What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-03-07 compared with 2023-03-09 · 72 added, 92 removed, 164 unchanged (50% of the section changed)

To be the global leader in fashion for the next generation of consumers through a portfolio of the most innovative brands.

Brands (“a.k.a.”) is an accelerator of fashion brands for the next generation.

We target and acquire high-potential brands that we believe are at a pivotal point in their growth trajectory that we can integrate into our operating model and accelerate their growth.

Leveraging our proven track record, industry expertise and operational synergies, we believe our brands can grow faster, reach broader audiences, achieve greater scale and enhance their profitability.

Brands Holdings Corp.

(“a.k.a.”) was formed as a Delaware corporation on May 19, 2021.

is a group of next-generation fashion brands for the next generation of consumers.

Leveraging our industry expertise and operational synergies, we help accelerate our brands so they can grow faster, reach broader audiences, achieve greater scale and enhance their profitability.

We believe we are disrupting the status quo and pioneering a new approach to fashion.

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Our current brands share a common focus on Millennial and Gen Z consumers who seek fashion inspiration on social media and primarily shop online.

Nimble by design, our innovative brands are customer-centric and have authentic and engaging relationships with their target audiences through highly relevant social content and other digital marketing strategies.

Leveraging innovative, data-driven insights, our brands introduce fresh content and high-quality merchandise daily.

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We believe we are differentiated by our ability to attract and retain a wide range of Millennial and Gen Z consumers through authentic brand messaging and curated, on-trend fashion.

In 2022, across a.k.a.

Brands, we grew our active customer base by 2.7% from 2021, who placed 13.8% more orders compared to 2021, and had a low sales return ratio of approximately 16.6% of net sales.

We believe our robust growth and profitability validate our business approach and asset-light business model.

We achieved $611.7 million in net sales and adjusted EBITDA of $31.9 million in 2022.

In 2023, we achieved $546.3 million in net sales and adjusted EBITDA of $13.8 million.

Brands currently consists of four brands:

two women’s brands, Princess Polly and Petal & Pup, and two streetwear brands, Culture Kings and mnml.

The Company owned Rebdolls, a brand that the Company purchased in December 2019, throughout all of 2022, but subsequently sold in February 2023 back to its founder.

While the Company believed in Rebdolls’ long-term success, the brand was below the scale that would allow it to experience the full potential of the a.k.a.

Brands platform.

Princess Polly

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The brand operates predominantly online and targets female customers between the ages of 15 and 25, who value the brand’s high-quality assortment, compelling price points and free and fast shipping.

Princess Polly customers are inspired by the brands’ constant stream of inspirational social media content and the fresh, new and affordable merchandise arriving daily.

We engage with Princess Polly customers through the brand’s constant stream of inspirational social media content, and the Princess Polly brand provides fresh, new and affordable merchandise arriving daily.

Since joining a.k.a.

Brands, Princess Polly has experienced rapid growth and increasing brand awareness in the United States.

In connection with Princess Polly’s expansion in the U.S., in September of 2023, Princess Polly opened its first brick and mortar store in Century City, Los Angeles, and we plan to open more stores across the U.S.

Founded in Australia in 2015, Petal & Pup joined a.k.a.

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The brand operates exclusively online and offers an assortment of trendy, flattering, feminine styles and dresses for special occasions.

The brand targets female customers typically in their twenties or thirties, with more than 70% of customers between the ages of 25 and 34.

The brand targets female customers typically in their 20s or 30s, with more than 70% of customers between the ages of 25 and 34.

In 2019, Petal & Pup expanded to the United States, which is now its fastest growing geography.

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Culture Kings is a premium multi-channel retailer of streetwear apparel, footwear, headwear and accessories.

The brand offers its customers a curated assortment from over one hundred leading third-party streetwear brands, as well as a large and growing portfolio of in-house designed brands and exclusive products that embody the relationship between music, sports, art and fashion.

The brand offers its customers a curated assortment from over 100 leading third-party streetwear brands, as well as a large and growing portfolio of in-house designed brands and exclusive products that embody the relationship between music, sports, art and fashion.

The brand targets male consumers between the ages of 18 and 35 who are fashion conscious, highly social and digitally focused.

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Culture Kings engages with customers through a combination of compelling online and offline marketing strategies that leverage the latest in music, fashion, art and celebrities to create brand hype and product excitement.

The brand operates eight experiential concept stores in major cities in Australia and New Zealand, and opened its first U.S.

The brand operates nine experiential concept stores in major cities in Australia and New Zealand, and opened its first U.S.

store in Las Vegas in November 2022.

These stores serve as a powerful customer acquisition tool, and provide customers a unique and immersive brand experience.

We believe these stores serve as a powerful customer acquisition tool, and provide customers a unique and immersive brand experience.

The stores feature engaging in-store designs and product displays, storefronts designed by best-in-class graffiti artists, exclusive product releases, including promotional products only available in-store and event-driven in-store activations.

The stores host a variety of public events and creative activities designed to instill feelings and emotions of excitement such as sneaker vending machines, basketball shooting competitions, live DJ sessions and appearances of global celebrities and tastemakers, including athletes and on-trend music artists.

The stores host a variety of public events and creative activities designed to instill feelings and emotions of excitement such as sneaker vending machines, basketball shooting competitions, live DJ sessions and appearances by global celebrities and tastemakers, including athletes and on-trend musicians.

The brand creates digital content based on the events and activities in-store and publishes them online, generating further hype on social media.

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mnml’s authentic social media marketing strategy, highlighted by its more than one million followers across social platforms, drives efficient customer acquisition and strong brand loyalty.

In 2022, Culture Kings began to sell mnml on Culture Kings’ website and in their stores in Australia and the U.S.

Our Operating Model

In 2023, mnml apparel was spotted on over 100 professional athletes who shared their outfits across social media, and became a top selling brand for Culture Kings in the U.S.

Next Generation Retail

Data-Driven Merchandising with High Penetration of Exclusive High-Quality Fashion

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Our women’s brands merchandise is purchased using our agile “test-and-repeat” merchandising model, which enables us to quickly react to customer demand and test product appeal without taking large initial inventory positions, yet still capture in-season demand.

This model ensures that our merchandise is always on-trend and customer-led, with minimal inventory risk because we only replenish the styles that our customers show us that they like.

This model provides greater certainty that our merchandise is always on-trend and customer-led, with minimal inventory risk because we only replenish the styles for which there is demonstrated customer demand.

Our brands’ compelling merchandising strategy is anchored by a high proportion of exclusive styles that cannot be found elsewhere.

Our women’s brands sell mostly exclusive styles and the majority of our streetwear styles are either exclusive in-house designed Culture Kings brands or exclusive styles from leading third party brands.

Our women’s brands sell mostly exclusive styles and the majority of our streetwear styles are either exclusive in-house designed brands or exclusive styles from leading third-party brands.

Our customers’ satisfaction with the fit, quality, affordability and exclusivity of our styles is further reflected in our sales return rates across our brands, which was well below industry average in 2023 at approximately 18.5% of net sales.

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Brands, we had nearly 13 million followers on social media and served more than 3.7 million active customers.

In addition to social media marketing, we also tested live video shopping events and increased our penetration of SMS text message marketing in 2022.

Our Operating Model Creates Value by Driving Synergies Across the Portfolio

In addition to social media marketing, we also leverage our stores and off-site locations to host both influencer marketing events as well as events open to customers to deepen our engagement.

Meet Our Customers Anywhere

Nimble by design, our brands meet our customers with a great experience whether online or in person.

Our brands greatly value the direct relationship with customers and the primary channel for all of our brands is direct-to-consumer and online.

However, to build a next-generation brand, we believe it’s imperative to show up where our customers are shopping.

Culture Kings operates nine experiential and immersive concept stores in major cities in Australia and New Zealand, and opened its first U.S.

store in Las Vegas in November 2022.

We believe these stores serve as a powerful customer acquisition tool, and provide customers a unique and immersive brand experience.

In 2023, we began piloting wholesale and marketplace initiatives and opened a store for Princess Polly to build brand awareness and increase brand touchpoints for our customers.

Flexible Back-End Operations

Our brands operate independently but have access to resources, guidance and vendors at the a.k.a.

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We believe this model balances scale-enabled cost savings with operational flexibility, facilitates low-risk innovation and accommodates the needs of our brands at various stages of growth.

Our operating model is designed to provide collective advantages and accelerate profitable growth in both existing and new markets and allows us to manage the brands at a portfolio level.

Flexible Technology Stack and Operations

Our operating model is designed to provide collective advantages, by leveraging access to a highly-skilled leadership team who have deep expertise in the business of fashion, sharing learnings across the brands and accelerating profitable growth through flexible back-end operations at lower costs.

Our brands leverage a broad network of third-party service and technology providers, which allows us to implement the latest capabilities with limited upfront investment and quickly adopt innovations in the market.

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Additionally, given our scale, we negotiate favorable rates with our vendors, providing our brands with attractive terms and enhancing overall profitability.

Deep Industry Expertise

Our brands have access to our highly-skilled leadership team, each of whom has a proven track-record and years of experience building and scaling successful eCommerce businesses.

We have deep expertise in the business of fashion, and we support our brands so they can focus on customer-facing priorities such as branding, merchandising and maintaining an authentic connection with customers.

Innovation Hub and Knowledge Sharing

We enable and encourage a network of cross-brand learnings to advance innovation and promote best practices – what accelerates profitable growth for one brand can accelerate profitable growth for others.

Across our brands, we test and learn digital innovation and facilitate knowledge sharing and benchmarking of key performance metrics to improve growth, operational efficiency and profitability.

We Promote Diversity and Practice Responsible Fashion

Our brands reflect the diversity and beauty of our customers and we continuously seek ways to expand the diversity in our brands, products and marketing.

We believe diversity and sustainability align with our core values and drive better results.

We operate responsibly and are committed to responsible fashion and sustainability through prioritization of transparency, fair labor practices and reduced waste.

Our Growth Strategies

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We intend to execute the following strategies to expand our business and gain market share:

Grow Our Brands Organically in Our Existing Markets and Channels

Grow Brand Awareness and Acquire New Customers Through Omni-Channel Expansion

Grow Our Brands Organically in Our Existing Markets Through Direct-to-Consumer Growth and Omni-channel Expansion

We believe our brands are underpenetrated in the markets in which they operate.

We think there is a significant opportunity to grow awareness of our brands due to the continued secular shift to eCommerce, as well as the strength of our data-driven marketing model.

We think there is a significant opportunity to grow awareness of our brands due to the continued secular shift to eCommerce, as well as the strength of our data-driven marketing and merchandising model.

We intend to efficiently acquire new customers through continued investment in our content creation and social media capabilities, as well as through our network of approximately 25,000 influencers.

For example, in 2023, our women’s brands partnered with top-tier influencers, including Alix Earle, Delaney Childs, Georgie Stevenson, and our men’s brands partnered with athletes and celebrities such as Caleb Plant, Lando Norris, Chito Vera and more.

Through continued investment in these initiatives, we believe we will be able to further appeal to our core demographic of Millennial and Gen Z consumers and increase our market share.

While our brands primarily operate direct to consumer and are digitally native, to further build brand awareness, we expect to test select omnichannel experiences in 2023.

We recently announced that we expect to partner on select wholesale engagements to expand our brands’ visibility in key retailers that we know our customers love.

We also believe that stores are important drivers of brand awareness given the success of the experiential Culture Kings stores in Australia, New Zealand and Las Vegas, and we recently committed to opening a Princess Polly store in 2023 to further build brand awareness.

While our brands primarily operate in the direct-to-consumer channel, and we expect that to continue in 2024, based on the success of our omnichannel tests in 2023, we intend to further expand our omnichannel initiatives in 2024 to further build brand awareness.

In 2023, we partnered with PacSun, Victoria’s Secret, Liverpool and other brands on wholesale engagements, which we expect will continue into 2024.

We also launched on Target’s, Macy’s and Nordstrom’s marketplaces or drop ship programs in 2023, and we plan to accelerate growth on those channels in 2024.

Additionally, based on the initial success of the Princess Polly store that opened in September 2023, we recently announced that we plan to open three to five additional Princess Polly stores in the U.S.

We believe we are building stores of the future that are experiential in nature and bring the brand to life through events and in-store activations.

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We believe our brands have a significant opportunity to expand product ranges, increase average order value and broaden customer reach.

For example, Princess Polly launched their extended size collection, Curve, and expanded upon their sustainably-made Low Impact assortment in 2022.

Additionally, in December of 2021, we acquired a print shop in California to create exclusive printed tees for our brands.

In 2022, Culture Kings expanded their licensed business of printed tees and Princess Polly and mnml recently began using the facility to create printed tees.

We intend to continue to increase our mix of owned brands and exclusive offerings, which we believe generate higher margins and drive traffic to our websites.

In 2024, we anticipate that Princess Polly will expand its offering to include active and sleepwear, and we intend to bring more top-tier third party footwear brands to Culture Kings in the United States.

Increase Loyalty and Wallet Share

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and Australian markets.

Net sales to customers outside of the U.S.

and Australia was $71.8 million across 184 countries and territories and represented 12% of total sales in 2022.

In 2023, net sales to customers outside of the U.S.

and Australia was $28.0 million across 151 countries and territories and represented 5% of total sales.

We will continue to target markets that demonstrate strong social and digital media usage.

As part of our long-term strategy, we have identified several markets in which we believe we can introduce one or more of our brands in the future, such as expanding Culture Kings in Korea and Japan and Princess Polly in Canada, Europe and the U.K.

Additionally, we plan to enter into key markets through strategic wholesale partnerships.

We believe our experience growing the Princess Polly and Petal & Pup brands in the U.S.

creates a proven roadmap to help us introduce our brands globally.

As part of our long-term strategy, we have identified several markets in which we believe we can successfully introduce one or more of our brands in the future, such as expanding Culture Kings in South Korea and Japan and Princess Polly in Canada, Europe and the U.K.

Additionally, we plan to enter into key markets through strategic wholesale and marketplace partnerships.

Grow Through Acquisitions

We employ a corporate development team dedicated to the identification, evaluation and acquisition of brands, and we maintain a strong pipeline of potential targets, which typically includes multiple acquisition opportunities at differing stages of evaluation.

We seek next-generation brands with strong customer followings and a proven track record of operating profitably but need help scaling to further accelerate their growth.

We seek next-generation brands with strong customer followings and a proven track record of operating profitably but that need help scaling to further accelerate their growth.

We look for talented and passionate teams who have proven abilities to leverage data, technology and content to grow.

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Continue to Drive Efficiencies

As we continue to scale organically and through acquisitions, we aim to improve operational performance across our portfolio and enhance profitability.

We will also look for ways to reduce our input costs by leveraging our collective scale to negotiate improved terms with suppliers and vendors, including for raw materials, freight and shipping.

As we continue to scale, we aim to improve operational performance across our portfolio and enhance profitability.

We will also look for ways to reduce our costs by leveraging our collective scale to negotiate improved terms with suppliers and vendors, including for raw materials, freight and shipping.

As our brands grow and gain scale, we intend to invest in automation and process improvement within our operations to drive lower variable costs and improved profitability.

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According to Statista, a platform specialized in market and consumer data, the global apparel market grew to $1.7 trillion in 2023 and the global footwear market was valued at $400 billion in 2023.

Although 2021 and 2022 retail sales were negatively impacted by the COVID-19 pandemic and macro-economic factors, the global apparel and footwear market is expected to grow at a CAGR of 12.8% between 2023 to 2028.

The global apparel and footwear market is expected to grow to almost $2.0 trillion by 2027.

Though we ship our products globally, we operate primarily in two geographies:

and Australia.

had the largest apparel market of any country, expecting to grow to an estimated $343 billion in 2023 and grow at a 2.0% CAGR from 2023 to 2027.

has the largest apparel market of any country, and is projected to grow to an estimated $357 billion in 2024 and grow at a 1.9% CAGR from 2023 to 2027.

The Australian apparel market is expecting to grow to an estimated $21.5 billion in 2024 and grow at a 2.4% CAGR from 2023 to 2027.

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Consumers are increasingly turning to online channels to make purchases, driven by the growing Millennial and Gen Z populations and the increasing influence of social and digital media channels.

According to BigCommerce, the U.S.

online apparel, footwear and accessories market was valued at approximately $180 billion in 2021, and is expected to have reached $205 billion in 2022.

According to Grand View Research, a market research and consulting company, the global online apparel market was valued at approximately $583 billion in 2022, and was expected to grow at a 8.6% CAGR from 2022 to 2030.

According to Statista, the U.S.

online apparel, footwear and accessories market was valued at approximately $207 billion in 2023, and could surpass $300 billion by 2027.

Digital-Savvy Millennial and Gen Z Consumers Seeking the Next-Generation Shopping Experience

According to data from the United Nations, Millennial and Gen Z consumers, our primary target demographic today, account for 23% and 32% of the global population, respectively, making them a large and growing demographic group with significant economic influence.

In addition, in the U.S., a content consumption study found that Millennials are the biggest users of social media with as many as 84% using at least one social network, while Gen Z consumers are the most digitally native with 98% of them owning a smartphone and spending an average of four hours on apps each day.

According to data from the U.S.

Census Bureau, Millennial and Gen Z consumers, our primary target demographic today, account for 22% and 21% of the U.S.

population, respectively, making them a large and growing demographic group with significant economic influence.

In addition, in the U.S., content consumption studies found that Millennials are the biggest users of social media, with 88% of them using social media weekly, while Gen Z consumers are the most digitally native, with 98% of them owning a smartphone and spending an average of four-and-a-half hours on social media each day.

Technology Infrastructure

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We then combine that customized presentation layer with the backend engine from Shopify, which is a proven and industry-leading eCommerce solution.

By pairing our own in-house technology with cloud software, we have been able to create a differentiated user experience that we can adjust as necessary while also leveraging engineering talent from some of the best SaaS companies in the world to scale rapidly and efficiently.

By pairing our own in-house technology with cloud software, we have been able to create a differentiated user experience that we can adjust as necessary while also leveraging engineering talent from some of the best software as a service (“SaaS”) companies in the world to scale rapidly and efficiently.

Our cloud-based, SaaS native strategy allows us to adopt innovative, dynamic technology and capabilities with limited upfront investment and nimbly adopt market-leading technologies as they are introduced.

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We have strong long-term relationships with our manufacturers, but we do not have any long-term commitments requiring us to purchase minimum volumes from any supplier or manufacturer.

We seek to leverage our collective scale and use the same suppliers for our brands, where possible, in order to obtain more favorable terms from our suppliers.

We seek to leverage our collective scale and use the same suppliers across our multiple brands, where possible, in order to obtain more favorable terms from our suppliers.

Our network of third-party suppliers allows us to be capital efficient and nimble, giving us the ability to move new designs we receive from our suppliers into production and then into inventory in as few as 30 to 45 days for the majority of our inventory, as compared to up to nine months for traditional apparel brands.

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While each of our brands celebrates its own unique culture and brand values, we collectively embrace a next-generation mindset:

• We are customer-led;

focusing relentlessly on delivering a high-quality customer experience,

• We move fast;

executing on innovative ideas swiftly,

• We are data driven;

using data and analytics to make smarter decisions every day,

• We are growth minded;

testing and learning continuously in and across our brands,

• We are diverse;

celebrating and expanding the diversity of our customers and teams,

• We act with integrity and practice responsible fashion;

when in doubt, we resort to the high standard.

As of December 31, 2022, across a.k.a.

Brands, we had more than 1,000 full- and part-time employees.

• We are customer-led—focusing relentlessly on delivering a high-quality customer experience;

• We move fast—executing on innovative ideas swiftly;

• We are data driven—using data and analytics to make smarter decisions every day;

• We are growth minded—testing and learning continuously in and across our brands;

• We are diverse—celebrating and expanding the diversity of our customers and teams;

• We act with integrity and practice responsible fashion—when in doubt, we resort to the high standard.

As of December 31, 2023, we had more than 1,300 full- and part-time employees.

The majority of our workforce is located in Australia, with the remaining employees located throughout the United States.

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We aim to promote a safe and respectful environment for workers who make our products and protect their human rights.

For example, in 2022, Princess Polly maintained valid ethical manufacturing audits for 100% of final stage production, or tier one production, and packaging production sites, while completing the tracing of 100% of their suppliers, or tier two supply chain.

With global traveling reopening, Princess Polly was able to visit a significant number of sites in India and China, while also engaging an on-ground ethical sourcing resource in China.

For example, in 2023, Princess Polly maintained valid ethical manufacturing audits for 100% of final stage production, or tier-one production, and packaging production sites, and 100% visibility of non-functional process suppliers, or tier-two supply chain.

With global travel reopening, Princess Polly achieved 150 site visits in India, the U.S.

and China, while also expanding to two on-ground ethical sourcing resources in China.

The suite of tools to support factory managers and empower workers has also been improved, piloting e-learning for managers and grievance hotlines accessible to workers.

Princess Polly is the leader on ethical sourcing in our portfolio and amongst their digitally native brand peers, and we will leverage their best practices and apply them to the rest of our portfolio.

Princess Polly is the leader on ethical sourcing in our portfolio and amongst their digitally native brand peers, and we will leverage Princess Polly’s best practices and apply them to the rest of our portfolio.

We are devoted to making continual progress towards our commitments and being transparent along the way.

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Presently, 30% of Princess Polly’s product range is made from verified lower-impact materials, including organic, recycled, water-based or forest-friendly alternatives to conventional materials.

Princess Polly has also introduced recycled nylon basics and recycled sequin party styles.

We are aiming to have over 40% of our products made with lower-impact materials by the end of 2023.

We are committed to protecting the planet by promoting circularity and improving the environmental impact of our packaging, business operations and factories.

Princess Polly has also introduced recycled nylon basics and recycled sequin party styles and is aiming to have 60% of its products made with lower-impact materials by the end of 2025.

We are committed to protecting the planet by addressing climate change, promoting circularity and improving the environmental impact of our packaging, business operations and factories.

Our business model limits the planetary burden of overproduction.

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This high-velocity, low-waste strategy allows us to avoid unnecessary production.

As members of the United Nations Fashion Industry Charter for Climate Action, Princess Polly committed to setting science-based targets inline with a 1.5 degree temperature rise.

Princess Polly also reduced the absolute impact of their upstream transport by 41% from 2021, and offset all emissions from global facilities.

Princess Polly is aiming to be carbon neutral by 2030.

Equality & Community

We are committed to instilling an inclusive culture and promoting diversity across our brands.

As such, we aim to represent the diversity of our customers in our marketing and offer the right product to serve their unique demand.

Our brands Culture Kings and mnml both address men’s fashion, both of which are traditionally underserved yet fast-growing markets.

56% of Culture Kings’ customers are men.

In 2023, Princess Polly approved near- and long-term science-based emissions reduction targets with the Science Based Targets initiative (SBTi), in line with a 1.5 degree temperature rise.

Princess Polly is aiming to be carbon neutral by 2030 and is making progress towards its 2030 target for 52% Scope 3 emissions intensity reductions as, by mid-2023, they have achieved an intensity reduction of 16.9% on its base year.

The online and offline retail markets generally are highly competitive and rapidly evolving.

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market continues, our quarterly revenues are less concentrated in the fourth fiscal quarter.

In fiscal year 2022, our net revenues in the first, second, third and fourth quarters represented 24%, 26%, 25% and 24% , respectively, of our total net sales for the year.

In fiscal year 2021, our net revenues in the first, second, third and fourth quarters represented 12%, 27%, 29% and 32% , respectively, of our total net sales for the year.

In fiscal year 2023, our net revenues in the first, second, third and fourth fiscal quarters represented 22%, 25%, 26% and 27% , respectively, of our total net sales for the year.

In fiscal year 2022, our net revenues in the first, second, third and fourth fiscal quarters represented 24%, 26%, 25% and 24% , respectively, of our total net sales for the year.

Intellectual Property

We primarily protect our intellectual property through the trademark, copyright and trade secret laws of Australia and the United States.

As of December 31, 2022, we owned approximately 496 trademark registration and approximately 83 Internet domain names.

As of December 31, 2023, we owned nearly 550 trademark registrations and 79 Internet domain names.

Although we have not sought copyright registration for our technology or works to date, we rely on common law copyright and trade secret protections in relation to our proprietary technology, products and the content displayed on our websites, including our photography and fabric prints that we design.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business