0001875444-23-000018 | 10-K | XBRL Viewer

Cover - USD ($) $ in Millions	12 Months Ended
Cover - USD ($) $ in Millions	Dec. 31, 2022	Feb. 28, 2023	Jun. 30, 2022
Document Information [Line Items]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Current Fiscal Year End Date	--12-31
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 Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 91.0
Documents Incorporated by Reference	Portions of the registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held May 18, 2023 are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent stated herein.
Entity Central Index Key	0001875444
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false
Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		52,947,617
Class B
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		87,115,600

Audit Information	12 Months Ended
Audit Information	Dec. 31, 2022
Audit Information [Abstract]
Auditor Name	PricewaterhouseCoopers LLP
Auditor Firm ID	238
Auditor Location	Cleveland, Ohio

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 145,181	$ 123,777
Restricted cash equivalents	7,346	7,131
Accounts receivable, net	1,734	228
Merchandise inventory, net	286,419	208,343
Prepaid and other current assets	37,371	28,517
Total current assets	478,051	367,996
Operating right-of-use assets	252,055	0
Financing right-of-use assets	38,522	0
Property, furniture and equipment, net	135,066	179,631
Deferred tax asset	16,841	27,684
Goodwill	10,961	10,961
Other noncurrent assets	296	278
Total assets	931,792	586,550
Current liabilities
Accounts payable	62,636	51,429
Accrued taxes	12,256	7,302
Accrued wages	20,860	16,524
Accrued other expenses	35,169	61,047
Client deposits	202,587	264,929
Current portion of operating lease liabilities	39,744	0
Current portion of financing lease liabilities	531	0
Total current liabilities	373,783	401,231
Operating lease liabilities, long-term	289,871	0
Financing lease liabilities, long-term	51,835	0
Capital lease obligation	0	50,525
Deferred rent and lease incentives	2,272	63,037
Other long-term liabilities	4,336	1,992
Total liabilities	722,097	516,785
Commitments and contingencies (Note 12)
Stockholders' equity
Retained Earnings (Accumulated Deficit)	20,053	(116,581)
Additional Paid-in Capital	189,504	186,209
Total Arhaus, Inc. stockholders' equity	209,695	69,765
Total liabilities and stockholders' equity	931,792	586,550
Class A
Stockholders' equity
Stock issued	51	50
Class B
Stockholders' equity
Stock issued	$ 87	$ 87

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2022	Dec. 31, 2021
Class A
Common stock, par value (in dollars per share)	$ 0.001
Common stock , shares authorized (in shares)	600,000,000
Common stock, shares issued (in shares)	51,437,348	50,427,390
Common stock, shares outstanding (in shares)	51,437,348	50,427,390
Class B
Common stock, par value (in dollars per share)	$ 0.001
Common stock , shares authorized (in shares)	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	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Statement [Abstract]
Net revenue	$ 1,228,928	$ 796,922	$ 507,429
Cost of goods sold	703,869	466,989	307,925
Gross margin	525,059	329,933	199,504
Selling, general and administrative expenses	340,388	296,117	168,616
Loss on disposal of property, furniture and equipment	0	466	8
Income from operations	184,671	33,350	30,880
Interest expense, net	3,387	5,432	13,057
Loss on extinguishment of debt	0	1,450	0
Other income	(1,294)	(320)	0
Income before taxes	182,578	26,788	17,823
Income tax expense (benefit)	45,944	(10,144)	783
Net and comprehensive income	136,634	36,932	17,040
Net and comprehensive income	136,634	36,932	17,040
Less: Net income attributable to noncontrolling interest	0	15,815	10,958
Net and comprehensive income attributable to Company	136,634	21,117	6,082
Net and comprehensive income attributable to Arhaus, Inc.	136,634	21,117	3,235
Comprehensive income attributable to Arhaus, Inc.	$ 136,634	$ 21,117	$ 3,235
Net and comprehensive income per share, basic
Weighted-average number of common shares outstanding, basic (in shares)	138,094,180	116,013,492	112,058,742
Net and comprehensive income per share, basic (in dollars per share)	$ 0.99	$ 0.18	$ 0.03
Net and comprehensive income per share, diluted
Weighted-average number of common shares outstanding, diluted (in shares)	139,605,550	119,521,442	112,058,742
Net and comprehensive income per share, diluted (in dollars per share)	$ 0.98	$ 0.18	$ 0.03

Condensed Consolidated Statements of Changes in Mezzanine Equity and Members’ Deficit - USD ($) $ in Thousands	Total	Class B Units	Class A	Class B	Member Units Class A Units	Member Units Class B Units	Common Stock Class A	Common Stock Class B	Retained Earnings (Accumulated Deficit)	Additional Paid-in Capital	Noncontrolling Interest
Beginning balance (in shares) at Dec. 31, 2019		1,250,000
Beginning balance at Dec. 31, 2019		$ 18,206
Increase (Decrease) in Temporary Equity [Roll Forward]
Preferred units dividend unpaid		2,847
Preferred units dividend paid		$ (8,553)
Preferred units repayments (in shares)		(1,250,000)
Preferred units repayments		$ (12,500)
Ending balance (in shares) at Dec. 31, 2020		0
Ending balance at Dec. 31, 2020		$ 0
Beginning balance (in shares) at Dec. 31, 2019					645,000	4,158,000
Beginning balance at Dec. 31, 2019	$ (38,000)								$ (31,657)	$ 1,367	$ (7,710)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	17,040								6,082		10,958
Tax distribution	(10,937)										(10,937)
Preferred units dividend unpaid	(2,847)								(2,847)
Preferred units dividend paid	0
Equity based compensation	309									309
Repurchase of incentive units	(6)
Ending balance (in shares) at Dec. 31, 2020					645,000	4,158,000	0	0
Ending balance at Dec. 31, 2020	(34,441)						$ 0	$ 0	(28,422)	1,670	(7,689)
Ending balance (in shares) at Nov. 08, 2021		0
Ending balance at Nov. 08, 2021		$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	23,843								8,028		15,815
Tax distribution	(7,865)										(7,865)
Shareholder distribution	(12,350)								(12,350)
Equity based compensation	1,367									1,367
Pre-IPO dividend to noncontrolling interests of Arhaus, LLC	(50,659)										(50,659)
Shareholder distributions	(49,565)								(46,528)	(3,037)
Initial public offering less underwriter fees (in shares)							12,903,000
Initial public offering less underwriter fees	157,258						$ 13			157,245
Issuance of Class A and B common stock to vested incentive unit holders of Arhaus, LLC (in shares)							5,837,000	6,148,000
Issuance of Class A and B common stock to vested incentive unit holders of Arhaus, LLC	0						$ 6	$ 6		(12)
Non-controlling interest adjustment, in exchange of Class A common stock (in shares)							31,267,000	1,097,000
Non-controlling interest adjustment, in exchange of Class A common stock	0						$ 31	$ 1	(50,398)	(32)	50,398
Controlling interest adjustment, in exchange of Class B common stock (in shares)					(645,000)	(4,158,000)		(79,695,000)
Controlling interest adjustment, in exchange of Class B common stock	0							$ 80		(80)
Shareholder capital contribution	3,872									3,872
Ending balance (in shares) at Nov. 08, 2021					0	0	50,007,000	86,940,000
Ending balance at Nov. 08, 2021	31,460						$ 50	$ 87	(129,670)	160,993	0
Beginning balance (in shares) at Dec. 31, 2020		0
Beginning balance at Dec. 31, 2020		$ 0
Ending balance (in shares) at Dec. 31, 2021		0
Ending balance at Dec. 31, 2021		$ 0
Beginning balance (in shares) at Dec. 31, 2020					645,000	4,158,000	0	0
Beginning balance at Dec. 31, 2020	(34,441)						$ 0	$ 0	(28,422)	1,670	(7,689)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	36,932
Preferred units dividend unpaid	0
Ending balance (in shares) at Dec. 31, 2021					0	0	50,428,000	86,519,000
Ending balance at Dec. 31, 2021	69,765						$ 50	$ 87	(116,581)	186,209	0
Beginning balance (in shares) at Nov. 08, 2021		0
Beginning balance at Nov. 08, 2021		$ 0
Ending balance (in shares) at Dec. 31, 2021		0
Ending balance at Dec. 31, 2021		$ 0
Beginning balance (in shares) at Nov. 08, 2021					0	0	50,007,000	86,940,000
Beginning balance at Nov. 08, 2021	31,460						$ 50	$ 87	(129,670)	160,993	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	13,089								13,089
Equity based compensation	465									465
Deferred tax impact of Reorganization from partnership to a corporation	17,436									17,436
Transfer of Class B common stock to Class A common stock for long-tenured employees (in shares)							421,350	421,000
Transfer of Class B common stock to Class A common stock for long-tenured employees	7,315									7,315
Ending balance (in shares) at Dec. 31, 2021					0	0	50,428,000	86,519,000
Ending balance at Dec. 31, 2021	69,765						$ 50	$ 87	(116,581)	186,209	0
Ending balance (in shares) at Dec. 31, 2022		0
Ending balance at Dec. 31, 2022		$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	136,634								136,634
Preferred units dividend unpaid	0
Equity based compensation (in shares)							1,009,000	597,000
Equity based compensation	4,288						$ 1			4,287
Initial public offering less underwriter fees (in shares)			31,266,536	80,792,206
Shareholder capital contribution	80									80
Adjustment to deferred tax asset impact of Reorganization from partnership to a corporation	(1,072)									(1,072)
Ending balance (in shares) at Dec. 31, 2022					0	0	51,437,000	87,116,000
Ending balance at Dec. 31, 2022	$ 209,695						$ 51	$ 87	$ 20,053	$ 189,504	$ 0

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Cash flows from operating activities
Net income	$ 136,634	$ 36,932	$ 17,040
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	24,901	23,922	16,957
Amortization of operating lease right-of-use asset	29,052	0	0
Amortization of deferred financing fees, payments-in-kind interest and interest on finance/capital lease in excess of principal paid	12,649	1,734	3,731
Loss on extinguishment of debt	0	1,450	0
Equity based compensation	4,288	6,383	403
Deferred tax assets	9,771	(10,216)	0
Derivative expense associated with Term Loan exit fee	0	44,544	17,928
Loss on disposal of property, furniture and equipment	0	466	8
Amortization and write-off of lease incentives	(304)	(6,112)	(8,034)
Changes in operating assets and liabilities
Accounts receivable	(1,506)	372	(160)
Merchandise inventory	(78,076)	(100,321)	2,049
Prepaid and other current assets	(9,252)	(3,333)	(8,356)
Other noncurrent assets	(77)	(288)	(1,522)
Other noncurrent liabilities	638	493	(1,191)
Accounts payable	14,014	17,595	1,611
Accrued expenses	27,746	17,302	8,305
Operating lease liabilities	(33,682)	0	0
Deferred rent and lease incentives	0	4,518	9,559
Client deposits	(62,342)	110,802	89,934
Net cash provided by operating activities	74,454	146,243	148,262
Cash flows from investing activities
Purchases of property, furniture and equipment	(52,658)	(47,870)	(13,011)
Net cash used in investing activities	(52,658)	(47,870)	(13,011)
Cash flows from financing activities
Proceeds from revolving debt	0	0	30,600
Payments on revolving debt	0	0	(34,600)
Payments on long-term debt	0	0	(36,972)
Payments on fees associated with early extinguishment of debt	0	(609)	0
Repayments of related party notes	0	(1,000)	(19,405)
Proceeds from related party notes	0	1,000	1,155
Payments of debt issuance costs	0	(288)	0
Payments of preferred units dividends	0	0	(8,553)
Preferred units repayments	0	0	(12,500)
Repurchase of incentive units	0	0	(100)
Principal payments under capital leases	0	(107)	0
Principal payments under finance leases	(177)	0	0
Payment of Term Loan exit fee derivative	0	(64,139)	0
Payments of pre-IPO dividend to noncontrolling interests of Arhaus, LLC	0	(50,659)	0
Shareholder distributions	0	(61,915)	0
Proceeds from capital contribution	0	2,764	0
Proceeds from issuance of Class A common stock sold in IPO, net of underwriting costs	0	157,258	0
Payments of offering costs	0	(5,907)	0
Distributions to noncontrolling interest holders	0	(7,865)	(10,937)
Net cash used in financing activities	(177)	(31,467)	(91,312)
Net increase in cash, cash equivalents and restricted cash equivalents	21,619	66,906	43,939
Cash, cash equivalents and restricted cash equivalents
Beginning of year	130,908	64,002	20,063
End of year	152,527	130,908	64,002
Supplemental disclosure of cash flow information
Interest paid in cash	5,155	5,121	9,295
Interest received in cash	1,373	0	0
Income taxes paid in cash	34,943	1,403	1,304
Lease incentives	4,312	5,352	5,196
Purchase of property, furniture and equipment in accounts payable	3,160	5,968	1,249
Conversion of units of Arhaus, LLC to shares of Arhaus, Inc.	0	124	0
Contribution of deferred tax asset from wholly owned subsidiary	0	17,436	0
Capital contribution from CEO related to long-tenured employee award	0	4,551	0
Capital contribution from CEO for deferred compensation plan	0	3,872	0
Adjustment to deferred tax asset impact of Reorganization from partnership to a corporation	(1,072)	0	0
Derecognition of build-to-suit assets as a result of ASC 842 adoption	(31,017)	0	0
Property, furniture and equipment additions due to build-to-suit lease transactions	0	31,017	0
Capital contributions	80	0	0
Capital lease obligation	$ 0	$ 2,591	$ 0

Nature of Business	12 Months Ended
Nature of Business	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Business	Nature of Business Arhaus, Inc (“Arhaus,” “Company,” “we,” “us” or “our”) 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 81 Showrooms at December 31, 2022. Arhaus was formed on July 14, 2021 for the purpose of completing an initial public offering (“IPO”) of its common stock and related transactions in order to carry on the business of Arhaus, LLC (“LLC”) and its subsidiaries. Pursuant to the corporate reorganization and completion of the IPO in November 2021, the Company became a holding company for LLC and its subsidiaries. Reorganization and Initial Public Offering On November 4, 2021, the Company completed its IPO and sold 12,903,226 shares of Class A common stock at an IPO price of $13.00 per share and received proceeds of $151.4 million, net of underwriting discounts and commissions of $10.4 million and offering expenses of $5.9 million. The Company used a portion of the net proceeds to pay the Term Loan exit fee of $64.1 million, as discussed in Note 5 — Long-Term Debt. The remainder of the net proceeds were used for general corporate purposes, including payment of fees and expenses in connection with the IPO and to replenish working capital following a pre-IPO payment in the amount of $100.0 million which consisted of a $50.7 million dividend to noncontrolling interests and a $49.3 million distribution to the owners of Homeworks. In connection with the IPO, the Company reorganized its ownership structure from a limited liability company to a corporation for the purpose of issuing common stock on a publicly traded exchange. 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 consolidated financial statements for periods prior to the Reorganization have been adjusted to retrospectively combine the previously separate entities for presentation purposes. The Reorganization transactions included: •the amendment and restatement of the certificate of incorporation of Arhaus, Inc., to authorize two classes of common stock, Class A common stock and Class B common stock and to authorize the Company to issue up to 750,000,000 shares of common stock, consisting of 600,000,000 share of Class A common stock, par value of $0.001 per share, 100,000,000 shares of Class B common stock, par value of $0.001 and 50,000,000 shares of Preferred Stock, par value of $0.001; and •the Company’s acquisition of the units of LLC held by FS Arhaus, Homeworks, John Reed (“Reed”) through the John P. Reed Trust dated April 29, 1985, as Amended (“Reed Revocable Trust”) and the Management Unitholders, pursuant to the mergers and exchanges described below, and the issuance in those transactions of Class A common stock to the holders of FS Arhaus and the Management Unitholders and Class B common stock to Homeworks, Reed and the Reed Revocable Trust. The following steps describe the transactions that were completed to effect the Reorganization on November 8, 2021: •Step 1: The Company formed two wholly owned subsidiaries, Ash Merger Sub 1, Inc. (“Merger Sub 1”), a Delaware corporation, and Ash Merger Sub 2, Inc. (“Merger Sub 2”), a Delaware corporation; •Step 2(a): Merger Sub 1 merged with and into FS Arhaus, with FS Arhaus surviving the merger, or Surviving Corporation 1, and became a wholly owned subsidiary of the Company and the holders of FS Arhaus received shares of Class A common stock; •Step 2(b): Merger Sub 2 merged with and into Homeworks, with Homeworks surviving the merger, or Surviving Corporation 2, and became a wholly owned subsidiary of the Company and the owners of Homeworks received shares of Class B common stock; •Step 2(c): The Management Unitholders contributed their units in LLC to the Company in exchange for shares of Class A common stock; •Step 2(d): Reed and the Reed Revocable Trust contributed their respective units in LLC to the Company in exchange for shares of Class B common stock; •Step 2(e): The Company contributed the units of LLC that it owns directly to Surviving Corporation 1 and Surviving Corporation 2 in proportion to the units of LLC owned by Surviving Corporation 1 and Surviving Corporation 2; and •Step 3: The Company issued shares of Class A common stock to the purchasers in the IPO. As a result of the Reorganization, a total of 39,623,041 shares of Class A common stock and 87,536,950 shares of Class B common stock were issued to the former holders of FS Arhaus, the former holders of Homeworks, Reed, the Reed Revocable Trust and the Management Unitholders. Of the total 127,159,991 shares of common stock issued, 2,520,229 shares of Class A common stock and 596,598 shares of Class B common stock issued to Management Unitholders are subject to certain vesting conditions specified in individual award agreements and were issued as restricted stock with the exact time-based vesting provisions as the incentive units that were exchanged for such shares. If the vesting conditions of the restricted stock are not satisfied, such restricted stock will be forfeited and cancelled. Effects of COVID-19 on Our Business The COVID-19 outbreak in the first quarter of 2020 caused disruption to our business operations. In our initial response to the COVID-19 pandemic, we undertook immediate adjustments to our business operations including temporarily closing all retail locations, furloughing employees, minimizing expenses and delaying investments, and pausing some inventory orders while we assessed the impact to our business. Our approach to the pandemic evolved quickly and business trends substantially improved during the second through fourth quarters of 2020, as a result of both the reopening of our Showrooms and strong consumer demand for our products. We reopened all of our Showrooms and Outlet stores by June 30, 2020. While we have been able to serve our clients and operate our business through the COVID-19 pandemic, there can be no assurance that future events will not have an impact on our business, results of operations or financial condition since the extent and duration of the pandemic remains uncertain. Future adverse developments in connection with the COVID-19 pandemic, including additional waves or resurgences of COVID-19 outbreaks, new strains or variants of the virus, evolving international, federal, state and local restrictions and safety regulations in response to COVID-19 risks, changes in consumer behavior and health concerns, the pace of economic activity in the wake of the COVID-19 pandemic, or other similar issues could adversely affect our business, results of operations or financial condition in the future, or our financial results and business performance in future periods. Various constraints in our merchandise supply chain have resulted in delays in our ability to convert demand into net revenue at normal historical rates. We expect that our supply chain may catch up to demand in the foreseeable future, but business circumstances and operational conditions cannot be predicted with certainty. Depending on the future course of the pandemic and further outbreaks, we may experience further restrictions and closures of our Showrooms and Outlet stores. Although we experienced strong demand for our products, some of the demand may have been driven by consumers reinvesting in their homes and furnishings as they spent more time at home due to the pandemic. The exact impact that COVID-19 will have on future consumer behavior and related demand for our products cannot be predicted with certainty.

Basis of Presentation and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Summary of Significant Accounting PoliciesA summary of significant accounting policies applied in the preparation of the consolidated financial statements are as follows:

Basis of Presentation

The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The 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.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers cash and all other highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company regularly carries deposits in excess of federally insured amounts, but does not believe that it is exposed to significant concentration of credit risk as they are carried at a high-quality financial institution with an investment-grade rating.

From time to time, the Company invests in money market funds and other Level 1 cash and cash equivalent investments. For the year ended December 31, 2022, the Company earned $1.9 million in interest income. The Company did not have cash and cash equivalent investments for the years ended December 31, 2021 and 2020. Interest income is included within interest expense, net on our consolidated statements of comprehensive income.

Cash and cash equivalents include $13.0 million and $9.1 million at December 31, 2022 and 2021, respectively, for amounts in-transit from credit card companies since settlement is reasonably assured and not restricted.

Restricted Cash Equivalents

The Company maintains certain cash balances restricted as to withdrawal or use. Restricted cash is comprised primarily of cash used as collateral for the Company’s credit card sales processing partner, a portion of our workers’ compensation obligations that our insurance carrier requires us to collateralize and a portion of our customs obligation that the U.S Customs and Border Protection requires us to collateralize.

Accounts Receivable

The Company’s accounts receivables are $1.7 million and $0.2 million, respectively, at December 31, 2022 and 2021, net of allowance for expected credit losses of $0.7 million and $0.2 million, respectively. The allowance for expected credit losses is determined by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss history, the client’s current ability to pay its obligations, and the current and future condition of the general economy and industry as a whole. Accounts receivable are written off when they become uncollectible and any payments subsequently received on such receivables are credited to the allowance for expected credit losses. Accounts receivable are recorded at the invoiced amount and do not bear interest.

Revenue Recognition

Net revenue consists of sales to clients, net of returns and discounts. Net revenue and cost of goods sold are recognized when performance obligations under the terms of the contract are satisfied and the control of merchandise has been transferred to a client, which occurs when merchandise is received by our clients. Net revenue from “direct-to-client” and “home-delivered” sales are recognized when the merchandise is delivered to the client. Net revenue from “cash-and-carry” Showroom sales are recognized at the point of sale in the Showroom. Discounts provided to clients are accounted for as a reduction of sales at the point of sale. Sales commissions are incremental costs and are expensed as incurred.

A reserve is recorded for projected merchandise returns based on actual historical return rates. The Company provides an allowance for sales returns based on historical return rates, which is presented on a gross basis. The allowance for sales returns is presented within accrued other expenses and the estimated value of the right of return asset for merchandise is presented within prepaid expense and other current assets on the consolidated balance sheets. Actual merchandise returns are monitored regularly and have not been materially different from the estimates recorded. Merchandise returns are granted for various reasons, including delays in merchandise delivery, merchandise quality issues, client preference and other similar matters. The Company has various return policies for their merchandise, depending on the type of merchandise sold. Returned merchandise often represents merchandise that can be resold. Amounts refunded to clients are generally made by issuing the same payment tender as used in the original purchase. Merchandise exchanges of the same merchandise at the same price are not considered merchandise returns and, therefore, are excluded when calculating the sales returns reserve. The allowance for sales returns of

$8.3 million and $5.6 million at December 31, 2022 and 2021, respectively, is recorded in the accrued other expenses line item on the consolidated balance sheets.

All taxes assessed by a government authority that are both imposed on and concurrent with a specific revenue producing transaction and collected by the Company from clients are excluded from the measurement of the transaction price. As a result, sales are stated net of tax.

The Company collects various taxes as an agent in connection with the sale of merchandise and remits these amounts to the respective taxing authorities. These taxes are included within accrued taxes line item of the consolidated balance sheets until remitted to the respective taxing authorities.

Shipping and handling is recognized as an activity to fulfill the performance obligation of transferring merchandise to clients, therefore the fees are recorded in net revenue. The costs incurred by the Company for shipping and handling are included in cost of goods sold, and the costs of shipping and handling activities are accrued for in the same period as the delivery to clients.

Client deposits represent payments made by clients on orders. At the time of order, the Company collects deposits for all orders equivalent to at least 50 percent of the client’s 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 that substantially all client deposits as of December 31, 2022 will be recognized within 2023 as the performance obligations are satisfied.

Private Label Credit Card

The Company has an agreement with a Credit Card Issuer (“Issuer”) to provide clients with private label credit cards (the “Card Agreement”) which was amended on January 13, 2021 to extend the term of the agreement through August 31, 2026. Each private label credit card bears the Arhaus brand logo and can only be used at the Company’s Showroom locations or website. The Issuer is the sole owner of the accounts issued under the private label credit card program and absorbs the losses associated with non-payment by the private label card holders and a portion of any fraudulent usage of the accounts.

During the term of the Card Agreement, the Company receives a percentage of private label credit card sales from the Issuer and is also eligible to receive incentive payments for the achievement of certain targets. These funds are recorded within net revenue in the consolidated statements of comprehensive income. The Company also receives reimbursement funds from the Issuer for certain expenses the Company incurs. These reimbursement funds are used by the Company to fund marketing and other programs associated with the private label credit card and are recorded within net revenue in the consolidated statements of comprehensive income.

Loyalty Reward Program

The Company offers a loyalty reward program for clients who use the Company’s private label credit card to receive rewards based on the client’s merchandise purchases. The liabilities associated with the rewards are established on the consolidated balance sheets when the rewards are issued and are removed from the consolidated balance sheets, either when used by the client or upon expiration (3 months from when the reward is issued). At December 31, 2022 and 2021, outstanding liabilities related to the loyalty reward program of $1.5 million and $1.3 million, respectively, are included within the accrued other expenses line item of the consolidated balance sheets. The Company recognizes expense upon the establishment of the liability.

Merchandise Inventory

The Company’s merchandise inventory is comprised primarily of finished goods and is carried at the lower of cost or net realizable value, with cost determined on a weighted-average cost method. To determine if the value of inventory should be marked down, below original cost, we use estimates to determine the lower of cost or net realizable value, which considers current and anticipated demand, client preference and merchandise age.

Reserves for shrinkage are estimated and recorded throughout the period as a percentage of current merchandise inventory levels and historical shrinkage results. Actual shrinkage is recorded throughout the year based upon periodic cycle counts and the results of the Company’s annual physical inventory counts. Merchandise inventory includes reserves of $5.7 million and $4.2 million at December 31, 2022 and 2021, respectively.

Prepaid and Other Current Assets

Prepaid and other current assets include cash advanced by the Company for leasehold improvements at new (or existing, in some cases) Showroom locations. These amounts represent capital costs associated with opening new Showroom locations, a substantial portion of which is subject to recovery from the lessor upon completion. The amount to be recovered totaled $16.1 million and $11.5 million at December 31, 2022 and 2021, respectively.

Advertising Costs

Except for costs associated with the semi-annual catalogs, the Company expenses advertising costs as incurred. Advertising costs amounted to $38.7 million, $35.9 million and $24.4 million for the years ended December 31, 2022, 2021 and 2020, respectively, and are included within the selling, general and administrative expenses line item on the consolidated statements of comprehensive income. Expense associated with the catalogs are recognized upon the delivery of the catalogs to the carrier.

Lease Accounting

The Company leases real estate for our Showrooms, corporate headquarters, distribution centers, and equipment. We determine if a contract contains a lease at inception based on our right to control the use of an identified asset and our right to obtain substantially all the economic benefits from the use of that identified asset. Our leases often have the option to renew lease terms, in addition, certain lease agreements may be terminated prior to their original expiration date. The Company assesses these options to determine if we are reasonably certain of exercising them based on all relevant economic and financial factors. Any options that meet these criteria are included in the lease term at lease commencement. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company accounts for lease and non-lease components as a single lease component. We determine the lease classification and begin to recognize lease and any related expenses upon the lease’s commencement, which for real estate leases is generally when we take possession or control of the asset.

Lease arrangements may require the landlord to provide tenant allowances for the Company’s real estate leases. Standard tenant allowances received from landlords, typically those received under operating lease agreements, are recorded as cash and cash equivalents with an offset recorded in operating right-of-use assets on the consolidated balance sheets. Tenant allowances received from landlords during the construction phase of a leased asset and prior to lease commencement are recorded as cash and cash equivalents with an offset recorded in prepaid and other current assets (to the extent the Company has incurred related capital expenditure for construction costs) on the consolidated balance sheets. After the leased asset is constructed and the lease commences, the tenant allowance is reclassified from other non-current assets to operating right-of-use assets on the consolidated balance sheets, and such allowances are amortized over the lease term.

Lease Classification

Certain of our real estate and equipment leases are classified as finance leases. Lease characteristics that we evaluate to

determine lease classification include, but are not limited to, the lease term, incremental borrowing rate

and fair value of the leased asset and the economic life of the leased asset. Lease related assets classified as financing leases are included in financing right-of-use assets on the consolidated balance sheets. Financing lease assets and liabilities are recognized at the commencement date of the lease based on the present value of future minimum lease payments. For finance leases, interest expense is presented for the lease liability in the interest expense line item, consistent with how other interest expense is presented. The Company presents amortization of the right-of-use asset in the “depreciation and amortization” expense line item, consistent with presentation of depreciation or amortization of similar assets.

Leases that do not meet the definition of a finance lease are considered operating leases. Lease related assets classified as operating leases are included in operating right-of-use assets on the consolidated balance sheets. Operating lease assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. For operating leases, the Company recognizes lease cost on a straight-line basis over the term of the lease.

Lease Payments

The majority of the real estate lease agreements include minimum rent payments which are subject to stated lease escalations over the lease term and eligible renewal periods. These stated fixed payments, through the lease term, are included in our measurement of the lease right-of-use assets and lease liabilities upon lease commencement.

Depending on particular Showroom leases, the Company can also owe variable rental payments if particular Showrooms meet certain sales figures. Due to the variable and unpredictable nature of such payments, the Company does not recognize a lease right-of-use asset and lease liability related to such payments. Estimated variable rental payments are included in accrued expenses on the consolidated balance sheets in the period they are incurred and until such payments are made, and the related lease cost is included in cost of goods sold on the consolidated statements of comprehensive income.

Incremental Borrowing Rate

The discount rate implicit within the finance leases was determined at the time of lease commencement. However, the discount rate implicit within the 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. See Note 6 — Leases for further discussion on how the Company estimated the incremental borrowing rate.

Property, Furniture and Equipment

Property, furniture and equipment is stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line method generally using the following useful lives:


Asset class/ type						Useful Life-Years
Leased property under capital lease						Term of the underlying lease
Leasehold improvements						Lesser of 10 years or lease term
Landlord improvements						Lesser of 10 years or lease term
Furniture and fixtures						3 to 5 years
Computers and equipment						3 to 10 years
Vehicles						5 to 10 years

Capitalized software costs relate to third-party developed software and are amortized on a straight-line basis over the estimated useful life of the software, which generally is three years.

Depreciation and amortization expense was $24.9 million, $23.9 million and $17.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Property, furniture and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. For further discussion regarding the impairment accounting policy refer to “Long-Lived Assets.”

Goodwill

Goodwill represents the excess of the purchase price over the fair value of assets and liabilities acquired in a business combination. The Company operates as one segment and has a single reporting unit, Arhaus Consolidated. For the purposes of goodwill impairment testing, a reporting unit is defined as an operating segment or one level below an operating segment (referred to as a component) for which discrete financial information is available.

We test goodwill for impairment on an annual basis in the fourth quarter of each year, and more frequently if events or changes in circumstances indicate that it might be impaired. Circumstances that may indicate impairment include, but are not limited to:

•Deterioration in general economic conditions, limitations on accessing capital, or other developments in equity and credit markets;

•Industry and market considerations such as deterioration in the environment in which the Company operates, an increased competitive environment, a decline in market dependent multiples or metrics, a change in the market for the Company’s merchandise or services, or a regulatory or political development;

•Cost factors that have a negative effect on earnings and cash flows;

•Overall financial performance;

•Changes in management, key personnel, strategy, or clients; and

•A sustained decrease in share price in either absolute terms or relative to peers.

Under U.S. GAAP, we have the option to first assess qualitative factors in order to determine if it is more likely than not that the fair value of our reporting unit is greater than its carrying value (“Step 0”). The term more likely than not refers to a level of likelihood that is more than 50 percent. If the qualitative assessment leads to a determination that the reporting unit’s fair value is less than its carrying value, or if we elect to bypass the qualitative assessment altogether, we are required to perform a quantitative impairment test (“Step 1”) by calculating the fair value of the reporting unit and comparing the fair value with its associated carrying value. We will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.

We determine fair values using an equally weighted combination of the discounted cash flow approach (“income approach”) and the guideline public company method (“market approach”), based upon the relevance and availability of the data at the time we perform the valuation.

Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for the reporting unit. Actual results may differ from those assumed in our forecasts. We derive our discount rate based on our weighted average cost of capital determined by using a combination of the capital asset pricing model, the cost of debt and an appropriate industry capital structure. We use a discount rate that is commensurate with the risks and uncertainty inherent in the respective businesses and in our internally developed forecasts. Valuations using the market approach are derived from metrics of publicly traded companies that are deemed sufficiently similar to the Company. Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates described above could change in future periods.

Long-Lived Assets

The Company evaluates long-lived assets, such as property, furniture and equipment and lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. Circumstances that may indicate impairment include, but are not limited to:

•A significant decrease in the market price of a long-lived asset or asset group;

•A significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition;

•A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset or asset group, including an adverse action or assessment by a regulator;

•an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset or asset group;

•A current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group; and

•A current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

An asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our Showrooms is the individual Showroom level.

In those circumstances that may indicate an impairment, the Company performs an undiscounted cash flow analysis to determine if an impairment exists. If the sum of the estimated undiscounted future cash flows over the remaining life of the asset are less than the carrying value, the Company will recognize an impairment charge equal to the difference between the carrying value and the fair value, usually determined by the estimated discounted future cash flows associated with the asset.

Based on management’s analysis there were no events or circumstances identified during 2022 or 2021 indicating a potential impairment of any long-lived assets.

Deferred Rent and Lease Incentives

Prior to the adoption of Accounting Standards Update (“ASU”) 2016-02, Leases, leases that contained fixed escalations of the minimum annual lease payment during the original term of the lease were recognized as rental expense on a straight-line basis over the lease term and recorded the difference between rent expense and the amount currently payable as deferred rent. The Company recorded rental expense during the construction period, as the expected lease term began the date the Company took

possession for construction or other purposes. Deferred lease incentives included construction allowances received from landlords, which were amortized on a straight-line basis over the initial lease term, including the construction period.

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 at the time 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. 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 were as follows (amounts in thousands):


	2022		2021
Balance as of beginning of period	$	4,724	$	3,326
Accruals during the period	11,687		7,903
Settlements during the period	(10,036)		(6,505)
Balance as of end of the period (1)	$	6,375	$	4,724

(1) $3.7 million and $2.7 million were recorded in accrued other expenses at December 31, 2022 and 2021, respectively. The remainder is recorded in other long-term liabilities.

We recorded accruals during the periods presented in the table above, primarily to reflect charges that relate to warranties issued during the respective periods.

Income Taxes

We account for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. In estimating future tax consequences, we generally take into account all expected future events then known to us, other than changes in the tax law or rates which have not yet been enacted and which are not permitted to be considered. We may record a valuation allowance to reduce our net deferred tax assets to the amount that is more-likely-than-not to be realized. The determination as to whether a deferred tax asset will be realized is made on a jurisdictional basis and is based upon the weight of available evidence. Future taxable income of the appropriate character in either the carryback or carryforward period under the tax law and ongoing prudent and feasible tax planning are considered in determining the amount of the valuation allowance, and the amount of the allowance is subject to adjustment in the future. Specifically, in the event we were to determine that it is not more-likely-than-not that we would be able to realize our net deferred tax assets in the future, an adjustment to the valuation allowance would decrease net income in the period such determination is made. This allowance does not alter our ability to utilize the underlying tax net operating loss and credit carryforwards in the future, the utilization of which requires future taxable income.

The accounting standard for uncertainty in income taxes prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on subsequent recognition, derecognition, and measurement based on management’s best judgement given the facts, circumstances, and information available at the reporting date. Differences between tax positions taken in a tax return and amounts recognized in the financial statements generally result in an increase in liability for income taxes payable or a reduction of an income tax refund receivable, or a reduction in a deferred tax asset or an increase in a deferred tax liability, or both. At December 31, 2022 and 2021, the Company assessed its income tax positions and concluded that it had no unrecognized tax benefits. We recognize interest and penalties related to unrecognized tax benefits in income tax expense on the consolidated statements of comprehensive income. No such interest and penalties were recorded for the years ended December 31, 2022, 2021 or 2020.

Prior to the Reorganization, the Company was a limited liability company under the Internal Revenue Code that had elected to be taxed as a partnership and did not pay federal or most state corporate income taxes on its taxable income, but rather its members were liable for their respective portions of the taxable income (loss) of Arhaus, LLC. Therefore, no provision for federal income taxes are included in these consolidated financial statements prior to the Reorganization. Subsequent to the

Reorganization, Arhaus, LLC’s taxable income flows through to FS Arhaus and Homeworks who are subject to U.S. federal and state corporate income taxes.

The Company is subject to state and local income tax examinations by tax authorities. With few exceptions, the Company is no longer subject to state and local tax examinations for the years before 2018.

Cost of Goods Sold

Cost of goods sold includes, but is not limited to, the direct cost of purchased merchandise, inventory shrinkage, inbound freight, all freight costs to get merchandise to our Showrooms, design, buying and allocation costs, our supply chain, such as product development and sourcing, credit card fees, occupancy costs related to Showroom operations, such as rent, property tax and common area maintenance for our leases, depreciation and amortization of leasehold improvements, equipment and other assets in our Showrooms, sourcing related costs, and all logistics costs associated with shipping merchandise to clients.

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A, expenses include all operating costs not included in cost of goods sold. These expenses include payroll and payroll related expenses, Showroom expenses other than occupancy and expenses related to many of our operations at our distribution centers and corporate headquarters, including marketing, information technology, legal, human resources, utilities and depreciation and amortization expense. Marketing primarily includes catalog production, mailing and print advertising costs. Payroll includes both fixed compensation and variable compensation. Variable compensation includes Showroom commissions and Showroom bonus compensation related to demand, likely before the client obtains control of the merchandise. Variable compensation is primarily received by Showroom employees and is not significant in our eCommerce channel. All new Showroom opening expense other than occupancy are included in SG&A expenses and are expensed as incurred.

Gift Cards

The Company sells gift cards to our 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 $1.0 million and $0.9 million at December 31, 2022 and 2021, respectively, is recorded in the accrued other expenses line item of the consolidated balance sheets. The Company recognizes income associated with breakage proportional to actual gift card redemptions. For the years ended December 31, 2022, 2021 and 2020, breakage was minimal.

Self-Insurance

We maintain insurance coverage for significant exposures as well as those risks that, by law, must be insured. In the case of health care coverage for employees, we have a managed self-insurance program related to claims filed. Expenses related to this self-insured program are computed on an actuarial basis, based on claims experience, regulatory requirements, an estimate of claims incurred but not yet reported (“IBNR”) and other relevant factors. The projections involved in this process are subject to uncertainty related to the timing and number of claims filed, levels of IBNR, fluctuations in health care costs and changes to regulatory requirements. We had liabilities of $1.0 million and $0.9 million at December 31, 2022 and 2021, respectively, recorded in the accrued other expenses line item of the consolidated balance sheets.

We carry workers’ compensation insurance subject to a deductible amount for which we are responsible on each claim. We had liabilities related to workers’ compensation claims of $0.5 million and $0.2 million at December 31, 2022 and 2021, respectively, recorded in the accrued taxes line item of the consolidated balance sheets.

Credit Risk and Concentration Risk

Approximately 13%, 18% and 25% of the Company’s merchandise was purchased from one vendor for the years ended December 31, 2022, 2021 and 2020 respectively.

Fair Values of Financial Instruments

The Company’s primary financial instruments are cash and cash equivalent investments, accounts receivable, payables, lease obligations, a derivative, and equity based compensation instruments. Due to the short-term maturities of cash and cash

equivalent investments, accounts receivable and payables, the Company believes the fair values of these instruments approximate their respective carrying values at December 31, 2022 and 2021. See Note 5 — Long-Term Debt for discussion of our derivative, Note 6 — Leases for discussion of our lease obligations and Note 9 — Equity Based Compensation for discussion of our equity based compensation instruments.

The Company has established a hierarchy to measure our financial instruments at fair value, which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect the Company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. The hierarchy defines three levels of inputs that may be used to measure fair value:

Level 1 Unadjusted quoted prices in active markets for identical, unrestricted assets and liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability.

Level 3 Unobservable inputs that reflect the entity’s own assumptions about the assumptions market participants would use in the pricing of the asset or liability and are consequently not based on market activity but rather through particular valuation techniques.

Deferred Financing Fees

Debt issuance costs were recorded as part of the establishment of the Company’s financing arrangements (see Note 5 — Long-Term Debt). The debt issuance costs were recorded within the other noncurrent assets line item on the consolidated balance sheets and were amortized as interest expense over the contractual life of the debt structure using the straight-line method, which approximates the effective interest rate method.

Noncontrolling Interest

Noncontrolling interests represent the ownership interests of the Company held by FS Arhaus. The Company identifies its noncontrolling interests separately within the Company’s consolidated statements of changes in mezzanine equity and stockholders’/members’ equity (deficit). The amounts of consolidated net and comprehensive income attributable to the Company and to the noncontrolling interest are presented separately on the Company’s consolidated statements of comprehensive income. As part of the Reorganization, the noncontrolling interest held by FS Arhaus was exchanged for shares of class A common stock. Accordingly, net and comprehensive income attributable to noncontrolling interest shown for 2021 on the consolidated statements of comprehensive income only represents income statement activity until the day of the Reorganization.

Equity Based Compensation

In connection with the Reorganization, the Company adopted the 2021 Equity Incentive Plan (the “2021 Equity Plan”), which authorized the Company to grant stock options (either incentive or non-qualified), stock appreciation rights or SARs, restricted stock, restricted stock units or RSUs, performance shares, performance share units or PSUs and other stock-based awards with respect to our Class A common stock. During the year ended December 31, 2022, the Company granted RSU and PSU awards to certain of the Company’s named executive officers and other key employees under the 2021 Equity Plan. The Company also granted RSU awards to certain members of the Board of Directors. The fair value of each RSU and PSU award is based on the grant date market price and recognizes costs as expense over the vesting period. Forfeitures are accounted for as they occur. See Note 9 — Equity Based Compensation for further discussion on the awards granted under the 2021 Equity Plan.

Prior to the Reorganization, the Company granted incentive units to employees and computed the costs arising from the grants at fair value and recognizes costs as expense over the vesting period for the units. The Company used the Black-Scholes valuation model which requires the input of assumptions regarding the expected term, expected volatility, dividend yield and risk-free interest rate to estimate the fair value of its incentive unit arrangements. The Company accounts for forfeitures as they occur. See Note 9 — Equity Based Compensation for further discussion of the incentive unit arrangements.

Net and comprehensive income per share

Basic net and comprehensive income per share is computed as net income attributable to Arhaus, Inc. divided by the weighted-average number of common shares outstanding for the period. Diluted net and comprehensive income per share is computed as

net income attributable to Arhaus, Inc. divided by the weighted-average number of common shares outstanding for the period and common share equivalents under equity plans using the treasury stock method. Potential dilutive securities are excluded from the computation of diluted net income per share if their effect is anti-dilutive.

Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

New Accounting Standard or Updates

In February 2016, the Financial Accounting Standards Board (“FASB”) issued 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 6 — 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 consolidated financial statements.

Property, Furniture, and Equipment

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Property, Furniture and Equipment

Property, furniture and equipment, net consists of the following at December 31, 2022 and 2021 (amounts in thousands):


	2022		2021
Leased property under capital lease	$	—	$	48,303
Leasehold improvements	50,776		42,418
Landlord improvements	150,545		137,106
Furniture and fixtures	6,542		5,411
Computer and equipment	49,091		25,124
Vehicles	9,963		9,229
Build-to-suit properties	—		31,017
Construction in process	8,426		10,457
	275,343		309,065
Less: Accumulated depreciation	(52,514)		(54,054)
Less: Landlord improvement accumulated depreciation	(87,763)		(75,380)
Property, furniture and equipment, net	$	135,066	$	179,631

Goodwill	12 Months Ended
Goodwill	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	Goodwill During 2022, we reviewed Arhaus Consolidated, our one reporting unit’s goodwill for impairment by performing a qualitative assessment in the fourth quarter. Based on the results, it was identified that it was more likely than not the fair value of goodwill recorded exceeded the current carrying value and concluded no impairment existed. During the years ended December 31, 2022 and 2021, there was no change in the recorded goodwill balances and we have not recorded any historical goodwill impairments.

Long-Term Debt

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Long-Term Debt

The Company’s prior debt structure entered into in 2017 (“Prior Credit Facilities”) included a revolving credit facility of $30.0 million (the “Prior Revolver”) and a term loan of $40.0 million (the “Term Loan”). The Prior Revolver’s availability was limited pursuant to a borrowing base formula based on specified percentages of eligible inventories and accounts receivable. The Company had the option, subject to terms and conditions, to borrow on the Prior Revolver by means of any combination of Base Rate Loans or LIBOR Loans. The Company’s borrowings under the Prior Revolver bore variable interest rates for Base Rate Loans of the greater of (a) the Federal Funds Rate plus 0.5%, (b) the Prime Rate, (c) the LIBOR Rate plus 1.0%, and (d) 4.0% and at LIBOR loans at the LIBOR rate (“LIBOR”) plus the applicable margin (6.25% at December 31, 2019). The Prior Revolver carried a non-use fee of 0.50% per annum. Deferred financing costs related to the Prior Revolver 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 $0.2 million for the year ended December 31, 2020, and is included in interest expense within the consolidated statements of comprehensive income. The unamortized balance of these loan costs of $0.6 million as of June 25, 2020 were written off to interest expense within the consolidated statements of comprehensive income, as the Company terminated the Prior Revolver and entered in a new credit agreement with new lenders.

The Term Loan bore interest at a rate equal to 16.0% per annum, of which 12.0% per annum was to be paid in cash and 4.0% per annum was to be paid in kind by capitalizing such amount and adding it to the principal amount of the loan each quarter. The Company was required to make a prepayment on the Term Loan in an amount not less than 50 percent of the Company’s Excess Cash Flow, as defined in the Term Loan agreement, on or before May 15th of the year following such year. Other than the mandatory Excess Cash Flow payments, as defined, which were calculated at the end of each year, the Term Loan had no required periodic principal payments during the term. The Term Loan facility permitted early principal payments subject to a 1.0% prepayment premium through December 26, 2020, and none thereafter. The Term Loan was paid in full on December 28, 2020.

Deferred financing costs related to the Term Loan were amortized over the term of the Term Loan, on a straight-line basis, which approximated the effective interest method. Amortization expense was $0.6 million for the year ended December 31,

2020, and is included in interest expense within the consolidated statements of comprehensive income. On December 28, 2020, in connection with the repayment of the Term Loan, the unamortized balance of these financing costs of $0.7 million were written off to interest expense.

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 it would decline the option to receive the $3.0 million and elect to receive a payout equivalent to 4.0% of the equity value. The exit fee was treated as a derivative and adjusted to fair value each reporting period. In connection with the Company’s IPO the fair value of the exit fee was determined to be $64.1 million and was paid by the Company in November 2021, using proceeds from the IPO. The Company recorded $44.5 million and $17.9 million of derivative expense for the years ended December 31, 2021 and 2020, respectively in selling, general and administrative expenses within the consolidated statements of comprehensive income.

At December 31, 2020, the Company used a discounted cash flow method and guideline public company method to determine the fair value of equity which was used to calculate the fair value of the derivative liability. The key assumptions used within the valuation as December 31, 2020 were as follows:


Term			10 years
Risk-free rate of return			0.90%
Volatility			40.00%
Dividend yield			0.00%

On June 25, 2020, the Company entered into a credit agreement (the “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 at LIBOR plus the applicable margin (5.5% at December 31, 2020). 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 Company had the option, subject to terms and conditions, to borrow on the Revolver by means of LIBOR loans. The Revolver had certain financial covenants, including a minimum fixed charge ratio and minimum EBITDA requirements. The Revolver carried a non-use fee of 0.50% per annum. Deferred financing costs related to the Revolver of $1.5 million were recorded in other noncurrent assets on the consolidated balance sheets and were amortized over the term of the Revolver on a straight-line basis. Amortization expense was $0.4 million and $0.2 million for the years ended December 31, 2021 and 2020, respectively and is included in interest expense within the consolidated statements of comprehensive income. The Revolver was set to expire on June 25, 2023.

On November 4, 2021 the Company terminated the Revolver of which there were no borrowings drawn. The termination of the Revolver resulted in a $1.4 million loss on extinguishment of debt. The loss, which included a $0.6 million early termination fee and a write off of the remaining unamortized loan costs of $0.8 million, is included in the loss on extinguishment of debt within the consolidated statements of comprehensive income for the year ended December 31, 2021.

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 was initially $50.0 million. The 2021 Credit Facility contains restrictive covenants and has certain financial covenants, including a minimum rent-adjusted total leverage ratio and 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 December 31, 2022 and 1.75% at December 31, 2021), whereas the applicable margin is adjusted quarterly based on the Company’s consolidated rent-adjusted total leverage ratio.

On December 9, 2022, the Company amended the 2021 Credit Facility to increase the revolving credit commitment thereunder by $25.0 million. After giving effect to such increase, the aggregate amount of all commitments under the 2021 Credit Facility is $75.0 million. The 2021 Credit Facility expires on November 8, 2026.

At December 31, 2022 and 2021, we had no borrowings on the 2021 Credit Facility, respectively. Deferred financing costs related to the 2021 Credit Facility as of December 31, 2022 and 2021, were $0.4 million and $0.3 million, respectively, and are recorded in other noncurrent assets on the consolidated balance sheets. The deferred financing costs are amortized over the term of the debt on a straight-line basis. Amortization expense was $0.1 million for the year ended December 31, 2022, and is included in interest expense within the consolidated statements of comprehensive income.

In accordance with the change in reporting entity, the Company’s consolidated financial statements include the effect of related-party promissory notes from Reed to Homeworks which were paid off in December 2020. Interest expense related to these promissory notes of $0.4 million were included within interest expense within the consolidated statements of comprehensive income for the year ended December 31, 2020.

The Company was in compliance with all covenants at December 31, 2022 and 2021, and expects to remain in compliance over the next 12 months.

Leases

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Leases

During the first quarter of fiscal 2022, we adopted ASU 2016-02, Leases (Topic 842) and all related amendments as discussed in Note 2 — Basis of Presentation and Summary of Significant Accounting Policies. The Company leases real estate and equipment under operating and finance leases, some of which are from related parties as discussed in Note 13 — 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 consolidated balance sheets related to leases as of December 31, 2022 (amounts in thousands):


	Consolidated Balance Sheets Classification	December 31, 2022
Assets
Operating lease assets	Operating right-of-use assets	$	252,055
Finance lease assets	Financing right-of-use assets	38,522
Total leased assets		$	290,577

Liabilities
Current operating leases	Current portion of operating lease liabilities	$	39,744
Non-current operating leases	Operating lease liabilities, long-term	289,871
Total operating lease liabilities		329,615

Current finance leases	Current portion of financing lease liabilities	531
Non-current finance leases	Financing lease liabilities, long-term	51,835
Total finance lease liabilities		52,366
Total lease liabilities		$	381,981

The components of lease cost recognized within our consolidated statements of comprehensive income for the year ended December 31, 2022, are as follows (amounts in thousands):


	Consolidated Income Statement Classification	2022
Lease costs:
Operating lease costs	Cost of goods sold	$	34,421
Operating lease costs	Selling, general and administrative expenses	6,930
Finance lease costs
Amortization of right-of-use assets	Selling, general and administrative expenses	2,056
Interest expense on lease liabilities	Interest expense, net	5,027
Variable lease costs(1)	Cost of goods sold	38,276
Short term lease costs	Selling, general and administrative expenses	677
Total lease costs		$	87,387

(1) Includes $0.4 million of month-to-month lease costs.

Rent expense calculated under ASC 840 for the years ended December 31, 2021 and 2020 was $66.5 million and $58.6 million, respectively. Percentage rent expense calculated under ASC 840 for the years ended December 31, 2021 and 2020 was $6.1 million and $1.0 million, respectively. Amortization of landlord improvements calculated under ASC 840 for the years ended December 31, 2021 and 2020 was $13.5 million and $10.4 million, 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 December 31, 2022.


Weighted Average Remaining Lease Term (In Years)						December 31, 2022
Operating leases						9.29
Finance leases						22.46

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 (“IBR”). For all operating leases, the Company utilized a market-based approach to estimate the 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 December 31, 2022.


Weighted Average Discount Rate	December 31, 2022
Operating leases	5.54	%
Finance leases	9.72	%

Future lease liabilities at December 31, 2022 are as follows (amounts in thousands):


Year Ending December 31,	Operating Lease Liabilities (1)		Finance Lease Liabilities		Total Lease Liabilities
2023	$	55,415	$	5,333	$	60,748
2024	52,280		5,153		57,433
2025	46,492		5,153		51,645
2026	44,000		5,612		49,612
2027	40,069		5,423		45,492
Thereafter	192,361		115,168		307,529
Total lease payments	430,617		141,842		572,459
Less: Amounts representing interest	(101,002)		(89,476)		(190,478)
Total	$	329,615	$	52,366	$	381,981

(1) Includes leases with related parties. See Note 13 — Related Party Transactions for amounts leased from related parties.

At December 31, 2022, the Company has entered into leases for Showrooms and equipment which have not yet commenced with expected lease terms ranging from 3 to 14 years. The aggregate minimum rental payments over the term of the leases of approximately $148.0 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
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 13 — Related Party Transactions for amounts leased from related parties.

Supplemental cash flow information related to leases for the year ended December 31, 2022, is as follows (amounts in thousands):


	Year Ended
	December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	47,722
Operating cash flows for finance leases	4,785
Financing cash flows for finance leases	419
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	77,098
Finance leases	2,018

Leases

The following table summarizes the amounts recognized in our consolidated balance sheets related to leases as of December 31, 2022 (amounts in thousands):


	Consolidated Balance Sheets Classification	December 31, 2022
Assets
Operating lease assets	Operating right-of-use assets	$	252,055
Finance lease assets	Financing right-of-use assets	38,522
Total leased assets		$	290,577

Liabilities
Current operating leases	Current portion of operating lease liabilities	$	39,744
Non-current operating leases	Operating lease liabilities, long-term	289,871
Total operating lease liabilities		329,615

Current finance leases	Current portion of financing lease liabilities	531
Non-current finance leases	Financing lease liabilities, long-term	51,835
Total finance lease liabilities		52,366
Total lease liabilities		$	381,981

The components of lease cost recognized within our consolidated statements of comprehensive income for the year ended December 31, 2022, are as follows (amounts in thousands):


	Consolidated Income Statement Classification	2022
Lease costs:
Operating lease costs	Cost of goods sold	$	34,421
Operating lease costs	Selling, general and administrative expenses	6,930
Finance lease costs
Amortization of right-of-use assets	Selling, general and administrative expenses	2,056
Interest expense on lease liabilities	Interest expense, net	5,027
Variable lease costs(1)	Cost of goods sold	38,276
Short term lease costs	Selling, general and administrative expenses	677
Total lease costs		$	87,387

(1) Includes $0.4 million of month-to-month lease costs.


Weighted Average Remaining Lease Term (In Years)						December 31, 2022
Operating leases						9.29
Finance leases						22.46


Weighted Average Discount Rate	December 31, 2022
Operating leases	5.54	%
Finance leases	9.72	%

Future lease liabilities at December 31, 2022 are as follows (amounts in thousands):


Year Ending December 31,	Operating Lease Liabilities (1)		Finance Lease Liabilities		Total Lease Liabilities
2023	$	55,415	$	5,333	$	60,748
2024	52,280		5,153		57,433
2025	46,492		5,153		51,645
2026	44,000		5,612		49,612
2027	40,069		5,423		45,492
Thereafter	192,361		115,168		307,529
Total lease payments	430,617		141,842		572,459
Less: Amounts representing interest	(101,002)		(89,476)		(190,478)
Total	$	329,615	$	52,366	$	381,981

(1) Includes leases with related parties. See Note 13 — 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
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 13 — Related Party Transactions for amounts leased from related parties.

Supplemental cash flow information related to leases for the year ended December 31, 2022, is as follows (amounts in thousands):


	Year Ended
	December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	47,722
Operating cash flows for finance leases	4,785
Financing cash flows for finance leases	419
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	77,098
Finance leases	2,018

Employee Benefit Plans	12 Months Ended
Employee Benefit Plans	Dec. 31, 2022
Retirement Benefits [Abstract]
Employee Benefit Plans	Employee Benefit PlansThe Company has a defined contribution retirement savings plan covering substantially all employees. The Company may contribute a discretionary matching contribution equal to a percentage that the Company deems advisable. Total costs recorded in selling, general and administrative expenses on the consolidated statements of comprehensive income related to the plan were $2.6 million, $2.2 million and $0.5 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Mezzanine Equity and Stockholders'/Members' Equity (Deficit)	12 Months Ended
	Dec. 31, 2022
Temporary Equity Disclosure [Abstract]
Mezzanine Equity and Stockholders'/Members' Equity (Deficit)	Mezzanine Equity and Stockholders’/Members’ Equity (Deficit) Homeworks Equity Structure Prior to Reorganization In accordance with the change in reporting entity, the Company’s consolidated financial statements were retrospectively adjusted to include Homeworks’ financial results for all periods presented (see Note 1 — Nature of Business). Prior to the Reorganization, Homeworks’ historical equity structure was comprised of 645 voting and 4,158 non-voting shares. The equity of Homeworks includes their investment in LLC, the noncontrolling interest in LLC and the Class B Preferred Units discussed below, which were owned by FS Arhaus and management incentive unit holders. Prior to the Reorganization, Homeworks and Reed held Class A units in LLC while FS Arhaus held Class B Units in LLC. Refer below for information on the LLC equity structure prior to the Reorganization. For the year ended December 31, 2021 cash distributions made were $61.9 million. Arhaus, LLC Equity Structure Prior to Reorganization Prior to the Reorganization, LLC established a multi-class unit structure with its members. Pursuant to LLC’s Third Amended and Restated Limited Liability Company Agreement dated June 26, 2017 (the “2017 LLC Agreement”) and the Arhaus, LLC 2017 Equity Plan (the “2017 Equity Plan”), LLC was authorized to issue up to 20,938,265 Class A Units, 7,488,248 Class B Units, 3,185,435 Class C Units, 285,387 Class D Units, 3,158,501 Class F Units, 3,158,501 Class F-1 Units, 1,250,000 Class A Preferred Units and 1,250,000 Class B Preferred Units. In connection with the issuance of the Prior Credit Facilities discussed in Note 5 — Long-Term Debt, the Class A and Class B unit equity holders made an aggregate $25.0 million capital contribution to the Company in exchange for 1,250,000 Class A Preferred Units and 1,250,000 Class B Preferred Units, respectively (collectively, the “Preferred Units”). The Preferred Units were issued pursuant to the 2017 LLC Agreement and accrued a 16% per annum (compounded annually) preferred return. The Preferred Units had no voting rights and did not participate in profits or losses. Preferred Unit holders were entitled to receive distributions in excess of tax distributions to Class A and B members in proportion to the accrued and unpaid preferred return and unreturned capital contributions. Further, Preferred Unit holders were entitled to receive proceeds upon a capital transaction before other unit holders in proportion to the accrued and unpaid preferred return and unreturned capital contributions. The Company could redeem the Preferred Units at our discretion, however, because the Preferred Unit holders control the board of directors (“Board”) and could force the Company to redeem the Preferred Units they were recorded as mezzanine equity. Upon the retrospective adjustment to include Homeworks, the Class A preferred units were eliminated upon consolidation. On December 29, 2020, the Preferred Units were repaid in full, including the preferred return dividend payment of $8.6 million. In May 2021, the 2017 LLC Agreement and 2017 Equity Plan were amended to authorize the Company to issue up to 967,987 Class G incentive units. Additionally, in accordance with the amendments, the authorized Class F and Class F-1 incentive units that could be issued were reduced to 2,190,514 and 2,190,514, respectively. No changes to the Company’s Class C and D incentive units were made. The Class C, D, F, F-1 and G Units (collectively referred to as the “Incentive Units) were incentive units to be issued to employees, directors, and others pursuant to the terms of the amended 2017 Equity Plan and have no voting rights and do not participate in profits or losses. Only the Class A and Class B Units had voting rights. Distributions were payable to the various unit classes only upon the occurrence of certain capital events, based upon participation thresholds and waterfalls as defined within the amended 2017 LLC Agreement. If Class B Units or Class B Preferred Units remained outstanding on January 6, 2023, the holder of those units, as defined, would have the right to cause a sale of the Company. Income and loss of the Company is allocated proportionately based off of the equity waterfall defined in the 2017 LLC Agreement. Prior to the Reorganization, the Company could make quarterly tax distributions to the Class A and B members pro rata based on the taxable income allocated to such members in an amount equal to the product of each member’s distributive share of the Company’s taxable income relating to each quarter (as estimated by the Board based on the results of the quarter), including any guaranteed payments, and the assumed tax rate. For the years ended December 31, 2021 and 2020, the Company’s tax distributions made to Class A and B members were $7.9 million and $10.9 million, respectively. Prior to the Reorganization, the Company made a pre-IPO payment in the amount of $100.0 million which consisted of a $50.7 million dividend to noncontrolling interests and a $49.3 million distribution to the owners of Homeworks. Amendment and Restatement of Certificate of Incorporation In connection with the Reorganization, the Company’s Certificate of Incorporation was amended and restated to authorize two classes of common stock, Class A common stock and Class B common stock, and to authorize the Company to issue up to 750,000,000 shares of common stock, consisting of 600,000,000 shares of Class A common stock, par value of $0.001 per share, 100,000,000 shares of Class B common stock, par value of $0.001 and 50,000,000 shares of Preferred Stock, par value of $0.001. Holders of Class A common stock are entitled to one vote per share, and holders of Class B common stock are entitled to ten votes per share. Except as otherwise required in the Certificate of Incorporation or by applicable law, the holders of Class A common stock and Class B common stock shall vote together as a single class on all matters. Further, except as otherwise required in the Certificate of Incorporation or by applicable law, the holders of Class A common stock and Class B common stock shall be treated equally, identically and ratable in all respects as to all matters including, dividends, distributions, subdivision or combination and change of control transactions. Initial Public Offering On November 4, 2021, the Company completed its IPO and sold 12,903,226 shares of Class A common stock at an IPO price of $13.00 per share and received proceeds of $151.4 million, net of underwriting discounts and commissions of $10.4 million and offering expenses of $5.9 million. The Company used a portion of the net proceeds to pay the Term Loan exit fee of $64.1 million, as discussed in Note 5 — Long-Term Debt. The remainder of the net proceeds were used for general corporate purposes, including payment of fees and expenses in connection with the IPO and to replenish working capital following the payment of the Pre-IPO dividend to LLC Unit holders. No preferred shares were issued as part of the IPO. 2021 Equity Incentive Plan In connection with the Reorganization, the Company adopted the 2021 Equity Incentive Plan (the “2021 Equity Plan”), which authorized the Company the ability to grant stock options (either incentive or non-qualified), SARs, restricted stock, RSUs, performance shares, PSUs and other stock-based awards with respect to our Class A common stock. Under this plan, the maximum number of Class A common stock that may be granted through awards is 11,205,100 shares. See Note 9 — Equity Based Compensation for further discussion on the awards granted under the 2021 Equity Plan. Other Equity Transactions In December 2021, Reed, a related party, transferred 421,350 shares of Class B common stock, which were automatically converted upon transfer to shares of Class A common stock to certain long-tenured employees of the Company, which was treated as an equity award. The transferred shares of Class A common stock do not have any vesting requirements. As a result of the transfer and awarding of the Class A common stock to employees, the Company recorded $4.6 million of compensation expense at December 31, 2021, within the selling, general and administrative expenses line item of the consolidated statements of comprehensive income. Further, Reed contributed $2.8 million to the Company in relation to the tax withholding obligations of the Company and those long tenured employees. The contribution was recorded as withholding expense within the selling, general and administrative expenses line item of the consolidated statements of comprehensive income. In accordance with the change in reporting entity, the Company’s consolidated financial statements include a deferred compensation liability related to a former employee of Homeworks. At the time of the Reorganization, Reed assumed the deferred compensation liability which resulted in a capital contribution to additional paid-in-capital for $3.9 million at December 31, 2021.

Equity Based Compensation

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Equity Based Compensation

In January 2014, the Arhaus, LLC 2014 Equity Plan was established which allowed for the granting of Class C and D incentive units to employees. In June 2017, the Board adopted the 2017 Equity Plan, which allowed for the granting of Class F/F-1 incentive units to employees and in May 2021, the 2017 LLC Agreement and 2017 Equity Plan were amended to allow for the granting of Class G incentive units.

In May, June and July 2021 (collectively the “2021 Awards”), the Company granted a total of 701,965 Class G incentive units that vest over a five year term. The Class C, D, F and F-1 incentive units vest over three to five years. All holders of the Incentive Units become fully vested in the event of a change in control, death or disability, as long as the holder of the unit is employed by the Company on the date of such event. Further, certain Class G incentive unit holders who are terminated without cause will have their unvested units fully vest upon that event.

The Incentive Units represent interests that share only in proceeds from defined capital transactions above specified participation thresholds. Upon the Incentive Unit holder’s termination of employment, all unvested units are forfeited, and the Company has the right to purchase all vested units at a per unit price equal to the fair market value of a unit determined at the date such right is exercised by an independent appraisal firm to be mutually agreed to by the Company and the unit holder; provided however, all vested and unvested units are forfeited without compensation in the event of termination for cause.

The Company’s valuation of the Class G incentive units granted in May, June and July 2021 were measured using the probability-weighted expected return model (“PWERM”). The PWERM is a scenario-based methodology that estimates the fair value of the Incentive Units awarded 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 Black-Scholes option pricing model and applied a discount for lack of marketability.


			2021 Awards
Term			10 years
Risk-free rate of return			1.50%
Volatility			40.00%
Dividend yield			0.00%

The expected term represents our expected time until a liquidity event, as of the valuation date. The volatility assumption is based on an identified group of comparable public companies over a similar term. The risk-free rate of return is based on the yields of U.S. Treasury securities with maturities similar to the expected term. We used an expected divided yield of zero, as we do not plan to pay cash dividends for the foreseeable future.

The fair values of each class of units have been determined utilizing unobservable inputs, and therefore are Level 3 measurements under the fair value hierarchy.

Additionally, a probability distribution of possible future equity values is completed and incorporated into the calculation of respective unit fair values. This is necessary as upon the occurrence of a liquidity event in the future, the proceeds thereof will be allocated in accordance with the distribution waterfall defined within the amended 2017 LLC Agreement.

In connection with the Reorganization, the Incentive Unit holders contributed their units of LLC to Arhaus, Inc. in exchange for shares of Class A or Class B common stock for their vested Incentive Units and Class A or Class B restricted stock for their unvested Incentive Units (collectively referred to as the "Exchanged Stock"). The Exchanged Stock's fair value was equal to the respective Incentive Units’ fair market value prior to the Reorganization, which was in accordance with the distribution waterfall defined in the 2017 LLC Agreement. The vesting requirements for the exchanged Class A and Class B restricted stock (collectively the "Restricted Stock") did not change from the original Incentive Unit terms. The exchange of the Exchanged Stock was accounted for as a Type I (probable-to-probable) modification in accordance with ASC 718, Stock Based Compensation, in which no incremental fair value was determined to have been given to the Incentive Unit holders.

The following tables summarize the activity of the Company’s Restricted Stock for the year ended December 31, 2022 and their equity based compensation expense for the years ended December 31, 2022, 2021 and 2020, respectively (amounts in thousands):


	Restricted Stock
	Class A			Class B
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Unvested at 12/31/2021	2,520,229	5.24		596,598	0.10
Granted	—	—		—	—
Forfeited	—	—		—	—
Vested	(1,009,960)	$	2.71	(596,598)	$	0.10
Unvested at 12/31/2022	1,510,269	$	6.94	—	$	—


	2022		2021		2020
Equity based compensation expense - Restricted Stock(1)	$	2,756	$	1,832	$	403

(1) Total unrecognized compensation cost to be recognized in future periods is $8.8 million at December 31, 2022, and will be recognized over a weighted average period of 3.4 years. Equity based compensation is recorded within selling, general and administrative expenses on our consolidated statements of comprehensive income.

The total fair value of units vested during the year ended December 31, 2022 was $11.8 million. The total fair value of units vested was minimal for the years ended December 31, 2021, and 2020.

On August 2, 2022, the Compensation Committee (the "Committee") of the Board of Directors of the Company approved grants of PSUs and RSUs under the 2021 Equity Plan to certain of the Company’s named executive officers and other key employees (“Award Recipient”). The Committee also approved RSU awards to certain members of the Board of Directors.

Each RSU represents a contingent right to receive one share of the Company’s Class A common stock upon vesting. The RSUs granted to Award Recipients vest in one-third increments on each of the first, second and third anniversary of the date of grant, provided that the Award Recipient continues to serve the Company through the applicable vesting date (“Continuous Service”). If the Award Recipient’s Continuous Service terminates for any reason other than death, disability or in connection with a change in control (as such terms are defined in the 2021 Equity Plan), unless the Committee determines otherwise, all RSUs that are unvested at the time of such termination shall be forfeited and cancelled immediately without consideration. The RSUs issued to certain members of the Board of Directors will vest on the one-year anniversary of the grant date.

Each PSU represents a contingent right to receive one share of the Company’s Class A common stock upon vesting. The number of PSUs earned will be based on the Company’s financial performance as measured against pre-established target goals for cumulative demand revenue and cumulative adjusted EBITDA (the “Performance Goals”) over the period beginning on January 1, 2022 and ending on December 31, 2024 (the “Performance Period”). PSUs will vest as of the end of the Performance Period (December 31, 2024) subject to the Award Recipient’s Continuous Service, but will not settle and payout until the number of PSUs earned is determined by the Committee. The Award Recipient may earn between 0% and 200% of the PSU target award based on the Company’s achievement of the Performance Goals.

The following tables summarizes the activity of the Company’s PSU and RSU awards for the year ended December 31, 2022, and their equity based compensation expense for the years ended December 31, 2022, 2021 and 2020, respectively (amounts in thousands):


	PSU Awards			RSU Awards
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2021	—	$	—	—	$	—
Granted	543,875	5.94		745,911	5.84
Forfeited	(30,750)	5.75		(14,250)	5.75
Vested	—	—		—	—
Unvested at December 31, 2022	513,125	$	5.95	731,661	$	5.84


	2022		2021		2020
Equity based compensation expense - PSUs(1)	$	774	$	—	$	—
Equity based compensation expense - RSUs(2)	$	758	$	—	$	—

(1) Total unrecognized equity based compensation for the PSUs to be recognized in future periods is $4.0 million at December 31, 2022, and will be recognized over a weighted average period of 2.0 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our consolidated statements of comprehensive income.

(2) Total unrecognized equity based compensation for the RSUs to be recognized in future periods is $3.5 million at December 31, 2022, and will be recognized over a weighted average period of 2.4 years. Equity based compensation expense is recorded within selling, general and administrative expenses on our consolidated statements of comprehensive income.

Segment Reporting

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segment Reporting

Our chief operating decision maker (“CODM”) is our 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, lighting, textiles, décor, and outdoor. The assortment of merchandise can be purchased through our Retail and eCommerce sales channels.

The majority of our 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 revenue by merchandise sales channel for the years ended December 31, 2022, 2021 and 2020 (amounts in thousands):


	2022		2021		2020
Retail	$	1,022,347	$	652,790	$	417,426
eCommerce	206,581		144,132		90,003
Total Net revenue	$	1,228,928	$	796,922	$	507,429

- 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
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Net and Comprehensive Income per Share

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Net and Comprehensive Income per Share

Net and comprehensive income per share

As a result of the Reorganization and IPO, existing Class A and Class B Unitholders of LLC were issued Class A and Class B common stock in the Company, in accordance with the distribution waterfall defined in the Company’s 2017 LLC Agreement. 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 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 years ended December 31, 2022, 2021 and 2020, was calculated by adjusting net and comprehensive income attributable to Arhaus, Inc. for preferred dividends, net and comprehensive income attributable to noncontrolling interest and dividing by basic and diluted weighted-average number of common shares outstanding. Management Incentive Unitholders and Preferred Unitholders did not participate in the earnings or losses of the Company as of December 31, 2021 and 2020 and therefore are not participating securities. As such, they were not included within the calculation of basic or diluted earnings per share as of December 31, 2021 and 2020.

Basic and diluted net and comprehensive income per share for the years ended December 31, 2022, 2021 and 2020, is as follows (amounts in thousands except unit and per unit data):


	2022		2021		2020
Numerator
Net and comprehensive income	$	136,634	$	36,932	$	17,040
Less: Preferred unit dividend unpaid	—		—		2,847
Less: Net and comprehensive income attributable to noncontrolling interest	—		15,815		10,958
Net and comprehensive income attributable to Arhaus, Inc.	$	136,634	$	21,117	$	3,235

Denominator—Weighted Average Shares Outstanding
Weighted-average number of common shares outstanding, basic	138,094,180		116,013,492		112,058,742
Effect of dilutive restricted stock (1)	1,511,370		3,507,950		—
Weighted-average number of common shares outstanding, diluted	139,605,550		119,521,442		112,058,742

Net and Comprehensive Income Per Share
Net and comprehensive income per share, basic	$	0.99	$	0.18	$	0.03
Net and comprehensive income per share, diluted	$	0.98	$	0.18	$	0.03

(1) During the years ended December 31, 2022 and 2021, 583,118 and 99,405 shares of unvested restricted stock and RSUs were excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive.

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and ContingenciesThe Company is involved in litigation and claims that are incidental to its business. Although the outcome of these matters cannot be determined at the present time, management of the Company believes that the ultimate resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.From time to time, the Company has received inquiries from a number of state and local taxing agencies with respect to the remittance of sales, use, telecommunications, excise, and income taxes. Several jurisdictions are currently conducting tax audits of the Company's records. The Company collects, or has accrued for, taxes that it believes are required to be remitted. The amounts that have been remitted have historically been within the accruals established by the Company. The Company adjusts its accrual when facts relating to specific exposures warrant such adjustment. As of December 31, 2022 and 2021, we recorded liabilities of $0.4 million and $1.2 million, respectively, in accrued other expenses on the consolidated balance sheets for non-income tax matters that were probable and reasonably estimable.

Related Party Transactions	12 Months Ended
Related Party Transactions	Dec. 31, 2022
Related Party Transactions [Abstract]
Related Party Transactions	Related Party Transactions The Company has beneficial owners and affiliated entities under the related party definition in ASC 850, “Related Party Disclosures.” Related parties include those defined in the Company’s proxy statement which has been incorporated by reference herein. 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 $1.4 million, $1.4 million and $1.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. In July 2010, the Company entered into a lease agreement with Brooklyn Arhaus, a company of which our CEO and Bill 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 $0.3 million, $0.3 million and $0.2 million for the years ended December 31, 2022, 2021 and 2020, 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 lease 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 $5.9 million and $5.9 million for the years ended December 31, 2021 and 2020, respectively. In March 2021, the Company entered into a lease agreement with Premier Conover, LLC, a company of which our CEO indirectly owns 40%, for a distribution center and manufacturing building, for which construction was completed in the fourth quarter of 2021. The base lease term is for 12 years, with a 10-year renewal option and two additional 5-year renewal options at the higher of the minimum base rent or the fair market rent at the time of renewal execution. The monthly rental payments range from $0.2 million to $0.3 million during the 12-year base lease term and from $0.4 million to $0.5 million during the 10-year renewal period. Rent expense was $3.7 million and $0.2 million for the years ended December 31, 2022 and 2021, respectively. Other transactions In accordance with the change in reporting entity, the Company’s consolidated statements of cash flows include the payment and receipt of a related-party note receivable between Homeworks and our CEO for $1.0 million for the year ended December 31, 2021. The receivable and the full principal on the note receivable, including accrued interest, were paid back to the Company by the CEO in May 2021. In accordance with the Reorganization, the Company has accounts payable due to noncontrolling interests of LLC for state and federal income tax refunds filed for tax periods prior to the Reorganization. The accounts payable due to related parties were $1.8 million and $2.9 million at December 31, 2022 and 2021, respectively, and are included within accounts payable on the consolidated balance sheets. For additional discussion of the Company’s related party transactions see Notes 1 — Nature of Business, 5 — Long-Term Debt and 8 — Mezzanine Equity and Stockholders’/Members’ Equity (Deficit).

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Tax Disclosure

Income Taxes

Components of income before provision for (benefit from) income taxes include (in thousands):


	2022		2021		2020
Domestic	$	182,578	$	26,788	$	17,823
Foreign	—		—		—
Income (loss) before taxes	$	182,578	$	26,788	$	17,823

The components of the provision for (benefit from) income taxes include (in thousands):


	2022		2021		2020
Current
Federal	$	25,550	$	112	$	—
State	10,624		218		783
Total current expense	36,174		330		783
Deferred
Federal (1)	8,498		(7,754)		—
State (1)	1,272		(2,720)		—
Total deferred expense (benefit)	9,770		(10,474)		—
Income tax expense (benefit)	$	45,944	$	(10,144)	$	783

(1) The 2021 deferred tax benefit reflects the recognition of deferred taxes as a result of the Reorganization. After 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.

The difference between income taxes expected at the U.S. federal statutory income tax rate of 21% and the provision (benefit) for income taxes is summarized as follows (in thousands):


	2022		2021		2020
Federal statutory income tax rate	$	38,341	$	5,625	$	3,743
State taxes	9,871		101		783
Nontaxable partnership (1)	—		(6,999)		(3,743)
FS Arhaus and Homeworks investment in LLC (1)	—		(9,137)		—
Federal return-to-provision adjustments (2)	(2,577)		—		—
Other	309		266		—
Provision (benefit) for income taxes	$	45,944	$	(10,144)	$	783

(1) Prior to the Reorganization, the Company was not subject to corporate income taxes. After the Reorganization, a deferred tax benefit related to Homeworks investment in the Arhaus, LLC partnership was recognized through income tax expense because Homeworks lost its nontaxable status through the Reorganization. The deferred tax benefit related to FS Arhaus, Inc.’s investment in Arhaus, LLC was recognized as a capital contribution to additional paid-in-capital for $17.4 million.

(2) The tax investment amount changed as a result of the LLC’s federal tax filing in 2022, therefore the Company recorded a return-to-provision adjustment of $1.1 million to additional paid-in capital for the year ending December 31, 2022.

Components of our deferred tax assets and liabilities include (in thousands):


	2022		2021		2020
Deferred tax assets
Interest expense carryforwards	$	—	$	7,465	$	—
Net operating loss carryforwards	22		1,768		—
FS Arhaus investment in LLC	11,431		13,034		—
Homeworks investment in LLC	5,388		5,417		—
Total deferred tax assets	16,841		27,684		—
Less: valuation allowance	—		—		—
Total deferred tax assets, net of valuation allowance	$	16,841	$	27,684	$	—

As of December 31, 2022, we have state NOL carryforwards of less than $1.0 million that begin to expire in 2041.

Based on available evidence (namely, a three-year cumulative income position), management believes it is more-likely-than-not that the net U.S. and state deferred tax assets will be fully realizable. We have not recorded a valuation allowance against deferred tax assets.

No unrecognized tax benefits have been recognized as of December 31, 2022 and 2021. We recognize accrued interest and penalties related to unrecognized tax benefits within the provision for income taxes in the consolidated statements of operations. There were no amounts of interest and penalties accrued as of December 31, 2022 and 2021.

We file income tax returns in the U.S. and various state and local jurisdictions. The tax years after 2018 remain open to examination by the state taxing jurisdictions in which the Company is subject to tax. As of December 31, 2022, the Company was not under examination by the Internal Revenue Service or any state tax jurisdiction.

The Inflation Reduction Act was enacted on August 16, 2022 and includes a new 15% minimum tax on “adjusted financial statement income” beginning with the Company’s fiscal year 2023, a new 1% excise tax on stock repurchases after December 31, 2022, and several tax incentives to promote clean energy. While these tax law changes have no immediate effect and are not expected to have a material adverse effect on our results of operations going forward, we will continue to evaluate their impact as further information becomes available.

- 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
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+ Details

Basis of Presentation and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Basis of Presentation

Use of Estimates

Cash and Cash Equivalents

Restricted Cash Equivalents

Accounts Receivable

Revenue Recognition

$8.3 million and $5.6 million at December 31, 2022 and 2021, respectively, is recorded in the accrued other expenses line item on the consolidated balance sheets.

Merchandise Inventory

Advertising Costs

Lease Accounting

Lease Classification

Certain of our real estate and equipment leases are classified as finance leases. Lease characteristics that we evaluate to

determine lease classification include, but are not limited to, the lease term, incremental borrowing rate

Lease Payments

Incremental Borrowing Rate

Property, Furniture and Equipment


Asset class/ type						Useful Life-Years
Leased property under capital lease						Term of the underlying lease
Leasehold improvements						Lesser of 10 years or lease term
Landlord improvements						Lesser of 10 years or lease term
Furniture and fixtures						3 to 5 years
Computers and equipment						3 to 10 years
Vehicles						5 to 10 years

Capitalized software costs relate to third-party developed software and are amortized on a straight-line basis over the estimated useful life of the software, which generally is three years.

Property, Furniture and Equipment, Impairment

Goodwill

•Deterioration in general economic conditions, limitations on accessing capital, or other developments in equity and credit markets;

•Cost factors that have a negative effect on earnings and cash flows;

•Overall financial performance;

•Changes in management, key personnel, strategy, or clients; and

•A sustained decrease in share price in either absolute terms or relative to peers.

Long-Lived Assets

•A significant decrease in the market price of a long-lived asset or asset group;

•A significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in its physical condition;

•A significant adverse change in legal factors or in the business climate that could affect the value of a long-lived asset or asset group, including an adverse action or assessment by a regulator;

•an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset or asset group;

•A current expectation that, more likely than not, a long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life.

Based on management’s analysis there were no events or circumstances identified during 2022 or 2021 indicating a potential impairment of any long-lived assets.

Deferred Rent and Lease Incentives

Merchandise Warranties

Income Taxes

Reorganization, Arhaus, LLC’s taxable income flows through to FS Arhaus and Homeworks who are subject to U.S. federal and state corporate income taxes.

Cost of Goods Sold

Selling, General and Administrative Expenses

Loyalty Reward Program

Self Insurance Reserve

Self-Insurance

Fair Value of Financial Instruments

Fair Values of Financial Instruments

Level 1 Unadjusted quoted prices in active markets for identical, unrestricted assets and liabilities that the reporting entity has the ability to access at the measurement date.

Deferred Financing Fees

Equity Based Compensation

Net and comprehensive income (loss) per share

Net and comprehensive income per share

New Accounting Standards or Updates Adopted and Not Yet Adopted

New Accounting Standard or Updates

•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.

Basis of Presentation and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2022

Accounting Policies [Abstract]

Property, Furniture, and Equipment, Useful Life


Asset class/ type						Useful Life-Years
Leased property under capital lease						Term of the underlying lease
Leasehold improvements						Lesser of 10 years or lease term
Landlord improvements						Lesser of 10 years or lease term
Furniture and fixtures						3 to 5 years
Computers and equipment						3 to 10 years
Vehicles						5 to 10 years

Merchandise Warranty Liability

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


	2022		2021
Balance as of beginning of period	$	4,724	$	3,326
Accruals during the period	11,687		7,903
Settlements during the period	(10,036)		(6,505)
Balance as of end of the period (1)	$	6,375	$	4,724

(1) $3.7 million and $2.7 million were recorded in accrued other expenses at December 31, 2022 and 2021, respectively. The remainder is recorded in other long-term liabilities.

Property, Furniture, and Equipment (Tables)

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, furniture and equipment, net consists of the following at December 31, 2022 and 2021 (amounts in thousands):


	2022		2021
Leased property under capital lease	$	—	$	48,303
Leasehold improvements	50,776		42,418
Landlord improvements	150,545		137,106
Furniture and fixtures	6,542		5,411
Computer and equipment	49,091		25,124
Vehicles	9,963		9,229
Build-to-suit properties	—		31,017
Construction in process	8,426		10,457
	275,343		309,065
Less: Accumulated depreciation	(52,514)		(54,054)
Less: Landlord improvement accumulated depreciation	(87,763)		(75,380)
Property, furniture and equipment, net	$	135,066	$	179,631

Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Schedule of Fair Value Assumptions for Long-Term Debt

The key assumptions used within the valuation as December 31, 2020 were as follows:


Term			10 years
Risk-free rate of return			0.90%
Volatility			40.00%
Dividend yield			0.00%

Leases (Tables)

12 Months Ended

Dec. 31, 2022

Leases [Abstract]

Liability for Operating and Finance Leases

The following table summarizes the amounts recognized in our consolidated balance sheets related to leases as of December 31, 2022 (amounts in thousands):


	Consolidated Balance Sheets Classification	December 31, 2022
Assets
Operating lease assets	Operating right-of-use assets	$	252,055
Finance lease assets	Financing right-of-use assets	38,522
Total leased assets		$	290,577

Liabilities
Current operating leases	Current portion of operating lease liabilities	$	39,744
Non-current operating leases	Operating lease liabilities, long-term	289,871
Total operating lease liabilities		329,615

Current finance leases	Current portion of financing lease liabilities	531
Non-current finance leases	Financing lease liabilities, long-term	51,835
Total finance lease liabilities		52,366
Total lease liabilities		$	381,981

Schedule of Lease Costs

The components of lease cost recognized within our consolidated statements of comprehensive income for the year ended December 31, 2022, are as follows (amounts in thousands):


	Consolidated Income Statement Classification	2022
Lease costs:
Operating lease costs	Cost of goods sold	$	34,421
Operating lease costs	Selling, general and administrative expenses	6,930
Finance lease costs
Amortization of right-of-use assets	Selling, general and administrative expenses	2,056
Interest expense on lease liabilities	Interest expense, net	5,027
Variable lease costs(1)	Cost of goods sold	38,276
Short term lease costs	Selling, general and administrative expenses	677
Total lease costs		$	87,387

(1) Includes $0.4 million of month-to-month lease costs.

The table below summarizes the weighted average remaining lease terms as of December 31, 2022.


Weighted Average Remaining Lease Term (In Years)						December 31, 2022
Operating leases						9.29
Finance leases						22.46

The table below summarizes the weighted average discount rate used to measure our lease liabilities as of December 31, 2022.


Weighted Average Discount Rate	December 31, 2022
Operating leases	5.54	%
Finance leases	9.72	%

Schedule of Future Minimum Lease Payments Under Capital Leases

Future lease liabilities at December 31, 2022 are as follows (amounts in thousands):


Year Ending December 31,	Operating Lease Liabilities (1)		Finance Lease Liabilities		Total Lease Liabilities
2023	$	55,415	$	5,333	$	60,748
2024	52,280		5,153		57,433
2025	46,492		5,153		51,645
2026	44,000		5,612		49,612
2027	40,069		5,423		45,492
Thereafter	192,361		115,168		307,529
Total lease payments	430,617		141,842		572,459
Less: Amounts representing interest	(101,002)		(89,476)		(190,478)
Total	$	329,615	$	52,366	$	381,981

(1) Includes leases with related parties. See Note 13 — Related Party Transactions for amounts leased from related parties.

Schedule of Future Minimum Rental Payments Under Operating 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
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 13 — Related Party Transactions for amounts leased from related parties.

Schedule of Cash Flow, Supplemental Disclosures

Supplemental cash flow information related to leases for the year ended December 31, 2022, is as follows (amounts in thousands):


	Year Ended
	December 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	47,722
Operating cash flows for finance leases	4,785
Financing cash flows for finance leases	419
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	77,098
Finance leases	2,018

Equity Based Compensation (Tables)

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

Fair Value Assumptions


			2021 Awards
Term			10 years
Risk-free rate of return			1.50%
Volatility			40.00%
Dividend yield			0.00%

Incentive Unit Activity


	Restricted Stock
	Class A			Class B
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Unvested at 12/31/2021	2,520,229	5.24		596,598	0.10
Granted	—	—		—	—
Forfeited	—	—		—	—
Vested	(1,009,960)	$	2.71	(596,598)	$	0.10
Unvested at 12/31/2022	1,510,269	$	6.94	—	$	—


	2022		2021		2020
Equity based compensation expense - Restricted Stock(1)	$	2,756	$	1,832	$	403

Share-Based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity


	PSU Awards			RSU Awards
	Shares	Weighted Average Grant Date Fair Value		Shares	Weighted Average Grant Date Fair Value
Unvested at December 31, 2021	—	$	—	—	$	—
Granted	543,875	5.94		745,911	5.84
Forfeited	(30,750)	5.75		(14,250)	5.75
Vested	—	—		—	—
Unvested at December 31, 2022	513,125	$	5.95	731,661	$	5.84


	2022		2021		2020
Equity based compensation expense - PSUs(1)	$	774	$	—	$	—
Equity based compensation expense - RSUs(2)	$	758	$	—	$	—

Segment Reporting (Tables)

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Net Revenue by Segment

The following table shows revenue by merchandise sales channel for the years ended December 31, 2022, 2021 and 2020 (amounts in thousands):


	2022		2021		2020
Retail	$	1,022,347	$	652,790	$	417,426
eCommerce	206,581		144,132		90,003
Total Net revenue	$	1,228,928	$	796,922	$	507,429

Net and Comprehensive Income per Share (Tables)

12 Months Ended

Dec. 31, 2022

Earnings Per Share [Abstract]

Calculation of Basic and Diluted Earnings Per Share

Basic and diluted net and comprehensive income per share for the years ended December 31, 2022, 2021 and 2020, is as follows (amounts in thousands except unit and per unit data):


	2022		2021		2020
Numerator
Net and comprehensive income	$	136,634	$	36,932	$	17,040
Less: Preferred unit dividend unpaid	—		—		2,847
Less: Net and comprehensive income attributable to noncontrolling interest	—		15,815		10,958
Net and comprehensive income attributable to Arhaus, Inc.	$	136,634	$	21,117	$	3,235

Denominator—Weighted Average Shares Outstanding
Weighted-average number of common shares outstanding, basic	138,094,180		116,013,492		112,058,742
Effect of dilutive restricted stock (1)	1,511,370		3,507,950		—
Weighted-average number of common shares outstanding, diluted	139,605,550		119,521,442		112,058,742

Net and Comprehensive Income Per Share
Net and comprehensive income per share, basic	$	0.99	$	0.18	$	0.03
Net and comprehensive income per share, diluted	$	0.98	$	0.18	$	0.03

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Income (Loss) Before Provision for (Benefit from) Income Taxes

Components of income before provision for (benefit from) income taxes include (in thousands):


	2022		2021		2020
Domestic	$	182,578	$	26,788	$	17,823
Foreign	—		—		—
Income (loss) before taxes	$	182,578	$	26,788	$	17,823

Schedule of Components of the Provision for (Benefit from) Income Taxes

The components of the provision for (benefit from) income taxes include (in thousands):


	2022		2021		2020
Current
Federal	$	25,550	$	112	$	—
State	10,624		218		783
Total current expense	36,174		330		783
Deferred
Federal (1)	8,498		(7,754)		—
State (1)	1,272		(2,720)		—
Total deferred expense (benefit)	9,770		(10,474)		—
Income tax expense (benefit)	$	45,944	$	(10,144)	$	783

Schedule of Effective Income Tax Rate Reconciliation

The difference between income taxes expected at the U.S. federal statutory income tax rate of 21% and the provision (benefit) for income taxes is summarized as follows (in thousands):


	2022		2021		2020
Federal statutory income tax rate	$	38,341	$	5,625	$	3,743
State taxes	9,871		101		783
Nontaxable partnership (1)	—		(6,999)		(3,743)
FS Arhaus and Homeworks investment in LLC (1)	—		(9,137)		—
Federal return-to-provision adjustments (2)	(2,577)		—		—
Other	309		266		—
Provision (benefit) for income taxes	$	45,944	$	(10,144)	$	783

Schedule of Deferred Tax Assets and Liabilities

Components of our deferred tax assets and liabilities include (in thousands):


	2022		2021		2020
Deferred tax assets
Interest expense carryforwards	$	—	$	7,465	$	—
Net operating loss carryforwards	22		1,768		—
FS Arhaus investment in LLC	11,431		13,034		—
Homeworks investment in LLC	5,388		5,417		—
Total deferred tax assets	16,841		27,684		—
Less: valuation allowance	—		—		—
Total deferred tax assets, net of valuation allowance	$	16,841	$	27,684	$	—

Nature of Business (Details) $ / shares in Units, $ in Thousands			10 Months Ended	12 Months Ended
	Nov. 08, 2021 $ / shares shares	Nov. 04, 2021 USD ($) $ / shares shares	Nov. 03, 2021 USD ($)	Dec. 31, 2022 USD ($) store $ / shares shares	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Nature of Business [Line Items]
Number of showrooms \| store				81
Proceeds from sale of stock under IPO \| $				$ 0	$ 157,258	$ 0
Stock issuance costs \| $				0	5,907	$ 0
Payments of pre-IPO dividend to noncontrolling interests \| $			$ 100,000
Cash and cash equivalents \| $				$ 145,181	$ 123,777
Common stock , shares authorized (in shares)	750,000,000
Preferred stock, shares authorized (in shares)	50,000,000
Restricted Stock
Nature of Business [Line Items]
Stock issued in Reorganization (in shares)	127,159,991
Class A
Nature of Business [Line Items]
Common stock , shares authorized (in shares)	600,000,000			600,000,000
Common stock, par value (in dollars per share) \| $ / shares				$ 0.001
Stock issued in Reorganization (in shares)	39,623,041
Class A \| Restricted Stock
Nature of Business [Line Items]
Stock issued in Reorganization (in shares)	2,520,229
Class A \| IPO
Nature of Business [Line Items]
Sale of stock, shares sold (in shares)		12,903,226
Sale of stock, price per share (in dollars per share) \| $ / shares		$ 13.00
Proceeds from sale of stock under IPO \| $		$ 151,400
Common stock, discount on shares \| $		10,400
Stock issuance costs \| $		$ 5,900
Class B
Nature of Business [Line Items]
Common stock , shares authorized (in shares)	100,000,000			100,000,000
Common stock, par value (in dollars per share) \| $ / shares	$ 0.001			$ 0.001
Stock issued in Reorganization (in shares)	87,536,950
Class B \| Restricted Stock
Nature of Business [Line Items]
Stock issued in Reorganization (in shares)	596,598
Preferred Stock
Nature of Business [Line Items]
Common stock, par value (in dollars per share) \| $ / shares	$ 0.001

Basis of Presentation and Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2022 USD ($) store	Dec. 31, 2022 USD ($)	Dec. 31, 2022 USD ($) segment	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Jan. 01, 2022 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cash and cash equivalents	$ 145,181	$ 145,181	$ 145,181	$ 145,181	$ 145,181	$ 123,777
Interest income		1,900
Accounts receivable, net	1,734	1,734	1,734	1,734	1,734	228
Allowance for doubtful accounts	700	700	700	700	700	200
Allowance for sales returns	8,300	8,300	8,300	$ 8,300	8,300	5,600
Client deposits, percentage collected (at least)				50.00%
Merchandise inventory reserve	(5,700)	(5,700)	(5,700)	$ (5,700)	(5,700)	(4,200)
Prepaid capital costs	16,100	16,100	16,100	16,100	16,100	11,500
Advertising costs		38,700				35,900	$ 24,400
Depreciation and amortization		24,901				23,922	16,957
Unrecognized tax benefits	0	0	0	0	0	0
Unrecognized tax benefits, penalties and interest expense		0				0	$ 0
Other accrued expenses, loyalty program	1,500	1,500	1,500	1,500	1,500	1,300
Self insurance liability	1,000	1,000	1,000	1,000	1,000	900
Workers' compensation liability	500	500	500	500	500	200
Operating right-of-use assets	252,055	252,055	252,055	252,055	252,055	$ 0
Total operating lease liabilities	329,615	329,615	$ 329,615	$ 329,615	$ 329,615
Construction costs								$ 31,000
Number of operating segments (in segments)			1		1
Number of reporting units \| store			1
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
Vendor 1 \| Accounts Payable \| Product Concentration Risk
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Concentration risk (percent)				13.00%		18.00%	25.00%
Other Accrued Expenses
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Other accrued expenses, gift cards	$ (1,000)	(1,000)	$ (1,000)	$ (1,000)	$ (1,000)	$ (900)
Minimum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Merchandise warranty, term	3 years
Minimum \| Software and Software Development Costs
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Estimated useful life	3 years
Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Merchandise warranty, term	10 years
In-Transit from Credit Card Companies
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cash and cash equivalents	$ 13,000	$ 13,000	$ 13,000	$ 13,000	$ 13,000	$ 9,100

Basis of Presentation and Summary of Significant Accounting Policies - Property, Furniture, and Equipment, Useful Life (Details)	12 Months Ended
	Dec. 31, 2022
Maximum \| Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Maximum \| Landlord improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Maximum \| Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Maximum \| Computer and equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Maximum \| Vehicles
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Minimum \| Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	3 years
Minimum \| Computer and equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	3 years
Minimum \| Vehicles
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	5 years

Basis of Presentation and Summary of Significant Accounting Policies - Merchandise Warranty Liability (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance as of beginning of period	$ 4,724	$ 3,326
Accruals during the period	11,687	7,903
Settlements during the period	(10,036)	(6,505)
Balance as of the end of the period	6,375	4,724
Accrued other expenses	$ (3,700)	$ 2,700

Property, Furniture, and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property, furniture and equipment, gross	$ 275,343	$ 309,065
Less: Accumulated depreciation	(52,514)	(54,054)
Less: Landlord improvement accumulated depreciation	(87,763)	(75,380)
Property, furniture and equipment, net	135,066	179,631
Leased property under capital lease
Property, Plant and Equipment [Line Items]
Property, furniture and equipment, gross	0	48,303
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, furniture and equipment, gross	50,776	42,418
Landlord improvements
Property, Plant and Equipment [Line Items]
Property, furniture and equipment, gross	150,545	137,106
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, furniture and equipment, gross	6,542	5,411
Computer and equipment
Property, Plant and Equipment [Line Items]
Property, furniture and equipment, gross	49,091	25,124
Vehicles
Property, Plant and Equipment [Line Items]
Property, furniture and equipment, gross	9,963	9,229
Build-to-suit properties
Property, Plant and Equipment [Line Items]
Property, furniture and equipment, gross	0	31,017
Construction in process
Property, Plant and Equipment [Line Items]
Property, furniture and equipment, gross	$ 8,426	$ 10,457

Goodwill - Narrative (Details)	12 Months Ended
Goodwill - Narrative (Details)	Dec. 31, 2022 segment
Goodwill and Intangible Assets Disclosure [Abstract]
Number of reportable segments (in segments)	1

Long-Term Debt - Narrative (Details) - USD ($)						1 Months Ended	12 Months Ended
Long-Term Debt - Narrative (Details) - USD ($)	Dec. 09, 2022	Dec. 31, 2021	Nov. 04, 2021	Dec. 31, 2020	Jun. 24, 2020	Dec. 31, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Nov. 30, 2021	Nov. 08, 2021	Dec. 28, 2020	Jun. 25, 2020
Debt Instrument [Line Items]
Unamortized financing costs													$ 700,000
Derivative expense associated with Term Loan exit fee							$ 0	$ 44,544,000	$ 17,928,000
Loss on extinguishment of debt							0	(1,450,000)	0
2021 Credit Facility
Debt Instrument [Line Items]
Amortization of loan costs							100,000
Credit facility increase	$ 25,000,000
Loan Payable \| Term Loan
Debt Instrument [Line Items]
Credit facility, face amount					$ 40,000,000
Amortization of loan costs									600,000
Stated interest rate					16.00%
Loan prepayment (not less than)					50.00%
Loan prepayment premium					1.00%
Loan, exit fee, face amount														$ 3,000,000
Loan, exit fee clause, percentage of total equity														4.00%
Exit fee											$ 64,100,000
Derivative expense associated with Term Loan exit fee								44,500,000	17,900,000
Loan Payable \| Term Loan \| Cash
Debt Instrument [Line Items]
Stated interest rate					12.00%
Loan Payable \| Term Loan \| Paid In Kind
Debt Instrument [Line Items]
Stated interest rate					4.00%
Promissory Note \| Homeworks
Debt Instrument [Line Items]
Interest expense, debt									400,000
Revolving Credit Facility \| 2021 Credit Facility
Debt Instrument [Line Items]
Credit facility, face amount	$ 75,000,000											$ 50,000,000
Credit facility, basis spread on variable rate		1.75%				1.50%
Loan costs, net		$ 300,000				$ 400,000	$ 400,000	300,000
Revolving Credit Facility \| Credit Agreement \| Credit Agreement - Revolver
Debt Instrument [Line Items]
Credit facility, face amount														$ 30,000,000
Credit facility, basis spread on variable rate				5.50%
Credit facility, unused capacity, non-use fee							0.50%
Loan costs, net						$ 1,500,000	$ 1,500,000
Amortization of loan costs								$ 400,000	200,000
Write off of unamortized loan costs			$ 800,000
Credit facility, early termination fee			600,000
Loss on extinguishment of debt			$ 1,400,000
Revolving Credit Facility \| Credit Agreement \| Credit Agreement - Prior Revolver
Debt Instrument [Line Items]
Credit facility, unused capacity, non-use fee					0.50%
Loan costs, net														$ 600,000
Amortization of loan costs									$ 200,000
Revolving Credit Facility \| Credit Agreement \| Credit Agreement - Prior Revolver \| Fed Funds Rate
Debt Instrument [Line Items]
Credit facility, basis spread on variable rate					0.50%
Revolving Credit Facility \| Credit Agreement \| Credit Agreement - Prior Revolver \| LIBOR
Debt Instrument [Line Items]
Credit facility, basis spread on variable rate					1.00%					6.25%
Revolving Credit Facility \| Credit Agreement \| Credit Agreement - Prior Revolver \| Base Rate
Debt Instrument [Line Items]
Credit facility, basis spread on variable rate					4.00%
Revolving Credit Facility \| Letter of Credit \| 2021 Credit Facility
Debt Instrument [Line Items]
Credit facility, face amount												10,000,000
Revolving Credit Facility \| Swingline Loan \| 2021 Credit Facility
Debt Instrument [Line Items]
Credit facility, face amount												$ 5,000,000

Long-Term Debt - Fair Value Assumptions (Details) - Level 3 - Discounted Cash Flow	Dec. 31, 2020
Term
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, measurement input	10
Risk-free rate of return
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, measurement input	0.0090
Volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, measurement input	0.4000
Dividend yield
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability, measurement input	0.0000

Leases - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
Leases - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2022	Jan. 01, 2022
Operating Leased Assets [Line Items]
Rent expense	$ 66,500	$ 58,600
Percentage rent expense	6,100	1,000
Deferred rent and lease incentives	63,037		$ 2,272
Aggregate minimum rental payments, lease not yet commenced			$ 148,000
Construction costs				$ 31,000
Minimum
Operating Leased Assets [Line Items]
Term of contract			3 years
Maximum
Operating Leased Assets [Line Items]
Term of contract			14 years
Leasehold improvements
Operating Leased Assets [Line Items]
Amortization	$ 13,500	$ 10,400

Leases - Liability for Operating and Finance Leases (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Leases [Abstract]
Operating right-of-use assets	$ 252,055	$ 0
Financing right-of-use assets	38,522	0
Total leased assets	290,577
Current portion of operating lease liabilities	39,744	0
Operating lease liabilities, long-term	289,871	0
Total operating lease liabilities	329,615
Current portion of financing lease liabilities	531	0
Financing lease liabilities, long-term	51,835	$ 0
Total finance lease liabilities	52,366
Total lease liabilities	$ 381,981

Leases - Components of Lease Cost (Details) $ in Thousands	12 Months Ended
Leases - Components of Lease Cost (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Lease Cost [Line Items]
Total lease costs	$ 87,387
Other lease costs	400
Cost of goods sold
Lease Cost [Line Items]
Operating lease costs	34,421
Variable lease costs	38,276
Selling, general and administrative expenses
Lease Cost [Line Items]
Operating lease costs	6,930
Amortization of right-of-use assets	2,056
Short term lease costs	677
Interest expense, net
Lease Cost [Line Items]
Interest expense on lease liabilities	$ 5,027

Leases - Schedule of Weighted Average Lease Term (Details)	Dec. 31, 2022
Leases [Abstract]
Operating leases	9 years 3 months 14 days
Finance leases	22 years 5 months 15 days

Leases - Schedule of Weighted Average Discount Rate (Details)	Dec. 31, 2022
Leases [Abstract]
Operating leases	5.54%
Finance leases	9.72%

Leases - Future Minimum Lease Payments (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Operating Lease Liabilities
2023	$ 55,415
2024	52,280
2025	46,492
2026	44,000
2027	40,069
Thereafter	192,361
Total lease payments	430,617
Less: Amounts representing interest	(101,002)
Total operating lease liabilities	329,615
Finance Lease Liabilities
2023	5,333
2024	5,153
2025	5,153
2026	5,612
2027	5,423
Thereafter	115,168
Total lease payments	141,842
Less: Amounts representing interest	(89,476)
Total finance lease liabilities	52,366
Total Lease Liabilities
2023	60,748
2024	57,433
2025	51,645
2026	49,612
2027	45,492
Thereafter	307,529
Total lease payments	572,459
Less: Amounts representing interest	(190,478)
Total	$ 381,981

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
Future minimum rental 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
Finance lease liability, payment, due	144,214
Less: Amounts representing interest	(94,064)
Total	50,150
Total Future Lease Payments
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) $ in Thousands	12 Months Ended
Leases - Supplemental Cash Flow (Details) $ in Thousands	Dec. 31, 2022 USD ($)
Leases [Abstract]
Operating cash flows for operating leases	$ 47,722
Operating cash flows for finance leases	4,785
Financing cash flows for finance leases	419
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	77,098
Finance leases	$ 2,018

Employee Benefit Plans (Details) - USD ($) $ in Millions	12 Months Ended
Employee Benefit Plans (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Retirement Benefits [Abstract]
Defined contribution plan costs	$ 2.6	$ 2.2	$ 0.5

Mezzanine Equity and Stockholders'/Members' Equity (Deficit) (Details) $ / shares in Units, $ in Thousands					2 Months Ended	10 Months Ended		12 Months Ended
	Dec. 31, 2021 USD ($)	Nov. 04, 2021 USD ($) $ / shares shares	Dec. 29, 2020 USD ($)	Jun. 26, 2017 USD ($) shares	Dec. 31, 2021 shares	Nov. 08, 2021 USD ($)	Nov. 03, 2021 USD ($) shares	Dec. 31, 2022 USD ($) vote shares	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	May 31, 2021 shares
Class of Stock [Line Items]
Number of voting shares (in shares) \| shares							645
Number of non-voting shares (in shares) \| shares							4,158
Shareholder distributions								$ 0	$ 61,915	$ 0
Proceeds from issuance of mezzanine equity				$ 25,000
Mezzanine equity, dividend rate (in dollars per share)				16.00%
Payments of preferred units dividends								0	0	8,553
Payments of tax distributions									7,900	10,900
Payments of pre-IPO dividend to noncontrolling interests							$ 100,000
Proceeds from issuance of Class A common stock sold in IPO, net of underwriting costs								0	157,258	0
Stock issuance costs								0	5,907	0
Shareholder capital contribution	$ 3,900					$ 3,872		$ 80
2021 Equity Incentive Plan
Class of Stock [Line Items]
Number of shares available for grant (in shares) \| shares								11,205,100
Noncontrolling interests
Class of Stock [Line Items]
Payments of pre-IPO dividend to noncontrolling interests							50,700
Owners
Class of Stock [Line Items]
Payments of pre-IPO dividend to noncontrolling interests							$ 49,300
Incentive Units
Class of Stock [Line Items]
Unit compensation expense								$ 2,756	1,832	$ 403
Preferred Units
Class of Stock [Line Items]
Payments of preferred units dividends			$ 8,600
Class A Preferred Units
Class of Stock [Line Items]
Issuance of mezzanine equity (in shares) \| shares				1,250,000
Class B Preferred Units
Class of Stock [Line Items]
Issuance of mezzanine equity (in shares) \| shares				1,250,000
Class A Units
Class of Stock [Line Items]
Issuance of mezzanine equity (in shares) \| shares				20,938,265
Class B Units
Class of Stock [Line Items]
Issuance of mezzanine equity (in shares) \| shares				7,488,248
Class C
Class of Stock [Line Items]
Issuance of mezzanine equity (in shares) \| shares				3,185,435
Class D
Class of Stock [Line Items]
Issuance of mezzanine equity (in shares) \| shares				285,387
Class F
Class of Stock [Line Items]
Issuance of mezzanine equity (in shares) \| shares				3,158,501
Class F \| Incentive Units
Class of Stock [Line Items]
Number of shares authorized (in shares) \| shares											2,190,514
Class F1
Class of Stock [Line Items]
Issuance of mezzanine equity (in shares) \| shares				3,158,501
Class F1 \| Incentive Units
Class of Stock [Line Items]
Number of shares authorized (in shares) \| shares											2,190,514
Class A
Class of Stock [Line Items]
Number of votes per share \| vote								1
Class A \| IPO
Class of Stock [Line Items]
Sale of stock, shares sold (in shares) \| shares		12,903,226
Sale of stock, price per share (in dollars per share) \| $ / shares		$ 13.00
Proceeds from issuance of Class A common stock sold in IPO, net of underwriting costs		$ 151,400
Common stock, discount on shares		10,400
Stock issuance costs		$ 5,900
Class A \| Common Stock
Class of Stock [Line Items]
Transfer of Class B common stock to Class A common stock for long-tenured employees (in shares) \| shares					421,350
Class A \| Common Stock
Class of Stock [Line Items]
Unit compensation expense									4,600
Share-based payment arrangement, expense, tax benefit									$ 2,800
Class B
Class of Stock [Line Items]
Number of votes per share \| vote								10
Class B \| Common Stock
Class of Stock [Line Items]
Transfer of Class B common stock to Class A common stock for long-tenured employees (in shares) \| shares					421,000

Equity Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended	10 Months Ended	12 Months Ended
	Aug. 02, 2022	Dec. 31, 2021	Jul. 31, 2021	Nov. 08, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	May 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shareholder capital contribution		$ 3,900		$ 3,872	$ 80
Incentive Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unit compensation expense					2,756	$ 1,832	$ 403
Unrecognized compensation cost					$ 8,800
Unrecognized compensation cost, period for recognition					3 years 4 months 24 days
Grant date fair value for units vested during period					$ 11,800
Incentive Units \| Class G
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)								967,987
Award vesting period			5 years
Granted (in shares)			701,965
Incentive Units \| Class C, D, F and F-1 \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			3 years
Incentive Units \| Class C, D, F and F-1 \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period			5 years
Common Stock \| Class A
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unit compensation expense						4,600
Share-based payment arrangement, expense, tax benefit						2,800
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unit compensation expense					774	$ 0	0
Unrecognized compensation cost					$ 4,000
Unrecognized compensation cost, period for recognition					2 years
Grant date market price (in dollars per share)		$ 0			$ 5.95	$ 0
Granted (in shares)					543,875
Performance Shares \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rights percentage	0.00%
Performance Shares \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting rights percentage	200.00%
RSU Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period	1 year
Unit compensation expense					$ 758	$ 0	$ 0
Unrecognized compensation cost					$ 3,500
Unrecognized compensation cost, period for recognition					2 years 4 months 24 days
Grant date market price (in dollars per share)		$ 0			$ 5.84	$ 0
Granted (in shares)					745,911

Equity Based Compensation - Fair Value Assumptions (Details) - Incentive Units	12 Months Ended
	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term	10 years
Risk-free rate of return	1.50%
Volatility	40.00%
Dividend yield	0.00%

Equity Based Compensation - Unvested Stock Activity (Details)	12 Months Ended
	Dec. 31, 2022 $ / shares shares
Performance Shares
Shares
Outstanding, beginning of period (in shares) \| shares	0
Granted (in shares) \| shares	543,875
Forfeited (in shares) \| shares	(30,750)
Vested (in shares) \| shares	0
Outstanding, end of period (in shares) \| shares	513,125
Weighted Average Grant Date Fair Value
Outstanding, beginning of period (in dollars per share) \| $ / shares	$ 0
Granted (in dollars per share) \| $ / shares	5.94
Forfeited (in dollars per share) \| $ / shares	5.75
Vested (in dollars per share) \| $ / shares	0
Outstanding, end of period (in dollars per share) \| $ / shares	$ 5.95
RSU Awards
Shares
Outstanding, beginning of period (in shares) \| shares	0
Granted (in shares) \| shares	745,911
Forfeited (in shares) \| shares	(14,250)
Vested (in shares) \| shares	0
Outstanding, end of period (in shares) \| shares	731,661
Weighted Average Grant Date Fair Value
Outstanding, beginning of period (in dollars per share) \| $ / shares	$ 0
Granted (in dollars per share) \| $ / shares	5.84
Forfeited (in dollars per share) \| $ / shares	5.75
Vested (in dollars per share) \| $ / shares	0
Outstanding, end of period (in dollars per share) \| $ / shares	$ 5.84
Class A \| Restricted Stock
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	(1,009,960)
Outstanding, end of period (in shares) \| shares	1,510,269
Weighted Average Grant Date Fair Value
Outstanding, beginning of period (in dollars per share) \| $ / shares	$ 5.24
Granted (in dollars per share) \| $ / shares	0
Forfeited (in dollars per share) \| $ / shares	0
Vested (in dollars per share) \| $ / shares	2.71
Outstanding, end of period (in dollars per share) \| $ / shares	$ 6.94
Class B \| Restricted Stock
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	$ 0.10
Granted (in dollars per share) \| $ / shares	0
Forfeited (in dollars per share) \| $ / shares	0
Vested (in dollars per share) \| $ / shares	0.10
Outstanding, end of period (in dollars per share) \| $ / shares	$ 0

Equity Based Compensation - Equity Based Compensation Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Incentive Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unit compensation expense	$ 2,756	$ 1,832	$ 403
Unrecognized compensation cost	$ 8,800
Unrecognized compensation cost, period for recognition	3 years 4 months 24 days
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unit compensation expense	$ 774	0	0
Unrecognized compensation cost	$ 4,000
Unrecognized compensation cost, period for recognition	2 years
RSU Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unit compensation expense	$ 758	$ 0	$ 0
Unrecognized compensation cost	$ 3,500
Unrecognized compensation cost, period for recognition	2 years 4 months 24 days

Segment Reporting (Details) $ in Thousands	12 Months Ended
Segment Reporting (Details) $ in Thousands	Dec. 31, 2022 USD ($)	Dec. 31, 2022 store	Dec. 31, 2022 segment	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Segment Reporting [Abstract]
Number of operating segments (in segments)		1	1
Number of reportable segments (in segments) \| segment			1
Segment Reporting Information [Line Items]
Net revenue	$ 1,228,928			$ 796,922	$ 507,429
Retail
Segment Reporting Information [Line Items]
Net revenue	1,022,347			652,790	417,426
eCommerce
Segment Reporting Information [Line Items]
Net revenue	$ 206,581			$ 144,132	$ 90,003

- 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)
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Net and Comprehensive Income per Share - Narrative (Details)	12 Months Ended
	Dec. 31, 2022 shares
Class B
Class of Stock [Line Items]
Shares issued (in shares)	80,792,206
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	2 Months Ended	10 Months Ended	12 Months Ended
	Dec. 31, 2021	Nov. 08, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Numerator
Net income	$ 13,089	$ 23,843	$ 136,634	$ 36,932	$ 17,040
Comprehensive income			136,634	36,932	17,040
Less: Preferred unit dividend unpaid			0	0	2,847
Less: Comprehensive income attributable to noncontrolling interest			0	15,815	10,958
Less: Net income attributable to noncontrolling interest			0	15,815	10,958
Net and comprehensive income attributable to Arhaus, Inc.			136,634	21,117	3,235
Comprehensive income attributable to Arhaus, Inc.			$ 136,634	$ 21,117	$ 3,235
Denominator—Weighted Average Shares Outstanding
Weighted-average number of common shares outstanding, basic (in shares)			138,094,180	116,013,492	112,058,742
Effect of dilutive restricted stock (in shares)			1,511,370	3,507,950	0
Weighted-average number of common shares outstanding, diluted (in shares)			139,605,550	119,521,442	112,058,742
Net and comprehensive income per share, basic (in dollars per share)			$ 0.99	$ 0.18	$ 0.03
Net and comprehensive income per share, diluted (in dollars per share)			$ 0.98	$ 0.18	$ 0.03
Anti-dilutive securities excluded from the computation of earnings per share (in shares)			583,118	99,405

Commitments and Contingencies (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Loss contingency accrual	$ (0.4)	$ (1.2)

Related Party Transactions (Details) - USD ($) $ in Thousands	1 Months Ended		3 Months Ended	12 Months Ended
	Sep. 30, 2021	Sep. 30, 2014	Dec. 31, 2022	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020	Mar. 31, 2021	Aug. 31, 2020	Jul. 31, 2010	Nov. 30, 2000
Related Party Transaction [Line Items]
Rent expense					$ 66,500	$ 58,600
Due to related parties			$ (1,800)	$ (1,800)	$ (2,900)
Distribution Center And Manufacturing Building
Related Party Transaction [Line Items]
Operating lease, term					12 years
Walton Hills, Ohio \| Warehouse
Related Party Transaction [Line Items]
Lease monthly payment			100
Brooklyn, Ohio \| Outlet
Related Party Transaction [Line Items]
Lease monthly payment			$ 20
Minimum \| Distribution Center And Manufacturing Building
Related Party Transaction [Line Items]
Operating lease, renewal term					5 years
Minimum \| Distribution Center And Manufacturing Building \| Renewal term, 10 years
Related Party Transaction [Line Items]
Rent expense				400
Minimum \| Distribution Center And Manufacturing Building \| Base term, 12 years
Related Party Transaction [Line Items]
Rent expense				200
Maximum \| Distribution Center And Manufacturing Building
Related Party Transaction [Line Items]
Operating lease, renewal term					10 years
Maximum \| Distribution Center And Manufacturing Building \| Renewal term, 10 years
Related Party Transaction [Line Items]
Rent expense				500
Maximum \| Distribution Center And Manufacturing Building \| Base term, 12 years
Related Party Transaction [Line Items]
Rent expense				300
Related Party \| Chief Executive Officer \| Premier Arhaus, LLC
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners					50.00%
Related Party \| Chief Executive Officer \| Premier Canover, LLC
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners							40.00%
Related Party \| Headquarters And Distribution Center
Related Party Transaction [Line Items]
Operating lease, term	3 years	17 years
Rent expense					$ 5,900	5,900
Related Party \| Distribution Center And Manufacturing Building
Related Party Transaction [Line Items]
Rent expense				3,700	200
Related Party \| Walton Hills, Ohio \| Chief Executive Officer \| Pagoda Partners, LLC
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners										50.00%
Related Party \| Walton Hills, Ohio \| Warehouse
Related Party Transaction [Line Items]
Operating lease, term										17 years
Rent expense				1,400	1,400	1,400
Related Party \| Brooklyn, Ohio \| Chief Executive Officer \| Brooklyn Arhaus
Related Party Transaction [Line Items]
Ownership percentage by parent									85.00%
Related Party \| Brooklyn, Ohio \| Director \| Brooklyn Arhaus
Related Party Transaction [Line Items]
Ownership percentage by noncontrolling owners									15.00%
Related Party \| Brooklyn, Ohio \| Outlet
Related Party Transaction [Line Items]
Operating lease, term									15 years
Rent expense				$ 300	300	$ 200
Related Party \| Minimum \| Headquarters And Distribution Center
Related Party Transaction [Line Items]
Operating lease, renewal term		5 years
Related Party \| Minimum \| Headquarters And Distribution Center \| Base term, 17 years
Related Party Transaction [Line Items]
Rent expense		$ 200
Related Party \| Minimum \| Headquarters And Distribution Center \| Renewal term, 10 years
Related Party Transaction [Line Items]
Rent expense		$ 500
Related Party \| Minimum \| Headquarters And Distribution Center \| Amended Lease Agreement
Related Party Transaction [Line Items]
Rent expense	$ 100
Related Party \| Maximum \| Headquarters And Distribution Center
Related Party Transaction [Line Items]
Operating lease, renewal term		10 years
Related Party \| Maximum \| Headquarters And Distribution Center \| Base term, 17 years
Related Party Transaction [Line Items]
Rent expense		$ 500
Related Party \| Maximum \| Headquarters And Distribution Center \| Renewal term, 10 years
Related Party Transaction [Line Items]
Rent expense	600	$ 600
Related Party \| Maximum \| Headquarters And Distribution Center \| Amended Lease Agreement
Related Party Transaction [Line Items]
Rent expense	$ 200
Related Party \| Maximum \| Walton Hills, Ohio \| Warehouse
Related Party Transaction [Line Items]
Operating lease, renewal term								12 months		5 years
Homeworks and Founder
Related Party Transaction [Line Items]
Related-party note receivable					$ 1,000

Income Taxes - Income (Loss) Before Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Domestic	$ 182,578	$ 26,788	$ 17,823
Foreign	0	0	0
Income before taxes	$ 182,578	$ 26,788	$ 17,823

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

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

Income Taxes - Current and Deferred Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Federal	$ 25,550	$ 112	$ 0
State	10,624	218	783
Total current expense	36,174	330	783
Federal	8,498	(7,754)	0
State	1,272	(2,720)	0
Total deferred expense (benefit)	9,770	(10,474)	0
Provision (benefit) for income taxes	$ 45,944	$ (10,144)	$ 783

- Definition

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

+ References + Details

Income Taxes - Provision (Benefit) for Income Taxes (Details) - USD ($) $ in Thousands	2 Months Ended	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Income Tax Examination [Line Items]
Federal statutory income tax rate		$ 38,341	$ 5,625	$ 3,743
State taxes		9,871	101	783
Nontaxable partnership		0	(6,999)	(3,743)
FS Arhaus and Homeworks investment in LLC		0	(9,137)	0
Federal return-to-provision adjustments (2)		(2,577)	0	0
Other		309	266	0
Provision (benefit) for income taxes		45,944	(10,144)	$ 783
Deferred tax impact of Reorganization from partnership to a corporation	$ 17,436
Return-to-provision adjustment		$ 1,100
Homeworks
Income Tax Examination [Line Items]
Deferred tax impact of Reorganization from partnership to a corporation			$ 17,400

Income Taxes - Deferred Tax Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Valuation Allowance [Line Items]
Interest expense carryforwards	$ 0	$ 7,465	$ 0
Net operating loss carryforwards	22	1,768	0
Total deferred tax assets	16,841	27,684	0
Less: valuation allowance	0	0	0
Total deferred tax assets, net of valuation allowance	16,841	27,684	0
FS Arhaus
Valuation Allowance [Line Items]
Investment in LLC	11,431	13,034	0
Homeworks
Valuation Allowance [Line Items]
Investment in LLC	$ 5,388	$ 5,417	$ 0

Income Taxes - Narrative (Details) $ in Millions	Dec. 31, 2022 USD ($)
State and Local Jurisdiction
Operating Loss Carryforwards [Line Items]
NOL carryforward	$ 1.0

Equity Based Compensation - Unvested Stock Activity (Details)	12 Months Ended
	Dec. 31, 2022 $ / shares shares
Performance Shares
Shares
Outstanding, beginning of period (in shares) \| shares	0
Granted (in shares) \| shares	543,875
Forfeited (in shares) \| shares	(30,750)
Vested (in shares) \| shares	0
Outstanding, end of period (in shares) \| shares	513,125
Weighted Average Grant Date Fair Value
Outstanding, beginning of period (in dollars per share) \| $ / shares	$ 0
Granted (in dollars per share) \| $ / shares	5.94
Forfeited (in dollars per share) \| $ / shares	5.75
Vested (in dollars per share) \| $ / shares	0
Outstanding, end of period (in dollars per share) \| $ / shares	$ 5.95
RSU Awards
Shares
Outstanding, beginning of period (in shares) \| shares	0
Granted (in shares) \| shares	745,911
Forfeited (in shares) \| shares	(14,250)
Vested (in shares) \| shares	0
Outstanding, end of period (in shares) \| shares	731,661
Weighted Average Grant Date Fair Value
Outstanding, beginning of period (in dollars per share) \| $ / shares	$ 0
Granted (in dollars per share) \| $ / shares	5.84
Forfeited (in dollars per share) \| $ / shares	5.75
Vested (in dollars per share) \| $ / shares	0
Outstanding, end of period (in dollars per share) \| $ / shares	$ 5.84
Class A \| Restricted Stock
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	(1,009,960)
Outstanding, end of period (in shares) \| shares	1,510,269
Weighted Average Grant Date Fair Value
Outstanding, beginning of period (in dollars per share) \| $ / shares	$ 5.24
Granted (in dollars per share) \| $ / shares	0
Forfeited (in dollars per share) \| $ / shares	0
Vested (in dollars per share) \| $ / shares	2.71
Outstanding, end of period (in dollars per share) \| $ / shares	$ 6.94
Class B \| Restricted Stock
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	$ 0.10
Granted (in dollars per share) \| $ / shares	0
Forfeited (in dollars per share) \| $ / shares	0
Vested (in dollars per share) \| $ / shares	0.10
Outstanding, end of period (in dollars per share) \| $ / shares	$ 0