Nature of Business

12 Months Ended

Dec. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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 merchandise 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 103 Showrooms at December 31, 2024.

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. In connection with the IPO, the Company reorganized its ownership structure from a limited liability company to a corporation through a series of transactions for the purpose of issuing common stock on a publicly traded exchange. Pursuant to the corporate reorganization (“Reorganization”) and the completion of the IPO in November 2021, the Company became a holding company for LLC and its subsidiaries.

Revision of Previously Issued Consolidated Financial Statements

As previously disclosed, in preparation of the December 31, 2023 consolidated financial statements, the Company identified an error within the consolidated balance sheet as of December 31, 2022, related to certain leasehold and landlord improvements prior to showroom completion being incorrectly included in prepaid and other current assets rather than property, furniture and equipment, net. The error resulted in inaccurate cash flows ascribed to operating and investing activities in the consolidated statement of cash flows for the year ended December 31, 2022 and the Company concluded to revise such prior period consolidated financial statements as presented below in Adjustment No.1.

In preparation of the March 31, 2024 unaudited condensed consolidated financial statements, the Company identified an additional error within the consolidated balance sheets related to certain cash receipts from landlord reimbursements prior to showroom completion being incorrectly included in property, furniture and equipment, net. The error resulted in inaccurate cash flows ascribed to operating and investing activities in the consolidated statement of cash flows for the years ended December 31, 2023 and 2022 and the Company concluded to revise the consolidated financial statements as presented below in Adjustment No. 2.

The Company has evaluated the errors both quantitatively and qualitatively and concluded they were not material, individually or in the aggregate, to the prior period consolidated financial statements.

In connection with the revisions, the Company determined it was appropriate to correct for certain other previously identified immaterial errors.

We have also revised impacted amounts within the accompanying notes to the consolidated financial statements, as applicable. Specifically, Note 2 — Basis of Presentation and Summary of Significant Accounting Policies, Note 3 — Property, Furniture and Equipment, Note 4 — Accrued Other Expenses and Note 7 — Leases.

The following tables summarize the impact of these corrections for the periods presented (amounts in thousands):


	December 31, 2023
Consolidated Balance Sheet	As Reported		Adjustment No. 2		As Revised
Prepaid and other current assets	$	45,260	$	(18,956)	$	26,304
Total current assets	$	528,251	$	(18,956)	$	509,295

Property, furniture and equipment, net	$	210,238	$	10,010	$	220,248
Total assets	$	1,114,094	$	(8,946)	$	1,105,148

Accrued other expenses	$	42,502	$	3,560	$	46,062
Current portion of operating lease liabilities	45,557		(12,506)		33,051
Total current liabilities	$	351,293	$	(8,946)	$	342,347
Total liabilities	$	773,856	$	(8,946)	$	764,910
Total liabilities and stockholders’ equity	$	1,114,094	$	(8,946)	$	1,105,148


	Year Ended
	December 31, 2023
Consolidated Statement of Cash Flows	As Reported		Adjustment No. 2		As Revised
Cash flows from operating activities
Changes in prepaid and other assets	$	(20,721)	$	9,612	$	(11,109)
Changes in operating lease liabilities	(25,794)		(13,226)		(39,020)
Net cash provided by operating activities	$	172,299	$	(3,614)	$	168,685

Cash flows from investing activities
Purchases of property, furniture and equipment	$	(97,055)	$	3,614	$	(93,441)
Net cash used in investing activities	$	(96,722)	$	3,614	$	(93,108)

Supplemental disclosure of cash flow information
Noncash investing activities:
Purchase of property, furniture and equipment in current liabilities	$	6,726	$	3,560	$	10,286


	Year Ended
	December 31, 2022
Consolidated Statement of Cash Flows	As Originally Reported		Adjustment No. 1		As Previously Reported		Adjustment No. 2		As Revised
Cash flows from operating activities
Changes in prepaid and other assets	$	(9,329)	$	2,442	$	(6,887)	$	(267)	$	(7,154)
Changes in accounts payable	14,014		(3,718)		10,296		—		10,296
Changes in operating lease liabilities	(33,682)		—		(33,682)		4,551		(29,131)
Net cash provided by operating activities	$	74,454	$	(1,276)	$	73,178	$	4,284	$	77,462

Cash flows from investing activities
Purchases of property, furniture and equipment	$	(52,658)	$	1,276	$	(51,382)	$	(4,284)	$	(55,666)
Net cash used in investing activities	$	(52,658)	$	1,276	$	(51,382)	$	(4,284)	$	(55,666)

Supplemental disclosure of cash flow information
Noncash operating activities
Lease incentives	$	4,312	$	(4,312)	$	—	$	—	$	—
Noncash investing activities:
Purchase of property, furniture and equipment in current liabilities	$	3,160	$	3,718	$	6,878	$	1,591	$	8,469