Restructuring Charges, Asset Impairment, and Assets Held For Sale

6 Months Ended

Jun. 30, 2022

Restructuring and Related Activities [Abstract]

Restructuring Charges, Asset Impairment, and Assets Held For Sale

Restructuring Charges, Asset Impairment, and Assets Held For SaleOn June 21, 2022, the Company announced the closure of 11 hub locations and made the decision to not commence retail sales operations at 3 other locations with executed leases. The closures were part of a review of the business, with cash preservation and future profitable growth as key determining factors. Retail sales operations were ceased, with all hub closing activities completed by July 8, 2022. The Company has or intends to assign or sub-lease the lease contracts associated with the 11 closed and three unopened hub locations and has classified the assets and liabilities associated with the hub locations that we believe are assignable as of June 30, 2022 as held for sale. The assets and liabilities associated with certain hub locations that we believe we are likely to sublease as of June 30, 2022 are not classified as held for sale. In addition, the Company evaluated the recoverability of amounts associated with lease assets and long lived assets at the held for sale locations. The fair values of the lease assets and property and equipment were determined based on estimated future discounted cash flows for such assets using market participant assumptions, including data on the ability to sub-lease the properties. The charge for inventory reserves represents inventory that will be disposed of through the wholesale channel following the hub closures and is the

difference between the estimated wholesale value and inventory cost. In conjunction with the hub closures, the Company recorded the following charges in the three months ended June 30, 2022:

	Three months ended June 30, 2022		Six months ended June 30, 2022
Inventory reserves associated with restructuring	$	1,010	$	1,010
Operating lease asset impairment	2,548		2,548
Finance lease asset impairment	1,371		1,371
Property and equipment impairment	5,832		5,832
Loss on sale of assets related to closed hubs	—		—
Labor and other costs incurred closing hubs	465		465
Severance	515		515
Contract termination costs	—		—
Total	11,741		11,741

The $1,010 charge for inventory reserves was recorded in cost of sales in the Company’s consolidated statement of operations. The other $10,731 charges were recorded in Restructuring expenses in the Company’s consolidated statement of operations. The total costs recorded in the three and six months ended June 30, 2022 represent the total amount that can be reasonably estimated to be incurred in connection with the restructuring. We cannot conclude how long it will take to sublease or assign each lease, so we cannot reasonably estimate other future costs associated with the restructuring.

The carrying amount and major classes of assets and liabilities classified as held for sale are:

	As of June 30, 2022
Operating lease assets	$	20,467
Finance lease assets	$	7,622
Property and equipment	$	437
Total	$	28,526
Operating lease liabilities	$	21,731
Finance lease liabilities	$	8,391
Total	$	30,122