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Nature of Business and Basis of Presentation | 6 Months Ended
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Jun. 30, 2026
Accounting Policies [Abstract] |
Nature of Business and Basis of Presentation | Nature of Business and Basis of Presentation Nature of Business 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 across a broad range of categories, including furniture, outdoor, bath, lighting, textiles, and décor. Our curated assortments are presented across our sales channels in sophisticated, family-friendly and lifestyle-oriented settings. Showrooms are immersive, design-forward spaces that serve as an important driver of brand awareness and client engagement, while our eCommerce channel functions as a seamless extension of the physical Showroom experience. The Company operated 109 Showrooms as of June 30, 2026. Basis of Presentation The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The accompanying condensed consolidated financial statements include our accounts and those of our wholly owned subsidiaries. Accordingly, all intercompany balances and transactions have been eliminated through the consolidation process. The accompanying condensed consolidated balance sheets at June 30, 2026 and December 31, 2025, the condensed consolidated statements of comprehensive income, changes in stockholders’ equity for the six and three months ended June 30, 2026 and June 30, 2025, the condensed consolidated statements of cash flows for the six months ended June 30, 2026 and June 30, 2025 and the related interim condensed consolidated disclosures are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In management’s opinion, the accompanying condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the Company’s financial position at June 30, 2026 the results of operations and changes in stockholders’ equity for the six and three months ended June 30, 2026, and cash flows for the six months ended June 30, 2026. The condensed consolidated balance sheet as of December 31, 2025 included herein was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The results for the six and three months ended June 30, 2026 and June 30, 2025 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future period. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025. Use of Estimates The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounting estimates and other matters included within our condensed consolidated financial statements and notes to the condensed consolidated financial statements we have assessed include, but were not limited to, revenue recognition, including a reserve for merchandise returns, inventory reserves, impairment of long-lived assets and fair value of financial instruments which include, but are not limited to, accounts receivable, payables and lease obligations. Tariffs In February 2026, the U.S. Supreme Court issued a ruling invalidating certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”). Subsequently, the U.S. Court of International Trade ruled that tariffs paid under the IEEPA must be refunded in accordance with the law. As a result, the U.S. Customs and Border Protection Agency launched a special tariff refund program to facilitate such refunds. The Company has requested refunds of $37.8 million for IEEPA tariffs previously paid and believes recovery is probable. As of June 30, 2026, the Company recognized a receivable of $32.7 million, which is included in prepaid and other current assets within the condensed consolidated balance sheets. As of June 30, 2026, the Company received $5.1 million in cash for the refunds. During the six and three months ended June 30, 2026, the Company recognized a benefit of $23.8 million for the recovery of IEEPA tariffs paid, of which $15.5 million related to inventory sold prior to April 2026 and $8.3 million related to inventory sold during the quarter, in cost of goods sold within the condensed consolidated statements of comprehensive income. As of June 30, 2026, the Company recorded $14.0 million primarily related to the reductions in inventory costs in merchandise inventory, net within the condensed consolidated balance sheets. As of August 6, 2026, the Company has received $37.8 million in tariff refunds and $1.3 million in interest. Client Deposits Client deposits represent payments made by clients on orders. At the time of order, the Company collects deposits for all orders equivalent to at least 50 percent of the clients’ purchase price. Orders are recognized as revenue when the merchandise is delivered to the client and at the time of delivery the client deposit is no longer recorded as a liability. The Company expects substantially all client deposits as of June 30, 2026 will be recognized as net revenue within the next 12 months as the performance obligations are satisfied. Gift Cards The Company sells gift cards to clients in our Showrooms. Such gift cards do not have expiration dates. We defer revenue when payments are received in advance of performance for unsatisfied obligations related to our gift cards. The liability related to unredeemed gift cards at June 30, 2026 and December 31, 2025 of $0.4 million and $0.6 million, respectively, is recorded in accrued other expenses within the condensed consolidated balance sheets. The Company recognizes income associated with breakage proportional to actual gift card redemptions. Fair Values of Financial Instruments The Company’s primary financial ins truments are cash and cash equivalent investments, accounts receivable, payables, lease obligations and equity based compensation instruments. Due to the shor t-term maturities of cash and cash equivalent investments, accounts receivable and payables, the Company believes the fair values of these instruments approximate their respective carrying values at June 30, 2026 and December 31, 2025. See Note 5 — Leases for discussion of our lease obligations and Note 6 — Equity Based Compensation for discussion of our equity based compensation instruments. The Company has established a hierarchy to measure our financial instruments at fair value, which requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect the Company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. The hierarchy defines three levels of inputs that may be used to measure fair value: Level 1 Unadjusted quoted prices in active markets for identical, unrestricted assets and liabilities that the reporting entity has the ability to access at the measurement date. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability. Level 3 Unobservable inputs that reflect the entity’s own assumptions about the assumptions market participants would use in the pricing of the asset or liability and are consequently not based on market activity but rather through particular valuation techniques. The Company invests in Level 1 cash and cash equivalent investments such as money market funds and interest-bearing checking accounts. For the six and three months ended June 30, 2026, the Company earne d $4.3 million, of which $1.0 million related to interest on IEEPA refunds, and $2.5 million, of which $1.0 million related to interest on IEEPA refunds, respectively, in interest income. For the six and three months ended June 30, 2025, the Company earned $4.0 million and $2.1 million, respectively, in interest income. Interest income is included in interest income, net within our condensed consolidated statements of comprehensive income. Accounts Receivable The Company’s accounts receivables are $0.2 million and $0.7 million, respectively, at June 30, 2026 and December 31, 2025, net of allowance for expected credit losses of $0.3 million and $0.4 million, respectively. The allowance for expected credit losses is determined by considering a number of factors, including the length of time trade accounts receivable are past due, previous loss history, the client’s current ability to pay its obligations, and the current and future condition of the general economy and industry as a whole. The Company has elected the practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when estimating expected credit losses. Accounts receivable are written off when they become uncollectible and any payments subsequently received on such receivables are credited to the allowance for expected credit losses. Accounts receivable are recorded at the invoiced amount and do not bear interest. Prepaid and Other Current Assets P repaid and other current assets consist of the following (amounts in thousands):
|  | June 30, |  | December 31,
|  | 2026 |  | 2025
Prepaid expenses |  | $ | 7,758 |  |  | $ | 7,955 |
Right of return asset |  | 2,397 |  |  | 2,050 |
Prepaid cloud computing arrangements, net(1) |  | 10,639 |  |  | 8,282 |
Deposits |  | 3,988 |  |  | 4,152 |
Other current assets |  | 36,283 |  |  | 2,986 |
Total prepaid and other current assets |  | $ | 61,065 |  |  | $ | 25,425 |
(1) Presented net of accumulated amortization of $13.1 million and $8.7 million as of June 30, 2026 and December 31, 2025, respectively. Accrued Other Expenses Accrued other expenses consist of the following (amounts in thousands):
|  | June 30, |  | December 31,
|  | 2026 |  | 2025
Loyalty reward program |  | $ | 1,822 |  |  | $ | 1,984 |
Reserve for returns |  | 11,199 |  |  | 10,575 |
Accrued showroom costs |  | 9,906 |  |  | 12,688 |
Accrued warranty |  | 5,079 |  |  | 4,912 |
Gift cards |  | 444 |  |  | 587 |
Accrued self-insurance |  | 2,288 |  |  | 1,616 |
Accrued other expenses |  | 22,531 |  |  | 14,419 |
Total accrued other expenses |  | $ | 53,269 |  |  | $ | 46,781 |

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- Definition The entire disclosure for the general note to the financial statements for the reporting entity which may include, descriptions of the basis of presentation, business description, significant accounting policies, consolidations, reclassifications, new pronouncements not yet adopted and changes in accounting principles. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 250 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/250/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Publisher FASB -URI https://asc.fasb.org/1943274/2147483426/235-10-50-1 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 810 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/810/tableOfContent + Details
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