F-1 1 tm2322981-10_f1.htm F-1 tm2322981-10_f1 - none - 74.3175254s
As filed with the Securities and Exchange Commission on January 4, 2024.
Registration No. 333-      
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Amer Sports, Inc.
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
Cayman Islands
(State or other jurisdiction of
incorporation or organization)
2300
(Primary Standard Industrial
Classification Code Number)
Not Applicable
(I.R.S. Employer
Identification Number)
Cricket Square, Hutchins Drive,
P.O. Box 2681,
Grand Cayman, KY1-1111,
Cayman Islands
+1 345 945 3901
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
Andrew E. Page
Chief Financial Officer
One Prudential Plaza
130 East Randolph Street #600
Chicago, IL 60601
+1 773 714-6400
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Michael Kaplan
Li He
Roshni Banker Cariello
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
+1 212 450-4000
Jutta Karlsson
General Counsel
Konepajankuja 6
00511 Helsinki
Finland
+358 (0)20 712 2500
Marc D. Jaffe
Ian D. Schuman
Michael Benjamin
Adam J. Gelardi
Latham & Watkins LLP
1271 Avenue of the Americas
New York, NY 10020
+1 212 906-1200
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
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, 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 an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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. ☐
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 the registration statement shall become effective on such date as the U.S. Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standard Codification after April 5, 2012.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to Completion, Dated              , 2024
PRELIMINARY PROSPECTUS
Shares
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Amer Sports, Inc.
Ordinary Shares
This is the initial public offering of ordinary shares of Amer Sports, Inc. We are offering     of our ordinary shares to be sold in this offering.
Prior to this offering, there has been no public market for our ordinary shares. We expect that the initial public offering price will be between $      and $      per ordinary share. We have applied to list our ordinary shares on the New York Stock Exchange (“NYSE”) under the symbol “AS.”
We are a “foreign private issuer” under applicable U.S. Securities and Exchange Commission rules and will be eligible for reduced public company disclosure requirements. See “Summary—Implications of Being a Foreign Private Issuer.”
Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Investing in our ordinary shares involves risks. See “Risk Factors” beginning on page 29 of this prospectus.
Per
Ordinary Share
Total
Initial public offering price
$       $     
Underwriting discounts and commissions (1)
$ $
Proceeds, before expenses, to us
$ $
(1)
We have agreed to reimburse the underwriters for certain expenses in connection with this offering. See “Underwriting” for a description of all compensation payable to the underwriters.
We have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to an additional          ordinary shares from us at the initial public offering price less the underwriting discounts and commissions to cover over-allotments, if any.
At our request, the underwriters have reserved up to       % of the ordinary shares offered by this prospectus for sale, at the initial public offering price, to certain individuals associated with the Company. See “Underwriting—Directed Share Program.”
The underwriters expect to deliver the ordinary shares against payment in New York, New York on or about         , 2024.
Goldman Sachs
BofA Securities
J.P. Morgan
Morgan Stanley
Citigroup
UBS Investment Bank
Baird BNP PARIBAS CICC CLSA Evercore ISI TD Cowen Wells Fargo Securities Deutsche Bank Securities HSBC
Blaylock Van, LLCDrexel Hamilton Loop Capital Markets Ramirez & Co., Inc. Siebert Williams Shank Tigress Financial Partners
The date of this prospectus is           , 2024.

 
TABLE OF CONTENTS
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F-1
 
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Through and including         , 2024 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
We and the underwriters have not authorized anyone to provide any information or to make any representations other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may have referred you. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We and the underwriters have not authorized any other person to provide you with different or additional information. Neither we nor the underwriters are making an offer to sell the ordinary shares in any jurisdiction where the offer or sale is not permitted. This offering is being made in the United States and elsewhere solely on the basis of the information contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the ordinary shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus.
For investors outside the United States: neither we nor the underwriters have done anything that would permit this offering or the possession or distribution of this prospectus in any jurisdiction where action for those purposes 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, this offering of ordinary shares and the distribution of this prospectus outside the United States.
We are a company incorporated under the laws of the Cayman Islands. Under the rules of the U.S. Securities and Exchange Commission (the “SEC”) we are currently eligible for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Moreover, a number of our directors and executive officers are not residents of the United States, and all or a substantial portion of the assets of such persons are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon us or upon such persons or to enforce against them judgments obtained in U.S. courts, including judgments in actions predicated upon the civil liability provisions of the federal securities laws of the United States.
PRESENTATION OF FINANCIAL AND OTHER INFORMATION
Certain Definitions
Unless otherwise indicated or the context otherwise requires, all references in this prospectus to “Amer Sports, Inc.,” the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to Amer Sports, Inc., together with its subsidiaries. All references to “U.S. dollars,” “dollars” or “$” are to the U.S. dollar and all references to “EUR” or “€” are to the euro. Unless otherwise indicated or the context otherwise requires, all references to “EMEA” refer to Europe, the Middle East and Africa, all references to “Greater China” refer to mainland China, Hong Kong, Macau and Taiwan and all references to “Asia Pacific” exclude Greater China.
Financial Statements
Unless otherwise indicated, all financial information contained in this prospectus is prepared and presented in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Certain differences exist between IFRS and generally accepted accounting principles in the United States of America (“U.S. GAAP”) which might be material to the financial information herein. We have not prepared a reconciliation of our consolidated financial statements and related footnote disclosures between IFRS and U.S. GAAP. Potential investors should consult
 
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their own professional advisers for an understanding of the differences between IFRS and U.S. GAAP and how these differences might affect the financial information herein.
The audited consolidated financial statements included in this prospectus have been restated due to certain changes in accounting principles, classification and corrections of errors from previously published audited consolidated financial statements. For further information on the restatements of our audited consolidated financial statements for the fiscal years 2022, 2021 and 2020, see Note 3, “Changes in accounting principles and correction of errors,” to our audited consolidated financial statements included elsewhere in this prospectus.
Our fiscal year ends on December 31 of each year. However, solely for fiscal year 2020, our restated audited consolidated statement of financial position is presented as of January 1, 2021, as a result of such restatement.
Our financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, including the notes thereto, included elsewhere in this prospectus.
Non-IFRS Financial Measures
We use constant currency revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income, which are non-IFRS financial measures, in this prospectus. A non-IFRS financial measure is generally defined as one that purports to measure financial performance but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. We calculate constant currency revenue by translating the current period reported amounts using the actual exchange rates in use during the comparative prior period, in place of the exchange rates in use during the current period. EBITDA is calculated as net loss plus income tax expense, finance cost, depreciation and amortization and minus finance income, from both continuing and discontinued operations. We calculate Adjusted EBITDA as EBITDA with adjustments to exclude results from discontinued operations, restructuring expenses, impairment losses on goodwill and intangible assets, expenses related to M&A activities, expenses related to certain legal proceedings and share-based payments. We calculate Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue. We calculate Adjusted Net Income as net loss with adjustments for loss from discontinued operations, restructuring expenses, impairment losses on goodwill and intangible assets, expenses related to M&A activities, expenses related to certain legal proceedings, share-based payments and related income tax expense. We believe that constant currency revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income when taken together with our financial results presented in accordance with IFRS, provide meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of constant currency revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income are helpful to our investors as they are measures used by management in assessing the health of our business and evaluating our operating performance, as well as for internal planning and forecasting purposes.
You should not consider constant currency revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin or Adjusted Net Income either in isolation or as substitutes for analyzing our results as reported under IFRS. Constant currency revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income are presented for supplemental informational purposes only and have limitations as an analytical tool. For example, EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin exclude certain tax payments that may reduce cash available to us, do not reflect any cash capital expenditure requirements for the assets being depreciated and amortized that may have to be replaced in the future, do not reflect changes in, or cash requirements for, our working capital needs and do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt.
In addition, Adjusted Net Income excludes the impact of discontinued operations, and constant currency revenue does not reflect impacts of foreign currency on revenue.
Additionally, our calculations of constant currency revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income may be different from the calculations used by other companies
 
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for similarly titled measures, including our competitors, and therefore may not be comparable to those of other companies. For reconciliations of EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income to the most directly comparable IFRS measure, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-IFRS Financial Measures.”
Rounding
We have made rounding adjustments to some of the figures included in this prospectus. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that preceded them. With respect to financial information set out in this prospectus, a dash (“—”) signifies that the relevant figure is not available or not applicable, while a zero (“0.0”) signifies that the relevant figure is available but is or has been rounded to zero.
Market and Industry Data
Market data and certain industry forecast data used in this prospectus were obtained from internal reports, where appropriate, as well as third-party sources, including independent industry publications, such as Euromonitor International Limited (“Euromonitor International”) and Statista, Inc. (“Statista”), as well as other publicly available information. 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. 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. These and other factors could cause our future performance to differ materially from our assumptions and estimates. 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. See “Cautionary Statement Regarding Forward-Looking Statements.”
Trademarks and Trade Names
We own various trademark registrations and applications, and unregistered trademarks, including Arc’teryx, Salomon, Wilson, Peak Performance, Atomic, Armada, ENVE, Louisville Slugger, DeMarini, EvoShield and ATEC, among others, and our other registered and common law trade names, trademarks and service marks, including our corporate logo. Solely for convenience, some of the trademarks, service marks and trade names referred to in this prospectus are listed without the ® and symbols, but we will assert, to the fullest extent under applicable law, rights to such trademarks, service marks and trade names.
 
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SUMMARY
This summary highlights information contained elsewhere in this prospectus. This summary may not contain all the information that may be important to you, and we urge you to read this entire prospectus carefully, including the “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and our consolidated financial statements, including the notes thereto, included elsewhere in this prospectus, before deciding to invest in our ordinary shares.
Our Purpose
Elevating the world through sport—from courts to slopes, from cities to mountains, and everywhere in between, we aim to inspire people to explore and experience the joy of sports and outdoor activities, and lead better, healthier lives. Our vision is to be the global leader in premium sports and outdoor brands.
Company Overview
Amer Sports is a global group of iconic sports and outdoor brands, including Arc’teryx, Salomon, Wilson, Atomic and Peak Performance. Our brands are known for their detailed craftsmanship, unwavering authenticity, premium market positioning and compelling market shares in their categories. We pride ourselves on cutting-edge innovation, technical performance and ground-breaking designs that allow athletes and everyday consumers to perform better every day. Through partnerships with industry influencers and elite athletes, and in collaboration with the various communities we serve, we develop next-generation products that define winning moments in sports. Our brands are creators of exceptional apparel, footwear, equipment, protective gear and accessories that we believe give our consumers the confidence and comfort to excel.
Select Pinnacle Moments in Sports where Amer Sports’ Brands are Delivering at the Highest Levels
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Courtney Dauwalter smashes ultramarathon world records
wearing Salomon shoes, apparel and packs
Marta Kostyuk takes the court at Roland-Garros,
playing head-to-toe in Wilson
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Pro freeskier, Chris Benchetler, is protected from the elements
in his Arc’teryx jacket
Winning her 88th World Cup race in 2023, Mikaela Shiffrin has the record for most Alpine World Cup victories in history
 
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Our brands are our stars, constantly elevating the consumer experience and creating thriving communities. We empower our brands to pursue market-shaping leadership and set the standard for quality, performance and brand experience globally. While our brands have established heritage and market leadership today, significant runway remains ahead. We are excited about our future and the opportunity to drive growth in each of our three reportable segments: Technical Apparel, Outdoor Performance and Ball & Racquet Sports. Our segments comprise our “brand clusters,” which reflect both how our consumers engage with our products and how we manage our business.
Technical Apparel
Outdoor Performance
Ball & Racquet Sports
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Each segment is led by one of our core brands: Arc’teryx, Salomon and Wilson.
Arc’teryx
Arc’teryx is a technical outdoor apparel brand inspired by the Canadian Coast Mountains and built on the principle of obsessive, precise design and production. Arc’teryx gear pushes the boundaries of performance and enables adventurers to excel in their outdoor pursuits in the mountains, in the backcountry and on some of the world’s most technical climbs. The products are known for their minimalist design and sleek and streamlined aesthetic, along with new, innovative features that continually advance outdoor activities. Product quality, from the materials to the design, allows Arc’teryx to command premium pricing as evidenced by its best-selling “hardshell” jacket in North America, the Alpha SV. Overall, Arc’teryx combines beautiful, innovative products and an authentic brand experience that extends beyond apparel, fostering communities and bringing people together across all regions of the world who share a passion for the outdoors.
Salomon
Born in the French Alps in 1947, Salomon creates premium innovative footwear, apparel, winter sports equipment and accessories. Since its founding, Salomon has been fueled by a culture of design, craftmanship, continuous innovation, and performance inspired by progress, the outdoors and athletes. The brand first produced metal ski edges and expanded into releasable ski bindings before launching industry changing rear-entry ski boots and monocoque skis. The brand’s leadership in winter sports helped to propel it into a diverse portfolio of sports and products including footwear and apparel. Today, Salomon is a market leader in global trail running footwear and premium hiking footwear, with products recognized for their performance, style, durability and sustainability. Over 60% of Salomon’s revenue for 2022 came from footwear, while also having leading market positions in its legacy winter sports equipment categories (skis, snowboards, boots, bindings, goggles, helmets, etc.), creating a 365-day, year-round brand serving all seasons for mountain sport consumers.
Wilson Sporting Goods
Founded in 1914 in Chicago, Illinois, Wilson Sporting Goods is a leading manufacturer of high-performance sports equipment, apparel, footwear and accessories. The Wilson Sporting Goods portfolio is made up of the iconic Wilson brand, as well as Louisville Slugger, DeMarini, EvoShield and ATEC. Collectively, these brands bring more than three centuries of innovation, history and heritage to a variety of mainstream sports. As a multi-sports platform, Wilson drives innovation and product excellence by
 
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leveraging learnings across the brands’ various disciplines, including tennis, baseball and basketball, among other sports. The Wilson brand has a legacy as the top-of-the-line sports equipment and is associated with legendary athletes, including Roger Federer, Russell Wilson and Jamal Murray. In addition, Wilson is the official partner of professional sports leagues, including the NBA, WNBA, NFL, the US Open and Roland Garros Grand Slam Tennis Championships, as well as the NCAA, making Wilson products integral to performance in sport. These athletes and leagues are a testament to the credibility and reputation of Wilson’s track record of innovation and superior products.
While Arc’teryx, Salomon and Wilson stand tall and lead our three segments, our other brands appropriately fit our sports-oriented portfolio. Brands such as Atomic and Peak Performance enhance our scale, competitive positioning and diversification across sports categories. Together, our brands enable us to lead and compete in various sports segments and drive the continued success of our portfolio.
The Amer Sports Group
We excel at identifying, developing and defining brands that meet our corporate vision. We empower these brands to autonomously connect with consumers and develop products to drive growth. Our platform supports the brands via scaled infrastructure and financial controls to accelerate performance. Our operations are subject to complexity and risk consistent with being a large global organization. We believe that the size and diversification of our platform mitigates risks and provides financial flexibility to invest prudently to meet the continuously evolving needs of consumers, to develop competitive advantages and to drive growth across the brands through a relentless focus on innovation. We also believe that our platform enables efficient integration, scaling and optimization of target opportunities that fit within our portfolio, as well as critical insight to inform divestiture decisions.
We govern our brands through management across the finance, supply chain, sustainability, communication, legal and compliance functions, among other areas. At the same time, we enable our brands through our group’s incubator model that provides shared learnings from data analytics across the platform as well as from the economies of scale and synergies of shared resources, including supplier services, distribution and logistics, human resources and enterprise IT infrastructure. We further serve our brands through access to shared, centralized business services, including customer service and treasury management functions. All together, these resources empower our brand leadership teams to focus on serving consumers through brand, product and go-to-market strategies that drive performance, and our global and scaled operating model enables larger, robust brand organizations to independently flourish.
Deeply Committed to Sustainability
As a global group of sports and outdoor brands, we believe we can foster more sustainable lifestyles, encourage mindful consumption, and promote well-being. While the sports and outdoor industry connects us with nature, we also understand it can consume our planet’s precious resources. Together with our brands, we are focused on managing the complex and challenging supply chains in our industry to build a sustainability culture that positively impacts our environment and the people whose lives we touch. As a participant of the UN Global Compact, Amer Sports Corporation, our wholly-owned subsidiary, aims to incorporate the Ten Principles of the Global Compact and to support applicable UN Sustainable Development Goals. In addition, we have committed to set science-based near-term and net-zero emission reduction targets at the group level, which we intend to submit to be validated by the Science Based Targets initiative (SBTi).
At the brand level, we are focused on sustainable business practices. For example, Arc’teryx opened five new ReBird™ Service Centers in the United States, Canada, Greater China and Japan. ReBird™ Service Centers offer consumers complementary repair services for their Arc’teryx gear, connecting consumers to the brand’s ongoing focus on improving circularity, including upcycling, resale, care and repair. Arc’teryx’s sustainability program, ReCare™, provides consumers with information on home care and field repair for their products, while the ReCut™ program diverts rescued textiles that are repurposed into original and coveted pieces and the ReGear™ program accepts used gear and refurbishes it for sale on the ReGear™ platform. Salomon and Peak Performance have reduced the need for materials and transport by using 3D product samples for sales purposes and are looking to expand the use of 3D in consumer experiences and
 
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e-commerce. Further, Arc’teryx and Salomon have each set brand-level near-term science-based emission reduction targets for 2030 approved by the SBTi.
Our management oversees the implementation of our sustainability strategy. Cross-functional operational teams drive our efforts on sustainable business practices, led by the Amer Sports platform with participation across key brands and functions. Working groups plan and execute roadmaps on sustainability initiatives in key areas identified, such as climate change, circular economy, responsible procurement and supply chain, human rights, and diversity, equity, and inclusion. We also take our responsibility for the health and well-being of our own employees as well as the employees of our partners along the value chain seriously. Our membership in the Fair Labor Association highlights our commitment to working to uphold human rights in our global supply chain with initiatives to protect workers’ rights globally and drive long-term improvements through training and education, worker engagement, and integration into sourcing practices.
Our Transformation
In 2019, an international investment consortium consisting of ANTA Sports, FountainVest, Anamered Investments (an entity affiliated with Dennis J. (Chip) Wilson) and Tencent (each as defined below) acquired Amer Sports (the “Acquisition”) with the goal of unlocking substantial underlying brand growth potential by transforming the business model, investing in the brands, expanding geographies and developing a multi-channel strategy. Following the Acquisition, our revenue growth has accelerated, with a compound annual growth rate (“CAGR”) of 20.4% from 2020 to 2022, while gross margins have expanded from 47.0% to 49.7% over the same time period.
Brand-direct Operating Model Delivering a Tailored Consumer Experience
In 2019, we reorganized and simplified our corporate structure to reflect a brand-direct model within our three core segments designed to empower our brands and drive accountability. Under this new structure, the leadership team of each brand is responsible for developing its own brand strategy and executing it end-to-end throughout the value chain. Our segments, Technical Apparel, Outdoor Performance and Ball & Racquet Sports, each focus on specific areas of strength within the group. Each segment is in turn led by one of our top three brands. This segment focused brand-direct model provides each brand with significant autonomy over decisions across key approved functional areas including product innovation, design and development, marketing and sourcing as well as channel and geographic strategies.
At the same time, we have sharpened our strategic focus on the most attractive subsectors in outdoor and sports, driving our multi-channel strategy and the dominance of our core brands in large markets. We mobilize global resources of the Amer Sports platform to support our brands to create a differentiated and powerful growth engine. Since our transition to our new group structure and operating model, our brands have demonstrated strong momentum and accelerated growth.
Elevated Brand Positioning
In 2019, we conducted consumer insight studies to enhance our brands’ understanding of their target consumer demographics across key geographies. We expect our target consumers to be highly focused on technical performance and premium quality, and to aspire to own and utilize the best products regardless of whether engaging in sporting activities or navigating everyday routines. We continue to advance our products to meet our consumers’ needs, while enhancing our marketing strategies to clarify the premium brand positioning and drive a deeper emotional connection with consumers. We leverage creative product marketing, rich digital content, brand ambassadors and community building activities centered around the brands to create an authentic connection with the consumer that has resulted in stronger brand advocacy and loyalty. As our brands continue to grow, we will need to balance the risk of brand dilution with greater brand awareness, and if we are not able to maintain and enhance our brands, our reputation and results of operations may be adversely affected. Moreover, harm to our reputation could adversely impact our ability to attract and retain consumers and wholesale partners, employees, brand ambassadors, partners and other stakeholders.
 
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Strategic Transformation of the Go-to-Market Strategy
Through our brand-direct model, we have developed a better understanding of each brand’s target consumers, which has allowed us to elevate brand positioning and customize each brand’s go-to-market strategies to develop deeper and more meaningful relationships with consumers. These tailored go-to-market strategies are designed to effectively reach target consumers and drive traffic and conversion. For example, Arc’teryx is aligned with a DTC channel strategy because of its technical apparel product portfolio where it can leverage a retail store base to deliver an immersive experience to consumers. Salomon and Wilson are historically wholesale driven businesses but have an equally strong drive to connect with consumers directly. Both brands have recently increased their presence within the DTC channel while enhancing their wholesale partnerships to further brand equity and drive growth. Across our three core brands, our global owned retail network includes 138 Arc’teryx owned retail stores, 114 Salomon owned retail stores and nine Wilson owned retail stores as of September 30, 2023.
Accelerated Brand Penetration in Greater China
We have leveraged key learnings from our long-term oriented owners to enhance our capabilities and performance in Greater China. As a result, we have grown our Greater China business significantly at a time when others were facing challenges or retrenching. We now have a deep understanding of the average consumer in Greater China and are able to deliver authentic, technical and premium products that align with consumer preferences. Our retail knowhow, including our ability to deliver a high-end, luxury oriented in-store presentation and execution capabilities have been upgraded significantly, allowing us to quickly identify and secure highly attractive store locations with desirable consumer foot traffic. For example, we have 63 Arc’teryx owned retail stores in Greater China as of September 30, 2023. The stores combined with our brand connects well with both pure outdoor adventurers and luxury consumers in Greater China. We also have 30 Salomon owned retail stores and a total of 67 Salomon distribution points (including owned retail stores and partner stores) in Greater China as of September 30, 2023, up from 13 in 2019. For Wilson, we recently became the exclusive NBA provider and licensee of basketballs, which is driving growth in the region, and the rapid adoption of winter sports in Greater China is driving Salomon and Atomic winter equipment sales.
Our execution in Greater China has successfully increased our percentage of total revenue derived from the region from 8.3% in 2020 to 14.8%, or $523.8 million, in 2022, and up to 19.4% for the nine months ended September 30, 2023 and we believe there is significant runway for growth in the region as we continue to roll-out retail locations across our brands and scale our e-commerce platform.
Assembled a Talented and Innovative Leadership Team to Execute the Transformation and Growth Strategy
In 2020, we appointed Jie (James) Zheng as our Chief Executive Officer. Mr. Zheng also served as President of ANTA Sports until 2023 and, prior to that, had a successful career in senior executive and sales roles at companies such as Adidas, Reebok and Procter & Gamble. We also attracted key senior management leaders including Michael Hauge Sørensen as the Chief Operating Officer, Andrew E. Page as the Chief Financial Officer and Victor Chen as the Chief Strategy Officer. These team members bring a wealth of corporate experience from global companies including Adidas, Reebok, Procter & Gamble, Boston Consulting Group, ECCO, Footlocker, General Electric, Pandora and Under Armour.
Importantly, we also reset the leadership in each of our segments and infused the organization with a deep bench of talent with experience growing global brands. We appointed Stuart C. Haselden to lead Arc’teryx and Peak Performance. Mr. Haselden has experience with fast growing brands having previously served as the Chief Operating Officer and Chief Financial Officer at Lululemon Athletica as well other senior executive roles at brands such as J.Crew. We appointed Franco Fogliato to lead Salomon. Mr. Fogliato has extensive outdoor experience with large global portfolios, having previously served as an Executive Vice President of Global Omnichannel at Columbia Sportswear with additional experience at The North Face and Billabong. We promoted Joseph Dudy to lead Wilson. Mr. Dudy has worked at Wilson for more than 28 years and has a deep understanding of the brand having previously served as Wilson’s Chief Financial Officer. Under his leadership, Wilson has experienced strong growth in racquet sports, including new racquet categories such as padel and pickleball, won a contract with the NBA to once again be its exclusive
 
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basketball provider and licensee, and deepened its relationship with the NFL. Lastly, we appointed John Yao as General Manager of Amer Sports Greater China to closely coordinate brand success with global teams in this important region. John previously helped lead Nike’s business in Greater China for over 17 years.
In addition to resetting our leaderships teams, we have made considerable investments to attract top-tier industry talent across the Amer Sports group. We have attracted highly experienced and successful talent from some of the world’s leading brands. These talented individuals bring deep industry knowledge and capabilities in key areas such as brand marketing, product design, merchandising and DTC go-to-market strategies.
Rationalized Brand Portfolio
As part of our transformation, we performed a detailed evaluation of our brand portfolio to determine which brands are core to our strategic initiatives. We identified opportunities to rationalize our portfolio and divested Mavic in 2019, Precor in 2021 and Suunto in 2022. We are focused on core brands within our segments which have large market opportunities and significant upside potential, and we have allocated our capital and resources accordingly to achieve our strategic growth plan.
Recent Financial Performance
Our transformation has resulted in strong revenue growth, gross margin improvement and an increase in operating profitability. Comparing 2022 and 2020, we achieved the following results:

increase in revenue from $2.4 billion to $3.5 billion, representing a CAGR of 20.4%

increase in gross margin from 47.0% to 49.7%

increase in net loss from $237.2 million to $252.7 million

increase in Adjusted EBITDA from $311.4 million to $453.0 million, representing a CAGR of 20.6%
Comparing the nine months ended September 30, 2023 and September 30, 2022, we achieved the following results:

increase in revenue from $2.4 billion to $3.1 billion, representing a growth rate of 29.9%

increase in gross margin from 49.4% to 52.2%

increase in net loss from $104.4 million to $113.9 million

increase in Adjusted EBITDA from $261.8 million to $422.1 million, representing a growth rate of 61.3%
Revenue Gross Profit Margin Net Income / (Loss) Adjusted EBITDA
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Our Competitive Strengths
We believe that the following competitive strengths have been key drivers of our success to date and strategically position us for continued success. Although we believe these competitive strengths will contribute to the growth and success of our company, our business is subject to risks that may prevent us from achieving our business objectives or otherwise adversely affect our business, results of operations or financial condition. See “Risk Factors” for a discussion of these risks, which you should consider carefully before making an investment decision to purchase our ordinary shares.
 
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Iconic Leading Brands in Attractive Diversified Categories
Our dynamic portfolio of iconic brands is featured at the pinnacle of sports and power “winning moments” for professional athletes and amateurs alike. Our brands are defined by innovative, excellent products with superior quality, sustainability and thoughtful design, enabling them to be “market shapers” and leaders in intensely competitive markets for products, services and experiences. For example, Arc’teryx produces specialty climbing and mountain apparel worn from the foot to the peak of the Canadian Rockies, Salomon attracts the best athletes with its footwear and winter sports equipment from the French Alps to trails across the world and Wilson Sporting Goods is a market leader for tennis equipment, baseball gloves, baseball and softball bats, basketballs and footballs. With multiple brands that are market leaders in their respective categories, we have a diversified, resilient portfolio. The consistency and profitability of our hard goods categories are complemented by multiple forward growth levers, including double digit, profitable growth in soft goods across large markets.
As a group, our brands are complementary to one another while also geographically and seasonally diversified. We serve a wide range of global athletic and outdoor activities year-round. The relationship among our brands positions us to outfit the outdoor athlete from head to toe. For example, an outdoor athlete can ski on Atomic in the winter, wear an Arc’teryx jacket when rock climbing in the fall and run with Salomon shoes year round. Our market leadership in numerous categories, combined with the diversification of our portfolio, allows us to serve consumers around the world at all times of the year and reduces the aggregate level of seasonality across our business. Nevertheless, changes in market trends and consumer preferences could adversely affect our results of operations.
Authentic Brand Connection with Consumers across Performance Levels
We believe our brands are individually and collectively genuine, true to the aligned group and brand values and purposeful in delivering on promises to our communities. The authenticity of our brands connects us to sports and outdoor enthusiasts who associate our brands with quality craftsmanship, leading innovation and a passion for athletics and the outdoors. An Arc’teryx consumer sees a high-end climbing and ski brand while a Wilson consumer sees it as a leader in tennis. Our credibility is supported by strong brand heritage along with professional athletes across sports leagues and activities choosing to use our brands’ products. At the same time, our products fit and appeal to consumers of all skill levels. This genuine brand equity helps us drive attention and traffic to our brands, with everyday consumers seeking to align themselves with the carefully crafted brand images we have curated over time.
Core to the identity of each of our brands is our mission to enhance consumer experiences. In doing so, our brands foster a sense of belonging. We create thriving communities that are passionate about the sports and activities we support and are loyal to our brands. Arc’teryx hosts community events at retail locations and in the outdoors that bring thousands of people together in an authentic way. At ski resorts globally, Salomon, Atomic, Armada and Arc’teryx brand awareness grows naturally as millions of outdoor enthusiasts see some of the most skilled athletes using our brands. We believe the authenticity of our brands attracts consumers, drives brand affinity and builds a growing loyal following.
Performance Products Driven by Consumer-focused Innovation
Our products are rooted in innovation and technical excellence, and set the standard for quality, function and style across their respective categories. Through a consumer-focused, design-led mindset, we emphasize understanding and meeting the evolving needs and demands of athletes and consumers. Our innovation processes are institutionalized through continued investment in research and development at our innovation centers. These include the Wilson Innovation Center in Chicago, Arc’teryx design centers in North Vancouver, Portland and Tokyo and Salomon’s Annecy Design Center in France. Our teams are constantly testing new ideas to improve our current offering and to be the first to commercialize new products, while balancing the potential lack of receptivity of new products, as well as shifting consumer preferences.
Our brands are supported by former competitive athletes who enjoy an active lifestyle and have a desire to lean into hard problems and apply design to create possibility. We have an expansive network of hundreds of professional athletes and ambassadors across our brands who we actively collaborate with. We gather feedback, insights and ideas from them to incorporate into our designs. This direct feedback drives our
 
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product innovation engine and results in high-end products that are trusted by our consumers. We leverage advanced technologies to constantly improve our products and reaffirm the pricing power our brands command. For example, Wilson has driven innovation across sports including football, baseball, tennis and golf for over a century. Today, that culture of innovation is present in each of our brands as we are using artificial intelligence to design a baseball bat with a larger sweet spot, we have used 3D printing to create an airless basketball, and we use sensors and cameras on skiers to improve ski edge designs. Design features across our brands include Arc’teryx and Salomon developing new, greener membranes with Gore-Tex for their jackets and shoes, improving the waterproofing and breathability, Salomon’s patented Sensifit footwear technology providing precise and comfortable fit in combination with the differentiated Quicklace system and Wilson’s cushion core carcass in its basketballs designed to ensure an easy grip for players. In recent years, design teams at our brands have also invested in the development of products, packaging and services with a sustainability focus, such as Wilson’s Triniti™ tennis balls made of certain materials that enhance product longevity and using recyclable packaging and Salomon’s MTN Summit alpine boot with eco-designed features. Our products’ shape their respective categories with innovative technologies fueled by our deep commitment to rigorous research and development.
Global Market Access with Scale and Global Points of Presence
Collectively, we are a scaled global business with diverse geographic reach and distribution. In 2022, 42% of our revenue was from the Americas, 36% from EMEA, 7% from Asia Pacific excluding Greater China, and 15% from Greater China. For the nine months ended September 30, 2023, 40% of our revenue was from the Americas, 33% from EMEA, 8% from Asia Pacific excluding Greater China, and 19% from Greater China. All around the globe, our brands are guided by a consumer-first mindset and meet consumers exactly where they shop, in both digital and physical spaces. Each brand boasts a multi-channel distribution strategy that is tailored to the brand’s product assortment. For example, Salomon has strong access to key specialty retailers in remote mountain locations where consumers buy trail running and winter sports equipment, where the customer base differs significantly from sporting good chains. Arc’teryx is oriented towards a DTC model with next generation retail locations that illuminate the brand identity and resonate with consumers, tailored to consumer preferences by region.
As a group, we deploy a vertically integrated, DTC mindset, while leveraging our network of strong wholesale relationships. We are increasingly emphasizing our owned e-commerce and building out our owned retail distribution around the world. As of September 30, 2023, we have over 330 owned retail stores and growing. Our owned retail stores serve as attractive marketing tools that elevate the consumer experience, and, with the help of in-store activations and events, enhance brand loyalty, build communities and generate a strong return-on-investment. Our owned retail benefits our global e-commerce business, which has grown significantly across all brands, up 88% from 2020 to 2022. The combination of our wholesale and DTC channels, along with our global infrastructure allow our brands to connect with consumers conveniently and seamlessly around the world.
While our business and revenues are geographically diverse, this is the aggregate result of an extensive global footprint built and expanded at the local level and fostered over decades. Today we have owned retail stores in 24 countries representing generations of investment in local communities, which allows us the flexibility to tailor our approach to best meet the needs of local markets. We are nimble across markets and able to replicate success of new product launches in one region globally in a short period of time given our investments in our growing worldwide network.
Differentiated Operating Model Supporting Our Brands
Our global platform supports the brands in key functional areas such as financial controls, capital allocation, compliance and sustainability. IT infrastructure, cybersecurity, vendor administration and communication functions are areas in which we seek to ensure the ongoing protection of shared assets. We also serve the brands in areas such as human resources, financial reporting, automation and continuous technological improvement. Across these functional areas, our brands benefit from infrastructure that they would not be able to build cost efficiently as stand-alone entities. The scale advantages of our platform can be observed in the over $1.4 billion in annual procurement spend we undertake across 176 suppliers in 32 countries as well as 19 distribution centers, of which we operate 9, globally as of September 30, 2023. In
 
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essence, our brands enjoy the benefits of access to a high-quality global supply chain commensurate with a greater than $3 billion revenue platform. The shared resources not only create synergies for the brands across each of our segments, but also empower them to prioritize and optimize brand strategy and performance.
Proven Ability to Win in Greater China
Since 2018, our capabilities in Greater China have expanded as our group headcount in the region has increased from approximately 450 to 800 employees as of September 30, 2023. We have realized significant success in the region through a commercialization strategy specific to the Chinese market. Our leaders are empowered to make decisions quickly so that we can compete to win in a dynamic and evolving Chinese retail landscape. While the brand experience for consumers is consistent with each brand’s global ethos, we employ localization strategies that resonate with Chinese consumers. For example, Arc’teryx’s loyalty program includes over 1.7 million members in Greater China as of September 30, 2023, having grown from only fourteen thousand in 2018 due to the brand’s ability to leverage tools such as WeChat to accelerate loyalty member enrollment.
Our strategy in Greater China also leverages a precise retail rollout combined with operational excellence. Store locations are selected using detailed data analysis, and we are keenly focused on optimizing store size and store-level productivity. Each location seeks to bring to life our authentic brand stories. Our operational excellence allows us to refresh retail inventory on a regular cadence, helping to drive consistent traffic and excitement in our stores and facilitating a luxury experience. We have already demonstrated success in Greater China, having grown our revenue from $202.3 million in 2020 to $523.8 million in 2022, representing a 60.9% CAGR, and operating margins in the region exceeds the margins of the business overall. Our revenue from Greater China has continued to grow in 2023, with $593.0 million revenue derived from the region for the nine months ended September 30, 2023, up from $353.8 million for the nine months ended September 30, 2022, representing an annual growth rate of 67.6%. In addition, while our initial success in Greater China was largely related to growth of Arc’teryx, we have developed a repeatable playbook with Salomon, which grew its revenue in Greater China by 72% from 2021 to 2022.
We believe we are in the preliminary stages of addressing our growth opportunity in Greater China as our brands continue to be recognized and appreciated by consumers in Greater China, while our proven ability to tailor and execute a regional strategy highlights our global potential.
Highly Experienced Management Team with Deep Bench of Talent
Our strategic vision, operational execution and company culture are driven by our executive leadership team, which has a proven track record in developing sportwear brands on a global scale. At the brand level, we have a deep bench of leaders that have significant experience building DTC retail strategies and unrivaled expertise in accessing fast growing markets. Our brand CEOs operate with a high degree of autonomy and support from group management. Within each brand organization, we have highly talented individuals executing key functionalities, including brand marketing, product development and operations. Across the organization, one third of employees at the top two leadership tiers of the company are individuals hired within the last two years, allowing for fresh perspectives to partner with experienced talent driving strong execution.
Our Growth Strategies
We have established comprehensive growth strategies across each of our brands, founded on the pillars of product innovation, geographic expansion, channel mix optimization and increased brand awareness. We intend to leverage both the intrinsic strengths of our brands and the synergistic benefits of our platform to pursue the following growth strategies:
Leverage Innovation Leadership to Strengthen Core Categories and Scale Newer Categories
The foundation of our brands’ success comes from an ability to innovate and create products that appeal to both elite athletes and everyday consumers. We believe our innovation model, which has been institutionalized across brands in each of our three segments, will allow us to expand our market shares within core categories, as well as tactically scale in newer categories.
 
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Within Technical Apparel, Arc’teryx employs a hands-on, iterative product development process that begins with innovative ideas in the North Vancouver design center. These product innovations come to life via on-site prototyping at the nearby ARC’One facility. Further, the team rigorously tests the product in the Canadian Coast Mountains with world-class mountain athletes. This results in a product that meets our high quality standards and drives continuous innovation. Core innovation enables products like the Alpha SV waterproof breathable “hardshell” jacket to consistently be among Arc’teryx’s top selling products, supporting the brand’s market leadership within outdoor technical apparel and driving continued topline growth. Along with core outdoor category growth, Arc’teryx plans to grow its women’s category, where it has invested in new design leadership, including an expanded assortment, color palette and updated fits, along with rigorous engagement with female athletes to further expand market share with female consumers. For new product development, Arc’teryx recently opened a footwear development office in Portland, Oregon to be able to provide a more comprehensive offering to the outdoor consumer, while also further diversifying product line seasonality. Arc’teryx is also expanding its product portfolio through its popular contemporary urban lifestyle line, Veilance. These new categories are supplemented by sustainability programs, including ReCare™, ReCut™ and ReGear™. ReCare™ provides consumers with information on home care and field repair for their products, while the ReCut™ program diverts rescued textiles that are repurposed into original and coveted pieces and the ReGear™ program accepts used gear and refurbishes it for sale on the ReGear™ platform.
Within Outdoor Performance, Salomon is deeply committed to innovation in footwear, reflected by its world-class design center in Annecy, France, along with a professional athlete collaboration program to design next-generation products. Through trail running, Salomon has been influential in shaping the modern outdoor footwear industry, rich in heritage of the French Alps. These innovations fuel the future of the sport, recently being worn by Courtney Dauwalter as she set back-to-back records at the Western States Endurance Race 100-mile run, and three weeks later, in the Hardrock 100 with the same pair of S/LAB Genesis shoes. S/LAB is the brand’s halo collection of specialty running and Nordic ski systems which have won races from the UTMB in Chamonix France to the 2022 Olympic Winter Games in Beijing, China. The brand’s ADDIKT PRO on-piste ski line is made with recycled ABS sidewalls, demonstrating Salomon’s leading innovation.
Historically, innovation has supported the evolution of Salomon’s iconic products like the XT-6, which was launched in 2013 and originally designed for ultra-distance trail runners under harsh conditions. This silhouette now creates the foundation of Salomon’s rapidly growing Sportstyle line, which creates a blend between function and fashion that is loved by athletes and consumers alike and represents a significant opportunity for the brand. Salomon Sportstyle footwear has become so culturally relevant that the MM6 Maison Margiela x Salomon Cross Low shoes have been worn by global superstars, including during the Super Bowl LVII halftime show, which was viewed by more than 115 million people globally. Sportstyle is the fastest growing collection in the Salomon brand with revenue over $80 million in 2022, and over $165 million for the nine months ended September 30, 2023.
Salomon also demonstrates an unwavering commitment to producing high-quality equipment for winter sports. During the 2022 Winter Olympic Games in Beijing, athletes using Salomon products went on to win 28 Olympic medals, showcasing the technical excellence of the brand’s winter sports equipment from skis, ski boots, ski bindings, snowboards, snowboard boots and bindings. Two-time World Cup Overall Alpine ski racer Marco Odermatt has relied exclusively on Salomon ski boots and bindings in his wins. Salomon intends to continue leveraging its premier innovation capabilities to improve existing product lines as well as develop new products to drive growth and increase market share.
In Ball & Racquet Sports, Wilson’s in-house innovation capabilities, anchored by its innovation center located in Chicago, provide a competitive advantage and an engine for continuous growth. The brand’s significant scale, particularly compared to mono-sport competitors, allows Wilson to make significant investments in research and development. The innovation process leverages key insights from technical scientists, engineers and designers who have a deep understanding of sports and the technical needs of athletes who use Wilson products. For example, as of September 1, 2023, 27% of the top 100 men’s tennis players and 42% of the top 100 women’s players in the world use Wilson rackets.
Other recent innovation examples include a Louisville Slugger baseball bat that uses simulation software combined with artificial intelligence, first utilized in the golf space and then expanded to baseball,
 
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to enhance the contact sweet spot, or the Evo NXT basketball that redistributes the weight of the ball with an advanced internal construction, making the ball easier to shoot from long range. New product introductions accounted for approximately 21% to 22% of revenue each year from 2020 to 2022 for Wilson, and accounted for approximately 21% of the brand’s revenue for the nine months ended September 30, 2023. These product innovations drive market share growth in core sports as well as adjacent categories such as the increasingly popular games of padel in Europe and pickleball in the United States.
As a new growth lever, Wilson is expanding its reach in soft goods categories in addition to sports equipment. Wilson is already experiencing success with its Tennis 360 Softgoods strategy, which involves launching tennis footwear and increasing exposure to apparel and represented 3.7% of total Wilson sales during the year ended December 31, 2022 and 5.1% of total Wilson sales during the nine months ended September 30, 2023. We believe this category will continue to grow as a larger contributor to the Wilson business and help fuel broader brand engagement.
Across segments, our plans to innovate, expand our product offering and successfully implement our growth strategy 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.
Further Penetrate Key Markets and Strategically Broaden Our Geographic Footprint
While our brands across each of our three segments have achieved global recognition, there are specific markets where they enjoy greater prominence: Arc’teryx in North America and Greater China, Salomon in Europe and Wilson in North America. By capitalizing on our existing global presence and leveraging our brands’ strengths, we have a significant opportunity to strategically increase our presence in existing and new geographies by cultivating new customer bases where there is promising market demand and ample room for growth.
Within Technical Apparel, Arc’teryx’s future geographic growth will be grounded in its historical momentum in North America and Greater China, with considerable opportunity in Europe and the rest of Asia Pacific. In North America and Greater China, the brand operates 48 and 63 owned retail stores, including seven and 21 factory outlets, respectively, as of September 30, 2023. Since 2019, the brand has opened 31 stores in Greater China, as well as 17 stores in North America, including nine new stores to date in 2023, with plans to open three more by the end of the year. In Europe and in the rest of Asia Pacific, Arc’teryx operates six and 21 owned retail stores, including two and five factory outlets, respectively, as of September 30, 2023. The brand intends to continue developing its retail real estate portfolio in these markets to drive brand awareness and growth. In Europe, there are retail opportunities in large metro areas such as Paris, as well as iconic, outdoor locations across the Alps, including Chamonix, France, Zermatt, Switzerland and St. Anton, Austria, where important community-building “mountain stores” are targeted to create authentic brand positioning.
Within Outdoor Performance, while Salomon is relatively well known in Europe, we believe brand awareness is significantly lower in Greater China and the United States. These markets represent strong growth opportunities as the technical performance, innovative design and premium nature of the brand’s products, especially within footwear, align well with consumer preferences in these markets. In Greater China, Salomon has successfully opened 30 owned retail stores as of September 30, 2023 and has plans to accelerate its retail rollout in this market. Despite still emerging brand awareness, Salomon enjoys specialty niche market positioning in the United States, including being well known for its winter sports equipment. According to the Circana/Retail Tracking Service, it is the number two outdoor footwear brand in the United States for the nine months ended September 30, 2023, based on dollar sales.
Within Ball & Racquet Sports, Wilson has a compelling opportunity to leverage its reputation for technical excellence in various sports activities, stemming from its historical success in the North American market. Wilson plans to expand its market leadership in North America while driving growth in both Greater China and Europe. In these newer markets, Wilson plans to leverage its partnership with the NBA as well as capitalize on increasing participation in sports and outdoor activities such as tennis. In Greater China, we believe that higher levels of participation in sports by children, young adults and women provide an opportunity to leverage the Tennis 360 Softgoods strategy to drive apparel and footwear growth while also
 
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developing a strong brand relationship with a large and dynamic consumer base. In Europe, Wilson plans to leverage its product authority in racquet sports to drive market share gains in padel, which is a popular fast-growing sport in the region. Fast growing sports like padel and pickleball are also fragmented and provide Wilson an opportunity to innovate on currently relatively standardized equipment.
Optimize Go-to-market Strategies to Conveniently Engage Consumers
Each of our brands employs a customized go-to-market strategy that is tailored specifically to the brand’s attributes and designed to effectively reach and captivate consumers. We remain committed to further refining and enhancing our go-to-market strategies with the goal of expanding our market presence, fostering customer loyalty and driving growth. Our DTC strategy will continue to require significant investment and management focus and may present risks and challenges, while our wholesale strategy may be impacted by the strength of our relationships with our wholesale partners.
Within Technical Apparel, for Arc’teryx, the DTC channel is the primary vehicle to engage consumers and drives both online and offline conversions. The DTC channel allows Arc’teryx to seamlessly leverage grassroots community marketing strategies and provides for a more agile inventory management model focused on consistent flow of fresh product. While Arc’teryx has a selective wholesale footprint that will remain an important element in its distribution strategy, we expect owned retail and e-commerce to continue to enable DTC to be the brand’s fastest growing channel.

Retail Brand Stores:   Elevated brand stores provide a critical space for Arc’teryx to engage directly with consumers, showcase products and build community. Its retail store strategy has evolved to include three differentiated store formats with square footage generally ranging from 1,000–10,000 sq ft. With multiple store formats, the brand has expanded its retail store network, with a focus on global retail hubs like Shanghai and New York. The brand stores are highly productive with an average global sales per square foot of approximately $1,474 for the twelve months ended September 30, 2023. Brand stores generally have been profitable with a target payback period of 24 months, with actual performance generally exceeding targets based on our global brand store openings for the twelve months ended September 30, 2023. The ReBird™ Care and Repair centers, incorporated in several new stores opened since 2022, have been an important element of the brand’s immersive store experience, not only to enhance our efforts in improving the circularity and reusability of our products, but also to drive traffic and consumer engagement.

E-commerce:   Arc’teryx’s digital platform is a catalyst for the business across all channels by growing brand awareness and serving as a global “storefront” for products and brand identity. We believe the Arc’teryx e-commerce platform will continue to grow as brand awareness accelerates through brand and community marketing investments, which contribute to Arc’teryx’s ability to adapt its business based on consumer data received from this platform.
Within Outdoor Performance, we have optimized Salomon’s go-to-market strategy from a traditional wholesale model to a modern and balanced consumer-centric retail strategy. The strategy is designed to elevate the brand by selectively choosing premium wholesale partners, curating and segmenting the inventory assortment with them, while also reaching more consumers on a direct basis through owned retail and e-commerce and providing engaging consumer experiences. While the channel mix remains primarily wholesale, DTC has grown significantly from 18% of brand revenue in 2020 to 21% in 2022 in an effort to drive penetration globally.

Direct-to-Consumer:   The brand has a strategic retail expansion plan, focusing on the development of multi-sport, experiential store formats in select major global cities, such as Paris and Milan, as well as increasing the number of Sportstyle focused stores in Greater China. For e-commerce, Salomon recently redesigned its website with a vision to inspire, guide and equip new and returning consumers to unleash their potential through mountain sports. We believe the platform provides an immersive and frictionless brand experience which has led to increased traffic and conversion. We expect growth on the e-commerce platform to scale with retail expansion as brand awareness increases and Salomon builds larger brand communities.

Wholesale:   Salomon targets high-quality wholesale partners, including specialty retailers, globally to attract new consumers. The brand collaborates with partners to drive higher per door productivity.
 
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Many of the brand’s specialty retailer partners focus directly on Salomon’s core competencies, including product expertise in hiking and trail running. Within outdoor and trail running shoes, Salomon is focused on consolidating the number of accounts and improving productivity. Within the Sportstyle category, Salomon is similarly focused on improving productivity while expanding the number of retail partners carrying the brand’s products. Salomon intends to further increase its number of strategic wholesale accounts in Europe, especially in underpenetrated areas of Western Europe, as well as the United States where Salomon seeks to target top-tier sporting goods retailers.
Within Ball & Racquet Sports, Wilson Sporting Goods’s go-to-market strategy revolves around highly productive wholesale relationships complemented by owned retail stores and an e-commerce platform that create excitement around Wilson’s categories and elevate Wilson’s brand. The wholesale channel is pivotal for Wilson as we believe many consumers prefer to shop in stores where expert recommendations are available and can be critical to driving the point-of-sale for sporting goods. Approximately 50% of Wilson’s wholesale revenue in 2022 and in the nine months ended September 30, 2023 came from differentiated specialty retailers. Through strong wholesale relationships and a complementary DTC strategy, Wilson aims to continue increasing consumer engagement in the appropriate channels. Importantly, while Wilson’s owned store footprint is expected to remain relatively small and targeted, these stores serve as important consumer touchpoints to build engagement with the brand in high-quality, immersive retail environments.

Wholesale:    Wilson’s wholesale channel comprises more than 15,000 wholesale partners globally for the year ended December 31, 2022, balanced between traditional and specialty retailers and smaller pro shops and country clubs. Through internal, specialized sales teams, Wilson closely collaborates with its wholesale partners to deliver a premium and educational consumer experience that drives brand productivity. From 2020 to 2022, Wilson meaningfully increased wholesale productivity with two of its top wholesale partners, Dick’s Sporting Goods and Academy, each increasing revenue by 101% and 73%, respectively. As Wilson continues to deliver superior products, it intends to continue increasing productivity and shelf space with strategic wholesale partners.

Direct-to-Consumer:   Wilson leverages DTC channels to complement its wholesale strategy by increasing brand awareness and elevating the brand. Wilson has owned retail stores in strategic locations, such as New York City and Chicago, which provide an immersive consumer experience and illuminate Wilson’s leadership across categories. The brand’s retail strategy is complemented by a global e-commerce platform with innovative digital capabilities, such as a direct-to-team baseball offering that leverages Wilson’s dynamic portfolio of brands and connections with baseball academies, clubs and organizations. Overall, we believe DTC will continue to play a critical role in driving traffic and conversion for Wilson in both the DTC and wholesale channels as brand equity and awareness grow.
Grow Brand Awareness, Expand Our Communities and Increase Customer Loyalty
We believe efforts to drive higher levels of brand awareness and increased customer loyalty across key markets are critical for each of our brands to achieve their commercial potential. As such, each brand has developed robust global marketing programs that build on the authenticity of each brand through strategies ranging from “grass roots” local community activities, to large scale global on-mountain events, to sophisticated original content and social media campaigns that leverage digital marketing.
Within Technical Apparel, Arc’teryx has created a reputation of authenticity and an uncompromising standard of excellence. The result has created a passionate, loyal following for the brand. However, Arc’teryx global brand awareness levels are relatively low when compared to more established premium outerwear brands. The brand plans to tactically increase brand awareness and curate more passionate communities through the following global strategies:

Arc’teryx Academies:   Each year, Arc’teryx hosts several global events in some of the most iconic alpine destinations around the world such as Chamonix, France; St. Anton, Austria and Whistler, British Columbia. Each Academy focuses on a different mountain sport discipline and is open to the public. In 2022, these events saw over 17,500 attendees and generated 76.5 million media impressions.

Store-Driven Events:   Arc’teryx’s events enable the brand to connect to the communities surrounding the brand’s stores. These events range from design discussions, music performances, to speaker series hosted both in-store and online.
 
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Original Content + Digital and Social Media:   In 2022, Arc’teryx has produced 15 original content films with talented filmmakers that featured sponsored athletes. These films included examples such as Unfinished Business, a documentary about Greg Hill summiting all 20 peaks of the Spearhead Traverse in one day and Keep It Real, a video on the underground UK bouldering scene that provided original content to enable authentic brand storytelling across social media channels. We believe original content combined with digital marketing strategies will increase Arc’teryx brand awareness globally.
Within Outdoor Performance, while the Salomon brand has existed for more than 75 years, we believe there is an opportunity to grow brand awareness globally, particularly in North America and Greater China. To drive brand awareness, Salomon plans to use the following integrated, brand-first marketing strategy to communicate key product stories:

Television, Digital and Social Media:   Using television, digital and social media, Salomon plans to effectively communicate its brand story to a large audience of consumers and form a deeper connection. For example, in 2022, Salomon unveiled the new “Tomorrow is Yours” campaign aimed at inspiring a wider, younger and more diverse audience to connect with the outdoors. We believe this comprehensive global campaign increased brand awareness and perception globally.

Brand Ambassadors:   Professional athletes trust Salomon in the most demanding competitive environments, which is the greatest form of product validation. In total, more than 600 professional athletes across trail running, snowboarding and alpine and Nordic skiing actively use Salomon products. These athletes provide individual product and brand storytelling opportunities to drive awareness.

Loyalty Program:   In 2022, Salomon launched its loyalty program, S/Plus which allows consumers to earn points for each purchase, access exclusive products and receive other members only benefits. The S/Plus program had over 1.2 million members as of December 31, 2022, the first year of its existence, and over 1.5 million members as of September 30, 2023.

Original Content:   Salomon.tv originated in 2009 as the original branded content platform in sports. As of September 30, 2023, more than 245,000 subscribers view 6-10 original and authentic stories per year highlighting athletes, sports, products and community.

Events:   Salomon has developed a leading series of running events in some of the most iconic outdoor destinations around the world called The Golden Trail Series (“GTS”). These events are the only running events in the world designed and developed for a global television audience. In 2023, GTS events will be broadcasted on Eurosport across 53 countries. Salomon plans to further increase spending to add events in Japan and Greater China to complement the United States and European races, entrenching Salomon as the leading global brand powering the sport of trail running.
Within Ball & Racquet Sports, Wilson has recently elevated its brand through consistent, cohesive brand messaging across sports categories. Today Wilson is thoughtfully balancing product marketing and brand marketing to engage consumers, and it intends to continue growing its brand awareness in key global markets through the following strategies:

Professional Partnerships:   For more than 110 years, Wilson has been and continues to be a part of championship-level performance for some of the world’s best athletes and iconic sports leagues. These endorsements and partnerships serve as a competitive advantage, providing a differentiated opportunity to convey a story around “Play What the Pros Play.” Wilson plans to continue leveraging these partnerships with both professional leagues and young aspiring talent across sport activities to build brand awareness globally.

Strategic Marketing:   Known for product excellence across sport categories, Wilson is establishing a cohesive brand identity that sources and amplifies brand equity from each categories’ leadership and authenticity, effectively shifting from category marketing to brand marketing. Wilson leverages digital marketing, social media platforms, experiential concepts and collaborations with brands such as KITH to deliver authentic brand and product messaging to consumers. The digital marketing strategy combines personalized targeting, engaging content and data-driven optimization to build brand awareness and drive consumer engagement. In 2022, the brand launched a marketing program
 
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for everyone to “Live Like an Athlete,” which immediately increased the brand’s social media engagement. Wilson continues to build on this brand momentum through the Wilson Tennis 360 Softgoods strategy and a comprehensive brand campaign delivered in 2023.
Leverage the Amer Sports Platform to Scale All of Our Brands
We have laid the foundation and infrastructure to enable premium brands to thrive and scale on the Amer Sports platform. The ability for brands to chart their own consumer-centric strategies while leveraging the global scale and capabilities of our platform provides an opportunity for all our brands across each of our three segments to accelerate their growth in a profitable manner. For example, Atomic and Peak Performance have an opportunity to leverage our platform to increase their presence globally. Atomic is a leading player in winter sports as validated through the use of Atomic equipment by some of the world’s best alpine athletes, including Mikaela Shiffrin. We intend to leverage this professional brand halo to capture additional market share in the global winter sports equipment industry and further extend the Atomic brand to apparel and accessories. Given its Nordic roots, Peak Performance has a strong following within EMEA; however, there is an opportunity to expand the brand globally in the Americas, Greater China and the rest of Asia Pacific.
Our Market Opportunity
Our brands operate across several markets, including the athletic apparel, athletic footwear and sports equipment markets. These are global markets and form a collective market opportunity of approximately $522 billion as of 2022.

Global Athletic Apparel Market:   According to Euromonitor International, the global athletic apparel market represented $220 billion in annual spending in 2022 and is expected to grow at a 6.4% CAGR though 2027.

Global Athletic Footwear Market:   According to Euromonitor International, the global athletic footwear market represented $152 billion in annual spending in 2022 and is expected to grow at a 6.8% CAGR though 2027.
We believe our global capabilities and presence, especially within Greater China, positions us well to drive growth in the athletic apparel and athletic footwear markets globally.

Global Sports Equipment Market:   According to Statista, the global sports equipment market, which includes golf, outdoor, racquet, team sports and winter sports, represented $75 billion in annual spend in 2022 and is expected to grow at a 6.3% CAGR through 2027.
We believe the following trends influence the industries within which we operate and how consumers make their purchase decisions:

Health & Longevity:   We believe one of the lasting effects of the COVID-19 pandemic is an increased focus on health and longevity, resulting in increased participation in sports across genders, ages and geographies. For example, according to a survey conducted by a third-party research consulting group, approximately 50% of US consumers reported wellness as a top priority in their daily lives in 2022, an increase from 42% in 2020. We believe this increased focus on health and longevity is a trend that will continue and will drive consumers to purchase sports apparel, footwear and equipment to facilitate a healthy lifestyle through sports and outdoor recreation.

Increased Casualization:   There has been a shift towards more casual apparel and footwear options for daily use, a trend that has been accelerated by COVID-19. This casualization trend drives the need for products that can offer versatility across of a variety of use cases, whether in the office, or participating in outdoor activities. We believe our premium apparel and footwear products provide the necessary style, comfort and technical performance to allow consumers to seamlessly transition from one activity to the next while feeling confident throughout the day.

Growth in the Premium Consumer Segment:   Our brands target consumers who seek high-quality, premium performance products to help them perform at their best and feel confident on-and-off the court. According to the Credit Suisse 2022 Global Wealth Report, the number of adults globally
 
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with a net worth of $100,000 or more, which we define as the premium consumer segment, has increased from 358 million in 2010 to 689 million in 2021, representing a CAGR of 6.1%. We believe our brands and products are positioned as premium products and enable us to capitalize on growth in the number of premium consumers.

Sustainable Consumption:   We believe sustainable consumption is at the forefront of many consumers’ decision whether to engage or transact with a brand. According to a recent third-party survey of U.S. consumers, sustainability is increasingly influencing consumer behavior. We believe the consumer’s focus on sustainable consumption will be a continued trend and that consumers will seek out sustainability minded companies when making purchases.
History
Amer Sports Corporation, our wholly-owned subsidiary, was founded in Helsinki, Finland, in 1950, and was listed on the Nasdaq Helsinki in 1977. In 2019, Amer Sports Corporation was acquired by an investor group consisting of ANTA Sports Products Limited (“ANTA Sports”), FountainVest Partners (“FountainVest”), Anamered Investments Inc., an entity affiliated with Chip Wilson (“Anamered”) and Tencent Holdings Limited (“Tencent”), each of which owns their interests in us through Amer Sports Holding (Cayman) Limited (“JVCo”), an investment vehicle and our principal shareholder immediately prior to this offering, and Amer Sports Corporation was delisted from the Nasdaq Helsinki.
IPO-Related Transactions
Reclassification and Share Split
As of the date of this prospectus, we had issued and outstanding ordinary shares, par value EUR 0.10 per ordinary share, comprising an aggregate of (i)             class A voting shares and (ii)              class B non-voting shares.
Immediately prior to the completion of this offering, we intend to (i) redesignate and reclassify each of the issued and outstanding class A voting shares and each of the issued and outstanding class B non-voting shares into a single class of ordinary shares, each entitled to one vote per share (collectively, the “Reclassification”) and (ii) effect a      -for-1 share split of our ordinary shares (the “Share Split”).
Shareholder Loan Equitization
Immediately prior to the completion of this offering, we intend to equitize a portion of certain existing shareholder loans as described in further detail below (the “Equitization”). As of September 30, 2023, we had (1) an aggregate principal amount of $2.6 billion in borrowings outstanding under a shareholder loan from JVCo (“JVCo Loan 1,” as defined in “Related Party Transactions—Loans with Related Parties”) and (2) an aggregate principal amount of $7.5 million in borrowings outstanding under a shareholder loan (“Co-Invest Loan 1,” as defined in “Related Party Transactions—Loans with Related Parties”) from Amer Sports Management Company (Cayman) Limited (the “Co-Invest”), a minority shareholder. Immediately prior to the completion of this offering, each of JVCo and the Co-Invest will enter into a capitalization agreement with us, pursuant to which JVCo will agree to contribute $       billion and the Co-Invest will agree to contribute $      million to us in exchange for class A voting shares, which shares will be immediately surrendered and canceled resulting in no net change to our outstanding shares. The obligation by each of JVCo and the Co-Invest to pay us the subscription price for the class A voting shares will be set off against the corresponding amounts owed by us under the loan agreements and accordingly, such portions of the loans will be canceled. The remaining borrowings of $       billion under JVCo Loan 1 and $        million under Co-Invest Loan 1, after giving effect to the Equitization, are expected to be repaid with the net proceeds from this offering. See also “Related Party Transactions—Loans with Related Parties,” “Use of Proceeds” and “Capitalization.”
Distribution
Subsequent to the completion of this offering, each of JVCo and the Co-Invest expect to effect a transfer of our ordinary shares held by each respective entity to its ultimate owners (other than Anamered)
 
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(the “Distribution”) at which time the shareholders of JVCo (other than Anamered) and the Co-Invest will become our direct shareholders. Upon completion of such transfer of our ordinary shares, the Co-Invest will be dissolved.
Prior to the completion of this offering and after giving effect to the Reclassification and the Distribution, each of ANTA Sports, FountainVest, Anamered and Tencent will hold    %,    %,    % and    %, respectively, of our issued and outstanding ordinary shares. See “Principal Shareholders.”
Recent Developments
Preliminary Results for the Year Ended December 31, 2023
Set forth below are preliminary estimates of selected unaudited financial information for the fiscal year ended December 31, 2023, and actual financial results derived from our audited consolidated financial statements for the fiscal year ended December 31, 2022. We have provided estimates and ranges of certain preliminary results below because our closing procedures for our fiscal year ended December 31, 2023 are not yet complete. Our final results remain subject to the completion of managements’ final review and our other closing procedures, or subsequent events, as well as the completion of the audit of our financial statements. Accordingly, you should not place undue reliance on our preliminary results set forth below, which may differ from actual results. The audit of our consolidated financial statements as of and for the year ended December 31, 2023 will not be finalized until after the completion of this offering. During the course of the preparation of our audited consolidated financial statements and the notes thereto, additional items that require adjustments to the preliminary results presented below may be identified. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Critical Accounting Policies and Estimates” and “Cautionary Statement Regarding Forward-Looking Statements.”
The preliminary financial data included in this prospectus has been prepared by, and is the responsibility of, management. Our independent registered public accounting firm, KPMG AB, has not audited, reviewed, compiled, or applied agreed-upon procedures with respect to the preliminary financial data. Accordingly, KPMG AB does not express an opinion or any other form of assurance with respect thereto.
The preliminary results provided below do not represent a comprehensive statement of our financial results and should not be viewed as a substitute for the audited consolidated financial statements prepared in accordance with IFRS. In addition, the preliminary estimates for the year ended December 31, 2023 are not necessarily indicative of the results to be achieved in any future period. For additional information regarding the presentation of our financial information, see “Presentation of Financial and Other Information.”
The following table reflects certain preliminary results for the year ended December 31, 2023 and actual financial results derived from our audited consolidated financial statements for the year ended December 31, 2022:
For the Year Ended December 31,
2023
(Estimated)
2022
Low
High
($ in millions)
Revenue
$ $ $ 3,548.8
Net loss
(252.7)
Adjusted EBITDA(1)
453.0
(1)
Adjusted EBITDA is a non-IFRS measure. For more information regarding our use of this measure and its usefulness to investors, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-IFRS Financial Measures.” The following table sets forth a preliminary reconciliation of estimated net loss to estimated Adjusted EBITDA for the year ended December 31, 2023 and a reconciliation of actual net loss to actual Adjusted EBITDA for the year ended December 31, 2022:
 
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For the Year Ended
December 31,
2023
(Estimated)
2022
Low
High
($ in millions)
Net loss
$      $      $ (252.7)
Income tax expense(1)
48.5
Finance cost(2)
236.0
Depreciation and amortization(3)
197.0
Finance income(4)
(3.3)
Loss from discontinued operations(5)
19.4
Restructuring expenses(6)
5.8
Impairment losses on goodwill and intangible assets(7)
198.1
Expenses related to M&A activities(8)
0.3
Expenses related to certain legal proceedings(9)
3.9
Share-based payments(10)
Adjusted EBITDA
$ $ $ 453.0
(1)
Includes income tax expense from discontinued operations estimated to be nil for the year ended December 31, 2023 and $(0.2) million for the year ended December 31, 2022.
(2)
Total interest expense on lease liabilities under IFRS 16 was estimated to be a low of $      million and a high of $     million for the year ended December 31, 2023 and was $8.5 million for the year ended December 31, 2022.
Includes finance cost from discontinued operations estimated to be nil for the year ended December 31, 2023 and $0.5 million for the year ended December 31, 2022.
(3)
Total amortization expense for right-of-use assets capitalized under IFRS 16 was estimated to be a low of $     million and a high of $     million for the year ended December 31, 2023 and $73.3 million for the year ended December 31, 2022.
Includes depreciation and amortization from discontinued operations estimated to be nil for the year ended December 31, 2023 and $2.7 million for the year ended December 31, 2022.
(4)
There was no finance income from discontinued operations for the periods presented.
(5)
Loss from discontinued operations before income tax expenses, finance cost, depreciation and amortization and finance income.
(6)
Includes expenses for restructuring from exit and termination events.
(7)
Includes impairment losses on goodwill and intangible assets.
(8)
Includes advisory fees in connection with M&A activities.
(9)
Includes expenses related to certain significant legal proceedings.
(10)
We granted share-based compensation to employees under our equity compensation plans during the years ended December 31, 2023 and 2022, but did not incur any expenses related to share-based payments in periods prior to the fourth quarter of fiscal year 2023, as options granted under our equity compensation plans only vest once certain service and performance conditions are met, as well as upon the occurrence of an exit event, such as an initial public offering, and we did not believe an exit event was probable during such time. We started recognizing expenses related to share-based payments during the fourth quarter of the year ended December 31, 2023, as this offering became probable. We adjust for share-based payments in our calculations of Adjusted EBITDA because we believe that such expenses are not representative of our ongoing expenses as they relate to recognition in a single period of incentive compensation granted over a period of several fiscal years.
 
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We estimate that cash and cash equivalents were $      million as of December 31, 2023, compared to $402.0 million as of December 31, 2022, and we estimate that loans from financial institutions were $       million as of December 31, 2023, compared to $1,792.2 million as of December 31, 2022, loans from related parties were $       million as of December 31, 2023, compared to $4,039.0 million as of December 31, 2022, and other interest-bearing liabilities were $       million as of December 31, 2023, compared to $208.3 million as of December 31, 2022.
Corporate Information
We were incorporated as Amer Sports Management Holding (Cayman) Limited in the Cayman Islands as an exempted company with limited liability on January 3, 2020. On August 4, 2023, we changed our name to Amer Sports, Inc. Our registered offices are located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. Our telephone number at this address is +1 345 945 3901. Our corporate offices are located at Konepajankuja 6, 00511 Helsinki, Finland. Our telephone number at this address is +358 (0)20 712 2500. Investors should contact us for any inquiries through the address and telephone number of our corporate offices. Our principal website is www.amersports.com. The information on, or accessible through, our website is not a part of, and is not incorporated into, this prospectus. We have included our website address only as an inactive textual reference and do not intend it to be an active link to our website.
Risk Factors Summary
Investing in our ordinary shares involves a high degree of risk. The risks described in “Risk Factors” in this prospectus may cause us to not realize the full benefits of our strengths or may cause us to be unable to successfully execute all or part of our growth strategy. Some of the more significant risks include the following:
Risks Related to Our Business and Industry

Our business depends on the strength of our brands, and if we are not able to maintain and enhance our brands, our reputation and results of operations may be adversely affected.

Changes in market trends and consumer preferences could adversely affect our financial results.

Our products, services and experiences face intense competition.

Harm to our reputation could adversely impact our ability to attract and retain consumers and wholesale partners, employees, brand ambassadors, partners, and other stakeholders.

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

Our financial success may be impacted by the strength of our relationships with our wholesale partners.

Our growth strategy involves the continued expansion of our DTC channel, including our owned retail stores and e-commerce platform, which may present risks and challenges.

Our plans to innovate, expand our product offerings and successfully implement our growth strategies 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.

Our international operations involve inherent risks which could result in harm to our business.

We face risks associated with our business in the PRC.
Risks Related to Our Distribution Network and Suppliers

Our business or our results of operations could be harmed if we or our wholesale partners are unable to accurately forecast demand for our products or if we are unsuccessful at managing product manufacturing decisions.
 
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The operations of our suppliers and third-party manufacturers are subject to additional risks that are beyond our control, including those that may result in significant disruptions in supply, and that could harm our business, financial condition and results of operations.

If we encounter problems with our distribution system, our ability to deliver our brands’ products to the market could be adversely affected.

Sustainability- or ESG-related matters, climate change, or legal, regulatory or market responses thereto, may have an adverse impact on our business and results of operations.

Political uncertainty or geopolitical tensions could have a material adverse effect on our business, results of operation and financial condition.
Risks Related to Litigation and Regulation

Changes to trade policies, tariffs, import/export regulations and anti-competition regulations in the United States, EU, PRC and other jurisdictions, or our failure to comply with such regulations, may have a material adverse effect on our reputation, business, financial condition and results of operations.

We could face risks arising out of compliance with, or liabilities under, environmental, health and safety laws and regulations.
Risks Related to Our Intellectual Property and Information Technology

If we are unable to obtain, maintain, protect and enforce our intellectual property rights, or if the scope of our intellectual property protection is not sufficiently broad, others may be able to develop and commercialize products substantially similar to ours, and our business may be adversely affected.

Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on our business, financial condition and results of operations.

We license certain of our intellectual property rights to and from others. If we fail to adequately monitor our licensees’ compliance with, or if we fail to comply with our obligations under, our license agreements, our intellectual property rights may be adversely affected, we may be subject to third-party claims of intellectual property infringement, misappropriation, or other violation or we could lose our licensed rights.

A security breach or other disruption to our IT Systems could result in the loss, theft, misuse, unauthorized disclosure, or unauthorized access of information or could disrupt our operations, which could materially adversely affect our business, financial condition or results of operations.

We are subject to various laws, rules, regulations and guidelines relating to data privacy and security. Changes in such laws, rules, regulations and guidelines, or any actual or perceived failure by us to comply with them, could lead to government enforcement actions, private litigation or adverse publicity, any of which could have a material adverse effect on our reputation, results of operations or financial condition.
Risks Related to Financial, Accounting and Tax Matters

We plan to primarily use cash from operations to finance our growth strategy, but may need to raise additional capital that may be required to grow our business, which we may not be able to raise on terms acceptable to us or at all.

Fluctuations in foreign currency exchange rates could harm our results of operations.

If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.

We have identified a material weakness in our internal control over financial reporting. If we are unable to remediate the material weakness or if we identify additional material weaknesses in the future or otherwise fail to develop and maintain effective internal control over financial reporting, we may
 
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not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business.
Risks Related to Our Relationship with ANTA Sports

ANTA Sports may fail to perform under the BSA, or we may fail to have replacement systems and services in place when the BSA expires.
Implications of Being a Foreign Private Issuer
We are considered a “foreign private issuer.” Accordingly, upon consummation of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. This means that, as long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events.
In addition, the corporate governance rules of the NYSE require listed companies to have, among other things, a majority of independent directors and independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a foreign private issuer, we are permitted to follow home country practice in lieu of the above requirements. For as long as we choose to rely on the foreign private issuer exemption to certain of the NYSE corporate governance standards, our board of directors’ approach to governance may be different from that of a U.S. domestic company, and, as a result, the management oversight of our company may be more limited than if we were subject to all of the NYSE corporate governance standards. While a majority of the directors on our board of directors are independent directors, as long as we rely on the foreign private issuer exemption to certain of the NYSE corporate governance standards, a majority of the directors on our board of directors may not be required to be independent directors. Additionally, we currently intend to follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the NYSE in respect of the following:

the requirement of the NYSE listing rules that the compensation committee and the nominating and governance committee of the board of directors be composed entirely of independent directors;

the requirement of the NYSE listing rules that a listed issuer obtain shareholder approval when it establishes or materially amends a stock option or purchase plan or other arrangement pursuant to which stock may be acquired by officers, directors, employees or consultants;

the requirement of the NYSE listing rules that a listed issuer obtain shareholder approval prior to issuing or selling securities (or securities convertible into or exercisable for common stock) that equal 20% or more of the issuer’s outstanding common stock or voting power prior to such issuance or sale; and

the requirement of the NYSE listing rules that the independent directors have regularly scheduled meetings with only the independent directors present.
We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of
 
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our executive officers or directors are U.S. citizens or residents, (ii) more than 50% of our assets are located in the United States or (iii) our business is administered principally in the United States.
In this prospectus, we have taken advantage of certain of the reduced reporting requirements as a result of being a foreign private issuer. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold equity securities. See “Management—Corporate Governance Practices.”
 
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THE OFFERING
Share information presented below and elsewhere in this prospectus, other than our historical financial information, reflects a      -for-1 share split of our ordinary shares to occur after the effectiveness of this registration statement, of which this prospectus is a part, and prior to the closing of this offering.
Issuer
Amer Sports, Inc.
Offering of ordinary shares
          shares.
Over-allotment option to purchase additional ordinary shares
We have granted the underwriters an option to purchase up to          additional ordinary shares within 30 days of the date of this prospectus to cover over-allotments.
Ordinary shares to be issued and outstanding after this offering
          shares (or               shares if the underwriters’ over-allotment option is exercised in full).
Use of proceeds
We estimate that the net proceeds to us from the offering will be approximately $      (or $      if the underwriters’ over-allotment option is exercised in full) based on an assumed initial public offering price of $      per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and offering expenses payable by us. We intend to use the net proceeds we receive from this offering to repay all of our outstanding borrowings under our existing shareholder loans, after giving effect to the Equitization, and any remaining net proceeds to repay a portion of our outstanding borrowings under the Revolving Facility (each as defined below). See “—IPO-Related Transactions—Shareholder Loan Equitization” and “Use of Proceeds.”
Dividend policy
We have never declared nor paid any cash dividends on our ordinary shares. Our amended and restated memorandum and articles of association permits us to pay dividends. We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business, and we do not anticipate paying any cash dividends but our board of directors may choose to do so at any point if it is in the best interests of the Company and our shareholders. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors subject to applicable laws, and will depend on then-existing conditions, including our financial condition, results of operation, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. Our Senior Facilities Agreement (as defined herein) restricts our ability to make distributions, including dividends, subject to certain exceptions.
Directed share program
At our request, the underwriters have reserved up to     % of the ordinary shares offered by this prospectus for sale, at the initial public offering price, to certain individuals associated with the Company. Except for reserved shares purchased by our executive officers and directors, these
 
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reserved ordinary shares will not be subject to the lock-up restrictions described elsewhere in this prospectus. The number of ordinary shares available for sale to the general public will be reduced to the extent these persons purchase such reserved ordinary shares. Any reserved ordinary shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other ordinary shares offered by this prospectus. See “Underwriting—Directed Share Program.”
Listing
We have applied to list our ordinary shares on the NYSE, under the symbol “AS.”
Risk factors
See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our ordinary shares.
Unless otherwise indicated, all information contained in this prospectus assumes or gives effect to:

filing and effectiveness of our amended and restated memorandum and articles of association, the Reclassification and the Share Split, each of which will occur immediately prior to the completion of this offering;

no exercise of the option granted to the underwriters to purchase up to           additional ordinary shares to cover over-allotments, if any, in connection with the offering; and

an initial public offering price of $      per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus.
The number of ordinary shares that will be issued and outstanding after this offering is based on ordinary shares issued and outstanding as of December 31, 2023, upon the effectiveness of the Reclassification and the Share Split, and excludes:

     ordinary shares issuable on the exercise of options outstanding as of December 31, 2023, under our 2019 ESOP (as defined herein) with a weighted-average exercise price of EUR       per ordinary share;

      ordinary shares issuable on the exercise of options outstanding as of December 31, 2023, under our 2023 ESOP (as defined herein) with a weighted-average exercise price of EUR        per ordinary share; and

      ordinary shares reserved for issuance under our 2019 ESOP, 2023 ESOP and 2024 Amer Sports Equity Incentive Plan, plus any future increases in the number of ordinary shares reserved for issuance thereunder, as more fully described in the section titled “Management—Equity Incentive Plans—Existing Plans.”
The financial statements and the related notes thereto included elsewhere in this prospectus, including the share and per share information, are presented only on a historical basis and therefore do not reflect the Share Split.
 
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SUMMARY FINANCIAL AND OTHER INFORMATION
The summary of loss and other comprehensive income and loss data for the years ended December 31, 2022, 2021 and 2020, and summary balance statement of financial position data as of December 31, 2022, have been derived from our audited consolidated financial statements included elsewhere in this prospectus.
The summary of loss and other comprehensive income and loss data for the nine months ended September 30, 2023 and 2022, and summary balance statement of financial position data as of September 30, 2023, have been derived from our unaudited condensed consolidated interim financial statements included elsewhere in this prospectus, which in the opinion of our management, include all adjustments necessary to present fairly our results of operations and financial conditions at the date and for the periods presented.
We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB. Historical results for any prior period are not necessarily indicative of results expected in any future period. The results for any interim period are not necessarily indicative of the results that may be expected for the full year.
The audited consolidated financial statements included in this prospectus have been restated due to certain changes in accounting principles, classification and corrections of errors from previously published audited consolidated financial statements. For further information on the restatements of our audited consolidated financial statements for the fiscal years 2022, 2021 and 2020, see Note 3, “Changes in accounting principles and correction of errors,” to our audited consolidated financial statements included elsewhere in this prospectus.
The following summary financial information should be read in conjunction with “Presentation of Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, including the notes thereto, included elsewhere in this prospectus. Unless otherwise indicated, the information in this section does not give effect to the Share Split.
Summary Loss and Other Comprehensive Income and Loss Data
For the Nine Months Ended
September 30,
For the Year Ended December 31,
2023
2022
Restated
2022
Restated
2021
Restated
2020
($ in millions)
Revenue
$ 3,053.4 $ 2,350.1 $ 3,548.8 $ 3,066.5 $ 2,446.3
Cost of goods sold
(1,460.5) (1,188.5) (1,785.2) (1,560.9) (1,297.4)
Gross profit
1,592.9 1,161.6 1,763.6 1,505.6 1,148.9
Selling and marketing expenses
(956.8) (754.3) (1,107.6) (962.6) (733.2)
Administrative and other
expenses
(392.2) (299.8) (415.1) (364.4) (277.3)
Impairment losses
(4.6) (0.9) (201.7) (0.7) (20.5)
Other operating income
3.3 2.2 11.4 9.0 7.2
Operating profit
$ 242.6 $ 108.7 $ 50.6 $ 186.9 $ 125.1
Finance income
4.5 2.1 3.3 2.3 1.6
Finance cost (1)
(296.6) (168.5) (236.5) (279.0) (274.1)
Net finance cost
(292.1) (166.4) (233.2) (276.7) (272.5)
Loss before tax
$ (49.5) $ (57.7) $ (182.6) $ (89.8) $ (147.4)
Income tax expense
(64.4) (24.9) (48.3) (34.7) (26.2)
Loss from continuing operations
$ (113.9) $ (82.6) $ (230.9) $ (124.5) $ (173.6)
Loss from discontinued operations, net of tax
(21.8) (21.8) (1.8) (63.6)
Net loss
$ (113.9) $ (104.4) $ (252.7) $ (126.3) $ (237.2)
Net loss margin
(3.7)% (4.4)% (7.1)% (4.1)% (9.7)%
 
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For the Nine Months Ended
September 30,
For the Year Ended December 31,
2023
2022
Restated
2022
Restated
2021
Restated
2020
($ in millions)
Net loss attributable to:
Equity holders of the company
(115.6) (104.4) (252.7) (126.3) (237.2)
Non-controlling interests
1.7
Net loss per ordinary share—basic and diluted
(0.99) (0.91) (2.19) (1.10) (2.06)
Weighted average number
of ordinary shares
outstanding—basic and
diluted
115,572,938 115,494,673 115,514,239 115,220,745 115,220,745
Pro forma net loss (2)
Pro forma net loss per
ordinary shares—basic
and diluted (2)
Pro forma weighted
average number of
ordinary shares
outstanding—basic and
diluted (2)
(1)
Includes interest expense relating to the shareholder loans expected to be equitized or repaid in connection with this offering of $167.5 million and $100.6 million for the nine months ended September 30, 2023 and 2022, respectively, and $138.5 million, $142.9 million and $132.5 million for the years ended December 31, 2022, 2021 and 2020, respectively. See “Related Party Transactions—Loans with Related Parties.”
(2)
Pro forma net loss, pro forma net loss per share—basic and diluted and pro forma weighted average number of ordinary shares outstanding—basic and diluted each give effect to (a) the Reclassification, (b) the Share Split, (c) the Equitization and (d) the issuance of       ordinary shares in this offering at an initial public offering price of $      per share, which is the midpoint of the range set forth on the cover of this prospectus and the application of the net proceeds therefrom, as if each had occurred on the first date of the period presented. See “—Reclassification and Share Split,” “—Shareholder Loan Equitization” and “Use of Proceeds.”
The following is a reconciliation of historical net loss to pro forma net loss for the fiscal year ended December 31, 2022 and for the nine months ended September 30, 2023:
 
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Nine Months Ended
September 30, 2023
Year Ended
December 31, 2022
($ in millions)
Net loss as reported
$ (113.9) $ (252.7)
Decrease in interest expense(a)
$      $
Increase in share-based payments
$      $
Pro forma weighted average number of ordinary shares outstanding(b)
Basic
Diluted
Pro forma net loss per share
Basic
Diluted
Pro forma net loss
$      $
(a)
Reflects the decrease in interest expense as a result of (i) the Equitization and (ii) the repayment of shareholder loans with the net proceeds from this offering. See “Related Party Transactions—Loans with Related Parties” and “Use of Proceeds.”
(b)
Reflects       additional ordinary shares to be issued by us in this offering.
Summary Balance Statement of Financial Position Data
As of September 30, 2023
As of December 31, 2022
Actual
As Adjusted (1)
Actual Restated
($ in millions)
Total assets
$ 8,147.0 $         $ 7,895.1
Total liabilities
$ 8,138.2 $ $ 7,969.0
Total equity
$ 8.8 $ $ (73.9)
(1)
As adjusted amounts give effect to the issuance and sale of           ordinary shares by us in the offering at the initial public offering price, after deducting estimated underwriting discounts and commissions and offering expenses payable by us, as set forth under “Use of Proceeds.” See “Use of Proceeds” and “Capitalization.”
Summary Cash Flows Data
For the Nine Months Ended September 30,
For the Year Ended December 31,
2023
2022
Restated
2022
Restated
2021
Restated
2020
($ in millions)
Total net cash flows (used in)/from operating activities
$ (106.1) $ (179.7) $ (91.7) $ 268.0 $ 297.9
Net cash flow (used in)/from investing activities
$ (95.6) $ (82.4) $ (118.6) $ 295.4 $ (106.7)
Net cash flow from/(used in) financing activities
$ 97.3 $ 47.8 $ 81.1 $ (369.7) $ (165.3)
 
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Non-IFRS Financial Data (1)
For the Nine Months Ended September 30,
For the Year Ended December 31,
2023
2022
2022
2021
2020
($ in millions)
Constant Currency Revenue
$ 3,103.3 $ 3,771.1 $ 2,982.9
EBITDA
$ 401.1 $ 234.2 $ 225.5 $ 388.7 $ 281.6
Adjusted EBITDA
$ 422.1 $ 261.8 $ 453.0 $ 416.8 $ 311.4
Adjusted EBITDA Margin
13.8% 11.1% 12.8% 13.6% 12.7%
Adjusted Net Income
$ (94.2) $ (75.5) $ (29.9) $ (98.7) $ (170.0)
(1)
Constant currency revenue, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income are non-IFRS financial measures. Management believes that these non-IFRS measures, together with the IFRS measures used by management, reflect how we evaluate performance and make decisions about our business. These non-IFRS measures should be considered supplements to, not substitutes for, or superior to, the corresponding measures calculated in accordance with IFRS. For additional information about these non-IFRS measures, including a reconciliation of each of EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Net Income to their most directly comparable financial measure calculated in accordance with IFRS, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-IFRS Financial Measures.”
 
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RISK FACTORS
An investment in our ordinary shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below as well as the other information included in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes thereto included elsewhere in this prospectus, before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. The trading price of our ordinary shares could decline due to any of these risks, and, as a result, you may lose all or part of your investment. See also “Cautionary Statement Regarding Forward-Looking Statements.”
Risks Related to Our Business and Industry
Our business depends on the strength of our brands, and if we are not able to maintain and enhance our brands, our reputation and results of operations may be adversely affected.
Our iconic sports and outdoor brands, including Arc’teryx, Salomon, Wilson, Atomic and Peak Performance, are integral to our business and to the implementation of our strategies for expanding our business. We believe that the brand images we have cultivated have significantly contributed to the success of our business and are critical to maintaining and expanding our consumer base. Maintaining and enhancing our premium brands may require us to make substantial investments in areas such as product design, intellectual property, operations, marketing, supply chain (including raw materials, manufacturing and distribution), sustainability, environmental, social and governance (“ESG”), community relations, employee training and our direct-to-consumer (“DTC”) and wholesale distribution channels, including investments in additional distribution partnerships, the opening of new owned retail stores and new owned e-commerce websites, the inclusion of products on third-party e-commerce platforms, and other e-commerce projects, and these investments may not be successful.
We anticipate that, as our business continues to expand into new markets and new product categories, maintaining and enhancing our brands may become difficult and require expending significant resources. If these or similar efforts in the future are not successful, our brands may be adversely impacted. Even if such efforts are commercially successful, they may dilute our image in our brands’ respective core markets, including apparel, footwear, sports equipment, protective gear and accessories. In addition, our brands may be adversely affected if our public image or reputation is tarnished by negative publicity. Our brands currently have significant autonomy within the structure of the Amer group with respect to the implementation of their strategic goals. Decision makers at our respective brands could take actions that harm our overall reputation or lead to the loss of goodwill by wholesale partners and consumers. Likewise, the reputation of our brands could be damaged by adverse publicity regarding Amer Sports and if decision-makers of Amer Sports take actions that would be viewed negatively by our wholesale partners, consumers or the general public. Furthermore, our exposure to social media platforms may accelerate and aggravate such negative publicity. In addition, ineffective marketing, product diversion to unauthorized distribution channels, product defects, counterfeit products and failure or legal limitations to obtain, maintain, protect and enforce the intellectual property rights in our brands may threaten the strength of our brands, and those and other factors could diminish consumer confidence in us. Maintaining and enhancing our brands will depend largely on our ability to remain a leader in premium performance in the sports and outdoor industry and to continue to offer a range of high-quality products to our consumers, which we may not execute successfully. Any of these factors could harm our business, reputation, prospects, financial condition or operating results.
Changes in market trends and consumer preferences could adversely affect our financial results.
We are a consumer products company and the relative popularity of various sports and outdoor activities and changing design trends affect the demand for our products. Consumer preferences and, as a result, the popularity of particular designs and categories of apparel, footwear and accessories, generally change over time. Similarly, consumer preferences may also change as it relates to sporting equipment and protective gear, as interest in certain sports and outdoor activities may wane over time. Our success depends in part on our ability to promptly anticipate, understand and respond to changing apparel, footwear,
 
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sports equipment, protective gear and accessories trends, popularity in sports or outdoor activities and consumer preferences in a timely manner. Our efforts to maintain and improve our competitive position by monitoring and timely and appropriately responding to changes in consumer preferences, increasing brand awareness and enhancing the style, comfort, performance and/or perceived value of our products may not be successful. If we are unable to maintain or enhance the images of our brands or if we are unable to timely and appropriately respond to new competition, changing consumer preferences and evolving trends and interests (including due to product lead times which make it difficult to rapidly shift sourcing and manufacturing to align with such changes), consumers may consider our brands’ images to be outdated and associate our brands with styles and activities that are no longer popular, which would decrease demand for our products. In addition, we market our products globally through a diverse spectrum of advertising and promotional programs and campaigns, including social media, mobile applications and online advertising. If we do not successfully market our products or if advertising and promotional costs increase, these factors could have an adverse effect on our business. Such failures could result in loss of market share, reduced sales, excess inventory, trade name impairments, lower gross margin and other adverse impacts on our results of operations.
Our products, services and experiences face intense competition.
The sports and outdoor industry is highly competitive and fragmented both in the United States and worldwide. We compete internationally with a significant number of athletic and leisure apparel and footwear companies and sports equipment companies, including both private labels and large companies that have diversified lines of athletic and leisure apparel, footwear, sports equipment, protective gear and accessories, some of which have more resources or broader products lines. We also compete with other companies for the production capacity of third-party manufacturers that produce certain of our products. In addition, we and our third-party manufacturers compete with other companies and industries for raw materials used in our products. Our DTC brand platforms, both through our e-commerce operations and owned retail stores, also compete with multi-brand retailers, which sell our products through their digital platforms and physical stores. Furthermore, we believe that our wholesale partners face intense competition from other department stores, sporting goods stores, retail specialty stores, and online retailers, among others, which could negatively impact the financial stability of their businesses and their ability to conduct business with us.
Brand image and recognition, product offerings and quality, marketing expenditures (including expenditures for advertising and endorsements), innovation and design, sustainability, distribution, pricing, costs of production, customer service, e-commerce platforms, digital services and experiences and social media presence are areas of intense competition. These, in addition to ongoing rapid changes in technology, a reduction in barriers to the creation of new apparel and footwear companies and consumer preferences in the markets for apparel, footwear, sports equipment, protective gear and accessories constitute significant risk factors in our operations. In addition, the competitive nature of retail, including shifts in the ways in which consumers shop, and the continued proliferation of e-commerce, constitutes a risk factor implicating our DTC and wholesale operations. Some of our competitors have significant competitive advantages, including longer operating histories, larger and broader consumer bases, more established relationships with a broader set of suppliers, greater brand recognition, and greater financial, research and development, store development, marketing, distribution, and other resources than we do. If we do not adequately and timely anticipate and respond to our competition, our costs may increase, demand for our products may decline, possibly significantly, or we may need to reduce wholesale or suggested retail prices for our products.
Failure to continue to obtain or retain high-quality brand partners and ambassadors of our products could harm our business.
We establish relationships with professional and collegiate sports organizations, athletes, influencers and other brand ambassadors to develop, evaluate and promote our products, as well as establish product authenticity with consumers. However, as competition in the sports and outdoor industry has increased, the costs associated with establishing and retaining such sponsorships, partnerships and other relationships also have increased. If we are unable to maintain our current associations with such organizations or our brand ambassadors or to do so at a reasonable cost, we could lose the high visibility or on-field authenticity associated with our products, and we may be required to modify and substantially increase our marketing investments. Additionally, certain of our agreements with such organizations are subject to renewal in the near
 
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term, and there is no assurance we will renew such agreements on the same terms or at all. As a result, our brands, revenue, expenses and profitability could be harmed.
Furthermore, if certain brand ambassadors were to stop using our products contrary to their endorsement agreements, our business could be adversely affected. In addition, actions taken or statements made by athletes, teams or leagues, or other brand ambassadors, associated with our products or brand that harm the reputations of those brand ambassadors, could also seriously harm our brand image with consumers and, as a result, could have an adverse effect on our sales and financial condition. In addition, poor or non-performance by our brand ambassadors, a failure to continue to correctly identify promising athletes, public figures or sports organizations to use and endorse our products and brand, or a failure to enter into cost-effective endorsement arrangements with prominent athletes, public figures and sports organizations could adversely affect our brand, sales and profitability.
Harm to our reputation could adversely impact our ability to attract and retain consumers and wholesale partners, employees, brand ambassadors, partners, and other stakeholders.
Negative publicity or perceptions involving us and our brands, products, vendors, brand ambassadors, principal shareholders or marketing and other partners, or failure to detect, prevent, mitigate or address issues giving rise to reputational risk could adversely impact our reputation, business, results of operations, financial condition and the price of our ordinary shares, and may adversely impact our ability to attract and retain employees, brand ambassadors, consumers and wholesale partners, sponsorships, partnerships, relationships with professional and collegiate sports leagues and other stakeholders. Issues that might pose a reputational risk include:

product liability, product recalls, and product boycotts including due to failure to obtain any applicable professional organization or safety or performance certifications;

product sponsorship and brand ambassador relationships, including those with athletes and celebrity brand ambassadors, professional and collegiate sports leagues, influencers or group affiliations;

public stances on controversial social or political issues;

our handling of issues relating to sustainability and ESG matters, including the transparency of setting or our progress toward sustainability and ESG expectations, goals and initiatives;

perceptions of our or our affiliates’ supply chain and sourcing practices, including due to geopolitical tensions;

perceptions of our principal shareholders;

our social media activity;

failure of our cybersecurity measures to protect against data breaches;

failure to comply with applicable laws, sanctions, trade or other regulations;

issues with management or other key personnel, as well as labor issues; and

any of the other risks enumerated in these risk factors.
Furthermore, the prevalence of social media and a constant, on-demand news cycle may accelerate and in the short-term increase the potential scope of any negative publicity we or others might receive and could increase the negative impact of these issues on our reputation, business, results of operations, and financial condition.
We rely on technical innovation and high-quality products to compete in the market for our products.
Technical innovation and quality management in the design and manufacturing processes of apparel, footwear, sports equipment, protective gear and accessories are essential to the commercial success of our products and development of new products. We must continue to invest in research and development in connection with the innovation and design of our products in order to attract and retain consumers. If we are unable to anticipate consumer preferences or industry changes, or if we are unable to introduce new products or modify our existing products on a timely basis, we may lose wholesale partners and consumers
 
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or become subject to greater pricing pressures. Our operating results would also suffer if our innovations and designs do not respond to the needs and demands of our wholesale partners and consumers, are not appropriately timed with market opportunities or are not effectively brought to market. Any failure on our part to innovate and design new products or modify existing products may harm our brand image and consumer demand for our products could decline and could result in a decrease in our revenue and an increase in our inventory levels.
In addition, we believe our wholesale partners and consumers view many of our products as premium quality. If we experience problems with the quality of our products, we may incur substantial expense to remedy the problems along with a loss of consumer confidence and loyalty, and consumers may also be unwilling to pay premium prices for such products. Additionally, if the quality of certain of our brands and/or certain of our brands’ products does not meet expectations, that could negatively impact consumer views about our other brands and/or such brands’ products as well. Any of these factors could negatively impact our business, results of operations, financial condition and the price of our ordinary shares.
Economic uncertainty in our key markets may affect consumer purchases of discretionary items, which may adversely affect demand for our products.
Our products may be considered discretionary items for consumers. Factors affecting the level of consumer spending for such discretionary items include general economic conditions and other factors such as consumer confidence in future economic conditions, fears of recession and trade wars, political turmoil, the availability and cost of consumer credit, higher consumer debt levels, levels of unemployment, inflationary pressures, lower corporate earnings and fluctuating interest, foreign currency exchange rates and tax rates.
The uncertain state of the global economy continues to impact businesses around the world, most acutely in emerging markets and developing economies. As global economic conditions continue to be volatile or economic uncertainty remains, including in light of the conflict in Ukraine, and with increasing inflation, trends in consumer discretionary spending also remain unpredictable and subject to reductions as a result of significant increases in employment, financial market instability, and uncertainties about the future. Unfavorable economic conditions may lead consumers to delay or reduce purchases of our products. Consumer demand for our products may decline as a result of store closures, an economic downturn, or economic uncertainty in our key markets, particularly in North America, Europe, and Asia, which in turn may result in reduced orders from wholesale partners and consumers for our products, order cancellations, lower revenue, higher discounts, increased inventories and lower gross margins. Our sensitivity to economic cycles and any related fluctuation in consumer demand may have a material adverse effect on our business, results of operations, and financial condition.
Inflationary pressures have and may continue to hamper our business.
Inflationary pressures, shortages in the labor market, and increased competition within and outside the sports and outdoor industry for talented employees may increase our labor costs, which could negatively impact our profitability. Labor shortages may also negatively impact us from servicing any demand that exists for our products or operating our manufacturing facilities efficiently. Further, inflationary pressures could increase other key costs, such as the cost of raw materials, operational expenses and costs of labor, which would make it harder to operate our business and maintain current profit margins.
Our financial success may be impacted by the strength of our relationships with our wholesale partners.
Our financial success is partially dependent on our wholesale partners continuing to carry our products and the success of these partners. A substantial amount of our sales are made through our wholesale partners, either directly or indirectly, who may decide to emphasize products from our competitors, to redeploy their retail floor space to other product categories, or to take other actions that reduce or discontinue their purchases of our products. Although we believe that our business relationships with our wholesale partners are positive, we cannot assure you that these business relationships will continue to generate satisfactory sales in the future. If any of our major wholesale partners fails to remain committed to our products or brand, then these partners may reduce or discontinue purchases from us, which could adversely impact our business.
 
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If we face supply chain difficulties or other delays in our manufacturing and distribution channels and if we cannot fill our wholesale partners’ orders in a timely manner, the sales of our products and our relationships with those partners may suffer, and this could have a material adverse effect on our ability to grow our product lines and our results of operations. Many of our wholesale partners also compete with each other, and if they perceive that we are offering their competitors better pricing and support, they may reduce or discontinue purchases of our products. In addition, we compete directly with our wholesale partners by selling our products to consumers through our DTC channel. If our wholesale partners believe that our DTC channel diverts sales from their stores, this may weaken our relationships with our partners and cause them to reduce or discontinue purchases of our products. In addition, if we fail to accurately identify the needs of our partners, our partners fail to accept new products or product line expansions or attribute premium value to our new or existing products or product line expansions relative to competing products or if we fail to obtain shelf space from our wholesale partners (whether by our competitors introducing new products or otherwise), our sales, business, results of operations and financial condition may be adversely impacted.
We may be adversely affected by the financial health of our wholesale partners and consumers.
We generally do not have long-term contracts with our wholesale partners, and sales to our wholesale partners are generally on a per-purchase basis. To assist in the scheduling of production and the shipping of our products, we offer the majority of our wholesale partners the opportunity to place orders several months ahead of delivery under our pre-order program. Sales to our wholesale partners are generally on an order-by-order basis and 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. We also extend credit to our wholesale partners based on an assessment of such retailer’s financial condition, generally without requiring collateral. While we do not have significant concentration among our wholesale partners as of September 30, 2023, our largest single customer accounted for 2.9% of total accounts receivable and our 20 largest wholesale partners accounted for 27.4% of total accounts receivable. Some of our retailers have in the past, and may in the future, experience financial difficulties, including bankruptcies, which have had and could have an adverse effect on our sales, our ability to collect on receivables and our financial condition.
In addition, we and our wholesale partners could face risks from a decline in the overall level of consumer retail spending, and a weak retail environment could impact consumer traffic in the stores of our wholesale partners and also adversely affect our revenue. Moreover, traditional brick-and-mortar retail channels have experienced low growth or declines in recent years and recent trends have increased permanent and temporary store closures. Recent years have also seen shifts in consumer preferences and purchasing practices, which may increase the difficulty for us to retain and grow our consumer base through our wholesale partners. If and 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. 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 that experience financial difficulties may fail to make such investments or delay them, resulting in lower sales and orders for our products. These and other risks could adversely affect our business, results of operations, financial condition and the price of our ordinary shares.
Our growth strategy involves the continued expansion of our DTC channel, including our owned retail stores and e-commerce platform, which may present risks and challenges.
Our business involves distributing products on a wholesale basis for resale through our wholesale partners and also includes a multi-channel experience, including owned retail stores, which we operate in 24 countries, and e-commerce websites that are owned and operated by us. Growing our e-commerce platforms and the number of physical stores we operate is essential to our growth strategy, as is innovating and expanding our product offerings available through these channels. Sales in our DTC channel continue to grow, which may expose us to other risks, including those relating to continuing to grow brand awareness. This strategy has, and will continue to require significant investment in cross-functional operations and management focus, along with investment in supporting technologies and retail store spaces. If we are unable to provide a
 
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convenient and consistent experience for our consumers, our ability to compete and our results of operations could be adversely affected. In addition, if our e-commerce platform design does not appeal to our consumers, function reliably and conveniently, or maintain the privacy and security of consumer data, or if we are unable to consistently meet our brand promise to our consumers, we may experience a loss of consumer confidence or sales, including as a result of losing repeat consumers, or be exposed to fraudulent purchases, cyberattacks or other issues which could adversely affect our reputation and results of operations. Our growth in the DTC channel may also negatively impact our relationships with existing wholesale partners.
As of September 30, 2023, we operate our e-commerce digital platforms in approximately 20 countries, where we generally also operate in through our wholesale channel, and we are planning to expand our e-commerce platform to other geographies. Existing and additional countries may impose different and evolving laws governing the operation and marketing of e-commerce websites, as well as the collection, storage and use of information on consumers interacting with those websites. We may incur additional costs and operational challenges in complying with these laws, and differences in these laws may cause us to operate our businesses differently in different territories. If so, we may incur additional costs and may not realize benefits from our investment in our international expansion. We are also exposed to the risk of fraudulent domains or websites pretending to sell our products, when they are in reality phishing websites or imitator domains, and we might be unable to stop those websites from operating in due time, or permanently due to regulatory or factual constraints.
Our revenues depend in part on the success of our retail stores, including related to volume of traffic to its stores and the availability of suitable lease space.
A portion of our revenues are DTC sales through stores operated by our brands. In order to generate consumer traffic, we locate many of our stores in prominent locations generally within successful retail shopping centers or in fashionable shopping districts. Our stores benefit from the ability of the retail center and other attractions in an area to generate consumer traffic in the vicinity of our stores. Part of our future growth is significantly dependent on our ability to operate stores in desirable locations with capital investment and lease costs providing the opportunity to earn a reasonable return. We cannot control the development of new shopping centers or districts; the availability or cost of appropriate locations within existing or new shopping centers or districts; competition with other retailers for prominent locations; or the success of individual shopping centers or districts. As we seek to expand the number of our brands’ retail stores, we may spend significant time and resources exploring locations that are not suitable or that we are unable to secure, whether due to financing, political constraints, or other factors. We may be unable to successfully open new store locations in existing or new geographies in a timely manner, if at all, which could harm our results of operations. Existing store locations may also become unsuitable due to, and our sales volume, consumer traffic and profitability generally may be harmed by, among other things: economic downturns in a particular area, competition from nearby retailers, changing consumer demographics in a particular market, changing lifestyle choices of consumers in a particular market, and the closing or decline in popularity of other businesses located near our stores. 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, business and results of operations to be less than expected. Further, if we are unable to renew or replace our existing store leases or enter into leases for new stores on favorable terms, or if we violate the terms of our current leases, our growth and profitability could be harmed.
Additionally, as we grow our retail store footprint, there is a risk that we will increase sales in retail stores at the expense of our wholesale business and/or our e-commerce DTC sales. All of these factors may impact our ability to meet our growth targets and could have a material adverse effect on our financial condition or results of operations.
We face risks associated with the acquisition and divesture of businesses.
We have expanded our products and markets in part through strategic acquisitions and may continue to do so in the future, depending on our ability to identify and successfully pursue suitable acquisition candidates. Acquisitions involve numerous risks, including risks inherent in entering new markets in which we may not have prior experience; potential loss of significant customers or key personnel of the acquired business; not obtaining the expected benefits of the acquisition on a timely basis or at all; managing
 
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operations in new geographies; and potential diversion of management’s attention from other aspects of our business operations. Acquisitions may also cause us to incur debt or result in dilutive issuances of our equity securities, write-offs of goodwill and substantial amortization expenses associated with other intangible assets. We may not be able to obtain financing for future acquisitions on favorable terms, making any such acquisitions more expensive. Any such financing may have terms that restrict our operations. We may not be able to successfully integrate the operations of any acquired businesses into our operations and achieve the expected benefits of any acquisitions, and certain acquisitions or divestitures may not have the desired effect of enhancing the status of our portfolio of brands. Our acquisitions and our divestitures have in the past resulted in, and could in the future result in, exposure to contingent or unexpected liabilities, such as litigation, indemnification claims, regulatory claims and earn-out obligations.
We may not consummate a potential acquisition for a variety of reasons, but still incur material costs in connection with an acquisition that we cannot recover. The failure to successfully integrate newly acquired businesses or achieve the expected benefits of strategic acquisitions in the future, or consummate a potential acquisition after incurring material costs, could have an adverse effect on our business, results of operations and financial position.
In addition, we have divested, and may divest in the future, businesses, brands and assets as part of ongoing efforts to refine our portfolio and redefine our strategic priorities. These divestitures may adversely affect our business, results of operations or financial condition if we are unable to offset the dilutive impacts from the loss of revenue associated with the divested businesses, brands or assets or otherwise achieve the anticipated benefits or cost savings from the divestitures. Furthermore, businesses, brands or assets under consideration for, or otherwise subject to, divestiture may be adversely impacted prior to completion of the divestiture, which could adversely affect our business, results of operations or financial condition.
Our plans to innovate, expand our product offerings and successfully implement our growth strategies 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.
Our future success depends, in large part, on our ability to implement our growth strategies, including expanding our brands’ product offerings to capture additional market share, continuing to engage in consumer acquisition and retention efforts that drive long-term consumer and wholesale partner relationships and continuing to grow our business. Our ability to implement these growth strategies depends, among other things, on our ability to:

expand our product offerings;

increase our brand recognition by effectively implementing our multi-channel strategy alongside our network of wholesale partner relationships without compromising our premium consumer experience;

expand the geographic reach of our brands;

increase consumer engagement with our digital platforms;

leverage our investments in our human capital and operational infrastructure to drive traffic and consumer acquisition;

expand and diversify our wholesale channel while continuing to expand our DTC channel, including increasing our number of retail stores;

enter into distribution and other strategic arrangements with potential distributors of our products in order to better influence consumer experience at better cost efficiency and manage risks associated with third-party distributors; and

develop and grow our own manufacturing facilities, third-party sourcing and logistics footprint.
 
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The principal risks to our ability to successfully carry out our plans to expand our product offering include:

if our expanded product offerings fail to maintain and enhance our distinctive brand identities and premium quality, our brand images may be diminished, and our sales may decrease;

our innovations in apparel, footwear, sports equipment, protective gear and accessories may fail to be financially viable or may not be well received by our consumers or the market;

implementation of our plans may divert management’s attention from other aspects of our business and place a strain on our management, operational and financial resources, as well as our information systems;

entrance into joint ventures may face risks related to governance of the venture, strategic misalignment, termination or exit, among others; and

incorporation of novel materials or features into our apparel, footwear, sports equipment, protective gear and accessories may not be accepted by our consumers or may be considered inferior to similar products offered by our competitors.
Moreover, our ability to successfully implement our growth strategies and carry out our plans to expand our product offerings may be affected by economic and competitive conditions, changes in consumer spending patterns and changes in consumer preferences and styles. We may invest in technology, infrastructure, new businesses, product offerings and manufacturing innovation and expansion of existing business, such as our DTC operations, and such significant investments are subject to typical risks and uncertainties inherent in developing a new business or expanding an existing business. These plans could be abandoned, could cost more than anticipated, could impact the quality of our products and could divert resources from other areas of our business, any of which could negatively impact our competitive position, reduce our revenue and profitability or negatively impact the price of our ordinary shares.
Expanding our product offerings may also require that we develop additional in-house manufacturing capability, either by expanding our existing manufacturing facilities or building new facilities. There is a risk that we will be unable to develop and maintain the capacity or other capabilities necessary for us to implement our business plan. Additionally, we may need to hire additional employees as we scale our operations or increase the size of our retail footprint and otherwise pursue our growth strategies. We may face difficulties and added expenses increasing the number of employees in the current market, due to factors such as wage inflation and a limited labor market, among others. If we are unable to scale our manufacturing capability and increase the number of employees to meet our expected growth, we may be unable to provide for appropriate supply of products in a timely manner and on a cost-effective basis and meet consumer demand for customer service, and as a result, our revenue and results of operations would be affected adversely.
Counterfeit or “knock-off” products may siphon off demand we have created for our brands’ products, and may result in consumer confusion, harm to our brands, a loss of our market share, and/or a decrease in our results of operations.
We face competition from counterfeit or “knock-off” products manufactured and sold by third parties that infringe, misappropriate or otherwise violate our intellectual property rights, as well as from products that are inspired by our brands’ products in terms of design and style, including private label offerings by retailers. In the past, third parties have established websites to target users on social media platforms with “look alike” websites intended to trick users into believing that they were purchasing our brands’ products at a steep discount. Some individuals who actually made purchases from such “look alike” websites believed they had purchased from our actual website and subsequently submitted complaints to us.
These activities of third parties may result in consumer confusion, require us to incur additional administrative costs to manage consumer complaints related to counterfeit goods, divert consumers from us, cause us to miss out on sales opportunities, and result in a loss of our market share. We could also be required to increase our marketing and advertising spend. If consumers are confused by these other products and believe them to be actual products sold by our brands, we could be forced to deal with dissatisfied consumers who mistakenly blame us for poor service or poor-quality goods.
 
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In addressing these or similar issues in the future, we may also be required to incur substantial expense to protect our brands and enforce our intellectual property rights, including through legal action in the United States or in foreign countries, which could negatively impact our results of operations and financial condition.
These and similar “counterfeit” issues could reoccur and could again result in consumer confusion, harm to our brands, a loss of our market share, and/or a decrease in our results of operations.
Certain of our brands’ products carry warranties, which may result in an increase to our expenses in the event of warranty claims.
Many of our brands’ products are generally used in outdoor activities, sometimes in severe conditions. Product recalls or product liability claims resulting from the failure, or alleged failure, of our brands’ products could have a material adverse effect on the reputation of our brands and result in additional expenses. Many of our brands’ products also carry warranties for defects in quality or workmanship. The Company provides product warranties on many products. Many of these product warranties are limited in time to one to two years, but certain of our brands issue longer warranties on specific products. For example, Arc’teryx provides warranties on its packs, accessories and apparel for the “Practical Product Lifespan” which can be an extended period, such that warranty claims for such products may be brought many years after the product was sold. We maintain a warranty reserve for estimated future warranty claims, but the actual costs of servicing future warranty claims may exceed the reserve which could adversely affect our business, results of operations and financial condition.
Our international operations involve inherent risks which could result in harm to our business.
The majority of our products are sourced from a network of suppliers, predominantly in the Asia Pacific region, including Greater China, with the remaining from EMEA, and the Americas, and our products are sold around the world. Accordingly, we are subject to the risks generally associated with global trade and doing business abroad, which include foreign laws and regulations, varying consumer preferences across geographic regions, political unrest, disruptions or delays in cross-border shipments and changes in economic conditions in countries in which our products are manufactured or where we sell products. This includes, for example, the changes to the legal and regulatory framework that apply to the United Kingdom (the “UK”) and its relationship with the European Union (the “EU”), as well as new and proposed changes affecting tax laws and trade policy in the United States and elsewhere, as further described below under “—Risks Related to Our Financial, Accounting and Tax Matters—We could be subject to changes in tax laws, tax regulations and tax treaties, including their interpretation and application, in the Cayman Islands, Finland, Germany, the United States, the PRC, or any other country in which we operate, which could result in additional tax liabilities or increased volatility in our effective tax rate” and “—Risks Related to Litigation and Regulation—Changes to trade policies, tariffs, import/export regulations and anti-competition regulations in the United States, EU, PRC and other jurisdictions, or our failure to comply with such regulations, may have a material adverse effect on our reputation, business, financial condition and results of operations.” We also generate a significant portion of our revenue from sales in the People’s Republic of China (the “PRC” and only in the context of describing PRC laws, regulations and other legal or tax matters in this prospectus, excludes Hong Kong, Macau and Taiwan). See “—We face risks associated with our business in the PRC.” There could be legislative actions limiting outsourcing manufacturing and production activities to foreign jurisdictions, including through tariffs or penalties on goods manufactured outside the United States, which may require us to change the way we conduct business and adversely affect our business, results of operations, financial condition and the price of our ordinary shares.
Our ability to sell products in certain markets, demand for our products in certain markets, our ability to collect accounts receivable, our or our third-party manufacturers’ ability to procure raw materials or manufacture products, distribution and logistics providers’ ability to operate, our ability to operate brick and mortar stores, our workforce, and our cost of doing business (including the cost of freight and logistics) may be impacted by these events should they occur and changing laws and regulations. Our exposure to these risks is heightened in the PRC, where a significant portion of our third-party manufacturing is located. Should certain of these events occur in the PRC, they could cause a substantial disruption to our business and have a material adverse effect on our financial condition, results of operations and cash flows.
 
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In addition, disease outbreaks, such as the COVID-19 pandemic or future pandemics and public health crises, terrorist acts and political or military conflict, such as the conflict in Ukraine, have increased the risks of doing business abroad. Such political and economic instability, and any resulting negative sentiment toward the countries where we operate, sell or have our products manufactured, could interrupt our ability to operate internationally. These factors, among others, could affect our ability to manufacture products or procure materials, our ability to import finished products, our ability to move and store products, our ability to sell products in international markets and our cost of doing business.
We face risks associated with our business in the PRC.
For the year ended December 31, 2022, 14.1% of our revenue was derived from sales in the PRC. In addition to our sales activity, we have key suppliers and manufacturing facilities in the PRC, and approximately 33% of our products sourced from third-party suppliers were manufactured in the PRC in 2022. Additionally, ANTA Sports, our largest shareholder, has significant operations in the PRC and has a principal place of business in the PRC, as well as management and directors that are PRC citizens or domiciled in the PRC. As a result, our business is subject to risks associated with doing business in the PRC, including but not limited to, a general climate of economic, political and social conditions, including with respect to future regulatory, policy and legislative developments, increased costs and uncertainties associated with enforcing contractual obligations in the PRC and increasingly strengthening intellectual property protection system in the PRC, each of which could adversely impact our business, results of operations and financial condition.
The PRC government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of improved corporate governance in business enterprises, and such measures and policies relating to such measures are evolving and subject to change. The PRC government has significant authority to exert influence on the ability of companies with Chinese operations to conduct their business. The PRC government has recently published new policies that significantly affected certain industries and we cannot rule out the possibility that it will in the future release additional regulations or policies that directly or indirectly affect the sports and outdoor industry or require us to seek additional permission to continue our operations, which could result in a material adverse change in our operation and/or the value of our ordinary shares.
The PRC legal system is a civil law system based on written statutes, where prior court decisions have limited precedential value. The PRC legal system is evolving rapidly, and the interpretations and enforcement of many laws, regulations and rules involves uncertainties. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy but may have a negative effect on our suppliers and manufacturing operations. Any changes in policies in the PRC governing the regulation of our products, tariffs, imports and exports, taxation, inflation, environmental regulations, foreign currency exchange rates, the labor market, property or financial regulation may have an adverse effect on our business, results of operations and financial condition.
More broadly, while the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in the PRC, in the policies of the PRC government or in the laws and regulations in the PRC could have an adverse effect on the overall economic growth of the PRC. Such changes could also adversely affect our business and operating results, lead to reduction in demand for our products and adversely affect our competitive position. In addition, changes in the political climate or trade policy of any other countries or regions, such as increased duties or tariffs on imports from the PRC, may adversely affect our business. For more discussion of the risks related to our Chinese operations, see “—Risks Related to Litigation and Regulation—There remain some uncertainties as to whether we will be required to obtain approvals from PRC authorities to list on the U.S. exchanges and offer securities in the future, and if required, we cannot assure you that we will be able to obtain such approval.”
 
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Risks Related to Our Distribution Network and Suppliers
Our business or our results of operations could be harmed if we or our wholesale partners are unable to accurately forecast demand for our products or if we are unsuccessful at managing product manufacturing decisions.
To ensure adequate inventory supply, we and our wholesale partners forecast inventory demand, which is subject to many factors, including seasonal and quarterly variations, changing consumer preferences or product trends, product introductions by competitors, unanticipated changes in general market conditions, declines in overall consumer spending, and weakening of economic conditions or consumer confidence in future economic conditions. Like our competitors, we have an extended design, development, manufacturing and logistics process, which involves the initial design and development of our products, the purchase of raw materials, the production of finished goods, the accumulation and subsequent sale of inventories, and the collection of the resulting accounts receivable. This production cycle requires us to incur significant expenses relating to the design, development, manufacturing, distributing and marketing of our products, including product development costs for new products, in advance of the realization of any revenue from the sale of our products, and results in significant liquidity requirements and working capital fluctuations throughout our fiscal year. Because the production cycle typically involves long lead times, which requires us to make manufacturing decisions several months in advance of an anticipated purchasing decision by the consumer, it is challenging for us to estimate and manage our inventory and working capital requirements, and as such challenges have been, and could in the future be, exacerbated by global supply chain issues. If we fail to accurately forecast demand or our inventory and working capital requirements, we may experience excess inventory levels or a shortage of product to deliver through our DTC channel and to our wholesale partners. In addition, our wholesale partners may fail to accurately forecast the demand for our products and may purchase an insufficient amount of our products or may accumulate excess inventory, each of which could negatively impact our business, brand and results of operations.
If we underestimate the demand for our products, we may not allocate sufficient budgetary resources and may not be able to produce or source products to meet our wholesale partner requirements, and this could result in delays in the shipment of our products and our failure to satisfy demand, as well as damage to our reputation and wholesale partner relationships. If our wholesale partners underestimate the demand for our products, they may not have enough products on hand to satisfy demand in a timely fashion and sales opportunities may be lost. If we or our wholesale partners overestimate the demand for our products, we or our wholesale partners could face inventory levels in excess of demand, which could result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would harm our gross margins and our brand management efforts. The difficulty in forecasting demand also makes it difficult to estimate future revenue, costs and cash flows from period to period, which could result in the misallocation of our resources. In addition, these and other factors, including failures to accurately predict the level of demand for our products and future revenue, costs and cash flows, could cause a decline in revenue and harm our business, operating results, financial condition and the price of our ordinary shares.
The operations of our suppliers and third-party manufacturers are subject to additional risks that are beyond our control, including those that may result in significant disruptions in supply, and that could harm our business, financial condition and results of operations.
We rely on our suppliers and, while we have multiple suppliers available for the majority of our product components, certain of our suppliers are the sole source for specific components of our apparel, footwear, sports equipment, protective gear and accessories. For example, Gore-Tex is used in certain Arc’teryx, Salomon, Peak Performance and Atomic products, with Arc’teryx products representing 90.4% of our total spend on Gore-Tex and Salomon, Peak Performance and Atomic products representing 3.8%, 5.4% and 0.4%, respectively for the year ended December 31, 2022. We have in the past experienced significant disruptions as a result of global supply chain issues and there can be no assurance that there will not be a further disruption in the supply of raw materials or other products from current suppliers or, in the event of a disruption, that we would be able to locate alternative suppliers of materials or products of comparable quality at an acceptable price, in a timely manner or at all. Identifying a suitable supplier is a resource-intensive process that requires us to become satisfied with their technical capabilities, quality control, responsiveness and service, financial stability, regulatory compliance and labor and other ethical practices. Even if we are able
 
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to expand existing or find new manufacturing or component sources, we may encounter delays in production and added costs as a result of the time it takes to train our suppliers and manufacturers in our methods, products, and quality control standards. Delays related to supplier changes could also arise due to an increase in shipping times if new suppliers are located farther away from our markets or from other participants in our supply chain. In addition, freight capacity issues continue to persist worldwide as there is much greater demand for shipping and reduced capacity and equipment.
The majority of our manufacturing and finished goods as well as raw material suppliers are located outside the United States. In addition, we work with select third-party distributors, especially in the initial stages of expansion for highly complicated products and in new markets, and because we ultimately do not control those third parties, we are subject to additional risks as a result of such relationships. Moreover, in 2022 approximately 33% of our apparel, footwear, sports equipment, protective gear and accessories products sourced from third-party suppliers were manufactured in the PRC, with the remainder being produced in other Asian countries, North America and Europe. We experienced disruptions to our footwear business due to COVID-19 lockdowns adversely affecting certain of our suppliers in Asia. Many of our products are manufactured by third-party manufacturers. As a result of our international suppliers and third-party manufacturers, we are subject to risks associated with doing business in multiple jurisdictions, including:

political unrest, terrorism, labor disputes and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured;

wholesale partner or consumer boycotts due to ethical, environmental or political issues in certain countries we do business with, such as for example, human rights and labor concerns in Asia, or product-related environmental concerns;

compliance with existing and new laws and regulations, including those relating to labor conditions and workplace safety, environmental protection, chemical regulation, quality and safety standards, sustainability, ESG, transparency (the EU Corporate Sustainability Reporting Directive and other related EU directives or regulations), imports, duties, taxes and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds;

risks associated with doing business in or with the PRC, including as a result of the trade conflict, or other conflicts, between the United States and the PRC;

reduced protection for intellectual property rights, including patent and trademark protection, in some countries;

disruptions or delays in shipments and supply chains globally; and

changes in local economic conditions in countries where our manufacturers, suppliers, wholesale partners or consumers are located.
In particular, compliance with the sanctions and customs trade orders could affect the sourcing and availability of raw materials used by our suppliers in the manufacturing of certain of our products. Our ability to successfully import such materials may be adversely affected by changes in jurisdictions’ laws. See “—Increasing restrictions or additional requirements on products from certain areas, such as the U.S. Uyghur Forced Labor Prevention Act, may require us to incur additional costs, disrupt our value chain, or otherwise adversely impact our operations and financial condition.” There are also increasing expectations in various jurisdictions that companies proactively monitor the environmental and social performance of their value chain, including compliance with a variety of labor practices and human rights considerations, as well as consideration of a wider range of potential environmental and social matters, including the end-of-life considerations for products. For example, various jurisdictions have adopted, or are considering adopting, regulations that would require organizations to, among other things, conduct due diligence to identify certain environmental and human rights risks in their supply chains and take steps to mitigate any such risks identified. We have been and may continue to be subject to costs associated with such regulations, as well as any future regulations on the provenance of products or their component parts or materials, including for the diligence pertaining to these matters and the cost of remediation and other changes to products, processes, or sources of supply as a consequence of such verification activities. The impact of such regulations may result in a limited pool of acceptable suppliers, and we cannot be assured that we will be able to
 
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obtain products in sufficient quantities or at competitive prices. Additionally, because our supply chain is complex, we may face regulatory challenges in complying with applicable sanctions and trade regulations and reputational challenges with our consumers and other stakeholders if we are unable to sufficiently verify the origins for the materials used in the products we sell. Even if we comply with applicable regulations, we may be subject to additional expectations and scrutiny from investors, business partners, wholesale partners, consumers or other stakeholders on our environmental and human rights practices. These expectations are evolving quickly, and their application can involve substantial subjective determinations based on the context of specific circumstances. As such, certain of our actions or decisions, either currently or in the future, may be perceived to not align with best practices or stakeholder expectations, which could damage our reputation or otherwise adversely impact our business.
We also face risks from potential employment shortages for our supply operations as potential employees in certain geographies pursue opportunities outside of our and our suppliers’ industries. Any potential employment shortages may increase costs for our supplier and manufacturing partners and may limit our ability to scale our warehouse and factory operations efficiently. Increased costs in production may limit our profitability and may adversely impact our business, results of operations and financial condition.
These and other factors beyond our control could interrupt our suppliers’ production in offshore facilities, influence the ability of our suppliers to export our products cost-effectively or at all and inhibit our suppliers’ ability to procure certain materials, along with delays, interruptions or increased costs in supply or manufacturing of our goods, could harm our business, financial condition, results of operations and the price of our ordinary shares.
Increasing restrictions or additional requirements on products from certain areas, such as the U.S. Uyghur Forced Labor Prevention Act, may require us to incur additional costs, disrupt our value chain, or otherwise adversely impact our operations and financial condition.
Various jurisdictions where we import or sell our products have imposed restrictions on, or additional requirements for, products based on their provenance or the origins of certain of their component parts. For example, in December 2021, the U.S. Congress passed the Uyghur Forced Labor Prevention Act (the “UFLPA”), which act imposes a presumptive ban on the import of goods to the United States that are made, wholly or in part, in the Xinjiang Uyghur Autonomous Region (the “XUAR”) or by certain other designated persons and entities. The XUAR is the source of large amounts of cotton and textiles for the global apparel and footwear supply chain. Although our policy is to prohibit the use of forced labor in our supply chain, we have previously been and may in the future be subject to allegations that our products contain components or raw materials from the XUAR and we cannot assure you that our affiliates may not also be subject to similar allegations. Furthermore, the U.S. Customs and Border Protection (the “CBP”) issued a region-wide withhold release order (“WRO”) in January 2021, imposing import restrictions on cotton products produced in the XUAR. As a result of the UFLPA and WRO, materials we import into the United States have in the past been, and could in the future be, held by the CBP based on a suspicion that they originated from the XUAR or that they may have been produced by suppliers accused of participating in forced labor, pending our providing clear and convincing evidence to the contrary. While the UFLPA has not had a material impact on our results of operations, overcoming the presumptive ban in the UFLPA can be a time- and information-intensive process, which may require additional costs and can ultimately be unsuccessful. Even if such costs are incurred, we may not always be able to obtain sufficient information. Such a process could result in a delay or complete inability to import such materials (including potentially non-cotton materials), which could result in inventory shortages or greater supply chain compliance costs. We could also be subject to penalties or fines if our imports are found to have been in violation of the UFLPA or other customs-related laws and regulations. Even if we are not subject to any fines or penalties, any perceived link between our or our principal shareholder’s products and the XUAR, designated entities, or labor practices not in keeping with industry expectations may result in increased costs, affect our business and damage our reputation. Moreover, compliance with the UFLPA or other similar current or proposed requirements, including the European Union Forced Labor Ban Proposal, may have other effects on the global supply chain, the price and scarcity of traceable cotton or other materials of focus, and could lead to increases in our cost of goods sold, which may adversely impact our profitability.
 
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The cost of raw materials could increase our cost of goods sold and cause our results of operations and financial condition to suffer.
The raw materials used in our supply chain include synthetic fabrics and natural products, including blend fabrics, nylon, polyester, down and cotton, as well as plastics, rubber, carbon and metals. Significant price fluctuations, including as a result of inflation, or shortages or the cost of these raw materials may increase our cost of goods sold and cause our results of operations and financial condition to suffer.
Additionally, increasing costs of labor, freight and energy could increase our and our suppliers’ cost of goods. If our suppliers are affected by increases in their costs of labor, freight and energy (for example, because of rising global energy prices, increased global worker shortages impacting shipping and ports, truck driver shortages, increased congestion or other disruptions affecting the global distribution chain), they may attempt to pass these cost increases on to us. If we pay such increases, we may not be able to offset them through increases in our pricing, which could adversely affect our results of operation and financial condition.
Our business is subject to risks due to our reliance on third-party manufacturers.
We rely upon third-party manufacturers, which we do not own or operate, for the sourcing of certain of our products, including apparel, footwear, sports equipment, protective gear and accessories including helmets, goggles, poles, tennis rackets, baseball bats, boots and balls, among others. Our ability to meet our wholesale partners’ and our consumers’ needs depends on our ability to maintain a steady supply of products from our third-party manufacturers. While our agreements with our suppliers are generally fixed price arrangements on a purchase order basis that renew annually, 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, or be unable to perform, we may not be able to obtain replacement products in a timely manner, which could have an adverse effect on our business operations, sales, financial condition or results of operations. Additionally, if any of our third-party manufacturers fail to make timely shipments, do not meet our quality standards or otherwise fail to deliver us product in accordance with our plans, it could result in lost sales, added costs and distribution delays that could harm our business and wholesale partner and consumer relationships.
Certain of our third-party manufacturers are highly specialized and only produce a specific type of product. Such third-party manufacturers may go out of business if consumer preferences or market conditions change such that there is no longer sufficient demand for the types of products they produce. If, in the future, the relevant products are again in demand and the specialized third-party manufacturers no longer exist, we may not be able to locate replacement facilities to manufacture certain products in a timely manner or at all, which could have an adverse effect on our sales, financial condition or results of operations.
If we encounter problems with our distribution system, our ability to deliver our brands’ products to the market could be adversely affected.
We rely on leased and owned Amer Sports-operated distribution facilities, as well as an ANTA Sports distribution facility in the PRC and certain third-party facilities, to warehouse and ship product to our wholesale partners and consumers. Our distribution system includes computer-controlled and automated equipment, which may be subject to a number of risks related to security or computer viruses, the proper operation of software and hardware, power interruptions or other system failures. Because substantially all of our brands’ products are distributed from a relatively small number of locations, our operations could also be interrupted by earthquakes, floods, fires or other natural disasters or other events outside our control affecting our warehouses or distribution centers, including political or labor instability. Additionally, since we share distribution warehouses among brands, a disruption at one distribution center may impact deliveries and shipments for numerous brands. We maintain business interruption insurance under our property insurance policies, but it may not adequately protect us from the adverse effects that could be caused by significant disruptions in our distribution facilities. In addition, our distribution capacity is dependent on the timely performance of services by third parties, including the transportation of product to and from its distribution facilities. If we encounter problems with our distribution system, our ability to meet consumer expectations, manage inventory, complete sales and achieve operating efficiencies could be materially adversely affected.
 
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We distribute our products to our wholesale partners and consumers directly from the factory and through distribution centers located throughout the world. Our ability to meet consumer expectations, manage inventory, complete sales and achieve objectives for operating efficiencies and growth, depends on the proper operation of our distribution facilities, the development or expansion of additional distribution capabilities and the timely performance of services by third parties, including those involved in shipping product to and from our distribution facilities. In addition, our property damage, business interruption and other insurance policies may not adequately protect us from adverse effects caused by significant disruptions to our distribution facilities. Any negative impacts to our distribution facilities could result in an adverse effect on our business, results of operations, financial condition and the price of our ordinary shares.
The success of our business depends, in part, on competent employees including key personnel as well as our ability to maintain our workplace culture and values.
Our success depends in part on the continued service of competent employees, including key executive officers and personnel. The loss of the services of key individuals, or any negative perception with respect to these individuals, or our workplace culture or values, could harm our business. Our success also depends on our ability to recruit, retain and engage our personnel sufficiently, both to maintain our current business and to execute our strategic initiatives. Competition for employees in the sports and outdoor industry is intense and we may not be successful in attracting and retaining such personnel. Changes to our current and future office environments or adoption of a new work model that expects employees to work on-site for a specified number of days with some flexibility to work remotely on other days, may not meet the needs or expectations of our employees or may not be perceived as favorable compared to other companies’ policies, which could negatively impact our ability to attract, hire and retain our employees. We also believe that our corporate culture has been a key driver of our success, and we have invested substantial time and resources in building, maintaining and evolving our culture. Any failure to preserve and evolve our culture could negatively affect our future success, including our ability to retain and recruit employees.
Some employees at our own manufacturing facilities and distribution centers are subject to collective bargaining agreements. For example, the employees at our Wilson brand Ohio manufacturing facility as well as the employees at our facilities in Austria, France and Germany, are subject to a collective bargaining agreement. Labor disputes with these employees may have a material adverse effect on our business, potentially resulting in canceled orders by wholesale partners or consumers, inability to fulfill potential e-commerce demand, unanticipated inventory accumulation and reduced revenue and net income. In addition, if we fail to mitigate labor disputes, fail to properly hire and dismiss employees as needed or fail to comply with labor laws, which differ by location and jurisdiction and are rapidly changing, our risk of litigation may increase, which would cause us to incur additional costs.
We have not obtained key person life insurance policies on any members of our senior management team. As a result, we would not be protected against the associated financial loss if we were to lose the services of members of our senior management team.
Climate change, or legal, regulatory or market responses thereto, may have an adverse impact on our business and results of operations.
A significant majority of the scientific community has concluded that increased levels of carbon dioxide and other greenhouse gases in the atmosphere have caused, and are expected to continue to cause, potentially at a growing rate, increases in global temperatures, changes in weather (including precipitation and temperature) patterns and increasingly frequent, prolonged, and/or more intense extreme weather and climate events. For more information, see “—Extreme weather conditions and natural disasters could negatively impact our operating results and financial condition.” Climate change may also exacerbate challenges relating to the availability and quality of water and raw materials, including those used in the production of our products, and may result in changes in regulations or consumer preferences, or changes in the availability and/or cost of capital and insurance, which could in turn affect our business, operating results and financial condition. In addition, governmental authorities in various countries have proposed, and are likely to continue to propose, legislation and regulation to reduce or mitigate the impacts of climate change. Various countries and regions are following different approaches to the regulation of climate
 
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change, which could increase the complexity of, and potential cost related to complying with, such regulations. Failure to monitor, adapt, build resilience and develop solutions against the physical and transitional impacts from climate change, including any differences between what climate impacts we believe may occur and ultimately come to pass (including the timeframes associated with same), may negatively impact our brand and reputation, sales of our products and our results of operations.
Sustainability- or ESG-related matters, climate change, or legal, regulatory or market responses thereto, may have an adverse impact on our business and results of operations.
There has been increased focus by governmental and non-governmental organizations, wholesale partners and consumers, employees and other stakeholders on products that are sustainably made and other sustainability- and ESG-related matters, including climate change, responsible sourcing, animal welfare, deforestation, the use of plastic, energy and water, biodiversity and other natural capital impacts, human rights, ethics, the recyclability or recoverability of packaging, circular economy and pollution prevention considerations, materials transparency and banning of certain chemicals and product subcomponents, and employee and director diversity, any of which may require us to incur increased costs for additional transparency, due diligence, recruiting and reporting. Further, some investor advocacy groups, certain institutional investors, investment funds, other market participants, shareholders, current and prospective employees, and consumers have focused increasingly on sustainability- and ESG-related practices. These parties have placed increased importance on the implications of the environmental and social cost and related risks of their investments. Certain of these parties also use certain ESG ratings in their assessment of organizations, and unfavorable ESG ratings could lead to negative sentiment towards us. If our ESG practices do not meet investor or other industry stakeholder expectations and standards, which continue to evolve, our brand, reputation, share price, access to and cost of capital, and employee, wholesale partner, consumer, and/or business partner retention may be negatively impacted.
In addition, federal, state or local governmental authorities in various countries have proposed, and are likely to continue to propose, legislative and regulatory initiatives regarding the management of sustainability- or ESG-related topics, or disclosures on such matters. Various countries and regions are following different approaches to the regulation of climate change and other ESG matters and disclosure of related information, which could increase the complexity of, and potential cost related to complying with, such regulations. For example, we may be subject to the disclosure requirements of the EU’s Corporate Sustainability Reporting Directive (and its implementing laws and regulations) and other EU directives or EU and EU member state regulations, the International Sustainability Standards Board’s sustainability and climate disclosure standards, various disclosure requirements (such as greenhouse gas metrics, climate risks, use of offsets, and emissions reduction claims) from the State of California as well as the SEC’s climate disclosure proposal, if finalized, among other regulations or requirements; these regulations and requirements may not entirely align and thus require us to duplicate certain or make different efforts or use different reporting methodologies in order to comply with each jurisdictions’ requirements. Separately, various regulators have adopted, or are considering adopting, regulations on environmental marketing claims, including but not limited to the use of “sustainable,” “eco-friendly,” “organic,” “recyclable” or similar language in product marketing. Any of the foregoing may require us to make additional investments in facilities and equipment, may require us to incur additional costs for the collection of data and/or preparation of disclosures and associated internal controls for same, may impact the availability and cost of key raw materials used in the production of our products or the demand for our products, and, in turn, may adversely impact our business, operating results and financial condition.
We also may at times engage in certain voluntary initiatives or commitments (such as voluntary disclosures, certifications, or targets, among others) to improve the ESG profile of our company and/or products. However, such initiatives or commitments may be costly and may not have the desired effect. For example, execution of these strategies and achievement of our goals is subject to risks and uncertainties, many of which are outside of our control. These risks and uncertainties include, but are not limited to, our ability to set relevant, achievable and credible goals, execute our strategies and achieve our goals within the currently projected costs and the expected timeframes; the availability and cost of raw materials and renewable energy; unforeseen production, design, operational and technological difficulties; the outcome of research efforts and future technology developments, including the ability to scale projects and technologies on a commercially competitive basis such as carbon sequestration and/or other related processes; compliance with,
 
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and changes or additions to, global and regional regulations, taxes, charges, mandates or requirements relating to greenhouse gas emissions, carbon costs or climate-related goals, or to other sustainability or ESG matters; adapting products to consumer preferences and consumer acceptance of sustainable supply chain solutions; and the actions of competitors and competitive pressures. As a result, there is no assurance that we will be able to successfully execute our strategies and achieve our sustainability and ESG-related goals, which could damage our reputation and wholesale partner, consumer and other stakeholder relationships and have an adverse effect on our business, results of operations and financial condition. Moreover, actions or statements that we may take based on expectations, assumptions, other methodological considerations, or third-party information that we currently believe to be reasonable may subsequently be determined to be erroneous or be subject to misinterpretation. Additionally, there can be no assurance that our stakeholders will agree with our strategies, and any perception, whether or not valid, that we have failed to achieve, or to act responsibly with respect to, such matters or to effectively respond to new or additional legal or regulatory requirements regarding climate change, sustainability or ESG matters could result in adverse publicity or potential regulatory/investor engagement or litigation and adversely affect our business and reputation. For example, there have been increasing allegations of greenwashing against companies making significant ESG claims due to, among other things, allegations of incomplete disclosures, as well as to variety of perceived deficiencies in performance, including as stakeholder perceptions of sustainability continue to evolve. Additionally, many of our wholesale partners, consumers, business parties, and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us.
Extreme weather conditions and natural disasters could negatively impact our operating results and financial condition.
Given the broad and global scope of our operations, we are particularly vulnerable to the physical risks of climate change, such as shifts in weather patterns. Extreme weather conditions in the areas in which our retail stores, suppliers, manufacturers, factories, wholesale partners, consumers, distribution centers, offices, headquarters and vendors are located could adversely affect our operating results and financial condition. Moreover, natural disasters such as earthquakes, hurricanes, wildfires and tsunamis, whether occurring in the United States or abroad, and their related consequences and effects, including energy shortages and public health issues, have in the past temporarily disrupted, and could in the future disrupt, our operations, the operations of our vendors, manufacturers, wholesale partners and other suppliers or have in the past resulted in, and in the future could result in, economic instability that may negatively impact our operating results and financial condition. In particular, if a natural disaster or severe weather event were to occur in an area in which we or our suppliers, manufacturers, employees, wholesale partners, consumers, distribution centers and vendors are located, our continued success would depend, in part, on the safety and availability of the relevant personnel, raw materials, and facilities and proper functioning of our or third parties’ computer, network, telecommunication and other systems and operations. In addition, a natural disaster or severe weather event could negatively impact retail traffic to our stores or stores that carry our products and could have an adverse impact on consumer spending, any of which could in turn result in negative point-of-sale trends for our merchandise. Further, climate change may increase both the frequency and severity of extreme weather conditions and natural disasters, which may affect our business operations, either in a particular region or globally, as well as the activities of our third-party vendors and other suppliers, manufacturers, wholesale partners and consumers. In particular, our brands and products that cater to winter sports may be impacted by climate change, including due to seasonal shifts and rising temperatures. We believe the diversity of locations in which we operate, our operational size, disaster recovery and business continuity planning and our information technology systems and networks (“IT Systems”), including the Internet and third-party services position us well, but may not be sufficient for all or for concurrent eventualities. If we were to experience a local or regional disaster or other business continuity event or concurrent events, we could still experience operational challenges, in particular depending upon how a local or regional event may affect our human capital across our operations or with regard to particular aspects of our operations, such as key executive officers or personnel. Further, if we are unable to find alternative suppliers, replace capacity at key manufacturing or distribution locations or quickly repair damage to our IT Systems or supply systems, we could be late in delivering, or be unable to deliver, products to our wholesale partners and consumers. For more information regarding risks related to our IT Systems, see “— Risks Related to our Intellectual Property and Information Technology—We rely on a large number of complex IT
 
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Systems. Any failure to operate, maintain and upgrade our IT Systems may materially and adversely affect our operations.” These events could result in reputational damage, lost sales, cancellation charges or markdowns, all of which could have an adverse effect on our business, results of operations and financial condition. Moreover, to the extent catastrophic events become more frequent or intense, it may adversely impact the availability or cost of insurance.
Political uncertainty or geopolitical tensions could have a material adverse effect on our business, results of operation and financial condition.
As a multinational company, geopolitical events could have an impact on our business. Changes, potential changes or uncertainties in regulatory and economic conditions or laws and policies governing foreign trade, manufacturing, and development and investment in the territories and countries where we operate or sell our products could adversely affect our business, results of operations, and financial condition.
For example, the military conflict between Russia and Ukraine has significantly amplified existing geopolitical tensions among Russia, Ukraine, Europe, the PRC and the United States. We cannot predict how the conflict in Ukraine will evolve, but any escalation or expansion into other countries, particularly in Europe, would exacerbate geopolitical tensions and could lead to political and/or economic response from the United States, the EU and other countries, which may adversely impact economic conditions. While we suspended all significant commercial activities in Russia by the end of 2022, and our revenue in Russia represented 1.8% and 0.5% of our revenue in 2021 and 2022, respectively, the Russia-Ukraine conflict and the resulting sanctions could adversely affect global energy and financial markets and thus could adversely impact our operations. In addition, any escalation or expansion into neighboring countries where we have significant operations could adversely impact our business, results of operations and financial condition. Additional sanctions or other measures may be imposed by the global community, and counteractive measures may be taken by the Russian government, other entities in Russia or governments or other entities outside of Russia. There have been, and we expect there will continue to be, an increased risk of information security or cybersecurity incidents, including cyberattacks perpetrated by Russia or others at its direction. Although, to date, our IT Systems have not been compromised by these incidents, it is possible that future information security or cybersecurity incidents involving our wholesale partners, consumers, manufacturers, suppliers or other third-party partners could successfully compromise our IT Systems, which could adversely affect our business, results of operations or financial condition.
In addition, actions by the United States and other governments, including the Russian government, may limit or prevent our ability to obtain, maintain, protect and enforce any patent, trademark or other intellectual property rights in Russia. These actions could result in partial or complete loss of such intellectual property rights in Russia. For example, in March 2022, the Russian government adopted a decree allowing Russian companies and individuals to exploit inventions owned by patent holders from the United States and many other countries without consent or compensation. Consequently, we may not be able to prevent third parties from using our patented inventions in Russia or from selling or importing products made using our patented inventions in and into Russia. It is possible that the Russian government will adopt similar measures with regard to other types of intellectual property, including trademarks, or that Russian courts, even absent any additional decrees, will refuse to enforce existing intellectual property rights. Moreover, any prolonged non-use of our trademarks in Russia could result in the cancellation of such trademarks. Any counterfeit activity, grey imports, intellectual property infringement, misappropriation, dilution or other violation or the sale of unauthorized versions of our products that emerge in response to these actions could damage our reputation and our brands and otherwise adversely affect our business, results of operations or financial condition. For more information regarding risks related to our intellectual property, see “— Risks Related to Our Intellectual Property and Information Technology.”
The extent and duration of the military action, the response thereto, including resulting sanctions, and resulting future market disruptions, are impossible to predict, but could be significant. Additionally, any such disruptions, resulting sanctions or other actions (including cyberattacks) may magnify the impact of other risks factors discussed in this prospectus.
 
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Risks Related to Litigation and Regulation
Changes to trade policies, tariffs, import/export regulations and anti-competition regulations in the United States, EU, PRC and other jurisdictions, or our failure to comply with such regulations, may have a material adverse effect on our reputation, business, financial condition and results of operations.
Our businesses must be conducted in compliance with applicable economic and trade sanctions laws and regulations, including those administered and enforced by the U.S. Department of the Treasury’s Office of Foreign Asset Control, the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council, and other relevant sanctions authorities. Any country in which our products are produced or sold may eliminate, adjust or impose new quotas, duties, tariffs, safeguard measures, anti-dumping duties, cargo restrictions to prevent terrorism, restrictions on the transfer of currency, climate change and other environmental legislation, product safety regulations or other charges or restrictions, any of which could have an adverse effect on our business, results of operations, financial condition and the price of our ordinary shares.
In addition, our selling practices are regulated by competition law authorities in the United States, the EU and around the world, violations of the regulations of which could also result in claims for civil penalties or administrative remedies. The global nature operations expose us to the potential for inadvertent violations in cross border transactions and could result in sanctions or fines if such violations were to occur.
Further, changes in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently sell our products or conduct our business could adversely affect our business. Tariffs and other changes in United States and other trade policies have in the past and could in the future trigger retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing retaliatory measures on certain U.S. goods. Further, any emerging protectionist or nationalist trends either in the United States, the PRC, the EU or any of its member states or in other countries could affect the trade environment. Trade tensions have escalated in recent years between the United States and the PRC, with each country imposing significant, additional tariffs on a wide range of goods imported from the other country. It may be time-consuming and expensive for us to alter our business operations in order to adapt to or comply with any such changes. We, similar to many other multinational corporations, do a significant amount of business that would be impacted by changes to the trade policies of the United States and other countries (including governmental action related to tariffs, international trade agreements, or economic sanctions). Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof or the economy of another country in which we conduct operations, the sports and outdoor industry and the global demand for our products, and as a result, could have negative impact on our reputation business, financial condition, results of operations, growth prospectus, and the price of our ordinary shares.
Failure to comply with applicable anti-corruption laws could have a material adverse effect on our business, reputation, financial condition, and results of operations.
We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), as well as the anti-corruption laws of other countries in which we operate. Although we implement policies and procedures designed to promote compliance with these laws, our directors, officers, employees, agents or other partners or representatives, as well as those companies to which we outsource certain of our business operations, may take actions in violation of our policies or such laws. We face significant risks if we or any of our directors, officers, employees, agents or other partners or representatives fail to comply with these laws and governmental authorities in the United States or elsewhere could seek to impose substantial civil and/or criminal fines and penalties which could have a material adverse effect on our business, reputation, operating results and financial condition.
Any actual or alleged violation of the FCPA or other applicable anti-bribery or anti-corruption laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, severe criminal or civil sanctions. Responding to any investigation or action would likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. In addition, the U.S. government may seek to hold us liable for successor liability for FCPA violations committed by companies in which we invest
 
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or that we acquire. Any of these consequences could have a materially adverse effect on our reputation, business, financial condition, results of operations, growth prospects, and the price of our ordinary shares.
We may become involved in legal or regulatory proceedings and audits.
Our business requires compliance with many laws and regulations, including, but not limited to, labor and employment, product safety, labelling, sales and other taxes, customs, and consumer protection laws and ordinances that regulate the sports and outdoor industry generally or govern the production, importation, promotion and sale of merchandise, and the operation of warehouse facilities. For example, various jurisdictions worldwide have laws and regulations that aim to protect consumers, including by prohibiting advertising or marketing practices that may be deemed misleading or deceptive. Failure to comply with any laws or regulations could subject us to lawsuits and other proceedings, and could also lead to damage awards, fines and penalties. From time to time, we may become involved in a number of legal proceedings and audits, including, but not limited to, government and agency investigations, and consumer, employment, tort and other litigation. In addition, we could become subject to potential antitrust claims, which may relate to anti-competitive behavior, pricing pressures on our distribution partners or other allegations, as well as regulatory actions related to anti-competition regulatory authorities in the United States, the EU and in other countries where we operate. The outcome of some of these legal proceedings, audits and other contingencies could require us to take, or refrain from taking, actions that could harm our operations or require us to pay substantial amounts of money, harming our financial condition. Additionally, defending against these lawsuits and proceedings may be necessary, which could result in substantial costs and diversion of management’s attention and resources, harming our financial condition. There can be no assurance that any pending or future legal or regulatory proceedings and audits will not harm our business, financial condition, reputation, results of operations and the price of our ordinary shares.
If any of our brands’ products have manufacturing or design defects or are otherwise unacceptable to us or our wholesale partners and/or consumers, our business could be harmed.
We have occasionally received, and may in the future receive, shipments of products that fail to comply with our technical specifications or that fail to conform to our quality control standards. We have also received, and may in the future receive, products that are otherwise unacceptable to us or our wholesale partners and/or consumers. Under these circumstances, unless we are able to obtain replacement products in a timely manner, we risk the loss of revenue resulting from the inability to sell those products and related increased administrative and shipping costs. Additionally, if the unacceptability of our products is not discovered until after such products are sold, our wholesale partners and/or consumers could lose confidence in our brands’ products or we could face a product recall and our results of operations could suffer and our business, reputation and brands could be harmed.
Defects may also exist in components and products that we source from third parties. Any defects could make our brands’ products unsafe and create a risk of environmental or property damage or personal injury, in particular with respect to our sporting goods and equipment products, and we may become subject to the hazards and uncertainties of product liability claims and related litigation. The occurrence of real or perceived defects in any of our brands’ products, now or in the future, could result in additional negative publicity, regulatory investigations or lawsuits filed against us, particularly if consumers or others who use our brands’ products are injured. Even if injuries are not the result of any defects, if they are perceived to be, we may incur expenses to defend or settle any claims and our brand and reputation may be harmed.
We face safety risks related to the manufacture of our sporting goods and equipment.
The production of sporting good and equipment involves working with metal, glue and other potentially dangerous inputs. In connection with our sporting goods and equipment brands, we face risks related to the manufacturing of products, and in particular we face risks related to fire due to the flammable nature of glue used in the production process. If there were to be a fire at any of our manufacturing plants, we would face risks related to employee safety, destruction of property and delays in our ability to fulfill orders, all of which could adversely affect our results of operations.
 
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We could face risks arising out of compliance with, or liabilities under, environmental, health and safety laws and regulations.
We are subject to various federal, state, local and foreign laws and regulations that, among other matters, (i) regulate certain activities and operations that may have environmental or health and safety effects, such as the use of regulated materials in the manufacture of our products or emissions or disposal of certain materials, substances or wastes, (ii) impose liability for costs of cleaning up, and damages to natural resources from, spills at our current and former facilities, waste disposal at third-party sites, or other releases of hazardous materials or regulated substances, and (iii) regulate workplace safety. Compliance with these laws and regulations could increase our and our third-party manufacturers’ costs and impact the availability of materials required to manufacture our products. Violation of these laws and regulations may subject us to significant fines, penalties or disposal costs, which could negatively impact our results of operations. We could be responsible for the investigation and remediation of environmental conditions at currently or formerly owned, operated or leased sites, including at certain legacy sites in the United States and France where we are engaged in remediation, as well as for associated liabilities, including liabilities for natural resource damages, third-party property damage or personal injury. Such liabilities could result from lawsuits that could be brought by the government or private litigants, relating to our operations, the operations of facilities or the land on which our facilities are located. In addition, such remediation liabilities can arise in connection with facility expansions, such as the expansion of our facility in Romania, where we are investigating and remediating lead contamination in soil. In addition, liability for contamination under certain environmental laws and regulations can be imposed on current or past owners or operators of a site without regard to fault. As such, we may be subject to these liabilities regardless of whether we lease or own the facility, and regardless of whether such environmental conditions were created by us or by a prior owner or tenant, or by a third party or a neighboring facility whose operations may have affected such facility or land. We cannot assure you that environmental conditions relating to our prior, existing or future or expanded sites or those of predecessor companies whose liabilities we may have assumed or acquired will not have a material adverse effect on our business.
Our employees may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.
We are exposed to the risk that our employees may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate the regulations of regulatory authorities, including those laws requiring the reporting of true, complete, and accurate information to such authorities; or laws that require the reporting of financial information or data accurately. We are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices.
We have a code of conduct applicable to all of our employees, but it is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. Our operations also involve third-party manufacturers, suppliers, wholesale partners and others, and if any of these third-party actors fail to comply with applicable laws, they may subject us to litigation or other reputational risks. See “—Risks Related to Our Distribution Network and Suppliers—The operations of our suppliers and third-party manufacturers are subject to additional risks that are beyond our control, including those that may result in significant disruptions in supply, and that could harm our business, financial condition and results of operations.” Additionally, we are subject to the risk that a person could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
 
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There remain some uncertainties as to whether we will be required to obtain approvals from PRC authorities to list on the U.S. exchanges and offer securities in the future, and if required, we cannot assure you that we will be able to obtain such approval.
Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas, including increasing enforcement against illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structures, adopting new measures to conduct cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. For example, on December 28, 2021, the CAC and other PRC authorities promulgated the Cybersecurity Review Measures, which took effect on February 15, 2022. The Cybersecurity Review Measures provide that “a network platform operator” that possesses personal information of more than one million users and seeks a listing in a foreign country must apply for a cybersecurity review. Further, the relevant PRC governmental authorities may initiate a cybersecurity review against any company if they determine certain network products, services, or data processing activities of such company affect or may affect national security. As a network platform operator who possesses personal information of more than one million users for purposes of the Cybersecurity Review Measures, we have applied for and completed a cybersecurity review with respect to our proposed overseas listing pursuant to the Cybersecurity Review Measures.
On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Administrative Measures”) and five supporting guidelines (collectively, the “CSRC Filing Rules”), which came into effect on March 31, 2023. According to the CSRC Filing Rules, an issuer will be required to go through the filing procedures under the CSRC Filing Rules if the following criteria are met at the same time: (a) 50% or more of the issuer’s operating revenue, total profits, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year are accounted for by PRC domestic companies, and (b) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in mainland China. The CSRC Filing Rules also stated that the determination of whether it is applicable to the issuer will be done in accordance with the principle of “substance over form,” and that for issuers incorporated outside the PRC that do not meet criteria (a) and/or (b) in the preceding sentence, if the offering document includes major risk factors relating to mainland China, the lead underwriters and the issuer’s PRC counsel will be required to consider and analyze, in accordance with the principle of “substance over form,” whether the CSRC Filing Rules should apply. Furthermore, the CSRC Filing Rules provide a negative list of types of issuers banned from listing overseas, the issuers’ obligation to comply with national security measures and the personal data protection laws, and certain other matters such as the requirements that an issuer (i) file with the CSRC within three business days after it submits an application for initial public offering to the competent overseas regulator and (ii) file subsequent reports with the CSRC on material events, including change of control and voluntary or forced delisting, after its overseas offering and listing.
As advised by our PRC counsel, we are not required to obtain regulatory approval from the CSRC or go through the filing procedures under the CSRC Filing Rules before our ordinary shares can be listed or offered in the United States because (i) the main parts of our business activities are conducted outside mainland China, and our main places of business are located outside mainland China, and (ii) our senior managers in charge of our business operation and management are predominantly non-PRC citizens or not domiciled in mainland China. Nevertheless, as the CSRC Filing Rules are newly issued, there remains uncertainty as to how it will be interpreted or implemented. Therefore, we cannot assure you that whether we will be subject to such filing requirements for this contemplated offering and listing in the United States and our securities offering in the future, and if we do, we will be able to get clearance from the CSRC in a timely manner, or at all.
Since these rules, statements and regulatory actions are new, it is highly uncertain how soon the legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any. Changing regulatory requirements and any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer the ordinary shares, cause
 
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significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations, and cause the ordinary shares to significantly decline in value or become worthless.
Risks Related to Our Intellectual Property and Information Technology
If we are unable to obtain, maintain, protect and enforce our intellectual property rights for the products we develop, or if the scope of our intellectual property protection is not sufficiently broad, others may be able to develop and commercialize products substantially similar to ours, and our business may be adversely affected.
Our intellectual property is an essential asset of our business. We rely on a combination of intellectual property laws, including patent, trademark, copyright, design and trade secret laws, in addition to confidentiality procedures and contractual provisions, to maintain, protect and enforce our rights in our brands, technologies, proprietary information and processes. Failure to adequately obtain, maintain, protect and enforce our intellectual property rights could result in our competitors offering similar products, potentially resulting in the loss of our competitive advantage and a decrease in our revenue, which would adversely affect our business prospects, financial condition and results of operations.
We rely on our trademarks, trade names and brand names to distinguish our products from those of our competitors, to market our brands, and to build and maintain brand loyalty and recognition, and we have registered or applied to register many of these trademarks. We cannot assure you that our trademark applications will be approved, and effective trademark protection may not be available or may not be sought in every country in which our products are marketed and sold. Similarly, not every variation of a domain name that incorporates one or more of our trademarks or trade names may be available to be registered, or may be registered by us, even if available. Our trademarks and trade names, whether or not registered, may be infringed, diluted, misappropriated, declared generic, determined to be dilutive or otherwise violated. The validity and enforceability of our trademarks may be challenged, and our trademark registrations could be cancelled or may lapse. 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 and could require us to devote significant resources in advertising and marketing new brands. Further, competitors may adopt trademarks or trade names similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be trade name or trademark infringement, misappropriation, dilution or violation claims brought against us by owners of other trademarks, including trademarks that incorporate variations of our registered or unregistered trademarks or trade names. We have in the past entered into, and may in the future enter into, trademark co-existence agreements to settle such claims. Such agreements may restrict the ways in which we are permitted to obtain, maintain, protect, enforce and use the relevant trademarks. Without adequate protection for our trademarks and trade names, we may not be able to build name recognition in our markets of interest and our business may be adversely affected.
Additionally, we rely on patent laws for the protection of our technologies and product designs. We plan to apply for, and expect to continue to apply for, additional patent protection for proprietary aspects of existing and new products and technologies. We cannot guarantee that our patent applications will be successful and result in issued patents. Even if issued, the patents may not be of sufficient scope to provide us with competitive advantages or may be of limited territorial reach. Furthermore, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and third parties may challenge the validity or enforceability of our patents. Such proceedings could include supplemental examination or contested post-grant proceedings such as review, reexamination, interference or derivation proceedings challenging our patent rights. If such challenges are successful, it could dissuade companies from collaborating with us to license, develop or commercialize current or future products, and we may also face increased competition to our business, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Certain of our patents are due to expire in the near future, which may reduce or eliminate our competitive advantage in the jurisdictions in which these patents are expiring. Additionally, obtaining and maintaining patents can be time-consuming and expensive, and accordingly we do not seek patent protection in every jurisdiction in the world, and may not obtain certain of our patents in all of our key markets. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products
 
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similar or identical to ours. It is also possible that third parties, including our competitors, may obtain patents relating to products or technologies that overlap or compete with our technology. If third parties obtain patent protection with respect to such products or technologies, they may assert that our technology infringes their patents and seek to charge us a licensing fee or otherwise preclude the use of certain of our designs or technologies.
We also rely on agreements under which we contract to own, or license the rights to use, intellectual property developed by employees, contractors and other third parties, and to maintain the confidentiality of, and control access to and the use and disclosure of, certain trade secrets and other proprietary information to preserve our position in the market. We employ various methods to protect such intellectual property, such as entering into intellectual property assignment agreements, confidentiality agreements and non-compete agreements, as applicable, with certain employees, contractors, consultants, advisors and collaborators. However, we may fail to enter into such agreements with all relevant parties or such agreements may not be self-executing, and we may be subject to claims that such parties have misappropriated the trade secrets or other intellectual property or proprietary information of their former employers or other third parties. In addition, such agreements may be breached or rendered unenforceable by changes in applicable law. Thus, our efforts may not be effective in controlling access to our proprietary information, and we may not be able to prevent all unauthorized use and disclosure of our trade secrets and other proprietary information, and under trade secret law, we have no protection against third parties who independently develop the same or similar technology. Depending on the parties involved in a breach of any such agreement, the available remedies may not provide adequate compensation for the value of the proprietary information disclosed to a third party. If we are unable to maintain the proprietary nature of our technologies, we could be materially adversely impacted in our ability to establish or maintain a competitive advantage in the market. Furthermore, even if we successfully maintain the confidentiality of our trade secrets and other proprietary information, competitors may independently develop products or technologies that are substantially similar or superior to our own.
Intellectual property rights in certain elements of our products and manufacturing technology are owned or controlled by our suppliers and are generally not unique to us. As a result, our current and future competitors may be able to manufacture and sell products with performance characteristics, designs and styling similar to our products. If our competitors sell products similar to ours at lower prices, our financial results could suffer. In addition, if any third party copies or imitates our products in a manner that affects our wholesale partners’ or consumer perception of the quality of our products, our reputation and sales could suffer whether or not they violate our intellectual property rights.
We also may be forced to bring claims against third parties to determine the ownership of what we regard as our intellectual property or to enforce our intellectual property against its infringement, misappropriation, dilution or other violations by third parties. However, the measures we take to protect our intellectual property from unauthorized use by others may not be effective and there can be no assurance that our intellectual property rights will be sufficient to protect against others offering products that are substantially similar or superior to ours and that compete with our business. If we bring a claim to enforce our intellectual property, the defendant could claim that our asserted intellectual property is invalid or unenforceable and, if that defense is successful, we could lose valuable intellectual property rights. The outcomes of such intellectual property-related proceedings are often unpredictable. In addition, even if we are successful in enforcing our intellectual property against third parties, the damages or other remedies awarded, if any, may not be commercially meaningful. Regardless of whether any such proceedings are resolved in our favor, such proceedings could cause us to incur significant expenses and could distract our personnel from their normal responsibilities. In addition, if the strength of our intellectual property portfolio is threatened, regardless of the outcome, it could dissuade others from collaborating with us to license intellectual property, or develop or commercialize current or future products. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
Effective intellectual property protection is expensive to develop and maintain, both in terms of initial and ongoing prosecution and maintenance requirements and the costs of defending our rights. Furthermore, monitoring the unauthorized use of our intellectual property is difficult and costly. From time to time, we seek to analyze our competitors’ products, and may in the future seek to enforce our rights against potential
 
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infringement, misappropriation, dilution or other violation. However, the steps we take to protect our intellectual property rights may not be adequate to prevent the infringement, misappropriation, dilution or other violation of our intellectual property. We may not be able to detect the unauthorized use of, or take appropriate steps to enforce, our intellectual property rights, or pursue all counterfeiters who may seek to benefit from our brand. Any inability to meaningfully protect our intellectual property rights could result in harm to our ability to compete and reduce demand for our products. Moreover, our failure to develop and properly manage new intellectual property could adversely affect our market positions, business opportunities and the price of our ordinary shares.
The global footprint of our product offerings exposes us to additional intellectual property challenges. Patent, trademark, trade secret and other intellectual property laws vary significantly throughout the world. The legal systems of certain countries, particularly certain developing countries, do not protect intellectual property rights to the same extent as they are protected in the United States. Proceedings to enforce our intellectual property rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our intellectual property rights at risk of being invalidated or interpreted narrowly and our intellectual property applications at risk of not issuing and could provoke third parties to assert claims against us. It may therefore be difficult for us to successfully challenge the infringement, misappropriation, dilution or other violation of our intellectual property by other parties in these other countries, which could diminish the value of our brand and cause our competitive position and growth to suffer.
Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on our business, financial condition and results of operations.
Companies, organizations or individuals, including our competitors, may currently hold, or obtain in the future, patents, trademarks or other intellectual property rights that could prevent or limit our ability to make, use, develop, sell or market certain of our products, which could make it more difficult for us to operate our business. As we face increasing competition, the possibility of claims of intellectual property infringement, misappropriation, dilution or other violation made by third parties against us grows. While we try to avoid infringing the rights of others, we may unknowingly do so. For example, we may not be aware of existing patents or patent applications that could be pertinent to our business. Any claim or litigation alleging that we have infringed, misappropriated or otherwise violated intellectual property rights of third parties, with or without merit, and whether or not settled out of court or determined in our favor, could be time-consuming and costly to defend and resolve, and could divert the time and attention of our management and technical personnel. While some claims may be made by third parties seeking to obtain a competitive advantage, other claims may be brought for the sole purpose of revenue generation, including by non-practicing entities or individuals with no relevant product sales. It may be more difficult to defend against such claims, as we cannot deter such claims by threatening to assert our own intellectual property portfolio in response. Additionally, some third parties have substantially greater human and financial resources than we do and are able to sustain the costs and workload of complex intellectual property litigation to a greater degree and for longer periods of time than we could. The outcome of any litigation is inherently uncertain, and there can be no assurances that favorable final outcomes will be obtained in all cases. In addition, third parties may seek, and we may become subject to, preliminary or provisional rulings in the course of any such litigation, including potential preliminary injunctions requiring us to change our products or even cease the commercialization of our products entirely.
We may decide to settle such lawsuits and disputes on terms that are unfavorable to us. The terms of such a settlement or judgment may require us to cease some or all of our operations or pay substantial amounts to the other party. Similarly, if any litigation to which we are a party is resolved adversely, we may be subject to an unfavorable judgment, including being subject to an injunction and being required to pay substantial monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a party’s intellectual property rights. Even if we have an agreement to indemnify us against such costs, the indemnifying party may be unable or unwilling to uphold its contractual obligations. Further, our liability insurance may not cover potential claims of this type adequately or at all. In addition, we may have to seek a license to continue practices found to be in violation of a third party’s rights. If we are required or choose to enter into royalty or licensing arrangements, such arrangements may not be available on
 
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reasonable terms, or at all, and may significantly increase our operating costs and expenses. Such arrangements may also only be available on a non-exclusive basis, such that third parties, including our competitors, could have access to use the same intellectual property to compete with us. We may also have to redesign our products so they do not infringe, misappropriate or otherwise violate third-party intellectual property rights, which may not be possible or may require substantial monetary expenditures and time, during which our products may not be available for commercialization or use. If we cannot redesign our products in a non-infringing manner or obtain a license for any allegedly infringing aspect of our business, we would be forced to limit our products and may be unable to compete effectively.
In addition, in any intellectual property proceeding against us or that we assert against a third party, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our ordinary shares. Such litigation or proceedings could substantially increase our expenses and reduce the resources available for development activities or any future sales, marketing or distribution activities. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. Any of the foregoing, and any unfavorable resolution of such disputes and litigation, could have an adverse effect on our business, financial condition, results of operations and prospects.
We license certain of our intellectual property rights to others. If we fail to adequately monitor our licensees’ compliance with our license agreements, our intellectual property rights may be subject to cancellation, loss of rights, or diminution in value, and we may be subject to third-party claims of intellectual property infringement, misappropriation, dilution and other violation with respect to products designed and manufactured by our licensees.
We license certain of our intellectual property rights to others, including on an exclusive basis or pursuant to certain franchise arrangements. Such agreements provide our licensees with rights to our intellectual property and contain provisions requiring our licensees to comply with certain standards to be monitored by us. Our failure to adequately monitor our licensees’ compliance with these standards, or to take appropriate corrective action when necessary, may subject our intellectual property to cancellation, loss of rights, or diminution in value. In addition, the licensing of any of our intellectual property could result in a potential misuse of such intellectual property. There can be no assurance that third parties will comply with their contractual requirements or that they will use our licensed intellectual property in an appropriate manner. Any misuse by a third party of intellectual property related to our trademarks or brands could lead to a negative perception of our brands by current and potential licensees, joint venture partners or consumers, and could adversely affect our ability to develop our brands and meet our strategic goals, which, in turn, could decrease our potential revenue.
As a licensor of intellectual property, we may be named as a defendant in lawsuits related to products designed or manufactured by our licensees. In most cases, our licensees are obligated to defend and indemnify us and our affiliates with respect to such litigation, but such indemnifying parties may be unable or unwilling to uphold their contractual obligations. We also may be required to indemnify certain of our licensees or wholesale partners for claims of intellectual property infringement, misappropriation, dilution or other violation brought against them. While we maintain insurance for certain risks, it is not possible to obtain insurance to protect against all possible liabilities, and we have no assurances that such insurance will continue to be available on commercially reasonable terms, or at all, or that our insurer will not deny coverage of a claim. Any litigation has an element of uncertainty and if any such litigation were to be adversely determined, if a licensee were to fail to properly indemnify us, if we must indemnify a licensee or wholesale partner, and/or if we did not have appropriate insurance coverage or if our insurer denied coverage, such litigation could affect our financial position and liquidity. Further, any adverse determination could damage our reputation or otherwise adversely impact the value of or goodwill associated with our relevant brands.
 
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We license intellectual property rights from third parties, including our brand ambassadors and league partners. If we fail to comply with our obligations in any current or future agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose licensed rights that are important to our business.
We are, and may become, party to license agreements, including endorsement agreements, with third parties to obtain the rights to certain intellectual property, technologies and products, or to allow commercialization or promotion of our own products. Such agreements may impose numerous obligations, such as development, payment, royalty, sublicensing, insurance, enforcement and other obligations on us in order to maintain the licenses. In spite of our best efforts, our licensors might conclude that we have materially breached such license agreements and might therefore terminate such license agreements, thereby removing or limiting our ability to use certain brands or develop and commercialize products covered by such license agreements. For example, we license certain intellectual property rights from the National Basketball Association, the National Football League, the National Collegiate Athletics Association, other sports leagues and organizations, universities, athletes and influencers, among others, for use in connection with our products. If our license agreements or endorsement agreements with any one of these organizations, athletes or influencers were to terminate for any reason, we would be required to cease the development, advertisement, promotion and sale of certain of our products bearing such licensed intellectual property or modify the affected products or marketing materials to remove such licensed intellectual property. The foregoing could have a material adverse effect on our sales, profitability or financial condition.
Disputes also may arise between us and our licensors regarding the intellectual property licensed to us under any license agreement, including disputes related to:

the scope of rights granted under the license agreement and other interpretation-related issues;

our compliance with reporting, financial or other obligations under the license agreement;

the amounts of royalties or other payments due under the license agreement;

whether and the extent to which we infringe, misappropriate or otherwise violate intellectual property rights of the licensor that are not subject to the license agreement;

our right to sublicense applicable rights to third parties;

our right to transfer or assign the license; and

the ownership of intellectual property and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners.
If we do not prevail in such disputes, we may lose any or all of our rights under such license agreements, experience significant delays in the development and commercialization of our products and technologies or incur liability for damages, any of which could have a material adverse effect on our business prospects, financial condition and results of operations.
Our business may suffer if our licensors fail to abide by the terms of our license agreements, if our licensors fail to enforce licensed intellectual property against infringing third parties, if the intellectual property rights licensed to us are found to be invalid or unenforceable, or if we are generally unable to enter into necessary licenses on acceptable terms or at all. In addition, we may seek to obtain additional licenses from our licensors, and, in connection with obtaining such licenses, we may agree to amend our existing licenses in a manner that may be more favorable to the applicable licensor, including by agreeing to terms that could enable third parties, including our competitors, to receive licenses to a portion of the intellectual property that is subject to our existing licenses and to compete with our products. Our licensors may be free to exploit any rights that are licensed to us on a non-exclusive basis for themselves or to license such intellectual property to third parties, including our competitors, on terms that may be superior to those offered to us, which could place us at a competitive disadvantage. Furthermore, the agreements under which we may license intellectual property from third parties are likely to be complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual
 
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property, or increase what we believe to be our financial or other obligations under the relevant agreements, either of which could have a material adverse effect on our sales, business, financial condition or results of operations.
A security breach or other disruption to our IT Systems could result in the loss, theft, misuse, unauthorized disclosure, or unauthorized access of wholesale partner, consumer, supplier, or sensitive company information or could disrupt our operations, which could damage our relationships with wholesale partners, consumers, suppliers or employees, expose us to litigation or regulatory proceedings, or harm our reputation, any of which could materially adversely affect our business, financial condition or results of operations.
Our business involves the storage and transmission of a significant amount of personal, confidential, and sensitive information, including the personal information of our consumers and employees, information relating to consumer preferences, and our proprietary financial, operational and strategic information. The protection of this information is vitally important to us as the loss, theft, misuse or unauthorized disclosure of, access to or other processing of such information could lead to significant reputational or competitive harm, result in litigation involving us or our business partners, expose us to regulatory proceedings, and cause us to incur substantial liabilities, fines, penalties, or expenses. As a result, we believe our future success and growth depends, in part, on the ability of our key business processes and systems, including our IT and global communication systems, to prevent the theft, loss, misuse or unauthorized disclosure of, access to or other processing of this personal, confidential, and sensitive information, and to respond quickly and effectively if any such security incidents do occur.
The frequency, intensity, and sophistication of cyberattacks, ransomware attacks, and other security incidents, including personal information breaches, has significantly increased in recent years and it is expected that these trends will continue. As with many other businesses, we have experienced, and are continually at risk of being subject to, such attacks and incidents. Due to the increased risk of these types of attacks and incidents, we expend significant resources on IT Systems and security tools, measures, and processes designed to protect our IT Systems, as well as the personal, confidential, or sensitive information stored on or transmitted through those systems, and to ensure an effective response to any cyberattack or security incident. Despite the implementation of preventative and detective security controls, our IT Systems are vulnerable to damage or interruption from a variety of sources, including telecommunications or network failures or interruptions, system malfunction, natural disasters, epidemics, malicious human acts, terrorism and war. Our IT Systems are also vulnerable to physical or electronic break-ins, security breaches from inadvertent or intentional actions by our employees, third-party service providers, contractors, consultants, business partners, and/or other third parties, from cyberattacks by malicious third parties (including the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering, password spraying, credential stuffing, phishing, and other means to affect service reliability and threaten the confidentiality, integrity, and availability of information), or other security incidents. These risks may be exacerbated in the remote work environment. Additionally, due to the recent Russia-Ukraine conflict, there have been publicized threats to increase hacking activity against the critical infrastructure of any nation or organization that is supportive of Ukraine. Because the techniques used to obtain unauthorized access to IT Systems are constantly evolving and becoming more sophisticated (including by threat actors’ increasing use of artificial intelligence), may not be recognized until launched, and can originate from a wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations, hostile foreign governments or agencies, or state-sponsored actors, we may be unable to anticipate all types of security threats or implement adequate preventive measures in response. Our ability to effectively manage and maintain our inventory and to ship products to wholesale partners and consumers on a timely basis depends significantly on the reliability of our IT Systems. We also use these systems to process financial information and results of operations for internal reporting purposes and to comply with regulatory financial reporting, legal and tax requirements. As such, any of the foregoing could have a materially adverse effect on our business, financial condition and results of operation.
Cyberattacks or security incidents could remain undetected for an extended period, which could potentially result in significant harm to our IT Systems, as well as unauthorized access to the information stored on and transmitted by our IT Systems. Even when a security breach is detected, the full extent of the breach may not be determined immediately. The costs to us to mitigate cyberattacks and security incidents could be significant and, while we have implemented security measures to protect our IT Systems, our efforts
 
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to address these problems may not be successful. Further, despite our security efforts and training, our employees may purposefully or inadvertently cause security breaches that could harm our IT Systems or result in the unauthorized disclosure of or access to information. Any measures we do take to prevent security breaches, whether caused by employees or third parties, have the potential to limit our ability to complete sales or ship products to our wholesale partners and consumers, harm relationships with our suppliers, or restrict our ability to meet our consumers’ expectations with respect to their online or retail shopping experience. A cyberattack or other security incident could result in the significant and protracted disruption of our business such that:

critical business systems become inoperable or require a significant amount of time or cost to restore;

key personnel are unable to perform their duties or communicate with employees, consumers or third-party partners;

it results in the loss, theft, misuse, unauthorized disclosure or unauthorized access of wholesale partner, consumer, supplier or company information;

we are prevented from accessing information necessary to conduct our business;

we are required to make unanticipated investments in equipment, technology or security measures;

consumers cannot access our e-commerce websites and consumer orders may not be received or fulfilled;

we become subject to return fraud schemes, reselling schemes and imposter websites schemes; or

we become subject to other unanticipated liabilities, costs or claims.
If any of these events were to occur, it could have a material adverse effect on our financial condition and results of operations and result in harm to our reputation and the price of our ordinary shares. Furthermore, although we currently maintain disaster recovery and business continuity plans to address such disruptions, we may not be able to adequately continue our business or return to operability within a reasonable period of time in the case of such an occurrence. Recovery of our IT Systems may be additionally hampered where we have outsourced the operation of IT Systems and information storage to third parties.
A security breach that results in the unauthorized disclosure of personal information could also expose us to liability under various laws and regulations across jurisdictions and increase the risk of litigation and governmental or regulatory investigation. Due to concerns about information security and integrity, a growing number of legislative and regulatory bodies have adopted breach notification and other requirements in the event that information subject to such laws is accessed by unauthorized persons and additional regulations regarding security of such information are possible. We are subject to an increasing number of reporting obligations, including, in some jurisdictions,an obligation to disclose our processes for assessing, identifying and managing material risks from cybersecurity threats, and we have had to, and may in the future need to, notify governmental authorities, affected individuals and other third parties with respect to cybersecurity incidents. For example, laws in the European Economic Area (the “EEA”), the UK and all 50 U.S. states may require businesses to provide notice to individuals whose personal information has been disclosed as a result of an information security breach. Some laws impose specific data breach reporting obligations if special categories of personal information that we process, such as health data, is disclosed as a result of an information security breach. Complying with such numerous and complex regulations in the event of an information security breach would be expensive and difficult, and failure to comply with these regulations could subject us to regulatory scrutiny, sanctions and additional liability. We may also be contractually required to notify business partners of a security incident. Regardless of our contractual protections, any actual or perceived security incident, or breach of our legal or contractual obligations, could harm our reputation and brand, expose us to potential liability or require us to expend significant resources on information security and in responding to any such actual or perceived incident.
In addition, if a cyberattack or other security incident results in the loss, theft, misuse, or unauthorized disclosure of, access to or other processing of personal, confidential, or sensitive information belonging to our wholesale partners, consumers, suppliers, or employees, it could put us at a competitive disadvantage, result in the deterioration of our wholesale partners’ and consumers’ confidence in our brand, cause our
 
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suppliers to reconsider their relationship with our company or impose more onerous contractual provisions on us and subject us to potential litigation (including class action), liability, fines and penalties. For more information regarding risks related to data privacy and security, see “—Risks Related to Our Intellectual Property and Information Technology—We are subject to various laws, rules, regulations and guidelines relating to data privacy and security governing the use and processing of personal information. Changes in such laws, rules, regulations and guidelines, or any actual or perceived failure by us to comply with such laws, rules, regulations, guidelines or contractual or other obligations relating to data privacy and security, could lead to government enforcement actions (which could include administrative fines, civil or criminal penalties, suspension of processing activities and audits), private litigation or adverse publicity, any of which could have a material adverse effect on our reputation, results of operations, financial condition and cash flows.”
We are also reliant on the security practices of our third-party service providers, which may be outside of our direct control. These third parties, and the services provided by these third parties, which may include cloud-based services, are subject to the same risk of experiencing, and have experienced, outages, other failures and security breaches described above. IT Systems provided by third parties on which we rely also may be difficult to integrate with other tools due to their complexity, resulting in high data inconsistency and incompatibility. If these third parties fail to adhere to adequate security practices, or experience a breach of their systems, the information of our employees, wholesale partners, consumers and business associates may be improperly accessed, used, disclosed or otherwise processed, and we may potentially be held liable, or alleged to be liable, under certain laws or contractual obligations for the acts or omissions of our third-party providers. In addition, our providers may have broad discretion to change and interpret the terms of service and other policies with respect to us, and those actions may be unfavorable to our business operations. Our providers also may take actions beyond our control that could harm our business, including discontinuing or limiting our access to one or more services, increasing pricing terms, terminating or seeking to terminate our contractual relationship altogether, or altering how we are able to process information in a way that is unfavorable or costly to us. Although we expect that we could obtain similar services from other third parties, if our arrangements with our current providers were terminated, we could experience interruptions in our business, as well as delays and additional expenses in arranging for alternative services. Any loss or interruption to our IT Systems or the services provided by third parties could adversely affect our business, financial condition and results of operations.
We do not currently maintain cybersecurity insurance, and therefore the successful assertion of one or more large claims against us in connection with a breach or other cybersecurity-related matter could adversely affect our business and financial condition.
We rely on a large number of complex IT Systems. Any failure to operate, maintain and upgrade our IT Systems may materially and adversely affect our operations.
It is critical to our success that wholesale partners and consumers and potential new consumers within the countries we operate in are able to access our online services at all times. We operate on a combination of shared and individual, central or local IT Systems, including cloud-based infrastructure, and related solutions. Any failure of either central or local IT Systems and functions may disrupt the efficiency and functioning of all our operations. Updates or changes in the software or hardware technology may lead to failures of communication between our platforms and consumers in the course of the order transmission or other processes. We therefore rely on a large number of IT Systems, as well as local network and internet coverage, to manage the entire process, from the placing of and payment for orders online by consumers to the receipt of and confirmation of those orders by our backend systems, which creates significant complexity and negatively affects our ability to scale our business and realize cost savings.
We have made substantial investments into the development of our IT Systems, which form the backbone of our business operations. Due to the complexity of these IT Systems, we cannot rule out that they may cause or contribute to failures in the order transmission process or may prove less efficient than anticipated. In addition, a failure of any individual network carrier, IT System or IT provider would impact our ability to accurately predict the level of demand for our products, receive and transmit orders or to accept payment for orders. The efficient operation and scalability of our own IT Systems and the third-party IT Systems on which we rely is therefore critical to maintain operations and decision-making processes. We
 
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are currently in the process of upgrading our global SAP enterprise resource planning system across all our brands and may face risks related thereto, including an increased risk of cyberattacks or other security breaches. Furthermore, the continued operation and development of our IT Systems depends in part on the continued service of high-quality employees. The loss of the services of such key individuals could harm our ability to maintain our IT Systems, which could materially and adversely affect our operations.
It may become increasingly difficult to maintain and improve the availability of our platform, especially during peak usage times and as consumer traffic increases. If our online marketplace is unavailable when users attempt to access it or does not load as quickly as consumers expect, they may seek other services, and may not return to our online marketplace as often in the future, or at all. This would harm our ability to attract consumers and decrease the frequency with which consumers use our online marketplace. We expect to continue to make significant investments to maintain and improve the availability of our online marketplace and to enable rapid releases of new products. To the extent that we do not effectively address capacity constraints, respond adequately to service disruptions, upgrade our systems as needed or continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, results of operations and the price of our ordinary shares would be harmed. We have previously experienced service disruptions, and in the future, we may experience further service disruptions, outages, or other performance problems due to a variety of factors, including infrastructure changes, human or software errors and capacity constraints due to an overwhelming number of users accessing our platform simultaneously. In some instances, we may not be able to identify the cause or causes of these performance problems within an acceptable period of time. For more information regarding risks related to our IT Systems, see “— Risks Related to Our Intellectual Property and Information Technology—A security breach or other disruption to our IT Systems could result in the loss, theft, misuse, unauthorized disclosure, or unauthorized access of wholesale partner, consumer, supplier, or sensitive company information or could disrupt our operations, which could damage our relationships with wholesale partners, consumers, suppliers or employees, expose us to litigation or regulatory proceedings, or harm our reputation, any of which could materially adversely affect our business, financial condition or results of operations.
We are subject to various laws, rules, regulations and guidelines relating to data privacy and security governing the use and processing of personal information. Changes in such laws, rules, regulations and guidelines, or any actual or perceived failure by us to comply with such laws, rules, regulations, guidelines or contractual or other obligations relating to data privacy and security, could lead to government enforcement actions (which could include administrative fines, civil or criminal penalties, suspension of processing activities and audits), private litigation or adverse publicity, any of which could have a material adverse effect on our reputation, results of operations, financial condition and cash flows.
We are, and may increasingly become, subject to various laws, directives, industry standards, rules and regulations, as well as contractual obligations, related to data privacy and security in the jurisdictions in which we operate. We collect, maintain, use and otherwise process information, including personal information, available to us through online activities and other consumer interactions in our business as well as from individuals in other circumstances, such as employee and business contacts, and certain of our marketing practices rely upon e-mail, cookies, tracking technologies and other e-marketing technologies to communicate with consumers. Our current and future marketing programs may depend on our ability to collect, maintain, use and otherwise process this information, and our ability to do so is subject to evolving U.S. and other international laws and enforcement trends, including in the EEA and UK where European court and regulatory decisions are driving increased attention to cookies and tracking technologies.
The regulatory environment related to data privacy and security is increasingly rigorous, with new and constantly changing requirements applicable to our business, and is likely to remain uncertain for the foreseeable future. These laws, rules and regulations may be interpreted and applied differently over time and from jurisdiction to jurisdiction, and it is possible that they will be interpreted and applied in ways that may have a material adverse effect on our results of operations, financial condition and cash flows. If applicable data privacy and marketing laws become more restrictive at the international, federal or state levels, our compliance and other costs may increase, our ability to effectively engage consumers through personalized marketing may decrease and the effectiveness of our marketing may be limited, our investment in our e-commerce platform may not be fully realized or our systems may require significant changes, our opportunities for growth may be curtailed by our compliance burden, our margins may be adversely affected
 
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and our potential reputational harm or liability for security breaches or compliance violations may increase. Moreover, in light of the complex and evolving nature of privacy laws, including relating to certain categories of data (e.g., biometric and health data) and cookies and tracking technologies (including those in the EEA and the UK), there can be no assurances that we will be successful in our efforts to comply with such laws and associated regulatory expectations. Violations of such laws and associated regulatory expectations could result in regulatory investigations, fines, orders to cease or change our use of such technologies, as well as civil claims including class actions, and reputational damage.
In the United States, various federal and state regulators, including governmental agencies like the Federal Trade Commission, have adopted, or are considering adopting, laws, rules and regulations concerning personal information and information security and have prioritized privacy and information security violations for enforcement actions. Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, all of which may complicate compliance efforts. For example, the California Consumer Privacy Act, as amended by the California Privacy Rights Act (“CPRA,” and collectively, “CCPA”), and several other state laws, which introduce new data protection and privacy rights, require covered companies to provide new disclosures, and in some cases introduce a private right of action for certain data breaches. State laws are changing rapidly and there is discussion in Congress of a new comprehensive federal data protection law to which we would become subject if it is enacted, which may add additional complexity, variation in requirements, restrictions and potential legal risks, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data, and could result in increased compliance costs or changes in business practices and policies.
We are also subject to international laws, rules, regulations and standards in many jurisdictions, which apply broadly to the collection, use, retention, security, disclosure, transfer and other processing of personal information. For example, in the EEA, we are subject to the European Union General Data Protection Regulation (“EU GDPR”), and, following the UK’s exit from the EU, we are subject in the UK to the UK General Data Protection Regulation and the UK Data Protection Act 2018 (“UK GDPR”), which currently imposes the same obligations as the EU GDPR in most material respects. However, the UK GDPR will not automatically incorporate future changes to be made to the EU GDPR (such changes would need to be specifically incorporated by the UK government), which creates a risk of divergent parallel regimes and related uncertainty. The EU GDPR and UK GDPR also impose strict rules on the transfer of personal information to countries outside of the EEA and the UK. As the enforcement landscape develops, and supervisory authorities issue further guidance on international data transfers, we could suffer additional costs, complaints and/or regulatory investigations or fines, we may have to make certain operational changes, we have had to and will have to implement revised transfer mechanisms for intragroup, customer and vendor arrangements within required time frames, the manner in which we provide our products could be affected, and it could adversely affect our business, operations and financial condition.
We are subject to evolving data privacy and security laws, rules and regulations in the PRC, particularly the Cybersecurity Law (“CSL”), the Data Security Law (“DSL”), and the Personal Information Protection Law (“PIPL”), along with their implementing regulations and standards. These laws require that any collection, use, transfer, and storage of personal information follow the three principles of legitimacy, justification, and necessity. Consent from the data subject is required, unless there are other legal bases for processing. Furthermore, operators of critical information infrastructure (“CIIOs”) and personal information handlers must locally store personal information and important data generated within the PRC, if it exceeds a certain threshold defined by relevant authorities. The CSL, DSL, and PIPL also specify rules for transferring personal information and important data outside the PRC. Compliance with security assessments or certifications by designated agencies or entering into approved standard contracts with overseas recipients are among the requirements for such transfers.
In addition to the CSL, the DSL and the PIPL, the relevant government authorities of the PRC promulgated several regulations or released a number of draft regulations for public comments which are designed to provide further implemental guidance in accordance with the laws mentioned above. We cannot predict what impact the new laws and regulations or the increased costs of compliance, if any, will have on our operations in the PRC, in particular the CSL, DSL or PIPL, or the increased costs of compliance, if any, will have on our operations in the PRC due to their recent enactment and the limited guidance
 
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available, particularly on PIPL, which entities are awaiting further guidance on, particularly on the scope of data localization requirement. It is also generally unclear how the laws will be interpreted and enforced in practice by the relevant government authorities as often, the abovementioned laws are drafted broadly and thus leave great discretion to the relevant government authorities to exercise.
We post our privacy policy and practices concerning our collection, use, retention, security, disclosure, transfer and other processing of personal information on our websites and provide similar policies to our employees. Although we endeavor to comply with legal obligations and our public statements and documentation, we may at times fail to do so or be alleged to have failed to do so. The publication of our privacy policies and other statements that provide promises and assurances about privacy and information security can subject us to potential government or legal action if they are found to be deceptive, unfair or misrepresentative of our actual practices.
In addition, we are subject to the Payment Card Industry Data Security Standard (“PCI DSS”). PCI DSS is a specific set of comprehensive security standards imposed by payment card networks on companies that process credit card information, related to enhancing payment account information security, including, but not limited to, requirements for security management, policies, procedures and standards related to network architecture, software design and certification requirements. PCI DSS compliance is required in order to maintain credit card processing services and to provide our payment facilitation services. Additionally, we are also required to comply with payment card network operating rules, which are set and interpreted by the payment card networks. Payment card networks could adopt new operating rules or interpret or reinterpret existing rules in ways that might prohibit us from providing certain services to some consumers, be costly to implement, or difficult to follow. Moreover, compliance with PCI DSS does not guarantee a completely secure environment and, notwithstanding the results of a compliance assessment, there can be no assurance that payment card networks will not request further compliance assessments or set forth additional requirements binding on us to maintain access to credit card processing services. Compliance is an ongoing effort and the requirements evolve as new threats are identified. In the event that we were to lose PCI DSS compliance status (or fail to renew compliance under a future version of the PCI DSS), or if our information security systems are breached or compromised, we may be liable for card-issuing banks’ and our third-party payments processors’ costs, subject to fines and higher transaction fees, and lose our ability to accept credit and debit card payments from our consumers, process electronic funds transfers or facilitate other types of online payments, and our business, financial condition and results of operations could be materially and adversely affected.
All of these evolving compliance and operational requirements impose significant costs on us, such as costs related to organizational changes, implementing additional protection technologies, training associates and engaging consultants, which are likely to increase over time. Such requirements may require us to modify our data processing practices and policies, distract management or divert resources from other initiatives and projects, all of which could have a material adverse effect on our results of operations, financial condition and cash flows. Any failure or perceived failure by us to comply with any applicable federal, state or similar foreign laws, rules, regulations and guidelines relating to data privacy and security could result in damage to our reputation and our relationship with our wholesale partners and consumers, as well as proceedings or litigation by governmental agencies, wholesale partners or consumers, including class action privacy litigation in certain jurisdictions, which could subject us to significant fines, sanctions, awards, penalties, corrective measures or judgments, any of which could result in costly investigations and litigation, civil or criminal penalties (including against officers), operational changes, and negative publicity that could adversely affect our reputation, as well as our results of operations and financial condition.
Risks Related to Financial, Accounting and Tax Matters
We plan to primarily use cash from operations to finance our growth strategy, but may need to raise additional capital that may be required to grow our business, which we may not be able to raise on terms acceptable to us or at all.
While we intend to primarily finance our growth through the cash flows generated by our operations, we may need to seek additional capital, potentially through debt or equity financings, to fund our growth. Our ability to obtain additional capital, if and when required, will depend on our business plans, investor
 
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demand, our operating performance, market conditions, our credit rating and other factors. We cannot assure you that we will be able to raise needed cash on terms acceptable to us or at all. Failure to secure any necessary financing, including any refinancing of existing indebtedness, in a timely manner in our preferred currency, or on favorable terms could have a material adverse effect on our growth strategy. Financings may be on terms that are dilutive or potentially dilutive to our shareholders, and the prices at which new investors would be willing to purchase our securities may be lower than the price per share of our ordinary shares. The holders of any new securities may also have rights, preferences or privileges which are senior to those of existing holders of ordinary shares. If we raise additional capital through the sale of equity or convertible debt securities, you and our existing shareholders may experience substantial dilution, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a holder of our ordinary shares. If new sources of financing are required, but are insufficient or unavailable, we may be required to modify our growth and operating plans based on available funding, if any, which would harm our profitability, business, results of operation, financial condition and the price of our ordinary shares.
Our existing and any future indebtedness could adversely affect our ability to operate our business.
As of September 30, 2023, we had $2.1 billion of outstanding borrowings pursuant to our Senior Credit Facilities (as defined herein). Our facilities are secured by liens on our and certain of our subsidiaries’ assets, which are senior to any lien otherwise secured against our assets.
Our existing indebtedness has had, and any future indebtedness could have, important consequences, including financial covenants and restrictions on:

incurrence of indebtedness;

granting loans, guarantees or security interests;

disposing of assets; and

making or entering into acquisitions, joint ventures or mergers.
In addition, our indebtedness under the Senior Credit Facilities bear interest at a variable rate, making us vulnerable to increases in the market rate of interest. If the market rate of interest increases substantially, we will have to pay additional interest on this indebtedness, which would reduce cash available for our other business needs.
We may not have sufficient funds, and may be unable to generate sufficient cash flows from operations, to pay the amounts due under our existing debt instruments. Failure to make payments or comply with other covenants under our existing or future debt instruments could result in an event of default. If an event of default occurs and the lender accelerates the amounts due, we may need to seek additional financing, which may not be available on acceptable terms, in a timely manner or at all. In such event, we may not be able to make accelerated payments, and the lender could seek to enforce security interests, if any, in the collateral securing such indebtedness, which includes or could include substantially all of our assets. In addition, the covenants under our existing or future debt instruments, any pledge of our assets as collateral and any negative pledge with respect to our intellectual property could limit our ability to obtain additional debt financing. Any of these events could have a material and adverse effect on our business, financial condition, operating results, cash flows, and prospects. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Indebtedness—Senior Facilities Agreement.”
Fluctuations in foreign currency exchange rates could harm our results of operations.
We report our consolidated financial results in U.S. dollars but have significant non-U.S. operations. Our functional currency is the euro. A large portion of our business is conducted in currencies other than U.S. dollars, in particular the euro, the Canadian dollar and Renminbi (“RMB”), and generally the applicable local currency is our functional currency in that locality. Our sales are generally made in local currencies, while the majority of our costs are paid in U.S. dollars or the euro. As a result, we face foreign currency exposure on the translation of net income, assets and liabilities of our operations in numerous jurisdictions into U.S. dollars, including on our outstanding indebtedness denominated in euro. Given the strength of the U.S. dollar against our key foreign currencies, including the euro, the Canadian dollar and RMB,
 
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translation into U.S. dollars for the periods presented results in lower profitability. In the future, if the U.S. dollar continues to be strong against local currencies, we will continue to see lower profitability; however, if the U.S. dollar were to weaken against the euro or RMB, translation into U.S. dollars could result in increased profitability.
Where possible, we manage foreign currency exposure through a variety of methods, including by financing each business unit in its functional currency and concentrating cash flows through centralized entities to limit the number of foreign currencies being utilized for purchases. Additionally, we enter into hedging arrangements to limit our exposure to foreign currency fluctuations for a significant portion of our cash flows, in particular with our most commonly used foreign currencies, including euros, Canadian dollars and RMB. The majority of our hedging arrangements are short-term and are usually rolled forward within the standard business cycle. Nonetheless, it is not practical for us to mitigate all of our foreign currency exposure, nor are we able to accurately predict the possible impact of future foreign currency exchange rate fluctuations on our results of operations, due to our constantly changing exposure to various foreign currencies, difficulty in predicting fluctuations in foreign currency exchange rates relative to the U.S. dollar and the significant number of foreign currencies involved. As we continue to expand our global operations, our exposure to foreign currency risk could become more significant and could have a significant and potentially adverse, effect on our results of operations.
Foreign exchange variations have been significant in the past and current foreign exchange rates may not be indicative of future exchange rates, and may be further impacted by the efforts of central banks to curb inflation, in the United States as well as in the other jurisdictions in which we operate and recognize sales and incur costs. Significant variations in foreign exchange rates may also make hedging contracts ineffective for hedge accounting purposes in future periods.
Our revenue and other operating income fluctuate on a seasonal basis.
We experience limited seasonal fluctuations in our revenue and other operating income, with a slightly higher portion of our revenue and earnings in the fourth fiscal quarter due to our higher share of fall and winter collections. Any decrease in revenue or margins during this period could have a material adverse effect on our results of operations, financial condition and cash flows. Seasonal fluctuations also affect our cash and inventory levels, since we usually manufacture and produce products, including for our wholesale partners in advance of our and their peak selling periods. We manufacture a significant amount of inventory before the winter seasons. As such, working capital requirements typically increase throughout our second and third fiscal quarters as inventory builds to support our peak shipping and selling period which typically occurs from August to December. If we are not successful in selling inventory, they may have to sell the inventory at significantly reduced prices or may not be able to sell the inventory at all, which could have a material adverse effect on our results of operations.
If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.
The preparation of financial statements in conformity with IFRS accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base our estimates on a set of underlying data that may include our historical experience, knowledge of current events and conditions and on other factors that we believe to be reasonable under the circumstances at the time of the estimate, as provided in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing our consolidated financial statements include those related to revenue, inventory, impairment of goodwill and intangible assets with indefinite useful lives and share-based payments. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the price of our ordinary shares.
 
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We could incur goodwill and other intangible asset impairment charges, which could harm our profitability.
We have goodwill and other intangible assets held on our balance sheet. We periodically review the carrying values of goodwill and other intangible assets to determine whether such carrying values exceed their recoverable amount, which is the higher of the asset or cash generating unit’s (“CGU”) fair value less costs of disposal and value in use. Declines in the profitability of individual reporting units due to economic or market conditions or otherwise, as well as adverse changes in financial, competitive and other conditions, including declines in the operating performance of our reportable segments or other adverse changes in the key valuation assumptions contributing to the estimated fair value of our reportable segments, could adversely affect the estimated fair values of the related reportable segments, which could result in an impairment of the recorded balances of goodwill or other intangible assets.
We have identified a material weakness in our internal control over financial reporting. If we are unable to remediate the material weakness or if we identify additional material weaknesses in the future or otherwise fail to develop and maintain effective internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business.
In connection with the preparation of our consolidated financial statements, we identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. Specifically, the material weakness related to (i) lack of consistent and proper application of accounting processes and procedures, defined control processes, including defined review and supervision roles in those control processes, and segregation of duties and (ii) insufficient resources with an appropriate level of technical accounting and SEC reporting expertise. We are in the process of implementing measures designed to improve our internal control over financial reporting and remediate the material weakness, including implementing new information technology and systems for the preparation of financial statements, implementing additional review procedures within our accounting and finance department, and hiring additional staff and engaging external accounting experts to support improving our accounting processes and procedures and supplement our internal resources in our computation processes. We cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the material weakness in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses.
In addition, neither our management nor an independent registered public accounting firm has performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) because no such evaluation has been required. As a public company, we will be required to certify our compliance with Section 404 of the Sarbanes-Oxley Act, which will require us to furnish annually a report by management on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 20-F. Moreover, beginning with our second annual report on Form 20-F, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting on an annual basis. Had we or our independent registered public accounting firm performed an evaluation of our internal control over financial reporting in accordance with the provisions of the Sarbanes-Oxley Act, additional material weaknesses may have been identified. If we identify any additional material weaknesses, or we are unable to successfully remediate our existing material weakness or any future material weaknesses in our internal control over financial reporting, or if we cannot comply with the requirements of the Sarbanes-Oxley Act in a timely manner or attest that our internal control over financial reporting is effective, or if our independent registered public accounting firm cannot express an unqualified opinion as to the effectiveness of our internal control over financial reporting when required, the accuracy and timing of our financial reporting may be adversely affected, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in the accuracy and completeness of our financial reporting and our share price may decline as a result, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
 
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If we are a “passive foreign investment company” ​(a “PFIC”) in the year of the offering or in any future year, a U.S. shareholder may be subject to adverse U.S. federal income tax consequences.
Under the Internal Revenue Code of 1986, as amended (the “Code”), we will be a PFIC for any taxable year in which, after the application of certain look-through rules with respect to our subsidiaries, either (i) 75% or more of our gross income consists of passive income or (ii) 50% or more of the average quarterly value of our assets consists of assets that produce, or are held for the production of, passive income (including cash). Passive income includes, among other things, dividends, interest, certain non-active rents and royalties, and capital gains. Based on the expected market price of our ordinary shares following this offering and the composition of our income and assets, including goodwill, we do not expect to be a PFIC for our 2024 taxable year or in the foreseeable future. However, the determination of whether we are a PFIC is a fact-intensive determination that must be made on an annual basis applying principles and methodologies that are in some circumstances unclear, and whether we will be a PFIC in 2024 or any future taxable year is uncertain in several respects. Moreover, our PFIC status for any taxable year will depend on the composition of our income and assets and the value of our assets from time to time (which may be determined, in part, by reference to the market price of our ordinary shares, which may fluctuate substantially over time). Accordingly, there can be no assurance that we will not be a PFIC for any taxable year, and our U.S. counsel expresses no opinion with respect to our PFIC status, or with respect to our expectations regarding our PFIC status in 2024 or any future taxable year.
Certain adverse U.S. federal income tax consequences could apply to U.S. investors if we are treated as a PFIC for any taxable year during which such investors hold our ordinary shares. For further discussion, see “Taxation—Material U.S. Federal Income Tax Considerations for U.S. Holders.”
Adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition.
We are subject to the examination of our tax returns by tax authorities in Finland, Germany, the United States, the PRC and the numerous other jurisdictions in which we have operations. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of its provision for income taxes. Although we believe our tax provisions are adequate, the final determination of tax audits and any related disputes could be materially different from our historical income tax provisions and accruals. In addition, we and our subsidiaries, as part of our ongoing operations, regularly engage in intercompany transactions and arrangements based on transfer pricing policies that we have implemented. Although we believe that our transfer pricing policies comply with applicable law, tax authorities in the jurisdictions in which we operate have in the past challenged and could in the future challenge our transfer pricing policies with respect to these transactions and arrangements. The results of audits, challenges or related disputes could have an adverse effect on our cash tax liabilities, effective tax rate, and financial statements for the period or periods for which the applicable final determinations are made.
We could be subject to changes in tax laws, tax regulations and tax treaties, including their interpretation and application, in the Cayman Islands, Finland, Germany, the United States, the PRC, or any other country in which we operate, which could result in additional tax liabilities or increased volatility in our effective tax rate.
We are subject to the tax laws in the Cayman Islands, Finland, Germany, the United States, the PRC and numerous other jurisdictions. Current economic and political conditions make tax laws, tax regulations and tax treaties, including their interpretation and application, in any jurisdiction subject to significant change. We earn a substantial portion of our income in countries around the world and are subject to the tax laws of those jurisdictions. A number of the jurisdictions in which we operate have recently reformed or changed their tax laws, regulations and tax treaties, such as the anti-tax avoidance directive adopted by the member states of the EU and the Inflation Reduction Act adopted by the United States which, among other changes, introduced a 15% corporate minimum tax on certain corporations, and many jurisdictions are considering other proposals to reform or change their tax laws, regulations and tax treaties, including minimum tax and tax-avoidance proposals being considered in connection with the OECD’s project on base erosion and profit shifting, and proposals in the United States. The adoption or implementation of these proposals could significantly impact how we are taxed on our earnings from operations in these jurisdictions. Although we cannot predict whether or in what form these proposals will be adopted, several of the proposals considered,
 
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if enacted into law, could have an adverse impact on our income tax expense and cash flows. Portions of our operations are subject to a reduced tax rate or are free of tax under various tax holidays and rulings. We also utilize tax rulings and other agreements to obtain certainty in treatment of certain tax matters. These tax holidays, rulings and agreements expire in whole or in part from time to time and may be extended when certain conditions are met or terminated if certain conditions are not met. The expiration or termination of any tax holidays, rulings or agreements, or changes in the conditions governing such tax holidays, rulings or agreements, could have an adverse effect on our effective income tax rate.
We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs our consumers would have to pay for our products and adversely affect our operating results.
In general, we have not historically collected state or local sales, use or other similar taxes in any jurisdictions in which we do not have a tax nexus, in reliance on court decisions or applicable exemptions that restrict or preclude the imposition of obligations to collect such taxes with respect to online sales of our products. In addition, we have not historically collected state or local sales, use or other similar taxes in certain jurisdictions in which we do have a physical presence, in reliance on applicable exemptions. On June 21, 2018, the U.S. Supreme Court decided, in South Dakota v. Wayfair, Inc., that state and local jurisdictions may, at least in certain circumstances, enforce a sales and use tax collection obligation on remote vendors that have no physical presence in such jurisdiction. A number of states have already begun, or have positioned themselves to begin, requiring sales and use tax collection by remote vendors and/or by online marketplaces. The details and effective dates of these collection requirements vary from state to state. While we now collect, remit and report sales tax in all states that impose a sales tax, it is still possible that one or more jurisdictions may assert that we have liability for previous periods for which we did not collect sales, use or other similar taxes, and if such an assertion or assertions were successful it could result in substantial tax liabilities, including for past sales taxes and penalties and interest, which could materially adversely affect our business, financial condition and operating results.
Risks Related to Our Relationship with ANTA Sports
ANTA Sports may fail to perform under the business services agreement (“BSA”), or we may fail to have replacement systems and services in place when the BSA expires.
We expect that following the completion of this offering, ANTA Sports will continue to provide us with services related to certain shared functions in Greater China pursuant to a BSA we expect to enter into in connection with the consummation of this offering. See “Related Party Transactions—Transactions with ANTA Sports.” These services will be provided for terms of varying duration following the completion of this offering. We will rely on ANTA Sports to satisfy its obligations during the term of the BSA. Failure by ANTA Sports to perform these obligations, or any delay in or disruption to ANTA Sports’ ability to perform these obligations, could increase our costs of procuring these services, result in system or service interruptions, divert our management’s focus or otherwise adversely affect our business, results of operations or financial condition, potentially for an extended period of time. Furthermore, pursuant to the BSA, ANTA Sports will agree to perform the services for us in a manner consistent with the past practice of our business. As a result, our operational flexibility to implement changes with respect to these services or the amounts we pay for them will be limited, and we may not be able to implement changes in a manner desirable to us. In addition, we have historically received informal support from ANTA Sports, which may not be addressed in the BSA. The level of this informal support may diminish following the completion of this offering.
The services that ANTA Sports will provide to us pursuant to the BSA are subject to change over time. Upon the termination of the BSA in accordance with the terms thereof, or to the degree it is not renewed according to its terms, we will be required to create our own, or engage alternative third-party sources to provide, systems and services to replicate or replace many of the systems and services that ANTA Sports currently provides to us. However, we may not be able to successfully replicate or replace these services or obtain the services at the same or better quality, at the same or lower costs or otherwise on the same or more favorable terms and conditions from third parties. If we do not have our own systems and services, or comparable agreements with alternative third-party sources, in place when the BSA expires, our business, results of operations or financial condition could be adversely affected, including in the manner described in
 
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the preceding paragraph. For more information regarding risks related to cybersecurity, see “— Risks Related to Our Intellectual Property and Information Technology.”
We potentially could have received better terms from unaffiliated third parties than the terms in our agreements with ANTA Sports.
The agreements we have entered into, or will enter into in connection with this offering, with ANTA Sports, including the BSA and the procurement and sourcing of products, sharing of certain middle to back-office services, retail platform related transactions and licensing, have been negotiated by us during periods in which we did not have a board of directors or a management team independent of ANTA Sports. See “Related Party Transactions—Transactions with ANTA.” Arm’s-length negotiations for similar products and services with an unaffiliated third party may have resulted in more favorable terms to the unaffiliated third party.
Following this offering, some of our directors and officers may have actual or potential conflicts of interest because of their equity ownership in ANTA Sports, and service as directors and/or officers of ANTA Sports.
Because of their current or former positions with ANTA Sports, following this offering, some of our directors and executive officers may own shares of ANTA Sports or have options to acquire shares of ANTA Sports, and the individual holdings may be significant for some of these individuals compared to their total assets. Prior to the completion of this offering, our Chief Executive Officer was an officer of ANTA Sports. In addition, following the completion of this offering, certain of our directors will continue to serve as officers or directors of ANTA Sports. Pursuant to our amended and restated memorandum and articles of association, ANTA Sports will have the right to nominate a number of directors to our board of directors, to be designated by such shareholder. For so long as ANTA Sports and its affiliates together continue to beneficially hold (i) at least 30% of our then-outstanding ordinary shares, it shall have the right to nominate a total of five (5) candidates to serve as directors; (ii) at least 25% (but less than 30%) of our then-outstanding ordinary shares, it shall have the right to nominate a total of four (4) candidates to serve as directors; (iii) at least 20% (but less than 25%) of our then-outstanding ordinary shares, it shall have the right to nominate a total of three (3) candidates to serve as directors; (iv) at least 15% (but less than 20%) of our then-outstanding ordinary shares, it shall have the right to nominate a total of two (2) candidates to serve as directors; and (v) at least 10% (but less than 15%) of our then-outstanding ordinary shares, it shall have the right to nominate a total of one (1) candidate to serve as director. At the time ANTA Sports and its affiliates together beneficially hold less than 10% of our then-outstanding ordinary shares, it shall no longer have the right to nominate for election any candidates to serve as directors.
A director who has a material interest in a matter before our board of directors or any committee on which he or she serves is required to disclose such interest as soon as the director becomes aware of it in accordance with applicable law. In situations where a director has a material interest in a matter to be considered by our board of directors or any committee on which he or she serves, such director may be required to excuse himself or herself from the meeting while discussions and voting with respect to the matter are taking place. Although all transactions with related parties after this offering will be approved by independent members of our board of directors that may meet in the absence of senior executive officers and non-independent directors, the ownership of ANTA Sports equity or service to ANTA Sports may create the appearance of conflicts of interest when the ANTA Sports-affiliated directors and officers are faced with decisions that could have different implications for ANTA Sports or us. For example, potential conflicts of interest could arise in connection with the resolution of any dispute that may arise between ANTA Sports and us regarding the terms of the BSA and the relationship thereafter between the companies. Potential conflicts of interest could also arise if we enter into commercial arrangements with ANTA Sports in the future. As a result of these actual or apparent conflicts, we may be precluded from pursuing certain growth initiatives.
While the board of directors believes that, given its size and structure, such actual or potential conflicts of interest can be managed adequately, including that the independent members of our board of directors may meet in the absence of senior executive officers and non-independent directors in respect of the relevant matter, the actual or perceived conflicts of interest that may arise could cause reputational or other harm.
 
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In addition, given these relationships, consumers as well as other third parties may confuse our business with that of our principal shareholder as well as any perceived link between our or our principal shareholder’s products, each of which could affect our business, competitive position and market perception.
Risks Related to Our Ordinary Shares and this Offering
We do not know whether an active trading market will develop or be sustained for our ordinary shares or what the market price of our ordinary shares will be, and, as a result, it may be difficult for you to sell your ordinary shares.
Prior to this offering, there has been no public market for our ordinary shares, and we cannot assure you that one will develop or be sustained after this offering. The initial public offering price for our ordinary shares will be determined through negotiations with the underwriters and may not bear any relationship to the market price at which our ordinary shares will trade after this offering or to any other established criteria of the value of our business. Although we intend to apply to have our ordinary shares approved for listing on the NYSE, an active trading market for our ordinary shares may never develop or be sustained following this offering. If an active market for our ordinary shares does not develop or is not sustained, it may be difficult for you to sell ordinary shares you purchase in this offering without depressing the market price for the shares or at all.
If you purchase ordinary shares in this offering, you will suffer immediate and substantial dilution of your investment.
The initial public offering price of our ordinary shares will be substantially higher than the pro forma as adjusted net tangible book value per ordinary share immediately after this offering. Therefore, if you purchase our ordinary shares in this offering, you will pay a price per ordinary share that substantially exceeds our pro forma as adjusted net tangible book value per ordinary share after this offering. In addition, you will pay more for your ordinary shares than the amounts paid by our existing owners. Based on an assumed initial public offering price of $      per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus, you will experience immediate dilution of $      per ordinary share (after giving effect to the Share Split), representing the difference between our pro forma as adjusted net tangible book value per ordinary share after giving effect to this offering and the initial public offering price. See “Dilution” for more details.
If securities analysts do not commence to publish or cease publishing research or reports or publish misleading, inaccurate or unfavorable research about us, our business or our market, or if they publish negative evaluations of our ordinary shares, the price and trading volume of our ordinary shares could decline.
The trading market for our ordinary shares is expected to be influenced, in part, by the research and reports that industry or financial analysts publish about us, our business, our market and our competitors. We do not currently have research coverage by industry or financial analysts. If no, or few, analysts commence coverage of us, the trading price of our ordinary shares would likely decrease. Even if we do obtain analyst coverage, if one or more of the analysts covering our business downgrade their evaluations of our ordinary shares or publish inaccurate or unfavorable research about our business, or provide more favorable relative recommendations about our competitors, the price of our ordinary shares could decline. If one or more industry or financial analysts fail to regularly publish reports on us or if one or more of these analysts cease to cover our business, we could lose visibility in the market, which in turn could cause the price or trading volume of our ordinary shares to decline.
The market price of our ordinary shares may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our ordinary shares in this offering.
The market price of our ordinary shares could be subject to significant fluctuations after this offering, and may decline below the initial public offering price. In addition, securities markets worldwide have experienced, and are likely to continue to experience, extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your
 
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ordinary shares at or above the initial public offering price. The market price for our ordinary shares may be influenced by many factors, including the other factors described in this “Risk Factors” section.
In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted against that company. Any lawsuit to which we are a party, with or without merit, may result in an unfavorable judgment. We also may decide to settle lawsuits on unfavorable terms. Any such negative outcome could result in payments of substantial damages or fines, damage to our reputation or adverse changes to our offerings or business practices. Such litigation may also cause us to incur other substantial costs to defend such claims and divert management’s attention and resources.
We will be a foreign private issuer and, as a result, we will not be subject to the U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.
Upon consummation of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act and although we are subject to Cayman laws and regulations with regard to such matters and intend to furnish quarterly financial information to the SEC, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (1) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (2) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, although we intend to provide quarterly information on Form 6-K. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year and U.S. domestic issuers that are large accelerated filers are required to file their annual report on Form 10-K within 60 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD, which is intended to prevent issuers from making selective disclosures of material information. As a result of all of the above, you may not have the same protections afforded to shareholders of a company that is not a foreign private issuer.
As a foreign private issuer within the meaning of the NYSE corporate governance rules, we are permitted to rely on exemptions from certain of the NYSE corporate governance standards, including the requirement that a majority of our board of directors consist of independent directors. Our reliance on such exemptions may afford less protection to holders of our ordinary shares.
The corporate governance rules of the NYSE require listed companies to have, among other things, a majority of independent directors and independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a foreign private issuer, we are permitted to follow home country practice in lieu of the above requirements. For as long as we choose to rely on the foreign private issuer exemption to certain of the NYSE corporate governance standards, our board of directors’ approach to governance may be different from that of a board of directors of a U.S. domestic company, and, as a result, the management oversight of our company may be more limited than if we were subject to all of the NYSE corporate governance standards. While a majority of the directors on our board of directors are independent directors, as long as we rely on the foreign private issuer exemption to certain of the NYSE corporate governance standards, a majority of the directors on our board of directors may not be required to be independent directors. Additionally, we currently intend to follow Cayman Islands corporate governance practices in lieu of the corporate governance requirements of the NYSE in respect of the following:

the requirement of the NYSE listing rules that the compensation committee and the nominating and governance committee of the board of directors be composed entirely of independent directors;

the requirement of the NYSE listing rules that a listed issuer obtain shareholder approval when it establishes or materially amends a stock option or purchase plan or other arrangement pursuant to which stock may be acquired by officers, directors, employees or consultants;
 
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the requirement of the NYSE listing rules that a listed issuer obtain shareholder approval prior to issuing or selling securities (or securities convertible into or exercisable for common stock) that equal 20% or more of the issuer’s outstanding common stock or voting power prior to such issuance or sale; and

the requirement of the NYSE listing rules that the independent directors have regularly scheduled meetings with only the independent directors present.
Accordingly, our shareholders will not have the same protection afforded to shareholders of companies that are subject to all of the NYSE corporate governance standards, and the ability of our independent directors to influence our business policies and affairs may be reduced.
We will have broad discretion in the use of the net proceeds from this offering and may not use them effectively.
Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our ordinary shares. You may not agree with our management’s decisions. The failure by our management to apply these funds effectively could result in financial losses that could cause the price of our ordinary shares to decline and delay the development of our products. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value. You will not have the opportunity to influence our decisions on how to use the net proceeds from this offering.
Because we do not anticipate paying any cash dividends on our ordinary shares in the foreseeable future, capital appreciation, if any, will be your sole source of gain.
Our amended and restated memorandum and articles of association permits us to pay dividends. We currently intend to retain any future earnings to fund the development and expansion of our business, and, therefore, we do not anticipate paying cash dividends on our ordinary shares but our board of directors may choose to do so at any point if it is in the best interests of the Company and our shareholders. Any future determination to pay dividends will be at the discretion of our board of directors, subject to applicable laws, and will depend on our results of operations, financial condition, capital requirements, contractual restrictions and other factors deemed relevant by our board of directors. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either a profit or share premium account, provided that in no circumstances may a dividend be paid if it would result in the company being unable to pay its debts as they fall due in the ordinary course of business. In addition, we are governed by the laws of the Cayman Islands and our amended and restated memorandum and articles of association, under which there is no minimum mandatory dividend payable to our shareholders and no established periodicity for the distribution of dividends. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. As a result, capital appreciation, if any, of our ordinary shares will be your sole source of gain for the foreseeable future. See “Dividend Policy.”
A significant portion of our issued and outstanding ordinary shares is restricted from immediate resale but may be sold into the market in the near future, which could cause the market price of our ordinary shares to drop significantly, even if our business is doing well.
Sales of a substantial number of our ordinary shares in the public market, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our ordinary shares and could impair our ability to raise capital through the sale of additional equity securities. After this offering, we will have                  ordinary shares outstanding based on the number of ordinary shares outstanding as of December 31, 2023 (after giving effect to the Share Split). This includes the ordinary shares that we are selling in this offering, which may be resold in the public market immediately without restriction, unless purchased by persons otherwise restricted from selling. The remaining                  ordinary shares are currently restricted as a result of securities laws or lock-up agreements but will become eligible to be sold at various times after the offering as described in the section of this prospectus titled “Shares Eligible for Future Sale.” The lock-up agreements include customary exceptions, and the representatives of the underwriters may release some or all of the ordinary shares subject to lock-up agreements at any time and without notice, which would allow for earlier sales of shares in the public market.
 
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Moreover, beginning 180 days after the completion of this offering or earlier waiver or release of the lockup, holders of an aggregate of                 our ordinary shares, will have rights, subject to specified conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other shareholders. We also intend to register all ordinary shares that we may issue under our equity compensation plans. Once we register these shares, they can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and the lock-up agreements described in the “Underwriting” section of this prospectus.
In the future, we may also issue additional securities if we need to raise capital or make acquisitions, which could constitute a material portion of our then-issued and outstanding ordinary shares.
We will incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.
As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs, particularly as we hire additional financial and accounting employees to meet public company internal control and financial reporting requirements and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance, which in turn could make it more difficult for us to attract and retain qualified members of our board of directors.
We are evaluating these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. If we fail to comply with new laws, regulations and standards, regulatory authorities could initiate legal proceedings against us, and our business could be harmed.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
Upon completion of this offering, we will become subject to certain reporting requirements of the Exchange Act. Our disclosure controls and procedures are designed to reasonably assure that information required to be disclosed by us in reports we file or submit in accordance with U.S. securities laws is accumulated and communicated to management, recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements or insufficient disclosures due to error or fraud may occur and not be detected.
Our amended and restated memorandum and articles of association will designate the Grand Court of the Cayman Islands as the exclusive forum for substantially all disputes between us and our shareholders, and the federal district court as the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act, the Exchange Act or other securities laws, which could limit our shareholders’ ability to choose the judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated memorandum and articles of association, which will become effective immediately prior to the completion of this offering, will provide that, unless we consent in writing to the
 
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selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or any other person, (iii) any action or proceeding arising pursuant to, or seeking to enforce any right, obligation or remedy under, any provision of the Companies Act of the Cayman Islands (the “Companies Act”), our amended and restated memorandum and articles of association, or any other provision of applicable law, (iv) any action or proceeding seeking to interpret, apply, enforce or determine the validity of our amended and restated memorandum and articles of association or (v) any action or proceeding as to which the Companies Act confers jurisdiction on the Grand Court of the Cayman Islands shall be the Grand Court of the Cayman Islands, in all cases subject to the court having jurisdiction over indispensable parties named as defendants.
Our amended and restated memorandum and articles of association will also provide that the federal district courts of the United States will be the exclusive forum for resolving any complaint asserting a cause of action under the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act or other securities laws. Any person or entity purchasing or otherwise acquiring or holding any interest in any of our securities shall be deemed to have notice of and consented to these provisions. However, shareholders will not be deemed to have waived our compliance with U.S. federal securities laws and the rules and regulations thereunder.
These exclusive forum provisions may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. The enforceability of similar choice of forum provisions in other companies’ organizational documents has been challenged in legal proceedings, and it is possible that a court could find these types of provisions to be inapplicable or unenforceable. If a court were to find the exclusive forum provisions in our amended and restated memorandum and articles of association to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could adversely affect our results of operations.
We are a Cayman Islands exempted company with limited liability. The rights of our shareholders, including with respect to fiduciary duties and corporate opportunities, may be different from the rights of shareholders governed by the laws of U.S. jurisdictions.
We are a Cayman Islands exempted company with limited liability. Our corporate affairs are governed by our amended and restated memorandum and articles of association and by the laws of the Cayman Islands. The rights of our shareholders and the responsibilities of members of our board of directors may be different from the rights of shareholders and responsibilities of directors in companies governed by the laws of U.S. jurisdictions. In particular, as a matter of Cayman Islands law, directors of a Cayman Islands company owe fiduciary duties to the company and separately a duty of care, diligence and skill to the company. Under Cayman Islands law, directors and officers owe the following fiduciary duties: (1) duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole; (2) duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose; (3) directors should not properly fetter the exercise of future discretion; (4) duty to exercise powers fairly as between different sections of shareholders; (5) duty to exercise independent judgment; and (6) duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests. However, following a declaration being made pursuant to the Articles of Association of the Company, subject to any separate requirement for audit committee approval under applicable law or the rules and regulations of the NYSE, and unless disqualified by the chairman of the relevant board meeting, a director may vote in respect of any contract or proposed contract or arrangement in which such director is interested and may be counted in the quorum at such meeting. Conversely, under Delaware corporate law, a director has a fiduciary duty to the corporation and its shareholders and the director’s duties prohibit self-dealing by a director and mandate that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. See “Description of Share Capital — Comparison of Cayman Islands Corporate Law and U.S. Corporate Law.”
 
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Our shareholders may face difficulties in protecting their interests because we are a Cayman Islands exempted company.
Our corporate affairs are governed by our amended and restated memorandum and articles of association, by the Companies Act and the common law of the Cayman Islands. The rights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under the laws of the Cayman Islands are not as clearly defined as under statutes or judicial precedent in existence in jurisdictions in the United States. Therefore, you may have more difficulty protecting your interests than would shareholders of a corporation incorporated in a jurisdiction in the United States, due to the comparatively less well-developed Cayman Islands law in this area.
Specifically, subject to limited exceptions, under Cayman Islands’ law, a minority shareholder may not bring a derivative action against the board of directors. Class actions are not recognized in the Cayman Islands, but groups of shareholders with identical interests may bring representative proceedings, which are similar. Further, while Cayman Islands law allows a dissenting shareholder to express the shareholder’s view that a court sanctioned reorganization of a Cayman Islands company would not provide fair value for the shareholder’s shares, Cayman Islands statutory law does not specifically provide for shareholder appraisal rights in connection with a court sanctioned reorganization (by way of a scheme of arrangement). This may make it more difficult for you to assess the value of any consideration you may receive in a corporate reorganization (approved by way of a scheme of arrangement) or to require that the acquirer gives you additional consideration if you believe the consideration offered is insufficient. However, the Companies Act does provide a mechanism for a dissenting shareholder in a statutory merger or consolidation to apply to the Grand Court of the Cayman Islands for a determination of the fair value of the dissenter’s shares if it is not possible for the company and the dissenter to agree on the fair value of such shares within the time limits prescribed by the Companies Act.
In addition, shareholders of Cayman Islands exempted companies have no general rights under Cayman Islands law to inspect corporate records and accounts or to obtain copies of lists of shareholders. Our directors have discretion under our amended and restated memorandum and articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain information needed to establish any facts necessary for a shareholder motion.
U.S. civil liabilities and certain judgments obtained against us by our shareholders may not be enforceable.
We are a Cayman Islands exempted company and the majority of our operations and current assets are conducted and located outside the United States. Most of our directors and executive officers reside outside the United States, and substantially all of their assets are located outside the United States. As a result, it may be difficult to effect service of process within the United States upon these persons. It may also be difficult to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors who are not resident in the United States and the substantial majority of whose assets are located outside of the United States.
Further, it is unclear if original actions predicated on civil liabilities based solely upon U.S. federal securities laws are enforceable in courts outside the United States, including in the Cayman Islands. Courts of the Cayman Islands may not, in an original action in the Cayman Islands, recognize or enforce judgments of U.S. courts predicated upon the civil liability provisions of the securities laws of the United States or any state of the United States on the grounds that such provisions are penal in nature. Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, courts of the Cayman Islands will recognize and enforce a foreign judgment of a court of competent jurisdiction if such judgment is final and conclusive and for a liquidated sum, provided it is not in respect of taxes or a fine or penalty, is not inconsistent with a Cayman Islands’ judgment in respect of the same matters, and was not obtained by fraud or in a manner which is contrary to the public policy of the Cayman Islands. In addition, a Cayman Islands court may stay proceedings if concurrent proceedings are being brought elsewhere.
 
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains statements that constitute forward-looking statements. Many of the forward-looking statements contained in this prospectus can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate” and “potential,” among others.
Forward-looking statements appear in a number of places in this prospectus and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified under the section titled “Risk Factors” in this prospectus. These risks and uncertainties include factors relating to:

the strength of our brands;

changes in market trends and consumer preferences;

intense competition that our products, services and experiences face;

harm to our reputation that could adversely impact our ability to attract and retain consumers and wholesale partners, employees, brand ambassadors, partners, and other stakeholders;

reliance on technical innovation and high-quality products;

general economic and business conditions worldwide, including due to inflationary pressures;

the strength of our relationships with and the financial condition of our third-party suppliers, manufacturers, wholesale partners and consumers;

ability to expand our DTC channel, including our expansion and success of our owned retail stores and e-commerce platform;

our plans to innovate, expand our product offerings and successfully implement our growth strategies that may not be successful, and implementation of these plans that may direct divert our operational, managerial and administrative resources;

our international operations, including any related to political uncertainty and geopolitical tensions;

our and our wholesale partners’ ability to accurately forecast demand for our products and our ability to manage manufacturing decisions;

our third party suppliers, manufacturers and other partners, including their financial stability and our ability to find suitable partners to implement our growth strategy

the cost of raw materials and our reliance on third-party manufacturers;

our distribution system and ability to deliver our brands’ products to our wholesale partners and consumers;

climate change and sustainability or ESG-related matters, or legal, regulatory or market responses thereto;

changes to trade policies, tariffs, import/export regulations and anti-competition regulations in the United States, EU, PRC and other jurisdictions, or our failure to comply with such regulations;

ability to obtain approvals from PRC authorities to list on the U.S. exchanges and offer securities in the future;

ability to obtain, maintain, protect and enforce our intellectual property rights in our brands, designs, technologies and proprietary information and processes;

ability to defend against claims of intellectual property infringement, misappropriation, dilution or other violations made by third parties against us;

security breaches or other disruptions to our IT systems;
 
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our reliance on a large number of complex IT systems;

changes in government regulation and tax matters;

our ability to remediate our material weakness in our internal control over financial reporting;

our relationship with ANTA Sports;

our expectations regarding the time during which we will be a foreign private issuer; and

other risk factors.
Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of an unanticipated event.
 
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USE OF PROCEEDS
We expect to receive total estimated net proceeds of approximately $      (or $      if the underwriters’ over-allotment option is exercised in full), based on an assumed initial public offering price of $     per ordinary share, which is the midpoint of the range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and offering expenses that are payable by us.
Each $1.00 increase (decrease) in the assumed initial public offering price per ordinary share would increase (decrease) our net proceeds, after deducting estimated underwriting discounts and commissions and offering expenses, by $      . Similarly, each increase (decrease) of 1,000,000 ordinary shares offered by us would increase (decrease) the net proceeds to us from this offering by approximately $      , assuming the assumed initial public offering price of $      per ordinary share remains the same, and after deducting estimated underwriting discounts and commissions and offering expenses.
We intend to use the net proceeds we receive from this offering to repay all of our outstanding borrowings under our existing shareholder loans, JVCo Loan 1, JVCo Loan 2, Co-Invest Loan 1 and Co-Invest Loan 2 (each as defined below), after giving effect to the Equitization, and any remaining net proceeds to repay a portion of our outstanding borrowings under the Revolving Facility (as defined below). See “Summary—IPO-Related Transactions—Shareholder Loan Equitization.”
Each of the shareholder loans mature on March 26, 2029. JVCo as the lender under JVCo Loans 1 and 2 and the Co-Invest as the lender under Co-Invest Loans 1 and 2 have each temporarily suspended the accrual of interest under such loans subsequent to December 31, 2022 in contemplation of this offering and the related equitization and repayment of the loans in connection therewith. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Indebtedness—Loans with Related Parties.”
The Revolving Facility matures on September 29, 2025 and bears interest at the relevant reference rate (being EURIBOR for loans in EUR and Term SOFR for loans in U.S. dollars) plus 3.25%. See “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Indebtedness—Senior Facilities Agreement.”
The expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. We cannot predict with certainty all of the particular uses for the net proceeds of this offering or the amounts that we will actually spend on the uses set forth above. As a result, our management will have broad discretion in applying the net proceeds of this offering, and investors will be relying on our judgment regarding the application of the net proceeds of this offering.
 
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DIVIDEND POLICY
We have never declared nor paid any cash dividends on our ordinary shares. Our amended and restated memorandum and articles of association permits us to pay dividends. We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business, and we do not anticipate paying any cash dividends but our board of directors may choose to do so at any point if it is in the best interests of the Company and our shareholders. Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors subject to applicable laws, and will depend on then-existing conditions, including our financial condition, results of operation, contractual restrictions, capital requirements, business prospects and other factors our board of directors may deem relevant. Our Senior Facilities Agreement (as defined herein) restricts our ability to make distributions, including dividends, subject to certain exceptions.
 
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CAPITALIZATION
The table below sets forth our cash and cash equivalents and total capitalization as of September 30, 2023:

on an actual basis; and

on an as adjusted basis to give effect to (1) the Reclassification, (2) the Share Split, (3) the Equitization and (4) our sale of the ordinary shares in the offering, and the receipt of approximately $       in estimated net proceeds, based on an assumed initial public offering price of $       per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deduction of the estimated underwriting discounts and commissions and offering expenses payable by us in connection with the offering, and the use of proceeds therefrom as described under “Use of Proceeds.”
You should read this table in conjunction with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” “Description of Share Capital” and our consolidated financial statements, including the notes thereto included elsewhere in this prospectus.
As of September 30, 2023
Actual
As Adjusted
($ in millions)
Cash and cash equivalents
$ 284.2 $     
Short-term debt
Revolving Facility
331.9
Term Loan Facility
Loans from related parties(1)
Other debt
50.0
Long-term debt
Revolving Facility
Term Loan Facility
1,784.9
Loans from related parties(1)
4,012.8
Other debt
Share capital
Class A voting shares, EUR 0.10 par value, 150,000,000 shares authorized, 115,220,745 issued and outstanding actual; 0 shares authorized, 0 issued and outstanding, as adjusted(2)
640.4
Class B non-voting shares, EUR 0.10 par value, 5,000,000 shares authorized, 352,193 issued and outstanding actual; 0 shares authorized, 0 issued and outstanding, as adjusted(2)
1.8
Ordinary shares, EUR      par value, 0 shares authorized, 0 issued and outstanding
actual;         shares authorized,         issued and outstanding, as adjusted(2)
Reserves
13.1
Accumulated deficit
(651.8)
Non-controlling interests
5.3
Total equity(1)
8.8
Total capitalization
$ 6,188.4 $
(1)
Includes JVCo Loan 1 (as defined below), with outstanding borrowings thereunder of $2.6 billion; JVCo Loan 2 (as defined below), with outstanding borrowings thereunder of $1.4 billion; Co-Invest Loan 1 (as defined below), with outstanding borrowings thereunder of $7.5 million; and Co-Invest Loan
 
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2 (as defined below), with outstanding borrowing thereunder of $3.9 million. $       billion of JVCo Loan 1 and $       million of Co-Invest Loan 1 are expected to be equitized immediately prior to the completion of this offering, and all remaining borrowings under each of the loans from related parties are expected to be repaid with net proceeds from this offering. See “Use of Proceeds” and “Related Party Transactions—Loans with Related Parties.” As adjusted loans from related parties reflects that there will be no outstanding loans from related parties after the application of net proceeds from this offering.
JVCo as the lender under JVCo Loans 1 and 2 and the Co-Invest as the lender under Co-Invest Loans 1 and 2 have each temporarily suspended the accrual of interest under such loans subsequent to December 31, 2022 in contemplation of this offering and the related equitization and repayment of the loans in connection therewith. The temporary suspension of interest on each of JVCo Loan 1, JVCo Loan 2, Co-Invest Loan 1 and Co-Invest Loan 2 is accounted for as a capital contribution. The portion of borrowings of JVCo Loan 1 and Co-Invest Loan 1 subject to equitization will be treated as credit to equity as shareholder contribution, and therefore has no associated gains or losses.
As adjusted total equity reflects an increase in equity of $       billion and $       million as a result of the equitization of a portion of JVCo Loan 1 and Co-Invest Loan 1, respectively, and of $      as a result of this offering.
(2)
Immediately prior to the consummation of this offering, we intend to redesignate and reclassify each of the issued and outstanding class A voting shares and each of the issued and outstanding class B non-voting shares into a single class of ordinary shares. As adjusted authorized, issued and outstanding shares reflect the effect of the Reclassification, resulting in no issued and outstanding shares of class A voting shares or class B non-voting shares.
A $1.00 increase (decrease) in the assumed initial public offering price of $       per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) each of our as adjusted cash and cash equivalents, capital reserves and total equity by $       million, assuming the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and offering expenses payable by us. Similarly, each increase (decrease) of 1,000,000 shares in the number of ordinary shares offered by us would increase (decrease) each of our as adjusted cash and cash equivalents, capital reserves and total equity by $       million, assuming the assumed initial public offering price of $       per ordinary share remains the same, and after deducting estimated underwriting discounts and commissions and offering expenses payable by us.
The number of ordinary shares that will be issued and outstanding after this offering is based on        ordinary shares outstanding as of December 31, 2023, upon the effectiveness of the Reclassification and the Share Split, and excludes:

       ordinary shares issuable on the exercise of options outstanding as of December 31, 2023, under our 2019 ESOP with a weighted-average exercise price of EUR     per ordinary share;

       ordinary shares issuable on the exercise of options outstanding as of December 31, 2023, under our 2023 ESOP with a weighted-average exercise price of EUR     per ordinary share; and

       ordinary shares reserved for issuance under our 2019 ESOP, 2023 ESOP and 2024 Amer Sports Equity Incentive Plan, plus any future increases in the number of ordinary shares reserved for issuance thereunder, as more fully described in the section titled “Management—Equity Incentive Plans—Existing Plans.”
The financial statements and the related notes thereto included elsewhere in this prospectus, including the share and per share information, are presented only on a historical basis and therefore do not reflect the Share Split.
 
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DILUTION
Information in this Dilution section and elsewhere in this prospectus, other than our historical financial information, reflects a       -for-1 share split of our ordinary shares to occur after the effectiveness of the registration statement of which this prospectus forms a part and prior to the closing of this offering.
If you invest in our ordinary shares in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per share of our ordinary shares and the as adjusted net tangible book value per share of our ordinary shares immediately after this offering. Dilution in as adjusted net tangible book value per ordinary share to new investors represents the difference between the price per ordinary shares paid by purchasers of our Class A ordinary shares in this offering and the as adjusted net tangible book value per ordinary share immediately after the completion of the offering.
At September 30, 2023, we had a net tangible book value of $       million, corresponding to a net tangible book value of $       per ordinary share. Net tangible book value represents the amount of our total assets less our total liabilities, excluding goodwill and other intangible assets. Net tangible book value per ordinary share represents net tangible book value divided by       , the total number of our ordinary shares outstanding at September 30, 2023.
After giving effect to (1) the Reclassification, (2) the Share Split, (3) the Equitization and (4) the sale by us of the        ordinary shares offered by us in the offering, and assuming an initial public offering price of $      per ordinary share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and offering expenses payable by us, our net tangible book value estimated at September 30, 2023 would have been $       million, representing $       per ordinary share. This represents an immediate increase in net tangible book value of $      per ordinary share to existing shareholders and an immediate dilution in net tangible book value of $       per ordinary share to new investors purchasing ordinary shares in this offering.
The following table illustrates this dilution to new investors purchasing ordinary shares in the offering.
Assumed initial public offering price per ordinary share
$       
Net tangible book value per ordinary share at September 30, 2023
$       
Increase in net tangible book value per ordinary share attributable to new
investors
As adjusted net tangible book value per ordinary share after the offering
Dilution per ordinary share to new investors
$
The dilution information discussed above is illustrative only and may change based on the actual initial public offering price and other terms of this offering. A $1.00 increase (decrease) in the assumed initial public offering price of $       per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus, would increase (decrease) our as adjusted net tangible book value per share after this offering by $      per ordinary share and increase (decrease) the immediate dilution to new investors by $       per share, in each case assuming the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and offering expenses payable by us. Similarly, each increase of 1,000,000 shares in the number of ordinary shares offered by us would increase our as adjusted net tangible book value by $       per ordinary share and decrease the dilution to new investors by $       per share, and each decrease of 1,000,000 shares in the number of ordinary shares offered by us would decrease our as adjusted net tangible book value by $       per ordinary share and increase the dilution to new investors by $       per ordinary share, in each case assuming the assumed initial public offering price of $       per ordinary share, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and offering expenses payable by us.
The following table summarizes, as of September 30, 2023, on as adjusted basis as described above, the number of our ordinary shares, the total consideration and the average price per ordinary share (1) paid to us by existing shareholders and (2) to be paid by new investors acquiring our ordinary shares in this offering at an assumed initial public offering price of $       per share, the midpoint of the estimated price range
 
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set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and offering expenses payable by us.
Shares Purchased
Total Consideration
Average Price
Per
Ordinary Share
Number
Percent
Amount
Percent
Existing shareholders
     
%