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United States securities and exchange commission logo
October 20, 2021
John Reed
Chief Executive Officer
Arhaus, Inc.
51 E. Hines Hill Road
Boston Heights, Ohio 44236
Re: Arhaus, Inc.
Registration
Statement on Form S-1
Filed October 4,
2021
File No. 333-260015
Dear Mr. Reed:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-1
Certain Definitions, page i
1. Here or in another
appropriate place, please identify the natural persons who having
voting and dispositive
control oveer the Freeman Spogli Funds.
Basis of Presentation
Key Terms and ... Non-GAAP Financial Measures, page iii
2. Please revise to
clarify what "New Showroom contribution" and "New Showroom
revenue" represent. For
"New Showroom contribution," discuss what the measure
consists of. For "New
Showroom revenue," discuss how this amount is determined.
John Reed
FirstName
Arhaus, Inc.LastNameJohn Reed
Comapany
October 20,NameArhaus,
2021 Inc.
October
Page 2 20, 2021 Page 2
FirstName LastName
Demand, page iv
3. We note your response to comment 3 that asserts "demand" and
"merchandise revenue"
include actual returns as offsets in the applicable period. You
revised the definition of
merchandise revenue on page iii to state this. However, the
definition of "demand" on
page iv does not state this. Please revise the definition of demand
accordingly.
4. Please explain to us and disclose as appropriate how amounts for
"demand" and
"merchandise revenue" include actual returns as offsets in the
applicable period.
5. As disclosed, "demand" is retail sales of merchandise measured at the
time the order is
placed and "merchandise revenue" is retail sales of merchandise from
orders when
delivered. Please clarify for us and in your disclosures if the amount
for "demand" differs
from the amount for "merchandise revenue" other than the point of time
each is
measured. Also, explain for us and disclose as appropriate how the
amount for demand
becomes merchandise revenue. If the amount for demand is not the same
as the amount
for merchandise revenue, tell us and disclose as appropriate the
percentage of demand that
becomes merchandise revenue.
Strong Operating Performance and Momentum, page 3
6. In the comparisons for the interim and annual periods, for balance
please include with
equal or greater prominence GAAP "net income as a percent of net
revenue" that is
comparable to the non-GAAP "adjusted EBITDA as a percent of net
revenue" presented.
Prospectus Summary
Recent Developments, page 12
7. Please delete as inappropriate your statement that your actual results
may differ
"materially" from the preliminary results that you have provided. In
addition, include
your analysis of the financial measures, so that investors can
understand what they mean
(for example, whether the measures are consistent with the trend
disclosure in your
Management's Discussion and Analysis section). Finally, please balance
the existing
disclosure with other disclosure relating to costs or gross margin.
Capitalization, page 63
8. Please revise your capitalization table to only give effect to the
Reorganization and
Distribution transactions in the pro forma column. Please present a
separate pro forma as
adjusted column to reflect the pro forma capitalization after giving
effect to the offering,
including the repayment of your term loan with the offering proceeds.
John Reed
FirstName
Arhaus, Inc.LastNameJohn Reed
Comapany
October 20,NameArhaus,
2021 Inc.
October
Page 3 20, 2021 Page 3
FirstName LastName
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
How We Assess the Performance of Our Business, page 79
9. In regard to both "New Showroom contribution" and "New Showroom
revenue" non-
GAAP measures on page 82, you exclude the operating performance for
the showrooms
that were opened before January 1, 2016 and after December 31, 2018.
Please clarify for
us and in your disclosure what a new showroom is considered to be and
the reasoning for
excluding showrooms opened after December 31, 2018 from the new
showroom
category. Also, explain to us the reason for the gap between the noted
dates.
Additionally, expand your disclosure to explain how management uses
these measures
and why you believe they provide useful information to investors
regarding your
performance pursuant to Item 10(e)(1)(i)(C) and (D) of Regulation S-K.
10. You state you exclude general and administrative expense in computing
"New Showroom
contribution" because they are not directly attributable to a
Showroom's economic
performance and include the other indicated costs. However, it appears
these expenses
are essential to support the operation and development of your
showrooms. Please revise
your disclosure to explain the limitations on the usefulness of this
measure in that it is not
indicative of overall results of the company, it does not accrue
directly to the benefit of
shareholders because of the costs excluded and the excluded costs
support the operations
of your showrooms.
11. Please explain to us and revise to disclose what "Other Showroom and
eCommerce
contribution" represents and how it is determined. Additionally, it
appears this is a non-
GAAP measure. Accordingly, comply with the requirements of Item
10(e)(1)(i) of
Regulation S-K, including reconciliation to the comparable GAAP
measure.
12. Please explain to us and revise to disclose what "Other Showroom and
eCommerce net
revenue" represents and how it is determined.
Composition of our Board of Directors, page 114
13. We note that the company and certain stockholders are party to an
investor rights
agreement which includes certain provisions regarding the election of
directors. Please
revise this section to clarify if there are any arrangements or
understandings between any
director and any other person or persons pursuant to which such
director was or is to be
selected as a director or director nominee. Refer to Item 401(a) of
Regulation S-K.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
John Reed
Arhaus, Inc.
October 20, 2021
Page 4
You may contact Suying Li at 202-551-3335 or Doug Jones at 202-551-3309
if you have
questions regarding comments on the financial statements and related matters.
Please contact
Donald Field at 202-551-3680 or Lilyanna Peyser at 202-551-3222 with any other
questions.
FirstName LastNameJohn Reed Sincerely,
Comapany NameArhaus, Inc.
Division of
Corporation Finance
October 20, 2021 Page 4 Office of Trade &
Services
FirstName LastName