Arhaus (ARHS) 10-Q 4 May 23 2023 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Mar. 31, 2023	Apr. 28, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
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	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Central Index Key	0001875444
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		52,923,110
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, 2023	Dec. 31, 2022
Current assets
Cash and cash equivalents	$ 144,520	$ 145,181
Restricted cash equivalents	7,100	7,346
Accounts receivable, net	1,907	1,734
Merchandise inventory, net	292,122	286,419
Prepaid and other current assets	44,122	37,371
Total current assets	489,771	478,051
Operating right-of-use assets	278,522	252,055
Financing right-of-use assets	37,957	38,522
Property, furniture and equipment, net	136,156	135,066
Deferred tax asset	12,242	16,841
Goodwill	10,961	10,961
Other noncurrent assets	277	296
Total assets	965,886	931,792
Current liabilities
Accounts payable	53,072	62,636
Accrued taxes	15,320	12,256
Accrued wages	6,590	20,860
Accrued other expenses	33,174	35,169
Client deposits	197,933	202,587
Current portion of operating lease liabilities	40,233	39,744
Current portion of financing lease liabilities	494	531
Total current liabilities	346,816	373,783
Operating lease liabilities, long-term	315,694	289,871
Financing lease liabilities, long-term	51,806	51,835
Deferred rent and lease incentives	2,192	2,272
Other long-term liabilities	4,284	4,336
Total liabilities	720,792	722,097
Commitments and contingencies (Note 9)
Stockholders' equity
Retained Earnings	54,152	20,053
Additional Paid-in Capital	190,803	189,504
Total Arhaus, Inc. stockholders' equity	245,094	209,695
Total liabilities and stockholders' equity	965,886	931,792
Class A
Stockholders' equity
Stock issued	$ 52	$ 51
Common stock, shares outstanding (in shares)	52,217,060	51,437,348
Class B
Stockholders' equity
Stock issued	$ 87	$ 87
Common stock, shares outstanding (in shares)	87,115,600

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
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)	52,241,567	51,437,348
Common stock, shares outstanding (in shares)	52,217,060	51,437,348
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)	87,115,600
Common stock, shares outstanding (in shares)	87,115,600

Condensed Consolidated Statemen

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Statement [Abstract]
Net revenue	$ 304,568	$ 246,300
Cost of goods sold	176,330	148,583
Gross margin	128,238	97,717
Selling, general and administrative expenses	82,782	74,848
Income from operations	45,456	22,869
Interest expense (income), net	(173)	1,300
Other income	(572)	(358)
Income before taxes	46,201	21,927
Income tax expense	12,102	5,869
Net and comprehensive income	$ 34,099	$ 16,058
Net and comprehensive income per share, basic
Weighted-average number of common shares outstanding, basic (in shares)	139,072,756	137,482,533
Net and comprehensive income per unit, basic (in dollars per share)	$ 0.25	$ 0.12
Net and comprehensive income per share, diluted
Weighted-average number of common shares outstanding, diluted (in shares)	139,939,543	138,708,468
Net and comprehensive income per unit, diluted (in dollars per share)	$ 0.24	$ 0.12

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Total	Common Stock Class A	Common Stock Class B	Retained Earnings	Additional Paid-in Capital	Treasury Stock Class A
Beginning Balance (in shares) at Dec. 31, 2021		50,428,000	86,519,000
Beginning Balance at Dec. 31, 2021	$ 69,765	$ 50	$ 87	$ (116,581)	$ 186,209	$ 0
Beginning Balance (in shares) at Dec. 31, 2021						0
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	$ 1			696
Ending Balance (in shares) at Mar. 31, 2022		51,232,000	86,519,000
Ending Balance at Mar. 31, 2022	86,544	$ 51	$ 87	(100,523)	186,929	$ 0
Ending Balance (in shares) at Mar. 31, 2022						0
Beginning Balance (in shares) at Dec. 31, 2022		51,437,000	87,116,000
Beginning Balance at Dec. 31, 2022	209,695	$ 51	$ 87	20,053	189,504	$ 0
Beginning Balance (in shares) at Dec. 31, 2022						0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	34,099			34,099
Shareholder capital contribution	17				17
Equity based compensation (in shares)		804,000
Equity based compensation	1,630	$ 1			1,629
Shares withheld to cover employees' withholding taxes for equity based compensation (in shares)		(25,000)				25,000
Shares withheld to cover employees' withholding taxes for equity based compensation	(347)				(347)
Ending Balance (in shares) at Mar. 31, 2023		52,216,000	87,116,000
Ending Balance at Mar. 31, 2023	$ 245,094	$ 52	$ 87	$ 54,152	$ 190,803	$ 0
Ending Balance (in shares) at Mar. 31, 2023						25,000

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities
Net income	$ 34,099	$ 16,058
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	6,740	5,876
Amortization of operating lease right-of-use asset	7,559	7,009
Amortization of deferred financing fees, interest on finance lease in excess of principal paid and interest on operating leases	4,640	2,557
Equity based compensation	1,630	697
Deferred tax assets	4,599	2,417
Amortization and write-off of lease incentives	(80)	(63)
Insurance proceeds	47	0
Changes in operating assets and liabilities
Accounts receivable	(173)	(1,358)
Merchandise inventory	(5,750)	(38,199)
Prepaid and other current assets	(7,513)	(3,016)
Other noncurrent liabilities	93	99
Accounts payable	(7,943)	8,680
Accrued expenses	(13,346)	4,633
Operating lease liabilities	(12,271)	(11,485)
Client deposits	(4,654)	41,314
Net cash provided by operating activities	7,677	35,219
Cash flows from investing activities
Purchases of property, furniture and equipment	(8,505)	(10,151)
Insurance proceeds	333	0
Net cash used in investing activities	(8,172)	(10,151)
Cash flows from financing activities
Principal payments under finance leases	(65)	(1)
Shares withheld to cover employees' withholding taxes for equity based compensation	(347)	0
Net cash used in financing activities	(412)	(1)
Net increase (decrease) in cash, cash equivalents and restricted cash equivalents	(907)	25,067
Cash, cash equivalents and restricted cash equivalents
Beginning of period	152,527	130,908
End of period	151,620	155,975
Supplemental disclosure of cash flow information
Interest paid in cash	1,305	1,281
Interest received in cash	1,507	0
Income taxes paid in cash	1,246	259
Lease incentives	741	0
Purchase of property, furniture and equipment in accounts payable	1,539	108
Derecognition of build-to-suit assets as a result of ASC 842 adoption	0	(31,017)
Capital contributions	$ 17	$ 24

Nature of Business and Basis of

Nature of Business and Basis of Presentation	3 Months Ended
	Mar. 31, 2023
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 82 Showrooms at March 31, 2023. 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, 2023 and December 31, 2022, the condensed consolidated statements of comprehensive income, cash flows and changes in stockholders’equity for the three months ended March 31, 2023 and 2022, 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 (“SEC”) 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 normal recurring adjustments, necessary for a fair statement of the Company’s financial position at March 31, 2023 and the results of operations, cash flows and changes in stockholders’equity for the three months ended March 31, 2023 and 2022. The condensed consolidated balance sheet as of December 31, 2022 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, 2023 and 2022 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, 2022. 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 and lease obligations. 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, 2023 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 at March 31, 2023 and December 31, 2022 of $1.0 million and $1.0 million, 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. For the three months ended March 31, 2023 and 2022, breakage was minimal. Fair Values of Financial Instruments The Company’s primary financial ins truments are cash and cash equivalent investments, accounts receivable, payables, lease obligations and equity based compensation instruments. Due to the shor t-term maturities of cash and cash equivalent investments, accounts receivable and payables, the Company believes the fair values of these instruments approximate their respective carrying values at March 31, 2023 and December 31, 2022. See Note 5 — Leases for discussion of our lease obligations and Note 6 — Equity Based Compensation 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. From time to time, the Company invests in money market funds and other Level 1 cash and cash equivalent investments. For the three months ended March 31, 2023, the Company earned $1.5 million in interest income. The Company did not have cash and cash equivalent investments for the three months ended March 31, 2022. Interest income is included within interest expense (income), net on our condensed consolidated statements of comprehensive income.

Recently Issued Accounting Stan

Recently Issued Accounting Standards	3 Months Ended
	Mar. 31, 2023
Accounting Policies [Abstract]
Recently Issued Accounting Standards	Recently Issued Accounting Standards New Accounting Standards Adopted in Fiscal 2023 We did not adopt any Accounting Standards Updates (“ASU”) in the three months ended March 31, 2023 that had a material impact on our accounting policies or our condensed consolidated financial statements. Accounting Standards Not Yet Adopted The following table summarizes accounting pronouncements which we have not yet adopted but will be adopted in the upcoming fiscal year. ASU 2023-01 is effective for annual periods beginning after December 15, 2023. We believe the adoption will not have a material impact on our accounting policies or our consolidated financial statements and related disclosures. ASU Description Adoption Date ASU 2023-01 Leases (Topic 842): Common Control Arrangements Fiscal year 2024

Merchandise Warranties

Merchandise Warranties	3 Months Ended
	Mar. 31, 2023
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, 2023 2022 Balance as of beginning of period $ 6,375 $ 4,724 Accruals during the period 3,381 2,196 Settlements during the period (3,291) (1,957) Balance as of end of the period (1) $ 6,465 $ 4,963 (1) $3.7 million and $3.7 million were recorded in accrued other expenses at March 31, 2023 and December 31, 2022, 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, 2023
Debt Disclosure [Abstract]
Long-Term Debt	Long-Term Debt On November 8, 2021, the Company entered into a 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 was initially $50.0 million. The 2021 Credit Facility contains restrictive covenants and has certain financial covenants, including a minimum rent-adjusted total leverage ratio and a 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, 2023 and 2022), whereas the applicable margin is adjusted quarterly based on the Company’s consolidated rent-adjusted total leverage ratio. On December 9, 2022, the Company amended the 2021 Credit Facility to increase the revolving credit commitment thereunder by $25.0 million. After giving effect to such increase, the aggregate amount of all commitments under the 2021 Credit Facility is $75.0 million. The 2021 Credit Facility expires on November 8, 2026. At March 31, 2023 and December 31, 2022 , we had no borrowings on the 2021 Credit Facility. Deferred financing costs related to the 2021 Credit Facility of $0.4 million are recorded in other noncurrent assets on the consolidated balance sheets and will be amortized over the term of the 2021 Credit Facility on a straight-line basis. Accumulated amortization related to deferred financing costs for the 2021 Credit Facility was $0.1 million as of March 31, 2023 and December 31, 2022 . The Company was in compliance with all applicable debt covenants at March 31, 2023 and December 31, 2022, and expects to remain in compliance over the next 12 months.

Leases

Leases	3 Months Ended
	Mar. 31, 2023
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, 2023 and December 31, 2022, respectively (amounts in thousands): Condensed Consolidated Balance Sheet Classification March 31, 2023 December 31, 2022 Assets Operating lease assets Operating right-of-use assets $ 278,522 $ 252,055 Finance lease assets Financing right-of-use assets 37,957 38,522 Total leased assets $ 316,479 $ 290,577 Liabilities Current operating leases Current portion of operating lease liabilities $ 40,233 $ 39,744 Non-current operating leases Operating lease liabilities, long-term 315,694 289,871 Total operating lease liabilities 355,927 329,615 Current finance leases Current portion of financing lease liabilities 494 531 Non-current finance leases Financing lease liabilities, long-term 51,806 51,835 Total finance lease liabilities 52,300 52,366 Total lease liabilities $ 408,227 $ 381,981 The components of lease cost recognized within our condensed consolidated statements of comprehensive income for the three months ended March 31, 2023 and 2022, respectively are as follows (amounts in thousands): Three months ended March 31, Condensed Consolidated Income Statement Classification 2023 2022 Lease costs: Operating lease costs Cost of goods sold $ 9,714 $ 8,405 Operating lease costs Selling, general and administrative expenses 2,401 1,087 Finance lease costs Amortization of right-of-use assets Selling, general and administrative expenses 540 458 Interest expense on lease liabilities Interest expense (income), net 1,268 1,231 Variable lease costs (1) Cost of goods sold 10,031 7,918 Short term lease costs Selling, general and administrative expenses 120 88 Total lease costs $ 24,074 $ 19,187 (1) Includes $0.3 million of month-to-month lease costs for the three months ended March 31, 2023. T he Company did not have month-to-month lease costs for the three months ended March 31, 2022. 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, 2023 and 2022, respectively. Weighted Average Remaining Lease Term (In Years) March 31, 2023 March 31, 2022 Operating leases 9.32 8.35 Finance leases 22.26 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, 2023 and 2022, respectively. Weighted Average Discount Rate March 31, 2023 March 31, 2022 Operating leases 5.80 % 3.83 % Finance leases 9.72 % 9.75 % Future lease liabilities at March 31, 2023 are as follows (amounts in thousands): Year Ending December 31, Operating Lease Liabilities (1) Finance Lease Liabilities Total Lease Liabilities Remainder of 2023 $ 43,363 $ 4,000 $ 47,363 2024 57,680 5,153 62,833 2025 52,012 5,153 57,165 2026 48,925 5,612 54,537 2027 45,032 5,423 50,455 2028 39,775 5,224 44,999 Thereafter 185,252 109,943 295,195 Total lease payments 472,039 140,508 612,547 Less: Amounts representing interest (116,112) (88,208) (204,320) Total $ 355,927 $ 52,300 $ 408,227 (1) Includes leases with related parties. See Note 10 — Related Party Transactions for amounts leased from related parties. At March 31, 2023, the Company has entered into leases for Showrooms and equipment which have not yet commenced with expected leas e terms ranging from 3 to 17 years. The aggregate minimum rental payments over the term of the leases of approximately $121.7 million are not included i n the above table. Supplemental cash flow information related to leases for the three months ended March 31, 2023 and 2022, respectively is as follows (amounts in thousands): Three months ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 13,411 $ 11,485 Operating cash flows for finance leases 1,204 1,231 Financing cash flows for finance leases 129 1 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 34,028 $ 430 Finance leases — —
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, 2023 and December 31, 2022, respectively (amounts in thousands): Condensed Consolidated Balance Sheet Classification March 31, 2023 December 31, 2022 Assets Operating lease assets Operating right-of-use assets $ 278,522 $ 252,055 Finance lease assets Financing right-of-use assets 37,957 38,522 Total leased assets $ 316,479 $ 290,577 Liabilities Current operating leases Current portion of operating lease liabilities $ 40,233 $ 39,744 Non-current operating leases Operating lease liabilities, long-term 315,694 289,871 Total operating lease liabilities 355,927 329,615 Current finance leases Current portion of financing lease liabilities 494 531 Non-current finance leases Financing lease liabilities, long-term 51,806 51,835 Total finance lease liabilities 52,300 52,366 Total lease liabilities $ 408,227 $ 381,981 The components of lease cost recognized within our condensed consolidated statements of comprehensive income for the three months ended March 31, 2023 and 2022, respectively are as follows (amounts in thousands): Three months ended March 31, Condensed Consolidated Income Statement Classification 2023 2022 Lease costs: Operating lease costs Cost of goods sold $ 9,714 $ 8,405 Operating lease costs Selling, general and administrative expenses 2,401 1,087 Finance lease costs Amortization of right-of-use assets Selling, general and administrative expenses 540 458 Interest expense on lease liabilities Interest expense (income), net 1,268 1,231 Variable lease costs (1) Cost of goods sold 10,031 7,918 Short term lease costs Selling, general and administrative expenses 120 88 Total lease costs $ 24,074 $ 19,187 (1) Includes $0.3 million of month-to-month lease costs for the three months ended March 31, 2023. T he Company did not have month-to-month lease costs for the three months ended March 31, 2022. 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, 2023 and 2022, respectively. Weighted Average Remaining Lease Term (In Years) March 31, 2023 March 31, 2022 Operating leases 9.32 8.35 Finance leases 22.26 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, 2023 and 2022, respectively. Weighted Average Discount Rate March 31, 2023 March 31, 2022 Operating leases 5.80 % 3.83 % Finance leases 9.72 % 9.75 % Future lease liabilities at March 31, 2023 are as follows (amounts in thousands): Year Ending December 31, Operating Lease Liabilities (1) Finance Lease Liabilities Total Lease Liabilities Remainder of 2023 $ 43,363 $ 4,000 $ 47,363 2024 57,680 5,153 62,833 2025 52,012 5,153 57,165 2026 48,925 5,612 54,537 2027 45,032 5,423 50,455 2028 39,775 5,224 44,999 Thereafter 185,252 109,943 295,195 Total lease payments 472,039 140,508 612,547 Less: Amounts representing interest (116,112) (88,208) (204,320) Total $ 355,927 $ 52,300 $ 408,227 (1) Includes leases with related parties. See Note 10 — Related Party Transactions for amounts leased from related parties. At March 31, 2023, the Company has entered into leases for Showrooms and equipment which have not yet commenced with expected leas e terms ranging from 3 to 17 years. The aggregate minimum rental payments over the term of the leases of approximately $121.7 million are not included i n the above table. Supplemental cash flow information related to leases for the three months ended March 31, 2023 and 2022, respectively is as follows (amounts in thousands): Three months ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 13,411 $ 11,485 Operating cash flows for finance leases 1,204 1,231 Financing cash flows for finance leases 129 1 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 34,028 $ 430 Finance leases — —

Equity Based Compensation

Equity Based Compensation	3 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Equity Based Compensation	Equity Based Compensation The following tables summarize the activity of the Company’s Restricted Stock for the three months ended March 31, 2023 and the equity based compensation expense for the three months ended March 31, 2023 and 2022, respectively (amounts in thousands): Restricted Stock - Class A Amount Weighted Average Grant Date Fair Value Unvested at December 31, 2022 1,510,269 $ 6.94 Granted — — Forfeited — — Vested (804,217) 0.10 Unvested at March 31, 2023 706,052 $ 14.72 Three months ended March 31, 2023 2022 Equity based compensation expense - Restricted Stock (1) $ 698 $ 697 (1) Total unrecognized equity based compensation to be recognized in future periods is $8.2 million at March 31, 2023, and will be recognized over a weighted average period of 3.14 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our condensed consolidated statements of comprehensive income . The Arhaus, Inc. 2021 Equity Incentive Plan (the “2021 Plan”) was adopted on November 8, 2021. The 2021 Plan authorizes the Company the ability to grant stock options (either incentive or non-qualified), stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance shares, performance share units (“PSUs”) and other stock-based awards with respect to our Class A common stock to our employees, officers, consultants, advisors and directors. The maximum number of Class A common stock that may be granted under the 2021 Plan is 11,205,100 shares. As of March 31, 2023, the Company has granted RSUs and PSUs to certain named executive officers and other key employees (“Award Recipient”). The Company has also issued RSU awards to certain members of the Board of Directors. Each RSU represents a contingent right to receive one share of the Company’s Class A common stock upon vesting. The RSUs granted to Award Recipients vest in one-third increments on each of the first, second and third anniversary of the date of grant, provided that the Award Recipient continues to serve the Company through the applicable vesting date (“Continuous Service”). If the Award Recipient’s Continuous Service terminates for any reason other than death, disability or in connection with a change in control (as such terms are defined in the 2021 Plan), unless the Compensation Committee of the Board of Directors determines otherwise, all RSUs that are unvested at the time of such termination shall be forfeited and canceled immediately without consideration. The RSUs issued to certain members of the Board of Directors will vest on the one-year anniversary of the grant date. The Company accounts for forfeitures as they occur. Each PSU represents a contingent right to receive one share of the Company’s Class A common stock upon vesting. The number of PSUs earned will be based on the Company’s financial performance as measured against pre-established target goals for cumulative demand revenue and cumulative adjusted EBITDA (the “Performance Goals”) over the applicable performance period. PSUs will vest as of the end of the performance period subject to the Award Recipient’s Continuous Service, but will not settle and payout until the number of PSUs earned is determined by the Compensation Committee. The Award Recipient may earn between 0% and 200% of the PSU target award based on the Company’s achievement of the Performance Goals. The Company accounts for forfeitures as they occur. The following table summarizes the activity of the Company’s PSU and RSU awards for the three months ended March 31, 2023, and their equity based compensation expense for the three months ended March 31, 2023 and 2022, respectively (amounts in thousands): PSU Awards RSU Awards Amount Weighted Average Grant Date Fair Value Amount Weighted Average Grant Date Fair Value Unvested at December 31, 2022 513,125 $ 5.95 731,661 $ 5.84 Granted 271,138 9.50 356,468 9.48 Forfeited (16,250) 5.75 (20,750) 5.75 Vested — — — — Unvested at March 31, 2023 768,013 $ 7.21 1,067,379 $ 7.06 Three months ended March 31, 2023 2022 (1) Equity based compensation expense - PSUs (2) $ 433 $ — Equity based compensation expense - RSUs (3) $ 499 $ — (1) At the three months ended March 31, 2022 there were no PSUs or RSUs yet granted under the 2021 Plan. (2) Total unrecognized equity based compensation for the PSUs to be recognized in future periods is $5.5 million at March 31, 2023, and will be recognized over a weighted average period of 2.15 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our condensed consolidated statements of comprehensive income. (3) Total unrecognized equity based compensation for the RSUs to be recognized in future periods is $6.3 million at March 31, 2023, and will be recognized over a weighted average period of 2.63 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our condensed consolidated statements of comprehensive income.

Segment Reporting

Segment Reporting	3 Months Ended
	Mar. 31, 2023
Segment Reporting [Abstract]
Segment Reporting	Segment Reporting Our chief operating decision maker is our Chief Executive Officer (“CEO”), 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, 2023 and 2022, respectively (amounts in thousands): Three months ended March 31, 2023 2022 Retail $ 250,102 $ 202,570 eCommerce 54,466 43,730 Total net revenue $ 304,568 $ 246,300

Net and Comprehensive Income pe

Net and Comprehensive Income per Share	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Net and Comprehensive Income per Share	Net and Comprehensive Income per Share Basic and diluted net and comprehensive income per share for the three months ended March 31, 2023 and 2022, was calculated by dividing net and comprehensive income by the number of basic and diluted weighted average common shares outstanding. Basic and diluted net and comprehensive income per share for the three months ended March 31, 2023 and 2022 , is as follows (amounts in thousands except share and per share data): Three months ended March 31, 2023 2022 Numerator Net and comprehensive income $ 34,099 $ 16,058 Denominator—Weighted Average Shares Outstanding Weighted-average number of common shares outstanding, basic 139,072,756 137,482,533 Effect of dilutive restricted stock (1) 866,787 1,225,935 Weighted-average number of common shares outstanding, diluted 139,939,543 138,708,468 Net and Comprehensive Income Per Share Net and comprehensive income per share, basic $ 0.25 $ 0.12 Net and comprehensive income per share, diluted $ 0.24 $ 0.12 (1) During the three months ended March 31, 2023, 547,370 shares of unvested restricted stock and RSUs were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.

Commitments and Contingencies

Commitments and Contingencies	3 Months Ended
	Mar. 31, 2023
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, management of 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, 2023 and December 31, 2022, we recorded liabilities of $0.3 million and $0.4 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, 2023
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 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, 2023 and 2022, 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 the Company, 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, 2023 and 2022, respectively. In March 2021, the Company entered into a lease agreement with Premier Conover, LLC, a company of which our CEO indirectly owns 40%, 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 $1.0 million and $0.9 million for the three months ended March 31, 2023 and 2022, respectively. Other transactions The accounts payable due to related parties for state and federal income tax refunds were $1.8 million and $1.8 million at March 31, 2023 and December 31, 2022, respectively, and are included within accounts payable on the condensed consolidated balance sheets.

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesIncome taxes were $12.1 million and $5.9 million in the three months ended March 31, 2023 and 2022, respectively. The effective tax rate was 26.2% and 26.8% for the three months ended March 31, 2023 and 2022, respectively.As of March 31, 2023, 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 2018 remain open to examination by the state taxing jurisdictions in which the Company is subject to tax. As of March 31, 2023, 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, 2023
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, 2023 and December 31, 2022, the condensed consolidated statements of comprehensive income, cash flows and changes in stockholders’equity for the three months ended March 31, 2023 and 2022, 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 (“SEC”) 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 normal recurring adjustments, necessary for a fair statement of the Company’s financial position at March 31, 2023 and the results of operations, cash flows and changes in stockholders’equity for the three months ended March 31, 2023 and 2022. The condensed consolidated balance sheet as of December 31, 2022 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, 2023 and 2022 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, 2022.
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 and lease obligations.
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, 2023 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 at March 31, 2023 and December 31, 2022 of $1.0 million and $1.0 million, 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. For the three months ended March 31, 2023 and 2022, breakage was minimal.
Fair Value of Financial Instruments	Fair Values of Financial Instruments The Company’s primary financial ins truments are cash and cash equivalent investments, accounts receivable, payables, lease obligations and equity based compensation instruments. Due to the shor t-term maturities of cash and cash equivalent investments, accounts receivable and payables, the Company believes the fair values of these instruments approximate their respective carrying values at March 31, 2023 and December 31, 2022. See Note 5 — Leases for discussion of our lease obligations and Note 6 — Equity Based Compensation 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 Fiscal 2023 We did not adopt any Accounting Standards Updates (“ASU”) in the three months ended March 31, 2023 that had a material impact on our accounting policies or our condensed consolidated financial statements. Accounting Standards Not Yet Adopted The following table summarizes accounting pronouncements which we have not yet adopted but will be adopted in the upcoming fiscal year. ASU 2023-01 is effective for annual periods beginning after December 15, 2023. We believe the adoption will not have a material impact on our accounting policies or our consolidated financial statements and related disclosures. ASU Description Adoption Date ASU 2023-01 Leases (Topic 842): Common Control Arrangements Fiscal year 2024

Merchandise Warranties (Tables)

Merchandise Warranties (Tables)	3 Months Ended
	Mar. 31, 2023
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, 2023 2022 Balance as of beginning of period $ 6,375 $ 4,724 Accruals during the period 3,381 2,196 Settlements during the period (3,291) (1,957) Balance as of end of the period (1) $ 6,465 $ 4,963 (1) $3.7 million and $3.7 million were recorded in accrued other expenses at March 31, 2023 and December 31, 2022, respectively. The remainder is recorded in other long-term liabilities on our condensed consolidated balance sheets.

Leases (Tables)

Leases (Tables)	3 Months Ended
	Mar. 31, 2023
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, 2023 and December 31, 2022, respectively (amounts in thousands): Condensed Consolidated Balance Sheet Classification March 31, 2023 December 31, 2022 Assets Operating lease assets Operating right-of-use assets $ 278,522 $ 252,055 Finance lease assets Financing right-of-use assets 37,957 38,522 Total leased assets $ 316,479 $ 290,577 Liabilities Current operating leases Current portion of operating lease liabilities $ 40,233 $ 39,744 Non-current operating leases Operating lease liabilities, long-term 315,694 289,871 Total operating lease liabilities 355,927 329,615 Current finance leases Current portion of financing lease liabilities 494 531 Non-current finance leases Financing lease liabilities, long-term 51,806 51,835 Total finance lease liabilities 52,300 52,366 Total lease liabilities $ 408,227 $ 381,981
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, 2023 and 2022, respectively are as follows (amounts in thousands): Three months ended March 31, Condensed Consolidated Income Statement Classification 2023 2022 Lease costs: Operating lease costs Cost of goods sold $ 9,714 $ 8,405 Operating lease costs Selling, general and administrative expenses 2,401 1,087 Finance lease costs Amortization of right-of-use assets Selling, general and administrative expenses 540 458 Interest expense on lease liabilities Interest expense (income), net 1,268 1,231 Variable lease costs (1) Cost of goods sold 10,031 7,918 Short term lease costs Selling, general and administrative expenses 120 88 Total lease costs $ 24,074 $ 19,187 (1) Includes $0.3 million of month-to-month lease costs for the three months ended March 31, 2023. T he Company did not have month-to-month lease costs for the three months ended March 31, 2022. Weighted Average Remaining Lease Term (In Years) March 31, 2023 March 31, 2022 Operating leases 9.32 8.35 Finance leases 22.26 23.79 Weighted Average Discount Rate March 31, 2023 March 31, 2022 Operating leases 5.80 % 3.83 % Finance leases 9.72 % 9.75 %
Lessee, Operating Lease, Liability, Maturity	Future lease liabilities at March 31, 2023 are as follows (amounts in thousands): Year Ending December 31, Operating Lease Liabilities (1) Finance Lease Liabilities Total Lease Liabilities Remainder of 2023 $ 43,363 $ 4,000 $ 47,363 2024 57,680 5,153 62,833 2025 52,012 5,153 57,165 2026 48,925 5,612 54,537 2027 45,032 5,423 50,455 2028 39,775 5,224 44,999 Thereafter 185,252 109,943 295,195 Total lease payments 472,039 140,508 612,547 Less: Amounts representing interest (116,112) (88,208) (204,320) Total $ 355,927 $ 52,300 $ 408,227
Finance Lease, Liability, Fiscal Year Maturity	Future lease liabilities at March 31, 2023 are as follows (amounts in thousands): Year Ending December 31, Operating Lease Liabilities (1) Finance Lease Liabilities Total Lease Liabilities Remainder of 2023 $ 43,363 $ 4,000 $ 47,363 2024 57,680 5,153 62,833 2025 52,012 5,153 57,165 2026 48,925 5,612 54,537 2027 45,032 5,423 50,455 2028 39,775 5,224 44,999 Thereafter 185,252 109,943 295,195 Total lease payments 472,039 140,508 612,547 Less: Amounts representing interest (116,112) (88,208) (204,320) Total $ 355,927 $ 52,300 $ 408,227
Supplemental Cash Flow from Leases	Supplemental cash flow information related to leases for the three months ended March 31, 2023 and 2022, respectively is as follows (amounts in thousands): Three months ended March 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases $ 13,411 $ 11,485 Operating cash flows for finance leases 1,204 1,231 Financing cash flows for finance leases 129 1 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 34,028 $ 430 Finance leases — —

Equity Based Compensation (Tabl

Equity Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Schedule of Unvested Stock Activity	The following tables summarize the activity of the Company’s Restricted Stock for the three months ended March 31, 2023 and the equity based compensation expense for the three months ended March 31, 2023 and 2022, respectively (amounts in thousands): Restricted Stock - Class A Amount Weighted Average Grant Date Fair Value Unvested at December 31, 2022 1,510,269 $ 6.94 Granted — — Forfeited — — Vested (804,217) 0.10 Unvested at March 31, 2023 706,052 $ 14.72 Three months ended March 31, 2023 2022 Equity based compensation expense - Restricted Stock (1) $ 698 $ 697 (1) Total unrecognized equity based compensation to be recognized in future periods is $8.2 million at March 31, 2023, and will be recognized over a weighted average period of 3.14 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our condensed consolidated statements of comprehensive income . The following table summarizes the activity of the Company’s PSU and RSU awards for the three months ended March 31, 2023, and their equity based compensation expense for the three months ended March 31, 2023 and 2022, respectively (amounts in thousands): PSU Awards RSU Awards Amount Weighted Average Grant Date Fair Value Amount Weighted Average Grant Date Fair Value Unvested at December 31, 2022 513,125 $ 5.95 731,661 $ 5.84 Granted 271,138 9.50 356,468 9.48 Forfeited (16,250) 5.75 (20,750) 5.75 Vested — — — — Unvested at March 31, 2023 768,013 $ 7.21 1,067,379 $ 7.06 Three months ended March 31, 2023 2022 (1) Equity based compensation expense - PSUs (2) $ 433 $ — Equity based compensation expense - RSUs (3) $ 499 $ — (1) At the three months ended March 31, 2022 there were no PSUs or RSUs yet granted under the 2021 Plan. (2) Total unrecognized equity based compensation for the PSUs to be recognized in future periods is $5.5 million at March 31, 2023, and will be recognized over a weighted average period of 2.15 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our condensed consolidated statements of comprehensive income. (3) Total unrecognized equity based compensation for the RSUs to be recognized in future periods is $6.3 million at March 31, 2023, and will be recognized over a weighted average period of 2.63 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our condensed consolidated statements of comprehensive income.

Segment Reporting (Tables)

Segment Reporting (Tables)	3 Months Ended
	Mar. 31, 2023
Segment Reporting [Abstract]
Net Revenue by Segment	The following table shows net revenue by merchandise sales channel for the three months ended March 31, 2023 and 2022, respectively (amounts in thousands): Three months ended March 31, 2023 2022 Retail $ 250,102 $ 202,570 eCommerce 54,466 43,730 Total net revenue $ 304,568 $ 246,300

Net and Comprehensive Income _2

Net and Comprehensive Income per Share (Tables)	3 Months Ended
	Mar. 31, 2023
Earnings Per Share [Abstract]
Calculation of Basic and Diluted Earnings Per Share	Basic and diluted net and comprehensive income per share for the three months ended March 31, 2023 and 2022 , is as follows (amounts in thousands except share and per share data): Three months ended March 31, 2023 2022 Numerator Net and comprehensive income $ 34,099 $ 16,058 Denominator—Weighted Average Shares Outstanding Weighted-average number of common shares outstanding, basic 139,072,756 137,482,533 Effect of dilutive restricted stock (1) 866,787 1,225,935 Weighted-average number of common shares outstanding, diluted 139,939,543 138,708,468 Net and Comprehensive Income Per Share Net and comprehensive income per share, basic $ 0.25 $ 0.12 Net and comprehensive income per share, diluted $ 0.24 $ 0.12 (1) During the three months ended March 31, 2023, 547,370 shares of unvested restricted stock and RSUs were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.

Nature of Business and Basis _3

Nature of Business and Basis of Presentation (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) store	Dec. 31, 2022 USD ($)
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Number of stores | store	82
Client deposits, percentage collected at least (as a percent)	50%
Client deposits	$ 197,933	$ 202,587
Interest income	1,500
Other Accrued Expenses
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Client deposits	$ 1,000	$ 1,000

Merchandise Warranties - Narrat

Merchandise Warranties - Narrative (Details)	3 Months Ended
	Mar. 31, 2023
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, 2023	Mar. 31, 2022
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance as of beginning of period	$ 6,375	$ 4,724
Accruals during the period	3,381	2,196
Settlements during the period	(3,291)	(1,957)
Balance as of the end of the period	6,465	4,963
Accrued and other expenses	6,465	$ 4,963
Accrued Other Expenses
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance as of beginning of period	3,700
Balance as of the end of the period	3,700
Accrued and other expenses	$ 3,700

Long-Term Debt - Narrative (Det

Long-Term Debt - Narrative (Details) - 2021 Credit Facility - USD ($)	Mar. 31, 2023	Dec. 09, 2022	Mar. 31, 2022	Dec. 31, 2022	Nov. 08, 2021
Debt Instrument [Line Items]
Credit facility increase		$ 25,000,000
Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, face amount		$ 75,000,000			$ 50,000,000
Credit facility, basis spread on variable rate	1.50%		1.50%
Borrowings on credit facility	$ 0			$ 0
Loan costs, net	400,000
Accumulated amortization, deferred loan costs	$ 100,000			$ 100,000
Revolving Credit Facility | Letter of Credit
Debt Instrument [Line Items]
Credit facility, face amount					10,000,000
Revolving Credit Facility | Swingline Loan
Debt Instrument [Line Items]
Credit facility, face amount					$ 5,000,000

Leases - Liability for Operatin

Leases - Liability for Operating and Finance Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Leases [Abstract]
Operating right-of-use assets	$ 278,522	$ 252,055
Financing right-of-use assets	37,957	38,522
Total leased assets	316,479	290,577
Current portion of operating lease liabilities	40,233	39,744
Operating lease liabilities, long-term	315,694	289,871
Total operating lease liabilities	355,927	329,615
Current portion of financing lease liabilities	494	531
Financing lease liabilities, long-term	51,806	51,835
Total finance lease liabilities	52,300	52,366
Total lease liability	$ 408,227	$ 381,981

Leases - Components of Lease Co

Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Lease Cost [Line Items]
Other lease costs	$ 300
Total lease costs	24,074	$ 19,187
Cost of goods sold
Lease Cost [Line Items]
Operating lease costs	9,714	8,405
Other lease costs	10,031	7,918
Selling, general and administrative expenses
Lease Cost [Line Items]
Operating lease costs	2,401	1,087
Amortization of right-of-use assets	540	458
Other lease costs	120	88
Interest expense (income), net
Lease Cost [Line Items]
Interest expense on lease liabilities	$ 1,268	$ 1,231

Leases - Schedule of Weighted A

Leases - Schedule of Weighted Average Lease Term (Details)	Mar. 31, 2023	Mar. 31, 2022
Leases [Abstract]
Operating leases	9 years 3 months 25 days	8 years 4 months 6 days
Finance leases	22 years 3 months 3 days	23 years 9 months 14 days

Leases - Schedule of Weighted_2

Leases - Schedule of Weighted Average Discount Rate (Details)	Mar. 31, 2023	Mar. 31, 2022
Leases [Abstract]
Operating leases	5.80%	3.83%
Finance leases	9.72%	9.75%

Leases - Narrative (Details)

Leases - Narrative (Details) $ in Millions	Mar. 31, 2023 USD ($)
Lease Cost [Line Items]
Aggregate minimum rental payments, not yet commenced	$ 121.7
Minimum
Lease Cost [Line Items]
Lease term, not yet commenced	3 years
Maximum
Lease Cost [Line Items]
Lease term, not yet commenced	17 years

Leases - Future Minimum Lease P

Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Operating Lease Liabilities
Remainder of 2023	$ 43,363
2024	57,680
2025	52,012
2026	48,925
2027	45,032
2028	39,775
Thereafter	185,252
Total lease payments	472,039
Less: Amounts representing interest	(116,112)
Total operating lease liabilities	355,927	$ 329,615
Finance Lease Liabilities
Remainder of 2023	4,000
2024	5,153
2025	5,153
2026	5,612
2027	5,423
2028	5,224
Thereafter	109,943
Total lease payments	140,508
Less: Amounts representing interest	(88,208)
Total finance lease liabilities	52,300	$ 52,366
Total Lease Liabilities
Remainder of 2023	47,363
2024	62,833
2025	57,165
2026	54,537
2027	50,455
2028	44,999
Total lease payments	295,195
Thereafter	612,547
Less: Amounts representing interest	(204,320)
Total	$ 408,227

Leases - Supplemental Cash Flow

Leases - Supplemental Cash Flow (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Leases [Abstract]
Operating cash flows for operating leases	$ 13,411	$ 11,485
Operating cash flows for finance leases	1,204	1,231
Financing cash flows for finance leases	129	1
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	34,028	430
Finance leases	$ 0	$ 0

Equity Based Compensation - Unv

Equity Based Compensation - Unvested Stock Activity (Details)	3 Months Ended
	Mar. 31, 2023 $ / shares shares
PSU Awards
Amount
Unvested, beginning of period (in shares) | shares	513,125
Granted (in shares) | shares	271,138
Forfeited (in shares) | shares	(16,250)
Vested (in shares) | shares	0
Unvested, end of period (in shares) | shares	768,013
Weighted Average Grant Date Fair Value
Unvested, beginning of period (in dollars per share) | $ / shares	$ 5.95
Granted (in dollars per share) | $ / shares	9.50
Forfeited (in dollars per share) | $ / shares	5.75
Vested (in dollars per share) | $ / shares	0
Unvested, end of period (in dollars per share) | $ / shares	$ 7.21
RSU Awards
Amount
Unvested, beginning of period (in shares) | shares	731,661
Granted (in shares) | shares	356,468
Forfeited (in shares) | shares	(20,750)
Vested (in shares) | shares	0
Unvested, end of period (in shares) | shares	1,067,379
Weighted Average Grant Date Fair Value
Unvested, beginning of period (in dollars per share) | $ / shares	$ 5.84
Granted (in dollars per share) | $ / shares	9.48
Forfeited (in dollars per share) | $ / shares	5.75
Vested (in dollars per share) | $ / shares	0
Unvested, end of period (in dollars per share) | $ / shares	$ 7.06
Class A | Restricted Stock
Amount
Unvested, beginning of period (in shares) | shares	1,510,269
Granted (in shares) | shares	0
Forfeited (in shares) | shares	0
Vested (in shares) | shares	(804,217)
Unvested, end of period (in shares) | shares	706,052
Weighted Average Grant Date Fair Value
Unvested, beginning of period (in dollars per share) | $ / shares	$ 6.94
Granted (in dollars per share) | $ / shares	0
Forfeited (in dollars per share) | $ / shares	0
Vested (in dollars per share) | $ / shares	0.10
Unvested, end of period (in dollars per share) | $ / shares	$ 14.72

Equity Based Compensation - Equ

Equity Based Compensation - Equity Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Incentive Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost	$ 8,200
Unrecognized compensation cost, period for recognition	3 years 1 month 20 days
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity based compensation expense	$ 698	$ 697
PSU Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity based compensation expense	433	0
Unrecognized compensation cost	$ 5,500
Unrecognized compensation cost, period for recognition	2 years 1 month 24 days
RSU Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity based compensation expense	$ 499	$ 0
Unrecognized compensation cost	$ 6,300
Unrecognized compensation cost, period for recognition	2 years 7 months 17 days

Equity Based Compensation - Nar

Equity Based Compensation - Narrative (Details) - shares	Aug. 02, 2022	Mar. 31, 2023
2021 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum shares that may be granted (in shares)		11,205,100
PSU Awards | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting percentage	0%
PSU Awards | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting percentage	200%
RSU Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	1 year

Segment Reporting - Narrative (

Segment Reporting - Narrative (Details)	3 Months Ended
	Mar. 31, 2023 segment
Segment Reporting [Abstract]
Number of operating segments	1
Number of reportable segments	1

Segment Reporting - Net Revenue

Segment Reporting - Net Revenue by Merchandise Sales Channel (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Segment Reporting Information [Line Items]
Net revenue	$ 304,568	$ 246,300
Retail
Segment Reporting Information [Line Items]
Net revenue	250,102	202,570
eCommerce
Segment Reporting Information [Line Items]
Net revenue	$ 54,466	$ 43,730

Net and Comprehensive Income _3

Net and Comprehensive Income per Share - Calculation of EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Numerator
Net income	$ 34,099	$ 16,058
Denominator—Weighted Average Shares Outstanding
Weighted-average number of common shares outstanding, basic (in shares)	139,072,756	137,482,533
Effect of dilutive restricted stock (in shares)	866,787	1,225,935
Weighted-average number of common shares outstanding, diluted (in shares)	139,939,543	138,708,468
Net and comprehensive income per unit, basic (in dollars per share)	$ 0.25	$ 0.12
Net and comprehensive income per unit, diluted (in dollars per share)	$ 0.24	$ 0.12
Antidilutive securities excluded from computation of earnings per hare (in shares)	547,370

Commitment and Contingencies (D

Commitment and Contingencies (Details) - USD ($) $ in Millions	Mar. 31, 2023	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Loss contingency accrual	$ 0.3	$ 0.4

Related Party Transactions (Det

Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2021	Dec. 31, 2022	Mar. 31, 2021	Aug. 31, 2020	Jul. 31, 2010	Nov. 30, 2000
Related Party Transaction [Line Items]
Operating lease, term (in years)			12 years
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]
Rent expense	1,000	$ 900
Due to related parties	1,800			$ 1,800
Affiliated Entity | Chief Executive Officer | Premier Canover, LLC
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners					40%
Affiliated Entity | Walton Hills, Ohio | Chief Executive Officer | Pagoda Partners, LLC
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners								50%
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 | Chief Executive Officer | Brooklyn Arhaus
Related Party Transaction [Line Items]
Ownership percentage by parent							85%
Affiliated Entity | Brooklyn, Ohio | Director | Brooklyn Arhaus
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners							15%
Affiliated Entity | Brooklyn, Ohio | Outlet
Related Party Transaction [Line Items]
Operating lease, term (in years)							15 years
Rent expense	$ 100	$ 100
Affiliated Entity | Maximum | Walton Hills, Ohio | Warehouse
Related Party Transaction [Line Items]
Operating lease, renewal term (in years)						12 months		5 years

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Tax Disclosure [Abstract]
Income tax expense	$ 12,102	$ 5,869
Effective income tax rate	26.20%	26.80%