Restructuring

9 Months Ended

Sep. 30, 2026

Restructuring and Related Activities [Abstract]

Transformation 2.0: Powering Honest Growth

In October 2025, the Company's Board of Directors approved Transformation 2.0: Powering Honest Growth (“Powering Honest Growth”) which builds upon the Company's original Transformation Pillars of Brand Maximization, Margin Enhancement and Operating Discipline. Powering Honest Growth is aimed at driving growth, improving simplicity, focus and profitability, which includes exiting certain lower margin, non-strategic categories and channels, including Honest.com fulfillment and the apparel category as a seller of merchandise, retail and online stores in Canada, as well as optimizing our cost structure by rightsizing selling, general and administrative expenses and implementing supply chain efficiencies.

Restructuring costs are one of the elements of Powering Honest Growth and are included in Restructuring on the condensed consolidated statements of comprehensive income:

•Contract and External Obligation Costs — includes expense to terminate contracts prior to expiration, litigation and professional fees, and other costs associated with external obligations arising from restructuring.

•Employee and Personnel-Related Costs — primarily severance and other post-employment benefit costs, calculated based on salary levels, prior service, statutory minimum benefits, and other personnel-related expenses incurred as a result of restructuring.

•Asset and Other Restructuring-Related Costs — consist primarily of technology taken out of service.

The Company records costs associated with the restructuring once the relevant accounting criteria have been met.

Costs associated with Powering Honest Growth were as follows (in thousands):


	Three Months Ended September 30, 2026		Nine Months Ended September 30, 2026

Cost of Revenue(1)	$	715	$	2,792
Restructuring Costs(2)	418		641
Total	$	1,133	$	3,433

______________

(1) Represents costs in connection with a warehouse closure which is included in cost of revenue on the condensed consolidated statements of comprehensive income.

(2) Includes an adjustment related to contract and external obligation costs for the nine months ended September 30, 2026. Refer to the restructuring table below for additional details of the costs included in restructuring costs for the nine months ended September 30, 2026.

Charges incurred to restructuring costs for the nine months ended September 30, 2026 were:


	Restructuring Costs
	Employee and Personnel-Related Costs		Asset and Other Restructuring-Related Costs		Contract and External Obligation Costs		Total

Charges for the nine months ended September 30, 2026	$	312	$	984	$	(655)	$	641

Changes in accrued expenses as of September 30, 2026 were:


	Accrued Restructuring-Related Costs(1)
	Asset and Other Restructuring-Related Costs		Contract and External Obligation Costs		Employee and Personnel-Related Costs		Total
Balance at December 31, 2025	$	1,147	$	2,535	$	852	$	4,534
Charges	2,623		—		358		2,981
Cash payments	(2,535)		(648)		(1,114)		(4,297)
Other adjustments	—		(655)		—		(655)
Balance at September 30, 2026	$	1,235	$	1,232	$	96	$	2,563

___________

(1) Included in accrued expenses as of September 30, 2026. Refer to Note 6, "Accrued Expenses" included elsewhere in these condensed consolidated financial statements.