What changed in this filing

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Item 1A. Risk Factors

2022-03-09 compared with 2021-03-10 · 94 added, 90 removed, 436 unchanged (30% of the section changed)

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We have grouped the risk factors into categories for ease of reading, and without any reflection on the importance of, or likelihood of, any particular category.

Economic and political risks

Macroeconomic risks

The Company’s business may be materially adversely affected by market conditions and by global and economic conditions and other factors beyond its control.

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• consumer credit availability and consumer debt levels;

• material input costs, including fuel and energy costs and labor cost inflation;

• material input costs, including fuel and energy costs, freight costs, and labor cost inflation;

• foreign currency translation;

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• unfavorable economic conditions in the United States, the U.K., continental Europe, Asia and elsewhere;

• unstable economic and political conditions, lack of legal regulation enforcement, civil unrest and political activism, particularly in Asia;

• political unrest, war, terrorism, geopolitical uncertainties, trade policies and sanctions, including the repercussions of the military conflict between Russia and Ukraine;

• unstable economic and political conditions, lack of legal regulation enforcement, civil unrest and potential accompanying shifts in laws and regulations;

• restructuring and integration of the Company's European operations;

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and other countries have contributed to increased volatility and diminished expectations for the global economy.

These factors, coupled with the prospect of decreased business and consumer confidence and increased unemployment resulting from the outbreak of COVID-19, may precipitate a prolonged economic slowdown and recession.

These factors, coupled with the prospect of decreased business and consumer confidence and increased unemployment resulting from the ongoing COVID-19 pandemic, may precipitate a prolonged economic slowdown and recession.

Given the ongoing and dynamic nature of the COVID-19 virus and the worldwide response related thereto, including the emergence of new variants, the distribution and availability of vaccines and the efficacy thereof, it is difficult to predict the full impact of the ongoing COVID-19 pandemic on the Company’s business.

The Company’s business may be unfavorably impacted by the fear of exposure to or actual effects of the COVID-19 pandemic, such as reduced travel or recommendations or mandates from governmental authorities to cease particular business activities.

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• Reductions in demand or volatility in demand for one or more of the Company’s products, which may be caused by, among other things:

the temporary inability of consumers to purchase the Company’s products due to illness and, brick and mortar retailers closing their store operations, which has occurred as a result of reduced demand from such customers, quarantine or other travel restrictions, or financial hardship for customers and consumers;

• Inability to meet the Company’s customers’ needs and achieve cost targets due to disruptions in the Company's supply chain arrangements as well as distribution centers caused by the loss or disruption of transportation, trucking availability, workforce, or other distribution capability;

the temporary inability of consumers to purchase the Company’s products due to illness, or brick and mortar retailers closing or reducing their store operations, which has occurred as a result of reduced demand from such customers, quarantine or other travel restrictions, or financial hardship for customers and consumers;

• Inability to meet the Company’s customers’ needs and achieve cost targets due to disruptions in the Company's supply chain arrangements caused by limited container capacity, increased demand for containers, and backlog at U.S.

and International ports as well as distribution centers caused by the loss or disruption of transportation, trucking availability, workforce, or other distribution capability;

• Failure of third parties on which the Company relies, including the Company’s suppliers, third-party manufacturers, distributors, and external business partners, to meet their obligations to the Company, including due to a lack of manufacturing capacity, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties;

• Customers' inability to make payments due to the Company pursuant to existing payment terms as a result of store closures resulting from the COVID-19 pandemic;

• Customers' inability to make payments due to the Company pursuant to existing payment terms as a result of store closures or reduced operations resulting from the COVID-19 pandemic;

• Significant changes in the political and labor conditions in markets in which the Company sells, or distributes products, including quarantines, governmental or regulatory actions, closures or other restrictions that limit or close the Company’s distribution facilities, restrict the Company’s employees’ ability or willingness to travel or perform necessary business functions, or otherwise prevent the Company's facilities or its third-party partners, suppliers, or customers from sufficiently staffing operations, including operations necessary for the production, distribution, sale, and support of the Company's products;

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Moreover, the Company may not be successful in finding or integrating suitable successors in the event of the loss of executive officers or other key employees or if such persons become unavailable for a prolonged period of time.

There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of the pandemic is highly uncertain and subject to change.

The Company does not yet know the full extent of the impact of COVID-19 on the global economy.

There are no comparable recent events that provide guidance as to the effect the ongoing spread of COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of the pandemic is highly uncertain and subject to change.

The Company does not yet know the full extent of the continued impact of COVID-19 on the global economy.

Although disruptions from the COVID-19 pandemic may continue to occur, the long-term economic impact and near-term financial impact on the Company, including but not limited to, any possible impairment, restructuring and other charges, cannot be reliably quantified or estimated at this time due to the uncertainty of future developments.

Despite efforts to manage and remedy the impact of COVID-19, the ultimate impact of COVID-19 could materially and adversely affect the Company’s business, financial condition, results of operations, cash flows and competitive position, and depends on factors beyond the Company’s knowledge or control, including the duration and severity of the COVID-19 pandemic as well as third-party actions taken in response thereto.

The Company's results of operations could be negatively impacted by inflation or deflation in supply chain costs, including raw materials, sourcing, transportation and energy

The Company designs, sources and sells branded kitchenware, tableware and other homeware goods and relies on third parties to manufacture its products who are, in turn, subject to changes in their underlying manufacturing costs.

The Company also relies on third parties for transportation and is exposed to fluctuations in freight costs to transport goods as well as the price of fuel and gasoline.

These prices may fluctuate based on a number of factors beyond the Company’s control, including from geopolitical conditions such as the military conflict in Ukraine and resulting sanctions imposed the U.S.

and other countries.

Inflation could also result in significant cost increases.

If the Company is unable to mitigate any cost increases from the foregoing factors through various customer pricing actions and cost reduction initiatives, its financial condition may be adversely affected.

Conversely, in the event that there is deflation, the Company may experience pressure from its customers to reduce prices.

There can be no assurance that the Company would be able to reduce its cost base to offset any such price concessions, which could adversely impact its results of operations and cash flows.

The Company’s U.K.

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A majority of the Company’s products are sourced from vendors in China.

In 2018 and 2019, tariffs were imposed by the United States Trade Representative on certain finished products imported by the Company into the U.S.

Both the U.S.

and China have implemented several rounds of tariffs and retaliations with respect to certain products imported from the other country.

For example, in 2018 and 2019, tariffs were imposed by the United States Trade Representative on certain finished products imported by the Company into the U.S.

from China, which have not been lifted by the current administration.

In response to the tariffs, the Company may seek to increase prices to its customers, which may diminish demand for its products.

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government, or the imposition of retaliatory policies or tariffs by other governments, may adversely affect the Company’s results of operations and financial condition.

Legislative or regulatory initiatives related to climate change could have a material adverse effect on our business.

Greenhouse gases may have an adverse effect on global temperatures, weather patterns, and the frequency and severity of extreme weather and natural disasters.

Such events could have a negative effect on the Company’s business.

Concern over climate change may result in new or additional legislative and regulatory requirements to reduce or mitigate the effects of climate change on the environment, which could result in future tax, transportation, and utility increases and could, in turn, have a material adverse effect on the Company’s business.

There is also increased focus, including by investors, customers, and other stakeholders, on these and other sustainability matters, including the use of plastic, energy, waste, and worker safety.

The Company’s reputation could be damaged if the Company does not, or is perceived to not, act responsibly with respect to sustainability matters, which could also have a material adverse effect on the Company’s business, results of operations, financial position, and cash flows.

The Company's ability to obtain insurance and the terms of any available insurance coverage could be materially adversely affected by macroeconomic and company-specific events, as well as the financial condition of insurers.

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The Company has a substantial amount of indebtedness and is dependent on the availability of its bank loan facilities to finance its liquidity needs.

As of December 31, 2020, the Company had $289.9 million of consolidated debt, consisting of $27.3 million under its senior secured asset-based revolving credit facility (the “ABL Agreement”) and $262.6 million outstanding under a senior secured term loan credit facility (the “Term Loan” and, collectively with the ABL Agreement, the “Debt Agreements”).

As of December 31, 2021, the Company had $252.1 million of consolidated debt outstanding under a senior secured term loan credit facility (the “Term Loan” and, collectively with the ABL Agreement, the “Debt Agreements”).

The ABL Agreement provides for, among other things, a maximum aggregate principal amount of $150.0 million and will mature on March 2, 2023.

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These requirements could limit the Company’s ability to obtain future financing and may prevent the Company from taking advantage of attractive business opportunities.

The Company’s ability to meet the covenants or requirements in its Debt Agreements may be affected by events beyond the Company’s control, and the Company may not be able to satisfy such covenants and requirements.

The Company’s ability to meet the covenants or requirements in its Debt Agreements may be affected by events beyond the Company’s control, and the Company

may not be able to satisfy such covenants and requirements.

A breach of these covenants or the Company’s inability to comply with the restrictions could result in an event of default under the Debt Agreements, which in turn could result in an event of default under the terms of the Company’s other indebtedness.

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Some of the Company’s borrowings bear interest at a variable rate based on LIBOR.

In July 2017, the United Kingdom’s Financial Conduct Authority (“FCA”), a regulator of financial services firms and financial markets in the United Kingdom, stated that it will plan for a phase out of regulatory oversight of LIBOR interest rates indices.

The FCA has indicated they will support the LIBOR indices through 2021, to allow for an orderly transition to an alternative reference rate.

In March 2021, the United Kingdom’s Financial Conduct Authority (“FCA”), a regulator of financial services firms and financial markets in the United Kingdom, stated that it will plan for a phase out of regulatory oversight of LIBOR interest rates indices beginning as of December 31, 2021.

The United States Federal Reserve has also advised banks to cease entering into new contracts that use USD LIBOR as a reference rate.

The Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate (“SOFR”) as its recommended alternative to LIBOR, and the Federal Reserve Bank of New York began publishing SOFR rates in April 2018.

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Treasury securities.

Further, other central banks have convened working groups to determine alternative reference rates for other currencies.

For example, the working group for the Sterling Risk-Free Reference Rates, have recommended the Sterling Overnight Index Average ("SONIA") as the alternative to Sterling LIBOR.

The Company is evaluating the potential impact of the eventual replacement of the LIBOR benchmark interest rate, including the possibility of SOFR as the dominant replacement.

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There can be no guarantee that SOFR will become widely used and that alternatives may or may not be developed with additional complications.

The Company is not able to predict whether LIBOR will cease to be available after 2021, whether SOFR will become a widely accepted benchmark in place of LIBOR, or what the impact of such a possible transition to SOFR may be on the Company's financial condition and results of operations.

The Company is not able to predict whether the USD LIBOR will cease to be available after June 2023, whether SOFR will become a widely accepted benchmark in place of LIBOR, or what the impact of such a possible transition to SOFR may be on the Company's financial condition and results of operations.

On December 28, 2021 the Company entered into Amendment No.1 amend the ABL Credit Agreement to make certain changes with respect to the interest rate benchmarks (the "Benchmarks") used to calculate the rate on at which interest accrues on the loans, commitments, and/or other extensions of credit under the ABL Credit Agreement.

Specifically, the Amendment provides a mechanism for determining an alternative rate of interest upon the occurrence of certain events relating to the availability of LIBOR and/or other applicable Benchmarks provided for in the ABL Credit Agreement.

At this time, the Company is not able to predict the impact that the changes or other reforms relating to LIBOR and the Benchmarks rates may have on its financial condition, results of operations and cash flows.

The Company’s inability to complete future acquisitions or strategic alliances and/or integrate acquired businesses could have a material adverse effect on the Company’s business and results of operations.

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• complexities associated with managing the combined businesses, including difficulty addressing possible differences in corporate cultures and management philosophies and the challenge of integrating complex systems, technology, networks, and other assets of each of the companies in a seamless manner that minimizes any adverse impact on customers, clients, employees, lenders, and other constituencies;

• risks associated with locating and entering into agreements with third-party logistics providers to assist in certain locations or to develop strategies to address inventory surges;

• potential unknown liabilities and unforeseen increased expenses or delays associated with the acquisition.

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The implementation of restructuring plans could be disruptive to the Company’s operations, result in higher than anticipated charges and otherwise adversely affect the Company’s results of operations and financial condition.

In addition, the Company’s ability to complete restructuring plans and achieve the anticipated benefits from a plan is subject to estimates and assumptions and may vary materially from the Company’s expectations, including as a result of factors that are beyond the Company’s control.

In addition, the Company’s ability

to complete restructuring plans and achieve the anticipated benefits from a plan is subject to estimates and assumptions and may vary materially from the Company’s expectations, including as a result of factors that are beyond the Company’s control.

Furthermore, following completion of a restructuring plan, the business may not be more efficient or effective than prior to implementation of the plan.

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other identifiable intangible assets, including trade names;

and fixed assets.

and long-lived assets.

At December 31, 2021, goodwill, net of impairment totaled $30.3 million;

indefinite-lived intangibles assets, net of impairment totaled $49.6 million;

finite-lived intangible assets, net of impairment and accumulated amortization totaled $132.8 million.

The Company does not amortize goodwill but rather reviews it for impairment on an annual basis or more frequently when events or changes in circumstances indicate that its carrying value may not be recoverable.

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The further recognition of an impairment of the Company’s goodwill or any of the Company’s assets would negatively affect the Company’s results of operations and total capitalization, the effect of which could be material.

Reporting Unit

During the first quarter of 2020, as a result of the economic downturn caused by the COVID-19 pandemic, the Company performed an interim assessment of the goodwill for the U.S.

reporting unit as of March 31, 2020, by comparing the fair value of the reporting unit with its carrying value.

The Company performed the analysis using a discounted cash flow and market multiple method.

Based upon the analysis performed, the Company recognized a non-cash goodwill impairment charge of $19.1 million during the first quarter of 2020.

The goodwill impairment charge resulted from, among other factors, the uncertain market conditions arising from the COVID-19 pandemic, which impacted the Company's market capitalization, as well as a reduction of forecasted future cash flows associated with the effects of the COVID-19 pandemic.

The fair value of the U.S.

reporting unit was approximately 3.9% below its carrying value as of March 31, 2020.

The Company performed its annual impairment assessment of its U.S.

reporting unit as of October 1, 2020 by comparing the fair value of the reporting unit with its carrying value.

The Company performed the analysis using a discounted cash flow and market multiple method.

As of October 1, 2020, the fair value of the U.S.

reporting unit exceeded the carrying value of goodwill.

In 2019, the Company recognized a non-cash goodwill impairment charge of $33.2 million, during the three months ended December 31, 2019.

The Company performed the analysis using a discounted cash flow and market multiple method.

The goodwill impairment charge resulted from, among other factors, a sustained decline in the Company's market capitalization observed in the fourth quarter of 2019.

The fair value of the U.S, reporting unit was approximately 6.1% below its carrying value at October 1, 2019.

The Company’s projections of product demand, sales and net income are highly subjective in nature and the Company’s future sales and net income could vary materially from the Company’s projections.

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This could result in higher volatility in the Company’s earnings and exposes the Company to higher financial risks.

The Company’s medical costs in recent years have generally increased and an aging workforce and other employee demographics could result in an increase in medical costs beyond what the Company has experienced or expects.

The Company’s medical costs in recent years have generally increased and other employee demographics could result in an increase in medical costs beyond what the Company has experienced or expects.

The Company has stop-loss coverage in place for catastrophic events, but the aggregate impact of a high number of claims up to the Company’s stop-loss limit may have an effect on the Company’s profitability.

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Over time, controls are revised, as necessary, due to changes in conditions or deterioration in the degree of compliance with policies or procedures.

If in the future the Company’s controls become inadequate, it could fail to meet its financial reporting obligations, its reputation may be adversely affected, its business and operating results could be harmed, and the market price of its stock could decline.

If in the future the Company’s controls become inadequate, it could fail to meet its financial reporting

obligations, its reputation may be adversely affected, its business and operating results could be harmed, and the market price of its stock could decline.

Customer risks

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Unanticipated changes in purchasing and other practices by the Company’s customers, including a customer’s pricing and payment terms, inventory de-stocking, limitations on shelf space, more extensive packaging requirements, changes in order quantities, use of private label brands and other practices, could materially and adversely affect the Company’s business, results of operations and financial condition.

In addition, as a result of the desire of retailers to more closely manage inventory levels, there is a growing trend among retailers to make purchases on a “just-in-time” basis.

While the Company generally orders products significantly in advance of

the anticipated time of their sale by the Company, this trend may require the Company to shorten its lead time for production in certain cases and more closely anticipate demand, which may require the Company to carry additional inventories.

In addition, as a result of the desire of retailers to more closely manage inventory levels and optimize their supply chains, there is a growing trend among retailers to evaluate suppliers based on their ability to deliver orders at the quantity and schedule specified, which is known as the "on-time-in-full" delivery metric.

Supply-chain complexity and customer demand for on-shelf availability creates additional pressure on delivery performance, which in turn can add strain on distribution channels.

The Company’s annual earnings and cash flows also depend to a great extent on the results of operations in the latter half of the year due to the seasonality of its sales.

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During the years ended December 31, 2021, 2020 and 2019, Wal-Mart Stores, Inc., including Sam’s Club and, in the U.K., Asda Superstore, (“Walmart”), accounted for 18%, 20% and 16% of consolidated net sales, respectively.

During the years ended December 31, 2020 and 2019, sales to Costco Wholesale Corporation (“Costco”) accounted for 11% of consolidated net sales.

During the year ended December 31, 2020, Amazon.com Inc., (“Amazon”), accounted for 10% of consolidated net sales.

During the years ended December 31, 2021, 2020 and 2019, sales to Costco Wholesale Corporation (“Costco”) accounted for 12%, 11%, and 11% of consolidated net sales.

During the year ended December 31, 2021 and 2020, Amazon.com Inc., (“Amazon”), accounted for 12% and 10% of consolidated net sales.

Sales to Walmart, Costco and Amazon are included in the Company's U.S.

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The Company would also be subject to increased credit risk with respect to such customers.

In particular, the concentration of the Company’s business with Walmart extends to its international business as well as through Vasconia in Mexico and the Company’s strategic alliance in Canada, due to the market presence of Walmart in these foreign countries.

Any changes in purchasing practices or decline in the financial condition, of Walmart or other large customers may have a material adverse impact on the business, results of operations and financial condition of the Company.

In particular, the concentration of the Company’s business with Walmart, Costco and Amazon extends to its international business as well as through Vasconia in Mexico and the Company’s strategic alliance in Canada, due to the market presence of Walmart, Costco and Amazon in these foreign countries.

Any changes in purchasing practices or decline in the financial condition, of Walmart, Costco and Amazon or other large customers, may have a material adverse impact on the business, results of operations and financial condition of the Company.

The Company’s large customers also have significant purchasing leverage.

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The Company’s customers could carry products that directly compete with the Company’s products for retail space and consumer purchases.

There is a risk that these customers could give higher priority to products of, or form alliances with, the Company’s

There is a risk that these customers could give higher priority to products of, or form alliances with, the Company’s competitors.

The failure of customers to provide the Company’s products with similar or better levels of promotional support and retail space as competitors receive could have a material adverse effect on the Company’s business, results of operations and financial condition.

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As a result, an increasing portion of total consumer expenditures with retailers is occurring online and through mobile commerce applications.

This overall trend has negatively affected many brick-and-mortar retailers, which has been exacerbated by the COVID-19 pandemic.

This overall trend has negatively affected many brick-and-mortar retailers, which has been exacerbated by the ongoing COVID-19 pandemic.

If the Company’s brick-and-mortar retail customers fail to maintain or grow their overall market position through the integration of physical retail presence and digital retail, these customers may experience financial difficulties including store closures, bankruptcies or liquidations.

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The Company is also vulnerable to certain additional risks and uncertainties associated with the Internet, including:

changes in required technology interfaces;

website downtime and other technical failures;

costs and technical issues as the Company upgrades its website software;

computer viruses;

changes in applicable federal and state regulations;

security breaches;

data breaches;

and consumer privacy concerns.

In addition, the Company must keep up to date with competitive technology trends, including the use of improved technology, creative user interfaces and other Internet marketing tools such as paid search, which may increase its costs and which may not succeed in increasing sales or attracting customers.

changes in required technology interfaces, website downtime and other technical failures, costs and technical issues as the Company upgrades its website software, computer viruses, changes in applicable federal and state regulations, security breaches, data breaches, and consumer privacy concerns.

may not succeed in increasing sales or attracting customers.

The Company’s failure to successfully respond to these risks and uncertainties might adversely affect the sales in its Internet business, as well as damage the Company’s reputation and brands.

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Supply chain risks

International suppliers subject the Company to regional regulatory, man-made or natural disasters, health epidemics, political, economic and foreign currency exchange risk that could materially and adversely affect the Company’s operating results.

The Company sources its products from suppliers located principally in Asia, Europe and the United States, which international scope of operations subjects the Company to various risks, including man-made or natural disasters, health epidemics, political, economic and foreign currency changes.

International suppliers subject the Company to regional regulatory, man-made or natural disasters, health epidemics, political or military conflicts, economic and foreign currency exchange risk that could materially and adversely affect the Company’s operating results.

Additionally, the Company’s vendors in Asia, from whom a substantial majority of the Company’s products are sourced, are located primarily in China, which subjects the Company to regional risks including regulatory, social and other risks in addition to the risks resulting from the rising tensions between the United States and China involving trade policies and certain regulatory actions.

The Company’s ability to select and retain reliable vendors and suppliers who provide timely deliveries of quality parts and products efficiently will impact its success in meeting customer demand for timely delivery of quality products.

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Changes in labor or other laws may be enacted, in China or in other countries in which the Company does business, which could have a material adverse effect on the Company’s operations and/or those of the Company’s suppliers.

In addition, any indirect supply chain disruptions due to the conflict in Ukraine may further complicate existing supply chain constraints.

Changes in currency exchange rates might negatively affect the Company and its overseas vendors’ profitability and business prospects.

The Company does not have access to its vendors’ financial information and the Company is unable to assess its vendors’ financial condition, including

their liquidity.

The Company does not have access to its vendors’ financial information and the Company is unable to assess its vendors’ financial condition, including their liquidity.

Interruption of supplies from any of the Company’s vendors, or the loss of one or more key vendors, could have a negative effect on the Company’s business and operating results.

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Accordingly, the Company is subject to risks incidental to such transportation.

These risks include, but are not limited to, increases in fuel costs, fuel shortages, the availability of ships, increased security restrictions, work stoppages, weather disruptions and carriers’ ability to provide delivery services to meet the Company’s shipping needs.

These risks include, but are not limited to, increases in fuel costs, fuel shortages, the availability of ships, increased security restrictions, transportation reroutes in response to geopolitical conflict, work stoppages, weather disruptions and carriers’ ability to provide delivery services to meet the Company’s shipping needs.

Transportation disruptions and increased transportation costs could materially adversely affect the Company’s business, results of operations and financial condition.

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Although the Company has agreements with its third party manufacturers regarding quality standards and regularly audits the facilities of its manufacturers through its quality control program, the third party manufacturers may not continue to meet the Company’s quality standards, social standards regarding its workforce that are expected in the United States or legislation and regulations that apply to the products the Company contracts to manufacture.

Failure by the Company’s manufacturers to meet these standards could, in turn, increase order cancellations, returns and price concessions and decrease customer demand for the Company’s products.

There is also no assurance that the Company’s quality control program will adequately audit, analyze and evaluate the quality standards of third party manufacturers.

Failure by the Company’s

manufacturers to meet these standards could, in turn, increase order cancellations, returns and price concessions and decrease customer demand for the Company’s products.

Non-compliance with the Company’s product standards, regulatory requirements or product recall (or other regulatory actions) could have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

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The cost of producing and distributing the Company’s products is also sensitive to energy costs, duties and tariffs.

For example, freight costs increased in 2021 and are expected to increase in 2022.

The selling prices of the Company’s products have not always increased in response to raw material, labor or other cost increases, and the Company is unable to determine to what extent, if any, it will be able to pass future cost increases through to its customers.

The Company’s inability to come to favorable agreements with its suppliers or to pass increased costs through to the Company’s customers could materially and adversely affect its financial condition or results of operations.

A widespread outbreak of an illness, such as the COVID-19 pandemic, or other health issue could negatively affect various aspects of the business, including the Company's supply chain, and make it more difficult and expensive to meet the Company's obligations to its customers, and could result in reduced demand from its customers.

The Company's global operations are susceptible to global events, including a widespread outbreak of an illness, such as the COVID-19 outbreak, or other health issue, As a result of epidemic outbreaks businesses can be shut down, supply chains can be interrupted, slowed, or rendered inoperable, and individuals can become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions.

A widespread outbreak of an illness, such as the ongoing COVID-19 pandemic, or other health issue could negatively affect various aspects of the business, including the Company's supply chain, and make it more difficult and expensive to meet the Company's obligations to its customers, and could result in reduced demand from its customers.

The Company's global operations are susceptible to global events, including a widespread outbreak of an illness, such as the ongoing COVID-19 pandemic, or other health issue.

As a result of epidemic outbreaks businesses can be shut down, supply chains can be interrupted, slowed, or rendered inoperable, and individuals can become ill, quarantined, or otherwise unable to work and/or travel due to health reasons or governmental restrictions.

Epidemic outbreaks could also substantially interfere with general commercial activity related to the Company's supply chain and customer base, which could have a material adverse effect on the Company's financial condition, results of operations, business, or prospects.

For example, the Company has experienced disruptions to its supply chain arrangements caused by limited container capacity, increased demand for containers and backlog at U.S.

and International Ports, as well as distribution centers caused by the loss or disruption of transportation, trucking availability, workforce or other distribution capability.

If the Company's operations are curtailed and the supply chain continues to be disrupted, the Company may need to seek alternate sources of supply for services and staff, which may be more expensive.

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Any such matters or proceedings could be burdensome, divert the time and resources of the Company’s personnel and the Company may not prevail.

Company’s competitors may independently develop technologies that are substantially equivalent or superior to the Company’s technology.

Furthermore, even if the Company’s intellectual property rights are not directly challenged, disputes among third parties could lead to the weakening or invalidation of the Company’s intellectual property rights, or other parties such as the Company’s competitors may independently develop technologies that are substantially equivalent or superior to the Company’s technology.

The laws of certain foreign countries in which the Company operates or may operate in the future do not protect, and the governments of certain foreign countries do not enforce, intellectual property rights to the same extent as do the laws and government of the U.S., which may negate the Company’s competitive or technological advantages in such markets.

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The Company conducts business outside of the United States through subsidiaries, affiliates and joint ventures.

These entities have operations and assets in the U.K., Mexico, Brazil, Canada, China and Hong Kong.

These entities have operations and assets in the U.K., Mexico, Netherlands, Canada, China and Hong Kong.

Therefore, the Company is subject to increases and decreases in its investments in these entities resulting from the impact of fluctuations in foreign currency exchange rates.

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• unanticipated income taxes, excise duties, import taxes, export taxes or other governmental assessments

• locating and entering into agreements with third-party logistics providers to assist in certain locations outside the United States.

In addition, the development of additional distribution space abroad involves significant financial and operational risks;

• difficulties in managing a global enterprise.

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These existing and future laws and regulations may impede the growth of the Internet, e-commerce or other online services.

These regulations and laws may cover taxation, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications,

consumer protection, the provision of online payment services, broadband residential Internet access and the characteristics and quality of products and services.

These regulations and laws may cover taxation, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services, broadband residential Internet access and the characteristics and quality of products and services.

It is not clear how existing laws governing issues such as property ownership, sales and other taxes, and personal privacy apply to the Internet and e-commerce.

Unfavorable resolutions of these issues could diminish the demand for the Company’s products on the Internet and increase the cost of doing business.

On June 21, 2018, the U.S.

Supreme Court decided South Dakota v.

For example, in 2018, the U.S.

Supreme Court ruling in South Dakota v.

Wayfair, Inc.

et al , (the “Wayfair Decision”), a case that challenged existing law under which online retailers are not required to collect sales tax unless they have a physical presence in the buyer’s state.

The Wayfair Decision established that a state may enforce or adopt laws requiring online retailers to collect and remit sales tax if there is a substantial nexus between the online retailer’s activity and the state, even if the retailer has no physical presence within the taxing state.

The majority of U.S.

states have enacted laws or have pending legislation that require online retailers to collect and remit sales tax for online sales.

These laws and pending legislation could result in the Company incurring substantial tax liabilities, including taxes on past sales, as well as penalties and interest.

The imposition by state governments of sales tax collection obligations on out-of-state internet retailers could also create additional administrative burdens on the Company.

This decision and the enactment and enforcement of laws resulting from this decision could also impact where the Company is required to file state income taxes.

As a result, the Company’s effective income tax rate, the cost of the Company’s e-commerce business, and the growth of its e-commerce business, could be materially adversely effected by the Wayfair Decision and other new laws or regulations governing the internet and e-commerce.

et al reversed longstanding precedent that remote sellers are not required to collect state and local sales taxes and established that a state may enforce or adopt laws requiring online retailers to collect and remit sales tax if there is a substantial nexus between the online retailer’s activity and the state, even if the retailer has no physical presence within the taxing state.

While the Company now collect, remits and reports sales tax in states that it does business, it is possible that Company’s effective income tax rate, the cost of the Company’s e-commerce business, and the growth of its e-commerce business could be materially adversely effected other new laws or regulations governing the internet and e-commerce.

This potential negative impact on the Company’s e-commerce business could have a material adverse effect on the Company’s overall business, results of operations and financial condition.

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The Company relies on many information technology systems for the operation of its principal business functions, including, but not limited to, the Company’s enterprise resource planning, warehouse management, inventory forecast and ordering and call center systems.

In the case of the Company’s inventory forecast and ordering system, most of the Company’s orders are received directly through electronic connections with the Company’s largest customers.

In the case of the Company’s inventory forecast and ordering system, most of the Company’s orders are received directly

through electronic connections with the Company’s largest customers.

Additionally, the success of certain product categories in a competitive marketplace is dependent upon the creation and launch of new, innovative products.

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The Company has made significant efforts to secure its computer network to mitigate the risk of possible cyber-attacks, including, but not limited to, data breaches, and is continuously working to upgrade its existing information technology systems and provide employee awareness training around phishing, malware, and other cyber risks to ensure that the Company is protected, to the greatest extent possible, against cyber risks and security breaches.

In the first quarter of 2021, we experienced a cyber security incident affecting our information technology systems.

The business disruption caused by the cyber incident was minimal.

Despite our continuous efforts to ensure the security of the Company’s computer networks, any future cyber incidents could compromise our information technology systems, which could impact operations and confidential information could be misappropriated, which could lead to negative publicity, loss of sales and profits or cause the Company to incur significant costs to reimburse third- parties for damages, which could adversely impact profits.

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The Company is in the process of transitioning the Company's Systems, Applications and Products and other critical systems to cloud-based technologies.

As the Company transitions to cloud-based technologies, the Company may be exposed to additional cyber threats

as the Company migrates from legacy systems to cloud-based solutions.

The Company's increased dependence on third parties for cloud-based systems may also subject the Company to further cyber threats.

As the Company transitions to cloud-based technologies, the Company may be exposed to additional cyber threats as the Company migrates from legacy systems to cloud-based solutions.

The Company's increased dependence on third parties for cloud-based systems may also subject the Company to further cyber threats, such as the recently identified Log4J vulnerability.

While such vulnerability did not result in a material adverse effect on the Company, there can be no assurance that the Company will not suffer a material adverse effect resulting from vulnerabilities in widely deployed software used by third parties.

The Company sells consumer products which involve an inherent risk of product liability claims.

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The Company may incur some of these costs directly and others may be passed on to the Company from its third-party suppliers.

Although the Company believes that it is substantially in compliance with applicable environmental laws and regulations at its facilities, the Company may not always be in compliance with such laws and regulations or any new laws and regulations in the future, which could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company also may incur costs associated with government inquiries and investigations.

For example, in August 2021 a wholly-owned subsidiary of the Company received a Notice of Liability from the Department of Justice on behalf of the EPA, and in September 2021, the subsidiary submitted a good faith offer to conduct additional testing and remedial design, which is under consideration by the EPA.

For further discussion of the Company's legal proceedings refer to NOTE 14 — COMMITMENTS AND CONTINGENCIES to the Company's consolidated financial statements included in this Annual Report on Form 10-K.

Any failure by the Company to be in compliance with applicable environmental laws and regulations or any new laws and regulations in the future could have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company’ executives and other key employees are critical to the Company’s success.

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The Company’s success also depends, in part, on its ability to identify, hire and retain other skilled personnel.

The Company’s industry is characterized by a high level of employee mobility and aggressive recruiting among competitors for personnel with successful track records.

The Company’s industry is characterized by a high level of employee mobility and aggressive recruiting among competitors for personnel with successful track records as well as growing pressure to increase wages for skilled personnel in the industry.

The Company may not be able to attract and retain skilled personnel or may incur significant costs in order to do so.

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(i) enter into any agreement for a transaction that would result in a change of control of the Company;

(ii) consummate any transaction for the sale of all or

substantially all of the Company’s assets;

(ii) consummate any transaction for the sale of all or substantially all of the Company’s assets;

(iii) file for reorganization pursuant to Chapter 11, or for liquidation pursuant to Chapter 7, of the U.S.

9 unchanged sentences

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 1A. Risk Factors