COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Summary of Recall Reserve Adjustment of Estimated Product Recall Expenses

The product recalls, which includes the recall reserve adjustment and other incurred costs, had the following effect on our income before income taxes (in thousands):

	Three Months Ended		Nine Months Ended
	September 30, 2023		September 30, 2023
Decrease to net sales(1)	$	(18)	$	(24,524)
Decrease to cost of goods sold(2)	843		7,148
Increase (decrease) to gross profit	825		(17,376)
Decrease to selling, general and administrative expenses(3)	—		10,549
Increase (decrease) to income before income taxes	$	825	$	(6,827)

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(1)Primarily reflects the unfavorable impact of the recall reserve adjustment related to higher estimated future recall remedies (i.e., estimated gift card elections). Of the total net sales impact, $8.1 million and $16.4 million was allocated to our DTC and wholesale channels, respectively, for the nine months ended September 30, 2023. These amounts were allocated based on the historical channel sell-in basis of the affected products.

(2)For the three months ended September 30, 2023, reflects a benefit of $0.8 million related to lower than anticipated recall-related costs. For the nine months ended September 30, 2023, reflects favorable impacts of $5.0 million primarily due to the favorable impact of the recall reserve adjustment related to lower estimated costs of future product replacement remedy elections and logistics costs, $1.3 million from an inventory reserve adjustment, and $0.8 million related to lower recall-related costs.

(3)Primarily reflects the favorable impact of the recall reserve adjustment related to lower estimated other recall-related costs, including logistics costs.

Summary of Reserve for the Estimated Product Recall Expenses

The following table summarizes the activity of the reserve for the estimated product recall expenses (in thousands):

	September 30, 2023
Balance, January 1, 2023	$	94,807
Actual product refunds, replacements and recall-related costs	(50,707)
Gift card issuances(1)	(26,685)
Reserve adjustment	8,515
Balance, September 30, 2023	$	25,930

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(1)For the three and nine months ended September 30, 2023, we recognized net sales of $6.3 million and $18.8 million, respectively, from redeemed recall-related gift cards. As of September 30, 2023, we had $7.8 million in unredeemed recall-related gift card liabilities, which are included in contract liabilities within accrued expenses and other current liabilities on our consolidated balance sheet.