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SIGNA Sports United (SSU)

Filed: 13 May 22, 8:56am
As filed with the Securities and Exchange Commission on May 13, 2022
Registration No. 333-            
 
 
 
UNITED STATES
SECURITIES AND
EXCHANGE
COMMISSION
Washington, D.C. 20549
 
 

FORM
 
F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
 
SIGNA Sports United N.V.
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
The Netherlands
 
2836
 
Not Applicable
(State or other jurisdiction of
incorporation or organization)
 
(Primary Standard Industrial
Classification Code Number)
 
(IRS Employer
Identification Number)
 
 
Kantstraße 164, Upper West
10623 Berlin, Federal Republic of Germany
+49 (30) 700 108 900
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
 
 
Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, NY 10168
(212)
947-7200
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
 
Copies of all communications, including communications
sent to agent for service, should be sent to:
 
P. Michelle Gasaway, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, CA 90071
(213)
687-5000
 
Stephan Hutter, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Taunustor 1, TaunusTurm
60310 Frankfurt am Main,
Republic of Germany
+49 (69) 742 200
 
 
Approximate date of commencement of proposed sale to the public
: From time to time after this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box.  ☒
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐
Indicate by check mark whether the registrant is 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 term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
 
 
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 Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
 
 
 


 
The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling securityholders may sell or distribute the securities described herein 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 MAY 13, 2022
PRELIMINARY PROSPECTUS
SIGNA Sports United N.V.
1,800,000 ORDINARY SHARES
This prospectus relates to the issuance by us of up to 1,800,000 ordinary shares, nominal value of €0.12 per share (the “Ordinary Shares”) following the conversion of certain cash bonus payments to a corresponding number of Ordinary Shares in the context of the closing of the Business Combination (as defined below) to be issued to certain executive officers, managing directors and senior employees of the SIGNA Sports United group, including, in particular, CRC (as defined below) (the “Cash to Equity Bonus Conversion”) and the offer and sale, from time to time, by the selling securityholders identified in this prospectus (each a “Selling Securityholder” and, collectively, the “Selling Securityholders”), or their permitted transferees, of the up to 1,800,000 Ordinary Shares to be issued as part of the Cash to Equity Bonus Conversion. This prospectus also covers any additional securities that may become issuable by reason of share splits, share dividends or other similar transactions.
This prospectus provides you with a general description of such securities and the general manner in which we and the Selling Securityholders may offer or sell the securities. More specific terms of any securities that we and the Selling Securityholders may offer or sell may be provided in a prospectus supplement that describes, among other things, the specific amounts and prices of the securities being offered and the terms of the offering. The prospectus supplement may also add, update or change information contained in this prospectus.
We will not receive any proceeds from the sale of Ordinary Shares by the Selling Securityholders pursuant to this prospectus. We will pay the expenses, other than underwriting discounts and commissions, associated with the sale of securities pursuant to this prospectus, as described in the section titled “
Plan of Distribution
.”
We are registering the offer and sale of the securities described above to satisfy certain registration rights we have granted in the context of the Cash to Equity Bonus Conversion. Our registration of the securities covered by this prospectus does not mean that the Selling Securityholders will offer or sell any of the securities. The Selling Securityholders may offer all or part of the securities for resale from time to time through public or private transactions, at either prevailing market prices or at privately negotiated prices. These securities are being registered to permit the Selling Securityholders to sell securities from time to time, in amounts, at prices and on terms determined at the time of offering. The Selling Securityholders may sell these securities through ordinary brokerage transactions, directly to market makers of our shares or through any other means described in the section titled “
Plan of Distribution
.” In connection with any sales of Ordinary Shares offered hereunder, the Selling Securityholders, any underwriters, agents, brokers or dealers participating in such sales may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).
We may amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read this entire prospectus and any amendments or supplements carefully before you make your investment decision.
Our Ordinary Shares are traded on the New York Stock Exchange (the “NYSE”) under the symbol “SSU”. On May 9, 2022, the closing price of our Ordinary Shares was $7.58 per share.
We are an “emerging growth company” and a “foreign private issuer” as those terms are defined under the federal securities laws and, as such, are subject to certain reduced public company reporting requirements for this prospectus and for future filings. See “
Prospectus Summary — Implications of Being an Emerging Growth Company and a Foreign Private Issuer
.”
Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 13 and in any applicable prospectus supplement.
Neither the Securities and Exchange Commission (the “SEC”) nor any other regulatory body or state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
Prospectus dated                , 2022
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form
F-1
that we filed with the SEC using a “shelf” registration process. Under this shelf registration process, we and the Selling Securityholders may, from time to time, issue, offer and sell, as applicable, any combination of the securities described in this prospectus in one or more offerings. We may use the shelf registration statement to issue up to an aggregate of 1,800,000 Ordinary Shares as part of the Cash to Equity Bonus Conversion (as defined herein). The Selling Securityholders may use the shelf registration statement to sell up to 1,800,000 Ordinary Shares to be issued as part of the Cash to Equity Bonus Conversion from time to time through any means described in the section entitled “
Plan of Distribution
.” More specific terms of any securities that the Selling Securityholders offer and sell may be provided in a prospectus supplement that describes, among other things, the specific amounts and prices of the Ordinary Shares being offered and the terms of the offering.
A prospectus supplement may also add, update or change information included in this prospectus. Any statement contained in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in such prospectus supplement modifies or supersedes such statement. Any statement so modified will be deemed to constitute a part of this prospectus only as so modified, and any statement so superseded will be deemed not to constitute a part of this prospectus. You should rely only on the information contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus. See “
Where You Can Find More Information
.”
Neither we nor the Selling Securityholders have authorized anyone to provide any information or to make any representations other than those contained in this prospectus, any accompanying prospectus supplement or any free writing prospectus we have prepared. We and the Selling Securityholders take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the securities offered hereby and only under circumstances and in jurisdictions where it is lawful to do so. No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus, any applicable prospectus supplement or any related free writing prospectus. This prospectus is not an offer to sell securities, and it is not soliciting an offer to buy securities, in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus or any prospectus supplement is accurate only as of the date on the front of those documents or as of any earlier date as of which such information is given, regardless of the time of delivery of this prospectus or any applicable prospectus supplement, or any sale of a security. Our business, financial condition, results of operations and prospects may have changed since those dates.
This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, will be filed or will be incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under “
Where You Can Find More Information
.”
Unless otherwise stated or the context otherwise indicates: (i) references to the “Company,” “we,” “our,” or “us” generally refer to SIGNA Sports United N.V. and, as the case may be and the context so indicates, SIGNA Sports United GmbH together with its subsidiaries, (ii) references to “SSU” refer solely to SIGNA Sports United GmbH, a German limited liability company (
Gesellschaft mit beschränkter Haftung
), including, as the case may be, its consolidated subsidiaries, and (iii) references to “Wiggle” or “Wiggle Group” refer to Mapil Topco Limited. SIGNA Sports United N.V. is a Dutch public limited liability company (
naamloze vennootschap
) incorporated as a Dutch private limited liability company (
besloten vennootschap met beperkte aansprakelijkheid
) on May 19, 2021. SIGNA Sports United N.V. was converted into a Dutch public limited liability company and became the holding company of SSU, an online sports specialty retailer focused on the fast-growing product categories bike, tennis/racket sports, outdoor and teamsport and athleisure, on December 14, 2021.
 
ii

CONVENTIONS WHICH APPLY TO THIS PROSPECTUS
In this prospectus, unless otherwise specified or the context otherwise requires:
 
  
“$,” “USD” and “U.S. dollar” each refer to the United States dollar;
 
  
“€,” “EUR” and “Euro” each refer to the Euro; and
 
  
“£,” “GBP” “pound sterling” each refer to the “British pound sterling.”
The exchange rate used for conversion between U.S. dollars and Euros is based on the ECB euro reference exchange rate published by the European Central Bank.
IMPORTANT INFORMATION ABOUT IFRS AND
NON-IFRS
FINANCIAL MEASURES
SSU’s audited financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and referred to in this prospectus as “
IFRS
.”
This prospectus contains
non-IFRS
measures that are not required by, or presented in accordance with, IFRS. We present
non-IFRS
measures because they are used by our management in monitoring our business and because we believe that they and similar measures are frequently used by securities analysts, investors and other interested parties in evaluating companies in our industry.
TRADEMARKS, SERVICE MARKS AND TRADE NAMES
The SSU logo and other trademarks or service marks of SSU appearing in this prospectus are the property of SSU. Solely for convenience, some of the trademarks, service marks, logos and trade names referred to in this prospectus are presented without the
®
and
TM
symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This prospectus contains additional trademarks, service marks and trade names of others, including the trademarks, tradenames and logos of the recently acquired Wiggle Group. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners. We do not intend to use or display of other companies’ trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
MARKET, INDUSTRY AND OTHER DATA
Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including our general expectations and market position, market opportunity and market size estimates, is based on information from independent industry analysts, third-party sources and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from our internal research, and are based on assumptions made by us based on such data and our knowledge of such industry and market, which we believe to be reasonable. In addition, while we believe the market opportunity information included in this prospectus is reliable and is based on reasonable assumptions, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the heading “
Risk Factors
.”
 
iii

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will” and “would,” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. Examples of forward-looking statements in this prospectus include, but are not limited to, statements regarding our disclosure concerning the Company’s operations, cash flows, financial position and dividend policy. These forward-looking statements include, but are not limited to, statements regarding future events, the estimated or anticipated future results and benefits of the Company following the Business Combination (as defined elsewhere in this prospectus), future opportunities for the Company, future planned products and services, business strategy and plans, objectives of management for future operations of the Company, market size and growth opportunities, competitive position, technological and market trends, and other statements that are not historical facts. These statements are based on the current expectations of the Company’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on, by any investor as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. All forward-looking statements are based upon estimates and forecasts and reflect the views, assumptions, expectations, and opinions of the Company, which are all subject to change due to various factors including, without limitation, changes in general economic conditions as a result of COVID-19. Any such estimates, assumptions, expectations, forecasts, views or opinions, whether or not identified in this Report, should be regarded as indicative, preliminary and for illustrative purposes only and should not be relied upon as being necessarily indicative of future results.
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 “
Risk Factors
.” The risks and uncertainties include:
 
  
our future operating or financial results;
 
  
our expectations relating to dividend payments and forecasts of our ability to make such payments;
 
  
our future acquisitions, business strategy and expected capital spending;
 
  
our assumptions regarding interest rates and inflation;
 
  
business disruptions arising from the recent coronavirus outbreak;
 
  
our financial condition and liquidity, including our ability to obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities;
 
  
estimated future capital expenditures needed to preserve our capital base;
 
  
our ability to effect future acquisitions and to meet target returns;
 
  
changes in general economic conditions in the Federal Republic of Germany (“Germany”), including changes in the unemployment rate, the level of consumer prices, wage levels, etc.;
 
  
the further development of online sports markets, in particular the levels of acceptance of internet retailing;
 
iv

  
our behavior on mobile devices and our ability to attract mobile internet traffic and convert such traffic into purchases of our goods;
 
  
our ability to offer our customers an inspirational and attractive online purchasing experience;
 
  
demographic changes, in particular with respect to Germany;
 
  
changes affecting interest rate levels;
 
  
changes in our competitive environment and in our competition level;
 
  
changes affecting currency exchange rates;
 
  
the occurrence of accidents, terrorist attacks, natural disasters, fire, environmental damage, or systemic delivery failures;
 
  
our inability to attract and retain qualified personnel;
 
  
political changes;
 
  
changes in laws and regulations; and
 
  
other factors discussed in “Risk Factors.”
Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in “Risk Factors” in this prospectus. Accordingly, you should not rely on these forward-looking statements, which speak only as of the date of this prospectus. We undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this prospectus or to reflect the occurrence of unanticipated events. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC after the date of this prospectus.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this prospectus. And while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely on these statements.
Although we believe the expectations reflected in the forward-looking statements were reasonable at the time made, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should carefully consider the cautionary statements contained or referred to in this section in connection with the forward-looking statements contained in this prospectus and any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf.
 
v


PROSPECTUS SUMMARY
This summary highlights information contained in more detail 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 sections entitled “
Cautionary Note Regarding Forward-Looking Statements
,” “
Risk Factors
,” “
Business
of SSU
” and “
Management’s Discussion and Analysis of Financial Condition and Results of Operations
,” “
Unaudited Pro Forma Condensed Combined Financial Information
” and the consolidated audited financial statements, including the notes thereto, included elsewhere in this prospectus, before making any investment decision.
Business Summary
Overview
Our group comprises dedicated market leading online sports specialist web shops in the fast-growing product categories bike, tennis/racket sports, outdoor and teamsports and athleisure. As a group, we consider ourselves to be the global number one online sports specialty retailer measured by revenue. We define the relevant market as the global sports retail market in which competition comes from a highly diversified group of competitors, i.e., traditional offline sports retailers, specialist offline sports retailers,
e-commerce
generalists and online sports specialists as well as some leading sporting goods brands. Among this group of competitors, online sports specialist retailers carry a broad range of sports products including hardlines such as equipment, parts and accessories, and softlines such as functional wear and clothing, from only one or more sports product categories such as cycling, outdoor, racquet sports, teamsports, swimming, running or fitness, focusing on sports retailing mainly via online channels and generating the vast majority of sales through online channels, e.g., own websites and marketplaces.
We sell products through various online web shops as well as selected physical locations mainly to customers in the European Union, Switzerland, Norway, the UK and the US, with approximately 274 million website visits and more than 7.1 million net orders (i.e. orders after cancellations and returns) in the fiscal year ended September 30, 2021.
Competitive Advantage
We operate in a large and still underpenetrated online sports retail market characterized by several global megatrends around health, fitness and wellness and related lifestyle and technology trends that drive structural growth in the industry.
We believe that with our leading market position in a highly fragmented market, we are particularly well positioned to benefit from the expected growth of the online sports market. We also differentiate ourselves from generalist online retailers such as Amazon and generalist sports retailers such as Decathlon due to our established and dedicated sports category and channel (e.g., online versus offline) competences based on an expert driven and longstanding product
know-how
as well as superior service offerings tailored to customers’ specific needs. We are also deeply engaged with sports communities through long-standing collaborations with associations and clubs. In light of our proven track record in the multi-brand online sports ecosystem, we believe that we are well prepared to successfully compete against online or offline sports generalists and specialists.
We own leading online category champion destinations in the bike, tennis, outdoor, as well as team sports and athleisure segments in terms of revenue and brand awareness. We provide our customers with an enhanced sports retail solution driving revenue growth and customer loyalty.
 
1

Experienced management team with proven track record
Our management team is led by a highly experienced and dedicated management team with a strong track record. Our chief executive officer, Dr. Stephan Zoll, possesses substantial experience in the areas of online, sports retail, marketing, process management, finance, logistics and technology. Alexander Johnstone is our chief financial officer. Philipp Rossner is our chief strategy officer. Thomas Neumann is our chief technology officer. We also have a dedicated strong
mid-level
management team in charge of our product categories including the respective founders Mr. Miele leading Tennis-Point and Mr. Rochon leading Probikeshop.
Wiggle Group Overview
On December 14, 2021, SSU completed the acquisition of Mapil Topco Limited, a private company limited by shares incorporated in England and Wales (“Wiggle,” together with its subsidiaries, the “Wiggle Group,” and such acquisition, the “Wiggle Acquisition”). For more information about the Wiggle Group, see “
Business of the Wiggle Group
.”
Closing of the Business Combination
On December 14, 2021 (the “Closing Date”), SIGNA Sports United N.V. (f/k/a SIGNA Sports United B.V.) (“SIGNA”) closed the previously announced business combination pursuant to that certain Business Combination Agreement, dated as of June 10, 2021, as amended by Amendment No. 1, dated July 9, 2021, Amendment No. 2, dated October 15, 2021, and Amendment No. 3, dated December 3, 2021 (as amended, the “Business Combination Agreement”), by and among SIGNA, Yucaipa Acquisition Corporation, a Cayman Islands exempted company (“Yucaipa”), SIGNA Sports United GmbH, a German limited liability company (“SSU”), Olympics I Merger Sub, LLC, a Cayman Islands limited liability company (“Merger Sub”), and SIGNA International Sports Holding GmbH, a German limited liability company (“SISH”). At the Closing Date, several transactions were completed pursuant to the Business Combination Agreement, as a result of which Yucaipa merged with and into Merger Sub, with Merger Sub as the surviving company, and SIGNA became the ultimate parent company of SSU and Merger Sub (the “Business Combination”). On December 14, 2021, SSU also completed the Wiggle Acquisition. See “
Certain Relationships and Related Party Transactions
.”
On the Closing Date, SIGNA issued (i) 2,679,315 Ordinary Shares to holders of Class A ordinary shares of Yucaipa, (ii) 9,905,000 Ordinary Shares to holders of Class B ordinary shares of Yucaipa, including Yucaipa Acquisition Manager, LLC, a Delaware limited liability company (the “Yucaipa Sponsor”), (iii) 243,850,473 Ordinary Shares (the “SSU Shares”) to each of the shareholders of SSU that duly delivered a shareholder undertaking agreeing to participate in the transaction prior to the Closing Date in exchange for the contribution by such shareholders of all of their equity interests in SSU (
Geschäftsanteile
), (iv) 31,045,383 Ordinary Shares in partial consideration for the Wiggle Acquisition (the “Wiggle Shares”), (v) 39,700,000 Ordinary Shares to the PIPE Investors (as defined below), SISH and Ronald W. Burkle (as defined below), (vi) 6,000,000 Ordinary Shares to SISH pursuant to the Redemption Offset Agreement (the “Shortfall Shares”) and (vii) options to Stephan Zoll to purchase 1,293,200 Ordinary Shares pursuant to the option agreement entered into on June 10, 2021.
On the Closing Date, SIGNA also issued 51,000,000 Ordinary Shares to SISH, on the terms and subject to the conditions set forth in
the Earn-Out Agreement
(as defined herein), that will vest (in whole or in part) upon, among other things, the achievement of
certain earn-out thresholds
prior to the fifth anniversary of the Closing Date.
On the Closing Date, SIGNA also exchanged all private and public warrants issued by Yucaipa for 17,433,333 of our public warrants the (“Public Warrants”).
 
2

PIPE Financing
On June 10, 2021, concurrently with the execution of the Business Combination Agreement, and in addition on October 7, 2021 and December 3, 2021, SIGNA and Yucaipa entered into subscription agreements (the “Subscription Agreements”) with certain third-party investors (each, a “PIPE Investor” and together, the “PIPE Investors”), SISH and Ronald W. Burkle, pursuant to which, among other things, the PIPE Investors, SISH and Mr. Burkle (or, if assigned pursuant to the terms of his Subscription Agreement, one or more of his affiliates or assignees) agreed to subscribe for and purchase, severally and not jointly, and SIGNA agreed to issue and sell to the PIPE Investors, SISH and Mr. Burkle (or, if assigned pursuant to the terms of his Subscription Agreement, one or more of his affiliates or assignees), an aggregate of 39,700,000 Ordinary Shares (the “PIPE Shares”) in exchange for an aggregate purchase price of $397,000,000 (the “PIPE Financing”) on the Closing Date. The PIPE Financing closed concurrently with the Business Combination.
The Ordinary Shares issued in the PIPE Financing were issued in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.
Implications of Being an Emerging Growth Company and a Foreign Private Issuer
We are an “emerging growth company” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). We will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of the Business Combination, (b) in which we have total annual gross revenue of at least $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of the Ordinary Shares held by
non-affiliates
exceeds $700 million as of the last business day of our prior second fiscal quarter, and (ii) the date on which we issued more than $1.0 billion in
non-convertible
debt during the prior three-year period. We intend to take advantage of exemptions from various reporting requirements that are applicable to most other public companies, whether or not they are classified as “emerging growth companies,” including, but not limited to, an exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requiring that our independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting and reduced disclosure obligations regarding executive compensation. The JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in the Securities Act for complying with new or revised accounting standards.
As a “foreign private issuer,” we are subject to different U.S. securities laws than domestic U.S. issuers. The rules governing the information that we must disclose differ from those governing U.S. corporations pursuant to the Exchange Act. We will be exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements to shareholders. Those proxy statements are not expected to conform to Schedule 14A of the proxy rules promulgated under the Exchange Act. In addition, as a “foreign private issuer,” our officers and directors and holders of more than 10% of the issued and outstanding Ordinary Shares, will be exempt from the rules under the Exchange Act requiring insiders to report purchases and sales of ordinary shares as well as from Section 16 short swing profit reporting and liability.
 
3

Summary of Risk Factors
Investing in our securities involves a high degree of risk. You should consider all the information contained in this prospectus before investing in our securities. These risks are discussed more fully in the section entitled “Risk Factors.” If any of these risks actually occur, our business, financial condition or results of operations would likely be materially adversely affected. These risks include, but are not limited to, the following:
Risks Related to the Industry in Which We Operate and Our Business Activities
 
  
The sports retail industry in our markets is very competitive and our ability to compete depends on a large variety of factors both within and beyond our control.
 
  
Negative developments in global and local economic conditions in our markets, including the
COVID-19
pandemic if it continues as well as severe supply chain interruptions, adversely impact and could continue to adversely impact consumer spending in the sports retail industry as well as our results of operations and prospects.
 
  
We may not be able to maintain or grow our revenue or our business, if we are unable to manage our organic growth effectively; this could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
 
  
We have incurred significant operating losses since our inception, and there is no guarantee that we will achieve or maintain profitability in the future.
 
  
Our management team has limited experience managing a public company, and publicly traded company reporting, control and compliance requirements could divert resources from the day-to-day management of our business.
 
  
Our growth strategy includes entering new geographic markets and pursuing new business opportunities, developing new websites or apps, or offering new products, sales formats or services, and the related investments may not yield the targeted results.
 
  
Our business depends on strong brands, which we might not be able to maintain or enhance and we may be subject to negative publicity, which could harm our business, financial condition, cash flows, results of operations and prospects.
 
  
Our business depends on search engines to attract a substantial portion of the customers who visit our sites. An increase in the cost of or in our reliance on search engine marketing or any decrease in the effectiveness of our search engine marketing could materially adversely affect our business.
 
  
We are involved in and may pursue strategic relationships. We may have limited control over such relationships, and these relationships may not provide the anticipated benefits.
 
  
We rely on external financing to support the continued growth of our business and may not be able to raise needed capital on economically acceptable terms, or at all.
 
  
We rely on third parties for development and maintenance of internet infrastructure, suppliers for the products we sell, and fulfillment and distribution of our products to end customers; and any deterioration in those business relationships may materially and adversely affect our business.
 
  
We are exposed to the risk of security breaches, including cyber-attacks, and unauthorized use of one or more of our websites, databases, online security systems or computerized logistics management systems.
 
  
We are subject to various regulations applying to
e-commerce
and tech businesses generally, including but not limited to regulations governing cyber security, data protection, consumer protection, product safety and trademarks, and future regulations might impose additional requirements and other obligations on our business.
 
4

  
Product recalls, product liability claims and breaches of corporate social responsibility could harm our reputation and business.
Risks Related to the Acquisition of Wiggle
 
  
We may not be successful in integrating Wiggle into our existing business in the manner, or within the time frame, as currently anticipated or only at higher costs.
 
  
Potential tariffs or uncertainty surrounding the exit of the United Kingdom from the European Union could have a material adverse effect on Wiggle’s business.
Corporate Information
We were incorporated as a Dutch private limited liability company (
besloten vennootschap met beperkte aansprakelijkheid)
under the name SIGNA Sports United B.V. on May 19, 2021 solely for the purpose of effectuating the business combination (the “Business Combination”) between us, Yucaipa Acquisition Corporation, a Cayman Islands exempted company (“Yucaipa”), SIGNA Sports United GmbH, a German limited liability company, Olympics I Merger Sub, a Cayman Islands limited liability company (“Merger Sub”), and SIGNA International Sports Holding GmbH, a German limited liability company (“SISH”). Upon the closing of the Business Combination on December 14, 2021, we converted into a Dutch public limited liability company (
naamloze vennootschap
) and changed our name to SIGNA Sports United N.V. The Business Combination also included the acquisition of Mapil TopCo Limited and Chain Reaction Cycles Retail Limited (“CRC”) (together with its subsidiaries, the “Wiggle Group”) by SSU. The Wiggle Group is a leading online sports retailer of specialist cycling, running and swimming equipment, apparel and accessories headquartered in the UK.
Prior to the Business Combination, we did not conduct any material activities other than those incident to our formation and certain matters related to the Business Combination, such as the making of certain required securities law filings and the establishment of subsidiaries to effect the Business Combination. Upon the closing of the Business Combination, SSU became the direct, wholly owned subsidiary of the Company, and holds all material assets and conducts all business activities and operations of the Company.
We are registered in the Commercial Register of the Chamber of Commerce (
Kamer van Koophandel
) in the Netherlands under number 82838194. We have our corporate seat in Amsterdam, the Netherlands and the mailing address of our principal executive office is at Kantstraße 164, Upper West, 10623 Berlin, Federal Republic of Germany, and our telephone number is +49 (30) 700 108 900.
 
5


THE OFFERING
 
Ordinary shares to be issued
Up to 1,800,000 Ordinary Shares to be issued as part of the Cash to Equity Bonus Conversion.
 
Cash to Equity Bonus Conversion
The conversion of certain cash bonus payments to a corresponding number of Ordinary Shares in the context of the closing of the Business Combination (as defined elsewhere in this prospectus) to be issued to certain executive officers, managing directors and senior employees of the SIGNA Sports United group, including, in particular, CRC (as defined below).
 
Ordinary shares that may be offered and sold from time to time by the Selling Securityholders
Up to 1,800,000 Ordinary Shares to be issued as part of the Cash to Equity Bonus Conversion.
 
Ordinary shares outstanding as of March 31, 2022
336,966,204 Ordinary Shares (assumes the options provided to Stephan Zoll under the Option Agreement entered into by and between the Company and Stephan Zoll on June 10, 2021 have been exercised)
 
Offering price
The Ordinary Shares offered by this prospectus may be offered and sold at prevailing market prices, privately negotiated prices or such other prices as the Selling Securityholders may determine. See the section titled “
Plan of Distribution
”.
 
Use of proceeds
All of the Ordinary Shares offered by the Selling Securityholders pursuant to this prospectus will be sold by the Selling Securityholders for their respective accounts. We will not receive any of the proceeds from such sales and we will not receive any proceeds from the issuance of the Ordinary Shares as part of the Cash to Equity Bonus Conversion, pursuant to this prospectus.
 
Dividend policy
We have never declared or paid any cash dividends and have no plan to declare or pay any dividends on our Ordinary Shares in the foreseeable future. We currently intend to retain any earnings for future operations and expansion.
 
 
Under Dutch law, we may only pay dividends and other distributions from our reserves to the extent our shareholders’ equity (
eigen vermogen
) exceeds the sum of our
paid-in
and
called-up
share capital plus the reserves we must maintain under Dutch law or our articles of association (the “Articles of Association”) and (if it concerns a distribution of profits) after adoption of our statutory annual accounts by the General Meeting from which it appears that such dividend distribution is allowed. Subject to those restrictions, any future determination to pay dividends or other distributions from our
 
6

 
reserves will be at the discretion of our board of directors (the “Board”) and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors we deem relevant. See the section titled “
Dividend Policy
.”
 
Market for our Ordinary Shares
Our Ordinary Shares are listed on the NYSE under the symbol “SSU.”
 
Risk factors
Investing in our securities involves a high degree of risk. See “
Risk Factors
” beginning on page 13 of this prospectus for a description of certain of the risks you should consider before investing in our Ordinary Shares.
 
7

SELECTED CONSOLIDATED HISTORICAL AND OTHER FINANCIAL INFORMATION
Selected Historical Financial Data of SSU
The following tables set forth selected historical consolidated financial information and operating data for SSU as of and for the fiscal years ended September 30, 2021 and 2020. You should read the following selected historical financial information and operating data in conjunction with SSU’s consolidated financial statements and related notes, all included elsewhere in this prospectus. SSU derived the selected consolidated statements of profit or loss data, the selected consolidated statements of financial position data and the selected statement of cash flows data for the fiscal years ended September 30, 2021 and 2020 from SSU’s audited consolidated financial statements for the fiscal year ended September 30, 2021 and 2020 prepared based on IFRS included elsewhere in this prospectus.
Consolidated Statement of Profit or Loss Data
 
   
For the fiscal year ended
September 30,
 
   
    2021    
   
    2020    
 
   
(audited)
 
Revenue
  
 
872.0
 
  
 
703.2
 
Own work capitalized
   3.8    3.3 
Other operating income
   6.1    1.5 
Cost of materials
   (534.1   (449.6
Personnel expenses
   (98.1   (75.5
Other operating expenses
   (255.2   (175.7
Depreciation, amortization and impairment
   (30.9   (25.6
Operating result
  
 
(36.5
  
 
(18.4
Finance income
   3.0    0.2 
Finance costs
   (9.7   (8.7
Result from investments accounted for at equity
   (1.3   (0.7
Earnings before tax (EBT)
  
 
(44.4
  
 
(27.6
Income tax expense (prior year benefit)
   (1.6   1.9 
Loss for the period
  
 
(46.0
  
 
(25.6
of which attributable to
non-controlling
interests
   —      (0.9
of which attributable to the owners of SIGNA Sports United GmbH
   (46.0   (24.8
Loss per shares
          
Basic and diluted loss per share
   (2.6   (1.4
 
 
8

Consolidated Statement of Financial Position
Assets
 
   
As of
September 30,
 
   
2021
   
2020
 
   
(audited)
 
Property, plant and equipment
   37.7    33.9 
Right-of-use-assets
   60.6    35.3 
Intangible assets and goodwill
   326.8    313.7 
Investments accounted for using the equity method
   0.0    0.7 
Other
non-current
financial assets
   1.4    0.6 
Non-current
assets
  
 
426.6
 
  
 
384.2
 
Inventories
   181.9    147.8 
Trade receivables
   26.3    21.6 
Other current financial assets
   24.0    13.3 
Other current assets
   33.4    19.5 
Cash and cash equivalents
   50.7    95.6 
Current assets
  
 
316.3
 
  
 
297.8
 
Total assets
  
 
742.9
 
  
 
682.0
 
Equity and liabilities
 
   
As of
September 30,
 
   
2021
   
2020
 
   
(audited)
 
Share capital
   17.6    17.6 
Share capital – not yet registered (convertible loan)
   1.7    —   
Share capital – not yet registered (NCI)
   2.0    —   
Capital reserve
   558.4    370.4 
Retained earnings
   (206.3   (64.6
Other reserves
   (0.0   (0.7
Capital and reserves attributable to the owners of SIGNA Sports United GmbH
  
 
373.4
 
  
 
322.7
 
Non-controlling
interests
   —      24.4 
Total equity
  
 
373.4
 
  
 
347.1
 
Non-current
provisions
   0.1    0.1 
Non-current
financial liabilities
   140.4    138.9 
Other
non-current
liabilities
   1.0    0.1 
Deferred tax liabilities
   40.2    39.6 
Non-current
liabilities
  
 
181.6
 
  
 
178.6
 
Current provisions
   4.9    2.9 
Trade payables
   102.7    79.3 
Other current financial liabilities
   27.7    28.2 
Other current liabilities
   47.9    40.2 
Contract liabilities
   4.7    5.7 
Current liabilities
  
 
187.9
 
  
 
156.3
 
Total liabilities
  
 
369.5
 
  
 
334.9
 
Total equity and liabilities
  
 
742.9
 
  
 
682.0
 
 
9

Consolidated Statement of Cash Flows
 
   
For the fiscal
year ended
September 30,
 
   
2021
   
2020
 
   
(audited)
 
   
(in € million)
 
Earnings before taxes
  
 
(44.4
  
 
(27.6
Adjustments for
          
Depreciation and amortization
   30.9    25.6 
Income from investments accounted for using the equity method
   1.3    0.7 
Net finance costs
   6.7    8.5 
Other
non-cash
income and expenses
   (1.2   0.1 
Change in other
non-current
assets
   (0.7   (0.2
Change in other non-current liabilities
   0.7    (0.3
Change in inventories
   (29.2   (10.9
Change in trade receivables
   (4.6   (1.1
Change in other current financial assets
   (10.7   (3.5
Change in other current assets
   (12.2   4.4 
Change in current provisions
   2.0    2.5 
Change in trade payables
   19.0    (9.0
Change in other current financial liabilities
   7.8    (5.1
Change in other current liabilities
   5.1    9.6 
Change in contract liabilities
   (1.0   2.2 
Income tax payment
   0.1    (0.1
Net cash flow from operating activities
  
 
(30.4
  
 
(4.2
Acquisition of intangible assets and property, plant and equipment
   (24.2   (26.5
Proceeds from the sale of intangible assets and property, plant and equipment
   0.1    0.0 
Acquisition of subsidiaries, net of cash acquired
   (7.5   (0.3
Acquisition of shares in equity method investments
   —      (1.2
Net cash flow from investing activities
  
 
(31.6
  
 
(28.0
Proceeds from capital contributions
   —      —   
Proceeds from the issue of convertible loans
   —      24.4 
Proceeds from financial liabilities to shareholders
   —      0.0 
Acquisitions of NCI
   (4.7   (0.4
Repayments of financial liabilities to related parties
   (1.3   (25.2
Proceeds from financial liabilities to financial institutions
   75.0    34.8 
Repayment of financial liabilities to financial institutions
   (38.0   (1.3
Repayment of other loans
   —      (0.4
Payments for lease liabilities
   (10.4   (7.8
Interest paid
   (3.6   (4.4
Net cash flow from financing activities
  
 
17.1
 
  
 
19.7
 
Effects of movements in exchange rates on cash held
  
 
0.0
 
  
 
0.0
 
Change in cash and cash equivalents
  
 
(44.8
  
 
(12.5
Cash and cash equivalents as of October 1
   95.6    108.1 
Cash and cash equivalents as of September 30
   50.7    95.6 
 
10

SELECTED UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following selected unaudited pro forma condensed combined balance sheet as of September 30, 2021 and the selected unaudited pro forma condensed combined statements of profit or loss for the twelve-month period ended September 30, 2021 are based on SSU’s and Wiggle’s historical consolidated financial statements prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) and Yucaipa’s historical financial statements and gives effect to all of the transactions contemplated by the Business Combination Agreement, the Wiggle Acquisition and the PIPE Financing (together, the “Transaction”).
The historical financial information has been adjusted to give effect to the events that are related and/or directly attributable to the Transaction, are factually supportable and are expected to have a continuing impact on the combined results. The adjustments presented in the selected unaudited pro forma condensed combined financial statements have been identified and presented to provide relevant information necessary for an understanding of the combined company upon consummation of the Transaction.
The selected unaudited pro forma condensed combined balance sheet as of September 30, 2021, assumes that the Business Combination was consummated on September 30, 2021.
The selected unaudited pro forma condensed combined statements of profit or loss for the twelve-month period ended September 30, 2021 assume that the Business Combination was consummated on October 1, 2020.
The selected unaudited pro forma condensed combined financial information should be read together with SSU’s, Wiggle’s and Yucaipa’s financial statements and related notes, “
Management’s Discussion and Analysis of Financial Condition and Results of Operations
” and other financial information included elsewhere in this prospectus.
The selected unaudited pro forma condensed combined financial information is presented for illustrative purposes only. Such information is only a summary and should be read in conjunction with the section titled “
Unaudited Pro Forma Condensed Combined Financial Statements
.” The assumptions and estimates underlying the unaudited pro forma adjustments are described in the notes to the accompanying unaudited pro forma condensed combined financial information. The financial results may have been different if the companies always had been combined. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.
For details regarding all of the pro forma adjustments made, please see the section entitled “
Unaudited Pro Forma Condensed Combined Financial Information
.”
Selected Unaudited Pro Forma Condensed Financial Information
 
(in € million, except per share data)
  
SSU

(Historical)
   
Yucaipa

(Historical)
1)
  
Wiggle

(Historical)
1)
  
Pro
Forma
2)
 
Balance Sheet Data as of September 30, 2021
                  
Cash and cash equivalents
   50.7    0.0   54.9   96.6 
Total assets
   742.9    298.1   299.8   1,463.8 
Total equity
   373.4    (30.5  (265.0  914.1 
Total liabilities
   369.5    328.6   564.8   549.7 
 
11

(in € million, except per share data)
  
SSU

(Historical)
  
Yucaipa

(Historical)
1)
  
Wiggle

(Historical)
1)
  
Pro
Forma
2)
 
Statement of Profit or Loss Data for the Twelve-Month Period Ended September 30, 2021)
                 
Revenue
   872.0   —     411.9   1,283.8 
Operating result
   (36.5  (4.3  28.6   (210.0
Loss for the period
   (46.0  (2.4  (1.8  (189.7
Loss per share — basic and diluted
               (0.57
 
1)
Yucaipa and Wiggle have historically prepared their financial statements in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and IFRS with the U.S. Dollar ($) and British pound sterling (£) as their reporting currency, respectively. The respective historical column gives effect to adjustments required to convert Yucaipa’s historical financial information to IFRS, its financial statement presentation (function) to SSU’s presentation (nature) and its reporting currency to Euros and Wiggle’s financial statement presentation to SSU’s presentation and its reporting currency to Euros. See “
Foreign Currency Alignment and Reclassification Adjustments
” in the section titled “
Unaudited Pro Forma Condensed Combined Financial Statements
.” The historical financial information for Wiggle relates to September 26, 2021 and the 52 weeks ended on September 26, 2021.
2)
The pro forma column gives effect to the actual amount of redemptions by stockholders of Yucaipa at the closing of the Transaction.
3)
Yucaipa’s historical statement of profit or loss data for the twelve-month period ended September 30, 2021 is based on Yucaipa’s audited statement of operations for the period from June 4, 2020 (inception) through December 31, 2020, as restated, subtracted by Yucaipa’s unaudited condensed statement of operations for the period from June 4, 2020 (inception) through September 30, 2020, as restated, and adding Yucaipa’s unaudited condensed statement of operations for the nine-month period ended September 30, 2021, as restated. See “
Foreign Currency Alignment and Reclassification Adjustments
” in the section titled “
Unaudited Pro Forma Condensed Combined Financial Statements
.”
 
12

RISK FACTORS
Investing in our securities involves a high degree of risk. In addition to the other information set forth in this prospectus, including the section entitled “Cautionary Note Regarding Forward-Looking Statements,” you should carefully consider the risk factors discussed below when considering an investment in our securities and any risk factors that may be set forth in the applicable prospectus supplement, any related free writing prospectus, as well as the other information contained in this prospectus, any applicable prospectus supplement and any related free writing prospectus. If any of the following risks occur, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that case, the market price of our securities could decline and you could lose some or all of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.
Risks Related to the Industry in Which We Operate
The sports retail industry in our markets is very competitive and our ability to compete depends on a large variety of factors both within and beyond our control.
The sports retail industry is fragmented and characterized by intense competition. Each of our regional brands faces increasing competitive pressure both online and offline and from local and international players, impacting their ability to grow, sustain profitability and retain and grow market share. The diverse group of sports retailers with which we compete includes, but is not limited to:
 
  
pure-play online sports retailers with business models similar to ours;
 
  
general
e-commerce
retailers and marketplaces attempting to increase their presence across a range of product categories;
 
  
offline-focused, vertically-integrated local retailers and brands, as well as international companies seeking to enter our geographic markets, who are expanding their own online and offline market share space using their own websites and apps; and
 
  
offline stores and mail order retailers focused on or including sports that use their brand, customer reach and fulfillment infrastructure to expand their online sports market shares.
Some of our current and potential future competitors have longer operating histories, greater financial resources, a larger customer base and wider reach or better economies of scale than we do. New market entrants may appear and some of our current smaller competitors may be acquired by, receive investment from or enter into strategic relationships with well-established and well-funded companies or investors who would enhance their competitive positions, potentially leading to reduced sales, lower profitability, and loss of market share for us. Moreover, as has happened in several of our regions in the past, competitors may significantly discount their prices on merchandise also offered by us. Such intensive price competition could negatively affect our ability to generate revenues as well as our profitability. Additionally, individual, strong competitors could expand their market presence in our current or future geographies and thus create a market controlling position for themselves, which could make it more difficult for us to expand our own market position.
In addition, some of our brand partners and suppliers are producers or distributors of sports products that sell their products directly to
end-customers
independent of any partnership with us. We could experience additional competitive pressure if such suppliers initiate or successfully expand their own online retail operations, as they have access to their merchandise at lower costs and can therefore sell such merchandise at lower prices while maintaining higher margins on their revenue than we can. We also face competition from the grey market,
i.e.
, sports product imports that have not been authorized by the brand owner. In addition, as a result of the challenges presented by
COVID-19,
sports retailers and brands that previously have not used
e-commerce
channels to market their products may establish their own online presence or sell their goods in cooperation with our existing competitors, which may create new or strengthen existing competition.
 
13

We believe these factors make our industry especially competitive, with the potential for increased competition in the future. As a result, we believe that our ability to compete will depend on factors both within and beyond our control, including, but not limited to:
 
  
our ability to offer a convenient, efficient and reliable shopping experience for our customers in our regions and to adapt to evolving or local consumer preferences;
 
  
the development, brand recognition and reputation of our brands, relative to those of our competitors;
 
  
the growth, size and composition of our customer base and our ability to increase the number of repeat purchases from active customers;
 
  
the composition of and the quality of relationship with our supplier base, and its subsequent impact on the selection and price of products we feature on our sites;
 
  
the perception of our technical and operational capabilities, e.g. our websites, tools and apps as attractive distribution channels and service partners for our brand partners and suppliers;
 
  
our ability to create and expand proprietary brands that are recognized for high quality and generate attractive margins for us;
 
  
our ability to expand our product offering into new product categories and into new geographies;
 
  
our ability to create efficient and cost-effective advertising and marketing efforts to acquire new customers;
 
  
our ability to develop and manage new and existing technologies and sales channels in a timely manner;
 
  
our ability to collect, consolidate and leverage our data in order to improve our various operational processes and to drive new business models both for consumers and our brand partners;
 
  
the efficiency, reliability and service quality of our fulfillment operations, including fulfillment center activities, distribution, payment and customer service;
 
  
the legal framework on
e-commerce
and related legislation governing liability, obligations and supervisory oversight; and
 
  
our ability to offer convenient payment methods for every customer.
Any failure to properly address these factors and to successfully compete against current or future competitors could negatively affect our ability to attract and retain customers as well as brand partners and to achieve growth and sustainable profitability, which could, in turn, have a material adverse effect on our business, financial condition, results of operations and prospects.
Negative developments in global and local economic conditions in our markets, including the
COVID-19
pandemic if it continues as well as severe supply chain interruptions, adversely impact and could continue to adversely impact consumer spending in the sports retail industry as well as our results of operations and prospects.
We sell sports products mainly online. Purchases of our customers are discretionary, and therefore dependent upon the level of customer spending, particularly among affluent customers. As a result, our performance depends on global and regional economic conditions, which, however, have shown significant volatility in recent years. For example, as a result of the
COVID-19
pandemic and the measures taken by various governments to combat its spread most countries in which we operate fell into recession in 2020. Our home market Germany, which had seen a long period of stable economic growth since the financial and economic crisis of 2008/2009, reported a 5% decline in its gross domestic product (GDP) for 2020 compared to 2019 (
source: Destatis (Press release #20 of January
 14, 2021
)), followed by an increase of 2.7% of GDP for 2021
 
14

compared to 2020 (
source: Destatis (Press release #20 of January 14, 2022)
). However, this still represents a 2% decline in GDP in 2021 compared to 2019 (
source: Destatis (Press release #20 of January 14, 2022)
) and it can be expected that the ongoing pandemic and related counter-measures will at best continue to dampen economic prospects in Europe in the short term. While the
COVID-19
crisis contributed to growth in the sports retail industry in 2020, following the end of government support programs a continued economic downturn in one or more of our markets may result in higher levels of unemployment or other negative macro-economic developments that can, as a consequence materially negatively affect consumer confidence and discretionary consumer spending, including purchases of sports products.
In addition, adverse economic developments in the countries in which we generate our revenue could adversely affect the collection of accounts receivable from our customers due to deterioration in credit quality and increase our inventory risk. There is also a risk of increased taxes, for the purpose of addressing the extraordinary levels of public spending and public debt related to the
COVID-19
pandemic, in some or all of the European countries in which we sell our merchandise. Tax increases that lead to increases in the sales prices of our products or the prices of services we purchase or offer or reduce the income available for consumption could also weaken demand for our sports products.
Furthermore, there is no guarantee that our markets will continue to grow at rates experienced in the recent past, or at all. In particular, there is no certainty that our growth continues to be supported by an increasing shift from offline to online retail in the markets in which we operate (particularly in our bike vertical). There is no guarantee that the growth in demand, which has been significantly driven by the
COVID-19
pandemic, will continue sustainably after the end of the
COVID-19
pandemic. Additionally, we have been adversely impacted by the
on-going
COVID-19
related supply chain disruption, which began in early 2021 and has had a significant negative impact on our ability to service the increased consumer demand for our products, and therefore, our revenues. Although we expect to continue to grow the market for our products at rates experienced in the recent past once the
COVID-19
related supply chain disruption normalizes, we cannot predict with certainty if and when the supply chain disruption will resolve and whether demand for our products will increase as currently anticipated. Consequently, we may not be able to recoup the investments made in these markets and may be forced to close, or decide to divest, our operations in selected markets, which could have an adverse material effect on the implementation of our expansion strategy and our results of operations and prospects.
Risks Related to Our Business Activities
We have incurred significant operating losses since our inception, and there is no guarantee that we will achieve or maintain profitability in the future.
We have not yet generated any consolidated net profit. In the fiscal year ended September 30, 2020, SSU’s group wide loss amounted to €25.6 million and to €46.0 million in the fiscal year ended September 30, 2021. These losses are primarily attributable to the costs associated with building and growing SSU’s business such as marketing expenses, geographic expansion and investments to further developing SSU’s platform. Our business plan is premised on our ability to benefit from the expected growth of, and increasing
e-commerce
penetration in, our regional markets. If our markets experience disruptive political or economic events or otherwise fail to grow, or if local governments restrain us from continuing to do business as SSU has done in the past or at all, our growth prospects may not materialize, which may negatively affect our profitability or may even force us to cease operating in certain regions. Even in a stable political and economic environment, we must invest significant resources into organic growth opportunities such as building relationships with sports brands, enhancing the customer experience, driving market campaigns to gain new and retain existing customers, improving and expanding our technology and fulfillment infrastructure and other areas in order to capitalize on any potential growth opportunities. These investments may prove more expensive than anticipated and may not yield the desired results. There can be no assurance that we will be able to achieve or maintain profitability in the future. Continued losses would have a material adverse effect on our business, financial condition, results of operations and prospects.
 
15

Our management team has limited experience managing a public company, and publicly traded company reporting, control and compliance requirements could divert resources from the day-to-day management of our business.
Our management team has limited experience managing a publicly traded company and complying with the increasingly complex laws pertaining to public companies. Our management team might not successfully or efficiently manage our transition to being a public company subject to significant regulatory oversight and reporting obligations under applicable laws and regulations. These new obligations will require substantial attention from our management team and could divert their attention away from the day-to-day management of our business.
As a public company, we are subject to additional reporting and disclosure requirements. In the fiscal year ended September 30, 2021, SSU identified material weaknesses in SSU’s internal controls related to (i) the design and maintenance of effective entity level controls to identify business risks relevant to financial reporting objectives, estimate the significance of the risks, assess the likelihood of their occurrence and determine actions to address those risks, (ii) the adequate number of individuals within its accounting and financial reporting function with sufficient training in IFRS and SEC reporting standards, (iii) the design and maintenance of formal and effective controls over certain general information technology controls for IT systems, (iv) the design and maintenance of effective controls to ensure the completeness of accounts payable and vendor accruals, (v) the design and maintenance of effective controls to ensure that revenue was recorded in the correct accounting period and (vi) the design and maintenance of effective controls to ensure the appropriateness of the estimate of the recoverable amount of goodwill and indefinite-lived intangible assets. We have developed and are in the process of implementing a remediation plan to address these control deficiencies, which we believe will address the underlying causes of these material weaknesses. Please also refer to “
We are aware of material control and accounting weaknesses in our current finance organization. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which is likely to negatively affect our business and the market price of our Ordinary Shares
.”
Notwithstanding the actions already taken, management’s attention may be diverted from other business concerns and we may be required to hire and train additional employees or engage outside consultants to comply with these requirements and additional Sarbanes-Oxley Act requirements applicable to us in the future, which would increase costs and expenses. Any compliance failure could harm our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects. Compliance with these rules and regulations will increase our legal and financial compliance costs and may make some activities more time-consuming than they were previously. For example, our accounting, controlling, legal or other corporate administrative functions may not be capable of responding to these additional requirements without difficulties and inefficiencies that may cause us to incur significant additional expenditures and/or expose us to legal, regulatory or civil costs or penalties. Any non-compliance could result in significant fines or other penalties. To secure compliance it may become necessary to hire further employees or purchase outside services which may in turn interfere with our lean organizational set-up, increase our costs and expenses, and may therefore have a material adverse effect on the operation of our business as well as on our financial condition.
We regularly pursue acquisitions, any of which could result in significant additional expenses, failure to achieve anticipated benefits, or failure to be properly integrated.
As part of our business strategy, we regularly engage in acquisitions of other companies, businesses or assets. Acquisitions involve numerous risks, any of which could harm our business, including but not limited to:
 
  
difficulties in integrating the technologies, operations, existing contracts and personnel of acquired businesses;
 
  
difficulties in supporting, retaining and transitioning customers or suppliers of an acquired company;
 
16

  
diversion of financial and management resources from existing operations or alternative acquisition opportunities;
 
  
failure to realize the anticipated benefits or synergies of a transaction;
 
  
failure to identify all of the problems, liabilities or other shortcomings or challenges of an acquired company or technology, including issues related to intellectual property, regulatory compliance, accounting practices or employee or customer issues;
 
  
risks of entering new product categories or markets in which we have limited or no experience;
 
  
potential loss of key employees, customers and suppliers from either our current business or an acquired company’s business;
 
  
inability to generate sufficient net revenue, profits and/or financial benefits to offset acquisition costs;
 
  
additional costs or equity dilution associated with funding the acquisition; and
 
  
potential write-offs or impairment charges relating to acquired businesses.
If, in the context of any future acquisition, we fail to properly assess the merits of the acquisition target, incur costs that later prove to be unjustified, fail to integrate the acquisition into our business properly and in a cost-efficient manner, or incur liabilities that prove to be larger than anticipated, it could have a material adverse effect on our business, financial condition and results of operations. Failure to provide our customers with an inspiring personalized online sports experience and to adapt to the fast-changing landscape (including, but not limited to social media platforms, sports brands, associations and clubs) could limit our growth and prevent us from achieving or maintaining profitability.
We may not be able to maintain or grow our revenue or our business.
SSU experienced significant growth in the past, with revenue increasing from €413.3 million in the fiscal year ended September 30, 2018 to €872.0 million in the fiscal year ended September 30, 2021, corresponding to a compound annual growth rate (“
CAGR
”) of 62%. Likewise, the number of site visits increased from 178.7 million in the fiscal year ended September 30, 2018 to 274.7 million in the fiscal year ended September 30, 2021, corresponding to a CAGR of 33%. However, there can be no assurance that we will be able to sustain these historic growth levels, or that we will continue to experience significant above-market growth or any growth at all. In addition, we anticipate that our growth rate will decline over time, especially in our first-party
e-commerce
business, as we achieve higher market penetration rates in all markets in which we operate. To the extent growth rate in the first-party business slows, our business performance will become increasingly dependent on our ability to achieve economies of scale by, among other things, using our operating leverage, increasing our fulfillment efficiencies and reducing marketing costs in relation to our revenue and to expand into adjacent business models and new strategies to maintain growth. We have made and are continuing to make investments in optimizing and localizing our overall customer experience, our fulfillment and technology infrastructure and the development of mobile applications. However, there is no assurance that these efforts will be sufficient to grow our revenue or business in total or in relation to the costs we incur. In particular, there is no certainty that our revenue growth continues to be supported by an increasing shift from offline to online retail in the markets in which we operate (particularly in our bike vertical), which has been significantly driven by the
COVID-19
pandemic and that our new services and offerings leveraging our platform capabilities for industry partners and other market participants will be successful and will lead to complementary growth. There is no guarantee that the revenue growth driven by the increase in demand attributable to the
COVID-19
pandemic will continue sustainably after the end of the
COVID-19
pandemic. In addition, our revenue has been adversely impacted by the
on-going
COVID-19
related supply chain disruption, which began in early 2021 and has had a significant negative impact on our ability to service the increased consumer demand for our products. Although we expect our revenue to increase once the
COVID-19
related supply chain disruption normalizes, we cannot predict with certainty if and when the supply chain disruption will resolve and whether demand for our products will increase as currently
 
17

anticipated. If our efforts and strategies should prove to be unsuccessful, our revenue growth slows or if our revenue declines, this could have a material adverse effect on our business, financial condition, results of operations and prospects.
If we are unable to manage our organic growth effectively, this could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
While we have taken steps to further enable the scalability of our business, our underlying businesses continue to operate, to a large degree, as separate entities. A primary operational target of us is to create a more integrated
e-commerce
and technology platform across our businesses as well as integrated back-office functions to enable us to realize revenue and cost-saving synergies in the context of a rapidly growing market. If we continue to experience organic growth at similar or higher levels than currently envisaged, we may be required to further upscale our technical
IT-platform
as well as expand and improve our fulfillment infrastructure, enterprise resource planning, logistics, customer service and related functions beyond what is currently planned to further support the growth and harmonize our
e-commerce
and technology platform. Our existing teams may not be adequately staffed to handle an increase in the workload. In addition, our workforce management may prove insufficient for our expanding business and growth plans. Our continued growth strategy therefore depends on our ability to hire new and qualified personnel in the near future and there is no guarantee that we will be able to hire the required number of employees with the adequate qualifications to expand our business in a timely manner and on acceptable terms.
Continued growth may also require us to expand and improve our operational, IT, financial, accounting, compliance and management controls and reporting systems and to make significant capital expenditures in offline sites and facilities, which may not always be possible or prove lengthy or costly. If we are unable to successfully handle future growth, we may be required to take steps to slow down our growth, which may adversely affect our business and competitive position.
If we experience significant future growth, we may also have to expand our relationships with various suppliers and other third parties we do business with and to expend time and effort to integrate new suppliers and other third parties into our operations. The expansion of our business could exceed the capacities of certain of our suppliers and third parties willing to do business with us and if they are unable to keep up with our growth, our operations could be adversely affected.
In addition, an expansion of our
e-commerce
and technology platform, in particular our
IT-infrastructure,
as well as our relationships with a growing number of third parties and a growing workforce will make our operations more complex and challenging. There is no guarantee that we will be able to meet such challenges and the risk of disruptions and compliance violations may increase
An inability to manage future growth efficiently could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
Our growth strategy includes entering new geographic markets and pursuing new business opportunities, developing new websites or apps, or offering new products, sales formats or services, and the related investments may not yield the targeted results.
As part of our growth strategy we continuously search for opportunities to expand into new geographic markets, such as recently into the United Kingdom and the United States of America (“United States” or “U.S.”) as a result of the acquisition of Midwest Sports, Wiggle and Tennis Express. While we have experience with entering into new markets, such as entering into the Japanese market in 2020 via a joint venture with AEON Co., Ltd., we need to tailor our offering to the specific circumstances of every new geography which results in significant investments. However, we may not be able to reach our strategic goals for these new markets or these markets may prove less attractive than anticipated. If we launch but fail to generate satisfactory returns from any
 
18

such initiative, it could have a material adverse effect on our business, financial condition, results of operations and prospects.
If we choose to enter into new markets, expand our offering to include other types of products, or develop any new businesses, own sports brands, apps, websites, promotions, sales formats or services we believe would be compatible with, adjacent to, or complementary to our existing business, there can be no guarantee that any such endeavor will succeed. As a result, we may need to terminate, cancel, close, sell or wind-up parts of our business. Any such initiative that is not favorably received by consumers and/or suppliers, especially in the case of a termination, could damage our reputation and brand, and any expansion or alteration of our operations could require significant additional expenses and divert management and other resources, which could in turn negatively affect our results of operations. In addition, the entrance into new markets will result in a more complex regulatory and compliance environment and any failure to comply with such rules may negatively affect our results of operations.
We may be subject to negative publicity, including adverse information and negative publicity related to our affiliates or persons associated with us or any one of our affiliates.
Customers value readily available information concerning online retailers and often act on such information without further investigation or authentication or regard to its accuracy. Social media and websites immediately publish posts from users, often without filters or checks on the accuracy of the content posted. Allegations against us may be posted on social media, in internet chat rooms or on blogs or websites or other channels by anyone on an anonymous basis and any negative publicity may be accelerated through social media or other channels due to its immediacy and accessibility as a means of communication. In addition, we may be the target of harassment or other detrimental conduct by third parties, including from our competitors. Our reputation may be negatively affected as a result of the public dissemination of allegations or demeaning statements about our business, the business of our affiliates or persons associated with us or one of our affiliates, even if these allegations or statements are unfounded and we may be required to spend significant time and money to address such allegations. Such negative publicity, even if factually incorrect or based on isolated incidents, could damage our reputation, diminish the value of our brands, undermine the trust and credibility we have established and have a negative impact on our ability to attract new or retain existing customers. Inaccurate adverse information may harm our business and we may not be able to redress or correct inaccurate posts in a timely manner, or at all.
Our business may become the subject of negative media coverage and public attention, including regarding our business, the business of our affiliates or persons associated with us or one of our affiliates, which may develop strong dynamics and adversely affect our business. Third parties may communicate complaints to regulatory agencies and we may be subject to government or regulatory investigation as a result of such complaints. There is no assurance that we will be able to conclusively refute such allegations in a timely manner, or at all.
In addition, since many of our products are supplied by third-party suppliers, we may also receive negative publicity in case of inappropriate actions of our suppliers (e.g., violations of product safety regulation, environmental standards, labor laws or a use of child and slave labor). While we target to delist any products or suppliers who fail to meet our contractually agreed performance standards, there is no guarantee that we will be able to address any such concerns in a timely manner, or at all.
Any negative publicity and complaints could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
Our business depends on search engines to attract a substantial portion of the customers who visit our sites. Any increase in the cost of or in our reliance on search engine marketing or any decrease in the effectiveness of our search engine marketing could materially adversely affect our business.
A portion of our business is generated by customers clicking on search results displayed by search engines, such as Google, Yahoo or Bing. These search engines typically provide two types of results: algorithmic and
 
19

purchased listings. Algorithmic listings cannot be purchased and instead are determined and displayed solely by a set of formulas designed by the search engine provider. Purchased listings can be purchased by companies and other entities in order to attract users to their sites. We rely on both algorithmic and purchased listings to attract a substantial portion of the customers that we serve. The cost of purchased search listing advertising may increase as demand for such advertising channels grows, and further increases may have a negative impact on our ability to maintain or increase profitability. Further, search engines revise their algorithms from time to time in an attempt to optimize their search result listings and to maximize the advertising revenue generated by those listings. Innovations at search engines and online retailers, such as the Google “Buy” button or voice assistance, such as Amazon Alexa, may no longer channel customers to our websites in order to purchase products, which may result in reduced site traffic, fewer repeat customers and lower overall orders. Search engines may also place websites on a “blacklist” or remove them from their indexes for example due to poor search engine optimization. We cannot guarantee that a removal of any of our websites by Google, Yahoo, Bing or another search engine will not happen in the future or that we will be able to adapt to changes in search engine providers’ algorithms in a timely manner.
If the search engines on which we rely for site traffic remove any of our websites from their indices or otherwise modify their algorithms such that our websites have less favorable placement or do not appear among search results, our business would be adversely affected. Such circumstances may result in fewer customers clicking through to our sites, requiring us to resort to other more costly resources to attempt to replace that traffic, and this may reduce our net sales and could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
In addition, a part of our marketing strategy is to pay for a prominent display on search engines’ results pages. In order to place these listings with a search engine, we frequently place bids on key words at a certain cost per click that we pay to the search engine. Under the bidding system, the order in which websites appear in a search engine’s paid search results is determined by a combination of the price bid by the website and the historical and expected rate at which consumers click through to the website. Bids on generic search terms (such as “bike”) typically cost more than bids on branded search terms (such as “Tennis-Point”). The click-through rate is, in turn, influenced by the strength of the website’s brand and the popularity of the website. As the importance of online advertising increases and competition to be ranked higher in purchased listings intensifies, the cost of search engine marketing generally increases. Any increase in the cost of or in our reliance on search engine marketing, or any decrease in the effectiveness of our search engine marketing, could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
Our business depends on the continued penetration of the internet and the development and maintenance of internet infrastructure by third parties.
The delivery of our products and services depends on the ability of third-party internet service companies to provide internet access and maintain reliable networks with the necessary speeds, data capacity and security. Changes in access fees to users may materially adversely affect the ability or willingness of users to access our content. A departure from “net neutrality” (the principle that all forms of internet traffic (i.e., video, telephony and text) are subject to equal treatment in transmission speed and quality) in the markets in which we operate, for example, could result in increased costs to our business. These factors are out of our control and the manifestation of any of them could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
In addition, increasing traffic or user numbers may result in a decline in internet (including mobile internet) performance or reliability. Internet outages or delays could also materially adversely affect our ability to provide services to our customers, which could in turn have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
 
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Our investments to increase brand awareness, to generate website and mobile traffic and to build or retain a loyal customer base may not be effective.
Maintaining and enhancing the awareness of our brands, acquiring new customers, and increasing the number of customer visits to our website and apps, the number of orders and the basket size per order is critical to our success and profitability.
We have made significant investments related to brand awareness, customer acquisition and customer loyalty, and we expect to continue to spend significant amounts to attract new and retain existing customers. For example, we have incurred and will continue to incur significant expenses in marketing through a broad range of media to attract website and app traffic, to increase customer loyalty and repeat purchases in order to increase revenue and maintain our brand awareness and recognition. These expenses include cost of marketing relating primarily to search engine advertising (Google), costs for TV commercials and costs for price comparison websites. Our decisions regarding investments in customer acquisition substantially depend upon our analysis of the conversion rates and customer lifetime value to customer acquisition cost ratios as well as first order profitability generated from customers we acquired in earlier periods. There can be no assurance that our assumptions regarding required customer acquisition investment and resulting net revenue from such customers, including those relating to the effectiveness of our marketing expenditures, will prove to be correct or that our marketing efforts and other promotional activities will achieve what we consider to be an optimal mix of advertising and marketing at a cost we consider to be economically viable. Furthermore, we cannot guarantee that certain methods of advertising that we currently utilize will not become less effective, be prohibited or otherwise be unavailable to us in the future. Our online partners might be unable to deliver the anticipated number of customer visits or impressions, or visitors that are attracted to our websites by such campaigns might not make purchases as anticipated by us.
If we are unable to attract sufficient brand awareness, website or app traffic, translate a sufficient number of website visitors or app users into purchasers with sufficiently large basket sizes, build and maintain a loyal customer base, increase repeat purchases from customers, or do any of the foregoing on a cost-effective basis, our future growth could be limited or our revenue could even decline. The occurrence of any of these events, alone or in combination, could have a material adverse effect on our business, financial condition and results of operations.
Our business depends on strong brands, which we might not be able to maintain or enhance. Any such inability could harm our business, financial condition, cash flows, results of operations and prospects.
The recognition and reputation of our brands, in particular “Tennis-Point”
TM
, “fahrrad.de”
TM
, “Bikester”
TM
, “Brügelmann”
TM
, “Probikeshop”
TM
, “Addnature”
TM
, “Campz”
TM
, “Stylefile”
TM
and “Outfitter”
TM
, among customers and suppliers are critical for the growth and continued success of our business as well as for our competitiveness in our target product categories and markets. Maintaining leading brands is particularly important in the multi-brand sports
e-commerce
industry, and competition among online retailers typically favors the market participants with the strongest brands. While less well-known brands may also be able to operate profitably, the market participant with the strongest brand typically captures a very large market share. In this regard, we depend on our multi-brand strategy, where each individual brand is well known though not necessarily maintaining a leading market position in respect of such brand. Therefore, any developments, such as the legal dispute concerning the use of our brand “Tennis-Point”
TM
in the United States, that harm our brands could materially adversely affect our business.
As competition in the sports
e-commerce
markets intensifies, we anticipate that maintaining and enhancing our brands will become increasingly difficult and expensive, and investments to increase the value of our brands may not be successful. Many factors, some of which are beyond our control, are important for maintaining and enhancing our brands, including our ability to:
 
  
compile an attractive sports and sports-related product offering sold at attractive prices;
 
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increase brand awareness through marketing and brand promotion activities;
 
  
preserve and improve our reputation;
 
  
increase purchase frequency;
 
  
maintain and improve customer satisfaction through dedicated customer services tailored to meet customers’ specific needs (from
pre-sale
advice to after-sales services);
 
  
attractively present and market these products as part of an inspiring and convenient shopping experience, in particular products marketed under our private brand labels;
 
  
maintain, monitor and improve our relationships with suppliers;
 
  
manage new and existing technologies and sales channels, including our apps; and
 
  
maintain and improve the efficiency, reliability and quality of our delivery and fulfillment processes to ensure comparably short delivery times.
In addition, we may be required in the future to invest in one specific brand or customer category to the detriment of our other brands or customer categories, which may weaken such brand or category.
Any failure to offer high-quality products, an inspiring and convenient shopping experience and excellent customer service tailored to meet customers’ specific needs could damage our reputation and brands and result in the loss of revenues, which could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
Our business is complemented by our private label brands, which we might not be able to maintain or enhance, and unfavorable customer feedback or negative publicity could adversely affect our private label brands.
Our business is complemented by private label brands, including, Fixie Inc., Red Cycling, Votec, Ortler, Serious, Tennis-Point, Bidi Badu, Axant and Campz. The strong awareness of our private label brands contributes to higher organic traffic on our websites and lower marketing costs, as a high percentage of our website traffic is generated by direct visits or related to customer relationship management, social media or search engine optimization channels. We also typically achieve a higher gross margin when selling our private label brands to consumers vs selling third-party brands. Maintaining and enhancing our private label brands is therefore crucial for the expansion and retention of our base of customers, suppliers and brands as well as for the improvement of our financial results. However, our private label brands may be adversely affected if their public image or reputation is tarnished by customer complaints or negative publicity about product quality, delivery times, return processes, customer support or other services. Any failure to maintain or enhance our private label brands and thus to expend and retain our loyal customer base, could have a material adverse effect on our business, financial condition, results of operations, and prospects.
Failure to provide our customers with a customized and an inspiring sports online experience could limit our growth and prevent us from achieving or maintaining sustainable profitability.
We believe that the foundation of our success as a sports online retailer is to provide our customers with a highly inspiring and engaging sports online experience from a wide selection of brands. If we should fail to offer the sports products and brands in demand by our clients, if we are unable to present such products on our websites in an inspiring and attractive way and at competitive prices, if customization of online experience offered by us fails to be inspiring and yet being expensive, or if customers regard our fulfillment capabilities, in particular delivery, returns and payment, as not entirely convenient, we may be unable to win new customers, may lose existing customers or may be faced with reduced volumes of purchases on our websites, any of which would have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
 
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Any failure to anticipate and respond in a timely manner to sports trends and consumer preferences could result in a loss of customers and business.
Our ability to sell a sufficient number of products at satisfactory price levels depends on our ability to predict and respond to sports trends and changing customer preferences in a timely manner. We operate in the sports retail industry, which is highly sensitive to changes in customer preference, fluctuations in sports trends and seasonal weather patterns. Customer preferences regarding sports design, quality and price tend to change rapidly and new trends, such as focus on sustainability, may continue to gain importance. Thus, accurately forecasting the selection and required quantities of such products is difficult. In addition, we must take into account the time it takes us to respond to changes in trends, as we incur lead times for the delivery of merchandise from our suppliers. As such, a potential increase in lead times,
e.g.
, due to disruptions in the supply chain, may result in us not having the appropriate selection or the required quantities of products in order to satisfy customer demand. While there has been an increase in demand for more sustainable and environmental-friendly sports products due to ever more present public awareness regarding climate change and the environmental impact of sports, this may not result in customers’ willingness to pay higher prices, for example. We typically enter into agreements to purchase our merchandise in advance of the applicable selling season and any failure to anticipate and respond in a timely manner to sports trends and customer preferences could result in lost sales, a loss of customers or unfavorable margin structures when selling lower demanded products, which would have a material adverse effect on our business, financial condition, write-offs on inventory and results of operation.
We may miss or may not be able to adapt to the latest trends in communication with our customers through social media or other channels.
We heavily rely on social media to communicate with our customers. Changes to the terms and conditions of the relevant providers could limit our ability to communicate through social media. These services may also change their algorithms or interfaces even without notifying us, which may reduce our visibility or increase our costs.
We also use newsletters in the form of emails and other messaging services in order to promote our brands, inform customers of our product offering and/or the status of their transactions. Changes in how webmail services organize and prioritize emails could reduce the number of customers opening our emails. For example, several service providers organize incoming emails into categories. Such tools and features could result in our emails and other messages being shown as “spam” or as lower-priority messages to our customers, which could reduce the likelihood of customers opening or responding positively to them. Actions by third parties to block, impose restrictions on, or charge for the delivery of, emails, app push notifications and other messages, as well as legal or regulatory changes limiting our right to send such messages or imposing additional requirements on our ability to conduct email marketing or send other messages, could impair our ability to communicate with our customers.
If we are unable to communicate through social media, via emails, app push notifications or other messages with our customers, if our messages are delayed, or if customers do not receive or view them, we will no longer be able to use this marketing channel. This could impair our marketing efforts, or make them more expensive if we feel the need to increase spending on paid marketing channels to compensate for the loss of free marketing, and, as a result, our business could be adversely affected.
In addition, any malfunction of our communication services could result in erroneous messages being sent and customers no longer wanting to receive any messages from us. Furthermore, our process to obtain consent from the visitors to our websites to receive newsletters, app push notifications and other messages from us and to allow us to use their data may be seen as insufficient or invalid. As a result, such individuals or third parties may accuse us of sending unsolicited advertisements and other messages which could result in claims against us.
 
23

The way our customers communicate online is constantly evolving. Keeping up with these developments is key for us to effectively present our brand, labels and products to our customers. However, we may not be able to identify new trends in communication or to adapt to these trends. An inability to communicate through social media, app push notifications, emails or other messaging services could have a material adverse effect on our business, financial condition, results of operations and prospects.
We are involved in and may pursue strategic relationships. We may have limited control over such relationships, and these relationships may not provide the anticipated benefits.
We have partnered with numerous third parties,
inter alia
by acquiring shares in their businesses or by entering into cooperation agreements, including komoot and our joint venture with AEON and a number of operative cooperations across our group of companies and may pursue and enter into additional strategic relationships in the future. Current and future strategic relationships involve risks, including but not limited to maintaining good working relationships with the other party, inconsistency of economic or business interests, the other party’s failure to fund its share of capital for operations or to fulfill its other commitments – including providing accurate and timely accounting and financial information to us – loss of key personnel, actions taken by our strategic partners that may not be compliant with applicable rules, regulations and laws, reputational concerns regarding our partners or our leadership that may be imputed to us, bankruptcy and related bankruptcy proceedings requiring us to assume all risks and capital requirements related to the relationship. Further, these relationships may not deliver the benefits that were originally anticipated, all of which could have a material adverse effect on our business strategy and results of operations.
We rely on external financing to support the continued growth of our business and may not be able to raise needed capital on economically acceptable terms, or at all.
Since our inception, we have had negative operating cash flows and relied on external financing. The uncertain and volatile economic environment across our key regions, combined with significant funding needs and a loss-making business, may reduce our options for raising additional capital, be it in the form of equity or debt financing. This uncertain and volatile environment may also negatively impact the accuracy of our budgeting and financial forecasting. As a consequence, we may not be able to correctly anticipate our capital requirements. If we are not able to raise the required capital on economically acceptable terms, or at all, or fail to accurately project and anticipate our capital needs, we might have insufficient funds to meet our obligations and/or may be forced to limit or even scale back our operations, which may adversely affect our growth, business and market share and could ultimately lead to insolvency.
While we raised significant capital in the Business Combination, we may require additional capital to finance our operations or the future growth of our business. If we choose to raise additional capital by issuing new shares, our ability to place such shares at attractive prices, or at all, depends on the condition of equity capital markets in general and the price of our shares in particular, and such share price may be subject to considerable fluctuation.
A breach of covenants or other contractual obligations contained in external financing agreements, including any arrangements we enter into in the future, could trigger an event of default that may trigger immediate repayment obligations or may lead to the seizure of collateral posted by us, all of which may adversely affect our business. Additional debt financing from independent third parties may not be easily available to us. Even if additional debt financing were available, such financing may require us to grant security in favor of the relevant lenders or impose other restrictions on our business and financial position. Moreover, if we raise additional capital through debt financing on unfavorable terms, this could adversely affect our operational flexibility and profitability. Such restrictions may adversely affect our operations and limit our ability to grow our business as intended.
An inability to obtain capital on economically acceptable terms, or at all, could have a material adverse effect on the implementation of our business strategy, financial condition, results of operations and prospects.
 
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We rely on third party suppliers for the products we sell and any deterioration in those business relationships or continuing supply chain disruptions may materially and adversely affect our business.
We source the products we sell (including our private brand label products) from a significant number of suppliers. Our continued growth resulting from increased demand for the products we sell will require us to increase our ability to source commercial-quality products on reasonable terms.
Our suppliers (including those manufacturing our private label products) may:
 
  
cease selling merchandise on terms acceptable to us;
 
  
fail to deliver goods that meet consumer demands;
 
  
encounter financial difficulties;
 
  
terminate our relationships and enter into agreements with our competitors on more favorable terms;
 
  
have economic or business interests or goals that are inconsistent with ours and take actions contrary to our instructions, requests or objectives;
 
  
decide to initiate their own
e-commerce
operations, thereby directly competing with us;
 
  
be unable or unwilling to fulfill their obligations, including their obligations to meet our production deadlines, quality standards and product specifications;
 
  
fail to expand their production capacities to meet our growing demands;
 
  
encounter raw material or labor shortages or increases in raw material or labor costs, labor disputes or boycotts which may impact our costs;
 
  
be affected by natural disasters;
 
  
encounter trade restrictions or disruptions, currency fluctuations or adverse changes in general economic and political conditions;
 
  
encounter disruptions, including the current
COVID-19
related supply chain disruption; or
 
  
engage in other activities or employment practices that may harm our reputation.
In addition, a considerable reduction in payment terms from our suppliers, which may further decrease in the future, has,
inter alia
, led to additional short and medium term liquidity needs. Any disruptions in our relationships with suppliers or our failure to resolve disputes with or complaints from our suppliers in a timely manner or a further reduction in payment terms could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
In addition, certain of our businesses have a high level of turnover with a select number of suppliers. For instance, a significant portion of our sales in our teamsport and athleisure segments related to products of Adidas and Nike. If any significant supplier chooses not to sell their products to us or limit our access to their products, this could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
Our brands and other suppliers could discontinue selling to us on financially viable terms, fail to supply us with high quality, compliant and sufficient merchandise, or fail to comply with applicable laws or regulations.
We source our proprietary brand products from numerous domestic and international manufacturers, distributors and resellers with whom we typically do not agree on long-term supply agreements. These suppliers are subject to various risks, such as changes in raw material costs, labor disputes, boycotts, natural disasters, trade restrictions or disruptions, currency fluctuations, reductions in available credit from banks, factors or other financial institutions and adverse changes in general economic and political conditions as well as supply chain
 
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interruptions caused by the ongoing
COVID-19
pandemic that could limit their ability to provide us with high-quality and compliant merchandise on a timely basis and in accordance with agreed-upon terms or may fail to
re-negotiate
new supply agreements with our suppliers on favorable terms. In addition, we face risks in relation to the shortage of supplies in bicycles and bicycle parts due to the overall increased demand for bicycles and bicycle parts due to the
COVID-19
pandemic. In this respect, we may be unable to fully pass on price increases for bicycles to our customers which could have a negative impact on our profitability.
We could also become subject to adverse legal or regulatory actions if our suppliers provide us with or have us sell from third-party stock products that do not comply with applicable laws or regulations, including laws and regulations relating to product safety, embargoes, environmental protection, and standards relating to employment and factory conditions. While we have taken steps to prevent noncompliance of our brand partners and suppliers with applicable laws and regulations, there can be no assurance that these steps effectively prevent
non-compliance
in all circumstances. If sports brand partners or suppliers do not observe these regulations, we may be unable to sell or otherwise handle the relevant products. If we fail to detect any deficiencies in the products sold or handled by us before such products are shipped to customers, we may have to recall such products. In the event of any failure by sports brand partners or suppliers to meet our quality standards or the quality standards of our customers, we could incur additional costs, our brand and reputation may be damaged by negative publicity due to such deficiencies, we or our management may face administrative fines, claims related to product liability or criminal charges and we may lose current or potential customers, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
We source our private label brand products from a large number of different manufacturers, including manufacturers across multiple continents (including Asia), where there is a relatively higher risk that agreed-upon working conditions are not respected at all times. In addition, manufacturers may use materials that are not suitable for the relevant products and could potentially even harm consumers of our own private label brand products. While we regularly check the working conditions in most of these factories and the quality of our own private label brand products, there can be no guarantee that our checks effectively uncover all deficiencies. We may also become liable for violation of national or European legislation regarding the monitoring of our supply chains in the future (for further details please refer to “
We are subject to various regulations applying to
e-commerce
and tech businesses generally, including but not limited to regulations governing cyber security, data protection, consumer protection, product safety and trademarks, and future regulations might impose additional requirements and other obligations on our business.
”). Any deficiencies may result in negative publicity and may materially harm our reputation and business. In addition, some of our manufacturers require that we prepay orders for merchandise, which exposes us to the risk of fraud. Further, we may lose these prepayments if the relevant manufacturer enters bankruptcy proceedings.
We are subject to standardized contractual terms and conditions imposed by our suppliers that regularly include restrictive clauses, which, for example, prohibit us from selling our products in or into certain regions and markets or on certain platforms.
When we enter into arrangements or contracts with our suppliers, we typically have to agree to their respective standardized contractual terms and conditions, which are generally not further negotiable. Such standardized contracts often include various restrictive clauses, such as, territorially restricting or other similar clauses prohibiting us from selling our products in or into certain regions and markets or
on-selling
products through channels other than our own websites. At the same time, such standardized contracts typically do not impose comparable restrictions on our suppliers that would prevent those suppliers from selling the relevant products to our competitors or any other third party. Any breach of such restricting clauses, both intentional or inadvertent, might lead to the termination of the respective contract by the supplier concerned, expose us to substantial liability or contractual fines, and could result in material litigation against us. Even if our contractors falsely accuse us of having violated such clauses and assert corresponding claims against us, defending such claims might be expensive and time-consuming and may divert our management’s attention away from the
day-to-day
management of our business. Besides that, there would be no guarantee that the defense against such claims would ultimately be successful.
 
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The agreements concluded with our suppliers typically do not provide for a fixed price for the purchase of products by us. As a result, we may be subject to price fluctuations based on changes in our suppliers’ businesses, cost structures, foreign exchange rates or other factors. Most of these standardized contracts do not incorporate any obligations or standards for our suppliers regarding ethical business conduct, corporate responsibility or legal compliance in general. There is no guarantee that our suppliers conduct their business according to our own ethical business principles or ideas of corporate responsibility and any
non-compliance
by any of our suppliers with such principles or applicable laws and regulations could significantly damage our reputation, business and/or expose us to claims by third parties. For further details on recent supply chain legislation, please also refer to “
We are subject to various regulations applying to
e-commerce
and tech businesses generally, including but not limited to regulations governing cyber security, data protection, consumer protection, product safety and trademarks, and future regulations might impose additional requirements and other obligations on our business.
Further, we are already subject to numerous contracts incorporating such restricting or other similar clauses and may enter into additional contracts or may be subjected to similar arrangements in the future involving such or similarly restricting clauses, particularly if and to the extent we geographically expand our business operations. For example, based on such restricting clauses, we are already prohibited from selling certain of our products sourced from selected brand partners or suppliers in or into markets outside of Germany, the European Economic Area or the US. Certain other brand partners impose restrictions or certain requirements for the presentation of their products on our websites or our marketing activities. Any such contractual restriction may significantly limit our ability and potential to conduct or grow our business operations, particularly if we enter into further contracts containing such
non-compete,
territorially restricting or similar clauses in the future.
Many of our suppliers rely on credit insurance to protect their receivables, and any changes to, or too slow adjustments or withdrawals of, such credit insurance might lead suppliers to seek to reduce their credit exposure to us.
We are aware that many of our third-party suppliers have traditionally obtained credit insurance to protect their receivables against the risk of bad debt, insolvency or protracted default of their buyers, including us. Credit levels available to us from our suppliers remain dependent on the general economic environment and our financial position. Despite a modest improvement of availability of credit insurance to our suppliers during the fiscal year 2021, we experienced a notable decrease in the availability of credit insurance to our suppliers in previous years. If such availability decreases, or if requests concerning an increase in credit levels are not met in a timely manner, and if such suppliers are unwilling or unable to take credit risk themselves or find alternative credit sources, they might choose to reduce their credit exposure to us, which efforts might include attempts to change their credit terms or refusing to contract with us. Any such actions could have a material adverse effect on our cash position, lead to an increase in our indebtedness or have a negative impact on our product offering and, thus, on revenue, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Changes in customer return rates might increase our costs and harm our business.
We have established return policies specific to our various local markets and verticals that permit our customers to return products within designated timeframes ranging from 30 to 100 days following delivery. Granting return rights is an important element for converting app and website visitors into customers, providing our customers with the certainty that they will only be required to pay for those products that they want to keep.
We might experience a significant increase in returns — for example, due to customer dissatisfaction with our products or customer service, changes in customer behavior or the abuse of our liberal return policy by persons not actually willing to purchase our products. In this case there is no guarantee that we will be able to utilize returned goods in a cost-efficient manner — for example, by reselling them on our websites, selling them at third-party outlets or returning them to our suppliers. We incur costs associated with returned goods — for
 
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example, costs associated with return processing and delivery — but may not receive revenue from returns or proceeds from sales of returned goods may not cover all costs incurred. Thus, any increase in returns would increase our costs with no corresponding increase in revenue.
Continued growth, in particular in case of an increase in market place sales, is likely to increase the absolute number of returns, which may force us to allocate additional resources to the handling of such returns and may further complicate our operations. Even though products that have not passed through our fulfillment centers, but are delivered via drop-shipping, contain a return label for that drop-shipping partner, we cannot guarantee that some packages are wrongly labeled and returned to us, which may require us to store such products for a certain amount of time and initiate the further return to our partner. Furthermore, any modification of our return policies may result in customer dissatisfaction or an increase in the number of returns, which could adversely affect our business.
We may be unable to manage our own inventory levels effectively and shifting customer preferences may result in overstocking or understocking of products.
We operate in the sports retail industry, which is highly sensitive to changes in consumer preference, fluctuations in sports trends and weather patterns. Consumer preferences regarding sports design, quality, sustainability and price tend to change rapidly and accurately forecasting the selection and required quantities of such products in future periods is difficult. Accelerated through sentiments on social media, the popularity of products can change significantly between the time products are ordered and the date of sale. In addition, the lead times we must incur in taking delivery of merchandise from many of our suppliers pose challenges by increasing, in some cases significantly, the time it takes us to respond to changes in product trends, consumer demand and market prices. As a result, we face the risk of not having the appropriate selection or the required quantities of products in order to satisfy customer demand, in which case our reputation might suffer. A sudden loss of customers may additionally result in increased costs of maintaining inventory and the risk of losses on excess inventory.
In addition, we may misjudge the popularity of our products due to changing customer preferences, which may render us unable to avoid overstocking or understocking. We therefore face the risk of carrying excess inventory which we might be unable to sell during the relevant selling seasons, or only by offering significant discounts. In addition, significant discounting may damage both our relationship with suppliers whose products we sell at discounts as well as our own brand. We generally do not have the right to return unsold products to our brand partners. If we fail to anticipate and respond in a timely manner to changing consumer preferences and adjust our purchases and inventory accordingly, this may result in lost sales, sales at lower than anticipated margins and/or write-offs on inventories, any of which would have a material adverse effect on our business, financial condition and results of operations.
The broad variety of payment methods we accept exposes us to operational, regulatory and fraud risks.
We currently accept a number of different payment methods tailored to meet our customers’ payment preferences. These payment methods include, among others, invoicing, credit and debit cards, PayPal, direct deposit, online bank transfer, direct debit, checks and gift cards. Due to the complexity of the broad variety of payment methods we accept, we face the risk of operational failures in our checkout process, which could adversely affect our conversion rate (
i.e
., the percentage of people visiting our websites that actually place an order) and customer satisfaction. There is also the risk that, in connection with the methods of payment we offer, we may become subject to additional regulations, compliance requirements, and various types of fraud or cyber-attacks.
For certain payment methods, including credit and debit cards, we pay bank interchange and other fees. These fees may increase over time, increasing our operating costs and decreasing our profitability. We are also subject to operating rules and certification requirements of payment scheme associations, including the Payment
 
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Card Industry Data Security Standard and rules governing electronic funds transfers. Amendments to these rules or the introduction of new laws or requirements regarding any payment method we accept could result in increasing compliance costs, higher transaction fees, and the possible loss of or restrictions to our ability to accept credit or debit cards or other types of payment.
We generally rely on third parties to provide payment processing services. We also rely on third-party payment processors, and encryption and authentication technology licensed from third parties, to securely transmit customers’ personal information. If these companies become unwilling or unable to provide these services, or increase their fees, such as bank and intermediary fees for credit card payments, our operations may be disrupted and our operating costs could increase.
Furthermore, we face risks relating to customer claims that purchases or payments were not properly authorized or were transmitted in error, as well as risks that customers have insufficient funds and the risk of fraud. While fraud risks are mostly covered through our contracts with payment processing services, any failure to avoid or limit losses from fraudulent transactions could damage our reputation and result in increased legal expenses and fees.
The materialization of any of the risks described above could have a material adverse effect on our business, financial condition, results of operations and prospects.
We largely depend on third-party service providers for the fulfillment and distribution of our products to end customers.
We depend on third-party logistics providers for the fulfillment and distribution of the products that our customers order online. Therefore, we have only limited control over the handling of our goods in the course of the fulfillment process, the timing of deliveries and the security of our products while they are being transported. There may be shipping delays due to, among other things, inclement weather, natural disasters, strikes, terrorism or ongoing restrictions related to the
COVID-19
pandemic. We also face the risk that our products may be damaged or lost in transit — for example, in the course of sourcing from overseas. If these third-party providers terminate their contracts with us, we may not be able to find suitable alternatives on commercially acceptable terms, which could disrupt our services or increase our costs. Additionally, there can be no assurance that customers will not expect or demand faster delivery times than we can ensure in the future. If the products we sell are not delivered in a timely manner or are damaged or lost in transit, if we are not able to provide adequate customer support, or if our competitors are able to deliver the same or equivalent products faster or more conveniently, our customers could become dissatisfied and cease buying on our websites.
In some of our markets, it may be difficult to replace the logistics providers with whom we cooperate due to a lack of alternative offerings at comparable price and/or service quality and we may not be able to substitute such third-party services with an own last-mile delivery service. Changes in shipping terms and costs, for example due to higher fuel costs, or the inability or refusal of third-party logistics providers to deliver our products in a safe and timely manner could harm our reputation and have an adverse effect on our business. Additionally, any deterioration in the financial condition of any third-party service provider could have an adverse impact on the quality of our logistics processes and distribution costs. If third-party logistics providers were to increase their shipping costs and we continue to offer free delivery and returns, the increased shipping costs could have a material adverse effect on our business and financial condition.
Any failure to successfully address our changing fulfillment and logistics capacity requirements could severely affect our business and prospects.
The functioning of our online business depends to a large extent on our customers receiving the ordered goods in a timely and convenient manner and their ability to return them without any difficulties. To keep our customers satisfied we rely on a multi-national logistics infrastructure, consisting of both own, hybrid and third-
 
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party logistics infrastructure
set-ups,
including inbound receipt of items for sale, storage systems, packaging, outbound freight, and the receipt, screening and handling of returns. These processes are complex and depend on sophisticated
know-how
and computerized systems. We are therefore constantly monitoring and sourcing our fulfillment services and logistics capacity to keep up with those requirements and match our continued growth. It is, however, not certain that we will be able to find suitable service providers on commercially acceptable terms to support any future expansion plans. We might also need to increase our capital expenditures more than anticipated in order to increase the capacity of our own logistics infrastructure while at the same time, in other regions we may be forced to deal with excess capacities. Any failure in the required sourcing of fulfillment and logistics infrastructure as our business expands could materially impact our growth strategy.
If we continue to add new businesses or categories with different logistical requirements, or change the mix in products that we sell, our logistics capacities will become increasingly complex and operating it will become even more challenging. Operational difficulties could result in shipping delays and customer dissatisfaction or cause our logistics costs to become high and uncompetitive. Any failure to successfully address such challenges in a cost-effective and timely manner could severely disrupt our business and harm our reputation.
Our sourcing and logistics costs are subject to movements in the prices for raw materials and fuel as well as other factors beyond our control, and we may not be able to pass on price increases by our third-party services providers to our customers.
Our sourcing and logistics costs depend on the development of prices for certain raw materials, in particular cotton and other textile raw materials, as well as fuel. In addition, our sourcing costs are also influenced by the capacity utilization rates at our suppliers, quantities demanded from our suppliers, and product specification. As a result, our costs of materials can vary materially in the short-term and, in cases of supply shortages, can increase significantly. We are typically impacted by increases in the prices of raw materials and fuel price as well as carrier-charge increases, as our suppliers and third-party service providers attempt to pass along these increases to us. Although we may attempt to pass on cost increases to our customers by increasing selling prices via regular price reviews, we may not always be able to do so. Moreover, any price increases could adversely affect our sales or reduce our profitability. During periods of declining input or fuel prices, customer demand may also require that we sell our products at lower prices or may restrict our ability to increase prices, in spite of the fact that we may use goods that were purchased at higher prices or that we are forced to incur higher shipping costs, thereby negatively impacting our margins. The volatility in our sourcing and logistics costs and our limited ability to pass them on to customers may adversely affect our business and financial condition.
Dissatisfaction with our customer service could negatively affect our customer retention and the further implementation of our growth strategy.
A satisfied and loyal customer base is crucial to our continued growth. A strong customer service is required to ensure that customer complaints are dealt with in a timely manner and to the customer’s satisfaction. Except with respect to our offline stores, we do not typically have direct
face-to-face
contact with customers which is afforded through offline retail, the way we directly interact with customers through our customer service team is crucial to maintaining continuous customer relationships. We respond to customer requests and inquiries through
e-mail,
chat functions, social media and our partly toll-free hotlines. Any actual or perceived failure or unsatisfactory response by our customer service could negatively affect customer satisfaction and loyalty. Our inability to retain customers due to a lack of satisfactory customer service could have a material adverse effect on the further implementation of our growth strategy.
Our business is subject to operational and accident risks which may not be fully covered by our insurance.
We are exposed to risks related to the health and safety of our employees and contractors as well as other workplace safety risks. For example, our distribution activities involve specific risks such as fire, falls from height, objects falling from storage shelving and during movement, or traffic movements which could result in
 
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damage to equipment, damage to the property of third parties and personal injury or death. Accidents or other incidents that occur at any of our shops or distribution facilities or involve our personnel or operations could result in claims for damages against us and could damage our reputation. If staff and contractors get injured during the course of their duties we may, among other things, face fines and penalties from regulators as well as damage to our reputation.
We are also exposed to risks due to external factors beyond our control, including, but not limited to, accidents, vandalism, natural hazards, acts of terrorism, damage and loss caused by fire, power failures or other events, that could potentially lead to personal injuries, damage to third-party property or the environment or the interruption of our business operations. Accidents or other incidents that occur at our offices and workshops, or involve our personnel or operations could result in claims for damages against us and could damage our reputation. Although we maintain insurance against such losses to a level and at a cost we deem appropriate, our insurance policies are subject to exclusions and limitations, and we cannot guarantee that all material events of damage or loss will be fully or adequately covered by an applicable insurance policy. As a result, the amount of any costs, including fines or damages that we might incur in such circumstances, could substantially exceed any insurance we have to cover such losses. In addition, our insurance providers could raise their costs or become insolvent. The occurrence of any of these events, alone or in combination, could have a material adverse effect on our business, financial condition, results of operations and prospects.
Any failure to operate, maintain, integrate and scale our network and mobile infrastructure could result in customer dissatisfaction, loss of revenues or subject us to claims for damages.
As an online sports retailer, we are dependent on the smooth functioning of our information technology systems, especially our internet and mobile infrastructure, which are critical to our business and inherently subject to various operating risks. For example, our offering is founded on our marketing platform specifically designed for the sourcing, presentation, curation, marketing and fulfillment of sports products. In addition, a key element of our strategy is to generate a high volume of traffic on, and use of, our websites and mobile domains to analyze a broad range of customer data, tracking individual journeys and ensuring efficient spending of our marketing resources. Our reputation and ability to acquire, retain and serve our customers are dependent upon the reliable performance of our websites, mobile domains and their underlying network infrastructure. As our customer base and the amount of information shared on our websites continue to grow, we will require additional network capacity and computing power. In addition, we need to maintain reliable internet and mobile networks with the necessary speed, data capacity and security, as well as ensuring timely development of complementary products.
The operation of our technology systems is expensive and complex and could result in operational failures. In addition, we are exposed to the risk of our technology systems being undersized and functionally maladjusted. In the event that our customer base or the amount of traffic on our websites grows more quickly than anticipated, we may be required to incur significant additional costs to enhance the underlying network infrastructure. Inadequate performance of our technology systems, whether due to system failures, power outages, lack of firewall protection,
denial-of-service
and credential stuffing attacks (attempts of which we experience regularly), computer viruses, physical or electronic
break-ins,
undetected errors, design faults or other unexpected events or causes, could affect the security or availability of websites, prevent customers from accessing our websites and result in limited capacity, reduced demand, processing delays and loss of customers. Past internal and external audits have revealed deficiencies in the technology systems of certain of our verticals. There can be no assurance that our remediation measures are effective. Moreover, future audits could reveal similar or other deficiencies in our technology systems. Any actual or perceived failure to maintain the performance, reliability, security and availability of our products and technology systems to the satisfaction of our customers and certain regulators could harm our reputation, disrupt our business or decrease our ability to attract and retain customers.
We use cloud services for storing and maintaining customer data as well as for the provision of our
IT-infrastructure.
An interruption or breakdown of our technology systems and
IT-infrastructure
due to power
 
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outages, fire, natural disasters, acts of terrorism, vandalism or sabotage, actions of third-party providers or any other unanticipated reason cannot be ruled out completely. If our cloud service partners fail, we may experience downtime on websites which could reduce the attractiveness of our websites to customers. Failure in our
IT-infrastructure
could also result in unfavorable media coverage, damage our reputation, and/or result in regulatory inquiries or other proceedings.
A failure to adopt and apply technological advances in a timely manner could limit our growth and prevent us from maintaining profitability.
The internet and
e-commerce
ecosystems are characterized by rapid technological development. New advances in technology can increase competitive pressure. Our success therefore depends, for example, on our ability to improve our current technological capabilities and capacities, including machine learning algorithms and big data infrastructure and to develop new online features and apps for a variety of platforms in a timely manner in order to remain competitive. Any failure to adopt and apply new technological advances in a timely manner could decrease the attractiveness of our websites and mobile domains to customers and thus adversely affect our growth and our revenue.
Customer growth and activity on mobile devices depends upon effective use of mobile operating systems, networks and standards that we do not control.
Purchases using mobile devices by customers generally, and by our customers specifically, have increased significantly, and we expect this trend to continue. In the fiscal year ended September 30, 2021, approximately 64.8% of page views were generated via mobile app, tablet and mobile phone. To optimize the mobile shopping experience, we are dependent on our customers’ ability to access our sites from an internet browser on their mobile device. With the continued release of new mobile devices and operating systems, we face difficulties predicting the problems we may encounter in developing apps for these alternative devices and operating systems, and we may need to devote significant resources to the creation, support and maintenance of such applications. In addition, our future growth and our results of operations could suffer if we experience difficulties in the future when offering our merchandise on mobile devices. We are further dependent on the interoperability of our sites with popular mobile operating systems that we do not control, such as iOS and Android, and any changes in such systems that degrade the functionality of our sites or give preferential treatment to competitive products could adversely affect the usage of our sites on mobile devices. In the event that it is more difficult for our customers to access and use our sites on their mobile devices, or if our customers choose not to access or to use our sites on their mobile devices or to use mobile products that do not offer access to our sites, our customer growth could be harmed and our business, financial condition and results of operations may be materially and adversely affected.
Further, we continually upgrade existing technologies and business applications, and we may be required to implement new technologies or business applications in the future. The implementation of upgrades and changes requires significant investments. The timing, effectiveness and costs associated with the successful implementation of any upgrades or changes to our systems and infrastructure could have adverse effects on our results of operations.
We are exposed to the risk of security breaches, including cyber-attacks, and unauthorized use of one or more of our websites, databases, online security systems or computerized logistics management systems.
We operate apps, websites, networks and other data systems through which we collect, maintain, transmit and store information about our customers, suppliers and others, including credit card or other financial information and personal information, as well as other confidential and proprietary information, including information related to intellectual property. We also employ third-party service providers that store, process and transmit proprietary, personal and confidential information on our behalf. Furthermore, we rely on encryption and authentication technology licensed from third parties in an effort to securely transmit confidential and
 
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sensitive information, including credit card details. While we take extensive steps to protect the security, integrity and confidentiality of sensitive and confidential information (
e.g.
, password policies and firewalls), our security practices may be insufficient and third parties may breach our systems (
e.g.
, through Trojans, spyware, ransomware or other malware attacks, or breaches by our employees or third party service providers), which may result in unauthorized use or disclosure of information. Such attacks might lead to blackmailing attempts, forcing us to pay substantial amounts to release our captured data or resulting in the unauthorized release of such data.
Given that techniques used in these attacks change frequently and often are not recognized until launched against a target, it may be impossible to properly secure our systems. In addition, technical advances or a continued expansion and increased complexity of our
IT-infrastructure
could increase the likelihood of security breaches.
Advances in computer capabilities, new technological discoveries or other developments could increase the frequency or likelihood of security breaches. In addition, security breaches can also occur as a result of
non-technical
issues, including intentional or inadvertent breaches by our employees or by persons with whom we have commercial relationships. Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data security and other laws, and cause significant legal and financial risks, adverse publicity or a loss of confidence in our security measures. We cannot be certain that our insurance coverage concerning other risks will be adequate for liabilities that we might actually incur or that such insurance will continue to be available to us on economically reasonable terms, or at all. Additionally, we may need to devote significant resources to protect against security breaches or to address problems caused by breaches, which may require us to divert resources from the growth and expansion of our business. The materialization of any of the foregoing risks could have a material adverse effect on our business, financial condition, results of operations and prospects as well as our reputation as a software enterprise.
Our business may be harmed if we are unable to secure licenses for third-party technologies on which we rely.
We rely on licenses to utilize certain technology provided by third parties, such as database technology, our
e-commerce
and technology platform, operating systems for our servers and other computers and components for our servers. These third-party technology licenses may cease to be available to us on commercially reasonable terms, or at all. If we are unable to obtain licenses for, or otherwise make use of this technology, we would need to obtain substitute technology, which may not be available. If substitute technology is available, it may be of lower quality or have lower performance standards or may only be available at a greater cost, any of which could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
Also, because we often depend upon the successful operation of third-party products in conjunction with our software, any errors in these third-party products, which may be outside of our control, may prevent the implementation or impair the functionality of our software and internet-based services, or delay the introduction of new services.
Ineffective protection of confidential information might materially weaken our market position.
Our key employees, directors and officers have access to sensitive confidential information relating to our business, especially relating to the functioning of our websites and apps, our proprietary machine learning algorithms and big data infrastructure. While we have confidentiality agreements and technical measures in place we cannot assure that third parties or the general public never gain access to such information. Any ineffective protection of such information relating to our business might materially weaken our market position and thus adversely affect our business and operations.
 
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We may be unable to attract, train, motivate and retain suitably qualified personnel and to maintain good relationships with our workforce.
The competence and commitment of our employees are important factors for our successful development and management of opportunities and risks. Therefore, our success is largely dependent on our ability to attract, train, motivate and retain highly qualified individuals, while building our corporate culture. A lack of qualified and motivated personnel could impair our development and growth, increase our costs and harm our reputation. We face competition for qualified personnel, for example those in information technology positions. Any loss of qualified personnel, high employee turnover, or persistent difficulties in filling job vacancies with suitable applicants could have a material adverse effect on our ability to compete effectively in our business and considerable expertise could be lost by us or access thereto gained by our competitors. In addition, to attract or retain qualified personnel, we might have to offer competitive compensation packages and other benefits which could lead to higher personnel costs. Any failure to attract, train, motivate or retain skilled personnel at reasonable costs could result in a material adverse effect on our business, financial condition and our reputation.
Personnel expenses represent a significant cost factor for our business. Although none of our own employees, except for some of our employees at our subsidiary Addnature AB, is currently subject to any collective bargaining agreement, there can be no assurance that labor disputes, work stoppages, strikes or similar actions will not occur in the future which might urge us to adopt or negotiate a collective bargaining agreement. Any material disagreements between us and our employees could disrupt our operations, lead to a loss in revenue and customers and increase our operating costs. In addition, there is no guarantee that collective bargaining would be possible on terms that are satisfactory to us. If our operations are affected over a longer period of time by labor disputes or if we are forced to enter into a collective bargaining agreement at unfavorable terms, this could have a material adverse effect on our business, financial condition and our reputation.
Our business is partly subject to local seasonal revenue fluctuations which may make it difficult to predict our future performance.
Our business has historically been, and will in all likelihood continue to be, seasonal. For example, most sports we sell equipment for are played in spring/summer, leading to significantly lower sales during winter times than during spring/summer. As a result of this seasonality of our business, any factor that negatively affects our business during the warmer months in any given year can have a disproportionate adverse effect on our revenue for such year. These factors include unfavorable economic conditions in the markets in which we operate at the relevant time and adverse weather conditions such as unusually long winters or short summers. In addition, any negative effects of weak seasons or weak sales of seasonal merchandise are likely to be exacerbated by industry-wide price reductions designed to clear out excess merchandise before or at the end of the relevant season. We might be unable to forecast accurately or synchronize our procurement cycles to coincide properly with seasonal variations in sales volumes. If our business growth slows or ceases, these seasonal fluctuations could become more important to our results of operations. Seasonal variations could also cause our inventories, working capital requirements and cash flows to vary from quarter to quarter. In addition, any negative effects of weak seasons or weak sales of seasonal merchandise are likely to be exacerbated by industry-wide price reductions designed to clear out excess merchandise before or at the end of the relevant season. We might be unable to forecast accurately or synchronize our procurement cycles to coincide properly with seasonal variations in sales volumes. If our business growth slows or ceases, these seasonal fluctuations could become more important to our results of operations. Seasonal variations could also cause our inventories, working capital requirements and cash flows to fluctuate from quarter to quarter. Any failure to adapt to these seasonal changes in a timely manner, may have a material adverse effect on our financial condition and results of operations for the relevant period.
 
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Inability to forecast our business accurately could prevent us from properly planning expenses and process capacity.
We base our current and future expense levels on our forecasts of our business and estimates of future revenue. Such future revenue and results of operations are difficult to forecast because they generally depend on the volume, timing and type of orders we receive, all of which are uncertain. Seasonal variations in our inventories, working capital requirements and cash flows, among other things, also increase the difficulty of our financial forecasting and could adversely affect our ability to accurately predict financial results. For any given season, a substantial portion of our expenses is incurred in advance, and therefore fixed, due to the seasonality of demand for our products and the necessity of purchasing merchandise with significant lead times. As a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected shortfall in revenue, which could have a material adverse effect on our financial condition and results of operations.
Regulatory, Legal and Tax Risks
We are subject to various regulations applying to
e-commerce
and tech businesses generally, including but not limited to regulations governing cyber security, data protection, consumer protection, product safety and trademarks, and future regulations might impose additional requirements and other obligations on our business.
We are subject to a variety of laws and regulations applicable to
e-commerce
and tech businesses, as well as laws and regulations of broader application that apply to us and to public companies in general. These laws and regulations include, among other things, cyber security, data protection, consumer protection, product safety, trademarks and internet domains, human rights and environmental topics (including the collection and disposal of electrical waste and electronic equipment), antitrust, pricing, content, copyrights, the design and operation of websites, social media and other communication, advertising practices, electronic contracts, credit card processing procedures, the provision of online payment services, unencumbered internet access to our services, textile labeling, packaging as well as taxation, tariffs and anti-bribery.
These laws and regulations evolve continuously and at a rapid pace and can differ across the jurisdictions in which we operate. Existing and future regulations and laws may particularly impede the growth and availability of the internet and online services which in turn could impede the ability to grow our business, or otherwise adversely affect our business by increasing costs and administrative burdens.
Given the broad variety of rules and their evolving nature, there can be no assurance that we have complied or will comply fully with all applicable laws and regulations. Any actual or alleged failure by us to comply with applicable laws or regulations could damage our reputation, could lead to a loss of revenue and may give rise to civil liability, administrative orders, fines or criminal charges. Legal or enforcement actions brought against us could damage our reputation and result in substantial legal expenses. Changes in laws or regulations could cause us to incur substantial costs, require us to change business practices, and could inhibit the effective implementation of our growth strategy.
In addition, the legislative and regulatory bodies, or self-regulatory organizations in jurisdictions in which we operate, may expand the scope of applicable laws or regulations, enact new laws or regulations in areas that are relevant to our business. For example, the European Commission’s Digital Single Market (DSM) initiative is expected to result in additional rules on
e-commerce
or data protection, information security and privacy. Furthermore, on June 11, 2021, the German federal parliament (
Bundestag
) adopted the
so-called
Supply Chain Act (
Lieferkettengesetz
), under which companies will have to carefully document their whole value chains, review their suppliers and prove that they are making efforts to comply with applicable standards and will make companies responsible for counteracting human rights violations in the production of their economic goods or economic goods supplied to them. In addition, in January 2021, the Legal Affairs Committee of the European Parliament called on the Commission to present a law that ensures companies are held accountable and liable when they harm or contribute to harming human rights, the environment and good governance. The European
 
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Parliament adopted a legislative initiative report in March 2021 calling for the adoption of a binding European law on the same matter. This would oblige companies to identify, address and remedy aspects of their value chains. It would also include a ban on imported products linked to severe human rights violations. Companies could be held liable for their actions and risk fines and legal remedies by victims. The Commission envisages to present its legislative proposal on this matter in early 2022.
In the Netherlands, several legislative proposals with regard to mandatory human rights and environmental due diligence requirements were initiated by the Dutch parliament in the past years. The Dutch government has recently started working on a legislative proposal imposing such due diligence requirements, which is intended to be implemented swiftly. The responsible minister indicated that the legislation will be broader and more stringent than the legislation in neighboring countries (Germany, France, UK). The exact requirements will vary depending on the size of the company and type of sector (high risk or not). For all companies there will be a general duty of care to act with due diligence. For larger companies there will be mandatory due diligence requirements following the 6 step due diligence process as included in the OECD Guidelines.
Any (perceived) compliance failure with existing laws and regulations as well as new or expanded rules could result in damage to our reputation and a loss of revenues as well as liability, fines, charges and other sanctions, remedial measures or consequences.
Non-compliance
with data protection laws could result in liability and reputational harm to our business, and adverse changes in the applicable legal framework could increase our costs of operations.
As part of our business we process sensitive customer data (including banking/payment information, names and addresses) and therefore must comply with the applicable data protection and privacy laws. We are currently particularly subject to German and European laws and regulations on privacy, information security and data protection, the most relevant of which relate to the collection, protection and use of personal and business data, including Regulation (EU) 2016/679 of the European Parliament and of the Council of April 27, 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data (“
General Data Protection Regulation
”), but also to other legal frameworks like the UK Data Protection Act or the California Consumer Privacy Act. The costs of complying with the General Data Protection Regulation are high and continue to increase, particularly in the context of ensuring that adequate data protection and data transfer mechanisms are in place. Any failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions and damage to our reputation.
Privacy related regulation could interfere with our strategy to collect and use personal information as part of our data driven approach. For example, the use of “cookies” and similar (tracking) technologies, especially for behavioral advertising as well as other tracking and analytics purposes, requires any user’s explicit prior consent. Certain details as to how to validly obtain prior consent of the users are still open and there can be no assurance that further restrictions in obtaining prior consent, if widely adopted, will not result in a significant reduction in the effectiveness of the use of cookies and other methods of online tracking. Currently, there is uncertainty in relation to the exact implementation of future consent requirements and the exact implementation of tighter legislative restrictions may lead to lower
opt-in
rates for the application of our cookies and other methods of online tracking. Data protection laws and rules also impose certain standards of protection and safeguarding on our ability to collect and use personal information relating to customers and potential customers. This particularly applies to profiling, e.g. any form of automated processing of personal data intended to evaluate certain personal aspects relating to a natural person or to analyze or predict such person’s economic situation, location, health, consumer preferences, or other relevant behavior. Such restrictions may impede our ability to offer more curated and personalized content to our customers.
Any unauthorized access or disclosure of personal data may constitute a personal data breach under the General Data Protection Regulation. Unauthorized data access or disclosure could occur through cyber security
 
36

breaches as a result of human error, external hacking, malware infection, malicious or accidental user activity, internal security breaches, and physical security breaches due to unauthorized personnel gaining physical access. In the event of such a personal data breach, we could be required to notify applicable government authorities and/or potential victims on very short notice and could face continued governmental investigations, fines and private claims for compensation from individuals whose personal data was involved. Violations of the General Data Protection Regulation may result in monetary penalties in the higher of up to €20.0 million or 4% of our worldwide turnover of the preceding fiscal year.
Furthermore, on July 16, 2020, the European Court of Justice issued its decision in Data Protection Commissioner v. Facebook Ireland Limited and Maximilian Schrems, which invalidated the
EU-U.S.
Privacy Shield framework for data transfers from countries of the European Union to the United States. This decision has greatly increased the legal requirements imposed on data exporters for transfers of personal data from
EU-countries
to
non-EU
countries, which are deemed to have an inadequate data protection level compared to the standards imposed in the European Economic Area (including, amongst others, the United States). Ensuring compliance with changing and/or stricter standards requires resources to continuously review and, as necessary, replace, amend or supplement the international data transfer mechanisms which we currently rely on, including corporate binding rules, standard contractual clauses and adequate data processing agreements with our business partners. The resulting mechanisms and procedures may increase the expenses associated with our overall compliance with personal data protection requirements or even require us to discontinue using certain tools that are relevant to our business. Any
non-compliance
could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions and damage to our reputation.
Changes in the economic or political framework may lead to further changes in these and/or other regulations governing data protection or changed interpretation of existing laws as well as the enactment of stricter laws and regulations governing data protection, which could increase our costs of operations due to increased compliance measures.
We sell products to customers that are located in various jurisdictions and intent to further increase our geographic reach, which requires us to comply with various, and sometimes conflicting legal and regulatory requirements.
As we sell products to customers that are located in various jurisdictions, we are subject to various laws and regulations of the relevant countries. While a certain number of relevant regulations have been harmonized throughout the European Union, currently or main markets, many of these laws and regulations are complex and difficult to interpret, also due to deviating practices and interpretation of local authorities and courts. Moreover, as we plan to further expand our international operations to target customers in additional countries, we will become subject to additional laws and regulatory regimes. The legal and regulatory frameworks governing our business and operations may become increasingly uncertain due to quickly changing laws, contradictory interpretation of laws and regulations, administrative bypassing of legal frameworks or a lack of market precedents upon which we can rely.
Our international business is subject to laws and regulations in many areas, including cyber security, data protection, consumer protection, product safety, trademarks and internet domains, human rights and environmental topics, antitrust, pricing, content, copyrights, the design and operation of websites, social media and other communication, advertising practices, electronic contracts, credit card processing procedures, the provision of online payment services, textile labeling, packaging as well as taxation, tariffs, international sanctions and anti-bribery. These various laws and regulations often evolve and sometimes conflict with each other. Furthermore, operating in foreign jurisdictions entails an inherent risk of misinterpreting and wrongly implementing foreign laws and regulations. While we are not aware of any material breach by us of any applicable laws and regulations, we cannot rule out that we have not been in full compliance with these laws and regulations in the past.
 
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Additionally, some of the tax systems into which we sell our products are very complex and there is no guarantee that the relevant tax authorities agree with the positions we have taken or the tax optimization structures and measures we have used to minimize legal risks, administrative burdens and tax rates. In other countries, changes in the political or legal climate may impact our use of local currency and local banking. Similarly, we may be bound by extended waiting periods and complex and costly administrative approval processes and registration.
As these laws continue to evolve and as we expand into new jurisdictions, our compliance efforts will become more complex and expensive and the risk of
non-compliance
will increase. Violations of applicable laws and regulations may harm our reputation and result in legal action, criminal and civil sanctions, or administrative fines and penalties against us or members of our governing bodies and our employees. Such violations may also result in damage claims by third parties or other adverse legal consequences, including class action lawsuits and enforcement actions by national and international regulators resulting in the limitation or prohibition of business operations. There is no guarantee that we can successfully manage or avoid any of the legal risks to which we are exposed, and
non-compliance
with the legal and regulatory frameworks that govern our operations, whether intentional or not, may have material adverse effects on our businesses, including causing us to cease our operations entirely.
Product recalls, product liability claims and breaches of corporate social responsibility could harm our reputation and business.
There is a risk that the goods we sell may cause property damage or injury to our customers, particularly in our bike business. While we believe that our operations comply in all material respects with all applicable product safety and consumer protection laws and regulations, the sale of defective products might result in product recalls, product liability claims and/or administrative fines or criminal charges. Even if an event causing a product recall proves to be unfounded or if a product liability claim against us is unsuccessful, the negative publicity surrounding any assertion that products sold by us caused injury or damage, or any allegation that the goods sold by us were defective, could adversely affect our reputation with both existing and potential customers as well as our corporate and brand image, particularly with a view to our own brands. We also face risks associated with environmental, animal-rights and sustainability concerns. For example, any negative publicity campaigns concerning
low-priced,
short-lived sports items may negatively affect our reputation or our sales. Similarly, negative publicity associated with the sale of sports items manufactured using animal-sourced products may negatively affect our reputation or our sales. We are further exposed to risks in relation to possible breaches of corporate social responsibility, including ethical sourcing, working conditions, child labor and responsible recruitment, which may harm our reputation and prospects. For example, if improper working conditions are found or alleged to exist at one or more of the factories in which the sports products we sell are manufactured, or if there is a major injury or
loss-of-life
incident in such factories, we could face negative publicity that could damage our reputation and the perception of the brands we sell, including our own brands, and we may be required to pay fines, face enhanced scrutiny by regulators or be subjected to other adverse legal consequences. Deficiencies in the area of corporate social responsibility may also negatively affect our recruiting efforts or disrupt our business.
The materialization of any of the foregoing risks, alone or in combination, could have a material adverse effect on our business, financial condition, results of operations and prospects.
Our inability to acquire, use or maintain our local trademarks and domain names for our sites could substantially harm our business, financial condition and results of operations.
We are the registrant of various trademarks as well as the trademarks of our websites in numerous jurisdictions and have also registered various internet domain names containing
e.g.,
our brand names for our websites combined with the relevant top level domain in those jurisdictions in which we are active,
e.g.
,
inter alia
but not limited to, “fahrrad.de”, “tennis-point”, “bikester”, “probikeshop”, “campz”, “Outfitter” and
 
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“stylefile” for our websites in those jurisdictions in which we are active (for example, “tennis-point.de” in Germany). Domain names are generally regulated by internet regulatory bodies and are also subject to trademark laws and other related laws of each country. If we do not have or cannot obtain or maintain on reasonable terms the ability to use our core trademarks or a major private label brand in a particular country, or to use or register our domain names, we could be forced either to incur significant additional expenses to market our products within that country, including the development of a new brand and the creation of new promotional materials and packaging, or to elect not to sell products in that country.
Any of our trademarks and domain names, from time to time, may become the subject matter of litigation. Currently, our trademark “Tennis-Point” is subject to a dispute for
cease-and-desist
and deletion in the United States and the opposing party has filed a motion for preliminary injunction to that effect. In case of a negative outcome, we therefore might not be able to use our trademark Tennis-Point, our domain Tennis-Point.com and the respective company name in the US in the future, however we do not believe this will have a material adverse effect on our business, financial condition or results of operations.
Furthermore, the regulations governing domain names and laws protecting marks and similar proprietary rights could change in ways that block or interfere with our ability to use relevant domains or our current brands. In addition, we might not be able to prevent third parties from registering, using or retaining domain names that interfere with our consumer communications or infringe or otherwise decrease the value of our marks, domain names and other proprietary rights. Regulatory bodies may establish additional generic or country-code
top-level
domains or may allow modifications of the requirements for registering, holding or using domain names. As a result, we might not be able to register, use or maintain the domain names that utilize our brand names in all of the countries in which we currently conduct business or intend to conduct business in the future, which, alone or in combination with the above risks, could have a material adverse effect on the further implementation and expansion of our business.
The realization of any of such risks, alone or in combination, could have a material adverse effect on our business, financial condition, cash flows, results of operations and prospects.
We might be unable to adequately protect other intellectual property rights.
We believe our customer data, copyrights, trade secrets, proprietary technology and similar intellectual property are critical to our success, and we rely on trade secret protection, agreements and other methods with our employees and others to protect our proprietary rights. In addition, we have developed, and we anticipate that we will continue to develop, a substantial number of programs, processes and other
know-how
on a proprietary basis (but partly based on open source codes) that are of key importance to the successful functioning of our business.
We might be required to spend significant resources to monitor and protect our intellectual property rights. We may not be able to discover or determine the extent of any infringement, misappropriation or other violation of our intellectual property rights and other proprietary rights. We may initiate claims or litigation against others for infringement, misappropriation or violation of our intellectual property rights or proprietary rights or to establish the validity of such rights. Despite our efforts, we may be unable to prevent third parties from infringing upon, misappropriating or otherwise violating our intellectual property rights and other proprietary rights. Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel, which could have a material adverse effect on our business and financial condition.
Third parties might accuse us of infringing their intellectual property rights.
The
e-commerce
sports industry, as well as the sports industry in general, is characterized by vigorous protection for and pursuit of intellectual property rights. We might be subject to litigation and disputes related to
 
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our intellectual property rights and technology in the future, as well as disputes related to intellectual property and product offerings of third-party suppliers featured by us. The costs of defending against such actions can be high, and there is no guarantee that such defenses will be successful. In addition, as our business expands and the number of competitors in our market increases, infringement claims against us could increase in number and significance. As an example, our trademark “Tennis-Point” is currently subject to a dispute for
cease-and-desist
and deletion in the United States. In case of a negative outcome, we therefore might not be able to use our trademark Tennis-Point, our domain Tennis-Point.com and the respective company name in the US in the future. We also have received in the past, and we will receive in the future, claims from third parties that certain items posted on, or sold through one of our websites violate third-party marks, copyrights, trade names or other intellectual property rights. Such claims, whether or not successful, could result in significant expenses, redirect management attention and could have a material adverse effect on our business and financial condition.
Legal claims regarding intellectual property rights are subject to inherent uncertainties due to the complex issues involved, and we cannot be certain that we will be successful in defending ourselves against such claims. Many potential litigants have the ability to dedicate substantially greater resources than we do to the enforcement of intellectual property rights and defense of claims that may be brought against them. If successful, a claimant could secure a judgment against us for substantial damages or prevent us from conducting our business as we have historically done so or may desire to do so in the future. We could also be required to seek additional licenses or pay royalties for the use of the intellectual property we need to conduct our business, which might not be available on commercially acceptable terms or at all. Alternatively, we may be forced to develop
non-infringing
technology or intellectual property on a proprietary basis, which could be expensive and/or unsuccessful.
The control and prevention mechanisms of our compliance structure might not be sufficient to adequately protect us from all legal or financial risks.
To protect us against legal risks and other potential harm, we established several compliance guidelines, including a code of ethics for employees as well as anti-corruption and anti-bribery guidelines and a group-wide guideline on data protection. These codes, guidelines and policies and the oversight of our internal compliance and legal departments might not be sufficient to prevent all unauthorized practices, legal infringements, corruption and fraud — especially regarding purchasing practices — or other adverse consequences of
non-compliance
within our organization or by or on behalf of our employees. Any compliance failure could harm our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects.
As a result, we are exposed to the risk that our employees or other authorized persons could make payments or grant hidden benefits in violation of anti-corruption laws and regulations, especially in response to demands or attempts at extortion. In addition, our current internal controls, prevention (such as our anti-corruption policy) and training programs may prove to be insufficient. Our employees or authorized persons may have been or could be engaged in activities for which we could be held liable.
Some laws and regulations promulgated against corruption and money laundering may require us to implement certain controls, procedures and internal regulations in order to ensure that the operations of a given entity do not involve corruption, illegal payments, extortion or money-laundering. The great diversity and complexity of these local laws and regulations and the expansive nature of the business conducted by us in various countries and markets create a risk that we may be deemed liable for violations of local laws and regulations. Any violation or breach of these laws and regulations could affect our overall reputation and, depending on the case, expose us to administrative or judicial proceedings, which could result in criminal and civil judgments, including a possible prohibition on maintaining business relationships with suppliers, sports brands or customers in certain countries, which could have material adverse effects on the implementation of our business strategy as well as on our financial condition.
 
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Changes in tax treatment of companies engaged in
e-commerce
in the jurisdictions in which we operate could adversely affect the commercial use of our sites and our financial results.
Our business is subject to the general tax environments in the countries in which we operate. Changes in tax legislation or case law, especially with regards to transnational
e-commerce
activities, — which might be applied retroactively — could increase our tax burden. Since 2017, the G20/OECD Inclusive Framework has been working on addressing the tax challenges arising from the digitalization of the economy and has proposed a
two-pillar
tax approach with pillar one referring to the
re-allocation
of taxing rights, addressing issues such as where tax should be paid and on what basis (
i.e.
, where sustained and significant business is conducted, regardless of a physical presence), and pillar two ensuring a minimum tax to be paid by multinational enterprises. An agreement on the approach presented could have material adverse effects for us as a digital and multinational enterprise with regards to our tax obligations.
Changes in tax treatment of companies engaged in
e-commerce
in the jurisdictions in which we operate could adversely affect the commercial use of our sites and our financial results. For example, some jurisdictions in which we operate our business (
e.g.
, Italy) have introduced new local taxes on transnational
e-commerce
activities (“digital services taxes” or “DST”). These DST generally aim at securing taxation rights of the jurisdiction for the revenues/profits generated by the transnational
e-commerce
activities with customers who are resident in this specific jurisdiction. We have established a process to assess on a regular (
i.e.
, quarterly) basis whether or not our revenues/profits are subject to these DST. For 2021, it was concluded that there should be no such DST liability but there is a general risk that new local DST will be introduced or that the existing DST will be applied differently with the result that this could adversely affect our tax liability. We cannot predict the effect of current attempts to impose sales, income or other taxes on
e-commerce.
New or revised taxes —
e.g.
, sales taxes, value-added tax (“VAT”) and similar taxes — would likely increase the cost of doing business online and decrease the attractiveness of advertising and selling products over the internet. New taxes could also lead to significant increases in internal costs necessary to capture data and collect and remit taxes.
Additionally, tax laws may be interpreted differently by the competent tax authorities and courts, and their interpretations may change at any time, which could lead to an increase of our tax burden. Accordingly, we may face unfounded tax claims in such countries. Moreover, legislators and tax authorities may change territoriality rules or their interpretation for the application of VAT on cross-border services, which may lead to significant additional payments for past and future periods. In addition, court decisions are sometimes ignored by competent tax authorities or overruled by higher courts, which could lead to higher legal and tax advisory costs and create significant uncertainty. New taxes could also result in additional costs necessary to collect the data required to assess these taxes and to remit them to the relevant tax authorities. Besides this, the documentation obligations under applicable VAT and
VAT-related
laws are considerable. Therefore, it cannot be ruled out that we may not fully comply, or, as the case may be, may have not fully complied with applicable VAT regulations throughout all phases of their development.
Taxes actually assessed in future tax audits for periods not yet covered by our last tax audit may exceed the taxes already paid by us. As a result, we may be required to make significant additional tax payments with respect to previous periods. Furthermore, the competent tax authorities could revise their original tax assessments (for example, with respect to the recognition of invoiced value added taxes). Any tax assessments that deviate from our expectations could lead to an increase in our tax burden. In addition, we may be required to pay interest on these additional taxes as well as late filing penalties. Furthermore, we have carried out reorganizations of the Group structure, and there is a risk that any such restructuring could attract additional tax scrutiny or result in unexpected or expected tax leakage despite our best efforts to avoid such negative tax consequences (
e.g.
, obtain tax advisory services by reputable consultants who confirmed the tax neutrality of the group structure reorganizations).
Any of these events occurring could, alone or in combination, have a material adverse effect on our business, financial condition, results of operations and prospects.
 
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We have no operating or financial history and our results of operations may differ significantly from the unaudited pro forma financial data included in this prospectus.
SIGNA Sports United B.V. was incorporated as a private Dutch private limited liability company (
besloten vennootschap met beperkte aansprakelijkheid
) in May 2021 and was converted into a Dutch public limited liability company (
naamloze vennootschap
) and renamed SIGNA Sports United N.V. on December 14, 2021. We have no operating history and no revenues. This prospectus includes unaudited pro forma condensed combined financial information for SIGNA. The unaudited pro forma condensed combined statement of profit or loss of SIGNA for the twelve-month period ended September 30, 2021 combines the historical unaudited condensed combined statement of operations of Yucaipa for the period June 4, 2020 (inception) through December 31, 2020, subtracting Yucaipa’s unaudited condensed statement of operations for the period from June 4, 2020 (inception) through September 30, 2020, and adding Yucaipa’s unaudited condensed statement of operations for the nine-month period ended September 30, 2021, with the audited consolidated statement of profit or loss of SSU for the fiscal year ended September 30, 2021 and financial data from the Wiggle Group’s audited consolidated income statement for the 52 weeks ended September 26, 2021 and gives pro forma effect to the Business Combination and the Wiggle Acquisition as if it had been consummated as of October 1, 2020.
The unaudited pro forma condensed combined balance sheet of SIGNA assumes that the Business Combination was consummated on September 30, 2021.
The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only, are based on certain assumptions, address a hypothetical situation and reflect limited historical financial data. Therefore, the unaudited pro forma condensed combined financial statements are not necessarily indicative of the results of operations and financial position that would have been achieved had the Business Combination and the Wiggle Acquisition been consummated on the dates indicated above, or our future consolidated results of operations or financial position. Accordingly, our business, assets, cash flows, results of operations and financial condition may differ significantly from those indicated by the unaudited pro forma condensed combined financial statements included in this prospectus.
Risks Related to the Acquisition of Wiggle
We may not be successful in integrating Wiggle into our existing business in the manner, or within the time frame, as currently anticipated or only at higher costs
Through the acquisition of Mapil TopCo Limited, a private limited company by shares incorporated in England & Wales (“
Wiggle
” and, together with its subsidiaries, the “
Wiggle Group
”), we aim to expand our business into new markets, in particular in the United Kingdom. The integration of the Wiggle business into our business holds special challenges for both parties and exposes us to a number of risks, that could, among others arise from the circumstances described below. The following discussion is not meant to be exhaustive and, in addition, other risks and unexpected issues may arise that we are currently not aware of or unable to assess.
 
  
Commitment of management capacity:
The integration of the Wiggle Group is expected to require/requires significant resources in terms of time and attention by both companies’ managements. If integration issues divert management from other responsibilities, our business could be adversely affected.
 
  
Possible loss of key employees:
Both companies depend on our and Wiggle’s executives and talent for the successful integration and implementation of a joint strategy. Should we and Wiggle be unsuccessful in retaining these employees, for example due to potential uncertainty among employees regarding jobs, company locations or corporate culture, this could impede efficient integration and leveraging our or Wiggle’s respective strengths. In particular,
know-how
of management and talented employees could be lost, which could be negatively affect innovation capability and lead to business disruptions.
 
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Transaction and integration costs:
We and Wiggle have incurred and expect to continue to incur a number of nonrecurring expenses associated with the acquisition of Wiggle and the integration of Wiggle’s operations in our group, which could be significant. These include financial advisory, legal, accounting, consulting and other advisory fees and expenses, investments in IT, business continuity and the adaptation of quality, health, safety & environment systems, reorganization and restructuring costs, severance/employee benefit-related expenses, public company filing fees and other regulatory expenses and related charges.
 
  
Disruption to business operations:
In connection with the integration of Wiggle, inadequate or misaligned commercial priorities, insufficient speed of decision making or insufficient demand could lead to a result in business loss and reputational damage. In addition, failure to harmonize potentially diverging corporate and commercial policies of us and Wiggle could negatively impact stakeholder loyalty and cause customers to change existing business relationships. A failure to harmonize external cooperations could entail a loss of partners, loss of projects, overlaps and legal implications. There is also a risk that any negative perception of the acquisition of Wiggle may impair our ability to attract and retain its key stakeholders and could cause suppliers, customers and other counterparties to change existing business relationships.
 
  
Integration of internal controls and compliance procedures:
Wiggle has internal controls and compliance procedures in place to identify business and financial risks, including compliance risks, at an early stage and take appropriate action to manage them. While we expect that Wiggle’s control systems are designed to comply with legal and other requirements applicable or relevant to Wiggle, there can be no assurance that they cover all topics deemed relevant to us. While we aim to bring Wiggle’s internal controls and compliance procedures in line with our controls and compliance procedures as quickly as possible, there can be no assurance that our control and risk management system can provide adequate protection against losses arising from business risks, including compliance risks, arising from the Wiggle business.
 
  
Unidentified risks and liabilities:
We performed due diligence as part of the acquisition of Wiggle. However, we may not be aware of all material risks and such risks may only be detected in the course of the integration process.
If any of the risks discussed were to materialize, this could disrupt our operations and cause the integration of Wiggle to become more onerous, time-consuming and costly than anticipated. In addition, the potential benefits of the acquisition of Wiggle may not be realized to the full extent, in a timely fashion or at all. In particular, we may not be able to capitalize on the expected opportunities for cost and sales synergies.
Warranty claims and claims for damages and indemnification under the Wiggle share purchase agreement are limited in scope and amount and are subject to time limits.
All warranty claims and claims for damages that we may have against the sellers of Wiggle under the share purchase agreement are subject to customary limitations and qualifications. Each seller of Wiggle has given title and capacity warranties to us, with all other commercial and tax warranties being given by the warrantors only (as described in the Wiggle share purchase agreement, as amended). Most of the warranties contained in the share purchase agreement are backed by a warranty and indemnity insurance policy. However, due to the limitations in scope and amount of the warranty claims and claims for damages and indemnification and due to the fact that not all warranties are covered by insurance, for instance warranties for cyber security, legal compliance on data protection which are not covered by the warranty and indemnity insurance policy, there is no certainty that the warranty and indemnity insurance policy or our contractual protections under the Wiggle share purchase agreement will be sufficient to ensure we will be able to recover all claims and claims for damages we may have against the sellers of Wiggle.
 
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The pro forma consolidated financial information of SIGNA included in this prospectus describes only a hypothetical situation and thus, due to its nature, the presentation does not reflect our actual combined assets, financial position and results of operations post-closing of the Wiggle Acquisition.
Since the completion of the Business Combination and the Wiggle Acquisition is expected to have a material impact on our assets, financial position and results of operations, pro forma consolidated financial information, consisting of unaudited pro forma condensed combined statements of profit or loss for the twelve-month period ended September 30, 2021 and an unaudited pro forma condensed combined balance sheet as of September 30, 2021, and pro forma notes, was prepared for purposes of this prospectus (the “Unaudited Pro Forma Condensed Combined Financial Information”). The purpose of the Unaudited Pro Forma Condensed Combined Financial Information, among others, is to present the pro forma effects of the Wiggle Acquisition on SIGNA after giving pro forma effect to the Business Combination. The unaudited pro forma condensed combined balance sheet as of September 30, 2021, assumes that the Business Combination was consummated on September 30, 2021. The unaudited pro forma condensed combined statement of profit or loss for the twelve-month period ended September 30, 2021 assumes that the Business Combination was consummated on October 1, 2020. Therefore, the Unaudited Pro Forma Condensed Combined Financial Information describes only a hypothetical situation and thus, due to its nature, the presentation does not reflect our actual net assets, financial position and results of operations after completion of the Business Combination and the Wiggle Acquisition. The presentation of the Unaudited Pro Forma Condensed Combined Financial Information of SSU is based on information available, preliminary estimates and certain pro forma assumptions and is intended for illustrative purposes only. In addition, the Unaudited Pro Forma Condensed Combined Financial Information does not represent a forecast of our net assets, financial position and results of operations at any future date or for any future period. The Unaudited Pro Forma Condensed Combined Financial Information neither contains potential synergies or cost savings, nor a normalization of any restructuring or any additional future expenses that could result from the Wiggle Acquisition. Furthermore, the Unaudited Pro Forma Condensed Combined Financial Information is only meaningful in conjunction with the historical consolidated financial statements of SSU, Yucaipa and Wiggle, included elsewhere in this prospectus.
The historical consolidated financial information of Wiggle contained in the prospectus may not be considered indicative of Wiggle’s future performance as part of our company.
The audited consolidated financial statements for the 52 weeks ended September 26, 2021 of the Wiggle Group have been prepared in accordance with IFRS (the “Wiggle Consolidated Financial Statements”). The Wiggle Consolidated Financial Statements have been prepared in accordance with IFRS and British pound sterling (GBP) as its reporting currency. We were not involved in the preparation of the Wiggle Consolidated Financial Statements and therefore did not have the possibility to independently confirm and verify that these financial statements are complete and correct in all material respects as was the case for our own historical financial statements contained herein. The Unaudited Pro Forma Condensed Combined Financial Information gives effect to adjustments required to convert Wiggle’s financial statement presentation (function) to SSU’s presentation (nature) and its reporting currency to Euros.
The Wiggle Acquisition will be accounted for as a business combination using the acquisition method of accounting in accordance with IFRS 3 Business Combinations. The assets acquired and liabilities assumed from the Wiggle Group are recorded at the fair value. The accounting of the Wiggle Acquisition will have a significant impact on our future consolidated financial statements.
Therefore, the historical consolidated financial information of Wiggle contained in this prospectus may not be considered indicative of the future performance of Wiggle as part of our company.
 
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Potential tariffs or uncertainty surrounding the exit of the United Kingdom from the European Union could have a material adverse effect on Wiggle’s business.
On March 29, 2017, the United Kingdom formally notified the European Council of its intention to leave the European Union (“Brexit”). On January 24, 2020, a withdrawal agreement was entered into between the European Union, the European Atomic Energy Community and the United Kingdom, setting the terms of the withdrawal of the latter from the former two. On December 24, 2020, the United Kingdom and the European Union agreed to a trade and cooperation agreement (the “Trade and Cooperation Agreement”). The Trade and Cooperation Agreement took provisional effect from January 1, 2021 and provided for, among other things,
zero-rate
tariffs and zero quotas on the movement of goods between the United Kingdom and the European Union.
Due to the size and importance of the economy of the United Kingdom, the uncertainty and unpredictability concerning the United Kingdom’s future laws and regulations (including financial laws and regulations, tax and free trade agreements, immigration laws and employment laws) as well as its legal, political and economic relationships with Europe following its exit of the European Union may continue to be a source of instability in international markets, create significant currency fluctuations or otherwise adversely affect trading agreements or similar cross-border cooperation arrangements (whether economic, tax, fiscal, legal, regulatory or otherwise) for the foreseeable future. The long-term effects of Brexit will depend on the implementation of the Trade and Cooperation Agreement and any future agreements (or lack thereof) between the United Kingdom and the European Union and, in particular, any potential changes in the arrangements for the United Kingdom to retain access to European Union markets. Brexit could result in adverse economic effects across the United Kingdom and Europe, which could have a material adverse effect on Wiggle’s business, results of operations, financial condition and prospects. In addition, a portion of Wiggle’s staff in the United Kingdom are from other European countries and there is a risk that Brexit will affect the ability of Wiggle to recruit skilled workers from this wider European labor market for its operations in the United Kingdom.
Risks Related to Ownership of our Ordinary Shares
We are a Dutch public company. The rights of our shareholders and the duties of our directors are governed by (i) Dutch law, (ii) the Articles of Association and (iii) internal rules and policies adopted by the Board, and might differ in some important respects from the rights of shareholders and the duties of members of a board of directors of a U.S. company.
We are a public limited liability company (
naamloze vennootschap
) under Dutch law. Our corporate affairs are governed by the Articles of Association, the rules of the Board, our other internal rules and policies and by Dutch law. There can be no assurance that Dutch law will not change in the future or that it will serve to protect shareholders in a similar fashion afforded under corporate law principles in the United States, which could adversely affect the rights of our shareholders.
The rights of shareholders and the responsibilities of our directors may be different from the rights and obligations of shareholders and directors in companies governed by the laws of the United States. In particular, pursuant to Dutch law our directors are required to act in the interest of the company and its business, and should be guided by promoting the sustainable success of its business, with an aim to creating long-term value, taking into account the interests of our employees, clients, shareholders and other stakeholders of the company, such as creditors and suppliers, as a whole and not only those of our shareholders in all cases with due observation of the principles of reasonableness and fairness. It is possible that some of these parties will have interests that are different from, or in addition to, your interests as a shareholder.
We are organized and existing under the laws of the Netherlands, and, as such, the rights of our shareholders and the civil liability of our directors and executive officers will be governed in certain respects by the laws of the Netherlands.
We are organized and existing under the laws of the Netherlands, and, as such, the rights of our shareholders and the civil liability of our directors and executive officers will be governed in certain respects by the laws of
 
45

the Netherlands. The ability of our shareholders in certain countries other than the Netherlands to bring an action against us, our directors and executive officers may be limited under applicable law. In addition, substantially all of our assets are located outside the United States.
As a result, it may not be possible for shareholders to effect service of process within the United States upon us or our directors and executive officers or to enforce judgments against us or them in U.S. courts, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. In addition, it is not clear whether a Dutch court would impose civil liability on us or any of our directors and executive officers in an original action based solely upon the federal securities laws of the United States brought in a court of competent jurisdiction in the Netherlands.
As of the date of this prospectus, the United States and the Netherlands do not have a treaty providing for the reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. With respect to choice of court agreements in civil or commercial matters, the Hague Convention on Choice of Court Agreements has entered into force for the Netherlands, but has not entered into force for the United States. Accordingly, a judgment rendered by a court in the United States, whether or not predicated solely upon U.S. securities laws, would not automatically be recognized and enforced by the competent Dutch courts. However, if a person has obtained a final and conclusive judgment for the payment of money rendered by a court in the United States that is enforceable in the United States and files a claim with the competent Dutch court, the Dutch court will generally give binding effect to such foreign judgment insofar as it finds that (i) the jurisdiction of the U.S. court has been based on a ground of jurisdiction that is generally acceptable according to international standards, (ii) the judgment by the U.S. court was rendered in legal proceedings that comply with the Dutch standards of proper administration of justice including sufficient safeguards (
behoorlijke rechtspleging
), (iii) binding effect of such foreign judgment is not contrary to Dutch public order (
openbare orde
) and (iv) the judgment by the U.S. court is not incompatible with a decision rendered between the same parties by a Dutch court, or with a previous decision rendered between the same parties by a foreign court in a dispute that concerns the same subject and is based on the same cause, provided that the previous decision qualifies for acknowledgment in the Netherlands. However, even if such a foreign judgment is given binding effect, a claim based on that foreign judgment may still be rejected if the foreign judgment is not or no longer formally enforceable.
Based on the lack of a treaty as described above, U.S. investors may not be able to enforce against us or our directors, representatives or certain experts named herein who are residents of the Netherlands or countries other than the United States any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws.
Under the Articles of Association, and certain other contractual arrangements between us and our directors, we indemnify and hold our directors harmless against all claims and suits brought against them, subject to limited exceptions. There is doubt, however, as to whether U.S. courts would enforce such indemnity provisions in an action brought against one of our directors in the United States under U.S. securities laws.
We do not anticipate paying dividends on our Ordinary Shares.
We have never paid or declared any cash dividends in the past, and we do not anticipate paying any cash dividends in the foreseeable future. We intend to retain all available funds and any future earnings to fund the further development and expansion of its business. Under Dutch law, we may only pay dividends and other distributions from its reserves to the extent its shareholders’ equity (
eigen vermogen
) exceeds the sum of its
paid-in
and
called-up
share capital plus the reserves we must maintain under Dutch law or the Articles of Association and (if it concerns a distribution of profits) after adoption of our statutory annual accounts by the General Meeting from which it appears that such dividend distribution is allowed. Subject to those restrictions, any future determination to pay dividends or other distributions from its reserves will be at the discretion of the Board and will depend upon a number of factors, including our results of operations, earnings, cash flow,
 
46

financial condition, future prospects, contractual restrictions, capital investment requirements, restrictions imposed by applicable law and other factors the Board deems relevant. See “
Dividend Policy.
Under the Articles of Association, the Board may decide that all or part of the profits shown in our adopted statutory annual accounts will be added to our reserves. After reservation of any such profits, any remaining profits will be at the disposal of the General Meeting at the proposal of the Board for distribution on the Ordinary Shares, subject to applicable restrictions of Dutch law. The Board is permitted, subject to certain requirements and applicable restrictions of Dutch law, to declare interim dividends without the approval of the General Meeting. Dividends and other distributions shall be made payable no later than a date determined by the Board. Claims to dividends and other distributions not made within five years from the date that such dividends or distributions became payable will lapse and any such amounts will be considered to have been forfeited to us (
verjaring
).
We may reclaim any distributions, whether interim or not interim, made in contravention of certain restrictions of Dutch law from shareholders that knew or should have known that such distribution was not permissible. In addition, on the basis of Dutch case law, if after a distribution we are not able to pay its due and collectable debts, then its shareholders or directors who at the time of the distribution knew or reasonably should have foreseen that result may be liable to our creditors.
Since we are a holding company, our ability to pay dividends will be dependent upon the financial condition, liquidity and results of operations of, and our receipt of dividends, loans or other funds from, our subsidiaries, including SSU. Our subsidiaries are separate and distinct legal entities and have no obligation to make funds available to us. In addition, there are various statutory, regulatory and contractual limitations and business considerations on the extent, if any, to which our subsidiaries may pay dividends, make loans or otherwise provide funds to us.
SIGNA International Sports Holding GmbH (“SISH”) owns a significant portion of our Ordinary Shares and is represented on the Board. In addition, SISH holds nomination rights for directors of the Board and one of our director nominees was designated by Yucaipa Acquisition Manager, LLC, a Delaware limited liability company (“Yucaipa Sponsor”). Yucaipa Sponsor and SISH may have interests that differ from those of other shareholders.
As of the date of this prospectus, SISH owns approximately 49.48% of our Ordinary Shares, with 47.7% being held directly by SISH and 1.77% being held by SISH Beteiligung GmbH & Co. KG, a German limited liability partnership (
Kommanditgesellschaft
) wholly owned and controlled by SISH. For as long as SISH, alone or together with its affiliates, holds at least 10% (but less than 20%) of our issued share capital, it will be allowed to make a binding nomination for one Director, for as long as SISH, alone or together with its affiliates, holds at least 20% (but less than 30%) or our issued share capital, it will be allowed to make a binding nomination for two Directors and for as long as SISH, alone or together with its affiliates, holds at least 30% of our issued share capital, it will be allowed to make a binding nomination for three Directors. The incumbent directors on the Board nominated by SISH have been appointed for four years and will serve an initial term as directors of the Board until 2025. In addition, one of our director nominees was designated by Yucaipa Sponsor. As a result, Yucaipa Sponsor and SISH may be able to significantly influence the outcome of matters submitted for director action, subject to obligation of the Board to act in the interest of all of our stakeholders, and for shareholder action, including the designation and appointment of the Board (and committees thereof) and approval of significant corporate transactions, including business combinations, consolidations and mergers. The influence of Yucaipa Sponsor and SISH over our Board could have the effect of delaying or preventing a change in control or otherwise discouraging a potential acquirer from attempting to obtain control of our company, which could cause the market price of our Ordinary Shares to decline or prevent our shareholders from realizing a premium over the market price for our Ordinary Shares. Additionally, Yucaipa Sponsor is controlled by Ronald W. Burkle, who is in the business of making investments in companies and who may from time to time acquire and hold interests in businesses that compete directly or indirectly with us or that supply us with goods and services. Mr. Burkle may
 
47

also pursue acquisition opportunities that may be complementary to (or competitive with) our business, and as a result those acquisition opportunities may not be available to us. Prospective investors in our Ordinary Shares should consider that the interests of Yucaipa Sponsor and SISH, as well as the interests of certain other former SSU equity holders who own a significant portion of our Ordinary Shares, may differ from their interests in material respects.
Provisions of the Articles of Association or Dutch corporate law might deter acquisition bids for our company that our shareholders might consider to be favorable and prevent, delay or frustrate any attempt to replace or remove the Board at the time of such acquisition bid.
Under Dutch law, various protective measures are possible and permissible within the boundaries set by Dutch law and Dutch case law.
In this respect, certain provisions of the Articles of Association may make it more difficult for a third-party to acquire control of the Company or effect a change in the composition of the Board. These include:
 
  
a provision that Directors are appointed by the General Meeting (i) until SISH, alone or together with its affiliates, no longer holds at least 10% of our issued share capital, with respect to one, two or three Directors (depending on the size of the shareholding that SISH holds together with its affiliates), on the basis of a binding nomination prepared by SISH and (ii) for all other Directors on the basis of a binding nomination prepared by the Board, provided any that such nomination can only be overruled by a
two-thirds
majority of votes cast representing more than half of our issued share capital;
 
  
a provision that Directors may only be dismissed by the General Meeting by a
two-thirds
majority of votes cast representing more than half of our issued share capital, unless the dismissal is proposed by (i) the Board or (ii) during the period when SISH is allowed to make a binding nomination as discussed above, with respect to a SISH nominated Director, at the proposal of SISH, in which case a simple majority of the votes cast would be sufficient;
 
  
a provision allowing, among other matters, the former chairperson of the Board or our former Chief Executive Officer (in each case, during the period when SISH is allowed to make a binding nomination as discussed above, together with a person designated by SISH for that purpose if the former chairperson or Chief Executive Officer, as applicable, was not a SISH nominated Director) to manage our affairs if all of the Directors are dismissed and to appoint others to be charged with our affairs, including the preparation of a binding nomination for Directors as discussed above, until new Directors are appointed by the General Meeting on the basis of such binding nomination; and
 
  
a requirement that certain matters, including an amendment of the Articles of Association, may only be resolved upon by the General Meeting with a majority of at least 75% of the votes cast during the period when SISH is allowed to make a binding nomination as discussed above and in each case at the proposal of the Board.
Dutch law also allows for staggered multi-year terms of the Directors, as a result of which only part of the Directors may be subject to appointment or
re-appointment
in any given year. Our initial Directors have been appointed with staggered term periods ranging from two to up to four years.
In addition, in accordance with the Dutch Corporate Governance Code (the “DCGC”), shareholders who have the right to put an item on the agenda for the General Meeting or to request the convening of a General Meeting shall not exercise such rights until after they have consulted the Board. If exercising such rights may result in a change in our strategy (for example, through the dismissal of Directors), the Board must be given the opportunity to invoke a reasonable period of up to 180 days to respond to the shareholders’ intentions. If invoked, the Board must use such response period for further deliberation and constructive consultation, in any event with the shareholder(s) concerned and exploring alternatives. At the end of the response time, the Board shall report on this consultation and the exploration of alternatives to the General Meeting. The response period
 
48

may be invoked only once for any given General Meeting and shall not apply (i) in respect of a matter for which a response period has been previously invoked or (ii) if a shareholder holds at least 75% of our issued share capital as a consequence of a successful public bid. The response period may also be invoked in response to shareholders or others with meeting rights under Dutch law requesting that a general meeting be convened, as described in “
Description of Securities
.”
Moreover, the Board can invoke a
cooling-off
period of up to 250 days when shareholders, using their right to have items added to the agenda for a General Meeting or their right to request a general meeting, propose an agenda item for our General Meeting to dismiss, suspend or appoint one or more Directors (or to amend any provision in the Articles of Association dealing with those matters) or when a public offer for our company is made or announced without our support, provided, in each case, that the Board believes that such proposal or offer materially conflicts with the interests of our company and its business. During a
cooling-off
period, the General Meeting cannot dismiss, suspend or appoint Directors (or amend the provisions in the Articles of Association dealing with those matters) except at the proposal of the Board. During a
cooling-off
period, the Board must gather all relevant information necessary for a careful decision-making process and at least consult with shareholders representing 3% or more of our issued share capital at the time the
cooling-off
period was invoked, as well as with our Dutch works council (if we or, under certain circumstances, any of our subsidiaries would have one). Formal statements expressed by these stakeholders during such consultations must be published on our website to the extent these stakeholders have approved that publication. Ultimately one week following the last day of the
cooling-off
period, the Board must publish a report in respect of its policy and conduct of affairs during the
cooling-off
period on our website. This report must remain available for inspection by shareholders and others with meeting rights under Dutch law at our office and must be tabled for discussion at the next General Meeting. Shareholders representing at least 3% of our issued share capital may request the Enterprise Chamber of the Amsterdam Court of Appeal (the “Enterprise Chamber” (
Ondernemingskamer
)), for early termination of the
cooling-off
period. The Enterprise Chamber must rule in favor of the request if the shareholders can demonstrate that:
 
  
the Board, in light of the circumstances at hand when the
cooling-off
period was invoked, could not reasonably have concluded that the relevant proposal or hostile offer constituted a material conflict with the interests of our company and its business;
 
  
the Board cannot reasonably believe that a continuation of the
cooling-off
period would contribute to careful policy-making; or
 
  
other defensive measures, having the same purpose, nature and scope as the
cooling-off
period, have been activated during the
cooling-off
period and have not since been terminated or suspended within a reasonable period at the relevant shareholders’ request (i.e., no ‘stacking’ of defensive measures).
We are aware of material control and accounting weaknesses in our current finance organization. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which is likely to negatively affect our business and the market price of our Ordinary Shares.
As a public company, we are required to report, among other things, control deficiencies that constitute a “material weakness” or changes in internal controls that, or that are reasonably likely to, materially affect internal controls 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 the company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in our implementation could cause us to fail to meet our reporting obligations. In addition, any testing conducted by us, or any testing conducted by our independent registered public accounting firm, may reveal deficiencies in our
 
49

internal control over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which is likely to negatively affect our business and the market price of our Ordinary Shares.
In the fiscal year ended September 30, 2021, SSU identified material weaknesses in SSU’s internal controls related to (i) the design and maintenance of effective entity level controls to identify business risks relevant to financial reporting objectives, estimate the significance of the risks, assess the likelihood of their occurrence and determine actions to address those risks, (ii) the adequate number of individuals within its accounting and financial reporting function with sufficient training in IFRS and SEC reporting standards, (iii) the design and maintenance of formal and effective controls over certain general information technology controls for IT systems, (iv) the design and maintenance of effective controls to ensure the completeness of accounts payable and vendor accruals, (v) the design and maintenance of effective controls to ensure that revenue was recorded in the correct accounting period and (vi) the design and maintenance of effective controls to ensure the appropriateness of the estimate of the recoverable amount of goodwill and indefinite-lived intangible assets. We have taken measures and plan to continue to take measures to remedy such material weaknesses. These remedial measures include hiring additional employees with training in IFRS and SEC reporting standards, taking steps to improve our controls and procedures including incorporating automated and software-based accounting tools, and engaging third parties to support our internal resources related to accounting and internal controls.
Notwithstanding the actions already taken, management’s attention may be diverted from other business concerns and we may be required to hire and train additional employees or engage outside consultants to comply with these requirements and additional Sarbanes-Oxley Act requirements applicable to us in the future, which would increase costs and expenses. Any compliance failure could harm our reputation and have a material adverse effect on our business, financial condition, results of operations and prospects. For further information please refer to the risk factors entitled “
Our management team has limited experience managing a public company, and publicly traded company reporting and compliance requirements could divert resources from the
day-to-day
management of our business.
We will be required to disclose changes made in our internal controls and procedures on a quarterly basis and our management will be required to assess the effectiveness of these controls annually. As long as we are an “emerging growth company” under the JOBS Act, an independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead to financial statements restatements and require us to incur the expense of remediation. The Company currently expects that it will no longer qualify as an “emerging growth company” under the JOBS Act as of the end of the fiscal year 2022 and that the exemptions now applicable to it will then no longer be available.
The market price and trading volume of our Ordinary Shares and Public Warrants may be volatile and could decline significantly.
The markets in which we are trading our Ordinary Shares and Public Warrants under the symbols “SSU” and “SSU WT,” respectively, have from time to time experienced significant price and volume fluctuations. Even if an active, liquid and orderly trading market develops and is sustained for our Ordinary Shares and Public Warrants, the market price of our Ordinary Shares and Public Warrants may be volatile and could decline significantly. In addition, as of the date of this prospectus, the trading volume in our Ordinary Shares is reduced due to the low free float rate and the trading volume in our Ordinary Shares and Public Warrants may fluctuate and cause significant price variations to occur in the future. If the market price of our Ordinary Shares and Public Warrants declines significantly, you may be unable to resell your securities at or above the market price. We
 
50

cannot assure you that the market price of the Ordinary Shares and Public Warrants will not fluctuate widely or decline significantly in the future in response to a number of factors, including, among others, the following:
 
  
the realization of any of the risk factors presented in this prospectus;
 
  
actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, results of operations, liquidity or financial condition;
 
  
additions and departures of key personnel;
 
  
failure to comply with the requirements of the New York Stock Exchange (“NYSE”);
 
  
failure to comply with the Sarbanes-Oxley Act or other laws or regulations;
 
  
future issuances, sales or resales, or anticipated issuances, sales or resales, of Ordinary Shares (including the Ordinary Shares issued as part of the Transaction, to which no
lock-up
restrictions apply;
 
  
publication of research reports about the Company;
 
  
the performance and market valuations of other similar companies;
 
  
broad disruptions in the financial markets, including sudden disruptions in the credit markets;
 
  
material and adverse impact of the
COVID-19
pandemic on the markets and the broader global economy;
 
  
speculation in the press or investment community;
 
  
actual, potential or perceived control, accounting or reporting problems; and
 
  
changes in accounting principles, policies and guidelines.
In the past, securities class-action litigation has often been instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on the Company.
If securities or industry analysts publish inaccurate or unfavorable research or cease publishing research about our company, our share price and trading volume could decline significantly.
The market for our Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. In the event securities or industry analysts downgrade their opinions about our Ordinary Shares, publish inaccurate or unfavorable research about us, or cease publishing about us regularly, demand for our Ordinary Shares could decrease, which might cause our share price and trading volume to decline significantly.
Our Shareholders may not be able to exercise
pre-emption
rights and, as a result, may experience substantial dilution upon future issuances of our Ordinary Shares or rights to subscribe for our Ordinary Shares.
In the event of an issue of our Ordinary Shares or a grant of rights to subscribe for our Ordinary Shares, subject to certain exceptions, each holder of our Ordinary Shares will have a pro rata
pre-emption
right in proportion to the aggregate nominal value of such holder’s Ordinary Shares. These
pre-emption
rights may be restricted or excluded by a resolution of the General Meeting or by another corporate body designated by the General Meeting. The Board is authorized for a period of five years to issue shares or grant rights to subscribe for shares up to our authorized share capital from time to time (which is approximately five times the currently issued share capital of the Company) and to limit or exclude
pre-emption
rights in connection therewith. Accordingly, holders of our Ordinary Shares may not have any
pre-emptive
rights in connection with, and may be diluted by, an issue of new shares and it may be more difficult for a shareholder to obtain control over the General Meeting. This could cause existing shareholders to experience substantial dilution of their interest in us.
 
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We are not obligated to, and do not, comply with all best practice provisions of the Dutch Corporate Governance Code.
We are subject to the DCGC. The DCGC contains principles and best practice provisions on corporate governance that regulate relations between the Board and the General Meeting and matters in respect of financial reporting, auditors, disclosure, compliance and enforcement standards. The DCGC is based on a “comply or explain” principle. Accordingly, companies must disclose in their statutory annual reports whether they comply with the provisions of the DCGC. If a company subject to the DCGC does not comply with those provisions, that company would be required to give the reasons for such
non-compliance.
We will not comply with all best practice provisions of the DCGC. This may affect your rights as a shareholder and you may not have the same level of protection as a shareholder in a Dutch company that fully complies with the DCGC.
The JOBS Act permits “emerging growth companies” like us to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies.
We currently qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. As such, we take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as we continue to be an emerging growth company, including the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act. As a result, our shareholders may not have access to certain information they deem important.
We cannot predict if investors will find our Ordinary Shares less attractive because we rely on these exemptions. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market and share price for our Ordinary Shares may be more volatile. The Company currently expects that it will no longer qualify as an “emerging growth company” under the JOBS Act as of the end of the fiscal year 2022 and that the exemptions now applicable to it will then no longer be available. The Company might fail to comply with the additional reporting requirements that will apply to the Company upon the lapse of its status as an “emerging growth company.”
As a foreign private issuer and as permitted by the listing requirements of NYSE, we follow certain home country governance practices rather than the corporate governance requirements of NYSE.
We are a foreign private issuer. As a result, in accordance with the listing requirements of NYSE we will rely on home country governance requirements and certain exemptions thereunder rather than relying on the corporate governance requirements of NYSE. In accordance with Dutch law and generally accepted business practices, the Articles of Association do not provide quorum requirements generally applicable to general meetings. To this extent, our practice varies from the requirement of NYSE Listed Company Manual §310.00, which requires an issuer to provide in its bylaws for a generally applicable quorum, and that such quorum required for any meeting of the holders of common stock should be sufficiently high to insure a representative vote. Although we must provide our shareholders with an agenda and other relevant documents for the General Meeting, Dutch law does not have a regulatory regime for the solicitation of proxies and the solicitation of proxies is not a generally accepted business practice in the Netherlands, thus our practice will vary from the requirement of NYSE Listed Company Manual §402.04(A). As permitted by the listing requirements of NYSE, we have also opted out of the requirements of NYSE Listed Company Manual §303A.05(a)), which requires, among other things, an issuer to have a compensation committee that consists entirely of independent directors, NYSE Listed Company Manual §303A.04(a), which requires independent director oversight of director nominations, and NYSE Listed Company Manual §303A.01, which requires an issuer to have a majority of independent directors on its board. We will also rely on the
phase-in
rules of the SEC and NYSE with respect to the independence of our audit committee. These rules require that a majority of Directors must be independent and all members of our audit committee must meet the independence standard for audit committee members
 
52

within one year of our listing on NYSE. In addition, we have opted out of shareholder approval requirements, as included in the NYSE Listing Rules, for the issuance of securities in connection with certain events such as the acquisition of shares or assets of another company, the establishment of or amendments to equity-based compensation plans for employees, a change of control of our company and certain private placements. To this extent, our practice varies from the requirements of NYSE Listed Company Manual § 312.03, which generally requires an issuer to obtain shareholder approval for the issuance of securities in connection with such events. Accordingly, you may not have the same protections afforded to shareholders of companies that are subject to these NYSE requirements.
We may fail to meet the NYSE’s listing criteria and the NYSE may not continue to list our securities on its exchange, which could limit the ability of investors to make transactions in our securities and subject us to additional trading restrictions.
If we fail to continue to meet the listing requirements of the NYSE, our securities may be delisted, and we could face significant material adverse consequences, including:
 
  
limited availability of market quotations for our securities;
 
  
limited amount of news and analyst coverage for us; and
 
  
decreased ability to issue additional securities or obtain additional financing in the future.
Our and SSU’s tax positions could be adversely affected by the future application and interpretation of applicable tax laws by tax authorities.
The tax treatment of us and our respective affiliates depends in some instances on determinations of fact and interpretations of complex provisions of applicable tax law for which no clear precedent or authority may be available. Relevant tax rules are consistently under review by persons involved in the legislative process and taxing authorities, which may result in revised interpretations of established concepts, statutory changes, new reporting obligations, revisions to regulations and other modifications and interpretations. The present tax treatment of us and our respective affiliates may be modified by administrative, legislative or judicial interpretation at any time, and any such action may apply on a retroactive or retrospective basis. Our and our respective affiliates’ effective tax rates could be adversely affected by changes in the relevant tax, accounting and other laws, regulations, principles and interpretations. Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. We and our respective affiliates continue to assess the impact of such changes in tax laws and interpretations on their businesses and may determine that changes to their structure, practice, tax positions or the manner in which they conduct their businesses are necessary in light of such changes and developments in the tax laws of the jurisdictions in which we and our respective affiliates operate. Such changes may nevertheless be ineffective in avoiding an increase in tax liability, which could adversely affect the financial conditions, results of operations and cash flows.
The original treatment of a
tax-relevant
matter in a tax return, tax assessment or otherwise could later be found incorrect and as a result, we and our respective affiliates may be subject to additional taxes, interest, penalty payments and/or social security payments. Such reassessment may be due to an interpretation or view of laws and/or facts by tax authorities in a manner that deviates from our and our respective affiliates’ view and may emerge as a result of tax audits or other review actions by the relevant financial or tax authorities. We and our respective affiliates are subject to tax audits by the respective tax authorities on a regular basis. As a result of future tax audits or other reviews by the tax authorities, additional taxes could be imposed that exceed the provisions reflected in previous financial statements. This could lead to an increase in our and/or our respective affiliates tax obligations, either as a result of the relevant tax payment being assessed directly against them or as a result of becoming liable for the relevant tax as a secondary obligor due to the primary obligor’s failure to pay. Consequently, we and/or our respective affiliates may have to engage in tax litigation to defend or achieve results reflected in prior estimates, declarations or assessments which may be time-consuming and expensive.
 
53

Further, current tax losses and tax loss carry-forwards existing with SSU or its German affiliates forfeit if, within a period of five years, more than 50% of the subscribed capital, membership rights, participation rights or voting rights of the respective company are transferred directly or indirectly to an acquirer or to persons closely associated with such an acquirer or a group of several acquirers with aligned interest, or if a comparable situation exists. By exception, tax losses and tax loss carry-forwards do not forfeit upon a harmful transfer of shares or any other comparable instrument as described, if,
inter alia
, to the extent such losses and loss carry forwards do not exceed the total taxable hidden reserves of the business assets of SSU or its German affiliates existing in Germany at the time of the harmful event. Various aspects of this loss forfeiture rule are unclear as of today and not yet determined by case law.
As we intend to operate in various countries and taxing jurisdictions, the application of tax laws can be subject to diverging and sometimes conflicting interpretations by taxing authorities of these jurisdictions. Generally, if two or more affiliated companies are located in different countries, the tax laws or regulations of each country will typically require that transfer prices be the same as those between unrelated companies dealing at arms’ length and that appropriate documentation is maintained to support the transfer prices. In addition, existing transfer pricing documentation may be considered to be insufficient by the relevant tax authorities which may also result in penalties and additional tax payments. It is not uncommon for taxing authorities in different countries to have conflicting views, for instance, with respect to, among other things, the manner in which the arm’s length standard is applied for transfer pricing purposes, or with respect to the valuation of intellectual property. If taxing authorities in any of these countries were to successfully challenge SSU’s transfer prices as not reflecting arm’s length transactions, they could require SSU to adjust its transfer prices and thereby reallocate its income to reflect these revised transfer prices, which could result in a higher tax liability to SSU. In addition, if the country from which the income is reallocated does not agree with the reallocation, both countries could tax the same income, potentially resulting in double taxation. If taxing authorities were to allocate income to a higher tax jurisdiction, subject SSU’s income to double taxation or assess interest and penalties, it would increase SSU’s tax liability, which could adversely affect its financial condition, results of operations and cash flows. Further, with a view that we are a Dutch corporation with effective place of management in Germany, Dutch and German tax authorities may have deviating views as to their respective entitlement under tax assets and income.
We may become taxable in a jurisdiction other than Germany and this may increase the aggregate tax burden on us.
Since our incorporation we have had, on a continuous basis, our place of “effective management” in Germany. We will therefore qualify as a tax resident of Germany on the basis of German domestic law. As an entity incorporated under Dutch law, however, we also qualify as a tax resident of the Netherlands for Dutch corporate income tax, Dutch dividend withholding tax and Dutch withholding tax purposes on the basis of Dutch domestic law. However, based on our current management structure and the current tax laws of the United States, Germany and the Netherlands, as well as applicable income tax treaties, and current interpretations thereof, we should qualify solely as a tax resident of Germany for the purposes of the 2012 Convention between the Federal Republic of Germany and the Kingdom of the Netherlands for the avoidance of double taxation with respect to taxes on income (the “
double tax treaty between Germany and the Netherlands
”) due to the “effective management”
tie-breaker
included in Article 4(3) of the double tax treaty between Germany and the Netherlands and the current reservation made by Germany under the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “
MLI
”), with respect to the
tie-breaker
provision included in Article 4(3) of the double tax treaty between Germany and the Netherlands (the “
MLI
tie-breaker
reservation
”).
The test of “effective management” is largely a question of fact and degree based on all the circumstances, rather than a question of law. Nevertheless, the relevant case law and OECD guidance suggest that we are likely to be regarded as having become a German tax resident from incorporation and remaining so if, as our company intends, (i) most meetings of our executive officers, who manage the day-to-day business of the Company, are prepared and held in Germany (and none will be held in the Netherlands) with a majority of executive officers
 
54

present in Germany for those meetings; (ii) at those meetings there are full discussions of, and decisions are made regarding, the key strategic issues affecting our company and its subsidiaries; (iii) those meetings are properly minuted; (iv) a majority of our executive officers, together with supporting staff, are based in Germany; and (v) our company has permanent staffed office premises in Germany. We may, however, become subject to limited income tax liability in other countries with regard to the income generated in the respective other country, for example, due to the existence of a permanent establishment or a permanent representative in such other country.
The applicable tax laws or interpretations thereof may change, including the MLI
tie-breaker
reservation. Furthermore, whether we have our place of effective management in Germany and are as such tax resident in Germany is largely a question of fact and degree based on all the circumstances, rather than a question of law, which facts and degree may also change. Changes to applicable laws or interpretations thereof, changes to applicable facts and circumstances (for example, a change of directors or the place where board meetings take place), or changes to applicable income tax treaties, including a change to the MLI
tie-breaker
reservation, may result in us becoming (also) a tax resident of the Netherlands or another jurisdiction. As a consequence, our overall effective income tax rate and income tax expense could materially increase, which could have a material adverse effect on our business, results of operations, financial condition and prospects, which could cause our share price and trading volume to decline. Furthermore, the tax laws of Germany, in particular, the respective German implementation rules of the Council Directive (EU) 2016/1164 of 12 July 2016 (so-called
Anti-Tax Avoidance Directive
) may lead to additional German taxes irrespective of whether our place of effective management is in Germany or the Netherlands. In addition, as a consequence, dividends distributed by us, if any, may become subject to dividend withholding tax in more than one jurisdiction. The double taxation of income and the double withholding tax on dividends may be reduced or avoided entirely under the double tax treaty between Germany and the Netherlands or under a double tax treaty between the Netherlands and the respective other country. See also “
— If we do pay dividends, we may need to withhold tax on such dividends payable to holders of Ordinary Shares in both Germany and the Netherlands
” below.
If we do pay dividends, we may need to withhold tax on such dividends payable to holders of Ordinary Shares in both Germany and the Netherlands.
We do not intend to pay any dividends to holders of Ordinary Shares. See “—
 We do not anticipate paying dividends on our Ordinary Shares
.” However, if we do pay dividends, we may need to withhold tax on such dividends both in Germany and the Netherlands.
As an entity incorporated under Dutch law, any dividends distributed by us are subject to Dutch dividend withholding tax on the basis of Dutch domestic law. However, on the basis of the double tax treaty between Germany and the Netherlands currently in effect, the Netherlands will be restricted in imposing these taxes if we are also a tax resident of Germany and our effective management is located in Germany (the “withholding tax restriction”). See also “—
 We may become taxable in a jurisdiction other than Germany and this may increase the aggregate tax burden on us
” above. The withholding tax restriction does, however, not apply, and Dutch dividend withholding tax is still required to be withheld from dividends, if and when paid to Dutch resident holders of our Ordinary Shares and
non-Dutch
resident holders of our Ordinary Shares that have a permanent establishment in the Netherlands to which their Ordinary Shares are attributable. As a result, upon a payment of dividends, we will be required to identify our shareholders in order to assess whether there are Dutch residents or
non-Dutch
residents with a permanent establishment in the Netherlands to which the Ordinary Shares are attributable in respect of which Dutch dividend withholding tax has to be withheld. Such identification may not always be possible in practice. If the identity of our shareholders cannot be determined, withholding of both German and Dutch dividend withholding tax may occur upon a payment of dividends.
Furthermore, the withholding tax restriction referred to above is based on the current MLI
tie-breaker
reservation. If Germany changes its MLI
tie-breaker
reservation, we will not be entitled to any benefits of the double tax treaty between Germany and the Netherlands, including the withholding tax restriction, as long as
 
55

Germany and the Netherlands do not reach an agreement on our tax residency for purposes of the double tax treaty between Germany and the Netherlands, and, as a result, any dividends distributed by us during the period no such agreement has been reached between Germany and the Netherlands, may be subject to dividend withholding tax both in Germany and the Netherlands.
We may be or may become a PFIC, which could result in adverse U.S. federal income tax consequences to U.S. Holders.
If we or any of our subsidiaries is a PFIC for any taxable year, or portion thereof, that is included in the holding period of a U.S. Holder (as defined in the section of this registration statement captioned “
Taxation
”), such U.S. Holder may be subject to certain adverse U.S. federal income tax consequences and may be subject to additional reporting requirements. We and our subsidiaries are not currently expected to be treated as PFICs for U.S. federal income tax purposes for the taxable year of the Business Combination or for foreseeable future taxable years. However, this conclusion is a factual determination that must be made annually at the close of each taxable year and, thus, is subject to change. Accordingly, there can be no assurance that we or any of our subsidiaries will not be treated as a PFIC for any taxable year. Moreover, we do not expect to provide a PFIC annual information statement for 2021 or future taxable years. U.S. Holders are urged to consult their tax advisors regarding the possible application of the PFIC rules to holders of our Ordinary Shares and Public Warrants.
 
56

USE OF PROCEEDS
All of the Ordinary Shares offered by the Selling Securityholders pursuant to this prospectus will be sold by the Selling Securityholders for their respective accounts. We will not receive any proceeds from the sale of Ordinary Shares by the Selling Securityholders pursuant to this prospectus and we will not receive any proceeds from the issuance of the Ordinary Shares, to be issued by us as part of the Cash to Equity Bonus Conversion, pursuant to this prospectus.
We will pay certain expenses associated with the registration of the securities covered by this prospectus, as described in the section titled “
Plan of Distribution
.”
 
57

DIVIDEND POLICY
The Company has never declared or paid any cash dividends and has no plan to declare or pay any dividends on our Ordinary Shares in the foreseeable future. The Company currently intends to retain any earnings for future operations and expansion.
Under Dutch law, we may only pay dividends and other distributions from our reserves to the extent our shareholders’ equity (
eigen vermogen
) exceeds the sum of our
paid-in
and
called-up
share capital plus the reserves we must maintain under Dutch law or the Articles of Association and (if it concerns a distribution of profits) after adoption of our statutory annual accounts by the General Meeting from which it appears that such dividend distribution is allowed. Subject to those restrictions, any future determination to pay dividends or other distributions from our reserves will be at the discretion of the Board and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors we deem relevant.
Under the Articles of Association, the Board may decide that all or part of the profits shown in our adopted statutory annual accounts will be added to our reserves. After reservation of any such profits, any remaining profits will be at the disposal of the general meeting at the proposal of the Board for distribution on our Ordinary Shares, subject to applicable restrictions of Dutch law. The Board is permitted, subject to certain requirements and applicable restrictions of Dutch law, to declare interim dividends without the approval of the General Meeting. Dividends and other distributions shall be made payable no later than a date determined by us. Claims to dividends and other distributions not made within five years from the date that such dividends or distributions became payable will lapse and any such amounts will be considered to have been forfeited to us (
verjaring
).
Since the Company is a holding company, its ability to pay dividends will be dependent upon the financial condition, liquidity and results of operations of, and the receipt of dividends, loans or other funds from, its subsidiaries. The subsidiaries are separate and distinct legal entities and have no obligation to make funds available to the Company. In addition, there are various statutory, regulatory and contractual limitations and business considerations on the extent, if any, to which the subsidiaries of the Company may pay dividends, make loans or otherwise provide funds to the Company.
 
58

CAPITALIZATION
The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2021 on:
 
  
A historical basis for SSU; and
 
  
On a pro forma basis, after giving effect to the Business Combination, the Wiggle Acquisition and the PIPE Financing.
The information in this table should be read in conjunction with the financial statements and notes thereto and other financial information included in this prospectus and any prospectus supplement and the information under “
Management’s Discussion and Analysis of Financial Condition and Results of Operations
.” Our historical results do not necessarily indicate our expected results for any future periods.
 
   
As of September 30, 2021
 
   
Actual
   
Pro forma for

Business

Combination,

Wiggle
Acquisition and
PIPE Financing
(1)
 
   
(in € millions)
 
Cash and cash equivalents
   50.7    96.6 
Total liabilities
   369.5    549.7 
Share capital
   21.2    46.4 
Capital reserve
   558.4    1,261.2 
Retained earnings
   (206.3   (399.9
Other reserves
   (0.0   6.5 
Total equity
   373.4    914.1 
Total capitalization
   742.9    1,463.8 
 
 
(1)
The pro forma information is presented for informational purposes only and is not necessarily indicative of what our financial position and results would have been had these transactions actually occurred at such date nor is it indicative of our future financial position or performance.
 
59

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Introduction
The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation
S-X,
herein referred to as Article 11. The unaudited pro forma condensed combined financial information presents the pro forma effects of the Business Combination.
Yucaipa and Wiggle have historically prepared their financial statements in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) and IFRS as issued by the IASB (“IFRS”) with the U.S. Dollar ($) and British pound sterling (£) as their reporting currency, respectively. The unaudited pro forma condensed combined financial information gives effect to adjustments required to convert Yucaipa’s historical financial information to IFRS, its financial statement presentation (function) to SSU’s presentation (nature) and its reporting currency to Euros and Wiggle’s financial statement presentation to SSU’s presentation and its reporting currency to Euros.
All references to “TopCo” refer to SIGNA Sports United N.V. (f/k/a SIGNA Sports United B.V.) and its subsidiaries, after giving pro forma effect to the Business Combination.
SSU financed the cash portion of the consideration paid in the Wiggle Acquisition with proceeds from the Merger.
The unaudited pro forma condensed combined balance sheet as of September 30, 2021 assumes that the Business Combination was consummated on September 30, 2021.
The unaudited pro forma condensed combined statement of profit or loss for the twelve-month period ended September 30, 2021 assumes that the Business Combination was consummated on October 1, 2020.
The unaudited pro forma condensed combined financial information has been prepared for informational purposes only and does not necessarily reflect what TopCo’s actual financial position or results of operations would have been had the Business Combination consummated on the dates indicated. Further, the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of TopCo. The unaudited pro forma condensed combined financial information is intended to provide information about the continuing impact of the Business Combination as if it had been consummated earlier. The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11. TopCo has elected not to present Management’s Adjustments and will only be presenting Transaction Accounting Adjustments in the following unaudited pro forma condensed combined financial information and therefore, the unaudited pro forma condensed combined financial information does not include discussion of the realization of any expected cost savings or other synergies from the Wiggle Acquisition as a result of restructuring activities and other planned cost savings initiatives following the completion of the Business Combination. The unaudited Transaction Accounting Adjustments, which are described in the accompanying notes are based on information currently available and certain assumptions and may be revised as additional information becomes available and is evaluated. In the opinion of TopCo’s management, all adjustments necessary to present fairly the unaudited pro forma condensed combined financial information have been made based on information available at this time. The assumptions and estimates underlying the adjustments are described in the notes to the accompanying unaudited pro forma condensed combined financial information. The actual results may differ significantly from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts may differ materially from the information presented.
This information should be read together with the accompanying notes to the unaudited pro forma condensed combined financial information, SSU Group and Wiggle Group consolidated financial statements, Yucaipa financial statements and related notes and other financial information included in this prospectus.
 
60

The unaudited pro forma condensed combined financial information has been derived from the following financial information:
 
  
SSU’s audited consolidated financial statements for the fiscal year ended September 30, 2021 prepared based on IFRS and included in this prospectus;
 
  
the unaudited interim condensed financial statements of Yucaipa as of and for the period from June 4, 2020 (inception) through September 30, 2020, as restated, prepared in accordance with U.S. GAAP;
 
  
the audited financial statements of Yucaipa as of and for the fiscal year from June 4, 2020 (inception) through December 31, 2020, as restated, prepared in accordance with U.S. GAAP and included in this prospectus;
 
  
the unaudited interim condensed financial statements of Yucaipa as of and for the nine-month period ended September 30, 2021, as restated, prepared in accordance with U.S. GAAP; and
 
  
the audited consolidated financial statements of Wiggle Group for the 52 weeks ended September 26, 2021 prepared in accordance with IFRS and included in this prospectus.
The unaudited pro forma condensed combined financial information has been prepared utilizing period ends for SSU Group, Yucaipa and Wiggle Group that differ by fewer than 93 days, as permitted by Regulation
S-X.
The unaudited pro forma condensed combined statement of profit or loss for the twelve-month period ended September 30, 2021 is based on:
 
  
SSU’s audited consolidated statement of profit or loss for the fiscal year ended September 30, 2021;
 
  
Yucaipa’s audited statement of operations for the period from June 4, 2020 (inception) through December 31, 2020, as restated, subtracting Yucaipa’s unaudited condensed statement of operations for the period from June 4, 2020 (inception) through September 30, 2020, as restated, and adding Yucaipa’s unaudited condensed statement of operations for the nine-month period ended September 30, 2021, as restated; and
 
  
Wiggle Group’s audited consolidated income statement for the 52 weeks ended September 26, 2021.
Description of the Business Combination
On December 14, 2021 (the “Closing Date”), the following transactions occurred pursuant to the terms of the Business Combination Agreement (collectively, the “Business Combination”):
 
  
Yucaipa merged with and into Merger Sub (the “Merger”), with Merger Sub as the surviving company in the merger, and each issued and outstanding Class A ordinary share, par value of $0.0001 per share, of Yucaipa (the “Yucaipa Class A Shares”) and Class B ordinary share, par value of $0.0001 per share, of Yucaipa (the “Yucaipa Class B Shares” and, together with the Yucaipa Class A Shares, the “Yucaipa Shares”) was exchanged for a claim for a corresponding equity security in Merger Sub, which was contributed as a contribution in kind to TopCo in exchange for one ordinary share of TopCo (such ordinary shares, the “TopCo Ordinary Shares”) (provided that the 8,565,000 Yucaipa Class B Shares held by Yucaipa Acquisition Manager, LLC, a Delaware limited liability company (the “Sponsor”) entitled Sponsor to a claim for equity security in Merger Sub, which upon contribution in kind to TopCo, was exchanged for 9,815,000 TopCo Ordinary Shares); each outstanding warrant to acquire ordinary shares of Yucaipa became a warrant to acquire an equal number of TopCo Ordinary Shares (collectively, the “TopCo-Yucaipa Business Combination”);
 
  
immediately thereafter, TopCo issued TopCo Ordinary Shares, deemed under the Business Combination Agreement to have an aggregate value of $2,462 million, to the shareholders of SSU’s capital stock immediately prior to the Closing in exchange for the contribution by such shareholders of all of the paid up shares (Geschäftsanteile) of SSU (such exchange, the “Exchange”);
 
61

On June 10, 2021, concurrently with the execution of the Business Combination Agreement, and in addition on October 7, 2021 and December 3, 2021, TopCo and Yucaipa entered into Subscription Agreements with PIPE Investors, SISH and Ronald W. Burkle pursuant to which, among other things, the PIPE Investors, SISH and Mr. Burkle (or, if assigned pursuant to the terms of the Subscription Agreement, one or more of his affiliates or assignees) have agreed to subscribe for and purchase, severally and not jointly, and TopCo has agreed to issue and sell to the PIPE Investors, SISH and Mr. Burkle (or, if assigned pursuant to the terms of the Subscription Agreement, one or more of his affiliates or assignees), an aggregate of 39,700,000 TopCo Shares at a price of €8.64 ($10.00) per share in exchange for an aggregate purchase price of €342.9 million ($397.0 million) on the Closing Date. The PIPE Financing closed concurrently with the Business Combination. Pursuant to the amendment of the Sponsor Letter Agreement on October 15, 2021, the TopCo Shares issued to the PIPE Investors are not subject to a post-Closing
lock-up
period.
On October 15, 2021, SISH and Bridgepoint agreed to terms and conditions to offset redemptions that occurred above a certain level, on the terms and subject to the conditions set forth in the Redemption Offset Agreement.
Accounting for the Business Combination
The Business Combination was comprised of a series of transactions pursuant to the Business Combination Agreement, as described elsewhere in this Report. For accounting purposes, the Business Combination was effectuated in three main steps:
 
 1.
The exchange of shares held by SSU shareholders, which was accounted for as a capital reorganization.
 
 2.
The merger of Yucaipa and Merger Sub, which was not within the scope of IFRS 3 Business Combinations since Yucaipa did not meet the definition of a business in accordance with IFRS 3, was accounted for within the scope of IFRS 2 Share-based Payment. The excess of the fair value of TopCo Shares issued to Yucaipa shareholders over the fair value of Yucaipa’s identifiable net assets acquired represented compensation for services and was expensed as incurred. The expense recognized in accordance with IFRS 2 was based on the difference between the fair value of the TopCo Shares issued to Yucaipa shareholders and the fair value of Yucaipa’s identifiable net assets at consummation. At Closing Date the stock price of each Yucaipa Ordinary Share was $9.93 per share and was the basis to determine the fair value of the share-based consideration paid to Yucaipa shareholders.
 
 3.
The Subscription Agreements related to the PIPE Financing, which were executed concurrently with the Business Combination Agreement and, with regards to the upsizing of the size of the PIPE Financing, on October 7, 2021, and December 3, 2021 resulted in the issuance of TopCo Shares, led to an increase in share capital and capital reserve.
Within the Merger, SSU has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:
 
  
SSU’s shareholders have the largest portion of voting rights in TopCo;
 
  
SSU has the right to appoint the management in TopCo;
 
  
SSU’s existing senior management team comprises senior management of TopCo; and
 
  
The operations of TopCo primarily represent operations of SSU.
The Wiggle Acquisition is accounted for as a business combination using the acquisition method of accounting in accordance with IFRS 3 Business Combinations. SSU recorded a preliminary valuation analysis of the fair market value of assets acquired and liabilities assumed from Wiggle Group. The Wiggle Acquisition was consummated at the time of the Closing of the Business Combination.
 
62

Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2021
 
  
As of Sep 30, 2021
          
As of

Sep 26,
2021
         
in € million
 
SSU
Group
(Historical)
  
Yucaipa (As
Adjusted)
(Historical)
(Note 4)
  
Transaction
Accounting
Adjustments
(Note 6)
  
Note
 
Pro Forma
Combined
  
Wiggle
Group (As
Adjusted)
(Historical)
(Note 4)
  
Transaction
Accounting
Adjustments
(Note 6)
  
Note
 
Pro Forma
Combined
(incl.
Wiggle
Group)
 
ASSETS
                
Property, plant and equipment
  37.7   —     —      37.7   9.5   —      47.2 
Right-of-use-assets
  60.6   —     —      60.6   20.3   4.6  L  85.5 
Intangible assets and goodwill
  326.8   —     —      326.8   115.6   425.5  M  867.9 
Investments accounted for using the equity method
  0.0   —     —      0.0   —     —      0.0 
Other
non-current
financial assets
  1.4   298.0   (298.0 A  1.4   —     —      1.4 
Deferred tax assets
  —     —     —      —     16.9   —      16.9 
 
 
 
  
 
 
    
 
 
  
 
 
    
 
 
 
Non-current
assets
 426.6  298.0  (298.0  426.6  162.4  430.1   1,019.0 
 
 
 
  
 
 
    
 
 
  
 
 
    
 
 
 
Inventories
  181.9   —     —      181.9   71.0   —      252.9 
Trade receivables
  26.3   —     —      26.3   0.6   —      26.9 
Other current financial assets
  24.0   —     —      24.0   2.3   —      26.3 
Other current assets
  33.4   0.1   —      33.5   8.6   —      42.1 
Cash and cash equivalents
  50.7   0.0   23.2  A  372.1   54.9   (16.6 N  96.6 
    342.9  B    (213.3 O 
    (30.4 C    (77.6 P 
    (10.4 D    (2.7 Q 
    (3.9 E    (17.8 R 
    (0.0 F    (2.4 S 
  
 
 
     
 
 
    
 
 
 
Current assets
 316.3  0.1  321.3   637.8  137.4  (330.4  444.8 
  
 
 
     
 
 
    
 
 
 
Total assets
 742.9  298.1  23.3   1,064.3  299.8  99.7   1,463.8 
  
 
 
     
 
 
    
 
 
 
EQUITY AND LIABILITIES
               
Share capital
 21.2 0.0  4.8  B 42.6  0.1  0.0  R 46.4 
    0.1  E    3.7  T 
    8.7  G    —     
    1.5  H    —     
    6.1  I    —     
    0.2  J    —     
Capital reserve
  558.4   —     338.1  B  994.1   235.1   2.7  R  1,261.2 
    (9.6 C    29.3  T 
    4.7  E    —     
    (8.7 G    —     
    106.4  H    —     
    (6.1 I    —     
    10.9  J    —     
Retained earnings
  (206.3  (30.5  (20.8 C  (362.9  (502.0  (16.2 N  (399.9
    (84.8 H    (0.3 Q 
    (8.7 E    (20.5 R 
    (11.1 J    (0.1 S 
    (0.8 K    502.0  T 
Other reserves
  (0.0  —     —      (0.0  1.9   4.6  T  6.5 
  
 
 
  
 
 
   
 
 
  
 
 
  
 
 
   
 
 
 
Capital and reserves attributable to shareholders of the parent company
 373.4  (30.5 330.9   673.8  (265.0 505.3   914.1 
  
 
 
  
 
 
   
 
 
  
 
 
    
 
 
 
Non-controlling
interests
  —     —     —      —     —     —      —   
  
 
 
  
 
 
   
 
 
  
 
 
    
 
 
 
Total equity
 373.4  (30.5 330.9   673.8  (265.0 505.3   914.1 
  
 
 
  
 
 
   
 
 
  
 
 
    
 
 
 
 
63

Non-current
provisions
  0.1   —     —      0.1   3.2   —      3.3 
Non-current
financial liabilities
  140.4   314.7   (274.8 A  157.9   478.7   (77.4 P  180.9 
    (23.1 H    1.7  U 
    0.8  K    (379.9 V 
Other
non-current
liabilities
  1.0   10.4   (10.4 D  1.0   —     —      1.0 
Deferred tax liabilities
  40.2   —     —      40.2   1.7   40.0  W  81.9 
 
 
 
  
 
 
  
 
 
   
 
 
  
 
 
    
 
 
 
Non-current
liabilities
 181.6  325.1  (307.6  199.2  483.6  (415.6  267.1 
 
 
 
  
 
 
  
 
 
   
 
 
  
 
 
    
 
 
 
Current provisions
  4.9   —     —      4.9   2.4   (2.4 Q  4.9 
Trade payables
  102.7   0.1   —      102.8   38.4   (1.1 S  140.1 
Other current financial liabilities
  27.7   —     —      27.7   9.1   (7.1 V  29.5 
    —        (0.2 P 
Other current liabilities
  47.9   3.4   (0.0 F  51.3   29.8   (0.4 N  101.8 
    —        22.4  O 
        (1.3 S 
Contract liabilities
  4.7   —     —      4.7   1.6   —      6.3 
 
 
 
  
 
 
  
 
 
   
 
 
  
 
 
    
 
 
 
Current liabilities
 187.9  3.5  (0.0  191.4  81.2  10.0   282.6 
 
 
 
  
 
 
  
 
 
   
 
 
  
 
 
    
 
 
 
Total liabilities
 369.5  328.6  (307.6  390.5  564.8  (405.6)  549.7 
 
 
 
  
 
 
  
 
 
   
 
 
  
 
 
    
 
 
 
Total equity and liabilities
 742.9  298.1  23.3   1.064.3  299.8  99.7   1,463.8 
 
 
 
  
 
 
  
 
 
   
 
 
  
 
 
    
 
 
 
 
 
1
Corresponds to “Share capital” (€17.6 million), “Share capital - not yet registered (convertible loan)” (€1.7 million) and “Share capital - not yet registered (NCI)” (€2.0 million) in the audited consolidated statement of financial position of SSU as of September 30, 2021.
Unaudited Pro Forma Condensed Combined Statement of Profit or Loss
For the Twelve-Month Period Ended September 30, 2021
 
  
For the
twelve-month

period ended

Sep 30, 2021
              
For the

52 weeks
ended

Sep 26,
2021
          
in € million
 
 

SSU
Group
(Historical)
 
 
 
 
 


Yucaipa (As
Adjusted)
(Calculated)
(Note 4)
 
 
 
 
 
 


Transaction
Accounting
Adjustments
(Note 6)
 
 
 
 
 
 
Note
 
 
 

Pro
Forma
Combined
 
 
 
 
 



Wiggle
Group (As
Adjusted)
(Historical)
(Note 4)
 
 
 
 
 
 
 


Transaction
Accounting
Adjustments
(Note 6)
 
 
 
 
 
 
Note
 
 
 

Pro Forma
Combined (incl.
Wiggle Group)
 
 
 
Revenue
 872.0  —    —     872.0    411.9  —     1,283.8 
Own work capitalized
  3.8   —     —      3.8   2.4   —      6.2 
Other operating income
  6.1   —     —      6.1   3.5   —      9.6 
Cost of material
  (534.1  —     —      (534.1  (258.2  —      (792.3
Personnel expenses
  (98.1  —     (8.7  AA   (117.9  (39.8  (0.3  JJ   (178.5
    (11.1  BB     (20.5  KK  
Other operating expenses
  (255.2  (4.3  (19.4  CC   (395.4  (79.0  (16.2  LL   (490.6
    (116.7  DD     (0.1  MM  
    0.1   EE     —     
Depreciation and amortization
  (30.9  —     —      (30.9  (12.2  (5.7  NN   (48.2
    —        0.5   OO  
   
 
 
     
 
 
   
 
 
 
Operating result
 (36.5 (4.3 (155.7  (196.5 28.6  (42.1  (210.0
   
 
 
     
 
 
   
 
 
 
Finance income
  3.0   7.1   (0.0  FF   8.5   4.9   (4.7  PP   8.8 
    (1.6  HH     —     
Finance costs
  (9.7  (5.2  3.5   GG   (10.4  (50.3  4.0   PP   (12.5
    1.1   HH     44.3   QQ  
 
64

  
For the
twelve-month

period ended

Sep 30, 2021
              
For the

52 weeks
ended

Sep 26,
2021
          
Result from investments accounted for at equity
  (1.3  —     —      (1.3  —     —      (1.3
 
 
 
  
 
 
  
 
 
   
 
 
  
 
 
  
 
 
   
 
 
 
Earnings before taxes (EBT)
 (44.4 (2.4 (152.8  (199.6 (16.7 1.4   (215.0
 
 
 
  
 
 
  
 
 
    
 
 
    
 
 
 
Income tax benefit/(expense)
  (1.6   11.8   II   10.2   14.9   0.1   RR   25.3 
 
 
 
  
 
 
  
 
 
    
 
 
    
 
 
 
Loss for the period
 (46.0 (2.4 (141.0  (189.4 (1.8 1.6   (189.7
 
 
 
  
 
 
  
 
 
    
 
 
    
 
 
 
of which attributable to non — controlling interests
  —      —      —     —     —      —   
of which attributable to shareholders of the parent company
  (46.0  (2.4  (141.0   (189.4  (1.8  1.6    (189.7
Loss per share
         
Pro forma weighted average common shares outstanding — basic and diluted
          335,342,807 
Pro forma loss per share — basic and diluted
         (0.57
2. Basis of Presentation
The unaudited pro forma condensed combined financial information has been prepared to illustrate the effects of the Business Combination and has been prepared for informational purposes only.
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11. The Transaction Accounting Adjustments reported in these financial statements are based upon available information and certain assumptions that TopCo’s management believes are reasonable. The unaudited pro forma condensed combined financial information does not necessarily reflect what TopCo’s financial condition or result of operations would have been had the Business Combination occurred on the dates indicated. They also may not be useful in predicting the future financial condition and results of operations of TopCo. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors, including those discussed in the section entitled “
Risk Factors
” of this prospectus. The unaudited pro forma condensed combined balance sheet as of September 30, 2021, assumes that the Business Combination was consummated on September 30, 2021. The unaudited pro forma condensed combined statement of profit or loss for the twelve-month period ended September 30, 2021 assumes that the Business Combination was consummated on October 1, 2020.
The unaudited pro forma condensed combined financial information is presented in Euro (€). Amounts are stated in € millions (€ million) except if otherwise stated. The figures presented in the tables of the unaudited pro forma condensed combined financial information were rounded according to established commercial principles. Additions of the figures can thus lead to amounts that deviate from those shown in the tables.
There were no intercompany balances or transactions between SSU, Yucaipa, and Wiggle Group as of the dates and for the periods of these unaudited pro forma condensed combined financial information.
 
65

3. Redemption and Redemption Offset Agreement
Pursuant to Yucaipa’s charter, Yucaipa’s public shareholders were offered the opportunity to redeem, upon closing of the Business Combination, Yucaipa Class A Shares held by them for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account. The unaudited pro forma condensed combined financial information reflect the actual redemption of 31,820,685 shares of Yucaipa’s Class A Shares at $10.00 per share. As the level of redemptions by Yucaipa Public Shareholder required the release to such shareholders of an aggregate amount from Yucaipa’s Trust Account exceeding the Redemption Threshold Amount (as defined in the Redemption Offset Agreement), the First Instalment Shortfall Amount, the Second Instalment Shortfall Amount and the Third Instalment Shortfall Amount (each, as defined in the Redemption Offset Agreement) were received, i.e. (A) SISH subscribed for and purchased, and TopCo issued TopCo Ordinary Shares in the amount $60 million, (B) Wiggle Sellers subscribed for and purchased, and TopCo issued TopCo Ordinary Shares in the amount of $30 million and (C) $61 million of the Third Consideration Instalment were settled through the issuance of TopCo Ordinary Shares to the Wiggle Sellers in accordance with the terms of the Wiggle SPA.
The following table summarizes the number of TopCo Shares outstanding at Closing Date:
 
   
Ownership in
shares
  
Equity %
 
SSU shareholders*
   249,850,473   74.5 
SSU management
   1,293,200   0.4 
Wiggle Sellers
   31,045,383   9.3 
Management equity consideration
   869,436   0.3 
Yucaipa public shareholders
   2,679,315   0.8 
Yucaipa Sponsor
   9,815,000   2.9 
Yucaipa directors
   90,000   0.0 
PIPE Investors
   39,700,000   11.8 
thereof SISH
   2,500,000  
thereof Ronald W. Burkle
   5,000,000  
  
 
 
  
 
 
 
  
 
335,342,807
** 
 
 
100.0
 
  
 
 
  
 
 
 
 
*
Excludes 51,000,000
Earn-Out
Shares
**
Assumes the options granted to Stephan Zoll under the option agreement entered into by and between the Company and Stephan Zoll on June 10, 2021, have been exercised for 1,293,200 Ordinary Shares and the shares to be granted as management equity consideration have been issued.
4. Foreign Currency Alignment and Reclassification Adjustments
Foreign Currency Alignment
The historical financial information of Yucaipa was prepared in accordance with U.S. GAAP and presented in $. The historical financial information was translated from $ to € using the following historical exchange rates:
 
   $ / € 
Average exchange rate for the period from June 4, 2020 (inception) through September 30, 2020 (statement of profit or loss)
   0.86244 
Average exchange rate for the period from June 4, 2020 (inception) through December 31, 2020 (statement of profit or loss)
   0.85179 
Average exchange rate for the nine-month period ended September 30, 2021 (statement of profit or loss)
   0.83598 
Period end exchange rate as of September 30, 2021 (balance sheet)
   0.86363 
 
66

The historical financial information of Wiggle Group was prepared in accordance with IFRS and presented in British pound sterling (£). The historical financial information was translated from £ to € using the following historical exchange rates:
 
   £ / € 
Average exchange rate for the 52 weeks ended September 26, 2021 (statement of profit or loss)
   1.14386 
Period end exchange rate as of September 26, 2021 (balance sheet)
   1.17069 
Alignment to Nature of Expense Method
In order to present uniform basic figures in the unaudited pro forma condensed combined financial information, the statements of operations of Yucaipa for the periods from June 4, 2020 (inception) through September 30, 2020, from June 4, 2020 (inception) through December 31, 2020 and for the nine-month period ended September 30, 2021 and the consolidated income statements of Wiggle Group for the 52 weeks ended September 26, 2021, respectively, all historically presented in accordance with the function of expense method have been aligned to the nature of expense method as applied by SSU and the following adjustments were made:
Yucaipa Group alignment for the period from June 4, 2020 (inception) through September 30, 2020 (in $ million):
 
Yucaipa presentation
in $ million
  
SSU Group presentation
in $ million
 
     
Revenue
   
Own work
capitalized
   
Other
operating
income
   
Cost of
material
   
Personnel
expenses
   
Other
operating
expenses
 
   
$
  
$
   
$
   
$
   
$
   
$
   
$
 
General and administrative expenses
   (0.1  —      —      —      —      —      (0.1
Administrative expenses — related party
   (0.0  —      —      —      —      —      (0.0
Total
  $(0.2 $—     $—     $—     $—     $—     $(0.2
Yucaipa Group alignment for the period from June 4, 2020 (inception) through December 31, 2020 (in $ million):
 
Yucaipa presentation
in $ million
  
SSU Group presentation
in $ million
 
     
Revenue
   
Own work
capitalized
   
Other
operating
income
   
Cost of
material
   
Personnel
expenses
   
Other
operating
expenses
 
   
$
  
$
   
$
   
$
   
$
   
$
   
$
 
General and administrative expenses
   (0.2  —      —      —      —      —      (0.2
Administrative expenses — related party
   (0.1  —      —      —      —      —      (0.1
Total
  $(0.3 $—     $—     $—     $—     $—     $(0.3
 
67

Yucaipa Group alignment for the nine-month period ended September 30, 2021 (in $ million):
 
Yucaipa presentation
in $ million
  
SSU Group presentation
in $ million
 
     
Revenue
   
Own work
capitalized
   
Other
operating
income
   
Cost of
material
   
Personnel
expenses
   
Other
operating
expenses
 
   
$
  
$
   
$
   
$
   
$
   
$
   
$
 
General and administrative expenses
   (4.9  —      —      —      —      —      (4.9
Administrative expenses — related party
   (0.1  —      —      —      —      —      (0.1
Total
  $(5.0 $—     $—     $—     $—     $—     $(5.0
Wiggle Group alignment for the 52 weeks ended September 26, 2021 (in £ million):
 
 
   
SSU Group presentation
in £ million
 
Wiggle Group presentation
in £ million
     
Revenue
   
Own work
capitalized
   
Other
operating
income
   
Cost of
material
  
Personnel
expenses
  
Other
operating
expenses
 
   
£
  
£
   
£
   
£
   
£
  
£
  
£
 
Revenue
   360.3   360.1    —      0.3    —     —     —   
Cost of sales
   (227.2  —      —      —      (225.3  (1.4  (0.5
Selling and distribution expenses
   (49.3  —      —      —      (0.4  (8.3  (40.7
Administrative expenses
   (49.7  —      2.1    —      —     (25.2  (26.7
Total
  £34.2  £360.1   £2.1   £0.3   £(225.7)  £(34.8 £(67.9
Reclassification Adjustments
In addition to the alignment to nature of expense method, certain reclassifications have been made on a preliminary basis to the historical presentation of the financial statements of Yucaipa and the consolidated financial statements of Wiggle Group, included within the unaudited pro forma condensed combined financial information to conform to the financial statement presentation of SSU. TopCo will perform a full and detailed review of Yucaipa’s and Wiggle Group’s accounting policies and financial statements which may result in additional differences between the accounting policies of the companies may be identified that, when conformed, could have a material impact on the unaudited pro forma condensed combined financial information.
Until the date of the unaudited pro forma condensed combined financial information TopCo has identified preliminary adjustments to the presentation of the historical financial statements of Yucaipa and Wiggle Group to those of SSU based upon currently available information and assumptions management believes to be reasonable.
 
68

The following tables indicate the currency translations and reclassifications of the historical financial information of Yucaipa made for the purpose of unaudited pro forma condensed combined financial information:
Statement of Financial Position
 
  As of
Sep 30, 2021
        As of
Sep 30, 2021
  As of
Sep 30, 2021
 
in € million (unless otherwise stated) Yucaipa
(Restated)
in $ million
  Reclassification
Adjustments
in $ million
  Note  Yucaipa (As
Adjusted)
(Restated)
in $ million
  Yucaipa (As
Adjusted)
(Restated)
in € million
 
ASSETS $  $     $   
Property, plant and equipment
  —       —     —   
Right-of-use-assets
  —       —     —   
Intangible assets and goodwill
  —       —     —   
Investments accounted for using the equity method
  —       —     —   
Other
non-current
financial assets
1
  345.0     345.0   298.0 
Deferred tax assets
  —       —     —   
Non-current
assets
 $345.0  $—     $345.0  298.0 
Inventories
  —       —     —   
Trade receivables
  —       —     —   
Other current financial assets
  —       —     —   
Other current assets
2
  0.2     0.2   0.1 
Cash and cash equivalents
3
  0.0     0.0   0.0 
Assets held for sale
  —       —     —   
Current assets
 $0.2  $—     $0.2  0.1 
Total assets
 $345.2  $—     $345.2  298.1 
EQUITY AND LIABILITIES
 $   $    $    
Share capital
4
  0.0     0.0   0.0 
Capital reserve
5
  —       —     —   
Retained earnings
6
  (35.3    (35.3  (30.5
Other reserves
  —       —     —   
Capital and reserves attributable to shareholders of the parent company
 $(35.3 $—     $(35.3 (30.5
Non-controlling
interests
  —       —     —   
Total equity
 $(35.3 $—     $(35.3 (30.5
Class A ordinary shares; 34,500,000 shares subject to possible redemption at $10.00 per share redemption value as of September 30, 2021 and December 31, 2020
  345.0   (345.0  a  —     —   
Commitments and Contingencies
 $345.0  $(345.0  $—    —   
Non-current
provisions
  —       —     —   
Non-current
financial liabilities
  —     19.4   b  364.4   314.7 
   345.0   a  
Other
non-current
liabilities
7
  12.1     12.1   10.4 
Deferred tax liabilities
  —       —     —   
Derivative liabilities
  19.4   (19.4  b  —     —   
Non-current
liabilities
 $31.5  $345.0   $376.5  325.1 
Current provisions
  —       —     —   
Trade payables
8
  0.1     0.1   0.1 
Other current financial liabilities
  —       —     —   
Other current liabilities
9
  4.0     4.0   3.4 
Contract liabilities
  —       —     —   
Current liabilities
 $4.1  $—     $4.1  3.5 
Total liabilities
 $35.5  $345.0   $380.5  328.6 
Total equity and liabilities
 $345.2  $—     $345.2  298.1 
 
69

 
1
Corresponds to “Investments held in Trust Account” in the unaudited interim condensed statement of financial position of Yucaipa as of September 30, 2021.
2
Corresponds to “Prepaid expenses” in the unaudited interim condensed statement of financial position of Yucaipa as of September 30, 2021.
3
Corresponds to “Cash” in the unaudited interim condensed statement of financial position of Yucaipa as of September 30, 2021.
4
Corresponds to “Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; no nonredeemable Class A ordinary shares issued and outstanding as of September 30, 2021 and December 31, 2020” ($ nil) and “Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 8,625,000 shares issued and outstanding as of September 30, 2021 and December 31, 2020” ($0.0 million) in the unaudited interim condensed statement of financial position of Yucaipa as of September 30, 2021.
5
Corresponds to “Additional
paid-in
capital” in the unaudited interim condensed statement of financial position of Yucaipa as of September 30, 2021.
6
Corresponds to “Accumulated deficit” in the unaudited interim condensed statement of financial position of Yucaipa as of September 30, 2021.
7
Corresponds to “Deferred underwriting commissions” in the unaudited interim condensed statement of financial position of Yucaipa as of September 30, 2021.
8
Corresponds to “Accounts payable” in the unaudited interim condensed statement of financial position of Yucaipa as of September 30, 2021.
9
Corresponds to “Accrued expenses” ($4.0 million) and “Due to related party” ($0.0 million) in the unaudited interim condensed statement of financial position of Yucaipa as of September 30, 2021.
Statement of Operations
 
  For the period
from June 4, 2020
(inception) through
December 31, 2020
  Reclassification
Adjustments
in $ million
  Note  For the period
from June 4, 2020
(inception) through
December 31, 2020
  For the period
from June 4, 2020
(inception) through
December 31, 2020
 
in € million (unless otherwise stated)
 Yucaipa
(Restated, historical
after P&L alignment)
in $ million
  Yucaipa
(As Adjusted)
(Restated)
in $ million
  Yucaipa
(As Adjusted)
(Restated)
in € million
 
  $  $     $   
Revenue
  —       —     —   
Own work capitalized
  —       —     —   
Other operating income
  —       —     —   
Cost of material
  —       —     —   
Personnel expenses
  —       —     —   
Other operating expenses
  (0.3    (0.3  (0.2
Depreciation and amortization
  —       —     —   
 
 
 
  
 
 
   
 
 
  
 
 
 
Operating result
 $(0.3 $—     $(0.3 (0.2
 
 
 
  
 
 
   
 
 
  
 
 
 
Finance income
1
  0.0     0.0   0.0 
Finance costs
  —     (10.8  c  (10.8  (9.2
Result from investments accounted for at equity
  —       —     —   
Change in fair value of derivative liabilities
  (10.1  10.1   c  —     —   
Offering costs — derivative warrant liabilities
  (0.7  0.7   c  —     —   
Earnings before taxes (EBT)
 $(11.0 $—     $(11.0 (9.4
Income tax benefit/(expense)
  —       —     —   
Loss for the period
 $(11.0 $—     $(11.0 (9.4
 
70

 
1
Corresponds to “Interest income earned on investments held in Trust Account” ($0.0 million) in the audited statement of operations for the period from June 4, 2020 (inception) through December 31, 2020.
Statement of Operations
 
  For the period
from June 4, 2020
(inception) through
September 30, 2020
  Reclassification
Adjustments
in $ million
  Note  For the period
from June 4, 2020
(inception) through
September 30, 2020
  For the period
from June 4, 2020
(inception) through
September 30, 2020
 
in € million (unless otherwise stated) Yucaipa
(Restated, historical
after P&L alignment)
in $ million
  Yucaipa
(As Adjusted)
(Restated)
in $ million
  Yucaipa
(As Adjusted)
(Restated)
in € million
 
  $  $     $   
Revenue
  —       —     —   
Own work capitalized
  —       —     —   
Other operating income
  —       —     —   
Cost of material
  —       —     —   
Personnel expenses
  —       —     —   
Other operating expenses
  (0.2    (0.2  (0.1
Depreciation and amortization
  —       —     —   
 
 
 
  
 
 
   
 
 
  
Operating result
 $(0.2 $—     $(0.2 (0.1
 
 
 
  
 
 
   
 
 
  
Finance income
1
  0.0     0.0   0.0 
Finance costs
  —     (4.6  c  (4.6  (3.9
Result from investments accounted for at equity
  —       —     —   
Change in fair value of derivative liabilities
  (3.9  3.9   c  —     —   
Offering costs — derivative warrant liabilities
  (0.7  0.7   c  —     —   
Earnings before taxes (EBT)
 $(4.7 $—     $(4.7 (4.1
Income tax benefit/(expense)
  —       —     —   
Loss for the period
 $(4.7 $—     $(4.7 (4.1
 
1
Corresponds to “Interest earned on cash held in operating account” ($0.0 million) and “Interest income earned on investments held in Trust Account” ($0.0 million) in the unaudited interim condensed statement of operations for the period from June 4, 2020 (inception) through September 30, 2020.
 
71

Statement of Operations
 
   For the
nine-month
period ended
September
30, 2021
  Reclassification
Adjustments in
$ million
  Note  For the
nine-month

period ended
September
30, 2021
  For the
nine-month

period ended
September
30, 2021
 
in € million (unless otherwise stated)
  Yucaipa
(Restated,
historical after
P&L alignment)
in $ million
  Yucaip
(As
Adjusted)
(Restated)
in $ million
  Yucaipa
(As Adjusted)
(Restated)
in € million
 
   $  $     $   
Revenue
   —       —     —   
Own work capitalized
   —       —     —   
Other operating income
   —       —     —   
Cost of material
   —       —     —   
Personnel expenses
   —       —     —   
Other operating expenses
   (5.0    (5.0  (4.2
Depreciation and amortization
   —       —     —   
  
 
 
  
 
 
   
 
 
  
 
 
 
Operating result
  $(5.0 $—     $(5.0 (4.2
  
 
 
  
 
 
   
 
 
  
 
 
 
Finance income
1
   0.0   8.5   c  8.5   7.1 
Finance costs
   —       —     —   
Result from investments accounted for at equity
   —       —     —   
Change in fair value of derivative liabilities
   8.5   (8.5  c  —     —   
  
 
 
  
 
 
   
 
 
  
 
 
 
Earnings before taxes (EBT)
  $3.5  $—     $3.5  2.9 
  
 
 
  
 
 
   
 
 
  
 
 
 
Income tax benefit/(expense)
   —       —     —   
  
 
 
  
 
 
   
 
 
  
 
 
 
Loss for the period
  $3.5  $—     $3.5  2.9 
  
 
 
  
 
 
   
 
 
  
 
 
 
 
1
Corresponds to “Interest income earned on investments held in Trust Account” ($0.0 million) in the unaudited interim condensed statement of operations for the nine-month period ended September 30, 2021.
The following items represent certain reclassifications of the historical financial statement line items of Yucaipa presented in the tables above to conform to the financial statement line items and IFRS reporting presentation of SSU including:
Statement of financial position items
:
 
 a)
Reflects the conversion of redeemable shares which are presented as “Class A ordinary shares; 34,500,000 shares subject to possible redemption at $10.00 per share redemption value as of September 30, 2021 and December 31, 2020” in the U.S. GAAP unaudited interim condensed statement of financial position as restated of Yucaipa as of September 30, 2021 to the line item
Non-current
financial liabilities.
 
 b)
Yucaipa presents the line item Derivative liabilities. SSU presents the line item
Non-current
financial liabilities. Accordingly, the line item Derivative liabilities was reclassified to
Non-current
financial liabilities ($19.4 million) to be in line with the presentation of SSU.
Statement of profit or loss item
s:
 
 c)
Yucaipa presents the line items Change in fair value of derivative liabilities as well as Offering costs – derivative warrant liabilities. SSU presents the line items Finance income and Finance costs. Accordingly, the line item Offering costs — derivative warrant liabilities was reclassified to Finance costs for the period from June 4, 2020 (inception) through December 31, 2020 ($0.7 million) and for the period from June 4, 2020 (inception) through September 30, 2020 ($0.7 million). In addition,
 
72

 Yucaipa presents changes in fair value of derivative liabilities – net under the separate line item Change in fair value of derivative liabilities. SSU presents income from valuation of derivatives under the line item Finance income and expense from valuation of derivatives under the line item Finance costs. Accordingly, expense from valuation of derivatives in an amount of $10.1 million for the period from June 4, 2020 (inception) through December 31, 2020 and $3.9 million for the period from June 4, 2020 (inception) through September 30, 2020, both included in Change in fair value of derivative liabilities were reclassified to Finance costs and income from valuation of derivatives in an amount of $8.5 million for the nine-month period ended September 30, 2021 was reclassified to Finance income.
The following table presents the calculation of Yucaipa’s statement of operations for the twelve-month period ended September 30, 2021 as presented in the unaudited pro forma condensed combined statement of profit or loss for the twelve-month period ended September 30, 2021 after giving effect to currency translations and reclassifications of the respective historical financial information of Yucaipa as described above. The calculation is based on Yucaipa’s audited statement of operations for the period from June 4, 2020 (inception) through December 31, 2020 subtracting Yucaipa’s unaudited condensed statement of operations for the period from June 4, 2020 (inception) through September 30, 2020 and adding Yucaipa’s unaudited condensed statement of operations for the nine-month period ended September 30, 2021:
 
Statements of Operations  For the period from
June 4, 2020
(inception) through
December 31, 2020
  For the period
from
June 4, 2020
(inception) through
September 30, 2020
  For the
nine-month
period ended
September 30, 2021
  For the
twelve-month
period ended
September 30, 2021
 
in € million (unless otherwise stated)  Yucaipa
(As Adjusted)
(Restated)
in € million
  Yucaipa
(As Adjusted)
(Restated)
in € million
  Yucaipa
(As Adjusted)
(Restated)
in € million
  Yucaipa
(As Adjusted)
(Calculated)
in € million
 
          
Revenue
   —     —     —     —   
Own work capitalized
   —     —     —     —   
Other operating income
   —     —     —     —   
Cost of material
   —     —     —     —   
Personnel expenses
   —     —     —     —   
Other operating expenses
   (0.2  (0.1  (4.2  (4.3
Depreciation and amortization
   —     —     —     —   
     
 
 
 
Operating result
  (0.2 (0.1 (4.2 (4.3
     
 
 
 
Finance income
   0.0   0.0   7.1   7.1 
Finance costs
   (9.2  (3.9  —     (5.2
Result from investments accounted for at equity
   —     —     —     —   
     
 
 
 
Earnings before taxes (EBT)
  (9.4 (4.1 2.9  (2.4
     
 
 
 
Income tax benefit/(expense)
   —     —     —     —   
     
 
 
 
Loss for the period
  (9.4 (4.1 2.9  (2.4
     
 
 
 
 
73

In addition, the following tables indicate the currency translations and reclassifications of the historical financial information of the Wiggle Group made for the purpose of unaudited pro forma condensed combined financial information:
Consolidated Statement of Financial Position
 
in € million (unless otherwise stated)  
As of
Sep 26, 2021
  
Reclassification
Adjustments in
£ million
  
Note
  
As of
Sep 26, 2021
  
As of
Sep 26, 2021
 
  
Wiggle
Group
(Historical)
in £ million
  
Wiggle Group
(As Adjusted)
(Historical) in
£ million
  
Wiggle Group
(As Adjusted)
(Historical)
in € million
 
ASSETS
  
 
£
 
 
 
£
 
  
 
£
 
 
 
 
Property, plant and equipment
1
   25.5   (17.4  a  8.1   9.5 
Right-of-use-assets
    17.4   a  17.4   20.3 
Intangible assets and goodwill
2
   98.8     98.8   115.6 
Investments accounted for using the equity method
   —       —     —   
Other
non-current
financial assets
   —       —     —   
Deferred tax assets
   14.5     14.5   16.9 
  
 
 
  
 
 
   
 
 
  
 
 
 
Non-current
assets
  
£
138.7
 
 
£
—  
   
£
138.7
 
 
162.4
 
  
 
 
  
 
 
   
 
 
  
 
 
 
Inventories
3
   60.7     60.7   71.0 
Trade receivables
    0.5   b  0.5   0.6 
Other current financial assets
    1.9   b  1.9   2.3 
Other current assets
    7.4   b  7.4   8.6 
Cash and cash equivalents
   46.9     46.9   54.9 
Trade and other receivables
   9.8   (9.8  b  —     —   
  
 
 
  
 
 
   
 
 
  
 
 
 
Current assets
  
£
117.4
 
 
£
—  
   
£
117.4
 
 
137.4
 
  
 
 
  
 
 
   
 
 
  
 
 
 
Total assets
  
£
256.1
 
 
£
—  
   
£
256.1
 
 
299.8
 
  
 
 
  
 
 
   
 
 
  
 
 
 
EQUITY AND LIABILITIES
  
 
£
 
 
 
£
 
  
 
£
 
 
 
 
Share capital
   0.0     0.0   0.1 
Capital reserve
    127.7   c  200.8   235.1 
    72.4   d  
    0.7   e  
Retained earnings
    (428.8  e  (428.8  (502.0
Other reserves
    1.6   e  1.6   1.9 
Share premium
   127.7   (127.7  c  —     —   
Capital contribution
   72.4   (72.4  d  —     —   
Profit and loss
   (426.5  426.5   e  —     —   
  
 
 
  
 
 
   
 
 
  
 
 
 
Capital and reserves attributable to shareholders of the parent company
  
£
(226.4
 
£
—  
 
  
£
(226.4
 
(265.0
  
 
 
  
 
 
   
 
 
  
 
 
 
Non-controlling
interests
   —       —     —   
  
 
 
  
 
 
   
 
 
  
 
 
 
Total equity
  
£
(226.4
 
£
—  
 
  
£
(226.4
 
(265.0
  
 
 
  
 
 
   
 
 
  
 
 
 
Non-current
provisions
4
   2.7     2.7   3.2 
Non-current
financial liabilities
    408.9   f  408.9   478.7 
Other
non-current
liabilities
   —       —     —   
Deferred tax liabilities
5
   1.5     1.5   1.7 
Creditors: amounts falling due after more than one year
   408.9   (408.9  f  —     —   
  
 
 
  
 
 
   
 
 
  
 
 
 
Non-current
liabilities
  
£
413.1
 
 
£
—  
   
£
413.1
 
 
483.6
 
  
 
 
  
 
 
   
 
 
  
 
 
 
Current provisions
   —     2.1   g  2.1   2.4 
Trade payables
    32.8   g  32.8   38.4 
Other current financial liabilities
    7.8   g  7.8   9.1 
Other current liabilities
    25.4   g  25.4   29.8 
Contract liabilities
    1.4   g  1.4   1.6 
Creditors: amounts falling due within one year
   69.4   (69.4  g      
  
 
 
  
 
 
   
 
 
  
 
 
 
Current liabilities
  
£
69.4
 
 
£
—  
   
£
69.4
 
 
81.2
 
  
 
 
  
 
 
   
 
 
  
 
 
 
Total liabilities
  
£
482.4
 
 
£
—  
   
£
482.4
 
 
564.8
 
  
 
 
  
 
 
   
 
 
  
 
 
 
Total equity and liabilities
  
£
256.1
 
 
£
—  
   
£
256.1
 
 
299.8
 
  
 
 
  
 
 
   
 
 
  
 
 
 
 
74

 
1
Corresponds to “Tangible assets” in the audited consolidated statement of financial position of Wiggle Group as of September 26, 2021.
2
Corresponds to “Intangible assets” in the audited consolidated statement of financial position of Wiggle Group as of September 26, 2021.
3
Corresponds to “Inventory” in the audited consolidated statement of financial position of Wiggle Group as of September 26, 2021.
4
Corresponds to “Provisions for liabilities and charges” in the audited consolidated statement of financial position of Wiggle Group as of September 26, 2021.
5
Corresponds to “Deferred tax liability” in the audited consolidated statement of financial position of Wiggle Group as of September 26, 2021.
Consolidated Income Statement
 
   For the 52
weeks ended
Sep 26, 2021
  Reclassification
Adjustments in
£ million
  Note  For the 52
weeks ended
Sep 26, 2021
  For the 52
weeks ended
Sep 26, 2021
 
in € million (unless otherwise stated)  Wiggle Group
(Historical
after P&L
alignment) in
£ million
  Wiggle Group
(As Adjusted)
(Historical) in
£ million
  Wiggle Group
(As Adjusted)
(Historical) in
€ million
 
   £  £     £   
Revenue
   360.1     360.1   411.9 
Own work capitalized
   2.1     2.1   2.4 
Other operating income
   0.3   2.8   h  3.1   3.5 
Cost of material
   (225.7    (225.7  (258.2
Personnel expenses
   (34.8    (34.8  (39.8
Other operating expenses
   (67.9  (1.2  h  (69.0  (79.0
Depreciation and amortization
1
   (10.5  (0.1  h  (10.7  (12.2
Gain on disposal
   1.5   (1.5  h  —     —   
Operating result
  £25.0  £—       £25.0  28.6 
Finance income
2
   4.3     4.3   4.9 
Finance costs
   —     (44.0  i  (44.0  (50.3
Result from investments accounted for at equity
   —       —     —   
Other interest payable and similar charges
   (5.2  5.2   i  —     —   
Interest payable to shareholders and investors
   (38.8  38.8   i  —     —   
Earnings before taxes (EBT)
  £(14.6 £—       £(14.6 (16.7
Income tax benefit/(expense)
3
   13.0     13.0   14.9 
Loss for the period
  £(1.6 £—       £(1.6 (1.8
   
 
 
    
 
1
Corresponds to “Depreciation, amortisation and impairment” in the audited consolidated income statement of Wiggle Group for the 52 weeks ended September 26, 2021.
2
Corresponds to “Exchange gain / (loss) on bank debt and other foreign currency balances” in the audited consolidated income statement of Wiggle Group for the 52 weeks ended September 26, 2021.
3
Corresponds to “Taxation” in the audited consolidated income statement of Wiggle Group for the 52 weeks ended September 26, 2021.
The following items represent certain reclassifications of the historical Wiggle Group’s financial statement line items presented in the tables above to conform to the financial statement line items of SSU including:
Statement of financial position items
:
 
 a)
The Wiggle Group presents
right-of-use-assets
under the line item Property, plant and equipment. SSU presents
right-of-use
assets as separate line item. Accordingly,
right-of-use-assets
(£17.4 million) were reclassified to the separate line item
Right-of-use
assets, to be in line with the presentation of SSU.
 
75

 b)
The Wiggle Group presents the line item Trade and other receivables. SSU presents the line items Trade receivables, Other current financial assets and Other current assets as separate line items. Accordingly, Trade and other receivables were reclassified to Trade receivables (£0.5 million), Other current financial assets (£1.9 million) and Other current assets (£7.4 million) to be in line with the presentation of SSU.
 
 c)
The Wiggle Group presents the line item Share premium. SSU presents the line item Capital reserve. Accordingly, Share premium (£127.7 million) was reclassified to Capital reserve, to be in line with the presentation of SSU.
 
 d)
The Wiggle Group presents the line item Capital contribution. SSU presents the line item Capital reserve. Accordingly, Capital contribution (£72.4 million) was reclassified to Capital reserve, to be in line with the presentation of SSU.
 
 e)
The Wiggle Group presents the line item Profit and loss. SSU presents Capital reserve, Retained earnings and Other reserves as separate line items. Accordingly, Profit and loss was reclassified to Capital reserve (£0.7 million), Retained earnings (£(428.8) million) and Other reserves (£1.6 million) to be in line with the presentation of SSU.
 
 f)
The Wiggle Group presents the line item Creditors: amounts falling due after more than one year. SSU presents the line item Non-current financial liabilities. Accordingly, Creditors: amounts falling due after more than one year was reclassified to
Non-current
financial liabilities (£408.9 million) to be in line with the presentation of SSU.
 
 g)
The Wiggle Group presents the line item Creditors: amounts falling due within one year. SSU presents Trade payables, Other current financial liabilities, Other current liabilities and Contract liabilities as separate line items. Accordingly, the line item Creditors: amounts falling due within one year was reclassified to Trade payables (£32.8 million), Other current financial liabilities (£7.8 million), Other current liabilities (£25.4 million) and Contract liabilities (£1.4 million) to be in line with the presentation of SSU. In addition, the Wiggle Group presents provisions for long-term incentives (current) under the line item Creditors: amounts falling due within one year. SSU presents provisions for long-term incentives (current) under the line item Current provisions. Accordingly, the remaining portion of Creditors: amounts falling due within one year consisting of provisions for long-term incentives (current) (£2.1 million) was reclassified to Current provisions.
Statement of profit or loss items
:
 
 h)
The Wiggle Group presents income from disposals of fixed assets, losses on disposal of fixed assets and impairment of property, plant and equipment under the separate line item Gain on disposal. SSU presents income from disposals of fixed assets under the line item Other operating income, losses on disposal of fixed assets under the line item Other operating expenses and impairment of property, plant and equipment under the line item Depreciation and amortization. Accordingly, income from disposals of fixed assets (£2.8 million) were reclassified to Other operating income, losses on disposal of fixed assets (£1.2 million) were reclassified to Other operating expenses and impairment of property, plant and equipment (£0.1 million) were reclassified to Depreciation and amortization for the 52 weeks ended September 26, 2021.
 
 i)
The Wiggle Group presents the line items Other interest payable and similar charges as well as Interest payable to shareholders and investors. SSU presents the line item Finance costs. Accordingly, Other interest payable and similar charges as well as Interest payable to shareholders and investors were reclassified to Finance costs (£44.0 million) for the 52 weeks ended September 26, 2021 to be in line with the presentation of SSU.
 
76

5. Preliminary Purchase Price Allocation
The consideration of the Wiggle Acquisition is as follows:
 
Wiggle Group Consideration (in € million)
    
Initial Cash Consideration
  213.3 
Equity Consideration
  274.6 
Deferred Cash Consideration
*
  22.4 
Total consideration
  510.3 
 
*
The deferred cash consideration has to be settled within ten business days of the earlier date of (i) the date on which the
lock-up
period applicable to the Wiggle Sellers in respect of the Yucaipa Ordinary Shares expires as agreed in the Business Combination Agreement, and (ii) the date which is nine months after the completion of the Wiggle Acquisition.
TopCo has performed a preliminary valuation analysis of the fair market value of Wiggle Group’s assets to be acquired and liabilities to be assumed. Using the total consideration for the Wiggle Acquisition, TopCo has estimated the allocations to such assets and liabilities. The assumptions underlying the preliminary purchase price allocation are presented in Transaction Accounting Adjustments L, M, U, W, NN and OO. The following table summarizes the allocation of the preliminary purchase price (in € million):
 
in € million  Wiggle Group
(As Adjusted)
(Historical)
(Note 4)
   Transaction
Accounting
Adjustments
(Note 6)
   Note   Estimated
Fair
Value
 
Property, plant and equipment
  9.5   —       9.5 
Right-of-use-assets
   20.3    4.6    L    24.9 
Intangible assets and goodwill
   115.6    425.5    M    541.1 
Deferred tax assets
   16.9    —        16.9 
Inventories
   71.0    —        71.0 
Trade receivables
   0.6    —        0.6 
Other current financial assets
   2.3    —        2.3 
Other current assets
   8.6    —        8.6 
Cash and cash equivalents
   54.9    —        54.9 
Total assets acquired (I)
  299.8   430.1     729.8 
Non-current
provisions
   3.2    —        3.2 
Non-current
financial liabilities
   478.7    (378.3   U, V    100.4 
Deferred tax liabilities
   1.7    40.0    W    41.7 
Current provisions
   2.4    —        2.4 
Trade payables
   38.4    —        38.4 
Other current financial liabilities
   9.1    (7.1   V    2.0 
Other current liabilities
   29.8    —        29.8 
Contract liabilities
   1.6    —        1.6 
Total liabilities assumed (II)
  564.8   (345.3    219.5 
Total identifiable net assets [(I) — (II)]
  (265.0  775.3     510.3 
This preliminary purchase price allocation has been used to prepare Transaction Accounting Adjustments in the unaudited pro forma condensed combined balance sheet and statements of profit or loss. The final purchase price allocation could differ materially from the preliminary allocation used in the Transaction Accounting Adjustments. The final allocation will be determined when TopCo has completed the detailed valuations and necessary calculations and may include changes in fair values of property, plant and equipment, changes in allocations to intangible assets such as trademarks, customer relationships and technology as well as goodwill and other changes to assets and liabilities.
 
77

6.
Adjustments to Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined consolidated provision for income taxes does not necessarily reflect the amounts that would have resulted had TopCo filed consolidated income tax returns during the periods presented.
The Transaction Accounting Adjustments are based on information currently available and preliminary estimates and assumptions that are subject to change and may be revised as additional information becomes available and is evaluated.
Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet:
 
 A.
Reflects the (i) actual redemption of 31,820,685 TopCo Shares for aggregate redemption payments of €274.8 million at a redemption price of approximately €8.64 ($10.00) per share based on the investments held in the Trust Account at Closing of €298.0 million ($345.0 million) and (ii) the liquidation and reclassification of €23.2 million of investments held in the Trust Account to cash and cash equivalents after recording the actual redemptions.
 
 B.
Reflects the proceeds of €342.9 million ($397.0 million) from the issuance and sale of 39,700,000 TopCo Shares at €8.64 ($10.00) (with a nominal value of €0.12 per share) per share in the PIPE Financing pursuant to the PIPE Investors (including the Yucaipa Sponsor).
 
 C.
Reflects the payment of €30.4 million of transaction costs incurred in connection with the Merger by SSU and Yucaipa subsequent to September 30, 2021. The remaining transaction costs are already included in the historical consolidated statement of profit or loss of SSU for the fiscal year ended September 30, 2021 (€14.4 million) and in the historical statement of operations of Yucaipa for the twelve-month period ended September 30, 2021 (€3.9 million). These costs will not affect TopCo’s consolidated statement of profit or loss beyond 12 months after the acquisition date. Equity issuance costs (namely, professional fees directly attributable to the Merger) of €9.6 million are offset to capital reserve and the remaining balance is accounted for through retained earnings.
 
 D.
Reflects the payment of €10.4 million of deferred underwriting commissions in connection with Yucaipa’s IPO.
 
 E.
Reflects the payment of transaction bonuses for certain key executives in the amount of €8.7 million of which (i) €3.9 million are paid in cash and (ii) TopCo Shares in an amount of €4.8 million are issued.
 
 F.
Reflects the settlement of current liabilities in the amount of €0.0 million pursuant to the Administrative Services Agreement with the Sponsor, which terminated upon consummation of the Merger.
 
 G.
Reflects the adjustment to share capital and capital reserve after the contribution of SSU’s Shares outstanding to TopCo in exchange for 249,850,473 TopCo Shares resulting in a total share capital of €30.0 million and a decrease in capital reserve of €8.7 million, respectively. SSU’s historical share capital of €21.2 million is eliminated.
 
 H.
Reflects the contribution of outstanding Yucaipa Ordinary Shares to TopCo and the issuance of TopCo Shares in exchange. The Merger is accounted for under IFRS 2 with an expense reflected for the excess of the fair value of TopCo Shares issued to Yucaipa shareholders over the fair value of Yucaipa’s net assets acquired.
TopCo issues 12,584,315 TopCo Shares and recognizes share capital of €1.5 million and capital reserve of €106.4 million in exchange for all outstanding Yucaipa Ordinary Shares. Yucaipa’s historical equity, including share capital of €0.0 million, capital reserve of €nil million, retained earnings of €(30.5) million and the remaining redeemable Class A shares of €23.1 million (after recording the elimination of the actual redemptions as described in Transaction Accounting Adjustment A) presented under
non-current
financial liabilities are eliminated.
 
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In accordance with IFRS 2, the excess of the fair value of TopCo Shares issued to Yucaipa shareholders over the fair value of Yucaipa’s identifiable net assets acquired represents compensation for services and is reflected as an expense, resulting in a €116.7 million decrease to retained earnings.
 
 I.
Reflects the issuance of 51,000,000 TopCo Shares issuable pursuant to the
Earn-out
Agreement in the Business Combination Agreement with a nominal value of €0.12 per TopCo Share. The shares are conditioned upon per share increases agreed to in the Business Combination Agreement, there are no service conditions.
 
 J.
Reflects the issuance of 1,293,200 TopCo Shares to SSU’s management resulting in a total share capital of €0.2 million and an increase in capital reserve of €10.9 million.
 
 K.
Reflects the termination of Yucaipa’s forward purchase agreement with a fair value of €0.8 million, which terminated upon consummation of the Business Combination for no consideration.
 
 L.
Reflects the adjustment of Wiggle Group’s historical
right-of-use-assets
acquired by TopCo to their estimated fair values. Wiggle Group historically recognized an amount of €20.3 million
right-of-use-assets
pertaining mainly to a warehouse as well as forklifts, tools, and vehicles and corresponding lease liabilities in the amount of €24.9 million recognized within
Non-current
financial liabilities (€23.0 million) and Other current financial liabilities (€1.9 million) in the historical consolidated statement of financial position as of September 26, 2021.
As part of the preliminary valuation analysis of the
right-of-use
assets’ information, TopCo noted that either the
right-of-use-assets’
lease start date was recent (in which case market conditions are presumed), or that their remaining lease term and payment amounts deem them to be immaterial. The leases are assumed to be at market conditions, the net book value of the lease liabilities is deemed to be a good proxy for its fair value. Accordingly, and following IFRS 3.28B guidance, the fair value of the lease liabilities is deemed to be a good estimate for the fair value of the
right-of-use-assets.
The following table summarizes the estimated fair values of Wiggle Group’s identifiable
right-of-use-assets
and their estimated useful lives and uses a straight-line method of depreciation:
 
  Estimated
Fair Value
  Estimated
remaining useful
life in years
  
Twelve-Month Period

Ended September 30,
2021 depreciation
expense
 
in € million         
Right-of-use-assets
  24.9   13   1.9 
Total
  24.9    1.9 
Historical Right-of-use-assets
  20.3    2.4 
Total
  20.3    2.4 
Transaction Accounting Adjustment
  4.6    (0.5
These preliminary estimates of fair value and estimated useful lives will likely differ from final amounts TopCo will calculate after completing a detailed valuation analysis, and the difference could have a material effect on the accompanying unaudited pro forma condensed combined financial information. A 10% change in the valuation of
right-of-use-assets
would cause a corresponding increase or decrease in the balance of approximately €0.2 million, assuming an estimated remaining useful life of 13.0 years.
 
 M.
Reflects the adjustment of Wiggle Group’s historical intangible assets in respect of its former acquisition of CRC acquired by TopCo to their estimated fair values. As part of the preliminary valuation analysis, TopCo identified intangible assets, including trademarks, customer relationships and technology. The fair value of identifiable intangible assets is determined primarily using the “income approach”, which requires a forecast of all of the expected future cash flows. Since all information required to perform a detailed
 
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 valuation analysis of Wiggle Group’s intangible assets could not be obtained as of the date of this filing, for purposes of this unaudited pro forma condensed combined financial information, TopCo used certain assumptions based on publicly available transaction data for the industry.
The following table summarizes the estimated fair values of Wiggle Group’s identifiable intangible assets and their estimated useful lives and uses a straight-line method of amortization:
 
in € million Estimated
Fair Value
  Estimated
remaining useful
life in years
  
Twelve-Month Period

Ended September 30,
2021 amortization
expense
 
Goodwill
  355.3   n/a   n/a 
Trademarks
  115.2   5 —Indefinite   2.9 
Indefinite Trademarks
  89.7   Indefinite   n/a 
Finite Trademarks
  25.4   5 — 10   2.9 
Customer Relationships
  45.7   10 — 11   4.3 
Technology
  1.5   5   0.3 
Total
  517.7    7.5 
Historical Goodwill raised from the CRC acquisition
  83.3    n/a 
Historical Trademarks raised from the CRC acquisition
  8.3    1.7 
Historical Customer Relationships raised from the CRC acquisition
  —      —   
Historical Technologies raised from the CRC acquisition
  0.7    0.1 
Total
  92.2    1.8 
Transaction Accounting Adjustment
  425.5    5.7 
These preliminary estimates of fair value and estimated useful lives will likely differ from final amounts TopCo will calculate after completing a detailed valuation analysis, and the difference could have a material effect on the accompanying unaudited pro forma condensed combined financial information. A 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in the balance of goodwill and annual amortization expense of approximately €0.7 million, assuming an overall weighted average useful life of 9.9 years for the intangible assets with finite useful lives.
Additionally, this adjustment reflects the elimination of Wiggle Group’s historical goodwill of €83.3 million and the recognition of the goodwill based on the preliminary allocation of the purchase price of €355.3 million.
 
 N.
Reflects the additional payment of €16.6 million of transaction costs incurred within the Wiggle Acquisition by SSU and Wiggle Group subsequent to September 30, 2021, for which an amount of €0.4 million was already recognized in Other current liabilities in the historical consolidated statement of financial position of Wiggle Group as of September 26, 2021. The remaining transaction costs are already included in the historical consolidated statements of profit or loss of SSU (€4.2 million) and in the historical consolidated income statements of Wiggle Group (€1.8 million). These costs will not affect TopCo’s consolidated statement of profit or loss beyond 12 months after the acquisition date.
 
 O.
Reflects the payment of approximately €213.3 million in cash and the recognition of a deferred liability of €22.4 million as partial considerations of the Wiggle Acquisition.
 
 P.
Reflects the repayment of €77.6 million of Wiggle Group’s existing bank debt as of September 26, 2021 historically recognized within
Non-current
financial liabilities (€77.4 million) and Other current financial liabilities (€0.2 million) in the historical consolidated statement of financial position of Wiggle Group.
 
 Q.
Reflects the payment in full of the long-term incentive plan of €2.7 million of Wiggle Group, for which an amount of €2.4 million was already recognized in Current provisions in the historical consolidated statement of financial position of Wiggle Group as of September 26, 2021.
 
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 R.
Reflects the payment of transaction bonuses for certain key executives of Wiggle Group in the amount of €20.5 million of which (i) €17.8 million are paid in cash and (ii) TopCo Shares in an amount of €2.7 million are issued.
 
 S.
Reflects the payment of €2.4 million of outstanding monitoring fees to Wiggle Sellers, of which an amount of €2.3 million was already recognized in Trade payables (€1.1 million) and Other current liabilities (€1.3 million) in the historical consolidated statement of financial position of Wiggle Group as of September 26, 2021.
 
 T.
Reflects the elimination of the historical equity of Wiggle Group and the issuance of 31,045,383 TopCo Shares as part of the consideration paid to the Wiggle Sellers to finance the Wiggle Acquisition. The consideration paid will be denominated in £; however, for pro forma purposes, the period end exchange rate as of September 26, 2021 was used to convert the estimated consideration paid for the Wiggle Acquisition to € assuming the Business Combination have been consummated on September 30, 2021. The exchange rate used to calculate the corresponding amount of TopCo Shares to Wiggle Sellers is based on the most recent exchange rate, resulting in a cumulative translation adjustment of €6.5 million.
 
 U.
Reflects the adjustment of Wiggle Group’s historical preference shares and related dividends to their estimated fair values which become payable with completion of the Wiggle Acquisition.
The following table summarizes the adjustment to the fair values of Wiggle Group’s preference shares and related dividends:
 
in € million  Estimated
Fair Value
 
Preference shares and related dividends
   98.0 
Total
   98.0 
Historical Preference shares and related dividends
   96.4 
Total
   96.4 
Transaction Accounting Adjustment
   1.7 
 
 V.
Reflects the repayment of €385.3 million of Wiggle Group’s shareholder loans and preference shares and related dividends as of September 26, 2021 historically recognized within
Non-current
financial liabilities (€378.3 million) and Other current financial liabilities (€7.1 million) in the historical consolidated statement of financial position of Wiggle Group as well as the elimination of the fair value adjustment recognized within
Non-current
financial liabilities (€1.7 million) as presented in Transaction Accounting Adjustment U.
 
 W.
Reflects the deferred tax liabilities resulting from the Wiggle Acquisition. The estimated increase in deferred tax liabilities of €40.0 million primarily results from the fair value adjustments for
non-deductible
intangible assets and
right-of-use-assets
based on a corporate tax rate of 25.00% for Wiggle Group for future years. The deferred income tax balances are preliminary and subject to change based on management’s final determination of the fair values of assets acquired and liabilities assumed by jurisdiction.
Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Statement of Profit or Loss:
 
 AA.
Reflects the payment of transaction bonuses for certain key executives in the amount of €8.7 million of which (i) €3.9 million are paid in cash and (ii) TopCo Shares in an amount of €4.8 million are issued.
 
 BB.
Reflects the personnel expenses in the amount of €11.1 million relating to the issuance of 1,293,200 TopCo Shares to SSU’s management as presented in Transaction Accounting Adjustment J.
 
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 CC.
Reflects the transaction costs incurred in regard with the Merger by SSU subsequent to September 30, 2021 in the amount of €19.4 million. The remaining transaction costs are already included in the historical consolidated statement of profit or loss of SSU for the fiscal year ended September 30, 2021 (€14.4 million). These costs will not affect TopCo’s consolidated statement of profit or loss beyond 12 months after the acquisition date.
 
 DD.
Reflects the excess of the fair value of TopCo Shares issued over the fair value of Yucaipa’s identifiable net assets acquired recognized in other operating expenses in the amount of €116.7 million.
 
 EE.
Reflects the elimination of approximately €0.1 million in historical expenses related to Yucaipa’s office space, secretarial and administrative services pursuant to the Administrative Support Agreement for the twelve-month period ended September 30, 2021, which terminated upon consummation of the Merger.
 
 FF.
Reflects the elimination of approximately €0.0 million in interest income earned on Yucaipa’s investments held in Trust Account for the twelve-month period ended September 30, 2021.
 
 GG.
Reflects the elimination of €3.5 million in interest expense relating to the convertible loan in the historical consolidated statement of profit or loss of SSU for the fiscal year ended September 30, 2021.
 
 HH.
Reflects the elimination of fair value changes of the forward purchase agreement within finance income and finance costs due to the termination of the forward purchase agreement.
 
 II.
Reflects the income tax effect of transaction accounting adjustments relating to the Merger based on the statutory tax rate of 32.98% (including the solidarity surcharge of 15.83% and a trade tax rate of 17.15%) for SSU. Transaction accounting adjustments directly relating to Yucaipa do not reflect income tax effects as Yucaipa is not subject to income taxation by the Government of the Cayman Islands.
 
 JJ.
Reflects additional personnel expenses relating to the payment of the long-term incentive plan in the amount of €0.3 million. The remaining personnel expenses relating to the long-term incentive plan are already included in the historical consolidated income statements of Wiggle Group (for the 52 weeks ended September 26, 2021: €0.9 million).
 
 KK.
Reflects the payment of transaction bonuses for certain key executives of Wiggle Group in the amount of €20.5 million of which (i) €17.8 million are paid in cash and (ii) TopCo Shares in an amount of €2.7 million are issued.
 
 LL.
Reflects the transaction costs incurred within the Wiggle Acquisition by SSU and Wiggle Group subsequent to September 30, 2021 in the amount of €16.2 million. The remaining transaction costs are already included in the historical consolidated statements of profit or loss of SSU (€4.2 million) and in the historical consolidated income statements of Wiggle Group (€1.8 million). These costs will not affect TopCo’s consolidated statement of profit or loss beyond 12 months after the acquisition date.
 
 MM.
Reflects additional other operating expenses relating to the payment of the outstanding monitoring fees to Wiggle Sellers in the amount of approximately €0.1 million.
 
 NN.
Reflects the increase of amortization expense resulting from the estimated fair value adjustments recognized within the Wiggle Acquisition as presented in Transaction Accounting Adjustment M.
 
 OO.
Reflects the decrease of depreciation expense resulting from the estimated fair value adjustments recognized within the Wiggle Acquisition as presented in Transaction Accounting Adjustment L.
 
 PP.
Reflects the elimination of interest expenses relating to bank debt for the 52 weeks ended September 26, 2021 (€4.0 million) and the elimination of currency gains relating to bank debt mainly denominated in € for the 52 weeks ended September 26, 2021 (€4.7 million) in the historical consolidated income statement of Wiggle Group.
 
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 QQ.
Reflects the elimination of interest expenses for the shareholder loans and preference shares and related dividends for the 52 weeks ended September 26, 2021 (€44.3 million) in the historical consolidated income statement of Wiggle Group.
 
 RR.
Reflects the income tax effect of transaction accounting adjustments relating to the Wiggle Acquisition based on the statutory tax rate of 19.00% for Wiggle Group, a deferred corporate tax rate of 25.00% for Wiggle Group for future years and the statutory tax rate of 32.98% (including the solidarity surcharge of 15.83% and a trade tax rate of 17.15%) for SSU.
7. Loss per share
The pro forma basic and diluted loss per share amounts presented in the unaudited pro forma condensed combined statement of profit or loss are based upon the number of TopCo Shares outstanding as of September 30, 2021, assuming the Business Combination occurred on October 1, 2020. As the unaudited pro forma condensed combined statement of profit or loss for the twelve-month period ended September 30, 2021 is in a loss position, anti-dilutive instruments are excluded in the calculation of diluted weighted average number of ordinary shares outstanding, additionally, up to 51,000,000 TopCo Shares issuable pursuant to the
Earn-out
Agreement in the Business Combination Agreement and 11,500,000 Public and 5,933,333 Private Placement Warrants to acquire TopCo Shares.
The unaudited pro forma condensed combined financial information has been prepared using the actual redemption of Yucaipa’s Class A Shares:
 
in € million, except share and per share data
    
Weighted average shares outstanding — basic and diluted
1
   335,342,807 
Pro forma loss for the twelve-month period ended September 30, 2021
   (189.7
Loss per share — basic and diluted for the twelve-month period ended September 30, 2021
  (0.57
Weighted average shares outstanding — basic and diluted
1
     
SSU shareholders
   249,850,473 
SSU management
   1,293,200 
Wiggle Sellers
   31,045,383 
Management equity consideration
   869,436 
Yucaipa public shareholders
   2,679,315 
Yucaipa Sponsor
   9,815,000 
Yucaipa directors
   90,000 
PIPE Investors
   39,700,000 
thereof SSU PIPE Investors
   2,500,000 
thereof Ronald W. Burkle
   5,000,000 
   
 
 
 
   
 
335,342,807
 
 
1
The weighted average shares outstanding—basic and diluted exclude 51,000,000
Earn-Out
Shares to SSU shareholders and 11,500,000 Public and 5,933,333 Private Placement Warrants and assumes the options granted to Stephan Zoll under the option agreement entered into by and between the Company and Stephan Zoll on June 10, 2021, have been exercised for 1,293,200 Ordinary Shares and the shares to be granted as management equity consideration have been issued.
 
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BUSINESS OF SSU
Overview
Our group comprises dedicated market leading online sports specialist web shops in the fast-growing product categories bike, tennis/racket sports, outdoor and teamsports and athleisure. As a group, we consider ourselves to be the global number one online sports specialty retailer measured by revenue. We define our relevant market as the global sports retail market in which competition comes from a highly diversified group of competitors,
i.e
., traditional offline sports retailers, specialist offline sports retailers,
e-commerce
generalists and online sports specialists as well as some leading sporting goods brands. Among this group of competitors, online sports specialist retailers carry a broad range of sports products including hardlines such as equipment, parts and accessories, and softlines such as functional wear and clothing, from only one or more sports product categories such as cycling, outdoor, racquet sports, teamsports, swimming, running or fitness, focusing on sports retailing mainly via online channels and generating the vast majority of sales through online channels, e.g., own websites and marketplaces.
We sell products through various online web shops as well as selected physical locations mainly to customers in the European Union, Switzerland, Norway, the UK and the US, with approximately 274 million website visits on SSU-owned websites (fiscal year 2020: 250 million) and more than 7.1 million net orders (i.e. orders after cancellations and returns; fiscal year 2020: 5.4 million) via SSU sales channels in the fiscal year ended September 30, 2021.
For the fiscal year ended September 30, 2021, net revenue of SSU was €872 million (fiscal year 2020: €703.2 million). For the six months ended March 31, 2021, net revenue of SSU was €374.4 million and $625 million for the nine months ended June 30, 2021 (taking into account Midwest Sports since May 1, 2021). Furthermore SSU had net revenues less cost of materials, in the amount of €339 million in fiscal year ended September 30, 2021, resulting in a margin calculated as net revenue less costs of material divided by net revenue, of approximately 39% for the same period.
Bike is our largest product category with approximately 55.6% of SSU’s net revenues, followed by Tennis, Outdoor, and Teamsports and Athleisure with approximately 18.9%, 14.1%, 11.4% net revenue share, respectively, in the fiscal year ended September 30, 2021.
Our online shops offer a large variety of products from more than 1,000 third-party brands and exclusive own brands such as Votec, Ortler, Fixie Inc. and Serious as examples from our Bike business. Our websites are configured to help guide customers in choosing the right product for their level of activity and needs, e.g., online racket finder applications, digital bike size fitting tools and
web-based
jersey configurators. Many of our specialists online shops also offer customizable products and services (including, for example, delivery of fully assembled
ready-to-ride
bikes through our expert concierge service, customized racket stringing services, and team jersey customization), further distinguishing us from other online retailers. More broadly, we have undertaken a number of efforts to ensure that the customer experience is as seamless as possible, such as optimizing websites for mobile shopping, establishing a limited number of physical stores and
shop-in-shops,
which act as sales points as well provide after-sale services, and further developing our warehousing and logistics capabilities to ensure quick delivery times and
back-end
fulfillment. This core focus of serving the unique needs of the sports customer has led to high customer satisfaction and a growing customer base.
The sports industry is one of the largest consumer industries with a total global market size of approximately $1.1 trillion, of which sports retail accounts for approximately $475 billion in 2020 (
source
: Company information). In 2020, the sports retail market volume in
SSU-relevant
markets, consisting of Europe, the Asia-Pacific region (APAC) and North America, was $430 billion in 2020, of which $120 billion were attributable to sports
in-spired
athleisure categories (source: Company information). In the markets relevant to us (Europe, APAC and North America), the sports retail market grew on average by approximately 2.5% per year
 
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between 2015 and 2020 and is expected to continue to grow at an accelerated pace of 7% per year until 2025 to then reach $670 billion (source: Company information). This implies a growth rate of approximately 1.4x GDP growth compared to global GDP growth of 5% per year (2020 – 2025) (source: Company information). We believe that the market’s highly attractive growth profile is based on, and driven by, global and fundamental megatrends such as growing health & lifestyle consciousness, sustainability-induced electric mobility disruption, increasing female participation in sports activities, new technologies driving product innovation and sports digitalization, and accelerating
offline-to-online
retail shift. We foresee that these fundamental mega-trends will translate into more people doing more sports more digitally.
Our strategy is built on the firm belief that sports consumers can be served much better through a specialist proposition than a
one-size-fits-all
generalist sports retail model. In contrast to other billion-dollar consumer markets like Electronics, Fashion, or Fast-Moving Consumer Goods, that are characterized by rather homogenous customer preferences across product categories (e.g., customer behavior in Fashion markets differ more across gender than across product categories like shirts, trousers, and jackets), sports customer preferences vary a lot more across product categories. For example, tennis racket orders require customized stringing, advice from coaches can be an important part of the purchase decision, providing test rackets may drive conversion, and professional players like Serena Williams or Roger Federer are important influencers. Customers in the Outdoor category rather tend to derive their purchase decisions from expert blogs, advice from friends and family, and category-specific fitting tools. Teamsports and Athleisure’s customer orders are again very much different as they often arise from relations to clubs and teams and require a broad array of value adding jersey printing services and social marketing centered around
in-season
high-runner products. Just to name a few, there is surely more differences in customer preferences across sports categories.
A recent study conducted by SSU in January 2021 (on the basis of a survey completed by more than 16,000 consumers from Germany, France, the UK and the US) has shown that specialist online sports retailers are more likely to be the preferred shopping destination for equipment intense sports such as biking, tennis, golf, horse-back riding or winter sports compared to general online retailers: In fact,
two-thirds
of consumers prefer to purchase at online sports specialists for equipment-heavy sports according to the study. Additionally, consumers spend more per order when shopping with online sports specialists which is translating into more favorable unit economics (source: Company information).
Our strategic advantage is to be “large
and
special” at the same time: being special from a consumer proposition perspective while being large and scalable from an
e-commerce
backend perspective. We are realizing economies of scope from our sports specialists web shops with differentiated customer propositions tailored to the specific consumer needs by category while realizing economies of scale across the different webshops that are leveraging our central
e-commerce
and technology platform services.
History and Key Acquisitions
The following is a brief synopsis of the history and key milestones leading to the formation of our group:
Acquisition of Internetstores
SISH acquired the Internetstores group, comprising at that time Internetstores Holding GmbH, internetstores GmbH and Addnature AB, in December 2016 and subsequently transferred it to SSU in September 2018. The headquarters of the Internetstores group are located in Stuttgart (Germany). Internetstores is a leading bike and outdoor online retailer in Europe in terms of revenues (source: Company information), with a particularly strong market position in continental Europe. The Internetstores group mainly operates under the brands fahrrad.de, Bikester, Brügelmann and Probikeshop (since 2017) for bikes, and Addnature and Campz for outdoor related equipment, clothing and footwear.
Since its establishment in 2003, Internetstores has focused on bike and related product offerings online, addressing both the mainstream and enthusiast segments of the bike market via its specialized brands.
 
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Internetstores has developed unique expertise on offering and delivering full bikes, including private label products. In 2011, Internetstores entered the sports-inspired online outdoor market through its webshop Campz, initially focusing on Germany, Austria, and Switzerland. Through the acquisition of Addnature in May 2013, Internetstores also entered the Scandinavian online outdoor market. In 2017, Internetstores completed the acquisition of Probikeshop, a leading supplier of bike supplies, spare parts and accessories in France, mainly focused on the bike enthusiast and expert customer segments (see below).
Acquisition of Probikeshop
Internetstores Holding GmbH acquired the Probikeshop group, comprising Dolphin France SAS,
E-Prolog
SAS and
E-Procall
SAS, in May 2017. Probikeshop was subsequently transferred from SISH to us in September 2018 as part of the Internetstores Group. The Probikeshop group is located in St. Etienne (France). Since its foundation in 2005, Probikeshop has become the leading bike supplies, bike spare parts and accessories retailer for professional and expert bike enthusiasts by revenues (source: Company information) in France. The acquisition of Probikeshop enabled Internetstores to complement its regional footprint with a significantly stronger customer base in southern Europe. The acquisition of Probikeshop also helped Internetstores to expand its presence in the enthusiast and expert customer segments and to gain access to related product offerings. The integration into Internetstores allows Probikeshop to significantly extend its business scope with comprehensive full bike and private label product offerings in addition to its core product range of bike spare parts and accessories. Internetstores has also implemented marketing attribution measures and other efficiency measures at Probikeshop.
Acquisition of Tennis Point group
SISH acquired the Tennis-Point group, comprising Tennis-Point GmbH, its fully owned subsidiaries MRS Tennis AG and Tennis-Point Handels GmbH, in two stages in February 2017 (78%) and in March 2018 (10%) and subsequently transferred it to SSU in September 2018. In 2021, SSU acquired the remaining 12% in Tennis-Point. The headquarters of the Tennis-Point group are located in Herzebrock-Clarholz (Germany). Founded in 1999, Tennis-Point, which operates under the brands Tennis-Point, CenterCourt (acquired in April 2018), Tennis-Peters, Jogging-Point and Padel-Point, has become a trusted retailer for members of the entire tennis community including tennis enthusiasts (professionals and amateurs) and clubs, particularly in Germany and Austria, offering tennis sportswear, tennis balls, tennis shoes, tennis rackets, other tennis and racket sports equipment and accessories as well as running equipment. Tennis-Point also offers a range of value-added services around tennis and tennis fashion, such as stringing, testing and product guidance. Tennis-Point further successfully rolled out myTennis App, the leading tennis community app in Germany, with more than 300,000 downloads and an engaged active user base. It offers live scores, rankings, breakthrough statistics, and unique content, connecting tennis players, coaches as well as fans.
Acquisition of Outfitter
SISH originally acquired the Outfitter group in May 2016. SSU acquired the teamsport business of the Outfitter group, comprising Outfitter Teamsport GmbH and participations in teamstolz GmbH and System Sport GmbH, in two steps in June 2018 and June 2019. Located in Großostheim (Germany), Outfitter is a multi-channel
e-commerce
retailer centering around soccer with its 360 degree approach, which focuses on product offerings for before (products for training and fitness), during (jerseys and soccer products and accessories) and after (soccer lifestyle products) a soccer match. In particular, Outfitter provides soccer enthusiasts with a broad product portfolio ranging from sports accessories such as soccer sportswear and soccer shoes to fan merchandise and lifestyle products. Outfitter also offers customers the ability to purchase customized sports shirts and jerseys using sophisticated 3D software and
state-of-the-art
printing technology (including its flock printing machine, which we believe is one of only three installed in Europe). Outfitter is the partner of choice for more than 500 professional and amateur football clubs.
 
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Acquisition of Publikat
SIGNA Retail Sports Holding GmbH acquired Publikat GmbH in March 2018 and subsequently transferred it to SSU in September 2018. Publikat GmbH is located in Großostheim (Germany). Under its main brand StyleFile, Publikat has focused on the online retail supply of sports-inspired footwear and apparel, in particular sneakers, as well as selected graffiti art, streetwear, skateboarding and lifestyle products since its establishment in 1999.
Acquisition of TennisPro
SSU acquired the TennisPro group, a leading tennis online retailer in France and Southern-Europe, in August 2019 which included the takeover of the TennisPro group’s of online and offline business with currently 55 stores in France, Belgium, Greece and Italy. Besides the main brand TennisPro, TennisPro also operates webshops under the brands Tennis.fr, Tennis Achat, Larde Sports (Badminton) and Badminton-Point.
Acquisition of Midwest Sports
SSU acquired approximately 60% of the share capital in Midwest Sports based in Cincinnati, Ohio effective as of April 30, 2021. Midwest Sports is among the top three online tennis retailers in the U.S. and the official retail sponsor of the Western & Southern Open. The acquisition of Midwest Sports is highly complementary to our existing tennis business and serves as the entry point into the U.S. market for Tennis-Point. For further information on the acquisition documentation, please refer to “
Material Contracts — Midwest Acquisition SPA
”.
Acquisition of Wiggle
On June 11, 2021, SSU entered into a share purchase agreement (as amended from time to time, the “Wiggle SPA”) to acquire the entire issued share capital of Mapil Topco Limited from, among others, funds managed by Bridgepoint Advisers Limited (the “Wiggle Sellers”) (the “Wiggle Acquisition”). Mapil Topco Limited owns Wiggle Limited and Chain Reaction Cycles Retail Limited (“CRC”) (together with its subsidiaries, the “Wiggle Group”),. The Wiggle Group is a leading online sports retailer of specialist cycling, running and swimming equipment, apparel and accessories headquartered in the UK. The Wiggle Acquisition was consummated on December 14, 2021.
Completion of the Wiggle SPA (and the Wiggle Acquisition) (“Completion”), which was a condition to the Closing of the Business Combination, was conditional upon satisfaction of each of the following conditions:
 
  
Each of the (i) German Federal Cartel Office and (ii) Austrian Competition Authorities (Austrian Federal Competition Authority and Austrian Federal Cartel Prosecutor) having approved the Wiggle Acquisition or the Wiggle Acquisition being deemed to be approved.
 
  
The United Kingdom Competition and Markets Authority having communicated to SSU that it has no further questions in respect of the briefing paper (containing details of the Wiggle Acquisition) submitted to them or having announced that it does not intend to refer the Wiggle Acquisition for investigation under Schedule 4 of the Enterprise and Regulatory Reform Act 2013.
 
  
The Financial Conduct Authority (“FCA”) having notified (and not withdrawn) its approval (as required in accordance with Part XII of the Financial Services and Markets Act 2000) in relation to each new controller’s proposed interest in the Wiggle Group resulting from the Wiggle Acquisition or the FCA being deemed as having given such approval.
 
  
Confirmation having been given by SSU that the Business Combination Agreement has become unconditional in all respects.
 
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On Completion, the Total Consideration payable by the Company to the Wiggle Sellers in accordance with the terms of the Wiggle Liability Assumption Agreement entered into between the Company and SSU, was as follows:
 
  
41.8% of the Total Consideration was paid by the Company in cash on Completion (in an amount of estimated €287.7);
 
  
53.8% of the Total Consideration was satisfied by the Company issuing our Ordinary Shares to certain of the Wiggle Sellers (to be held subject to
lock-up
agreements);
 
  
4.4% of the Total Consideration will be payable by SSU in cash 10 business days of the earlier date of the date on which the
lock-up
agreements expire and the date which is nine months after the Completion.
The Wiggle SPA contains a customary suite of business warranties, together with a stand-alone tax covenant given in favor or the Buyer, all of which are backed by warranty and indemnity insurance.
Closing of the Business Combination and Listing on the NYSE
On December 14, 2021, we consummated the previously announced business combination pursuant to the Business Combination Agreement and all transactions related thereto. In particular, SSU consummated the acquisition of Wiggle and, upon the closing of the Business Combination, we became the direct parent of SSU. Our Ordinary Shares issued to former shareholders of Yucaipa were admitted to trading and listed on the NYSE on December 15, 2021.
Acquisition of Tennis Express
On December 31, 2021, we acquired 66.66% of the issued shares in Tennis Express, L.P., a Texas limited partnership, a full-service tennis specialty retailer based in Houston, Texas (the “Tennis Express Acquisition”). The strategic investment is intended to strengthen the activities in the Tennis business segment and to extend our internationalization strategy. The maximum total initial consideration in shares was USD 23.6 million.
The SEC maintains a website at http://www.sec.gov that contains reports and other information that the Company files with or furnishes electronically to the SEC.
The website address of the Company is https://signa-sportsunited.com/. The information contained on the website does not form a part of, and is not incorporated by reference into, this prospectus.
Our Strengths
World’s largest specialist online sports retailer, with leading market positions in fast growing categories and attractive markets
Our group comprises dedicated market leading online sports specialist web shops in the fast-growing product categories bike, tennis/racket sports, outdoor and teamsports and athleisure. As a group, we consider ourselves to be the global number one online sports specialty retailer measured by revenue. We define our relevant market as the global sports retail market in which competition comes from a highly diversified group of competitors,
i.e.
, traditional offline sports retailers, specialist offline sports retailers,
e-commerce
generalists and online sports specialists as well as some leading sporting goods brands. Among this group of competitors, online sports specialist retailers carry a broad range of sports products including hardlines such as equipment, parts and accessories, and softlines such as functional wear and clothing, from only one or more sports product categories such as cycling, outdoor, racquet sports, teamsports, swimming, running or fitness, focusing on sports retailing mainly via online channels and generating the vast majority of sales through online channels, e.g., own websites and marketplaces.
 
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We are running iconic sports specialists
e-commerce
shops, including Addnature, bikester, fahrrad.de, Outfitter, Probikeshop and Tennis-Point, with high brand awareness in the most attractive verticals and regions. Specialized online sports retailers are more likely to be the preferred shopping destination for equipment intense sports such as biking, tennis, golf, horseback riding or winter sports compared to general online retailers. Additionally, consumers spend more per order when shopping with online vertical sports specialists like us (source: Company information).
We also hold leading market positions in each of our fast-growing verticals Bike, Tennis, Outdoor, and Teamsports. Our bike category, on a pro forma basis including the Wiggle Group, is the largest bike online specialist by revenues worldwide with approximately €840 million of revenues in the fiscal year ended September 30, 2021 and the second largest competitor generating approximately estimated €250 million in the calendar year 2021 (source: Company information) and the only player covering major international markets in continental and Northern Europe (including Scandinavia and the UK), North America, South-East Asia, Japan and Australia. Our other categories also hold globally leading market positions: our Tennis category is the world’s largest online tennis retailer by revenues on a pro forma basis including Midwest Sports and Tennis-Express, with approximately €240 million of revenues in the fiscal year ended September 30, 2021 and the second largest competitor generating approximately estimated €110 million in the calendar year 2020, our Outdoor category is global number two by revenues with approximately €180 million of revenues in the fiscal year ending September 30, 2021 and our Teamsport category is global number three by revenues with approximately €100 million of revenues in the fiscal year ended September 30, 2021 and the largest competitor generating approximately estimated €280 million, respectively in the calendar year 2021 (source: Company information). Our market positions as described above are based on a comparison among the twenty largest online sports specialist retailers globally.
We are acting from a position of strength in a still highly fragmented global sports retail market where the
top-3
global sports retailers Decathlon, Dick’s Sporting Goods, and JD Sports, accounting for only approximately 7% of the total market revenues on a combined basis (source: Company information).
Our main competitive advantage is twofold:
 
  
Differentiated sports specialist web shops addressing expert and mainstream consumers with category specific customer propositions
 
  
Scalable, data-driven and synergistic commerce & technology platform powering core
e-commerce
functions for our own web shops as well as for third-party enterprise customers
Based on all of the above, we believe that we are well positioned to gain further market share and increase profitability in the future.
Highly differentiated category champions with vertical specific expertise and assortment
We own some of the most iconic sports specialist web shop brands, including Addnature, bikester, fahrrad.de, Outfitter, Probikeshop and Tennis-Point, with a high brand awareness as
top-of-mind
online sports point of sales. According to a brand awareness study carried out by us in January 2021 across the four markets Germany, France, UK, and US, our brands, when aggregated together, have an aided brand awareness (asking “do you know sports shop?”) of 35% across all markets, ranging from 12% in U.S. up to 70% in our core market Germany. Our brand awareness in our core verticals bike and tennis is even higher reaching 49% across all markets (Germany, France, UK, US) and 54% in Europe (Germany, France, UK), including Wiggle and Chain Reaction Cycles on a proforma basis.
We are positioning our web shop brands to address mutually exclusive but comprehensively exhaustive sports consumer segments in
non-overlapping
markets: For example, Probikeshop is addressing Expert Bike customers in Continental Europe. Same for Mainstream Bike customers which are addressed through our
 
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Fahrrad.de brand in Germany, and our Bikester brand in Rest of Europe. Mainstream outdoor customers across Europe are addressed by our Campz web shops, whereas our Addnature web shops are addressing more adventurous expert outdoor customers in Europe. We believe that such a distinguished but comprehensive specialist web shop brand architecture allows us to exploit a higher market share on a combined basis.
This is even more true because specialist online web shops are supposedly more likely to be the preferred shopping destination for equipment intense sports such as biking, tennis, golf, horseback riding or winter sports compared to general online retailers: In fact,
two-thirds
of consumers prefer to purchase at online sports specialists for equipment-heavy sports (source: company information). Additionally, consumers spend more per order when shopping with online sports specialists: For example, the average yearly spend on bike products is $271 per customer for online specialists shops, compared to only $195 for online generalists (source: Company information). This is translating into higher average order values and, ultimately, more favorable unit economics: For example, our online shops have achieved net average order value (calculated by dividing net revenue by net orders) of €100.6 for the fiscal year ending September 30, 2021.
Top reasons to buy from online sports specialist shops are curation and recommendation across a broad and sometimes exclusive product range, value added services and customization (source: company information). Our customer proposition is distinguishing our specialist web shops from other online and offline retailers in two ways:
 
  
Being better at the
e-commerce
basics: broad selection, right price, convenient delivery
 
  
Providing category-specific differentiators to inspire, guide, serve, and engage customers
Our specialist web shops offer a large variety of products from more than 1,000 third-party brands and exclusive SSU own brands such as Votec, Ortler, Fixie Inc. and Serious as examples from our Bike business. Approximately 2/3 of our products cannot be found on Amazon, with an even higher share of 89% for the products in our Bike business (source: assortment comparison vs. Amazon during calendar weeks
38-41
2020 carried out by us). Our dynamic pricing engine is determining the supposedly right price on a daily basis given relevant context information such as competitor pricing, supply situation, seasonal factors, and overall growth and profitability targets, amongst others. Our web shops are offering relevant payment options in their core markets and a relevant selection of convenient delivery options including home delivery, click & collect, and premium concierge delivery, subject to local customer preferences by category.
Our web shops are further configured to inspire, guide, serve and engage specific customer segments throughout all steps of the customer journey. For example: guiding customers to find the right product that is matching their personal body size and skill level with the help of proprietary online racket finder applications, digital bike size fitting tools, and
web-based
jersey configurators. Many of our specialist web shops offer customizable products and services: For example, Tennis-Point offers personalized stringing services to fit the racquet to individual needs of our customers, and our bike shops Probikeshop, Bikester, and Fahrrad.de offer a premium last-mile delivery and concierge service for full bike orders, to ensure that our bikes are fitted to the exact requirements of our customers. Our teamsport web shops have developed a proprietary
web-based
jersey configurator tool to customize teamsport orders in the most convenient way. We are also deeply engaged with sports communities, e.g. through long-standing collaborations with associations and clubs in our Tennis vertical.
More broadly, we have undertaken a number of efforts to ensure that the customer experience is as seamless as possible, such as optimizing websites for mobile shopping, establishing a limited number of physical stores and
shop-in-shops,
which act as sales points as well provide after-sale services, and further developing our ware-housing and logistics capabilities to ensure quick delivery times and
back-end
fulfillment. This core focus of serving the unique needs of the sports customer has led to high customer satisfaction and a growing customer base. This is not only creating high barriers to entry, but also yielding strong shop performance in terms of visit growth, conversion growth, and growth of net average order value. We have created
go-to
destinations in each of our customer categories, evidenced by
5-star
customer reviews via Trusted Shops (e.g. tennis-point.de 4.77/5 or fahrrad.de 4.7/5) such that we have increased visits by 9.7%
year-on-year
net conversion (defined as total net orders divided by total visits) by 39bps whereas net AOV (defined as total online revenue (excluding sales
 
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partners) divided by net orders) slightly decreased by
 
0.5€ year-on-year
 
to 100.6€ in the financial year ending September 30, 2021 driven by a lower e-bike share in terms of net revenue compared to fiscal year ended September 30 2020 During fiscal year 2021, website visits amounted to 274.4 million, respectively, with net orders being 7.1 million in the fiscal year 2021, not taking into account CRC and Tennis Express. The number of active customers increased to 5.1 million in the financial year ending September 30, 2021 (not counting in customers of CRC and Tennis Express) compared to the number of active customers during the financial year ending September 30, 2020, which was 3.9 million, representing a year-over-year increase in active customers of approximately 32%.
In light of our proven track record in the multi-brand online sports ecosystem, we are well prepared to successfully compete against online or offline sports generalists and specialists.
Scalable, data-driven and synergistic
 
e-commerce
 
and technology platform powering core
 
e-commerce
 
functions for our own web shops as well as for third-party enterprise customers
We operate a scalable and synergistic commerce & technology platform that is powering some of the core
 
e-commerce
 
functions for many of our online shops across all categories Bike, Outdoor, Tennis, and Teamsports. Our
 
e-commerce
 
and technology platform services can be distinguished at three levels: Data and technology solutions, global fulfillment services, and shared business functions & central services. We believe that the economic benefits from such scalable and synergistic commerce & technology platform are threefold: (1) Higher cost-efficiency and productivity across the group; (2) higher service quality and business function output for internal and external customers; (3) higher degree of innovation and best-practice exchange.
In addition to powering our own shops, our
 
e-commerce
 
and technology platform provides
 
e-commerce
 
and omni-channel solutions for third-party brands, associations, retailers, and sports apps and digital communities. We can provide full-service
 
direct-to-consumer
 
e-commerce
 
solutions for
 
mid-to
 
large-scale enterprise customers or standalone
 
e-commerce
 
services, including global fulfillment, content creation, retail media and data services. For example, we are powering the
 
end-to-end
 
direct-to-consumer
 
e-commerce
 
solutions for the International Tennis Federation (ITF) including shop frontend, order management,
 
check-out &
 
payment collection, Marketing & CRM, global fulfillment, and customer service.
Our platform services can be distinguished at three levels:
 
  
Data
 & technology solutions —
 
We operate a scalable,
 
best-of-breed
 
technology platform with custom-built software and
 
state-of-the-art
 
standard software from various vendors that runs parts of our own online shops as well as
 
e-commerce
 
retail operations for third-party enterprise customers. Our technology platform provides substantial flexibility to cater for category specific and local market and regulatory requirements on the one side and to provide a scalable
 
e-commerce
 
toolkit of advanced uniform solutions on the other side. These technology solutions include, among others,
 
state-of-the-art
 
shop frontend technology, our dynamic pricing engine, performance marketing solutions, business intelligence tools with automated data dashboards, connected retail solutions, and more. We also
 
collect and analyze large amounts of data across all our shops. We use this data to continuously improve our value proposition for end customers and enterprise partners and to improve our organizational processes and decision making such as dynamic pricing and marketing. We are in the process of
 
setting-up
 
a group data warehouse infrastructure to consolidate structured data at group level and a group data lakehouse to collect and analyze unstructured data across our group. Our data science team is deploying large-scale data analytics models and machine-learning algorithms on top of our data pools to continuously improve the technology used by us like our group-wide shop frontends, dynamic pricing engine, or performance marketing systems such as real-time bidding or attribution modeling. The different software solutions are connected through an enterprise service bus, which is a system that facilitates communication between software applications through a standard set of data interfaces and exchange protocols. Such an enterprise service bus architecture makes our commerce & technology platform highly robust, scalable, and flexible as it enables rapid integration of newly acquired
 
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companies or
setting-up
new shops and services connected to the quite heterogenous infrastructure of third-party enterprise customers.
 
  
Group fulfillment services — We have a fulfillment network of eight distribution centers (DC) across Europe, not including our most recent acquisitions Wiggle in UK, Midwest Sports and Tennis Express in US, and our joint venture company in Japan. Our fulfillment network is optimized to maximize efficiency, flexibility, scalability, customer differentiation and satisfaction across all shops in all verticals. We have implemented a high degree of process automation and system integration to optimize capacities across the network. Some facilities like our distribution center in Großostheim (Germany) are handling similar items across different verticals to realize economies of scale at group level, while other facilities like our distribution center in Holdorf (Germany) are focusing on specific product categories, in this case full-bike assembly and outbound logistics. We are continuously optimizing our fulfillment network and global supply-chain
set-up.
For example, in March 2021, we have entered into a long-term 3PL logistics service contract with a third-party contractor that will provide us with additional warehouse capacities mainly to cover the Southern European markets of our Tennis and Bike verticals, but also allows for flexibility to onboard further clients from other verticals. Our current logistical footprint already exhibits good cost ratios and sets us up for significant increased capacity with limited future investment requirements.
 
  
Shared business functions & central services: We are in the course of establishing shared business functions for retail media sales, pricing and marketing infrastructure development, and management of our own brands. We are also in the course of establishing central services in respect of our group finance, accounting and controlling structures (including the
roll-out
of uniform enterprise resource planning (“ERP”) systems throughout our verticals and a uniform controlling reporting platform), sourcing, a central HR group function as well as a centralized information security function. In addition, we run our M&A processes in a centralized manner, with close cooperation of our verticals. We have also established a central project management office at group level that centrally monitors the progress and continuous implementation of our various group-wide strategic and synergetic projects. Overall, we are constantly adjusting our overall organizational footprint to find the optimal balance between central services and local execution at business unit level.
We believe that our platform currently enables us to scale our businesses for future growth and further integration of the platform offers significant further upside potential. Please see “
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Integration of Acquisitions
” for further information in respect of the measures taken thus far to fully integrate our platform.
Proven business model in our core
e-commerce
business with strong organic growth, proven unit economics and expanding margins
Our value proposition and marketing approach in our core
e-commerce
business centers around the four pillars to inspire, guide, serve and engage our customers. Through these efforts, we believe we can grow our customer base, increase orders and order value, and overall lead to a higher level of profitability. This strategy has already shown success as implemented by our businesses to date.
For instance, for the period from January 1, 2020 to December 31, 2020, customer acquisition costs (“CAC”, defined as total applicable marketing costs, including employee costs, during a specific period to acquire a particular customer cohort divided by the total number of new customers acquired in that period) for our core verticals Bike, Outdoor, and Tennis (excluding TennisPro and Midwest) was on average €15.65 per new customer. For the same period, the average first order customer lifetime value (“CLV”, defined as net revenues less cost of materials after cancellations and returns, less shipping, packaging and fulfilment costs from only the initial orders of all new customers, divided by number of new customers) was €22.70 per new customer. This results in a first-order CLV to CAC ratio of 1.45x. Considering all (i.e. not only the initial, but also repeat) first-year orders of the same 2020 customer cohort this yields a first-year CLV to CAC ratio of already 1.70x, which
 
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we believe is rare in our industry as, for example luxury fashion online retailer MYT NETHERLANDS PARENT B.V. reports a first-year CLV/CAC of 1.17 and a second-year CLV/CAC of 1.60 for their 2016 customer cohort (source: Form
F-1
of MYT NETHERLANDS PARENT BV, dated December 28, 2020). By comparison, SSU’s average first-year CLV to CAC ratio for the 2017 and 2018 cohorts was 1.31x. As a result of our strong organic growth and proven unit economics, we were also able to increase our adjusted EBITDA in the fiscal year ended September 30, 2021 by 13.2 million to 27.7 million (against the previous fiscal year).
Dynamic management team with committed long-term shareholder
Our management team is led by a highly experienced and dedicated management team with a strong track record. Our Chief Executive Officer, Dr. Stephan Zoll, was President Online at Sears Holdings and Vice
President and General Manager Germany at eBay and possesses substantial experience in the areas of online, sports retail, marketing, process management, finance, logistics and technology. Alexander Johnstone, Chief Financial Officer, has worked for 10 years for Citigroup’s investment banking department in New York, Dubai and London and has gained a vast experience in the field of group financing, capital structure activities and investor relation communications. Philipp Rossner, our Chief Strategy Officer, has worked as CEO of the Brands4Friends online shopping club and more than eleven years in various positions at eBay and the Boston Consulting Group and possesses profound knowledge and experience in running our M&A processes and consolidating companies in the areas of smart data, marketing, sales and logistics. Thomas Neumann, Chief Technology Officer, the architect of our technology platform has more than 15 years of experience in the
e-commerce
field, including stations at Rocket Internet and acting as Head of IT for the online division of Plus Warenhandelsgesellschaft.
We also have a dedicated strong
mid-level
management team in charge of our product categories including the respective founders Mr. Miele leading Tennis-Point, Mr. Rochon leading Probikeshop and Mr. Wolf as founder of Midwest Sports.
In addition, SISH, SSU’s founding shareholder, is committed to remain a long-term shareholder in our company and to further strategically support our management in the future.
SSU’s Strategy
Build global leadership positions in specialist sports verticals organically or inorganically
Our strategic advantage is to be “large and special” at the same time: being special from a consumer proposition perspective while being large and scalable from an
e-commerce
backend perspective. We are realizing economies of scope from our sports specialists web shops with differentiated customer propositions tailored to the specific consumer needs by category while realizing economies of scale across the different web shops that are leveraging our commerce technology platform services.
We are determined to further grow our market share in the next several years by leveraging our leading market positions and our presence in fast-growing product categories and the most important geographical sports markets globally (except for China). The global sports market reached a volume of approximately $1.1 trillion in 2020 in size, and we see ample growth opportunities in our existing and new geographies and through our existing category offerings. We will selectively push our market presence and marketing efforts in select geographies to increase market share organically and inorganically.
Our growth strategy is threefold:
 
  
Increase organic market share from above-market growth
 
  
Consolidate markets inorganically
 
  
Expand platform businesses
 
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Regarding organic growth, we will continue to further differentiate the category-specific customer propositions of our web shops by further expanding and refining our established and dedicated specialist category competences, based on our expert driven and longstanding product
know-how
as well as our superior service offerings tailored to customers’ specific needs. Particularly, we intend to further develop and digitize our shopping experience to inspire, guide, serve and engage customers. For example, we plan to further develop our personal customer advisory offerings through our websites (“guide” e.g. by expanding, personal customer advisory services in our web shops or using advanced size, racket or shoe finding technologies for bikes, rackets and footwear), expand our value-added-services like stringing services for rackets,
ready-to-ride
services for bikes or product customization services for clubs (“serve”), continuously engage with our customers e.g. through product-related information services,
public-in-store
or other events and social media activation (“engage”) and to inspire our customers e.g. through blogs and magazines, testimonial or influencer marketing, sponsorings/collaboration with professional athletes or highly attractive flagship stores in various locations.
In addition, we intend to continuously expand our multichannel offering by adding more features and interconnectivity to our websites as well as positioning more of our websites internationally. More generally, we also intend to use our strong competitive position and highly differentiated sports category destinations on the basis of — among others — first-class front end usability, high quality product and brand offerings, demand-driven dynamic pricing models and superior expert service offerings to further grow our customer base and achieve above-market revenue growth across our key product categories while at the same time maintaining profitability. We are continually testing new marketing channels, expanding existing marketing channels, and piloting new omni-channel propositions to attract new customers and enhance customer loyalty. We will also use our commerce & technology platform to further integrate and optimize our overall business operations in support of our ambitious growth trajectory. Finally, we also intend to further benefit from our excellent product assortment by offering all or nearly all leading third-party brands in a specific category to our customers, complemented by a strong, price-attractive and profitable offering of own brands.
Overall, we will further sharpen the positioning of our web shop brands to address mutually exclusive but comprehensively exhaustive sports consumer segments with the most efficient web shop brand architecture. We are continuously monitoring and improving our global web shop brand architecture to ensure we have as much web shop brands as necessary, but as little as possible, to efficiently address distinguished customer segments.
Continuous improvement of commerce & technology platform to drive further scale benefits and operating leverage across verticals
We intend to further advance our synergetic and scalable commerce & technology platform to achieve cost synergies, operational efficiencies and benefit from economies of scope and scale as a result of additional integration and streamlining. For example, with our modular, harmonized IT blueprint, we intend to achieve scalability and fast
time-to-market
implementation. The rollout of our harmonized IT blueprint across our platform only occurs once a pilot project is implemented, tested and operating in one of our dedicated sports categories and once the respective IT module has reached its
end-of-life
cycle, thereby avoiding unnecessary IT slowdowns, excess costs or other complications. We are also in the course of establishing additional technology competence centers in order to enable cost-efficient and risk-optimized scaling. In respect of logistics, we believe there is further optimization potential through additional automation and consolidation of our logistical footprint and warehousing systems across our sports online offerings. For example, we have recently implemented additional automation technology in our warehouse in Großostheim serving our outdoor and teamsport categories and might increase the degree of automation in our other warehouses in the future as well, where appropriate. We believe that such platform related integration and streamlining measures will not only result in cost synergies but also generally support our future growth by unlocking additional capacity and generating additional economies of scale and scope.
 
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Continuously and actively monitor consolidation opportunities in our existing and adjacent markets and consider
bolt-on
or transformative acquisitions
Regarding inorganic growth, we continuously and actively monitor consolidation opportunities in our existing and adjacent markets and consider
bolt-on
or transformative acquisitions of complementary target companies, technologies or other assets. In addition to enhancing and expanding our already existing sports category expertise, we also continuously consider entering new (attractive) sports categories, new geographical markets as well as investing in access to new business models or technologies. Our M&A strategy will be closely aligned with our overall focus on profitable growth as well as building and executing an integrated and synergistic sports online platform. As an example, we have recently executed the geographical expansion of our largest product category bike by signing definitive agreements for the acquisition of the Wiggle Group, adding the UK and US as geographical markets to our group, and a focused strategic initiative for our Tennis category in France and the US by acquiring the French TennisPro Group in August 2019, Midwest Tennis Sports and signing definitive agreements for the acquisition of Tennis Express in April 2021.
We also intend to invest in the complementary expansion of our existing categories such as padel, running or others. For example, we have recently launched Padel-Point branded web shops specifically targeting Padel racket sports customers in different European jurisdictions. At a more general level, we find that those categories that we consider more attractive than others, can be characterized by all or at least some of the following seven criteria: (1) large global markets with above-average growth rates driven by fundamental megatrends; (2) attractive unit economics driven by high average order values, high price integrity, low return-rates, and a fair mix of fast-moving and more seasonal products; (3) high degree of supplier and retailer fragmentation; (4) equipment-heavy product range with high share of specialized fulfillment (e.g., bike assembly, racquet stringing, jersey printing) and relatively low fashion risk; (5) B2C and B2B distribution channels including teams, clubs, coaches, and associations; (6) professional leagues and global tournaments and events schedule with global media coverage; (7) high share of expert customers with higher
willingness-to-pay
for specialist products and higher overall engagement and dedication.
Become a strategically important partner for suppliers, offline specialist stores and enthusiast communities
We intend to become a strategically important partner for suppliers, offline specialist stores and enthusiast communities beyond our core B2C
e-commerce
business in the coming years. This will include implementing upstream retail media sales for suppliers and other third parties (e.g. branded newsletters, branded shops, social media campaigns or the sale of data packages etc.), for which we are currently in the course of building a dedicated team and server architecture. We also plan to expand our
e-commerce
as-a-service
solutions for third parties, spanning from strategic partnerships to optimize and manage brands’ D2C business relationships to
one-stop
shop
Software-as-a-service
solutions where we provide comprehensive
end-to-end
e-commerce
services to third parties. We have already partnered with a number of brands and business partners in this area (e.g. with the International Tennis Federation (ITF) or the Association of Tennis Professionals (ATP) in our tennis category). The downstream connected retail platform solutions for offline partners will include the expansion of our network of offline stores providing fulfillment services through which customers can
pick-up
their orders in local stores either
pre-assembled
or
ready-to
use (currently including around 500 independent partner retail stores in our bike category and 38 franchise stores in France and Italy in our tennis category), endless-aisle offerings through which connected retail stores can access our inventory and place purchase price orders as well as marketplace solutions through which connected retail stores can list their products on our online shops. Our engagement with enthusiast communities will encompass further self-built offerings (like our myTennis App and HelloSports App) cooperations with partners where the technical integration requires little effort (e.g. exclusive marketing partnerships where we grant shopping benefits to community partners, and minority investments in
start-ups
or other technology partners. We can also offer fulfilment as a service to Bike OEMs that want to sell bikes direct to consumer, or we can utilize our warehouse infrastructure to act as the exclusive distributor for a tennis brand in a region; fulfilling both their wholesale and direct to consumer orders. Our platform businesses are a selection of services geared towards our ecosystem partners designed to enable them to better reach and serve their end consumer and subsequently become a more efficient enterprise.
 
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Accelerate technology and data advantage to introduce new business models and technologies tailored to meet the specific needs of our B2C and B2B clients
We intend to develop new business models and technologies for additional transactions and internet-based applications (including IoT) for new online sports service models. We believe that new transactions and service models will need to take into account and reflect — among others — new mobility concepts, remote services, voice-based ordering technologies, theft protection and networked
e-bikes
as well as additional IoT product applications based on tracker and sensor technologies in combination with increasing data driven customer interaction. We believe that based on our leading market positions and longstanding online technology expertise we are well positioned to benefit from this development and to be a leading player also in the next generation sports
e-commerce
ecosystem. In the medium- to long-term, we intend to enhance our transaction-based model towards a data driven relationship-based model driven by engagement, personalization and innovative services.
We believe that by investing in new technologies and innovation we will be able to further strengthen our competitive position as a technology leader in the online sports retail industry and generate additional business volume. Through innovations in areas such as smart data analytics we seek to manage and analyze data received from external sources. We intend to use our insights to tailor our product offerings and recommendations more specifically to fit individual customer’s needs. For example, we are applying artificial intelligence powered algorithms to estimate customers’ price sensitivities which, in turn, are fed into our dynamic pricing models to increase revenues and profitability, for example. We also intend to develop a more harmonized digital marketing platform across our entire online sports product offerings to support future growth with top level marketing efficiencies. We believe that a more targeted new customer identification and activation process in combination with an optimization of utilized media resources (personalized marketing) will lead to higher marketing efficiencies and thereby further improve conversion rates and support profitable revenue growth.
Our Key Product Categories and Brands
Our operations are focused around four key product categories: Bike, Tennis, Outdoor and Teamsports and Athleisure. Bike is our largest product category with approximately 55.6% of SSU’s net revenues, followed by Tennis, Outdoor, and Teamsports and Athleisure with approximately 18.9%, 14.1%, 11.4% of SSU’s net revenues, respectively, in the fiscal year ending September 30, 2021. Our businesses operate primarily through various online websites as well as selected physical locations.
Bike
Our main bike shop brands include fahrrad.de, Bikester, Brügelmann, and Probikeshop.
Mainstream customer focus: fahrrad.de and Bikester
— Through the online and mobile channels of fahrrad.de and Bikester, we offer a broad selection of full bikes, parts, accessories and clothing to our mainstream customer segment, including family and recreational bikes,
e-bikes,
mountain bikes and road bikes. The product portfolio includes bikes and other products produced under own brands — VOTEC, Fixie Inc., Ortler, Serious, Vermont and Red Cycling Products — as well as products from most of the major third party brands. In addition to being able to address almost any customer need relating to bikes and biking related products, the fahrrad.de and Bikester bike shops also provide for dedicated specialist offerings, such as delivery of already substantially assembled bikes to the customer.
Enthusiast customer focus: Probikeshop and Brügelmann
— Brügelmann and Probikeshop offer a selection of full bikes (ranging from racing and cyclocross bikes to mountain bikes, BMX bikes, urban bikes, and
e-bike
offerings for most categories), parts, accessories and clothing catered to our bike enthusiast customer segment. Probikeshop has become a leading retailer of bikes and bike spare parts and is well renowned within France and Southern Europe addressing mainly the enthusiast biking community. Probikeshop stocks bike spare parts and accessories from all major manufacturers and maintains a significant inventory, enabling Probikeshop to deliver
 
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a large range of bike spare parts within a very short time. The size of Probikeshop’s inventory also allows Probikeshop to offer its customers tailor-made solutions that fit their specific requirements from a comprehensive portfolio of spare parts across many different specialist brands, providing Probikeshop with a competitive advantage over single manufacturers.
Strategic initiatives
— We intend to further expand our successful online full bike business and to roll out our proven business model across and beyond Europe, growing into North America and Asia. We will continue to exploit synergies across the different shops and drive key growth initiatives across markets. All bike shops are powered by our commerce & tech platform and share resources for key functions such as purchasing, pricing, marketing, and fulfillment, e.g.: certain bike inventory is held centrally and made available to all shops which is driving conversion and sell-through rates. At the same time, we are currently realizing logistics synergies across the five different bike distribution centers in Chaponnay (France), Esslingen (Germany), Holdorf (Germany), Helsingborg (Sweden) and Untertürkheim (Germany), providing for economies of scale and storage cost reduction. In addition, in March 2021, SSU has concluded a seven year-term logistics service agreement with a third-party logistics service provider who will give us even more flexibility in realizing logistics synergies in our bike business starting from 2022.
Growth initiatives are threefold: (1) Urban and Smart Mobility (incl.
E-
and
IOT-Bikes),
(2) private label brands, (3) and geographic expansion. SSU’s
e-Bike
business has been growing with a CAGR of more than 88% since the fiscal year ended September 30, 2017, with significant room to grow as many large markets like France, Italy, Spain, the UK, and the US show still a relatively low
e-Bike
sales penetration compared to more mature
e-Bike
markets like the Netherlands and Germany. Our own bike brands are especially well positioned in the
e-Bike
category accounting for approximately 29% of SSU’s total own brand bike net revenues. We also intend to further promote our other private label brands with a focus on full bikes and intend to further strengthen Probikeshop’s leading market position in France, Spain, Italy and Portugal as well as to expand Probikeshop’s expert offerings geographically to central and northern Europe.
Tennis
Our main tennis brands include Tennis-Point, TennisPro, CenterCourt, Tennis Peters and Midwest Sports (the latter since April 30, 2021).
Tennis-Point
— We operate 16 web shops in local languages under the brand Tennis-Point and offer a full range of brand name and private label tennis equipment as set forth above. Tennis-Point also offers a number of value-adding services, which helps drive customer growth and loyalty. For instance, Tennis-Point offers racket guidance through its websites and stringing services, allowing customers to purchase a complete racket adjusted to their needs online.
In addition, customers can test rackets (up to three at a time for a
ten-day
period), which has been demonstrated to lead to racket sales of approximately 57% of those customers who test rackets. Tennis-Point also operates more than 20 physical stores in Germany, Austria, Switzerland, Spain, Italy, Croatia and Turkey, with most of the shops located in Germany and Austria. Through its successful community platform myTennis app, Tennis-Point maintains a close relationship and communication with existing customers and uses the app to attract new customers.
Tennis-Point maintains longstanding relationships with key manufacturers and suppliers. It has established a number of partnerships with leading manufacturers, and we believe that given its purchasing power, Tennis-Point is able to drive demand in a number of product categories. Tennis-Point has also established strong relationships within the tennis community across Europe, including with tennis enthusiasts (professionals and amateurs) and clubs, and has maintained strong relationships with a number of European tennis associations like German tennis associations, the Austrian Tennis Association (Österreichischer Tennisverband), the International Tennis Federation and Tennis Europe. In April 2021, Tennis-Point has entered into a cooperation with the Association of
 
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Tennis Professionals (ATP), the worldwide association for the ATP’s men professional tennis circuit, pursuant to which Tennis-Point will become the official racket sports retail partner of the ATP and will launch a new ATP Tour online shop. Due to Tennis-Point’s longstanding strong relationship with the tennis community, we believe Tennis-Point is able to adopt trends quickly and to offer its customers the full range of high end, popular and fashionable tennis related equipment and products, including private label brands,
Tennis-Point has also started to operate web shops under the brand “Padel-Point” to enter the upcoming racket sports segment.
CenterCourt and Tennis Peters
— CenterCourt and Tennis Peters offer similar products as Tennis-Point but are positioned more as a discount option for price sensitive customers. Offers on these sites include
end-of-season
and second season lines.
TennisPro
— TennisPro is a leading online specialist for tennis, badminton and padel-related products and services in France and Southern Europe, which offers similar products as Tennis-Point to its customers. TennisPro also operates a network of 38 franchise stores in France, Belgium. Italy and Greece as well as 4 integrated stores. Besides the main brand TennisPro, TennisPro also operates webshops under the brands Tennis.fr, Tennis Achat, Larde Sports and Badminton Point.
Midwest Sports
— Midwest Sports, which was acquired by SSU as of April 30, 2021, is based in Cincinnati, Ohio and offers similar products as Tennis-Point mainly to customers in the US. Midwest Sports is one of the leading U.S. online tennis retailers and employs approximately 100 people. In 2020, Midwest Sports had almost six million website visitors and served more than 220,000 customers. Midwest Sports is the official retail sponsor of the Western & Southern Open, also known as the Cincinnati Masters.
Strategic initiatives
— We aim for further geographic expansion of Tennis-Point and to increase Tennis-Point’s visibility across and beyond Europe by selectively entering new European markets and expanding into the overseas markets North America and Asia. Additionally, we intend to further expand Tennis-Point’s product range to other racket sports, such as badminton, pickleball and padel. Tennis-Point also seeks to expand its proprietary mobile app platform (myTennis) where users can interact in and with their community, consume unique and quality content and follow tennis news, scores and rankings in addition to making purchases. By utilizing smart data obtained from the app, such as previous orders, favorite brands, motion profiles and time spent on the tennis court, we believe that Tennis-Point will be able to further enhance its tailor-made offers for tennis equipment to customers, addressing their specific and customized needs almost in real time. In addition, Tennis-Point is joining forces with tennis clubs, associations, and media partners to promote the sports of tennis overall with the clear goal to drive the number of people playing and following tennis in total.
Outdoor
Our outdoor brands include Addnature and Campz.
Addnature and Campz
— Addnature is one of the largest outdoor retailers in the Nordic countries, with additional operations in Italy, Poland and the UK, providing a wide range of private label and third party outdoor wear and equipment, including clothing and footwear, hiking, camping and climbing equipment and selected sportswear. Campz is an outdoor
e-commerce
retailer with similar product offering to Addnature and targets markets in southern and western Europe. In addition to third party products, Campz and Addnature also offer dedicated products under the Campz brand name.
Strategic initiatives
— We intend to further develop and expand our product offering in the outdoor category, to strengthen our core customer proposition and to further broaden our geographic reach, in particular in the UK, Nordics, and Southern-Europe. We are partnering with leading third-party outdoor tracking apps like e.g. Komoot (https://www.komoot.com/ ) so that outdoor users can connect their accounts with our shops to get
 
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access to exclusive shopping benefits. We intend to grow these partnerships on the one hand and deepen strategic supplier relations on the other hand to seamlessly connect the shopping experience with sports activities across different apps, devices, and wearables. At the same time, we intend to accelerate successful content marketing initiatives to drive outdoor customer engagement. E.g., our Addnature “hooked” magazine (e.g., https://www.addnature.com/magazine.html), and exclusive guides, tips, and inspirational content shared online and across social communities (e.g., https://www.addnature.com/info/). We are also in the process to reposition our outdoor brands, with Campz mainly targeting the recreational customer segments and Addnature mainly targeting the adventure-oriented customers.
Teamsports and Athleisure
Our Teamsports and Athleisure brands include Outfitter and Stylefile.
Outfitter
— Outfitter is an
e-commerce
retailer with a strong focus on soccer gear and soccer lifestyle products. Through its own online and mobile channels as well as through partner sites, such as Amazon, Outfitter provides soccer enthusiasts with a broad product portfolio ranging from sports products for soccer, training and fitness as well as sport-lifestyle products including footwear, clothing and accessories. The business distributes products from all major suppliers including Adidas, Nike, Puma and New Balance, among others, as well as its private label brand “Outfitter”. Outfitter has a particular focus on soccer products, offering soccer accessories, such as shoes, jerseys and fan merchandise. Outfitter also commands a strong competitive position supplying B2B customers like soccer clubs and companies with individualized team wear products – in particular soccer clothing, footwear, and balls. Outfitter supplies soccer jerseys to a number of German professional soccer clubs using its proprietary jersey printing and refinement technology providing for more endurable best in class items. Jerseys refined this way are also available to B2C customers and can be easily designed using Outfitter’s proprietary jersey configurator offering a broad variety of options for customization. Outfitter is an accredited soccer expert with major suppliers such as Adidas and Nike, enabling SSU to procure limited edition products from both manufacturers which are only available to a distinct number of such suppliers’ business partners.
Stylefile
— Stylefile is an online retailer focusing on sports-inspired footwear, streetwear and lifestyle products as part of our teamsports category. Stylefile offers a range of over 8,500 products, which are sold through its own websites and through large online marketplaces. We believe that a key strength of Stylefile is its ability to capture customer trends early across its distribution channels and to leverage these insights by a sophisticated
re-ordering
system that automatically focuses reorders on the bestselling and most trendy products in order to mitigate fashion risk (i.e., the risk that changes in fashion make existing inventory obsolete). Such strength is complemented by the young age of Stylefile’s workforce and their like-mindedness to Stylefile’s customers. Stylefile offers products from many different brands including major brands and suppliers such as Adidas, Nike, Levi’s and New Balance.
Strategic initiatives
— We intend to grow Outfitter’s B2B teamsports business by expanding the client base to additional soccer clubs and teams and to related and synergetic teamsports categories such as basketball. In addition, Outfitter intends to expand its B2B customer base to
mid-
and large-scale businesses and professional service firms. To this end, Outfitter has made its proprietary jersey printing and refinement technology, including Outfitter’s proprietary jersey configurator, available to companies for corporate activities and events. In addition, Outfitter is leveraging its corporate customer base to
co-sponsor
jersey orders from soccer teams and clubs who receive exclusive discounts on their jersey orders from such sponsor partnerships. Outfitter’s strategic focus on its core soccer business involves a further deepening of its relationship with regional and local amateur soccer clubs. Stylefile plans to continue to grow its limited capsule collections in partnership with brands like Puma, Calvin Klein Jeans and artists that create exclusive styles to upgrade products for sports-inspired product ranges.
 
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Customer Categories and Sales Channels
Customer Categories
With 5.1 million active customers (meaning customers that have made one or more purchases within the last twelve months irrespective of returns or cancellations) as of September 30, 2021 (including Midwest Sports, but not taking into account customers of CRC and Tennis Express), highly recognized consumer brands and a large selection of products across a number of sports verticals, SSU’s websites and stores attract a highly diversified customer base as measured across multiple attributes, including demographics (gender, age and income), psychographics (brand preference, sports activities and interests) and behavior (purchasing behavior and level of sports engagement). We target a well-defined set of customers within each of our customer categories.
Bike
Within the bike category, we generally focus on two customer groups, mainstream and enthusiast. Mainstream customers in bike include young people and students, health-conscious and traditional use, while the enthusiast category focuses on demanding enthusiasts, competition-oriented riders and convinced fans. Generally, fahrrad.de and Bikester focus more on mainstream customers and Brügelmann and Probikeshop focus more on enthusiast.
Tennis
Within the tennis category, we generally focus on two customer segments, core and discount. Core customers in tennis include products for the full range of tennis players from novices to professionals, while the discount segment has products for price sensitive customers. Generally, Tennis-Point, TennisPro and Midwest Sport focus on the core customer segment and CenterCourt and Tennis Peters focus on the discount customer segment.
Outdoor
Within the outdoor category, we generally focus on two customer segments, recreational and adventure. Recreational customers in outdoor include nature loving explorers,
 
fun-loving
 
fitness-oriented consumers and demanding senor nature friends, while the adventure-oriented customer segment focuses on urban runners, travel and mountain fans and passionate outdoor athletes. Generally, Campz focuses on the recreational customer segment and Addnature focuses on the adventure-oriented customer segment.
Teamsports and Athleisure
Within the Teamsports and Athleisure category, we generally focus on two customer segments, players and teams. Teamsports customers include professional and amateur soccer teams and other teams (e.g. esoports), while the players segment focuses on football enthusiastic children/teens and ambitious amateur players. Our athleisure customer segment focuses on fashion conscious sportswear with our brand Stylefile.
Sales Channels
Online and Mobile
With our comprehensive Bike, Tennis, Outdoor and Teamsports and Athleisure product offering we target the above-mentioned customer segments. Our sales occur predominantly through our own online and mobile channels as well as in certain categories (primarily team sports and athleisure) through marketplaces such as Amazon. In the twelve months ended September 30, 2021, there were approximately 274.4 million visits to SSU’s websites and over 7 million net orders (after cancellations and returns). Sales through online and mobile channels account for almost the entirety of our sales.
 
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Physical Stores
We also operate a limited number of physical stores in certain of our customer categories to further drive brand awareness and serve and engage our customers and related sports communities
 
  
Tennis-Point has 28 shops in Europe and Asia (14 in Germany, five in Austria, two in Switzerland, three in Spain, one in Italy, one in Croatia and two in Turkey). Its store located in Essen (Germany) is one of the world’s largest tennis stores with an area of approximately 1,500 square meters. We believe that the Tennis-Point stores constitute an important meeting and servicing place, allowing Tennis-Point to directly interact with customers. Tennis-Point stores are fully integrated into the online/offline customer experience, including
click-and-collect
and store inventory being displayed on websites. TennisPro operates a network of 38 franchise stores in France, Belgium, Italy and Greece.
 
  
Outfitter operates a flagship store in Frankfurt (Germany), which serves as an anchor point for the local soccer community and as a
point-of-contact
for Outfitter’s customers and a retail outlet store in Mainz-Kastel (Germany).
 
  
Our bike business currently operates five physical bike stores in Germany, one physical bike store in Lyon and one physical bike store in Stockholm. We believe that physical bike stores are an important
add-on
to our online bike offering by creating an additional touch point to interact and learn from customers while enhancing offered services. These stores are complementary to the online product offering with respect to service, maintenance, and bike testing capabilities. We believe that physical stores will also be an important
point-of
sale for
e-bikes.
In addition, our online shops are connected with more than 250 local bike stores who offer
click-and-collect,
repair and order services.
 
  
Addnature operates a store in the city center of Stockholm (Sweden), thereby physically reaching a large number of its Swedish customers for special services, such as expert advice and
click-and-collect.
 
  
Furthermore, we are piloting and testing physical
shop-in-shops
in the tennis and bike categories in larger general sports stores (such as Sport Scheck). In addition to physical locations, all of our businesses maintain customer service centers for
pre-sales
and after-sale services, including technical consumer advice.
Business-to-business
(B2B)
We currently maintain
business-to-business
(“B2B”) customers primarily through the Outfitter business. Outfitter’s sponsoring partners for the jersey configurator currently include more than 500 sports clubs / associations providing individualized teamsports products alone or in cooperation with business partners.
In addition, we maintain B2B customer sales in our Tennis business directly and exclusively supplying associations, clubs, pro shops, and tennis coaches. As of September 30, 2021, Tennis-Point was a partner to several hundred sports clubs providing tennis equipment and sportswear to teams and coaches. E.g., the Tennis-Point Advanced Coach Program (“ACP”) has signed up more than thousand licensed tennis coaches who get exclusive shopping benefits and benefit from a more convenient business customer experience and additional services. Tennis-Point also operates the global shop for the International Tennis Federation (“ITF”) where registered members and licensed players get exclusive product access and dedicated shopping benefits and promotions (e.g.,
https://itf-tennis-point.com/)
and will operate the ATP branded online shop based on a cooperation agreement signed with the ATP Tour in April 2021.
We further maintain B2B customer relations in our Bike business by providing omni-channel retail services to more than 500 independent retail store partners as well as by providing bike leasing services to corporate customers. Furthermore, we operate
e-commerce
shops-in-shop
of major bike brands (e.g. Cube, Orbea and Haibike) as part of our Retail Media Sales offerings and other global partners such as AEON on our commerce and tech platform.
 
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Assortment and Suppliers
We offer over 1,500 different brands on our websites.
We are a trusted partner for important brands in the sports retail industry in continental Europe, including Wilson (Tennis), Adidas (Teamsports and Athleisure, Tennis and Outdoor) and Cube (Bike).
With our diverse base of leading suppliers with reputable brands across our product categories, we are not dependent on any one supplier in any of our businesses, except for Teamsports and Athleisure. A number of our businesses have significant purchasing power due to their position in their respective markets, and as a result are able to obtain considerable wholesale price discounts.
With respect to our private label products, we do not manufacture such products ourselves, but instead purchase them from various third-party agents and manufacturer across multiple continents (including Asia) and currency areas, who source or produce the merchandise according to our specifications. Generally, private label brands will have a lower sale price but a better gross margin, than third party brands.
Pricing
Pricing is in general driven by market retail pricing, product cost, shipping and payment cost, marketing expenses including seasonal product promotions, margin objectives, and the overall demand, supply and competitive situation. Our pricing function is highly automated and controlled and executed through a group-wide dynamic pricing engine. Our pricing engine runs on tech stack combining proven standard software and proprietary software and machine-learning algorithms continuously optimized by our data science teams. All our businesses, i.e., Bike, Outdoor, Tennis, and Teamsports and Athleisure, determine their online shop consumer prices from the central pricing engine. The central pricing engine calculates optimal consumer prices every day based on a number of input variables such as competitor price information, product availability, historic sales, and seasonal information such as consumer demand and estimated price elasticity, and many more, given strategic pricing rules and financial targets individually set by pricing managers at business unit level. E.g., price crawlers and scrapers collect more than 10 million competitor price points per day to inform more up to 30,000 price changes per day on average. Our dynamic pricing engine is leveraging large scale data inputs combined with sophisticated machine-learning algorithms and technologies (e.g.,
 
double-ML
 
dynamic panel estimation to calculate price elasticities at single category level) to grow organically above market while realizing a consumer price premium at the same time driving long-term margins and brand perception. We are continuously optimizing data inputs and mappings, dynamic pricing algorithms and methods, pricing rules, and processes to cement long-term competitive advantage.
Marketing
We focus our efforts on reaching the world’s most affluent sports consumers. We believe there are 2,700 million people globally who do sports at least once per month and we have a significant opportunity to expand our customer base in both our existing and new markets. We expect to attract new customers in all geographies including Europe, as well as the United States and Asia. Our demonstrated playbook for attracting and retaining customers is efficient, effective and repeatable. We target, acquire and retain the most valuable sports customers by combining a uniquely differentiated shopping experience and services with advanced technology and data and decades of thought-leadership in sports.
SSU has grown its active customer base from 2.7 million in the fiscal year ended September 30, 2018 to 5.1 million in the fiscal year ended September 30, 2021 (including Midwest Sports, but not taking into account customers of CRC and Tennis Express), with higher CLV/CAC ratios for more recent cohorts compared to prior cohorts. Despite the steadily growing number of first-time customers over the last three years, our average CAC was decreasing while the gross margin was increasing over the same time period, a trend we
 
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believe is rare in our industry. Our customer acquisition has been first-order profitable over the last three years, meaning that the CLV of a newly acquired customers exceeds CAC already with the first transaction done after the acquisition.
A substantial part of our marketing is done
in-house.
Marketing is data-driven and
return-on-investment
focused, geared towards overall CLV/CAC optimization. We are relying on proprietary and highly sophisticated marketing attribution models to determine the effective CLV contribution from individual marketing channels along the user journey. Budgets for specific marketing channels and campaigns are allocated based on the channel’s expected contribution.
We are running and optimizing all text search campaigns on a central marketing engine across the group. This is driving significant synergies in terms of improved marketing
return-on-advertising-spend
as seen, for example, when the Probikeshop search advertising was migrated from a legacy system onto the group-wide central marketing engine. In addition, we are constantly fostering best-practice exchange amongst the different marketing teams to drive knowledge exchange.
The three main marketing methods that we employ are reach marketing, performance marketing and data driven promotions.
 
  
Reach marketing
— Reach marketing generally includes traditional TV advertising in order to drive traffic and new customers. TV advertising often occurs around high-profile sporting events to expand the viewing base. Using our marketing attribution model, it assesses the success of the TV campaign in order to optimize TV advertising spend almost in real-time. Physical stores also help drive sales in surrounding locations, serving a key marketing channel in those respective regions. In addition, we are running content marketing campaigns across a broad mix of channels including social communities like Facebook, Instagram, and YouTube.
 
  
Performance marketing
— Performance marketing generally includes search engine advertising (promotion of website through visible ads on a search engine screen), search engine optimization (promotion of website within a search engine’s results), and display marketing (promotion of website through visible ads on third-party websites and blogs). We rely on our proprietary attribution model in order to enhance return on investment.
 
  
Data driven promotions
— Marketing promotions are optimized to efficiently maximize sales and to acquire and retain customers, factoring in customer information, timing, and partnering strategies. We make use of our existing customer database, which includes information on customer activity, behavior, demographics and purchasing history, for promotions. In addition, promotions may be timed for specific sport events, seasons or other opportunities (such as
end-of-line
sales) and will occur across a number of marketing channels. Finally, we will work with suppliers and partners to help manage the discounting risk/reward
trade-off.
Most advertising that we engage in is performance advertising rather than brand advertising to drive measurable customer acquisition for our sites. We aim to maintain the right balance between marketing across brand-building channels and performance-based customer acquisition strategies.
We also employ customer relationship management activities that seek to maintain customer loyalty and drive repeat orders. We actively follow our customer orders and send targeted advertising, typically through an email or newsletter, to the customer to create cross selling opportunities.
In addition, we own a number of exclusive customer acquisition channels through sports events in cooperation with associations and brands or through sports clubs and community apps like the myTennis app. For instance, Tennis-Point maintains close cooperation with German tennis clubs and tennis associations, the International Tennis Federation (ITF) and the Association of Tennis Professionals (ATP). Tennis-Point maintains
 
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direct relationships with more than 1,000 tennis clubs and has more than 700 licensed tennis coaches
signed-up
in its proprietary Advanced Coach Program (ACP). Outfitter has a number of relationships with soccer clubs and associations across Germany and a number of regional and local amateur clubs. Probikeshop, Fahrrad.de, Bikester, Campz, and Addnature also participate in a number of bike and outdoor events, such as ÖTILLÖ Swimrun (a new endurance sport comprising swimming and running which is driven by respect and dedication for participants, competitors and the environment), Votec Gravel Fondo, races and performance shows. We also maintain an active social media presence on a number of platforms, including Facebook, Instagram and YouTube.
Order Fulfillment and Delivery
Handling and shipping sports goods can be complex as the products include items with differing characteristics and sizes. While a substantial share of the products is easy to transport (e.g. apparel, accessories, balls), tennis rackets are fragile items that require a fair amount of customization (e.g. stringing, grip adjustment) before being shipped. Full bikes are large and complex items of high value that often require customized and complex assembly (e.g.
e-bikes)
and sometimes two man handling delivery. Being category champions, each of our businesses has mastered the handling of these complexities over the past years. All businesses have implemented a
pro-active
approach towards customer returns prevention thanks to their guided shopping experience (e.g. correct sizes). As a result, we enjoy declining average return rates from 18.7% in the fiscal year ended September 30, 2018 down to 16.7% for the fiscal year ended September 30, 2021.
While we strive for integration amongst our businesses, we retain a product-specific approach when and where required. Therefore, each of our businesses maintains logistic centers for processing orders. In general, each of our businesses separately manages and operates their respective centers.
We use three different
set-ups
for our logistics centers. The logistics centers can be internal, i.e., own logistics hub operated at business units levels, external, i.e., logistics fully outsourced to external parties, or hybrid, i.e., based on the
in-built
model, where the assembly line is owned by us but located at an outsourced warehouse operated by an integrated partner under our supervision. This approach ensures flexibility with respect to handling specific customer needs and seasonality of certain product groups.
Our bike businesses have a
state-of-the-art
logistics infrastructure with logistic hubs in Esslingen (Germany), Untertürkheim (Germany), Holdorf and Gehrde (Germany), which serves as central full bike and bulky items hub, Chaponnay (France) and Helsingborg (Sweden). In certain jurisdictions, such as the Nordics, logistics are sourced out to reliable third-party logistics operators. The average delivery time for our bike products is between one day, in core countries, such as Germany and Sweden, and up to five days in more remote areas of
non-core
countries. With both our internal distribution centers and cooperation with external service providers, we retain high flexibility in coping with additional growth and in further scaling its activities.
While Probikeshop’s main logistics center is currently located in Chaponnay (France). Probikeshop also uses the stock of our German bike business, in particular the logistics hub in Holdorf (Germany).
Tennis-Point maintains a logistics center in Herzebrock-Clarholz (Germany). The center uses a fully automatized storage management system (AutoStore), with limited manual involvement, resulting in a lower error-rate, less personnel expenses and faster delivery times. The Tennis Pro group maintains a logistics center in Entzheim (France).
Our teamsports business uses a logistics center located in Großostheim (Germany). The facility provides a
state-of-the-art
logistics infrastructure which is well positioned to accommodate future growth. We have also established a new warehouse management system offering flexibly defined delivery times. Usual delivery times are between one to two days and up to five days in more remote areas outside core countries. The logistics center in Großostheim is also used to ship products sold by our German outdoor business Campz to customers.
 
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As a part of our efforts to harmonize our
e-commerce
and technology platform in line with our
‘buy-and-build’
strategy, we are in the process of further consolidating our businesses warehousing and logistics functions in order to realize cost synergies and improve
back-end
fulfillment capabilities. As an example, in March 2021, we have entered into a multi-year contract with a third-party logistics provider regarding the construction and use of a logistics center in Southern Germany that will serve as logistics hub for our Southern European bike and tennis business, but may also be used by our other businesses.
We believe that we have sufficient capacity to operate our current fulfilment and logistics
set-up
and will not be required to make material expansion investments in the next two years (with the exception of our Tennis business in the US, depending on the concrete expansion plans). Our existing footprint provides us with sufficient free space to be utilized with further capacity by adding additional layers of standard shelves, positioning us with sparse capacity without needing additional warehouse space. In addition, we have options to extend existing own warehouses and outsourced warehouses. Finally, we could use expansion in
2-
and
3-shift-operation,
special labor contracts and flextime accounts to accommodate potential growth.
We have implemented smart automation at selected warehouses (e.g. AutoStore at Herzebrock-Clarholz), which has optimized our logistics capacity utilization. We are committed to further concentrate our order fulfilment and delivery
set-up
around automation.
IT Infrastructure
We have adopted a technology-forward and data-driven approach to all aspects of our operations. At the heart of this approach, is a
state-of-the-art
IT infrastructure
set-up
that puts highest emphasis on security and reliability. Recruiting and retaining technology talent is thereof of high importance. We also strive to achieve cross-fertilization of best practices across segments with the aim of allowing scalability of our IT infrastructure while preserving agility.
We are currently in the process of further harmonizing our IT platform on the basis of a group wide IT blueprint allowing us to quickly develop new features and implement them across the group. Legacy tools are replaced by group-wide uniform IT solutions. This will allow for an overall more efficient IT architecture, with the ability to exploit potential synergies across all websites whenever possible. The IT architecture will be comprised of different modules and services that only need to be developed once but can be utilized across all online shops, ensuring full scalability of the business. This has been implemented already with customer facing applications like Salesforce Commerce Cloud nearly throughout all web shops in our group.
Our platform is engineered to build and leverage a compounding data advantage and to provide a personalized experience to our customers. We collect insights from our customers’ interactions through algorithms and through traditional information retrieval techniques, such as cookies. These insights include information on customer activity, behavior, demographics and purchasing history, which we use to improve the shopping experience of our customers, customize our offerings, increase the conversion rate, purchase frequency and average order value, continuously optimize the efficiency of our business operations and to initiate targeted marketing activities across various channels. We have also implemented a broad array of services and systems for pricing, site management, product searching, customer interaction, transaction processing, and order fulfillment functions, notably through the use of smart data. These services and systems use a combination of our own technologies and commercially available, licensed technologies. Many of the technologies our businesses use are compatible with partner sites, such as Amazon. We are also in the process of updating ERP programs across our group with the majority of our subsidiaries running on an SAP blueprint expectedly in the second half of 2022. We are expanding our IT infrastructure to deliver fast new features based on a minimum viable product (MVP) approach (introducing new features to satisfy the initial customers and provide feedback for future development), reduce website load times (in particular on mobile devices and applications) and to take into account future growth.
 
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We are committed to further invest into tech and data innovation to drive our profitable growth. As an example, we are currently expanding our data lake infrastructure and analytics platform that is, amongst others, aiming for increased personalization (e.g. product recommendation), elasticity-based dynamic pricing and advanced marketing attribution.
Seasonality
Our businesses are seasonal in nature, and we generate the majority of our sales and operating income during the third and fourth fiscal quarter that includes the summer holiday season. As a result, our overall profitability is heavily impacted by our third and fourth quarter operating results. Our sales and marketing expenses as a percentage of sales are lowest in the third and fourth quarter due to higher existing customer purchases during the summer holiday season which have lower marketing costs as a percent of total sales. Additionally, in preparation for the summer holiday sales season, our businesses significantly increase inventory levels.
Weather conditions during this time of the year may also have an impact on our business. Due to our geographic footprint, the impact of weather conditions is partially mitigated by the fact that we reach customers throughout the entire European continent which is rarely affected by low-pressure weather conditions as a whole. In addition, sports events can have a particular effect on sales. For instance, the success of major tennis stars can significantly boost sales in our tennis businesses.
Material Contracts
Wiggle SPA and SPA Variation Agreements
Acquisition of the entire issued share capital of Wiggle
On June 11, 2021, SSU entered into the Wiggle SPA to acquire the entire issued share capital of Mapil Topco Limited from, among others, the Wiggle Sellers. Mapil Topco Limited owns Wiggle Limited and CRC. The Wiggle Group is a leading online sports retailer of specialist cycling, running and swimming equipment, apparel and accessories headquartered in the UK.
Completion of the Wiggle SPA (and the Wiggle Acquisition) (“Completion”), which was a condition to the Closing of the Business Combination, occurred on December 14, 2021 and was conditional upon satisfaction of each of the following conditions:
 
  
Each of the (i) German Federal Cartel Office and (ii) Austrian Competition Authorities (Austrian Federal Competition Authority and Austrian Federal Cartel Prosecutor) having approved the Wiggle Acquisition or the Wiggle Acquisition being deemed to be approved.
 
  
The United Kingdom Competition and Markets Authority having communicated to the Buyer that it has no further questions in respect of the briefing paper (containing details of the Wiggle Acquisition) submitted to them or having announced that it does not intend to refer the Wiggle Acquisition for investigation under Schedule 4 of the Enterprise and Regulatory Reform Act 2013.
 
  
The Financial Conduct Authority (FCA) having notified (and not withdrawn) its approval (as required in accordance with Part XII of the Financial Services and Markets Act 2000) in relation to each new controller’s proposed interest in the Wiggle Group resulting from the Wiggle Acquisition or the FCA being deemed as having given such approval.
 
  
Confirmation having been given by SSU that the Business Combination Agreement has become unconditional in all respects.
The Wiggle SPA contains customary interim conduct undertakings pursuant to which the Wiggle Sellers undertook to (i) operate the Wiggle Group business in the ordinary course between the date of exchange and Completion and (ii) procure that the Wiggle Group does not take particular material actions without the prior written consent of the Buyer.
 
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On Completion, the Total Consideration (as defined in the Wiggle SPA) was paid by the Company to the Wiggle Sellers, in accordance with the terms of the Wiggle Liability Assumption Agreement, as follows:
 
  
41.8% of the Total Consideration was paid by the Company in cash on Completion. However, since the level of redemptions by Yucaipa Public Shareholders required the release to such shareholders of an aggregate amount from Yucaipa’s Trust Account exceeding the Redemption Threshold Amount (as defined in the Redemption Offset Agreement) (the amount by which the amount required to be released exceeds the Redemption Threshold Amount, the “Shortfall Amount”), SISH subscribed for and purchased, and the Company issued Ordinary Shares in the amount of 6,000,000 (the “First Instalment Shortfall Amount”) and the First Consideration Installment (as defined in the Wiggle SPA) up to an aggregate amount equal to First Consideration Instalment (as defined in the Wiggle SPA) was settled through the issuance of our Ordinary Shares to the Wiggle Sellers (as defined in the Wiggle SPA) in accordance with the terms of the Wiggle SPA, as amended from time to time and pursuant to the terms of the Wiggle Liability Assumption Agreement entered into between the Company and SSU.
 
  
53.8% of the Total Consideration was satisfied by SSU procuring the issue of shares by us to certain of the Wiggle Sellers (to be held subject to
Lock-Up
Agreements).
 
  
4.4% of the Total Consideration will be paid by the Company in cash 10 business days following the date on which the
Lock-Up
Agreements expire. However, since the Shortfall Amount exceeded $90 million, the Third Consideration Instalment (as defined in the Wiggle SPA) will be settled through the issuance of Ordinary Shares to the Wiggle Sellers in the amount of $ 25.3 million in accordance with the terms of the Wiggle SPA, as amended from time to time. The shares issued to the Wiggle Sellers in satisfaction of a portion of all of the Third Consideration Instalment pursuant to the Redemption Offset Agreement and the Wiggle SPA, as amended from time to time, as discussed above will be subject to the
lock-up
restrictions set forth in that certain
Lock-up
Agreement (as described in the section of this prospectus entitled “
Shares Eligible for Future Sale —
Lock-Up
Agreements
”).
The Wiggle SPA contains a customary suite of business warranties, together with a stand-alone tax covenant given in favor or the Buyer, all of which are backed by warranty and indemnity insurance.
Pursuant to a letter agreement dated October 15, 2021, SSU and Bridgepoint agreed to amend the Wiggle SPA to extend the Long Stop Date from November 30, 2021 to December 31, 2021.
Midwest Acquisition SPA
On January 8, 2021 SSU Midwest Acquisition Corp., a Delaware corporation and newly formed US subsidiary of SSU, as buyer and Midwest Sports Supply Holdings, Inc., an Ohio based corporation, as seller, entered into an equity purchase agreement pursuant to which SSU Midwest Acquisition Corp, agreed to acquire a participation of 60.60% to 66.66% in the issued and then outstanding shares of capital stock of Midwest Sports Supply, Inc., a wholly owned subsidiary of Midwest Sports Supply Holdings, Inc. and which, following to a certain reorganization and conversion process set out in the equity purchase agreement, would be transformed into a limited liability company under Delaware law and renamed Midwest Sports Supply, LLC, the exact amount of the to be acquired participation depending on the exact amount of the enterprise value at closing (as defined in the equity purchase agreement).
Under the equity purchase agreement SSU Midwest Acquisition Corp. acquired a stake of 60.60% of the issued and outstanding shares of Midwest Sports Supply, LLC from its parent company against payment of a cash purchase price determined on the basis of an agreed equity value of around $9.8 million for the acquired stake of 60.60% in Midwest Sports Supply LLC. In addition, SSU Midwest Acquisition Corp. has agreed, within twelve months period following the closing, to make an additional contribution of cash to Midwest Sports Supply LLC at a valuation equal to the valuation implied by the equity purchase agreement. Under the amended LLC company agreement, the parties to the LLC agreement also agreed on certain call/put option rights that allow the
 
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option holder to sell/buy its shares in Midwest Sports Supply LLC at certain points in time or if certain conditions are met. The put/call value is determined on the basis of certain parameters relating to the 12 months-economic performance of the business as of the last day of the most recent fiscal quarter ended immediately prior to the exercise of the option.
SSU provided financing for the initial purchase price to SSU Midwest Acquisition Corp. and in addition entered into a guaranty contract with and for the benefit of Midwest Sports Supply, Inc., according to which SSU guaranteed the full and punctual performance of the contractual duties of SSU Midwest Acquisition Corp. under the equity purchase agreement and agreed to indemnify, among others, Midwest Sports Supply, Inc. and Midwest Sports Supply Holdings, Inc. as its selling shareholder against any costs incurred in enforcing the selling parties’ rights under the equity purchase agreement.
Moreover, as a condition precedent to the closing of the share purchase, the former majority shareholder of Midwest Sports Supply, Inc., a key individual to the business of the company, entered into an employment agreement with Midwest Sports Supply, LLC following the transformation and reorganization process.
The transaction closed on April 30, 2021.
Tennis Express SPA
On April 30, 2021 SSU subsidiary SSU Midwest Acquisition Corp. as buyer and Tennis Express, L.P., a Texas limited partnership (“Tennis Express”), Tennis Express Management, L.L.C., a Texas limited liability company (“Tennis Management”), and the owner (the “Seller”) of Tennis Now LLC, a Nevada limited liability company (“Tennis Now”) as sellers entered into an equity purchase agreement (as amended, the “Tennis Express SPA”) to sell to SSU Midwest Acquisition Corp., following to a certain reorganization and conversion process set out in the Tennis Express SPA, 66.66% of the equity interests in Tennis Express. The Seller and Tennis Management were the sole owners of all outstanding equity interest of Tennis Express.
Under the Tennis Express SPA, the Seller agreed to contribute all of the equity interests of Tennis Now to Tennis Express, thereby making Tennis Now a wholly owned subsidiary of Tennis Express. Following the contribution of Tennis Now to Tennis Express, the Seller and Tennis Management agreed to cause Tennis Express to convert into a Delaware limited liability company and the Seller was to become the sole owner of all outstanding equity interests of Tennis Management.
The Tennis Express SPA contains customary interim conduct undertakings for the period between the execution of the Tennis Express SPA and the closing pursuant to which the Seller and Tennis Management agreed, among other things, to operate Tennis Express only in the ordinary course of business and consistent with past customs and practices.
The closing of the transactions contemplated by the Tennis Express SPA was subject to a number of conditions precedent, including, among others the successful completion of the audit of Tennis Express’ financial statements for the twelve months period ended June 30, 2021, the achievement of certain financial targets during that period by Tennis Express, the successful completion of our due diligence exercise and Tennis Express entering into an employment agreement pursuant to which the Seller will serve as Tennis Express’ president.
The cash purchase price was originally to be based on an enterprise value for 100% of the shares in Tennis Express L.P. in a range between USD 19 million and 25.2 million, the exact value of the enterprise value depending on the financial performance of the business in fiscal year 2020. Prior to the closing of the Tennis Express transaction, the parties to the Tennis Express SPA resolved to enter into an amendment to such agreement modifying the purchase price to enable the Seller and Tennis Management to receive all or a portion of the purchase price in our Ordinary Shares. In addition, under the amended LLC company agreement entered into at closing, the parties to the LLC agreement agreed on certain call/put option rights that allow the option
 
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holder to sell/buy its shares at certain points in time or if certain conditions are met. The put/call value is determined on the basis of certain parameters relating to the 12 months-economic performance of the business as of the last day of the most recent fiscal quarter ended immediately prior to the exercise of the option.
The purchase price payable by SSU Midwest Acquisition Corp. originally consisted of cash payments to the Seller and Tennis Management in accordance with their pro rata shareholdings in Tennis Express following the reorganization and conversion process and was subject to certain adjustment and disbursement provisions provided for in the Tennis Express SPA.
In connection with the closing of the Tennis Express acquisition on December 31, 2021, whereby SSU acquired 66.66% of the issued shares in Tennis Express, the parties to the Tennis Express SPA agreed to amend the Tennis Express SPA as follows:
1. The initially agreed closing long stop date of September 30, 2021 was changed to December 31, 2021 by amendment letters dated September 30, 2021, November 17, 2021 and December 14, 2021.
2. The enterprise value as basis for the calculation of the purchase price was set at USD 25.2 million.
3. The cash purchase price agreed in the Tennis Express SPA was amended to a payment in shares of the Company, with an agreed factor of 1.35 over the initially agreed cash purchase price (the “Stock Payment”). The actual Stock Payment of 2,492,833 Ordinary Shares (except for the portion of the purchase price to be placed into escrow) was determined based on an amount per share of common stock of the Company equal to the lesser of (i) the price as of the close of trading on the NYSE on March 7, 2022, and (ii) the volume weighted average price per share of the Shares for the five trading days ending March 7, 2022.
4. The Stock Payment was made to the Seller on March 11, 2022. We agreed to use commercially reasonable efforts to ensure that the Company shares comprising the Stock Payment would be fully and freely tradable in compliance with all federal securities laws, including through the facilities of the NYSE without any required lock-up, vesting conditions or registration or listing requirements within 10 business days of the applicable issuance.
LBBW syndicated loan and amendment to the loan agreement
On May 5, 2021 SSU and its subsidiaries Internetstores Holding GmbH and internetstores GmbH as borrowers and guarantors and SIGNA Sport Online GmbH, Dolphin France SAS and Tennis-Point GmbH as guarantors have entered into a €100,000,000 revolving facility agreement with Landesbank
Baden-Württemberg
(“LBBW”) as lender (the “LBBW RCF”). The committed facility amount under the LBBW RCF may be increased from €100,000,000 to a maximum of €150,000,000 upon request if certain conditions are met.
In general, any loan amount drawn under the LBBW RCF must be applied towards the refinancing of existing credit facility obligations of the borrowers, for working capital purposes, capital expenditures and up to an amount of €10,000,000 for certain M&A purposes, in particular the repayment of a bridge loan.
Any loan a borrower under the LBBW RCF requests bears interest for the period the respective borrower may determine in its utilization request in accordance with the terms of the revolving credit facility. The loan amount drawn under the LBBW RCF must be repaid in full with interest on the last day of the requested credit period.
The loans will be secured by independent payment obligations (
selbstständige Zahlungsversprechen
) and in case of any payment defaults undertakings to indemnify each of the lenders by the guarantors to the credit facility agreement.
The term of the agreement is three years and loans will be made available to the borrowers until one month prior to the termination date. However, the agreement provides for the right of each borrower to request an extension of the contract term under certain conditions.
 
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SSU, LBBW and the other lenders under the LBBW RCF are in advanced discussions to enter into an amendment agreement to the LBBW RCF (the “LBBW RCF Amendment Agreement”) which management believes will be entered into by the end of May 2022, at the latest. The LBBW RCF Amendment Agreement shall (i) amend and restate certain provisions of the LBBW RCF, including, in particular, the extension and increase option as well as certain minimum cash requirements and (ii) provide for an incremental funding obligation and certain additional information undertakings of the Company. Furthermore, the parties to the LBBW RCF intend to agree in the LBBW RCF Amendment Agreement to suspend the Net Leverage Ratio testing covenant pursuant to the revolving facility agreement to cure a formal breach by the Company of such covenant as of March 31, 2022 and to amend the Consolidated Adjusted EBITDA thresholds which the Company will be required to maintain in its fiscal years 2023 and 2024. The execution of the LBBW RCF Amendment Agreement is subject to the fulfilment of certain conditions precedent, including additional liquidity of up to EUR 200 million, which for an amount of up to EUR 100 million have already been provided by SIGNA Holding GmbH to the Company through the SIGNA Holding GmbH Working Capital Facility and also include a hard commitment letter to be issued by the Company to SSU and the other lenders under the LBBW RCF providing up to an additional EUR 100 million via a capital increase and/or subordinated shareholder loan by the end of fiscal year 2022. For more information on the SIGNA Holding GmbH Working Capital Facility see “Certain Relationships and Related Person Transactions–SIGNA Holding GmbH Working Capital Facility”.
Salesforce Commerce Cloud
On January 15, 2021 SSU has executed an order form for
 
e-commerce
 
cloud services provided by salesforce.com EMEA Limited, a limited liability company under UK law (“Salesforce”) in accordance with a Master Subscription Agreement between Salesforce and SISH of August 7, 2017. By entering into such order form with Salesforce SSU has agreed to be bound by the terms of the Master Subscription Agreement as if SSU was an original party thereto.
The services subscribed for include, among others, B2C Commerce services and other tools to track customer interactions and establish a personalized customer communication.
The contract end date is September 14, 2024 but may be renewed in case additional
 
e-commerce
 
cloud services are subscribed for by SSU.
Rhenus 3 PL Contract
On March 31, 2021 SSU subsidiaries Tennis-Point GmbH and internetstores GmbH have entered into a logistics agreement with Rhenus Warehousing Solutions SE & Co. KG, a logistics service provider and supplier of outsourcing warehousing solutions (“Rhenus”). The agreement provides for the establishment and operation of a goods distribution warehouse with a storage area of approx. 20,000 square meters in Hockenheim, Germany.
Under the logistics agreement, SSU is entitled to store in the warehouse sports goods, clothing and accessories for their tennis and bicycle business segments. The logistics service are not limited to Tennis-Point GmbH and Internetstores GmbH, however, but may be utilized by other SSU companies operating in the tennis or bicycle business segments as well, provided that such other companies are included in the contract as additional parties to the logistics agreement upon request.
Each SSU subsidiary that is or will become a party to the logistics agreement with Rhenus is individually and not jointly and severally liable for the services rendered to them by Rhenus in each case.
The logistics agreement provides for a remuneration of Rhenus for certain fixed costs incurred and a variable remuneration component based on the stock level and certain services provided by Rhenus.
The agreement has a fixed term until December 31, 2028 and is automatically extended by one year at a time if it has not been terminated in advance with due notice or for good cause by either of the contract parties.
 
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Among other collateral provided by its subsidiaries SSU has entered into a directly enforceable surety for the benefit of Rhenus with regard to payment obligations arising out of or in connection with the implementation of the logistics agreement for an amount of up to €4,500,000.
OMNIA Services Agreement
SSU and Omniaretail B.V. (“Omnia”) entered into a service agreement on March 15, 2020, as amended. Under this agreement Omnia provides various services to manage pricing and online markets for merchandise sold by SSU. The services are split into various packages relating to price watching and dynamic pricing packages as well as customer pricing fees. The agreement has a fixed term until March 14, 2021 but was extended for another 12 months period until March 14, 2022.
Real Property
We do not own any real property.
Below is a list of our material leased property as of the date of this prospectus, including the type of property, our business area, location and approximate square meterage.
 
Type of property  Business  Location Square Meterage  Owned /Leased
Office  Internetstores GmbH  Stuttgart, Germany 1,670  leased
Office & Warehouse  
E-Prolog
SAS
  Chaponnay, France 29,179  leased
Office & Warehouse  Publikat GmbH & OUTFITTER Teamsport GmbH Großostheim, Germany  20,335 leased   
Office & Warehouse  Tennis-Point GmbH  Herzebrock-Clarholz, Germany 19,065 leased  
Office & Warehouse  Tennispro Distribution SAS  Entzheim, France 10,745  leased
Warehouse  internetstores GmbH  Esslingen, Germany 8,554  leased
Warehouse  internetstores GmbH  Untertürkheim, Germany 7,568  leased
Warehouse  internetstores GmbH  Holdorf, Germany 14,079  leased
Warehouse  Internetstores GmbH  Gehrde, Germany 11,400  leased
Lease agreements for our premises are generally long-term leases with terms of between 3 and 10 years.
As of the date of this prospectus, the Company is not aware of any environmental issues that may affect the utilization of any of the premises described above and has no intention to engage in the construction, expansion or improvement of any real estate or facilities.
Intellectual Property
As of the date of this prospectus, we own more than 130 trademarks (including “SIGNA Sports United”, “fahrrad.de”, “Bru¨gelmann”, “CAMPZ”, “Addnature”, “Bikester”, “Probikeshop”, “Tennis-Point”, “Jogging-Point”, “TennisPro”, “Midwest Sports”, “CenterCourt”, “Outfitter”, “Stylefile”, and “Ballside”) as well as related tradenames and logos. We also have a portfolio of more than 900 domain names. We believe that our trademarks and our respective domains adopted for the different countries are of value to our business. Our private label brand products and other branding material are also featured on our websites and in our marketing.
 
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Insurance
We maintain insurance against various risks related to the ordinary operations of our businesses, including general business interruption insurance and third-party liability, employer’s liability, property damage, cyber liability, liabilities for acts of terror, transportation damage and directors’ and officers’ liability insurance. We believe that the types and amounts of insurance coverage that we maintain are consistent with customary industry standards. However, no assurances can be given that this coverage will be sufficient to cover the cost of defense or damages in the event of a significant claim.
Employees
The following table shows the annual average number of employees within SIGNA Sports United Group:
 
   
2021
   
2020
   
September 30,
2019
 
Employees   2,492    1,914    1,590 
Total
  
 
2,492
 
  
 
1,914
 
  
 
1,590
 
We believe that we have strong, positive relationships with our employees. We have not suffered any disruptions to our business as a result of work stoppages or strikes.
Legal and Arbitration Proceedings
Neither we nor any of our subsidiaries are party to any governmental, legal or arbitration proceedings (nor are we aware of any such proceedings that are pending or threatened) that have had or may have a significant effect on our financial position or profitability.
 
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BUSINESS OF THE WIGGLE GROUP
Overview
Wiggle is a UK headquartered online cycling and multisport specialist, supplemented by a hotline distribution business and
one brick-and-mortar store,
which, based on revenues and on a stand-alone basis, is the second largest specialist bike online retailer globally (Source: company information). The Wiggle Group operates 15 different transactional web shops in local languages under the shop brands Wiggle and Chain Reaction Cycles in
the high-end performance
bike segment, primarily targeting customers that frequently use their bikes for sports. It also targets customers in adjacent sports, such as running, triathlon and outdoors.
In fiscal year 2021, the Wiggle Group had over 1.9 million active customers. The Wiggle Group ships products worldwide in over 75 countries, with its main geographical markets in the UK (64% of revenues in the 52 weeks ended September 26, 2021) and continental Europe (15% of 2021 revenues — RoW accounted for 21% of revenues). The Wiggle Group sells both high-end third-party brands as well as a strong private labels portfolio, including well established brands such as Vitus (bikes), Nukeproof (bikes, components and clothing) and dhb (clothing).
The Wiggle Group generated revenues of 411.9 million in the 52 weeks ended September 26, 2021.
History
In 2016, Wiggle acquired Chain Reaction Cycles (“CRC”) as its leading competitor, forming the Wiggle Group. A key driver of the strategic rationale for the acquisition was the access to the strong CRC own brand portfolio, spanning bikes, accessories and performance clothing. The two business logistics operations were merged and underwent a significant investment and capability upgrade program.
In addition, the Wiggle Group acquired its competitor Bike24 in 2017 and resold it in 2019.
Wiggle’s Key Product Categories
The Wiggle Group focuses on three key product categories when addressing its target customers: hard goods (components, full bikes, bike accessories as well as wheels and tires), soft goods (cycling clothing including shoes and accessories) and focus sports (running, fitness, outdoor and triathlon). Hard goods contributed 58% to overall revenues, soft goods 29% and focus sports 13% in the 52 weeks ended September 26, 2021.
Hard goods
Hard goods offered by the Wiggle Group include components, full bikes, bike accessories as well as wheels and tires.
Components sold by the Wiggle Group include brakes, chains, pedals, entire group sets and cassettes of strong third-party brands like Shimano and SRAM and private labels like Prime and Lifeline. In the full bike category, the Wiggle Group mainly sells road race bikes and mountain bikes of strong third-party brands including Cube and Fuji, and its private labels Vitus and Nukeproof. Bike accessories include bike computers, indoor trainers, and other accessories; the main third-party brands in this product category include Garmin and Tacx, complemented by Lifeline as private label offering. Wheels and tires are sold under strong third-party brands such as Continental and Schwalbe and private labels like Lifeline and Prime.
Soft goods
Soft goods products sold by the Wiggle Group mainly consist of cycle performance clothing (including shoes, helmets and other protection wear such as sunglasses) across a range of price points, from entry level to super-premium offerings. Strong third-party brands include Castelli and Gore and private label dhb.
 
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Focus sports
Products sold for various adjacent focus sport categories mainly include running, fitness, outdoor and triathlon related products, such as clothing, shoes, smart watches and nutrition. Major third-party brands offered in this category include adidas, Zone3, the North Face and Salomon.
Customer Segments and Sales Channels
Customer Segments
The Wiggle Group mainly focuses on customers that frequently use their bikes for sports, with the majority of the more than 1.9 million active customers participating in multiple sports. In addition, the Wiggle Group’s customer base is highly engaged with 80% of its active customers training two times or more a week and 55% owning three or more bikes.
Within the bike segment, the Wiggle Group has identified various
sub-target
segments in cycling (the committed road cyclist, the new enthusiast, the thrill-seeking mountain biker and the trail rider) and in adjacent sports. Most of the bike customer categories are targeted by both the Wiggle and the CRC brand (with the exception of the thrill-seeking mountain biker, which is the focus area of CRC) while customers in adjacent sports areas like running, outdoor and triathlon are targeted through the Wiggle brand only.
Sales Channels
The Wiggle Group’s sales occur predominantly through its own online and mobile channels. In the 52 weeks ended September 26, 2021, there were approximately 138 million sessions on the Wiggle Group’s websites and over 5.8 million net orders (after cancellations and returns). Sales through online and mobile channels (including apps) account for almost the entirety of the sales of the Wiggle Group.
Assortment and Suppliers
The Wiggle Group offers over 500 different brands on its websites. Product categories can be differentiated between premium brands such as Castelli, Gore, Cube and Garmin, mainstream brands such as adidas, Asics, and the North Face and the Wiggle Group’s private label brands including Vitus, Nukeproof, dhb, Lifeline, Prime and Föhn.
The Wiggle Group is a trusted partner for some of the most important brands in the sports retail industry in the UK and continental Europe. Most importantly, the Wiggle Group has added new premium brands to its assortment, as is recently demonstrated with its supply of Hoka One One and Apple products.
The Wiggle Group is not dependent on any one supplier as it procures the majority of its top 20 brands from a well-diversified portfolio of suppliers. The top ten third party brands constitute less than 35% of purchasing value in fiscal year 2021, with the top three brands constituting less than 16%.
 
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With respect to the Wiggle Group’s private label products, the product portfolio is managed by a dedicated multi-functional team which is responsible for
the end-to-end product
management. The team is split into two focus centers of expertise: (1) bikes & components (focusing on creating bikes, components, equipment and bike accessories) and (2) clothing and accessories (focusing on creating clothing, footwear and other soft accessories). All new private label products are fully originated and
designed in-house, including
ongoing generational evolution and/or seasonal range updates and the relevant intellectual property rights owned by the Wiggle Group. The production of the products is outsourced with a range of third-party partners in the far East (frames and components) and Europe (Italy), depending on the product category.
Marketing
A substantial part of the Wiggle Group’s marketing is done
in-house.
The three main marketing methods that the Wiggle Group employs are brand marketing, performance marketing, customer relationship management (CRM) through
e-mail.
 
  
Brand marketing
— Brand marketing generally includes advertising of the CRC or Wiggle brands in print and online, defining the brand strategy and execution of this in terms of ‘look and feel’ (e.g. photography).
 
  
Performance marketing
— Performance marketing generally includes search engine advertising (promotion of website through visible ads on a search engine screen) and search engine optimization (promotion of website within a search engine’s results).
 
  
Customer Relationship Management (CRM)
— CRM utilizes the data the Wiggle Group holds on its customers to target and send relevant and timely email communications to encourage customers to visit the site and purchase goods.
The Wiggle Group also employs other marketing strategies that seek to maintain customer loyalty and drive repeat orders, typically through a loyalty program and Wiggle+ a subscription based unlimited free delivery proposition.
Order Fulfillment and Delivery
The Wiggle Group uses one main global distribution hub in Citadel/Wolverhampton, England, to ship all of its products, with all operations (mainly bike assembly) completely integrated in the warehouse. The warehouse is located in the logistics center of the UK with close access to motorways and international air hubs. The warehouse combines the full range of logistic functions from inbound, outbound, handling returns and bike assembly with workshop production. The relevant lease agreement runs through 2029. The Wiggle Group also used to operate a warehouse in Whitepark, Belfast, Northern Ireland, which discontinued operations in December 2020.
IT Infrastructure
The Wiggle Group has an established IT organization, primarily focusing on supporting the core operative business
functions (e-commerce sales
and services, merchandise management, warehousing, marketing and content).
The Wiggle Group has implemented a broad array of services and systems for site management, product search, customer interaction, transaction processing, and order fulfillment functions. These services and systems use a combination of the Wiggle Group’s own technologies and commercially available, licensed technologies. For example, the Wiggle Group uses self-developed applications for running its Wiggle web shop, order management system and product enhancement tools.
 
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The Wiggle Group uses its technology platform to improve the experience of its customers, increase the purchase frequency and average order size placed by its customers and optimize the efficiency of its business operations and online marketing.
In total, the Wiggle Group employs approximately 70 dedicated technology professionals.
Real Property
The Wiggle Group operates in several locations: its head offices in Portsmouth, England (leased) and Mallusk, Northern Ireland (leased), the Citadel logistics center in Wolverhampton, England (leased), the CRC branded bike shop in Belfast, Northern Ireland (leased), the Hotlines offices in Edinburgh, Scotland (leased) and a private labels sourcing office, Taiwan (leased).
The below list sets out the Wiggle Group’s material property as of the date of this prospectus, including the type of property, business area, location and approximate square meterage.
 
Type of property
  
Location
  
Square Meterage
Office  Portsmouth  2,065
Office  Mallusk  1,960
Warehouse  Citadel/Wolverhampton  30,140
Store  Belfast  929
Office  Edinburgh  340
Office  Taiwan  100
Intellectual Property
As of the date of this prospectus, the Wiggle Group owns approximately 41 trademarks (including “Wiggle”, “Chain Reaction Cycles”, “Vitus”, “Nukeproof”, “dhb”, “Lifeline”, “Prime” and “Föhn”) as well as related tradenames and logos. The Wiggle Group also holds a portfolio of approximately 525 domain names.
Insurance
The Wiggle Group maintains insurance against various risks related to the ordinary operations of its businesses, including Material Damage and Business Interruption, Employer’