our wholesale business internationally. Select wholesale partners internationally include Selfridges, Liberty of London, Sole Trader and Office. We plan to continue to drive expansion with our distributors and wholesale partners in international markets with limited future capital outlay.

Sourcing and Supplier Relationships

We do not own or operate any manufacturing facilities, but instead source finished products from a selected number of independent suppliers, many of whom Cole Haan has maintained long-standing relationships with. We source our footwear and selected lifestyle accessories from 12 suppliers across Vietnam, India and China, with our largest supplier representing 27% of the total footwear units we purchased in fiscal year 2019. Over the last five years, we have, in tandem with our long-term suppliers, shifted production from China to Vietnam in an effort to minimize cost, diversify supply sources and proactively protect against inflationary and political pressures. Currently, less than 15% of our footwear and handbag products are manufactured in China and we intend to further reduce that percentage over time.

We believe our suppliers have the capacity to accommodate our future growth. We do not have any long-term agreements requiring us to use any manufacturer, and no manufacturer is required to produce our products over the long term. Suppliers operate under the close supervision of our global sourcing functions located in Vietnam and India, with assistance from our U.S. quality assurance team. All products are produced according to our specifications and standards. Production and quality control staff in each country monitor manufacturing at supplier facilities in order to correct any issues prior to shipment of the final product. We require all suppliers who manufacture our products to comply with our code of conduct relating to supplier working conditions as well as certain environmental, employment and sourcing practices. See “Risk Factors—Risks Related to Our Business—Our products are subject to risks associated with sourcing and manufacturing” and “Risk Factors—Risks Related to Our Business—Failure of our suppliers or our licensees’ suppliers to use ethical business practices and comply with our code of conduct and laws and regulations could harm our business.”

Logistics Network

Our inventory is shipped directly from our suppliers to our 314,000 square foot distribution center in New Hampshire, which we directly lease and operate, and third-party managed fulfillment centers in the United States, Hong Kong and Japan. The inventory is then processed, sorted and shipped to our stores, our customers or our business partners using third-party carriers. The distribution network is managed through global information technology systems that provide an integrated view of inventory across our distribution center and third-party fulfillment centers. We believe that the size and scalability of our distribution network is sufficient to support our future expansion. See “Risk Factors—If we encounter problems with distribution,