Soho House & Co Inc. (NYSE: SHCO) (“SHCO,” “Company,” “we”
or “our”), a global membership platform that connects a vibrant,
diverse, and global group of members, today announced results for
the fourth quarter and fiscal year ended December 31, 2023.
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the full release here:
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Soho House Portland, opened March 5th,
2024. The first House in the Pacific North West. Credit:
Christopher_Sturman
Fourth Quarter 2023
Highlights
- Total Members in the fourth quarter 2023 grew to 259,884 from
255,252 in third quarter 2023 and by 14.6% year-over-year
- Soho House Members grew to 193,865 from 184,542 in third
quarter 2023, and 19.7% year-over-year
- SHCO Membership waitlist now sits at approximately 99,000, an
all-time high
- Total revenues of $290.8 million, 7.5% year-over-year
growth
- Membership revenues of $95.8 million increased by 24.2%
year-over-year, accounting for 32.9% of Total revenues
- In-House revenues grew to $125.2 million up 3.8% year-over-year
- Revenue Per Available Room (“RevPAR”) grew 4% year-over-year on
a like-for-like basis
- Net loss attributable to Soho House & Co Inc. was $57.0
million or $0.29 per share, inclusive of a $47 million impairment
charge predominantly related to Soho Works North America
- Adjusted EBITDA was $36.6 million, up $13.4 million from fourth
quarter 2022
- Recently opened Soho House Portland, expect to open Soho House
Sao Paulo soon
- Effective November 1, 2023, Tom Collins, former Managing
Director - UK Europe & Asia, was appointed as Chief Operating
Officer of the Company
Fiscal Year 2023 Financial
Results
- Fiscal Year 2023 Total revenues increased 16.8% year-over-year
to $1,135.9 million
- Membership revenues of $361.5m increased 32.5% year-over-year,
accounting for 31.8% of Total revenues
- In-House revenues grew to $482.1 million up 13% year-over-year
- Revenue Per Available Room (“RevPAR”) was 11% higher
year-over-year on a Like-for-Like basis
- Net loss attributable to Soho House & Co Inc. was $118.0
million or $0.60 per share, inclusive of the same impairment charge
outlined above
- Adjusted EBITDA was $128.0 million, up from $60.7 million in
fiscal year 2022
- Successfully opened two new Houses: Bangkok (February 2023) and
Mexico City (September 2023)
"The strong results we delivered in 2023 demonstrate our
continued focus on driving a better member experience and
significant progress on improving profitability. We grew Soho House
membership approximately 20%, including the benefit of maturing
Houses and entering into South East Asia and Latin America for the
first time. We more than doubled Adjusted EBITDA, reflecting 11%
margins up from 6% in 2022," said Andrew Carnie, CEO of Soho House
& Co.
“We are excited for the year-ahead. I would like to thank our
teams globally for their commitment and hard work, and our members
for their enduring loyalty over nearly 30 years."
Summary of Unaudited Financial Results
for the Periods Ended December 31, 2023
For the 13 Weeks Ended
For the Fiscal Year
Ended
(in thousands, except shares and per
share amount unless otherwise noted)
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
(Unaudited)
Total revenues
$
290,790
$
270,390
$
1,135,879
$
972,214
Membership revenues
$
95,767
$
77,124
$
361,487
$
272,809
In-House revenues
$
125,220
$
120,674
$
482,066
$
426,602
Other revenues
$
69,803
$
72,592
$
292,326
$
272,803
Operating gain (loss)
$
(23,156
)
$
36,010
$
(23,003
)
$
(147,481
)
House-Level Contribution(1)
$
65,304
$
45,448
$
218,037
$
144,425
House-Level Contribution margin (%)(1)
31
%
24
%
27
%
22
%
Other Contribution(1)
$
16,767
$
15,430
$
70,002
$
52,524
Other contribution margin (%)(1)
21
%
19
%
21
%
17
%
Net income (loss) attributable to SHCO
Inc.
$
(56,995
)
$
13,526
$
(117,953
)
$
(220,580
)
Adjusted EBITDA(1)
$
36,631
$
23,197
$
128,000
$
60,741
Adjusted EBITDA margin (%)(1)
13
%
9
%
11
%
6
%
Net debt(1)(2)
$
638,358
$
531,665
$
638,358
$
531,665
Weighted average Class A and Class B
Shares outstanding (basic)
195,126,343
196,878,523
195,589,859
199,985,264
Basic and diluted income (loss) per
share
$
(0.29
)
$
0.07
$
(0.60
)
$
(1.10
)
(1) See “Non-GAAP Financial Measures” for reconciliations of
Non-GAAP measures to GAAP measures.
The following selected items listed below are not added back in
Adjusted EBITDA:
For the 13 Weeks Ended
For the Fiscal Year
Ended
(in thousands)
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
(Unaudited)
Pre-opening expenses
$
4,311
$
3,753
$
18,604
$
14,081
Non-cash rent
1,423
2,233
7,621
7,877
Deferred registration fees, net
(464
)
(469
)
(1,855
)
924
We delivered the following highlights
against our strategic priorities in the fourth
quarter
1. Grow and Enhance Membership
- Membership continues to reach new highs benefiting from a
record waitlist and continued high retention rates
- Soho House members grew to 193,865 from 184,542 in third
quarter 2023, and 19.7% YoY
- Focused rollout of initiatives continues to improve member
experience
- Opened Soho House Mexico City in September 2023 and Soho House
Portland in March 2024. Expect to open Soho House Sao Paulo
soon
2. Operational Excellence to Drive Profitability
- We achieved fourth quarter 2023 Adjusted EBITDA of $36.6
million, an increase of $13.4 million compared to fourth quarter
2022
- In-House revenues grew to $125.2 million in fourth quarter
2023, up from $120.7 million in fourth quarter 2022
- Like-for-like F&B margins at our Houses rose ~200bps vs.
fourth quarter 2019
- Focus on driving accommodations performance resulted in 4%
RevPAR growth in fourth quarter 2023 vs. fourth quarter 2022 on a
like-for-like basis
Membership Summary for the Quarter
Ended December 31, 2023
As of
December 31, 2023
January 1, 2023
(Unaudited)
Total Members
259,884
226,830
Soho House
193,865
161,975
Frozen members
7,512
2,256
Soho Friends
59,971
58,222
Soho Works
6,048
6,633
Active App Users
201,211
168,641
As of
December 31, 2023
January 1, 2023
January 2, 2022
(Unaudited)
Number of Soho Houses
42
40
33
North America
15
14
11
United Kingdom
13
13
11
Europe/RoW
14
13
11
Number of Soho House Members
193,865
161,975
122,807
North America
70,284
60,439
45,733
United Kingdom
70,865
60,909
48,575
Europe/RoW
42,094
33,827
23,847
All Other
10,622
6,800
4,652
Number of Other Members
66,019
64,855
33,029
North America
17,615
17,864
7,944
United Kingdom
40,024
39,325
22,131
Europe/RoW
8,380
7,666
2,954
Number of Total Members
259,884
226,830
155,836
Number of Active App Users
201,211
168,641
119,677
Memberships
- Total Members grew to 259,884 from 255,252 in third
quarter 2023 and by 14.6% year-over-year
- Total Soho House Members grew to 193,865 from 184,542 in
third quarter 2023, driven by continued high retention rates,
alongside membership intakes in both new and existing Houses
- Frozen Members was 7,512 at the end of fourth quarter
2023
- Other Memberships including Soho Friends and Soho Works
was 66,019 members, a decrease of 4,691 from the end of the third
quarter 2023 but a 2% increase year-over-year
Financing
- SHCO ended fourth quarter 2023 with Cash and cash equivalents
and Restricted cash of $164 million
Updated Fiscal 2024 Guidance
The following forward-looking statements reflect our current
expectations as of today, March 15, 2024:
Fiscal 2023 Results
Actuals
Fiscal 2024 Guidance
Total Soho House Members
193,865
>210,000
Membership revenues
$361.5m
$405m – $415m
Total revenues*
$1,136m
$1,200m – $1,250m
Adjusted EBITDA**
$128.0m
$155m – $165m
*Assumes no material FX impact, reflecting bank estimates
**Without adding back pre-opening costs, non-cash rent and
deferred registration fees of ~$25-30m combined for fiscal 2024 as
a whole
Conference Call and Webcast:
A conference call and live webcast will be hosted to discuss
these results on Friday, March 15, 2024 at 9am EST / 1pm GMT.
A live broadcast and accompanying presentation will be available
at www.sohohouseco.com.
To listen to the live conference call via telephone, please
dial:
USA
New York (646) 307 1963 USA & Canada Toll-Free (800) 715
9871
UK
London +44 (0)20 3481 4247 UK Toll-Free +44 (0)800 260 6466
Conference ID 3174102 A replay of the webcast will be available
on our website following the call for up to 90 days.
Contacts: Investor Relations: ir@sohohouseco.com
Press: press@sohohouseco.com
Non-GAAP Financial Measures
This presentation contains certain financial measures, including
Adjusted EBITDA, House-Level Contribution and Margin, Other
Contribution and Margin, Net Debt and certain financial measures
presented on a Constant Currency basis that are not required by, or
presented in accordance with, accounting principles generally
accepted in the United States of America (‘GAAP’). We refer to
these measures as ‘non-GAAP financial measures.’ We use these
non-GAAP financial measures when planning, monitoring and
evaluating our performance. While we believe that these non-GAAP
financial measures are useful in evaluating our business, this
information should be considered as supplemental in nature and is
not meant as a substitute for revenues or net income (loss), in
each case as recognized in accordance with GAAP. In addition, other
companies may calculate one or more of these measures differently,
which reduces the usefulness of any such measure as a comparative
measure. See below for a definition of these non-GAAP financial
measures and a reconciliation to the most directly comparable GAAP
financial measures.
We provide earnings guidance using both GAAP and non-GAAP
financial measures. A reconciliation of the Company’s Adjusted
EBITDA guidance to the most directly comparable GAAP financial
measure cannot be provided without unreasonable efforts and is not
provided herein because of the inherent difficulty in forecasting
and quantifying certain amounts that are necessary for such
reconciliations, including adjustments that are made for future
changes in foreign exchange and the other adjustments reflected in
our reconciliation of historical non-GAAP financial measures, the
amounts of which, could be material.
The information in this presentation should be read in
conjunction with our Annual and Quarterly Reports on Form 10-K and
Form 10-Q and other information that we file with the SEC. The
reconciliations of non-GAAP financial measures are an integral part
of the information presented herein. You can access these documents
on our website, www.sohohouseco.com, free of charge, as well as any
amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Exchange Act, as soon as reasonably
practicable after such material is electronically filed with, or
furnished to, the SEC. The information contained on our website is
not incorporated by reference into, and should not be considered a
part of, this presentation.
In addition, the SEC maintains a website that contains reports,
proxy and information statements, and other information regarding
issuers, including the Company, that file electronically with the
SEC at www.sec.gov.
The non-GAAP financial measures we use herein are defined by us
as follows:
ADJUSTED EBITDA. Adjusted EBITDA is a supplemental
measure of our performance. Adjusted EBITDA is defined as Net
income (loss) before Depreciation and amortization, Interest
expense, net, Income tax (expense) benefit, adjusted to take
account of the impact of certain non-cash and other items that we
do not consider in our evaluation of ongoing operating performance.
These other items include, but are not limited to, Gain (loss) on
sale of property and other, net, Share of loss (profit) from equity
method investments, Foreign exchange, Share of equity method
investments adjusted EBITDA, Share-based compensation expense and
other applicable items. We believe that Adjusted EBITDA is an
appropriate measure of operating performance because it eliminates
the impact of expenses (income) that do not relate to ongoing
business performance.
HOUSE-LEVEL CONTRIBUTION AND MARGIN. House-Level
Contribution is defined as House Revenues less In-House operating
expenses, which includes expense items such as food and beverage
costs, labor costs, variable overheads and fixed costs, such as
rent. It does not reflect the impact of depreciation, amortization,
impairment, gain or loss on sale of property, general and
administrative expenses or other applicable items. House-Level
Contribution Margin is defined as House-Level Contribution as a
percentage of our House Revenues and is a key determinant of our
performance and profitability and our return on the investment we
make in each of our Houses. Given that all costs associated with
providing our members with the Soho House experience, including the
costs associated with maintaining our Houses and providing services
to members while in the Houses, are included in In-House operating
expenses, we use House Revenues (inclusive of House Membership
Revenues) in calculating House-Level Contribution and House-Level
Contribution Margin to assess the overall profitability of our
Houses. Accordingly, our management considers House-Level
Contribution and House-Level Contribution Margin to be an important
management measure to evaluate the performance of each House, and
growth in aggregate House-Level Contribution allows us to leverage
our general and administrative costs and improve overall
profitability.
OTHER CONTRIBUTION AND MARGIN. Other Contribution is
defined as Other revenues plus Non-House Membership Revenues less
Other operating expenses, which includes expense items not related
to the operation of Houses, such as labor costs, variable overheads
and fixed costs, such as rent. It does not reflect the impact of
depreciation, amortization, impairment, gain or loss on sale of
property, general and administrative expenses, pre-opening
expenses, foreign exchange gain/loss, Share-based compensation
expense and other applicable items. Other Contribution Margin
defined as Other Contribution as a percentage of our Other revenues
and is a key determinant of our performance and profitability and
our return on the investment in our non-House business. Our
management considers Other Contribution and Contribution Margin to
be an important management measure.
NET DEBT. Net Debt reflects the total debt, comprising
long-term debt, property mortgage loans and related party loans,
less cash, cash equivalents and restricted cash. Net Debt is an
important measure to monitor leverage and evaluate the balance
sheet. A limitation associated with using Net Debt is that it
subtracts Cash and cash equivalents and Restricted cash and
therefore may imply that there is less Company debt than the most
comparable GAAP measure indicates. Management believes that
investors may find it useful to monitor leverage and evaluate the
balance sheet.
CONSTANT CURRENCY. Some of our financial and operational
data that we disclose in this release is presented on a ‘constant
currency’ basis to isolate the effect of currency changes during
the period. Where we refer to a measure being calculated in
‘constant currency,’ we are calculating the dollar change and the
percentage change as if the exchange rate that is being used in the
current period was in effect for all prior periods presented. We
believe that this calculation provides a more meaningful indication
of actual year over year performance and eliminates any
fluctuations from currency exchange rates.
While we believe that these non-GAAP financial measures are
useful in evaluating our business, this information should be
considered as supplemental in nature and is not meant as a
substitute for revenues or net income (loss), in each case as
recognized in accordance with GAAP. In addition, other companies
may calculate one or more of these measures differently, which
reduces the usefulness of any such measure as a comparative
measure.
A reconciliation of Net income (loss) to Adjusted EBITDA for
the 13 weeks ending December 31, 2023 and January 1, 2023 is set
forth below:
For the 13 Weeks Ended
Percent Change
December 31, 2023
Actuals
January 1, 2023
Actuals
Actuals
Constant Currency(1)
(Unaudited, dollar amounts in
thousands)
Net income (loss)
$
(57,335
)
$
15,774
n/m
n/m
Depreciation and amortization
37,174
27,440
35
%
29
%
Interest expense, net
24,609
18,551
33
%
27
%
Income tax expense
5,425
2,061
n/m
n/m
EBITDA
9,873
63,826
(85
)%
(85
)%
Loss on sale of property and other,
net
1,634
1,139
43
%
37
%
Share of (income) loss of equity method
investments
2,511
(1,515
)
n/m
n/m
Foreign exchange gain, net(2)
(32,297
)
(58,560
)
45
%
47
%
Share of equity method investments
EBITDA
2,054
1,895
8
%
4
%
Adjusted share-based compensation
expense(3)
4,044
9,044
(55
)%
(57
)%
Operational reorganization and severance
expense(4)
—
5,293
n/m
n/m
Membership credits (rebate) expense(5)
—
(15
)
n/m
n/m
Out of period operating lease liability
adjustment(6)
(5,776
)
1,177
n/m
n/m
Out of period capital expenditure
adjustment(7)
2,562
—
n/m
n/m
Employment related settlement
expense(8)
—
913
n/m
n/m
Brand license inventory provision(9)
4,571
—
n/m
n/m
Impairment relating to long lived
assets(10)
47,455
—
n/m
n/m
Adjusted EBITDA
$
36,631
$
23,197
58
%
51
%
- See “Non-GAAP Financial Measures” for an explanation of our
constant currency results.
- Primarily driven by foreign exchange volatility impacting our
non-USD debt and working capital.
- For 13 Weeks Ended January 1, 2023 this excludes a $1 million
non-cash expense, which is included within Share-based compensation
expense in the Consolidated Statements of Operations and includes
an expense of $3 million, which is excluded from Share-based
compensation expense in the Consolidated Statements of Operations,
in respect of a non-recurring cash payment in connection with the
Growth Shares.
- In the 13 weeks ended January 1, 2023 this includes a non-cash
share-based compensation expense of $1 million and $4 million with
respect to a strategic reorganization of the Company's operations
and support team.
- Beginning on March 14, 2020, due to the COVID-19 pandemic, we
issued membership credits to active members of our closed Houses to
be redeemed for certain Soho Home products and services. Membership
credits were a one-time goodwill gesture, issued as a marketing
offer to active members. The expense represents our best estimate
of the cost in fulfilling the membership credits.
- Represents an out-of-period adjustments correcting errors with
respect to the estimation of the operating lease liability
identified during the 13 week period ended December 31, 2023 and
January 1, 2023 but relating prior financial periods. There is no
material impact from the correction of this error to previously
reported periods.
- Represents an out-of-period adjustment correcting an error with
respect to the capitalization of certain expenses in connection to
new House openings identified during the 13 week period ended
December 31, 2023 but relating prior financial periods. There is no
material impact from the correction of this error to previously
reported periods.
- Represents expenses incurred in the 13 weeks ended January 1,
2023 with respect to a historic settlement of an employment related
legal claim. The Company has remediated its operating processes to
mitigate a similar issue from recurring.
- In November 2023, the Company entered into a 10-year licensing
agreement with a third party to manufacture and distribute the
Company’s Cowshed brand, commencing January 1, 2024. This agreement
has restricted the Company’s ability to sell certain inventories it
acquired prior to entering into the agreement. As such, the Company
has provided in full for the inventory it is unable to recover as a
result of the entering into the agreement.
- Following the Company's impairment review in the 13 weeks ended
December 31, 2023, the Company recognized $47 million of impairment
losses on long-lived assets (comprised of $33 million in respect of
Operating lease assets and $14 million of Property and equipment,
net), of which $37 million is in respect of Soho Works North
America.
A reconciliation of Operating income (loss) to House-Level
Contribution & Other Contribution for the 13 weeks ending
December 31, 2023 and January 1, 2023 is set forth below:
For the 13 Weeks Ended
December 31, 2023
January 1, 2023
Change %
January 1, 2023 Constant
Currency
Constant Currency Change
%
Actuals
(Unaudited, dollar amounts in
thousands)
Operating income (loss)
$
(23,156
)
$
36,010
n/m
$
37,674
n/m
General and administrative
40,202
36,695
10
%
38,391
5
%
Pre-opening expenses
4,311
3,753
15
%
3,926
10
%
Depreciation and amortization
37,174
27,440
35
%
28,708
29
%
Share-based compensation
4,044
7,826
(48
)%
8,188
(51
)%
Foreign exchange gain, net
(32,297
)
(58,560
)
45
%
(61,267
)
47
%
Other, net
4,338
7,714
(44
)%
8,071
(46
)%
Loss on impairment of long-lived
assets
47,455
—
n/m
—
n/m
Non-House membership revenues
(9,131
)
(8,301
)
(10
)%
(8,685
)
(5
)%
Other revenues
(69,803
)
(72,592
)
4
%
(75,947
)
8
%
Other operating expenses
62,167
65,463
(5
)%
68,489
(9
)%
House-Level Contribution
$
65,304
$
45,448
44
%
$
47,549
37
%
Operating Gain (Loss) Margin
(2
)%
4
%
House-Level Contribution Margin
31
%
24
%
24
%
For the 13 Weeks Ended
December 31, 2023
January 1, 2023
Change %
January 1, 2023 Constant
Currency
Constant Currency Change
%
Actuals
(Unaudited, dollar amounts in
thousands)
Operating income (loss)
$
(23,156
)
$
36,010
n/m
$
37,674
n/m
General and administrative
40,202
36,695
10
%
38,391
5
%
Pre-opening expenses
4,311
3,753
15
%
3,926
10
%
Depreciation and amortization
37,174
27,440
35
%
28,708
29
%
Share-based compensation
4,044
7,826
(48
)%
8,188
(51
)%
Foreign exchange gain, net
(32,297
)
(58,560
)
45
%
(61,267
)
47
%
Other, net
4,338
7,714
(44
)%
8,071
(46
)%
Loss on impairment of long-lived
assets
47,455
—
n/m
—
n/m
House membership revenues
(86,636
)
(68,823
)
(26
)%
(72,004
)
(20
)%
In-House revenues
(125,220
)
(120,674
)
(4
)%
(126,252
)
1
%
In-House operating expenses
146,552
144,049
2
%
150,707
(3
)%
Total Other Contribution
$
16,767
$
15,430
9
%
$
16,143
4
%
Operating Gain (Loss) Margin
(2
)%
4
%
Other Contribution Margin
21
%
19
%
19
%
A reconciliation of Net loss to Adjusted EBITDA for the
Fiscal Years ending December 31, 2023 and January 1, 2023 is set
forth below:
For the Fiscal Year
Ended
Percent Change
December 31, 2023
Actuals
January 1, 2023
Actuals
Actuals
Constant Currency(1)
(Unaudited, dollar amounts in
thousands)
Net loss
$
(117,088
)
$
(219,780
)
47
%
47
%
Depreciation and amortization
111,403
99,930
11
%
11
%
Interest expense, net
84,136
71,499
18
%
17
%
Income tax expense
10,811
5,131
n/m
n/m
EBITDA
89,262
(43,220
)
n/m
n/m
Gain (loss) on sale of property and other,
net
1,038
(390
)
n/m
n/m
Share of (income) loss of equity method
investments
(1,900
)
(3,941
)
52
%
52
%
Foreign exchange loss, net(2)
(36,196
)
69,600
n/m
n/m
Share of equity method investments
EBITDA
9,319
7,577
23
%
22
%
Adjusted share-based compensation
expense(3)
20,230
25,101
(19
)%
(20
)%
Operational reorganization and severance
expense(4)
—
9,339
n/m
n/m
Membership credits expense(5)
—
1,201
n/m
n/m
Out of period operating lease liability
adjustment(6)
(5,779
)
(5,439
)
(6
)%
(5
)%
Employment related settlement
expense(7)
—
913
n/m
n/m
Brand license inventory provision(8)
4,571
—
n/m
n/m
Impairment relating to long lived
assets(9)
47,455
—
n/m
n/m
Adjusted EBITDA
$
128,000
$
60,741
n/m
n/m
- See “Non-GAAP Financial Measures” for an explanation of our
constant currency results.
- Primarily driven by foreign exchange volatility impacting our
non-USD debt and working capital.
- For 52 Weeks Ended January 1, 2023 this excludes a $5 million
non-cash expense, which is included within Share-based compensation
expense in the Consolidated Statements of Operations, separately
presented within Operational reorganization and severance expense
below. It also includes an expense of $3 million, which is excluded
from Share-based compensation expense in the Consolidated
Statements of Operations, in respect of a non-recurring cash
payment in connection with the Growth Shares.
- For 52 Weeks Ended January 1, 2023 this represents $4m of
expenses incurred with respect to a strategic reorganization
program of the Company's operations and support teams. This also
includes a non-cash share-based compensation expense of $5 million.
The non-cash share-based compensation expense is reported within
Share-based compensation expense.
- Beginning on March 14, 2020, due to the COVID-19 pandemic, we
issued membership credits to active members of our closed Houses to
be redeemed for certain Soho Home products and services. Membership
credits were a one-time goodwill gesture, issued as a marketing
offer to active members. The expense represents our best estimate
of the cost in fulfilling the membership credits.
- Represents out-of-period adjustments correcting errors with
respect to the estimation of the operating lease liability
identified during fiscal 2023 and 2022 but relating to fiscal years
2022, 2021, 2020 & 2019 and 2021, 2020 & 2019 respectively.
There is no material impact from the correction of this error to
previously reported periods.
- Represents expenses incurred with respect to a historic
settlement of an employment related legal claim. The Company has
remediated its operating processes to mitigate a similar issue from
recurring.
- In November 2023, the Company entered into a licensing
agreement with a third party for the Company’s Cowshed brand. This
has restricted the Company’s ability to sell certain inventories it
acquired prior to entering into the agreement. As such, the Company
has provided in full for inventory it is unable to recover as a
result of the entering into the agreement.
- Following the Company's impairment review in fiscal 2023, the
Company recognized $47 million of impairment losses on long-lived
assets (comprised of $33 million in respect of Operating lease
assets and $14 million of Property and equipment, net), of which
$37 million is in respect of Soho Works North America.
A Reconciliation of Operating loss to House-Level
Contribution & Other Contribution for the Fiscal Year ending
December 31, 2023 and January 1, 2023 is set forth below:
For the Fiscal Year
Ended
December 31, 2023
January 1, 2023
Change %
January 1, 2023 Constant
Currency(1)
Constant Currency Change
%(1)
Actuals
(Unaudited, dollar amounts in
thousands)
Operating loss
$
(23,003
)
$
(147,481
)
84
%
$
(152,137
)
85
%
General and administrative
143,583
123,435
16
%
124,506
15
%
Pre-opening expenses
18,604
14,081
32
%
14,203
31
%
Depreciation and amortization
111,403
99,930
11
%
100,797
11
%
Share-based compensation
20,230
27,681
(27
)%
27,921
(28
)%
Foreign exchange (gain) loss, net
(36,196
)
69,600
n/m
70,204
n/m
Other, net
5,963
9,703
(39
)%
9,787
(39
)%
Loss on impairment of long-lived
assets
47,455
—
n/m
—
n/m
Non-House membership revenues
(36,159
)
(30,057
)
(20
)%
(30,318
)
(19
)%
Other revenues
(292,326
)
(272,803
)
(7
)%
(274,606
)
(6
)%
Other operating expenses
258,483
250,336
3
%
252,508
2
%
House-Level Contribution
$
218,037
$
144,425
51
%
$
142,865
53
%
Operating Loss margin
(2
)%
(15
)%
(15
)%
House-Level Contribution Margin
27
%
22
%
22
%
For the Fiscal Year
Ended
December 31, 2023
January 1, 2023
Change %
January 1, 2023 Constant
Currency(1)
Constant Currency Change
%(1)
Actuals
(Unaudited, dollar amounts in
thousands)
Operating loss
$
(23,003
)
$
(147,481
)
84
%
$
(152,137
)
85
%
General and administrative
143,583
123,435
16
%
124,506
15
%
Pre-opening expenses
18,604
14,081
32
%
14,203
31
%
Depreciation and amortization
111,403
99,930
11
%
100,797
11
%
Share-based compensation
20,230
27,681
(27
)%
27,921
(28
)%
Foreign exchange (gain) loss, net
(36,196
)
69,600
n/m
70,204
n/m
Other, net
5,963
9,703
(39
)%
9,787
(39
)%
Loss on impairment of long-lived
assets
47,455
—
n/m
—
n/m
House membership revenues
(325,328
)
(242,752
)
(34
)%
(243,696
)
(33
)%
In-House revenues
(482,066
)
(426,602
)
(13
)%
(428,653
)
(12
)%
In-House operating expenses
589,357
524,929
12
%
529,484
11
%
Total Other Contribution
$
70,002
$
52,524
33
%
$
52,416
34
%
Operating Loss margin
(2
)%
(15
)%
(15
)%
Other Contribution Margin
21
%
17
%
17
%
A reconciliation of Net Debt as of December 31, 2023 and
January 1, 2023 is set forth below:
As of
Percentage change
December 31, 2023
January 1, 2023
Actuals
Constant Currency
(Unaudited)
Current portion of debt, net of debt
issuance costs
$
29,290
$
25,617
14
%
13
%
Debt, net of current portion and debt
issuance costs
635,576
579,904
10
%
9
%
Property mortgage loans, net of debt
issuance costs
137,099
116,187
18
%
17
%
Total debt
801,965
721,708
11
%
10
%
Less: Cash and cash equivalents
161,656
182,115
(11
)%
(12
)%
Less: Restricted cash
1,951
7,928
(75
)%
(76
)%
Net debt
$
638,358
$
531,665
20
%
19
%
Unaudited Consolidated Statements of Operations for fiscal
years 2023 and 2022 and 13 weeks ended December 31, 2023 and
January 1, 2023:
For the 13 Weeks Ended
For the Fiscal Year
Ended
(in thousands except for per share
data)
December 31, 2023
January 1, 2023
December 31, 2023
January 1, 2023
(Unaudited)
Revenues
Membership revenues
$
95,767
$
77,124
$
361,487
$
272,809
In-House revenues
125,220
120,674
482,066
426,602
Other revenues
69,803
72,592
292,326
272,803
Total revenues
290,790
270,390
1,135,879
972,214
Operating expenses
In-House operating expenses
(146,552
)
(144,049
)
(589,357
)
(524,929
)
Other operating expenses
(62,167
)
(65,463
)
(258,483
)
(250,336
)
General and administrative expenses
(40,202
)
(36,695
)
(143,583
)
(123,435
)
Pre-opening expenses
(4,311
)
(3,753
)
(18,604
)
(14,081
)
Depreciation and amortization
(37,174
)
(27,440
)
(111,403
)
(99,930
)
Share-based compensation
(4,044
)
(7,826
)
(20,230
)
(27,681
)
Foreign exchange gain (loss), net
32,297
58,560
36,196
(69,600
)
Loss on impairment of long-lived
assets
(47,455
)
—
(47,455
)
—
Other, net
(4,338
)
(7,714
)
(5,963
)
(9,703
)
Total operating expenses
(313,946
)
(234,380
)
(1,158,882
)
(1,119,695
)
Operating income (loss)
(23,156
)
36,010
(23,003
)
(147,481
)
Other (expense) income
Interest expense, net
(24,609
)
(18,551
)
(84,136
)
(71,499
)
(Loss) gain on sale of property and other,
net
(1,634
)
(1,139
)
(1,038
)
390
Share of income (loss) of equity method
investments
(2,511
)
1,515
1,900
3,941
Total other expense, net
(28,754
)
(18,175
)
(83,274
)
(67,168
)
Income (loss) before income
taxes
(51,910
)
17,835
(106,277
)
(214,649
)
Income tax (expense) benefit
(5,425
)
(2,061
)
(10,811
)
(5,131
)
Net (loss) Income
(57,335
)
15,774
(117,088
)
(219,780
)
Net (income) loss attributable to
non-controlling interests
340
(2,248
)
(865
)
(800
)
Net income (loss) attributable to Soho
House & Co Inc.
$
(56,995
)
$
13,526
$
(117,953
)
$
(220,580
)
Net income (loss) per share attributable
to Class A and Class B common stock
Basic and diluted
$
(0.29
)
$
0.07
$
(0.60
)
$
(1.10
)
Weighted average shares outstanding:
Basic and diluted (Note 17)
195,126
196,879
195,590
199,985
Unaudited Consolidated Statements of Cash flows for the 52
weeks ended December 31, 2023 and January 1, 2023:
For the Fiscal Year
Ended
(in thousands)
December 31, 2023
January 1, 2023
(Unaudited)
Cash flows from operating
activities
Net income (loss)
$
(117,088
)
$
(219,780
)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization
$
111,403
$
99,930
Non-cash share-based compensation
18,875
26,207
Deferred tax benefit
(607
)
237
Gain on sale of property and other,
net
1,038
(390
)
Impairment relating to long-lived
assets
47,455
—
Provision for write-down of
inventories
6,827
—
Share of (income) loss of equity method
investments
(1,900
)
(3,941
)
Amortization of debt issuance costs
2,808
4,315
Loss on debt extinguishment
3,278
—
PIK interest (settled), net of non-cash
interest
39,300
36,254
Distributions from equity method
investees
368
3,281
Foreign exchange (gain) loss, net
(36,196
)
69,600
Changes in assets and liabilities:
Accounts receivable
(14,228
)
(24,109
)
Inventories
(9,747
)
(31,029
)
Operating leases, net
(2,194
)
25,190
Other operating assets
(17,952
)
(38,667
)
Deferred revenue
13,845
20,131
Accounts payable and accrued and other
liabilities
4,527
47,453
Net cash provided by operating
activities
49,812
14,682
Cash flows from investing
activities
Purchase of property and equipment
(67,763
)
(73,729
)
Proceeds from sale of assets
1,368
926
Purchase of intangible assets
(17,966
)
(21,672
)
Property and casualty insurance proceeds
received
148
338
Net cash used in investing activities
(84,213
)
(94,137
)
Cash flows from financing
activities
Repayment of borrowings
(117,790
)
(736
)
Payment for debt extinguishment costs
(1,686
)
—
Issuance of related party loans
—
3,217
Proceeds from borrowings
140,000
105,795
Payments for debt issuance costs
(2,822
)
(1,860
)
Principal payments on finance leases
(407
)
(528
)
Principal payments on financing
obligation
—
(1,578
)
Distributions to non-controlling
interests
(390
)
(1,206
)
Purchase of treasury stock
(12,000
)
(50,000
)
Additional IPO costs
—
(269
)
Net cash provided by financing
activities
4,905
52,835
Effect of exchange rate changes on cash
and cash equivalents, and restricted cash
3,060
(3,999
)
Net (decrease) increase in cash and cash
equivalents, and restricted cash
(26,436
)
(30,619
)
Cash, cash equivalents and restricted
cash
Beginning of period
190,043
220,662
End of period
$
163,607
$
190,043
For the Fiscal Year
Ended
(in thousands)
December 31, 2023
January 1, 2023
(Unaudited)
Cash, cash equivalents and restricted cash
are comprised of:
Cash and cash equivalents
161,656
182,115
Restricted cash
1,951
7,928
Cash, cash equivalents and restricted
cash as of December 31, 2023 and January 1, 2023
$
163,607
$
190,043
Supplemental disclosures:
Cash paid for interest
$
32,254
$
29,893
Cash paid for income taxes
5,541
585
Supplemental disclosures of non-cash
investing and financing activities:
Operating lease assets obtained in
exchange for new operating lease liabilities
$
124,779
$
133,743
Acquisitions of property and equipment
under finance leases
$
33
$
12,315
Accrued capital expenditures
$
13,760
$
15,257
Unaudited Consolidated Balance Sheet as of December 31, 2023
and January 1, 2023:
As of
(in thousands, except for par value and
share data)
December 31, 2023
January 1, 2023
(Unaudited)
Assets
Current assets
Cash and cash equivalents
$
161,656
$
182,115
Restricted cash
1,951
7,928
Accounts receivable, net
58,158
42,215
Inventories
60,768
57,848
Prepaid expenses and other current
assets
112,512
91,101
Total current assets
395,045
381,207
Property and equipment, net
627,035
647,001
Operating lease assets
1,150,165
1,085,579
Goodwill
206,285
199,646
Other intangible assets, net
127,240
125,968
Equity method investments
21,695
21,629
Deferred tax assets
740
295
Other non-current assets
9,597
6,571
Total non-current assets
2,142,757
2,086,689
Total assets
$
2,537,802
$
2,467,896
Liabilities and Shareholders’
Equity
Current liabilities
Accounts payable
$
70,316
$
80,741
Accrued liabilities
84,815
84,112
Current portion of deferred revenue
117,129
91,611
Indirect and employee taxes payable
38,169
38,088
Current portion of debt, net of debt
issuance costs
29,290
25,617
Current portion of operating lease
liabilities - sites trading less than one year
1,721
4,176
Current portion of operating lease
liabilities - sites trading more than one year
49,436
35,436
Other current liabilities
33,633
36,019
Total current liabilities
424,509
395,800
Debt, net of current portion and debt
issuance costs
635,576
579,904
Property mortgage loans, net of debt
issuance costs
137,099
116,187
Operating lease liabilities, net of
current portion - sites trading less than one year
68,762
227,158
Operating lease liabilities, net of
current portion - sites trading more than one year
1,234,140
982,306
Finance lease liabilities
78,481
76,638
Financing obligation
76,624
76,239
Deferred revenue, net of current
portion
25,787
27,118
Deferred tax liabilities
1,510
1,666
Other non-current liabilities
5,941
256
Total non-current liabilities
2,263,920
2,087,472
Total liabilities
2,688,429
2,483,272
As of
(in thousands, except for par value and
share data)
December 31, 2023
January 1, 2023
(Unaudited)
Shareholders’ equity
Class A common stock, $0.01 par value,
1,000,000,000 shares authorized, 64,208,851 shares issued and
53,741,731 outstanding as of December 31, 2023 and 62,189,717
issued and 53,722,597 outstanding as of January 1, 2023; Class B
common stock, $0.01 par value, 500,000,000 shares authorized,
141,500,385 shares issued and outstanding as of December 31, 2023
and January 1, 2023
2,057
2,037
Additional paid-in capital
1,231,941
1,213,086
Accumulated deficit
(1,360,365
)
(1,242,412
)
Accumulated other comprehensive income
30,000
54,853
Treasury stock, at cost; 10,467,120 shares
as of December 31, 2023 and 8,467,120 shares as of January 1,
2023
(62,000
)
(50,000
)
Total shareholders’ deficit attributable
to Soho House & Co Inc.
(158,367
)
(22,436
)
Non-controlling interest
7,740
7,060
Total shareholders’ deficit
(150,627
)
(15,376
)
Total liabilities and shareholders’
equity
$
2,537,802
$
2,467,896
Key Performance and Operating Metrics
Evaluated by Management
In assessing the performance of our business, we consider a
variety of operating and financial measures. These key measures
include:
HOUSE MEMBERSHIP REVENUES. House Membership Revenues are
comprised primarily of annual membership fees and one-time legacy
registration fees from Soho House members which are amortized over
20 years. The one-time registration fee is no longer applicable to
new members admitted from April 4, 2022, see House Introduction
Credits below.
HOUSE INTRODUCTION CREDITS. New members admitted from
April 4, 2022 have been required to purchase House Introduction
Credits as part of their membership, per the House rules. House
Introduction Credits are credits of an equivalent value to cash
within Houses and are redeemable to purchase food and beverage
items, and bedroom stays, at the Houses. House Introduction Credits
expire after the first three months from the date of issuance,
where legally permitted in the regions we operate, if not utilized
or if the Company terminates a member’s House membership. House
Introduction Credits are recognized upon issuance as deferred
revenue on our consolidated balance sheets. Revenue from House
Introduction Credits are recognized as In-House revenues when
redeemed by members, and as breakage revenue within Membership
revenues upon expiration or in the period that we are able to
reliably estimate expected breakage to the extent that they are
unredeemed, are recognized.
IN-HOUSE REVENUES. In-House revenues include all revenues
realized within our Houses, including food and beverage,
accommodation and spa products and treatments.
HOUSE REVENUES. House Revenues is defined as House
Membership Revenues plus In-House revenues, less Non-House
Membership Revenues. Our management views House Membership Revenues
and In-House revenues as interrelated and their aggregation as
important in tracking House performance. Although there is no
minimum spend for any member on In-House offerings, nevertheless in
practice most members consume food and beverage, accommodations and
other offerings at our Houses. The pricing of our In-House
offerings is reflective of the fact that the significant majority
of In-House offerings that generate In-House revenues are consumed
by members who also pay a membership fee in relation to that House,
with pricing of such In-House offerings being identical for both
members and non-members.
NUMBER OF SOHO HOUSES. The number of Soho Houses reflects
the total number of Soho Houses in operation in any period,
irrespective of whether each House is (i) controlled by us, (ii)
operated through a non-controlling interest in a joint venture or
(iii) operated through a management contract.
We review the number of members from all Houses to assess new
member growth, total House Revenues, and House-Level
Contribution.
TOTAL MEMBERS. Total members is defined as Soho House
members plus Other members.
NUMBER OF SOHO HOUSE MEMBERS. Our Soho House membership
model is an integral part of our business and has a significant
impact on our profitability and financial performance. Typically,
members hold an Every House membership or a Local House membership.
Member count is the primary driver of Membership Revenues and is
also a critical factor in In-House Revenues as members utilize the
offerings that are provided within the Houses. Soho House members
include all active, frozen and non-paying members.
The extent to which we achieve growth in our membership base,
retain existing members and periodically increase our membership
fee rates will impact our profitability. We have historically
enjoyed strong member loyalty, reflected by very high retention
rates. Robust demand for our memberships is also evidenced by
considerable wait lists for our Houses.
The year-over-year increase in our total number of Soho House
members is driven by a combination of increases in membership at
existing Houses and members from new Houses.
NUMBER OF OTHER MEMBERS. Other members include members of
Soho Works and Soho Friends and are key to our growth strategy and
enhancing our Soho House member experience. Prior to August 2022,
HOME+ membership, which is now included in Soho Friends, was also
included. Like Soho House members, other memberships are an
integral part of our business and we believe will have a
significant impact on our profitability and financial performance
in the future.
SOHO HOUSE MEMBER RETENTION. Soho House Member Retention
is defined as the number of Adult Paying Members (being all Soho
House members excluding child members and complimentary members) at
the beginning of a period less the number of Adult Paying Members
who canceled their membership during that same period (without
giving any effect to Adult Paying Members who froze their
memberships during such period), as a proportion of total Adult
Paying Members at the beginning of such period.
FROZEN MEMBERS. Frozen Members refers to Soho House
members who have elected to suspend their membership payments on a
six, nine- or twelve-month basis during which period the member is
not able to gain access to a Soho House site as a member, access
our membership Apps, or book bedrooms or Cowshed treatments or
products on discounted member rates. Frozen Members are not
included in Adult Paying Members, but are included in the total
number of Soho House members.
MEMBERSHIP REVENUES. Membership revenues are comprised of
House Membership Revenues (as defined below) and Non-House
Membership Revenues (as defined below). House Membership Revenues
and Non-House Membership Revenues are each comprised primarily of
annual membership fees and one-time registration fees which are
amortized over 20 years. Membership revenues are a function of the
number of members, membership mix, and membership pricing. For
GAAP, we report Membership revenues only from Houses and sites in
which we own a controlling interest. Our membership pricing varies
by geographic segment and membership offering and, as such, our mix
of House and Soho Works club openings can affect our revenue growth
and profitability over time. Prices are generally higher in North
America and the rest of the world compared with the UK and Europe.
Membership revenues provide a stable and recurring source of
revenues which have few direct costs and, as such, is a reliable
and predictable source of cash flow.
HOUSE MEMBERSHIP REVENUES. House Membership Revenues is
an important performance indicator and is defined above in the
Non-GAAP reconciliation.
IN-HOUSE REVENUES. In-House revenues refer to all
revenues realized within our Houses, and primarily includes
revenues from food and beverage, accommodation, and spa products
and treatments.
HOUSE REVENUES. House Revenues is an important
performance indicator and is defined in “Non-GAAP Financial
Measures."
OTHER REVENUES. Other revenues are defined as total
revenues that are not realized within our Houses, including
revenues from Scorpios, Soho Works and our stand-alone restaurants,
procurement fees from Soho House Design, Soho Home and Cowshed
retail products and other revenues from products and services that
we provide outside of our Houses, as well as management fees from
The Ned sites and The LINE and Saguaro hotels.
NON-HOUSE MEMBERSHIP REVENUES. Non-House Membership
Revenues are comprised of Soho Works membership revenue, Soho
Friends membership revenue and SOHO HOME+ membership revenue which
was merged into Soho Friends membership at the beginning of August
2022.
ACTIVE APP USERS. Active App Users is defined as unique
users who have logged into any of our membership Apps within the
last three months.
AVERAGE DAILY RATE. is Average Daily Rate represents the
average rental income per paid occupied room.
REVENUE PER AVAILABLE ROOM (RevPAR). The key industry
standard for measuring hotel-operating performance is RevPAR, which
is calculated by multiplying the percentage of occupied rooms to
available rooms by the average daily rate realized. Where this is
presented on a like-for like basis, RevPAR is adjusted for new or
divested sites, for example Houses that were not open in the
comparison period.
Forward Looking
Statements
This release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
All statements contained in this release that do not relate to
matters of historical fact should be considered forward-looking
statements, including, without limitation, statements regarding our
expected financial performance and operational performance for
fiscal 2024, as well as statements that include the words “expect,”
“intend,” “plan,” “believe,” “project,” “forecast,” “estimate,”
“may,” “should,” “anticipate” and similar statements of a future or
forward-looking nature. These forward-looking statements are based
on management’s current expectations. These statements are neither
promises nor guarantees, but involve known and unknown risks,
uncertainties and other important factors that may cause actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements, including important
factors discussed under the caption “Risk Factors” in our annual
report on form 10-K for the fiscal year ended January 1, 2023 and
as such factors may be updated from time to time in our other
filings with the SEC, which are accessible on the SEC’s website at
www.sec.gov. In addition, we operate in rapidly changing
environment. New risks emerge from time to time. It is not possible
for our management to predict all risks, nor can we assess the
impact of all factors on its business or the extent to which any
factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking
statements that we may make. In light of these risks, uncertainties
and assumptions, the forward-looking events and circumstances
discussed in this release are inherently uncertain and may not
occur, and actual results could differ materially and adversely
from those anticipated or implied in the forward-looking
statements. Accordingly, you should not rely upon forward-looking
statements as predictions of future events. In addition, the
forward-looking statements made in this release relate only to
events or information as of the date on which the statements are
made in this release. Except as required by law, we undertake no
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise, after the date on which the statements are made or to
reflect the occurrence of unanticipated events.
About Soho House & Co:
Soho House & Co (SHCO) is a global membership platform of
physical and digital spaces that connects a vibrant, diverse and
global group of members. These members use the Soho House & Co
platform to work, socialize, connect, create and flourish all over
the world. We began with the opening of the first Soho House in
1995 and remain the only company to have scaled a private
membership network with a global presence. Members around the world
engage with Soho House & Co through our global collection, as
at December 31, 2023, of 42 Soho Houses, 9 Soho Works, Scorpios
Beach Club in Mykonos, Soho Home – our interiors and lifestyle
retail brand – and our digital channels. The Ned in London, New
York and Doha, The LINE and Saguaro hotels in North America also
form part of Soho House & Co's wider portfolio.
For more information, please visit www.sohohouseco.com.
Source: Soho House & Co (SHCO)
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Investor Relations ir@sohohouseco.com Media and
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