Arhaus (ARHS) 10-Q 11 May 22 2022 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Mar. 31, 2022	May 04, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	001-41009
Entity Registrant Name	Arhaus, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	87-1729256
Entity Address, Address Line One	51 E. Hines Hill Road
Entity Address, City or Town	Boston Heights
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	44236
City Area Code	440
Local Phone Number	439-7700
Title of 12(b) Security	Class A common stock, $0.001 par value per share
Trading Symbol	ARHS
Security Exchange Name	NASDAQ
Entity Current Reporting Status	No
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Central Index Key	0001875444
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Common, Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		52,947,617
Common, Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		87,115,600

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 148,841	$ 123,777
Restricted cash equivalents	7,134	7,131
Accounts receivable, net	1,586	228
Merchandise inventory, net	246,542	208,343
Prepaid and other current assets	31,013	28,517
Total current assets	435,116	367,996
Operating right-of-use assets	196,896	0
Financing right-of-use assets	38,103	0
Property, furniture and equipment, net	107,581	179,631
Deferred tax asset	25,268	27,684
Goodwill	10,961	10,961
Other noncurrent assets	264	278
Total assets	814,189	586,550
Current liabilities
Accounts payable	54,249	51,429
Accrued taxes	12,486	7,302
Accrued wages	12,822	16,524
Accrued other expenses	20,946	61,047
Client deposits	306,243	264,929
Current portion of operating lease liabilities	37,957	0
Current portion of financing lease liabilities	182	0
Total current liabilities	444,885	401,231
Operating lease liabilities, long-term	227,191	0
Financing lease liabilities, long-term	50,342	0
Capital lease obligation	0	50,525
Deferred rent and lease incentives	2,513	63,037
Other long-term liabilities	2,714	1,992
Total liabilities	727,645	516,785
Commitments and contingencies (Note 9)
Stockholders' equity
Accumulated Deficit	(100,523)	(116,581)
Additional Paid in Capital	186,929	186,209
Stockholders' Equity Attributable to Parent, Total	86,544	69,765
Total liabilities and stockholders' equity	814,189	586,550
Common, Class A
Stockholders' equity
Stock issued	51	50
Common, Class B
Stockholders' equity
Stock issued	$ 87	$ 87

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2022	Dec. 31, 2021
Common, Class A
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock , shares authorized (in shares)	600,000,000	600,000,000
Common stock, shares issued (in shares)	51,231,602	50,427,390
Common stock, shares outstanding (in shares)	51,231,602	50,427,390
Common, Class B
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock , shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	86,519,002	86,519,002
Common stock, shares outstanding (in shares)	86,519,002	86,519,002

Condensed Consolidated Statemen

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Statement [Abstract]
Net revenue	$ 246,300	$ 171,314
Cost of goods sold	148,583	100,979
Gross margin	97,717	70,335
Selling, general and administrative expenses	74,848	59,038
Loss on disposal of assets	0	14
Income from operations	22,869	11,283
Interest expense	1,300	1,367
Other income	(358)	0
Income before taxes	21,927	9,916
Income tax expense	5,869	704
Comprehensive income, including noncontrolling interest	16,058	9,212
Net income, including noncontrolling interest	16,058	9,212
Less: Net income attributable to noncontrolling interest	0	5,317
Comprehensive income	16,058	3,895
Net income	$ 16,058	$ 3,895
Net and comprehensive income per share, basic
Weighted-average number of common shares outstanding, basic (in shares)	137,482,533	112,058,742
Net and comprehensive income (loss) per unit, basic (in dollars per share)	$ 0.12	$ 0.03
Net and comprehensive income per share, diluted
Weighted-average number of common shares outstanding, diluted (in shares)	138,708,468	112,058,742
Net and comprehensive income (loss) per unit, diluted (in dollars per share)	$ 0.12	$ 0.03

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Changes in Stockholders'/Members' Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Total	Voting	Non-Voting	Member UnitsVoting	Member UnitsNon-Voting	Retained Earnings (Accumulated Deficit)	Additional Paid-in Capital	Noncontrolling Interest	Common StockCommon, Class A	Common StockCommon, Class B
Beginning Balance (in shares) at Dec. 31, 2020		645,000	4,158,000
Beginning Balance at Dec. 31, 2020	$ (34,441)					$ (28,422)	$ 1,670	$ (7,689)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	9,212					3,895		5,317
Tax distribution	(4,643)							(4,643)
Equity based compensation	76						76
Ending Balance (in shares) at Mar. 31, 2021		645,000	4,158,000
Ending Balance at Mar. 31, 2021	(29,796)					(24,527)	1,746	$ (7,015)
Beginning Balance (in shares) at Dec. 31, 2021				0	0				50,428,000	86,519,000
Beginning Balance at Dec. 31, 2021	69,765					(116,581)	186,209		$ 50	$ 87
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	16,058					16,058
Shareholder capital contribution	24						24
Equity based compensation (in shares)									804,000
Equity based compensation	697						696		$ 1
Ending Balance (in shares) at Mar. 31, 2022				0	0				51,232,000	86,519,000
Ending Balance at Mar. 31, 2022	$ 86,544					$ (100,523)	$ 186,929		$ 51	$ 87

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Cash flows from operating activities
Net income	$ 16,058	$ 9,212
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	5,876	4,463
Non-cash amortization of operating lease right-of-use asset	7,009	0
Amortization of deferred financing fees and interest on finance lease in excess of principal paid	2,557	692
Equity based compensation	697	76
Deferred tax assets	2,417	0
Derivative expense associated with Term Loan exit fee	0	11,547
Loss on disposal of assets	0	14
Amortization and write-off of lease incentives	(63)	(1,066)
Changes in operating assets and liabilities
Accounts receivable	(1,358)	(98)
Merchandise inventory	(38,199)	(13,937)
Prepaid and other current assets	(3,016)	2,127
Other noncurrent liabilities	99	(995)
Accounts payable	8,680	779
Accrued expenses	4,633	2,625
Operating right-of-use assets and liabilities	(11,485)	0
Deferred rent and lease incentives	0	986
Client deposits	41,314	56,674
Net cash provided by operating activities	35,219	73,099
Cash flows from investing activities
Purchases of property, furniture and equipment	(10,151)	(7,006)
Net cash used in investing activities	(10,151)	(7,006)
Cash flows from financing activities
Issuance of related party notes	0	(1,000)
Principal payments under capital leases	0	(71)
Principal payments under capital leases	(1)	0
Distributions to noncontrolling interest holders	0	(4,643)
Net cash used in financing activities	(1)	(5,714)
Net increase in cash, cash equivalents and restricted cash equivalents	25,067	60,379
Cash, cash equivalents and restricted cash equivalents
Beginning of period	130,908	64,002
End of period	155,975	124,381
Supplemental disclosure of cash flow information
Interest paid in cash	1,281	1,591
Income taxes paid in cash	259	110
Lease incentives	0	4,547
Purchase of property, furniture and equipment in accounts payable	108	(1,010)
Derecognition of build-to-suit assets as a result of ASC 842 adoption	(31,017)	0
Capital contributions	$ 24	$ 0

Nature of Business and Basis of

Nature of Business and Basis of Presentation	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
Nature of Business and Basis of Presentation	Nature of Business and Basis of Presentation Nature of Business Arhaus, Inc. (the “Company,” “we” or “Arhaus”) is a Delaware corporation and is a premium retailer in the home furnishings market, specializing in livable luxury supported by heirloom quality merchandise. We offer merchandise in a number of categories, including furniture, outdoor, lighting, textiles and décor. Our curated assortments are presented across our sales channels in sophisticated, family friendly and unique lifestyle settings. We position our retail locations as Showrooms for our brand, while our website acts as a virtual extension of our Showrooms. The Company operated 78 Showrooms at March 31, 2022. Arhaus was formed on July 14, 2021 for the purpose of completing an initial public offering (“IPO”) of its common stock and related transactions in order to carry on the business of Arhaus, LLC (“LLC”) and its subsidiaries. Pursuant to the corporate reorganization and completion of the IPO in November 2021, the Company became a holding company for LLC and its subsidiaries. In connection with the IPO, the Company reorganized its ownership structure from a limited liability company to a corporation. Pursuant to the terms of the Integrated Contribution Agreement by and among the Company, FS Arhaus Holding, Inc. (“FS Arhaus,” “Class B Units,” or “noncontrolling interest”), a Delaware corporation, Homeworks Holdings Inc. (“Homeworks,” or “Class A Units”) and the unit holders (“Management Unitholders”) of LLC, a series of transactions were completed on November 8, 2021, which we refer to, collectively, as the “Reorganization.” LLC and Homeworks were identified as entities under common control, in which both entities are ultimately controlled by the same party before and after the Reorganization and therefore resulted in a change in reporting entity. In accordance with ASC 805-50-45-5, for transactions between entities under common control, the condensed consolidated financial statements for periods prior to the Reorganization have been adjusted to retrospectively combine the previously separate entities for presentation purposes. Basis of Presentation The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying condensed consolidated financial statements include our accounts and those of our wholly owned subsidiaries. Accordingly, all intercompany balances and transactions have been eliminated through the consolidation process. The accompanying condensed consolidated balance sheets at March 31, 2022 and December 31, 2021, the condensed consolidated statements of comprehensive income, cash flows and changes in stockholders’equity (deficit) for the three months ended March 31, 2022 and 2021, and the related interim condensed consolidated disclosures are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In management’s opinion, the accompanying condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company’s financial position at March 31, 2022; the results of operations, cash flows and changes in stockholders’equity (deficit) for the three months ended March 31, 2022 and 2021. The condensed consolidated balance sheet as of December 31, 2021 included herein was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The results for the three months ended March 31, 2022 and 2021 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. Use of Estimates The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounting estimates and other matters included within our condensed consolidated financial statements and notes to the condensed consolidated financial statements are revenue recognition, including a reserve for merchandise returns, goodwill and fair value of financial instruments which include, but are not limited to, accounts receivable, payables, lease obligations, equity based compensation and a derivative instrument. Client Deposits Client deposits represent payments made by clients on orders. At the time of purchase, the Company collects deposits for all orders equivalent to at least 50 percent of the clients’ purchase price. Orders are recognized as revenue when the merchandise is delivered to the client and at the time of delivery the client deposit is no longer recorded as a liability. The Company expects substantially all client deposits as of March 31, 2022 will be recognized as net revenue within the next 12 months as the performance obligations are satisfied. Gift Cards The Company sells gift cards to clients in our Showrooms and through our website. Such gift cards do not have expiration dates. We defer revenue when payments are received in advance of performance for unsatisfied obligations related to our gift cards. The liability related to unredeemed gift cards of $0.9 million and $0.9 million at March 31, 2022 and December 31, 2021, respectively, is recorded in the accrued other expenses line item of the condensed consolidated balance sheets. The Company recognizes income associated with breakage proportional to actual gift card redemptions. Fair Values of Financial Instruments The Company’s primary financial instruments are accounts receivable, payables, lease obligations, derivatives and equity based compensation instruments. Due to the short-term maturities of accounts receivable and payables, the Company believes the fair values of these instruments approximate their respective carrying values at March 31, 2022 and December 31, 2021. See Note 4 for discussion of our derivative, Note 5 for discussion of our lease obligations and Note 6 for discussion of our equity based compensation instruments. The Company has established a hierarchy to measure our financial instruments at fair value, which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect the Company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. The hierarchy defines three levels of inputs that may be used to measure fair value: Level 1 Unadjusted quoted prices in active markets for identical, unrestricted assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. Level 3 Unobservable inputs that reflect the entity’s own assumptions about the assumptions market participants would use in the pricing of the asset or liability and are consequently not based on market activity but rather through particular valuation techniques.

Recently Issued Accounting Stan

Recently Issued Accounting Standards	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
Recently Issued Accounting Standards	Recently Issued Accounting Standards New Accounting Standards Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheets. While it will still be necessary for lessees to distinguish between “operating” and “financing” (formerly known as “capital”) leases, these distinctions will primarily affect how a lessee must recognize expense in its income statement. The new guidance is effective for financial statements issued for annual periods beginning after December 15, 2021. The Company adopted ASC 842 as of January 1, 2022, using the modified retrospective approach by applying the transition provisions at the beginning of the period of adoption. Comparative periods will continue to be presented in accordance with ASC 840. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward the historical lease classification, lease identification and initial direct costs. The Company did not elect the “Land Easements” or “Hindsight” practical expedients. Additionally, the Company made the following accounting policy elections in connection with the adoption: • Exclude short-term leases from our consolidated balance sheets; and • Include both the lease and non-lease components as a single component and account for it as a lease. As a result, the Company measured the right-of-use asset and lease liability for operating and finance leases as of January 1, 2022, using the remaining portion of the lease term that was determined under ASC 840. The adoption resulted in $242.0 million re cognized as total right-of-use assets and $326.5 million recognized as total lease liabilities on our consolidated balance sheets as of January 1, 2022. For certain previous operating and capital leases, we qualified as the deemed owner of the construction project due to our significant involvement during the construction period under build-to-suit lease accounting requirements within ASC 840. As part of our adoption of ASC 842, we derecognized the cost of these construction projects of $31.0 million, w hich were previously recorded in property, furniture and equipment, net with an offsetting obligation in accrued other expenses on our consolidated balance sheets at December 31, 2021. See Note 5 — Leases for additional information.

Merchandise Warranties

Merchandise Warranties	3 Months Ended
	Mar. 31, 2022
Product Warranties Disclosures [Abstract]
Merchandise Warranties	Merchandise Warranties The Co mpany warrants certain merchandise to be free of defects in both construction materials and workmanship from the date the performance obligation was fulfilled to the client for three A reconciliation of the changes in our limited merchandise warranty liability is as follows (amounts in thousands): Three months ended March 31, 2022 2021 Balance as of beginning of period $ 4,724 $ 3,326 Accruals during the period 2,196 1,592 Settlements during the period (1,957) (1,341) Balance as of end of the period (1) $ 4,963 $ 3,577 (1) $2.9 million and $2.7 million were recorded in accrued other expenses at March 31, 2022 and December 31, 2021, respectively. The remainder is recorded in other long-term liabilities on our condensed consolidated balance sheets. We recorded accruals during the periods presented in the table above, primarily to reflect charges that relate to limited merchandise warranties issued during the respective periods.

Long-Term Debt

Long-Term Debt	3 Months Ended
	Mar. 31, 2022
Debt Disclosure [Abstract]
Long-Term Debt	Long-Term Debt On June 25, 2020, the Company entered into a credit agreement (“Revolver”), which included a revolving credit facility of $30.0 million with availability limited pursuant to a borrowing base formula based on specified percentages of eligible inventory, net of reserves. The Company’s borrowings under the Revolver bore variable interest rates at the LIBOR index rate (“LIBOR”) plus the applicable margin (5.5% at March 31, 2021). In the event LIBOR ceased to be available during the term of the Revolver, the Revolver provided procedures to determine an Alternate Base Rate. The Revolver was to expire on June 25, 2023. Loan costs related to the Revolver of $1.5 million were recorded in other noncurrent assets and were amortized over the term of the debt on a straight-line basis, which approximated the effective interest method. Amortization expense was $0.1 million for three months ended March 31, 2021, and was included in interest expense within the condensed consolidated statements of comprehensive income. On November 4, 2021, the Company terminated the Revolver of which there were no borrowings drawn. On November 8, 2021, the Company entered into a new revolving credit facility (the “2021 Credit Facility”). The 2021 Credit Facility provides for, among other things, (1) a revolving credit facility, in an aggregate amount not to exceed at any time outstanding the amount of such lender’s commitment, (2) a letter of credit commitment, in an amount equal to the lesser of (a) $10.0 million, and (b) the amount of the revolving credit facility as of such date, and (3) a swingline loan, in an amount equal to the lesser of (a) $5.0 million, and (b) the amount of the revolving credit facility as of such date. The aggregate amount of all commitments of all lenders under the 2021 Credit Facility is $50.0 million, which may be increased pursuant to the terms of the 2021 Credit Facility. The 2021 Credit Facility contains restrictive covenants and has certain financial covenants, including a minimum rent-adjusted total leverage ratio and minimum fixed charge ratio. The 2021 Credit Facility bears variable interest rates at the prevailing Bloomberg Short-Term Bank Yield index rate plus the applicable margin (1.50% at March 31, 2022), whereas the applicable margin is adjusted quarterly based on the Company’s consolidated rent-adjusted total leverage ratio. The 2021 Credit Facility expires on November 8, 2026. At March 31, 2022, we had no borrowings on the 2021 Credit Facility. Deferred financing costs related to the 2021 Credit Facility of $0.3 million are recorded in other noncurrent assets on the consolidated balance sheets and will be amortized over the term of the debt on a straight-line basis, which approximates the effective interest method. Prior to the Company entering into the Revolver and 2021 Credit Facility, the debt structure (“Prior Credit Facilities”) included a revolving credit facility (the “Prior Revolver”) and a term loan (the “Term Loan”). The Prior Revolver was terminated on June 25, 2020 and Term Loan was paid in full on December 28, 2020. The Company’s Term Loan had an exit fee clause which allowed the holder of the Term Loan to receive either $3.0 million upon repayment of the Term Loan or a payout equivalent to 4.0% of the total equity value of the Company. The 4.0% of the total equity value of the Company payout was payable upon a change of control, qualified IPO or sale of all or substantially all assets of the Company. In connection with the repayment of the Term Loan on December 28, 2020, the holder informed the Company they would decline the option to receive the $3.0 million and elect to receive a payout equivalent to 4.0% of the equity value of the Company. The exit fee was treated as a derivative and adjusted to fair value each reporting period. The Company recorded derivative expense of $11.5 million for the three months ended March 31, 2021, which was included in selling, general and administrative expense within the condensed consolidated statements of comprehensive income. The Company used a portion of the net proceeds from the IPO to pay the derivative liability on November 8, 2021. The Company used a discounted cash flow method and guideline public company method to determine the fair value of equity which was used to calculate the fair value of the exit fee. The key assumptions used within the Black-Scholes OPM as of March 31, 2021 were as follows: March 31, Term 10 years Risk-free rate of return 1.70% Volatility 40.00% Dividend yield 0% The assumed volatility assumption is based on that of an identified group of comparable public companies. The fair value of the exit fee has been determined utilizing unobservable inputs and therefore is a Level 3 measurement under the fair value hierarchy. The Company was in compliance with all applicable debt covenants at March 31, 2022 and December 31, 2021.

Leases

Leases	3 Months Ended
	Mar. 31, 2022
Leases [Abstract]
Leases	Leases The Company leases real estate and equipment under operating and finance leases, some of which are from related parties as discussed in Note 10 — Related Party Transactions . The most significant obligati ons under these lease agreements require the payments of periodic rentals, real estate taxes, insurance and maintenance costs. Depending on particular Showroom leases, the Company can also owe a percentage rent payment if particular Showrooms meet certain sales figures. The following table summarizes the amounts recognized in our condensed consolidated balance sheets related to leases as of March 31, 2022 (amounts in thousands): Condensed Consolidated Balance Sheet Classification March 31, 2022 Assets Operating lease assets Operating right-of-use assets $ 196,896 Finance lease assets Financing right-of-use assets 38,103 Total leased assets $ 234,999 Liabilities Current operating leases Current portion of operating lease liabilities $ 37,957 Non-current operating leases Operating lease liabilities, long-term 227,191 Total operating lease liabilities 265,148 Current finance leases Current portion of financing lease liabilities 182 Non-current finance leases Financing lease liabilities, long-term 50,342 Total finance lease liabilities 50,524 Total lease liabilities $ 315,672 The components of lease cost recognized within our condensed consolidated statements of comprehensive income for the three months ended March 31, 2022 are as follows (amounts in thousands): Condensed Consolidated Income Statement Classification Three months ended March 31, 2022 Lease costs: Operating lease costs Cost of goods sold $ 8,405 Operating lease costs Selling, general and administrative expenses 1,087 Finance lease costs — Amortization of right-of-use assets Selling, general and administrative expenses 458 Interest expense on lease liabilities Interest expense 1,231 Other lease costs (1) Cost of goods sold 7,918 Other lease costs (1) Selling, general and administrative expenses 88 Total lease costs $ 19,187 (1) Other lease costs includes short-term lease costs and variable lease costs. Rent expense, amortization of landlord improvements and percentage rent expense calculated under ASC 840 was $15.7 million, $2.8 million and $0.5 million for the three months ended March 31, 2021, respectively. We often have options to renew lease terms for Showrooms and other assets. The exercise of lease renewal options is generally at our sole discretion. In addition, certain lease agreements may be terminated prior to their original expiration date at our discretion. We evaluate each renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. The table below summarizes the weighted average remaining lease terms as of March 31, 2022. Weighted Average Remaining Lease Term (In Years) March 31, 2022 Operating leases 8.35 Finance leases 23.79 The discount rate implicit within our finance leases was determined at the time of lease commencement. However, the discount rate implicit within our operating leases is generally not determinable at the time of lease commencement and therefore the Company determines the discount rate based on its incremental borrowing rate. For all operating leases, the Company utilized a market-based approach to estimate the incremental borrowing rate (“IBR”), which required significant judgment. The Company estimated the base IBR based on an analysis of (i) yields on the Company’s 2021 Credit Facility, as well as comparable companies and (ii) unsecured yields and discount rates. The Company applied adjustments to the base IBRs to account for full collateralization and lease term. The table below summarizes the weighted average discount rate used to measure our lease liabilities as of March 31, 2022. Weighted Average Discount Rate March 31, 2022 Operating leases 3.83 % Finance leases 9.75 % Future lease liabilities at March 31, 2022 are as follows (amounts in thousands): Year Ending December 31, Operating Lease Liabilities (1) Finance Lease Liabilities Total Lease Liabilities Remainder of 2022 $ 35,600 $ 3,652 $ 39,252 2023 44,648 4,853 49,501 2024 39,506 4,673 44,179 2025 33,577 4,673 38,250 2026 30,395 5,132 35,527 2027 26,710 5,224 31,934 Thereafter 104,048 115,167 219,215 Total lease payments 314,484 143,374 457,858 Less: Amounts representing interest (49,336) (92,850) (142,186) Total $ 265,148 $ 50,524 $ 315,672 (1) Includes leases with related parties. See Note 10 — Related Party Transactions for amounts leased from related parties. At March 31, 2022, the Company has entered into leases for a distribution center and Showrooms which have not yet commenced with expected lease terms ranging from 10 to 24 years. The aggregate minimum rental payments over the term of the leases of approximately $136.3 million are not included in the above table. Future minimum lease payments for operating and capital leases under ASC 840 at December 31, 2021, were as follows (amounts in thousands): Year Ending December 31, Operating Leases (1) Capital Leases Total Future Lease Payments 2022 $ 45,892 $ 4,673 $ 50,565 2023 43,507 4,673 48,180 2024 38,659 4,673 43,332 2025 33,125 4,673 37,798 2026 29,903 5,132 35,035 Thereafter 129,498 120,390 249,888 320,584 144,214 464,798 Less: Amounts representing interest — (94,064) (94,064) Total $ 320,584 $ 50,150 $ 370,734 (1) Includes leases with related parties. See Note 10 — Related Party Transactions for amounts leased from related parties. Supplemental cash flow information related to leases at March 31, 2022, is as follows (amounts in thousands): March 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 11,485 Operating cash flows from finance leases 1,231 Financing cash flows from finance leases 1 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 430

Equity Based Compensation

Equity Based Compensation	3 Months Ended
	Mar. 31, 2022
Share-based Payment Arrangement [Abstract]
Equity Based Compensation	Equity Based Compensation The Company recorded equity based compensation expense of $0.7 million and $0.1 million for the three months ended March 31, 2022 and 2021, respectively, which is included within the selling, general and administrative expenses line item of the condensed consolidated statements of comprehensive income . Total unrecognized compensation cost for equity based compensation to be recognized in future periods is $10.9 million at March 31, 2022, and will be recognized over a weighted average period of 4.08 years. The total grant-date fair value of restricted stock that vested as of March 31, 2022 and December 31, 2021, were $0.1 million and $0.3 million, respectively. Restricted stock activity for the three months ended March 31, 2022, was as follows: Class A Class B Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Unvested at December 31, 2021 2,520,229 $ 16.28 596,598 $ 0.13 Granted — — — — Forfeited — — — — Vested (804,214) 0.10 — — Unvested at March 31, 2022 1,716,015 $ 18.06 596,598 $ 0.13

Segment Reporting

Segment Reporting	3 Months Ended
	Mar. 31, 2022
Segment Reporting [Abstract]
Segment Reporting	Segment Reporting Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making decisions, assessing financial performance and allocating resources. We operate our business as one operating segment and therefore we have one reportable segment that offers an assortment of merchandise across a number of categories, including furniture, outdoor, lighting, textiles, and décor. The assortment of merchandise can be purchased through our retail and eCommerce sales channels. The majority of our net revenue is generated through sales to clients in the United States. Sales to clients outside of the United states are not significant. Further, no single client represents more than ten percent or more of our net revenue. The following table shows net revenue by merchandise sales channel for the three months ended March 31, 2022 and 2021, respectively (amounts in thousands): Three months ended March 31, 2022 2021 Retail $ 202,570 $ 138,792 eCommerce 43,730 32,522 Total net revenue $ 246,300 $ 171,314

Net and Comprehensive Income pe

Net and Comprehensive Income per Share	3 Months Ended
	Mar. 31, 2022
Earnings Per Share [Abstract]
Net and Comprehensive Income per Share	Net and Comprehensive Income per Share As a result of the Reorganization and IPO, existing Class A and Class B Unitholders of LLC were issued Class B and Class A common stock in the Company, respectively. The Class A Unitholders received 80,792,206 shares of Class B common stock and the Class B Unitholders received 31,266,536 shares of Class A common stock. Accordingly, all share and per share amounts for all periods presented in the condensed consolidated statements of comprehensive income and this note have been adjusted retroactively, where applicable, to reflect the Reorganization. Basic and diluted net and comprehensive income per share for the three months ended March 31, 2022 and 2021, was calculated by adjusting net and comprehensive income attributable to Arhaus, Inc. for net and comprehensive income attributable to noncontrolling interest, and dividing by basic and diluted weighted-average number of common shares outstanding. Management Incentive Unitholders did not participate in the earnings or losses of the Company as of March 31, 2021 and therefore were not participating securities. As such, they were not included within the calculation of basic or diluted earnings per share as of March 31, 2021. Basic and diluted net and comprehensive income per share for the three months ended March 31, 2022 and 2021 , is as follows (amounts in thousands except unit and per unit data): Three months ended March 31, 2022 2021 Numerator Net and comprehensive income $ 16,058 $ 9,212 Less: Net and comprehensive income attributable to noncontrolling interest — 5,317 Net and comprehensive income attributable to Arhaus, Inc. $ 16,058 $ 3,895 Denominator—Weighted Average Shares Outstanding Weighted-average number of common shares outstanding, basic 137,482,533 112,058,742 Effect of dilutive restricted stock 1,225,935 — Weighted-average number of common shares outstanding, diluted 138,708,468 112,058,742 Net and Comprehensive Income Per Share Net and comprehensive income per share, basic $ 0.12 $ 0.03 Net and comprehensive income per share, diluted $ 0.12 $ 0.03

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies The Company is involved in litigation and claims that are incidental to its business. Although the outcome of these matters cannot be determined at the present time, the Company believes that the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows. From time to time, the Company has received inquiries from a number of state and local taxing agencies with respect to the remittance of sales, use, telecommunications, excise, and income taxes. Several jurisdictions are currently conducting tax audits of the Company's records. The Company collects, or has accrued for, taxes that it believes are required to be remitted. The amounts that have been remitted have historically been within the accruals established by the Company. The Company adjusts its accrual when facts relating to specific exposures warrant such adjustment. As of March 31, 2022 and December 31, 2021, we recorded liabilities of $1.2 million and $1.2 million, respectively, in accrued taxes on the condensed consolidated balance sheets for non-income tax matters that were probable and reasonably estimable.

Related Party Transactions

Related Party Transactions	3 Months Ended
	Mar. 31, 2022
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions Leasing transactions In November 2000, the Company entered into a lease agreement with Pagoda Partners, LLC, a company of which John Reed, our Chief Executive Officer (“CEO”), indirectly owns 50%, for our warehouse in Walton Hills, Ohio. The base lease term was 17 years with a 5-year renewal option. In August 2020, the Company amended the lease agreement to extend the lease term to April 2024 with the ability to extend the lease in 12-month increments thereafter. The monthly rental payments are $0.1 million. Rent expense was $0.3 million and $0.3 million for the three months ended March 31, 2022 and 2021, respectively. In July 2010, the Company entered into a lease agreement with Brooklyn Arhaus, a company of which our CEO and Mr. Beargie, a Director of Arhaus, Inc., own 85% and 15%, respectively, for our Outlet in Brooklyn, Ohio. The base lease term is 15 years with no lease renewal options. The monthly rental payments are $20 thousand. Rent expense was $0.1 million and $0.1 million for the three months ended March 31, 2022 and 2021, respectively. In September 2014, the Company entered into a lease agreement with Premier Arhaus, LLC, a company of which our CEO indirectly owned 50% during 2021, on a triple net basis for our headquarters building and distribution center, with construction completed during 2016. The base lease term is 17 years, with a 10-year renewal option at fixed rental payments, and with two additional 5-year renewal options at fair market rent. The monthly rental payments range from $0.2 million to $0.5 million during the 17-year base lease term and from $0.5 million to $0.6 million during the 10-year renewal period. In September 2021, the Company amended the existing finance lease agreement to extend the lease term for an additional three years, which included monthly rental payments of $0.6 million. Further, the amended lease agreement provides for the expansion of the Company’s distribution center and monthly rental payments range from $0.1 million to $0.2 million. During the fourth quarter of 2021, the lessor sold its interest in the leased assets to a third party. As a result, the lease will no longer be with a related party of the Company. Rent expense was $1.4 million for the three months ended March 31, 2021. In March 2021, the Company entered into a lease agreement with Premier Conover, LLC, a company of which our CEO indirectly owned 10%, for a distribution center and manufacturing building, for which construction was completed in the fourth quarter of 2021. The base lease term is for 12 years, with a 10-year renewal option and two additional 5-year renewal options at the higher of the minimum base rent or the fair market rent at the time of renewal execution. The monthly rental payments range from $0.2 million to $0.3 million during the 12-year base lease term and from $0.4 million to $0.5 million during the 10-year renewal period . Rent expense was $0.9 million for the three months ended March 31, 2022. Other transactions In accordance with the change in reporting entity, the Company’s condensed consolidated financial statements include a related-party receivable and a related-party note receivable between Homeworks and our CEO for $0.1 million and $1.0 million, respectively at March 31, 2021. The receivable and the full principal on the note receivable, including accrued interest, were paid back to the Company by the CEO in May 2021. In accordance with the Reorganization, the Company has accounts payable due to noncontrolling interests of LLC for state and federal income tax refunds filed for tax periods prior to the Reorganization. The accounts payable due to related parties were $2.3 million and $2.9 million at March 31, 2022 and December 31, 2021, respectively, and are included within accounts payable on the condensed consolidated balance sheets .

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Income Tax Disclosure	Income Taxes Income taxes were $5.9 million in the three months ended March 31, 2022 compared to $0.7 million in the three months ended March 31, 2021. The effective tax rate was 26.8% and 7.1% for the three months ended March 31, 2022 and March 31, 2021, respectively. Prior to the Reorganization, the Company was a limited liability company under the Internal Revenue Code that had elected to be taxed as a partnership and did not pay federal or most state corporate income taxes on its taxable income, but rather its members were liable for their respective portions of the taxable income (loss) of Arhaus, LLC. The income tax provision included state and local tax in certain jurisdictions prior to the Reorganization. Subsequent to the Reorganization, Arhaus, LLC’s taxable income flows through to FS Arhaus and Homeworks who are subject to U.S. federal and state corporate income taxes. As of March 31, 2022, no unrecognized tax benefits have been recognized. The Company files income tax returns in the U.S. and various state and local jurisdictions. The tax years after 2017 remain open to examination by the state taxing jurisdictions in which the Company is subject to tax. As of March 31, 2022, the Company was not under examination by the Internal Revenue Service or any state tax jurisdiction.

Nature of Business and Basis _2

Nature of Business and Basis of Presentation (Policies)	3 Months Ended
	Mar. 31, 2022
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying condensed consolidated financial statements include our accounts and those of our wholly owned subsidiaries. Accordingly, all intercompany balances and transactions have been eliminated through the consolidation process. The accompanying condensed consolidated balance sheets at March 31, 2022 and December 31, 2021, the condensed consolidated statements of comprehensive income, cash flows and changes in stockholders’equity (deficit) for the three months ended March 31, 2022 and 2021, and the related interim condensed consolidated disclosures are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In management’s opinion, the accompanying condensed consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of the Company’s financial position at March 31, 2022; the results of operations, cash flows and changes in stockholders’equity (deficit) for the three months ended March 31, 2022 and 2021. The condensed consolidated balance sheet as of December 31, 2021 included herein was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The results for the three months ended March 31, 2022 and 2021 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.
Use of Estimates	Use of Estimates The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounting estimates and other matters included within our condensed consolidated financial statements and notes to the condensed consolidated financial statements are revenue recognition, including a reserve for merchandise returns, goodwill and fair value of financial instruments which include, but are not limited to, accounts receivable, payables, lease obligations, equity based compensation and a derivative instrument.
Client Deposits and Gift Cards	Client Deposits Client deposits represent payments made by clients on orders. At the time of purchase, the Company collects deposits for all orders equivalent to at least 50 percent of the clients’ purchase price. Orders are recognized as revenue when the merchandise is delivered to the client and at the time of delivery the client deposit is no longer recorded as a liability. The Company expects substantially all client deposits as of March 31, 2022 will be recognized as net revenue within the next 12 months as the performance obligations are satisfied. Gift Cards The Company sells gift cards to clients in our Showrooms and through our website. Such gift cards do not have expiration dates. We defer revenue when payments are received in advance of performance for unsatisfied obligations related to our gift cards. The liability related to unredeemed gift cards of $0.9 million and $0.9 million at March 31, 2022 and December 31, 2021, respectively, is recorded in the accrued other expenses line item of the condensed consolidated balance sheets. The Company recognizes income associated with breakage proportional to actual gift card redemptions.
Fair Value of Financial Instruments	Fair Values of Financial Instruments The Company’s primary financial instruments are accounts receivable, payables, lease obligations, derivatives and equity based compensation instruments. Due to the short-term maturities of accounts receivable and payables, the Company believes the fair values of these instruments approximate their respective carrying values at March 31, 2022 and December 31, 2021. See Note 4 for discussion of our derivative, Note 5 for discussion of our lease obligations and Note 6 for discussion of our equity based compensation instruments. The Company has established a hierarchy to measure our financial instruments at fair value, which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect the Company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. The hierarchy defines three levels of inputs that may be used to measure fair value: Level 1 Unadjusted quoted prices in active markets for identical, unrestricted assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. Level 3 Unobservable inputs that reflect the entity’s own assumptions about the assumptions market participants would use in the pricing of the asset or liability and are consequently not based on market activity but rather through particular valuation techniques.
New Accounting Standards Adopted	New Accounting Standards Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases which, for operating leases, requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheets. While it will still be necessary for lessees to distinguish between “operating” and “financing” (formerly known as “capital”) leases, these distinctions will primarily affect how a lessee must recognize expense in its income statement. The new guidance is effective for financial statements issued for annual periods beginning after December 15, 2021. The Company adopted ASC 842 as of January 1, 2022, using the modified retrospective approach by applying the transition provisions at the beginning of the period of adoption. Comparative periods will continue to be presented in accordance with ASC 840. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward the historical lease classification, lease identification and initial direct costs. The Company did not elect the “Land Easements” or “Hindsight” practical expedients. Additionally, the Company made the following accounting policy elections in connection with the adoption: • Exclude short-term leases from our consolidated balance sheets; and • Include both the lease and non-lease components as a single component and account for it as a lease. As a result, the Company measured the right-of-use asset and lease liability for operating and finance leases as of January 1, 2022, using the remaining portion of the lease term that was determined under ASC 840. The adoption resulted in $242.0 million re cognized as total right-of-use assets and $326.5 million recognized as total lease liabilities on our consolidated balance sheets as of January 1, 2022. For certain previous operating and capital leases, we qualified as the deemed owner of the construction project due to our significant involvement during the construction period under build-to-suit lease accounting requirements within ASC 840. As part of our adoption of ASC 842, we derecognized the cost of these construction projects of $31.0 million, w hich were previously recorded in property, furniture and equipment, net with an offsetting obligation in accrued other expenses on our consolidated balance sheets at December 31, 2021. See Note 5 — Leases for additional information.

Merchandise Warranties (Tables)

Merchandise Warranties (Tables)	3 Months Ended
	Mar. 31, 2022
Product Warranties Disclosures [Abstract]
Merchandise Warranty Liability	A reconciliation of the changes in our limited merchandise warranty liability is as follows (amounts in thousands): Three months ended March 31, 2022 2021 Balance as of beginning of period $ 4,724 $ 3,326 Accruals during the period 2,196 1,592 Settlements during the period (1,957) (1,341) Balance as of end of the period (1) $ 4,963 $ 3,577 (1) $2.9 million and $2.7 million were recorded in accrued other expenses at March 31, 2022 and December 31, 2021, respectively. The remainder is recorded in other long-term liabilities on our condensed consolidated balance sheets.

Long-Term Debt (Tables)

Long-Term Debt (Tables)	3 Months Ended
	Mar. 31, 2022
Debt Disclosure [Abstract]
Schedule of Fair Value Assumptions for Long-Term Debt	The key assumptions used within the Black-Scholes OPM as of March 31, 2021 were as follows: March 31, Term 10 years Risk-free rate of return 1.70% Volatility 40.00% Dividend yield 0%

Leases (Tables)

Leases (Tables)	3 Months Ended
	Mar. 31, 2022
Leases [Abstract]
Liability for Operating and Finance Leases	The following table summarizes the amounts recognized in our condensed consolidated balance sheets related to leases as of March 31, 2022 (amounts in thousands): Condensed Consolidated Balance Sheet Classification March 31, 2022 Assets Operating lease assets Operating right-of-use assets $ 196,896 Finance lease assets Financing right-of-use assets 38,103 Total leased assets $ 234,999 Liabilities Current operating leases Current portion of operating lease liabilities $ 37,957 Non-current operating leases Operating lease liabilities, long-term 227,191 Total operating lease liabilities 265,148 Current finance leases Current portion of financing lease liabilities 182 Non-current finance leases Financing lease liabilities, long-term 50,342 Total finance lease liabilities 50,524 Total lease liabilities $ 315,672
Components of Lease Expense	The components of lease cost recognized within our condensed consolidated statements of comprehensive income for the three months ended March 31, 2022 are as follows (amounts in thousands): Condensed Consolidated Income Statement Classification Three months ended March 31, 2022 Lease costs: Operating lease costs Cost of goods sold $ 8,405 Operating lease costs Selling, general and administrative expenses 1,087 Finance lease costs — Amortization of right-of-use assets Selling, general and administrative expenses 458 Interest expense on lease liabilities Interest expense 1,231 Other lease costs (1) Cost of goods sold 7,918 Other lease costs (1) Selling, general and administrative expenses 88 Total lease costs $ 19,187 (1) Other lease costs includes short-term lease costs and variable lease costs. Weighted Average Remaining Lease Term (In Years) March 31, 2022 Operating leases 8.35 Finance leases 23.79 Weighted Average Discount Rate March 31, 2022 Operating leases 3.83 % Finance leases 9.75 %
Lessee, Operating Lease, Liability, Maturity	Future lease liabilities at March 31, 2022 are as follows (amounts in thousands): Year Ending December 31, Operating Lease Liabilities (1) Finance Lease Liabilities Total Lease Liabilities Remainder of 2022 $ 35,600 $ 3,652 $ 39,252 2023 44,648 4,853 49,501 2024 39,506 4,673 44,179 2025 33,577 4,673 38,250 2026 30,395 5,132 35,527 2027 26,710 5,224 31,934 Thereafter 104,048 115,167 219,215 Total lease payments 314,484 143,374 457,858 Less: Amounts representing interest (49,336) (92,850) (142,186) Total $ 265,148 $ 50,524 $ 315,672
Finance Lease, Liability, Fiscal Year Maturity	Future lease liabilities at March 31, 2022 are as follows (amounts in thousands): Year Ending December 31, Operating Lease Liabilities (1) Finance Lease Liabilities Total Lease Liabilities Remainder of 2022 $ 35,600 $ 3,652 $ 39,252 2023 44,648 4,853 49,501 2024 39,506 4,673 44,179 2025 33,577 4,673 38,250 2026 30,395 5,132 35,527 2027 26,710 5,224 31,934 Thereafter 104,048 115,167 219,215 Total lease payments 314,484 143,374 457,858 Less: Amounts representing interest (49,336) (92,850) (142,186) Total $ 265,148 $ 50,524 $ 315,672
Schedule of Future Minimum Lease Payments Under Capital Leases	Future minimum lease payments for operating and capital leases under ASC 840 at December 31, 2021, were as follows (amounts in thousands): Year Ending December 31, Operating Leases (1) Capital Leases Total Future Lease Payments 2022 $ 45,892 $ 4,673 $ 50,565 2023 43,507 4,673 48,180 2024 38,659 4,673 43,332 2025 33,125 4,673 37,798 2026 29,903 5,132 35,035 Thereafter 129,498 120,390 249,888 320,584 144,214 464,798 Less: Amounts representing interest — (94,064) (94,064) Total $ 320,584 $ 50,150 $ 370,734 (1) Includes leases with related parties. See Note 10 — Related Party Transactions for amounts leased from related parties.
Supplemental Cash Flow from Leases	Supplemental cash flow information related to leases at March 31, 2022, is as follows (amounts in thousands): March 31, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 11,485 Operating cash flows from finance leases 1,231 Financing cash flows from finance leases 1 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 430

Equity Based Compensation (Tabl

Equity Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2022
Share-based Payment Arrangement [Abstract]
Restricted Stock Activity	Restricted stock activity for the three months ended March 31, 2022, was as follows: Class A Class B Shares Weighted Average Grant Date Fair Value Shares Weighted Average Grant Date Fair Value Unvested at December 31, 2021 2,520,229 $ 16.28 596,598 $ 0.13 Granted — — — — Forfeited — — — — Vested (804,214) 0.10 — — Unvested at March 31, 2022 1,716,015 $ 18.06 596,598 $ 0.13

Segment Reporting (Tables)

Segment Reporting (Tables)	3 Months Ended
	Mar. 31, 2022
Segment Reporting [Abstract]
Net Revenue by Segment	The following table shows net revenue by merchandise sales channel for the three months ended March 31, 2022 and 2021, respectively (amounts in thousands): Three months ended March 31, 2022 2021 Retail $ 202,570 $ 138,792 eCommerce 43,730 32,522 Total net revenue $ 246,300 $ 171,314

Net and Comprehensive Income _2

Net and Comprehensive Income per Share (Tables)	3 Months Ended
	Mar. 31, 2022
Earnings Per Share [Abstract]
Calculation of Basic and Diluted Earnings Per Share	Three months ended March 31, 2022 2021 Numerator Net and comprehensive income $ 16,058 $ 9,212 Less: Net and comprehensive income attributable to noncontrolling interest — 5,317 Net and comprehensive income attributable to Arhaus, Inc. $ 16,058 $ 3,895 Denominator—Weighted Average Shares Outstanding Weighted-average number of common shares outstanding, basic 137,482,533 112,058,742 Effect of dilutive restricted stock 1,225,935 — Weighted-average number of common shares outstanding, diluted 138,708,468 112,058,742 Net and Comprehensive Income Per Share Net and comprehensive income per share, basic $ 0.12 $ 0.03 Net and comprehensive income per share, diluted $ 0.12 $ 0.03

Nature of Business and Basis _3

Nature of Business and Basis of Presentation (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022USD ($)stores	Dec. 31, 2021USD ($)
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Number of stores | stores	78
Client deposits, percentage collected at least (as a percent)	50.00%
Client deposits	$ 306,243	$ 264,929
Other Accrued Expenses
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Client deposits	$ 900	$ 900

Recently Issued Accounting St_2

Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Jan. 01, 2022	Dec. 31, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating right-of-use assets	$ 196,896		$ 0
Total operating lease liabilities	$ 265,148
Construction costs			$ 31,000
Accounting Standards Update 2016-02
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating right-of-use assets		$ 242,000
Total operating lease liabilities		$ 326,500

Merchandise Warranties - Narrat

Merchandise Warranties - Narrative (Details)	3 Months Ended
	Mar. 31, 2022
Minimum
Product Warranty Liability [Line Items]
Warranty, performance obligation period	3 years
Maximum
Product Warranty Liability [Line Items]
Warranty, performance obligation period	10 years

Merchandise Warranties - Change

Merchandise Warranties - Change in Liability (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance as of beginning of period	$ 4,724	$ 3,326
Accruals during the period	2,196	1,592
Settlements during the period	(1,957)	(1,341)
Balance as of the end of the period	4,963	3,577
Standard product warranty accrual	4,963	$ 3,577
Accrued Other Expenses
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance as of beginning of period	2,700
Balance as of the end of the period	2,900
Standard product warranty accrual	$ 2,900

Long-Term Debt - Narrative (Det

Long-Term Debt - Narrative (Details) - USD ($)	Mar. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Nov. 08, 2021	Jun. 25, 2020	Jun. 24, 2020
Debt Instrument [Line Items]
Derivative expense associated with Term Loan exit fee		$ 0	$ 11,547,000
Term Loan | Loan Payable
Debt Instrument [Line Items]
Loan, exit fee, face amount						$ 3,000,000
Loan, exit fee clause, percentage of total equity						4.00%
Derivative expense associated with Term Loan exit fee			11,500,000
Revolving Credit Facility | Credit Agreement - Revolver | Credit Agreement
Debt Instrument [Line Items]
Credit facility, face amount					$ 30,000,000
Credit facility, basis spread on variable rate	5.50%
Loan costs, net		$ 1,500,000
Amortization of loan costs			$ 100,000
Revolving Credit Facility | 2021 Credit Facility
Debt Instrument [Line Items]
Credit facility, face amount				$ 50,000,000
Credit facility, basis spread on variable rate		1.50%
Borrowings on credit facility		$ 0
Deferred financing costs		$ 300,000
Revolving Credit Facility | 2021 Credit Facility | Letter of Credit
Debt Instrument [Line Items]
Credit facility, face amount				10,000,000
Revolving Credit Facility | 2021 Credit Facility | Swingline Loan
Debt Instrument [Line Items]
Credit facility, face amount				$ 5,000,000

Long-Term Debt - Fair Value Ass

Long-Term Debt - Fair Value Assumptions (Details) - Level 3	Mar. 31, 2022yr
Term | Discounted Cash Flow
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, measurement input	10,000
Risk-free rate of return | Black-Scholes OPM
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, measurement input	0.0170
Volatility | Black-Scholes OPM
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, measurement input	0.4000
Dividend yield | Black-Scholes OPM
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, measurement input	0

Leases - Liability for Operatin

Leases - Liability for Operating and Finance Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Leases [Abstract]
Operating right-of-use assets	$ 196,896	$ 0
Financing right-of-use assets	38,103	0
Total leased assets	234,999
Current portion of operating lease liabilities	37,957	0
Operating lease liabilities, long-term	227,191	0
Total operating lease liabilities	265,148
Current portion of financing lease liabilities	182	0
Financing lease liabilities, long-term	50,342	$ 0
Total finance lease liabilities	50,524
Total lease liability	$ 315,672

Leases - Components of Lease Co

Leases - Components of Lease Cost (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022USD ($)
Lease Cost [Line Items]
Total lease costs	$ 19,187
Cost of goods sold
Lease Cost [Line Items]
Operating lease costs	8,405
Other lease costs (1)	7,918
Selling, general and administrative expenses
Lease Cost [Line Items]
Operating lease costs	1,087
Amortization of right-of-use assets	458
Other lease costs (1)	88
Interest expense
Lease Cost [Line Items]
Interest expense on lease liabilities	$ 1,231

Leases - Schedule of Weighted A

Leases - Schedule of Weighted Average Lease Term (Details)	Mar. 31, 2022
Leases [Abstract]
Operating lease, Weighted average remaining lease term (in years)	8 years 4 months 6 days
Finance lease, Weighted average remaining lease term (in years)	23 years 9 months 14 days

Leases - Schedule of Weighted_2

Leases - Schedule of Weighted Average Discount Rate (Details)	Mar. 31, 2022
Leases [Abstract]
Operating leases	3.83%
Finance leases	9.75%

Leases - Future Minimum Lease P

Leases - Future Minimum Lease Payments (Details) $ in Thousands	Mar. 31, 2022USD ($)
Operating Lease Liabilities
Remainder of 2022	$ 35,600
2023	44,648
2024	39,506
2025	33,577
2026	30,395
2027	26,710
Thereafter	104,048
Total lease payments	314,484
Less: Amounts representing interest	(49,336)
Total operating lease liabilities	265,148
Finance Lease Liabilities
Remainder of 2022	3,652
2023	4,853
2024	4,673
2025	4,673
2026	5,132
2027	5,224
Thereafter	115,167
Total lease payments	143,374
Less: Amounts representing interest	(92,850)
Total finance lease liabilities	50,524
Total Lease Liabilities
Remainder of 2022	39,252
2023	49,501
2024	44,179
2025	38,250
2026	35,527
2027	31,934
Total lease payments	219,215
Thereafter	457,858
Less: Amounts representing interest	(142,186)
Total	$ 315,672

Leases - Narrative (Details)

Leases - Narrative (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2022
Lease Cost [Line Items]
Rent expense	$ 15.7
Percentage rent expense	0.5
Aggregate minimum rental payments, not yet commenced		$ 136.3
Minimum
Lease Cost [Line Items]
Lease term, not yet commenced		10 years
Maximum
Lease Cost [Line Items]
Lease term, not yet commenced		24 years
Leasehold Improvements
Lease Cost [Line Items]
Amortization	$ 2.8

Leases - Future Minimum Lease_2

Leases - Future Minimum Lease Payments, Operating and Capital (Details) $ in Thousands	Dec. 31, 2021USD ($)
Operating Leases
2022	$ 45,892
2023	43,507
2024	38,659
2025	33,125
2026	29,903
Thereafter	129,498
Total lease payments	320,584
Less: Amounts representing interest	0
Total	320,584
Capital Leases
2022	4,673
2023	4,673
2024	4,673
2025	4,673
2026	5,132
Thereafter	120,390
Total lease payments	144,214
Less: Amounts representing interest	(94,064)
Total	50,150
Leases, Operating and Capital [Abstract]
2022	50,565
2023	48,180
2024	43,332
2025	37,798
2026	35,035
Thereafter	249,888
Total lease payments	464,798
Less: Amounts representing interest	(94,064)
Total	$ 370,734

Leases - Supplemental Cash Flow

Leases - Supplemental Cash Flow (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Leases [Abstract]
Operating cash flows from operating leases	$ 11,485
Operating cash flows from finance leases	1,231
Financing cash flows from finance leases	1	$ 0
Right-of-use assets obtained in exchange for lease obligations:	$ 430

Equity Based Compensation - Nar

Equity Based Compensation - Narrative (Details) - Incentive Units - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unit compensation expense	$ 0.7	$ 0.1
Unrecognized compensation cost	$ 10.9
Unrecognized compensation cost, period for recognition	4 years 29 days
Grant-date fair value of restricted stock, vested	$ 0.1	$ 0.3

Equity Based Compensation - Unv

Equity Based Compensation - Unvested Restricted Stock Activity (Details) - Restricted Stock	3 Months Ended
	Mar. 31, 2022$ / sharesshares
Class A
Shares
Outstanding, beginning of period (in shares) | shares	2,520,229
Granted (in shares) | shares	0
Forfeited (in shares) | shares	0
Vested (in shares) | shares	(804,214)
Outstanding, end of period (in shares) | shares	1,716,015
Weighted Average Grant Date Fair Value
Outstanding, beginning of period (in dollars per share) | $ / shares	$ 16.28
Granted (in dollars per share) | $ / shares	0
Forfeited (in dollars per share) | $ / shares	0
Vested (in shares) | $ / shares	0.10
Outstanding, end of period (in dollars per share) | $ / shares	$ 18.06
Class B
Shares
Outstanding, beginning of period (in shares) | shares	596,598
Granted (in shares) | shares	0
Forfeited (in shares) | shares	0
Vested (in shares) | shares	0
Outstanding, end of period (in shares) | shares	596,598
Weighted Average Grant Date Fair Value
Outstanding, beginning of period (in dollars per share) | $ / shares	$ 0.13
Granted (in dollars per share) | $ / shares	0
Forfeited (in dollars per share) | $ / shares	0
Vested (in shares) | $ / shares	0
Outstanding, end of period (in dollars per share) | $ / shares	$ 0.13

Segment Reporting (Details)

Segment Reporting (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022USD ($)segment	Mar. 31, 2021USD ($)
Segment Reporting [Abstract]
Number of operating segments (in segments) | segment	1
Number of reportable segments (in segments) | segment	1
Segment Reporting Information [Line Items]
Net revenue	$ 246,300	$ 171,314
Retail
Segment Reporting Information [Line Items]
Net revenue	202,570	138,792
eCommerce
Segment Reporting Information [Line Items]
Net revenue	$ 43,730	$ 32,522

Net and Comprehensive Income _3

Net and Comprehensive Income per Share - Narrative (Details)	3 Months Ended
	Mar. 31, 2022shares
Common, Class B
Class of Stock [Line Items]
Shares issued (in shares)	80,792,206
Common, Class A
Class of Stock [Line Items]
Shares issued (in shares)	31,266,536

Net and Comprehensive Income _4

Net and Comprehensive Income per Share - Calculation of EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Numerator
Net income	$ 16,058	$ 9,212
Less: Net income attributable to noncontrolling interest	0	5,317
Comprehensive income attributable to noncontrolling interests	0	5,317
Net income	16,058	3,895
Net income (loss) attributable to the shareholders, diluted	$ 16,058	$ 3,895
Denominator—Weighted Average Shares Outstanding
Weighted-average number of common shares outstanding, basic (in shares)	137,482,533	112,058,742
Effect of dilutive restricted stock (in shares)	1,225,935	0
Weighted-average number of common shares outstanding, diluted (in shares)	138,708,468	112,058,742
Net and comprehensive income (loss) per unit, basic (in dollars per share)	$ 0.12	$ 0.03
Net and comprehensive income (loss) per unit, diluted (in dollars per share)	$ 0.12	$ 0.03

Commitment and Contingencies (D

Commitment and Contingencies (Details) - USD ($) $ in Millions	Mar. 31, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Loss contingency accrual	$ 1.2	$ 1.2

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Sep. 30, 2021	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Aug. 31, 2020	Sep. 30, 2014	Jul. 31, 2010	Nov. 30, 2000
Related Party Transaction [Line Items]
Operating lease, term (in years)			12 years
Rent expense			$ 15,700
Walton Hills, Ohio | Warehouse
Related Party Transaction [Line Items]
Lease monthly payment		$ 100
Brooklyn, Ohio | Outlet
Related Party Transaction [Line Items]
Lease monthly payment		20
Minimum
Related Party Transaction [Line Items]
Operating lease, renewal term (in years)			5 years
Minimum | Renewal term, 10 years
Related Party Transaction [Line Items]
Rent expense		400
Minimum | Base term, 12 years
Related Party Transaction [Line Items]
Rent expense		200
Maximum
Related Party Transaction [Line Items]
Operating lease, renewal term (in years)			10 years
Maximum | Renewal term, 10 years
Related Party Transaction [Line Items]
Rent expense		500
Maximum | Base term, 12 years
Related Party Transaction [Line Items]
Rent expense		300
Affiliated Entity
Related Party Transaction [Line Items]
Operating lease, term (in years)						17 years
Rent expense		900	$ 1,400
Due to related parties		2,300		$ 2,900
Affiliated Entity | Walton Hills, Ohio | Warehouse
Related Party Transaction [Line Items]
Operating lease, term (in years)								17 years
Rent expense		300	300
Affiliated Entity | Brooklyn, Ohio | Outlet
Related Party Transaction [Line Items]
Operating lease, term (in years)							15 years
Rent expense		100	$ 100
Affiliated Entity | Minimum
Related Party Transaction [Line Items]
Operating lease, renewal term (in years)						5 years
Affiliated Entity | Minimum | Base term, 17 years
Related Party Transaction [Line Items]
Rent expense		200
Affiliated Entity | Minimum | Renewal term, 10 years
Related Party Transaction [Line Items]
Rent expense	$ 100	500
Affiliated Entity | Maximum
Related Party Transaction [Line Items]
Operating lease, renewal term (in years)						10 years
Affiliated Entity | Maximum | Base term, 17 years
Related Party Transaction [Line Items]
Rent expense		500
Affiliated Entity | Maximum | Renewal term, 10 years
Related Party Transaction [Line Items]
Rent expense	$ 200	600
Affiliated Entity | Maximum | Walton Hills, Ohio | Warehouse
Related Party Transaction [Line Items]
Operating lease, renewal term (in years)					12 months			5 years
Homeworks and Founder
Related Party Transaction [Line Items]
Related-party receivable		100
Related-party note receivable		$ 1,000

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Income Tax Disclosure [Abstract]
Income tax expense	$ 5,869	$ 704
Effective income tax rate	26.80%	7.10%