COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 30, 2024

Commitments and Contingencies Disclosure [Abstract]

Claims and Legal Proceedings

We are involved in various claims and legal proceedings, some of which are covered by insurance. We believe that our existing claims and proceedings, and the potential losses relating to such contingencies, will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

Product Recall Reserves

In January 2023, we notified the U.S. Consumer Product Safety Commission (“CPSC”) of a potential safety concern regarding the magnet-lined closures of our Hopper M30 Soft Cooler, Hopper M20 Soft Backpack Cooler, and SideKick Dry gear case (the “affected products”) and initiated a global stop sale of the affected products. In February 2023, we proposed a voluntary recall of the affected products to the CPSC, and other relevant global regulatory authorities, which we refer to as the “voluntary recalls” herein unless otherwise indicated. In March 2023, we announced separate, voluntary recalls of the affected products in collaboration with the CPSC and subsequently began processing recall claims and returns.

The reserve for the estimated product recall costs is included within accrued expenses and other current liabilities on our consolidated balance sheets. The reserve for the estimated product recall costs is based on i) expected consumer participation rates; and ii) the estimated costs of the consumer’s elected remedy in the recalls, including the estimated cost of either product replacements or gift card elections, logistics costs, and other recall-related costs. The following table summarizes the activity of the reserve for the estimated product recall expenses (in thousands):


	March 30, 2024
Balance, December 30, 2023	$	13,090
Actual product refunds, replacements and recall-related costs	(2,488)
Gift card issuances(1)	(1,437)

Balance, March 30, 2024	$	9,165

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(1)As of March 30, 2024, we had $4.0 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. For the three months ended March 30, 2024, we recognized net sales of $2.0 million from redeemed recall-related gift cards.