0001875444-22-000090 | 10-Q | XBRL Viewer

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Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2022	Aug. 04, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 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	Yes
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	Q2
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 Sheets - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 144,628	$ 123,777
Restricted cash equivalents	6,985	7,131
Accounts receivable, net	1,500	228
Merchandise inventory, net	272,478	208,343
Prepaid and other current assets	29,509	28,517
Total current assets	455,100	367,996
Operating right-of-use assets	231,667	0
Financing right-of-use assets	39,602	0
Property, furniture and equipment, net	116,620	179,631
Deferred tax asset	22,833	27,684
Goodwill	10,961	10,961
Other noncurrent assets	249	278
Total assets	877,032	586,550
Current liabilities
Accounts payable	62,331	51,429
Accrued taxes	8,594	7,302
Accrued wages	13,911	16,524
Accrued other expenses	26,718	61,047
Client deposits	276,968	264,929
Current portion of operating lease liabilities	37,624	0
Current portion of financing lease liabilities	513	0
Total current liabilities	426,659	401,231
Operating lease liabilities, long-term	268,061	0
Financing lease liabilities, long-term	51,981	0
Capital lease obligation	0	50,525
Deferred rent and lease incentives	2,433	63,037
Other long-term liabilities	4,004	1,992
Total liabilities	753,138	516,785
Commitments and contingencies (Note 9)
Stockholders' equity
Accumulated Deficit	(63,884)	(116,581)
Additional Paid-in Capital	187,640	186,209
Total Arhaus, Inc. stockholders' equity	123,894	69,765
Total liabilities and stockholders' equity	877,032	586,550
Common, Class A
Stockholders' equity
Stock issued	51	50
Common, Class B
Stockholders' equity
Stock issued	$ 87	$ 87

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 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)	51,360,235	50,427,390
Common stock, shares outstanding (in shares)	51,360,235	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)	87,115,600	86,519,002
Common stock, shares outstanding (in shares)	87,115,600	86,519,002

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Statement [Abstract]
Net revenue	$ 306,265	$ 184,043	$ 552,565	$ 355,357
Cost of goods sold	173,239	106,209	321,822	207,188
Gross margin	133,026	77,834	230,743	148,169
Selling, general and administrative expenses	82,774	69,139	157,622	128,177
Loss on disposal of assets	0	0	0	14
Income from operations	50,252	8,695	73,121	19,978
Interest expense	1,316	1,359	2,616	2,726
Other income	(117)	0	(475)	0
Income before taxes	49,053	7,336	70,980	17,252
Income tax expense	12,414	500	18,283	1,204
Net and comprehensive income	36,639	6,836	52,697	16,048
Less: Net income attributable to noncontrolling interest	0	3,951	0	9,268
Net and comprehensive income attributable to Arhaus, Inc.	$ 36,639	$ 2,885	$ 52,697	$ 6,780
Net and comprehensive income per share, basic
Weighted-average number of common shares outstanding, basic (in shares)	137,840,691	112,058,742	137,662,601	112,058,742
Net and comprehensive income per unit, basic (in dollars per share)	$ 0.27	$ 0.03	$ 0.38	$ 0.06
Net and comprehensive income per share, diluted
Weighted-average number of common shares outstanding, diluted (in shares)	139,454,109	112,058,742	139,394,055	112,058,742
Net and comprehensive income per unit, diluted (in dollars per share)	$ 0.26	$ 0.03	$ 0.38	$ 0.06

Condensed Consolidated Statements of Changes in Stockholders'/Members' Equity (Deficit) (Unaudited) - USD ($) $ in Thousands	Total	Member Units Capital Unit, Class A	Member Units Capital Unit, Class B	Common Stock Common, Class A	Common Stock Common, Class B	Retained Earnings (Accumulated Deficit)	Additional Paid-in Capital	Noncontrolling Interest
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	16,048					6,780		9,268
Tax distribution	(7,865)							(7,865)
Shareholder distribution	(12,350)					(12,350)
Equity based compensation	427						427
Ending Balance (in shares) at Jun. 30, 2021		645,000	4,158,000
Ending Balance at Jun. 30, 2021	(38,181)					(33,992)	2,097	(6,286)
Beginning Balance (in shares) at Mar. 31, 2021		645,000	4,158,000
Beginning Balance at Mar. 31, 2021	(29,796)					(24,527)	1,746	(7,015)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	6,836					2,885		3,951
Shareholder capital contribution	(3,222)
Tax distribution								(3,222)
Shareholder distribution	(12,350)					(12,350)
Equity based compensation	351						351
Ending Balance (in shares) at Jun. 30, 2021		645,000	4,158,000
Ending Balance at Jun. 30, 2021	(38,181)					(33,992)	2,097	$ (6,286)
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
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	52,697					52,697
Shareholder capital contribution	43						43
Equity based compensation (in shares)				932,000	597,000
Equity based compensation	1,389			$ 1			1,388
Ending Balance (in shares) at Jun. 30, 2022				51,360,000	87,116,000
Ending Balance at Jun. 30, 2022	123,894			$ 51	$ 87	(63,884)	187,640
Beginning Balance (in shares) at Mar. 31, 2022				51,232,000	86,519,000
Beginning Balance at Mar. 31, 2022	86,544			$ 51	$ 87	(100,523)	186,929
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	36,639					36,639
Shareholder capital contribution	19						19
Equity based compensation (in shares)				128,000	597,000
Equity based compensation	692						692
Ending Balance (in shares) at Jun. 30, 2022				51,360,000	87,116,000
Ending Balance at Jun. 30, 2022	$ 123,894			$ 51	$ 87	$ (63,884)	$ 187,640

- Definition

The consolidated profit or loss for the period, net of income taxes, including the portion attributable to the noncontrolling interest.

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Amount of stockholders' equity (deficit), net of receivables from officers, directors, owners, and affiliates of the entity, attributable to both the parent and noncontrolling interests. Amount excludes temporary equity. Alternate caption for the concept is permanent equity.

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+ Details

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities
Net income	$ 52,697	$ 16,048
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	11,995	8,909
Amortization of operating lease right-of-use asset	14,508	0
Amortization of deferred financing fees and interest on finance lease in excess of principal paid	5,489	825
Equity based compensation	1,389	427
Deferred tax assets	4,851	0
Derivative expense	0	29,805
Loss on disposal of assets	0	14
Amortization and write-off of lease incentives	(144)	(3,801)
Changes in operating assets and liabilities
Accounts receivable	(1,272)	132
Merchandise inventory	(64,135)	(28,077)
Prepaid and other current assets	(5,095)	4,112
Other noncurrent liabilities	264	(890)
Accounts payable	15,197	616
Accrued expenses	8,728	3,852
Operating lease liabilities	(15,401)	0
Deferred rent and lease incentives	0	5,415
Client deposits	12,039	72,116
Net cash provided by operating activities	41,110	109,503
Cash flows from investing activities
Purchases of property, furniture and equipment	(20,355)	(13,691)
Net cash used in investing activities	(20,355)	(13,691)
Cash flows from financing activities
Issuance of related party notes	0	(1,000)
Proceeds from related party notes	0	1,000
Principal payments under capital leases	0	(127)
Principal payments under capital leases	(50)	0
Shareholder distributions	0	(12,350)
Distributions to noncontrolling interest holders	0	(7,865)
Net cash used in financing activities	(50)	(20,342)
Net increase in cash, cash equivalents and restricted cash equivalents	20,705	75,470
Cash, cash equivalents and restricted cash equivalents
Beginning of period	130,908	64,002
End of period	151,613	139,472
Supplemental Cash Flow Information [Abstract]
Interest paid in cash	2,155	2,799
Income taxes paid in cash	15,342	1,257
Lease incentives	4,494	665
Purchase of property, furniture and equipment in accounts payable	1,673	241
Derecognition of build-to-suit assets as a result of ASC 842 adoption	(31,017)	0
Capital contributions	$ 43	$ 0

Nature of Business and Basis of Presentation	6 Months Ended
Nature of Business and Basis of Presentation	Jun. 30, 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 80 Showrooms at June 30, 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. Certain reclassifications have been made to prior years' condensed consolidated financial statements to conform to the current year's presentation. The accompanying condensed consolidated balance sheets at June 30, 2022 and December 31, 2021, the condensed consolidated statements of comprehensive income and changes in stockholders’equity (deficit) for the six and three months ended June 30, 2022 and 2021, the condensed consolidated statements of cash flows for the six months ended June 30, 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 (“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 only normal recurring adjustments, necessary for a fair statement of the Company’s financial position at June 30, 2022; the results of operations and changes in stockholders’equity (deficit) for the six and three months ended June 30, 2022 and 2021 and the condensed consolidated statements of cash flows for the six months ended June 30, 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 six and three months ended June 30, 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, derivative and equity based compensation instruments. 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 June 30, 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 June 30, 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 cash and cash equivalents, accounts receivable, payables, lease obligations, derivative and equity based compensation instruments. Due to the short-term maturities of cash and cash equivalents, accounts receivable and payables, the Company believes the fair values of these instruments approximate their respective carrying values at June 30, 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 1Unadjusted 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 2Inputs 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 3Unobservable 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 Standards	6 Months Ended
Recently Issued Accounting Standards	Jun. 30, 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 recognized 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, which 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. In October 2020, the FASB issued ASU 2020-10, “Codification Improvements.” The amendments in this update represent changes to clarify the Codification or correct unintended application of guidance that are not expected to have a significant effect on current accounting practice. The amendments in this update affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. ASU 2020-10 is effective for annual periods beginning after December 15, 2021 for non-public business entities. Early application is permitted. The amendments in this update should be applied retrospectively. The Company adopted the standard as of January 1, 2022. The adoption of this standard did not have a material impact on our condensed consolidated financial statements.

Merchandise Warranties

6 Months Ended

Jun. 30, 2022

Product Warranties Disclosures [Abstract]

Merchandise Warranties

Merchandise Warranties The Company 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 to ten years depending on the merchandise category. The Company accounts for merchandise warranties by accruing an estimated liability when we recognize revenue on the sale of warrantied merchandise. We estimate future warranty claims based on claim experience which includes materials and labor costs to perform the repairs or replace products. We use judgment in making our estimates. We record differences between our estimated and actual costs when the differences are known.

A reconciliation of the changes in our limited merchandise warranty liability is as follows (amounts in thousands):


	Six months ended June 30,				Three months ended June 30,
	2022		2021		2022		2021
Balance as of beginning of period	$	4,724	$	3,326	$	4,963	$	3,577
Accruals during the period	5,104		3,514		2,908		1,922
Settlements during the period	(4,416)		(2,972)		(2,459)		(1,631)
Balance as of end of the period (1)	$	5,412	$	3,868	$	5,412	$	3,868

(1) $3.2 million and $2.7 million were recorded in accrued other expenses at June 30, 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

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

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 June 30, 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 $0.3 million and $0.2 million for the six and three months ended June 30, 2021, respectively, 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 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 June 30, 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 June 30, 2022 and December 31, 2021, 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 $29.8 million and $18.3 million for the six and three months ended June 30, 2021, respectively, 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.

At June 30, 2021, the Company’s valuation of the derivative liability was measured using the probability-weighted expected return model (“PWERM”). The PWERM is a scenario-based methodology that estimates the fair value of the derivative based upon an analysis of future values for the Company. The Company considered two different scenarios:(a) remain private; and (b) IPO. Under the remain private scenario, as of June 30, 2021, the Company estimated the enterprise value by weighting the guideline public company method and the discounted cash flow method, and then relied on the option pricing method (“OPM”) and applied a discount for lack of marketability (“DLOM”). The OPM estimated the value using the Black-Scholes OPM. The fair value of the exit fee was determined utilizing unobservable inputs and therefore is a Level 3 measurement under the fair value hierarchy. The key assumptions used within the Black-Scholes OPM as of June 30, 2021 were as follows:


	June 30, 2021
Term	10 years
Risk-free rate of return	1.50	%
Volatility	40.00	%
Dividend yield	0.00	%
DLOM	24.70	%

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 June 30, 2022 and December 31, 2021.

Leases

6 Months Ended

Jun. 30, 2022

Leases [Abstract]

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 obligations 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 June 30, 2022 (amounts in thousands):


	Condensed Consolidated Balance Sheet Classification	June 30, 2022

Assets
Operating lease assets	Operating right-of-use assets	$	231,667
Finance lease assets	Financing right-of-use assets	39,602
Total leased assets		$	271,269

Liabilities
Current operating leases	Current portion of operating lease liabilities	$	37,624
Non-current operating leases	Operating lease liabilities, long-term	268,061
Total operating lease liabilities		305,685

Current finance leases	Current portion of financing lease liabilities	513
Non-current finance leases	Financing lease liabilities, long-term	51,981
Total finance lease liabilities		52,494
Total lease liabilities		$	358,179

The components of lease cost recognized within our condensed consolidated statements of comprehensive income for the six and three months ended June 30, 2022 are as follows (amounts in thousands):


		Six months ended June 30,		Three months ended June 30,
	Condensed Consolidated Income Statement Classification	2022			2022
Lease costs:
Operating lease costs	Cost of goods sold	$	17,082		$	8,677
Operating lease costs	Selling, general and administrative expenses	2,788			1,701
Finance lease costs
Amortization of right-of-use assets	Selling, general and administrative expenses	976			518
Interest expense on lease liabilities	Interest expense	2,488			1,257
Other lease costs (1)	Cost of goods sold	16,803			8,885
Other lease costs (1)	Selling, general and administrative expenses	337			249
Total lease costs		$	40,474		$	21,287

(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 were $31.3 million, $5.6 million and $1.2 million for the six months ended June 30, 2021, respectively. Rent expense, amortization of landlord improvements and percentage rent expense calculated under ASC 840 were $15.6 million, $2.8 million and $0.7 million for the three months ended June 30, 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 June 30, 2022.


Weighted Average Remaining Lease Term (In Years)						June 30, 2022
Operating leases						8.74
Finance leases						22.87

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 June 30, 2022.


Weighted Average Discount Rate	June 30, 2022
Operating leases	4.32	%
Finance leases	9.72	%

Future lease liabilities at June 30, 2022 are as follows (amounts in thousands):


Year Ending December 31,	Operating Lease Liabilities (1)		Finance Lease Liabilities		Total Lease Liabilities
Remainder of 2022	$	24,016	$	2,666	$	26,682
2023	50,355		5,333		55,688
2024	45,518		5,153		50,671
2025	39,776		5,153		44,929
2026	37,153		5,612		42,765
2027	33,633		5,423		39,056
Thereafter	143,388		115,168		258,556
Total lease payments	373,839		144,508		518,347
Less: Amounts representing interest	(68,154)		(92,014)		(160,168)
Total	$	305,685	$	52,494	$	358,179

(1) Includes leases with related parties. See Note 10 — Related Party Transactions for amounts leased from related parties.

At June 30, 2022, the Company has entered into leases for the expansion of our Boston Heights 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 $148.4 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 for the six months ended June 30, 2022, is as follows (amounts in thousands):


	Six months ended June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	23,501
Operating cash flows for finance leases	2,488
Financing cash flows for finance leases	50
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	42,001
Finance leases	2,018

Leases

The following table summarizes the amounts recognized in our condensed consolidated balance sheets related to leases as of June 30, 2022 (amounts in thousands):


	Condensed Consolidated Balance Sheet Classification	June 30, 2022

Assets
Operating lease assets	Operating right-of-use assets	$	231,667
Finance lease assets	Financing right-of-use assets	39,602
Total leased assets		$	271,269

Liabilities
Current operating leases	Current portion of operating lease liabilities	$	37,624
Non-current operating leases	Operating lease liabilities, long-term	268,061
Total operating lease liabilities		305,685

Current finance leases	Current portion of financing lease liabilities	513
Non-current finance leases	Financing lease liabilities, long-term	51,981
Total finance lease liabilities		52,494
Total lease liabilities		$	358,179

The components of lease cost recognized within our condensed consolidated statements of comprehensive income for the six and three months ended June 30, 2022 are as follows (amounts in thousands):


		Six months ended June 30,		Three months ended June 30,
	Condensed Consolidated Income Statement Classification	2022			2022
Lease costs:
Operating lease costs	Cost of goods sold	$	17,082		$	8,677
Operating lease costs	Selling, general and administrative expenses	2,788			1,701
Finance lease costs
Amortization of right-of-use assets	Selling, general and administrative expenses	976			518
Interest expense on lease liabilities	Interest expense	2,488			1,257
Other lease costs (1)	Cost of goods sold	16,803			8,885
Other lease costs (1)	Selling, general and administrative expenses	337			249
Total lease costs		$	40,474		$	21,287

(1) Other lease costs includes short-term lease costs and variable lease costs.

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 June 30, 2022.


Weighted Average Remaining Lease Term (In Years)						June 30, 2022
Operating leases						8.74
Finance leases						22.87


Weighted Average Discount Rate	June 30, 2022
Operating leases	4.32	%
Finance leases	9.72	%

Future lease liabilities at June 30, 2022 are as follows (amounts in thousands):


Year Ending December 31,	Operating Lease Liabilities (1)		Finance Lease Liabilities		Total Lease Liabilities
Remainder of 2022	$	24,016	$	2,666	$	26,682
2023	50,355		5,333		55,688
2024	45,518		5,153		50,671
2025	39,776		5,153		44,929
2026	37,153		5,612		42,765
2027	33,633		5,423		39,056
Thereafter	143,388		115,168		258,556
Total lease payments	373,839		144,508		518,347
Less: Amounts representing interest	(68,154)		(92,014)		(160,168)
Total	$	305,685	$	52,494	$	358,179

(1) Includes leases with related parties. See Note 10 — Related Party Transactions for amounts leased from related parties.

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 for the six months ended June 30, 2022, is as follows (amounts in thousands):


	Six months ended June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	23,501
Operating cash flows for finance leases	2,488
Financing cash flows for finance leases	50
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	42,001
Finance leases	2,018

Equity Based Compensation

6 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement [Abstract]

Equity Based Compensation

The Company recorded equity based compensation expense of $1.4 million and $0.4 million for the six months ended June 30, 2022 and 2021, respectively. Equity based compensation expense was $0.7 million and $0.3 million for the three months ended June 30, 2022 and 2021, respectively. Equity based compensation expense is recorded 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 $10.2 million at June 30, 2022, and will be recognized over a weighted average period of 3.84 years.


	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	(932,847)	18.02		(596,598)	0.10
Unvested at June 30, 2022	1,587,382	$	17.93	—	$	—

Segment Reporting

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

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 six and three months ended June 30, 2022 and 2021, respectively (amounts in thousands):


	Six months ended June 30,				Three months ended June 30,
	2022		2021		2022		2021
Retail	$	458,965	$	290,511	$	256,395	$	151,719
eCommerce	93,600		64,846		49,870		32,324
Total net revenue	$	552,565	$	355,357	$	306,265	$	184,043

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Net and Comprehensive Income per Share

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

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 six and three months ended June 30, 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 June 30, 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 June 30, 2021.

Basic and diluted net and comprehensive income per share for the six and three months ended June 30, 2022 and 2021, is as follows (amounts in thousands except share and per share data):


	Six months ended June 30,				Three months ended June 30,
	2022		2021		2022		2021
Numerator
Net and comprehensive income	$	52,697	$	16,048	$	36,639	$	6,836

Less: Net and comprehensive income attributable to noncontrolling interest	—		9,268		—		3,951
Net and comprehensive income attributable to Arhaus, Inc.	$	52,697	$	6,780	$	36,639	$	2,885

Denominator—Weighted Average Shares Outstanding
Weighted-average number of common shares outstanding, basic	137,662,601		112,058,742		137,840,691		112,058,742
Effect of dilutive restricted stock (1)	1,731,454		—		1,613,418		—
Weighted-average number of common shares outstanding, diluted	139,394,055		112,058,742		139,454,109		112,058,742

Net and Comprehensive Income Per Share
Net and comprehensive income per share, basic	$	0.38	$	0.06	$	0.27	$	0.03
Net and comprehensive income per share, diluted	$	0.38	$	0.06	$	0.26	$	0.03

(1) During the six and three months ended June 30, 2022, 618,387 and 554,070 shares of unvested restricted stock were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.

Commitments and Contingencies	6 Months Ended
Commitments and Contingencies	Jun. 30, 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 June 30, 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	6 Months Ended
Related Party Transactions	Jun. 30, 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 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 $0.7 million and $0.7 million for the six months ended June 30, 2022 and 2021, respectively. Rent expense was $0.4 million and $0.4 million for the three months ended June 30, 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 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 $0.2 million and $0.2 million for the six months ended June 30, 2022 and 2021, respectively. Rent expense was $0.1 million and $0.1 million for the three months ended June 30, 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 is no longer with a related party of the Company. Rent expense was $2.9 million and $1.5 million for the six and three months ended June 30, 2021, respectively. 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 $1.8 million and $0.9 million for the six and three months ended June 30, 2022, respectively. Other transactions In accordance with the change in reporting entity, the Company’s condensed consolidated statements of cash flows include the payment and receipt of a related-party receivable and a related-party note receivable between Homeworks and our CEO for $0.1 million and $1.0 million, respectively for the six months ended June 30, 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 $0.2 million and $2.9 million at June 30, 2022 and December 31, 2021, respectively, and are included within accounts payable on the condensed consolidated balance sheets.

Income Taxes	6 Months Ended
Income Taxes	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesIncome taxes were $18.3 million and $1.2 million in the six months ended June 30, 2022 and 2021, respectively. Income taxes were $12.4 million and $0.5 million in the three months ended June 30, 2022 and 2021, respectively. The effective tax rate was 25.8% and 7.0% for the six months ended June 30, 2022 and 2021, respectively. The effective tax rate was 25.3% and 6.8% for the three months ended June 30, 2022 and 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 LLC. The income tax provision included state and local tax in certain jurisdictions prior to the Reorganization. Subsequent to the Reorganization, 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 June 30, 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 June 30, 2022, the Company was not under examination by the Internal Revenue Service or any state tax jurisdiction.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Nature of Business and Basis of Presentation (Policies)	6 Months Ended
Nature of Business and Basis of Presentation (Policies)	Jun. 30, 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. Certain reclassifications have been made to prior years' condensed consolidated financial statements to conform to the current year's presentation. The accompanying condensed consolidated balance sheets at June 30, 2022 and December 31, 2021, the condensed consolidated statements of comprehensive income and changes in stockholders’equity (deficit) for the six and three months ended June 30, 2022 and 2021, the condensed consolidated statements of cash flows for the six months ended June 30, 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 (“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 only normal recurring adjustments, necessary for a fair statement of the Company’s financial position at June 30, 2022; the results of operations and changes in stockholders’equity (deficit) for the six and three months ended June 30, 2022 and 2021 and the condensed consolidated statements of cash flows for the six months ended June 30, 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 six and three months ended June 30, 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, derivative and equity based compensation instruments.
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 June 30, 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 June 30, 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 cash and cash equivalents, accounts receivable, payables, lease obligations, derivative and equity based compensation instruments. Due to the short-term maturities of cash and cash equivalents, accounts receivable and payables, the Company believes the fair values of these instruments approximate their respective carrying values at June 30, 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 1Unadjusted 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 2Inputs 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 3Unobservable 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 recognized 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, which 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. In October 2020, the FASB issued ASU 2020-10, “Codification Improvements.” The amendments in this update represent changes to clarify the Codification or correct unintended application of guidance that are not expected to have a significant effect on current accounting practice. The amendments in this update affect a wide variety of Topics in the Codification and apply to all reporting entities within the scope of the affected accounting guidance. ASU 2020-10 is effective for annual periods beginning after December 15, 2021 for non-public business entities. Early application is permitted. The amendments in this update should be applied retrospectively. The Company adopted the standard as of January 1, 2022. The adoption of this standard did not have a material impact on our condensed consolidated financial statements.

- Definition

Disclosure of accounting policy for revenue from contract with customer.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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+ Details

Merchandise Warranties (Tables)

6 Months Ended

Jun. 30, 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):


	Six months ended June 30,				Three months ended June 30,
	2022		2021		2022		2021
Balance as of beginning of period	$	4,724	$	3,326	$	4,963	$	3,577
Accruals during the period	5,104		3,514		2,908		1,922
Settlements during the period	(4,416)		(2,972)		(2,459)		(1,631)
Balance as of end of the period (1)	$	5,412	$	3,868	$	5,412	$	3,868

Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Fair Value Assumptions for Long-Term Debt

The key assumptions used within the Black-Scholes OPM as of June 30, 2021 were as follows:


	June 30, 2021
Term	10 years
Risk-free rate of return	1.50	%
Volatility	40.00	%
Dividend yield	0.00	%
DLOM	24.70	%

Leases (Tables)

6 Months Ended

Jun. 30, 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 June 30, 2022 (amounts in thousands):


	Condensed Consolidated Balance Sheet Classification	June 30, 2022

Assets
Operating lease assets	Operating right-of-use assets	$	231,667
Finance lease assets	Financing right-of-use assets	39,602
Total leased assets		$	271,269

Liabilities
Current operating leases	Current portion of operating lease liabilities	$	37,624
Non-current operating leases	Operating lease liabilities, long-term	268,061
Total operating lease liabilities		305,685

Current finance leases	Current portion of financing lease liabilities	513
Non-current finance leases	Financing lease liabilities, long-term	51,981
Total finance lease liabilities		52,494
Total lease liabilities		$	358,179

Components of Lease Expense

The components of lease cost recognized within our condensed consolidated statements of comprehensive income for the six and three months ended June 30, 2022 are as follows (amounts in thousands):


		Six months ended June 30,		Three months ended June 30,
	Condensed Consolidated Income Statement Classification	2022			2022
Lease costs:
Operating lease costs	Cost of goods sold	$	17,082		$	8,677
Operating lease costs	Selling, general and administrative expenses	2,788			1,701
Finance lease costs
Amortization of right-of-use assets	Selling, general and administrative expenses	976			518
Interest expense on lease liabilities	Interest expense	2,488			1,257
Other lease costs (1)	Cost of goods sold	16,803			8,885
Other lease costs (1)	Selling, general and administrative expenses	337			249
Total lease costs		$	40,474		$	21,287

(1) Other lease costs includes short-term lease costs and variable lease costs.

The table below summarizes the weighted average remaining lease terms as of June 30, 2022.


Weighted Average Remaining Lease Term (In Years)						June 30, 2022
Operating leases						8.74
Finance leases						22.87

The table below summarizes the weighted average discount rate used to measure our lease liabilities as of June 30, 2022.


Weighted Average Discount Rate	June 30, 2022
Operating leases	4.32	%
Finance leases	9.72	%

Lessee, Operating Lease, Liability, Maturity

Future lease liabilities at June 30, 2022 are as follows (amounts in thousands):


Year Ending December 31,	Operating Lease Liabilities (1)		Finance Lease Liabilities		Total Lease Liabilities
Remainder of 2022	$	24,016	$	2,666	$	26,682
2023	50,355		5,333		55,688
2024	45,518		5,153		50,671
2025	39,776		5,153		44,929
2026	37,153		5,612		42,765
2027	33,633		5,423		39,056
Thereafter	143,388		115,168		258,556
Total lease payments	373,839		144,508		518,347
Less: Amounts representing interest	(68,154)		(92,014)		(160,168)
Total	$	305,685	$	52,494	$	358,179

Finance Lease, Liability, Fiscal Year Maturity

Future lease liabilities at June 30, 2022 are as follows (amounts in thousands):


Year Ending December 31,	Operating Lease Liabilities (1)		Finance Lease Liabilities		Total Lease Liabilities
Remainder of 2022	$	24,016	$	2,666	$	26,682
2023	50,355		5,333		55,688
2024	45,518		5,153		50,671
2025	39,776		5,153		44,929
2026	37,153		5,612		42,765
2027	33,633		5,423		39,056
Thereafter	143,388		115,168		258,556
Total lease payments	373,839		144,508		518,347
Less: Amounts representing interest	(68,154)		(92,014)		(160,168)
Total	$	305,685	$	52,494	$	358,179

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 for the six months ended June 30, 2022, is as follows (amounts in thousands):


	Six months ended June 30, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	23,501
Operating cash flows for finance leases	2,488
Financing cash flows for finance leases	50
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	42,001
Finance leases	2,018

Equity Based Compensation (Tables)

6 Months Ended

Jun. 30, 2022

Share-based Payment Arrangement [Abstract]

Restricted Stock Activity


	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	(932,847)	18.02		(596,598)	0.10
Unvested at June 30, 2022	1,587,382	$	17.93	—	$	—

Segment Reporting (Tables)

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Net Revenue by Segment

The following table shows net revenue by merchandise sales channel for the six and three months ended June 30, 2022 and 2021, respectively (amounts in thousands):


	Six months ended June 30,				Three months ended June 30,
	2022		2021		2022		2021
Retail	$	458,965	$	290,511	$	256,395	$	151,719
eCommerce	93,600		64,846		49,870		32,324
Total net revenue	$	552,565	$	355,357	$	306,265	$	184,043

Net and Comprehensive Income per Share (Tables)

6 Months Ended

Jun. 30, 2022

Earnings Per Share [Abstract]

Calculation of Basic and Diluted Earnings Per Share

Basic and diluted net and comprehensive income per share for the six and three months ended June 30, 2022 and 2021, is as follows (amounts in thousands except share and per share data):


	Six months ended June 30,				Three months ended June 30,
	2022		2021		2022		2021
Numerator
Net and comprehensive income	$	52,697	$	16,048	$	36,639	$	6,836

Less: Net and comprehensive income attributable to noncontrolling interest	—		9,268		—		3,951
Net and comprehensive income attributable to Arhaus, Inc.	$	52,697	$	6,780	$	36,639	$	2,885

Denominator—Weighted Average Shares Outstanding
Weighted-average number of common shares outstanding, basic	137,662,601		112,058,742		137,840,691		112,058,742
Effect of dilutive restricted stock (1)	1,731,454		—		1,613,418		—
Weighted-average number of common shares outstanding, diluted	139,394,055		112,058,742		139,454,109		112,058,742

Net and Comprehensive Income Per Share
Net and comprehensive income per share, basic	$	0.38	$	0.06	$	0.27	$	0.03
Net and comprehensive income per share, diluted	$	0.38	$	0.06	$	0.26	$	0.03

Nature of Business and Basis of Presentation (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($) stores	Dec. 31, 2021 USD ($)
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Number of stores \| stores	80
Client deposits, percentage collected at least (as a percent)	50.00%
Client deposits	$ (276,968)	$ (264,929)
Other Accrued Expenses
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Client deposits	$ (900)	$ (900)

Recently Issued Accounting Standards (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Jan. 01, 2022	Dec. 31, 2021
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating right-of-use assets	$ 231,667		$ 0
Total operating lease liabilities	$ 305,685
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 - Narrative (Details)	6 Months Ended
Merchandise Warranties - Narrative (Details)	Jun. 30, 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 in Liability (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance as of beginning of period	$ 4,963	$ 3,577	$ 4,724	$ 3,326
Accruals during the period	2,908	1,922	5,104	3,514
Settlements during the period	(2,459)	(1,631)	(4,416)	(2,972)
Balance as of the end of the period	5,412	3,868	5,412	3,868
Standard product warranty accrual	5,412	$ 3,868	5,412	$ 3,868
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	3,200		3,200
Standard product warranty accrual	$ 3,200		$ 3,200

Long-Term Debt - Narrative (Details) - USD ($)		3 Months Ended	6 Months Ended
Long-Term Debt - Narrative (Details) - USD ($)	Jun. 30, 2021	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Nov. 08, 2021	Jun. 25, 2020
Debt Instrument [Line Items]
Derivative expense			$ 0	$ 29,805,000
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		$ 18,300,000		29,800,000
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		$ 200,000		$ 300,000
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		$ 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 Assumptions (Details) - Level 3	Jun. 30, 2021 yr
Term \| Discounted Cash Flow
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, measurement input	10
Risk-free rate of return \| Black-Scholes OPM
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, measurement input	0.0150
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	0.0000
DLOM \| Black-Scholes OPM
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, measurement input	0.2470

Leases - Liability for Operating and Finance Leases (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Leases [Abstract]
Operating right-of-use assets	$ 231,667	$ 0
Financing right-of-use assets	39,602	0
Total leased assets	271,269
Current portion of operating lease liabilities	37,624	0
Operating lease liabilities, long-term	268,061	0
Total operating lease liabilities	305,685
Current portion of financing lease liabilities	513	0
Financing lease liabilities, long-term	51,981	$ 0
Total finance lease liabilities	52,494
Total lease liability	$ 358,179

Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022
Lease Cost [Line Items]
Total lease costs	$ 21,287	$ 40,474
Cost of goods sold
Lease Cost [Line Items]
Operating lease costs	8,677	17,082
Other lease costs	8,885	16,803
Selling, general and administrative expenses
Lease Cost [Line Items]
Operating lease costs	1,701	2,788
Amortization of right-of-use assets	518	976
Other lease costs	249	337
Interest expense
Lease Cost [Line Items]
Interest expense on lease liabilities	$ 1,257	$ 2,488

Leases - Schedule of Weighted Average Lease Term (Details)	Jun. 30, 2022
Leases [Abstract]
Operating Lease, Weighted Average Remaining Lease Term	8 years 8 months 26 days
Finance Lease, Weighted Average Remaining Lease Term	22 years 10 months 13 days

Leases - Schedule of Weighted Average Discount Rate (Details)	Jun. 30, 2022
Leases [Abstract]
Operating leases	4.32%
Finance leases	9.72%

Leases - Narrative (Details) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
Leases - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2021	Jun. 30, 2021	Jun. 30, 2022
Lease Cost [Line Items]
Rent expense	$ 15.6	$ 31.3
Percentage rent expense	0.7	1.2
Aggregate minimum rental payments, not yet commenced			$ 148.4
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	$ 5.6

Leases - Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Operating Lease Liabilities
Remainder of 2022	$ 24,016
2023	50,355
2024	45,518
2025	39,776
2026	37,153
2027	33,633
Thereafter	143,388
Total lease payments	373,839
Less: Amounts representing interest	(68,154)
Total operating lease liabilities	305,685
Finance Lease Liabilities
Remainder of 2022	2,666
2023	5,333
2024	5,153
2025	5,153
2026	5,612
2027	5,423
Thereafter	115,168
Total lease payments	144,508
Less: Amounts representing interest	(92,014)
Total finance lease liabilities	52,494
Total Lease Liabilities
Remainder of 2022	26,682
2023	55,688
2024	50,671
2025	44,929
2026	42,765
2027	39,056
Total lease payments	258,556
Thereafter	518,347
Less: Amounts representing interest	(160,168)
Total	$ 358,179

Leases - Future Minimum Lease Payments, Operating and Capital (Details) $ in Thousands	Dec. 31, 2021 USD ($)
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 (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Leases [Abstract]
Operating cash flows for operating leases	$ 23,501
Operating cash flows for finance leases	2,488
Financing cash flows for finance leases	50	$ 0
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	42,001
Finance leases	$ 2,018

Equity Based Compensation - Narrative (Details) - Incentive Units - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unit compensation expense	$ 0.7	$ 0.3	$ 1.4	$ 0.4
Unrecognized compensation cost	$ 10.2		$ 10.2
Unrecognized compensation cost, period for recognition			3 years 10 months 2 days

Equity Based Compensation - Unvested Restricted Stock Activity (Details) - Restricted Stock	6 Months Ended
	Jun. 30, 2022 $ / shares shares
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	(932,847)
Outstanding, end of period (in shares) \| shares	1,587,382
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	18.02
Outstanding, end of period (in dollars per share) \| $ / shares	$ 17.93
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	(596,598)
Outstanding, end of period (in shares) \| shares	0
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	0.10
Outstanding, end of period (in dollars per share) \| $ / shares	$ 0

Segment Reporting (Details) $ in Thousands	3 Months Ended		6 Months Ended
Segment Reporting (Details) $ in Thousands	Jun. 30, 2022 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) segment	Jun. 30, 2021 USD ($)
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	$ 306,265	$ 184,043	$ 552,565	$ 355,357
Retail
Segment Reporting Information [Line Items]
Net revenue	256,395	151,719	458,965	290,511
eCommerce
Segment Reporting Information [Line Items]
Net revenue	$ 49,870	$ 32,324	$ 93,600	$ 64,846

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8906-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9031-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
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-Publisher FASB
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-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130545-203045

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Net and Comprehensive Income per Share - Narrative (Details)	Nov. 08, 2021 shares
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 per Share - Calculation of EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Numerator
Net income	$ 36,639	$ 6,836	$ 52,697	$ 16,048
Less: Net income attributable to noncontrolling interest	0	3,951	0	9,268
Net income (loss) attributable to the shareholders, basic	36,639	2,885	52,697	6,780
Net income (loss) attributable to the shareholders, diluted	$ 36,639	$ 2,885	$ 52,697	$ 6,780
Denominator—Weighted Average Shares Outstanding
Weighted-average number of common shares outstanding, basic (in shares)	137,840,691	112,058,742	137,662,601	112,058,742
Effect of dilutive restricted stock (in shares)	1,613,418	0	1,731,454	0
Weighted-average number of common shares outstanding, diluted (in shares)	139,454,109	112,058,742	139,394,055	112,058,742
Net and comprehensive income per unit, basic (in dollars per share)	$ 0.27	$ 0.03	$ 0.38	$ 0.06
Net and comprehensive income per unit, diluted (in dollars per share)	$ 0.26	$ 0.03	$ 0.38	$ 0.06
Restricted Stock
Denominator—Weighted Average Shares Outstanding
Antidilutive securities excluded from computation of earnings per hare (in shares)	554,070		618,387

Commitment and Contingencies (Details) - USD ($) $ in Millions	Jun. 30, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Loss contingency accrual	$ 1.2	$ 1.2

Related Party Transactions (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	Sep. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Mar. 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		12 years
Rent expense			$ 15,600		$ 31,300
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		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		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)	3 years								17 years
Rent expense		900	$ 1,500	1,800	$ 2,900
Due to related parties		200		200		$ 2,900
Affiliated Entity \| Chief Executive Officer \| Premier Arhaus, LLC
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners						50.00%
Affiliated Entity \| Chief Executive Officer \| Premier Canover, LLC
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners							10.00%
Affiliated Entity \| Walton Hills, Ohio \| Chief Executive Officer \| Pagoda Partners, LLC
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners											50.00%
Affiliated Entity \| Walton Hills, Ohio \| Warehouse
Related Party Transaction [Line Items]
Operating lease, term (in years)											17 years
Rent expense		400	400	700	700
Affiliated Entity \| Brooklyn, Ohio \| Chief Executive Officer \| Brooklyn Arhaus
Related Party Transaction [Line Items]
Ownership percentage by parent										85.00%
Affiliated Entity \| Brooklyn, Ohio \| Director \| Brooklyn Arhaus
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners										15.00%
Affiliated Entity \| Brooklyn, Ohio \| Outlet
Related Party Transaction [Line Items]
Operating lease, term (in years)										15 years
Rent expense		100	$ 100	200	$ 200
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		100
Related-party note receivable		$ 1,000		$ 1,000

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Income Tax Disclosure [Abstract]
Income tax expense	$ 12,414	$ 500	$ 18,283	$ 1,204
Effective income tax rate	25.30%	6.80%	25.80%	7.00%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details