On AG(ONON)2023-03-20 16:00Retail Operations - The company operates approximately 9,232 retail stores across its direct markets as of December 31, 2022[47]. - For the year ended December 31, 2022, 60.4% of sales were to customers in North America, 29.0% in Europe, and 6.6% in Asia[65]. - The company has opened four retail stores in New York City, Tokyo, Zurich, and Los Angeles, with plans for future store openings, which may incur significant capital expenditures[98]. - The company leases all retail stores under long-term operating leases, with initial terms of five to ten years, and may face challenges in securing appropriate real estate or lease terms for future growth[100][101]. - The company faces risks related to opening new retail stores, including identifying suitable markets and managing pre-operating costs[97]. Financial Performance - The company generated a net income of CHF 57.7 million for the year ended December 31, 2022, but incurred net losses of CHF 170.2 million and CHF 27.5 million for the years ended December 31, 2021 and 2020, respectively[64]. - The company may incur significant losses in the future due to unforeseen expenses and challenges in maintaining profitability[64]. - The financial health of retail partners and customers may adversely affect the company's sales and financial condition due to potential bankruptcies and economic uncertainty[80]. - Consumer purchases of discretionary items, including premium footwear and apparel, tend to decline during recessionary periods, impacting sales and profitability[83]. - The company’s financial condition and stock price may be adversely impacted if it fails to innovate and meet consumer expectations[72]. Market Strategy and Growth - The company’s growth strategy includes expanding product offerings and increasing customer engagement through digital platforms[60]. - The company plans to continue significant investments in research and development to drive innovation in footwear, apparel, and accessories[72]. - The company has systematically redesigned key franchises, such as the Cloud and Cloudswift, over the last two years to enhance product offerings[73]. - The company plans to expand its distribution network and sales into new locations outside of the United States and the EU, with distribution agreements with 23 partners in 72 markets as of 2022[122]. - Expansion into new markets may be limited by the company's brand recognition and operational experience in those regions[66]. Supply Chain and Production - The company faces risks related to supply chain compliance, which could lead to recalls or adverse consumer reactions[51]. - The company has experienced significant disruptions in supply due to global supply chain issues, which could negatively impact its ability to meet customer demand and result in lower net sales[103][104]. - In 2022, 95% of the company's footwear products were produced in Vietnam, and 60% of apparel and accessories units were manufactured in Vietnam, indicating a heavy reliance on specific countries for production[115][116]. - The company relies on third-party suppliers for fabrics and components, with limited control over their quality and availability, which increases the risk of supply disruption[118][119]. - The company has secured additional production capacity in 2022, but future restrictions could still impact operations and costs[84]. Competition and Market Risks - The company faces intense competition in the footwear, apparel, and accessories market, which may pressure pricing and impact market share[77]. - The company is vulnerable to changes in consumer preferences, which could impact sales and profitability[59]. - A weak retail environment and shifts in consumer preferences could lead to lower sales and impact the company's financial health[80]. - The introduction of a subscription-based sales model with Cyclon footwear in June 2022 may not be financially viable or well-received by customers[78]. Marketing and Brand Management - The company relies on grassroots marketing efforts and partnerships with premium brand ambassadors to promote its brand[53]. - The company’s ability to connect with consumers through effective marketing strategies is crucial for maintaining brand awareness and driving sales[67]. - The company anticipates that maintaining and enhancing its premium brand may require substantial investments in product design, marketing, and operations[45]. - The company’s brand image may be harmed by negative publicity related to its manufacturing practices or supplier compliance[50]. Environmental and Regulatory Challenges - The company is focusing on eliminating petroleum-based materials, increasing the use of recycled and sustainable materials, such as the 100% recyclable Cyclon shoe made with over 50% bio-based material[121]. - The company’s operations are vulnerable to climate change and environmental risks, which could disrupt supply chains and affect financial performance[136]. - Increased scrutiny from investors regarding environmental, social, and governance (ESG) practices could lead to additional costs and risks, impacting reputation and employee retention[141]. - The company may face increased compliance costs and operational challenges due to new data protection regulations in Switzerland, effective September 1, 2023[178]. Intellectual Property and Legal Risks - The company emphasizes the importance of protecting intellectual property rights, as failure to do so could result in loss of competitive advantage and decreased net sales[143]. - The company relies on a combination of patents, trademarks, and trade secrets to protect its proprietary technologies, including CloudTec and Speedboard[143]. - Certain key patents related to CloudTec technology are set to expire soon, which may reduce competitive advantages in key markets[145]. - The company may increase investments in intellectual property protection, which could be expensive and time-consuming, but necessary for maintaining competitive advantage[154]. Cybersecurity and IT Risks - Cybersecurity threats have escalated, leading the company to invest significantly in IT security measures to protect sensitive information[166]. - The company does not currently maintain a disaster recovery plan, which could hinder recovery from cyber-attacks or data breaches[170]. - Any significant disruption in IT systems could result in operational delays and financial losses[170]. - The company relies on a large number of complex IT systems, and any failure in these systems could disrupt operations and negatively impact scalability and cost savings[180]. Corporate Governance and Shareholder Matters - The dual class structure allows the extended founder team to control approximately 59.7% of the total combined voting power of outstanding shares as of December 31, 2022[214]. - Class B voting rights shares have ten times the voting power of Class A ordinary shares, which may limit shareholder influence on corporate matters[214]. - The company does not intend to pay dividends for the foreseeable future, relying instead on appreciation in the price of Class A ordinary shares for returns[222]. - Recent Swiss corporate law reforms effective January 1, 2023, modernize aspects of corporate governance and strengthen shareholder rights[228].