Soho House & (SHCO)2025-03-31 21:17Membership and Growth - As of December 29, 2024, Soho House & Co has approximately 271,500 members, including around 212,400 Soho House members[18]. - The global waitlist for membership stands at over 112,000 applicants as of December 29, 2024[22]. - Soho House membership fees are approximately 130[34]. - Soho Works has 5,984 members as of December 29, 2024, with membership fees ranging from 750 per month for Soho House members[36]. - The company increased its total House count to 45 in fiscal 2024, up from 42 in fiscal 2023, with plans for two to three new openings in 2025[42]. - In fiscal 2024, over one million non-member guests visited the Houses, with a goal to convert them into members[45]. - The company plans to expand its presence in new and existing markets, focusing on establishing Houses in key cultural cities and integrating complementary products and services[105]. Financial Performance - The company incurred net losses of 130 million, and 1,540 million as of December 29, 2024[80]. - The company incurred a consolidated net loss of 90 million[103]. - The company is dependent on distributions from subsidiaries to cover taxes and operating expenses, which may be restricted by existing credit facilities[115]. - Inflation could adversely affect the company's financial condition and results of operations, as it may not be able to adjust member pricing accordingly[120]. - The company has an outstanding debt balance of 2 million to 10 million to $20 million range[26]. - The company continues to explore new openings on a case-by-case basis to balance member experience and optimize returns[25]. - The company has historically invested significantly in opening new Houses and enhancing membership experiences, which may continue to incur higher expenses than anticipated[80]. - The company is exposed to foreign currency exchange rate risk due to operations in non-US countries, particularly the UK, with no current hedging arrangements in place[109]. Market and Competitive Position - The company believes it has a first-mover advantage in the private membership club sector, creating significant barriers to entry for competitors[63]. - The company faces challenges in maintaining and expanding its international operations due to risks such as exchange rate fluctuations and differing protection of intellectual property rights[108]. - The company has experienced significant growth in its business activities, which places demands on its administrative and operational resources[83]. Regulatory and Compliance Risks - The company is subject to extensive environmental, health, and safety regulations across all operating regions, which may impact operational costs and compliance efforts[70]. - The company is subject to regulatory scrutiny regarding data privacy, which may necessitate changes in business operations and incur additional compliance costs[169]. - The company may incur substantial costs due to compliance with privacy laws and potential litigation from privacy-related claims[176]. - The company faces risks related to compliance with the US Foreign Corrupt Practices Act and the UK Bribery Act, which could result in severe penalties if violated[190]. Brand and Reputation - The company’s brand value is critical to attracting and retaining members, and any incidents that damage its reputation could adversely affect its business[86]. - The company has faced brand squatting issues in regions like South America and Asia, complicating trademark registration efforts[93]. - The company has not been able to protect its trademarks in significant jurisdictions such as China and Mexico, which may lead to brand dilution and customer confusion[94]. Technology and Cybersecurity - The reliance on information technology systems is critical, and any failure could harm business operations and reputation[155]. - Cybersecurity risks are a significant concern, with potential for data breaches that could lead to negative publicity and financial impact[159]. - The implementation of new technology systems, such as the Enterprise Resource Planning (ERP), may cause operational disruptions and increased costs[158]. - The complexity of IT systems increases vulnerability to security breaches, which could disrupt business operations and damage customer relationships[168]. Labor and Employment - The company faces risks from unionization efforts, particularly in regions with strong labor rights focus[183]. - The company is subject to various employment laws and may face claims related to employment discrimination and wage-hour issues[184]. - The company may face challenges in hiring qualified employees necessary for compliance with financial reporting regulations, impacting its operational effectiveness[199]. Governance and Control - The Voting Group controls approximately 96.6% of the combined voting power of the outstanding common stock, significantly limiting other stockholders' influence on corporate matters[204]. - The company qualifies as a 'controlled company' under NYSE rules, allowing it to rely on exemptions from certain corporate governance requirements[210]. - Certain directors have affiliations with Yucaipa, which may lead to conflicts of interest affecting the company's business decisions[211].