0001558370-23-008873 | 10-Q | XBRL Viewer | Lulus Fashion Lounge Holdings INC

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Apr. 02, 2023	Jan. 01, 2023
Current assets:
Cash and cash equivalents	$ 7,829	$ 10,219
Accounts receivable	7,234	3,908
Inventory, net	51,830	43,186
Assets for recovery	6,752	3,890
Income tax refund receivable	3,724	4,078
Prepaids and other current assets	4,033	3,738
Total current assets	81,402	69,019
Property and equipment, net	4,319	4,391
Goodwill	35,430	35,430
Tradename	18,509	18,509
Intangible assets, net	3,196	3,090
Lease right-of-use assets	31,432	32,514
Other noncurrent assets	5,278	4,251
Total assets	179,566	167,204
Current liabilities:
Accounts payable	7,043	5,320
Accrued expenses and other current liabilities	26,678	17,976
Returns reserve	17,586	9,066
Stored-value card liability	11,130	10,828
Lease liabilities, current	4,775	4,456
Total current liabilities	67,212	47,646
Revolving line of credit	20,000	25,000
Lease liabilities, noncurrent	27,761	29,042
Other noncurrent liabilities	818	623
Total liabilities	115,791	102,311
Commitments and Contingencies (Note 7)
Stockholders' equity:
Preferred stock: $0.001 par value, 10,000,000 shares authorized, and no shares issued or outstanding
Common stock: $0.001 par value, 250,000,000 shares authorized; and 39,727,187 and 39,259,328 shares issued and outstanding as of April 2, 2023 and January 1, 2023, respectively	40	39
Additional paid-in capital	243,224	238,725
Accumulated deficit	(179,489)	(173,871)
Total stockholders' equity	63,775	64,893
Total liabilities and stockholders' equity	$ 179,566	$ 167,204

Significant Accounting Policies - Revenue Recognition (Details) $ in Thousands	3 Months Ended
	Apr. 02, 2023 USD ($) item	Apr. 03, 2022 USD ($)
Disaggregation of Revenue [Line Items]
Number of performance obligation \| item	1
Practical expedient	true
Number of contractual liabilities \| item	2
Maximum
Disaggregation of Revenue [Line Items]
Revenue duration period	36 months
Deferred Revenue
Significant changes in the contract liabilities balances
Beginning Balance	$ 69	$ 145
Revenue recognized that was included in contract liability balance at the beginning of the period	(69)	(145)
Increase due to cash received, excluding amounts recognized as revenue during the period	122	315
Ending Balance	122	315
Stored-Value Cards
Significant changes in the contract liabilities balances
Beginning Balance	10,828	7,240
Revenue recognized that was included in contract liability balance at the beginning of the period	(1,720)	(1,786)
Increase due to cash received, excluding amounts recognized as revenue during the period	2,022	1,838
Ending Balance	$ 11,130	$ 7,292

Debt - Debt Discounts and Issuance Costs (Details) - USD ($) $ in Millions	Apr. 02, 2023	Jan. 01, 2023
Other non-current assets
Debt Instrument [Line Items]
Unamortized debt issuance costs	$ 0.3	$ 0.3

Equity-Based Compensation - Assumptions (Details) - Employee Stock Purchase Plan	3 Months Ended
	Apr. 02, 2023 $ / shares
Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	18 days
Expected volatility	87.86%
Risk-free interest rate	5.05%
Weighted average fair value of stock-based awards granted	$ 0.54
Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	1 year
Expected volatility	109.93%
Risk-free interest rate	5.06%
Weighted average fair value of stock-based awards granted	$ 1.57

Equity-Based Compensation - Omnibus Equity Plan and ESPP (Details) $ in Millions			1 Months Ended	3 Months Ended
	Feb. 25, 2023	Apr. 01, 2022 shares	May 10, 2023 shares	Apr. 02, 2023 USD ($) item shares	Nov. 15, 2021 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares registered		5,921,056
Offering period				12 months
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares registered		384,211
Additional shares registered		800,000
Maximum aggregate number of shares reserved for issuance				1,473,106	743,803
Percentage of increase in shares reserved for issuance					1.00%
Number of purchase period for awards \| item				2
Stock-based compensation expense \| $				$ 0.1
Issuance of common stock for employee stock purchase plan (ESPP) (in shares)				47,502
Purchase period	6 months
Percentage of discount from lower of stock price				15.00%
Employee Stock Purchase Plan \| Tranche 1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Offering period for awards				12 months
Employee Stock Purchase Plan \| Tranche 2
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Offering period for awards				12 months
Purchase period for awards				6 months
Omnibus Equity Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate shares registered		1,536,845
Additional shares registered		3,200,000
Maximum aggregate number of shares reserved for issuance				285,378	3,719,000
Percentage of increase in shares reserved for issuance					4.00%
Omnibus Equity Plan \| Forecast
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional shares registered			2,000,000

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Apr. 02, 2023	May 05, 2023
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Apr. 02, 2023
Entity File Number	001-41059
Entity Registrant Name	Lulu’s Fashion Lounge Holdings, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-8442468
Entity Address, Address Line One	195 Humboldt Avenue
Entity Address, City or Town	Chico
Entity Address State Or Province	CA
Entity Address, Postal Zip Code	95928
City Area Code	530
Local Phone Number	343-3545
Title of 12(b) Security	Common stock, $0.001 par value per share
Trading Symbol	LVLU
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		39,737,701
Entity Central Index Key	0001780201
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income
Net revenue	$ 90,976	$ 111,902
Cost of revenue	53,015	58,924
Gross profit	37,961	52,978
Selling and marketing expenses	19,489	21,886
General and administrative expenses	24,348	27,834
(Loss) income from operations	(5,876)	3,258
Other income (expense), net:
Interest expense	(523)	(208)
Other income, net	73	54
Total other expense, net	(450)	(154)
(Loss) income before (provision) benefit for income taxes	(6,326)	3,104
Income tax benefit (provision)	708	(1,061)
Net (loss) income and comprehensive (loss) income	(5,618)	2,043
Net (loss) income attributable to common stockholders	$ (5,618)	$ 2,043
Net income per share attributable to common stockholders - Basic	$ (0.14)	$ 0.05
Net income per share attributable to common stockholders - Diluted	$ (0.14)	$ 0.05
Weighted average shares used to compute net (loss) income per share attributable to common stockholders - Basic	39,233,953	38,098,073
Weighted average shares used to compute net (loss) income per share attributable to common stockholders - Diluted	39,233,953	38,385,765

Related Party Transactions (Details)	3 Months Ended
Related Party Transactions (Details)	Apr. 02, 2023 item
Related Party Transactions
Shareholders with ownership interest greater than 10%	3
Aggregate ownership interest	10.00%

Significant Accounting Policies - Selling and Marketing Expenses (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Selling and Marketing Expense.
Accounting Policies [Line Items]
Advertising costs	$ 15.1	$ 16.9

Income Taxes - Components of Provision for Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Income Taxes
(Loss) income before benefit (provision) for income taxes	$ (6,326)	$ 3,104
Benefit (provision) for income taxes	$ 708	$ (1,061)
Effective tax rate	(11.20%)	(34.18%)

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

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+ Details

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Leases - Lease Cost and Other Information (Details) $ in Thousands	3 Months Ended
	Apr. 02, 2023 USD ($)
Lease cost
Amortization of ROU assets	$ 304
Interest on lease liabilities	27
Operating lease cost	1,201
Short-term lease cost	159
Variable lease cost	216
Total lease cost	$ 1,907
Weighted-average remaining lease term - finance leases	37 months
Weighted-average remaining lease term - operating leases	84 months
Weighted-average discount rate - finance leases	3.05%
Weighted-average discount rate - operating leases	6.50%
Cost of revenue
Lease cost
Total lease cost	$ 1,387
General and administrative expenses
Lease cost
Total lease cost	$ 520

Common Stock

3 Months Ended

Apr. 02, 2023

Common Stock

Common Stock

9.Common Stock

The Company has authorized the issuance of 250,000,000 shares of common stock with a $0.001 par value as of April 2, 2023 and January 1, 2023. Holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders of the Company. Subject to the preferences that may be applicable to any outstanding share of preferred stock, the holders of common stock are entitled to receive dividends, if any, as may be declared by the board of directors. No dividends have been declared to date. As of April 2, 2023, the Company has reserved 161,397 shares of common stock for issuance upon the exercise of stock options, and 285,378 shares of common stock available for future issuance under the Omnibus Equity Plan (the “Omnibus Equity Plan”) and 1,473,106 shares of common stock available for future issuance under the 2021 Employee Stock Purchase Plan (the “ESPP”), respectively. Both equity plans are further described in Note 10, Equity-Based Compensation.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details

Equity-Based Compensation (Tables)

3 Months Ended

Apr. 02, 2023

Equity-Based Compensation

Schedule of estimate fair value of purchase rights under ESPP


Expected term (in years)		0.05 to 1.00
Expected volatility		87.86 to 109.93	%
Risk-free interest rate		5.05 to 5.06	%
Dividend yield		-
Weighted average fair value per share of ESPP awards granted	$	0.54 to 1.57

Summary of stock option activity

A summary of stock option activity is as follows (in thousands, except per share amounts and years):


		Weighted-		Weighted-
		Average		Average
		Exercise		Remaining	Aggregate
	Options	Price per		Contractual	Intrinsic
	Outstanding	Option		Life (years)	Value
Balance as of January 1, 2023	322,793	$	11.35	8.29
Granted	—		—	—
Forfeited	(161,396)	$	11.35	—
Outstanding as of April 2, 2023	161,397	$	11.35	8.04
Exercisable as of April 2, 2023	161,397	$	11.35	8.04	$	—
Vested and expected to vest as of April 2, 2023	161,397	$	11.35	8.04	$	—

Summary of restricted stock and restricted stock units


	Unvested	Weighted-
	Restricted	Average Fair
	Stock	Value per Share
Balance at January 1, 2023	78,303	$	5.38
Restricted stock granted	—		—
Restricted stock vested	(9,270)		5.37
Restricted stock forfeited	(2,720)		5.37
Balance at April 2, 2023	66,313	$	5.38


		Weighted-
	Unvested	Average Fair
	RSUs	Value per Share
Balance at January 1, 2023	1,336,674	$	8.94
RSUs granted	3,215,077		2.76
RSUs vested	(491,769)		6.05
RSUs forfeited	(35,472)		7.68
Balance at April 2, 2023	4,024,510	$	4.37

Summary of performance stock units


		Weighted-
	Unvested	Average Fair
	PSUs	Value per Share
Balance at January 1, 2023	—	$	—
PSUs granted	1,811,571		2.65
PSUs vested	—		—
PSUs forfeited	—		—
Balance at April 2, 2023	1,811,571	$	2.65

Leases (Tables)

3 Months Ended

Apr. 02, 2023

Leases

Schedule of future minimum lease payments for the Company's operating and financing lease


Fiscal Year:		Operating Leases	Finance Leases		Total
2023 (remaining nine months)	$	3,894	$	993	$	4,887
2024		5,283		1,267		6,550
2025		5,844		1,268		7,112
2026		4,605		14		4,619
2027		5,138		15		5,153
Thereafter		11,632		6		11,638
Total undiscounted lease payment		36,396		3,563		39,959
Present value adjustment		(7,275)		(148)		(7,423)
Total lease liabilities		29,121		3,415		32,536
Less: lease liabilities, current		(3,428)		(1,347)		(4,775)
Lease liabilities, noncurrent	$	25,693	$	2,068	$	27,761

Schedule of supplemental disclosure of lease costs and other information

The following information represents supplemental disclosure of lease costs, components of the statement of cash flows related to operating and finance leases and components of right-of-use assets (in thousands):



		Thirteen Weeks Ended
		April 2,
		2023
Finance lease cost
Amortization of ROU assets	$	304
Interest on lease liabilities		27
Operating lease cost		1,201
Short-term lease cost		159
Variable lease cost		216
Total lease cost	$	1,907

Lease cost included in cost of revenue	$	1,387
Lease cost included in general and administrative expenses	$	520

Weighted-average remaining lease term - finance leases		37 months
Weighted-average remaining lease term - operating leases		84 months
Weighted-average discount rate - finance leases		3.05%
Weighted-average discount rate - operating leases		6.50%

Common Stock (Details)	3 Months Ended
Common Stock (Details)	Apr. 02, 2023 Vote $ / shares shares	Jan. 01, 2023 $ / shares shares	Nov. 15, 2021 shares
Common stock, shares authorized	250,000,000	250,000,000
Common stock, par value (in dollars per share) \| $ / shares	$ 0.001	$ 0.001
Number of votes per common stock \| Vote	1
Dividends declared \| $ / shares	$ 0
Stock options
Common stock reserved for issuance	161,397
Employee Stock Purchase Plan
Common stock reserved for issuance	1,473,106		743,803
Omnibus Equity Plan
Common stock reserved for issuance	285,378		3,719,000

Income Taxes

3 Months Ended

Apr. 02, 2023

Income Taxes

Income Taxes

11.Income Taxes

All of the Company’s (loss) income before income taxes is from the United States. The following table presents the components of the benefit (provision) for income taxes (in thousands):


	Thirteen Weeks Ended
	April 2,			April 3,
	2023			2022
(Loss) income before benefit (provision) for income taxes	$	(6,326)		$	3,104
Benefit (provision) for income taxes		708			(1,061)
Effective tax rate		(11.2)	%		(34.18)	%

The Company’s provision for income taxes during interim reporting periods has historically been calculated by applying an estimate of the annual effective tax rate for the full year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. We utilized a discrete effective tax rate method, as allowed by ASC 740-270 “Income Taxes, Interim Reporting,” to calculate taxes for the thirteen weeks ended April 2, 2023. The Company’s pre-tax loss for the thirteen weeks ended April 2, 2023 relative to the Company’s projected pre-tax income for fiscal 2023 yielded an annual effective tax rate less than -240%, which was not deemed to be appropriate or meaningful. The Company determined that small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate, and therefore, the historical method would not provide a reliable estimate for the thirteen weeks ended April 2, 2023.

The effective tax rate for the thirteen weeks ended April 2, 2023 differs from the federal income tax rate of 21% primarily due to the increase in the amount of non-deductible executive compensation, relative to the decrease in (loss) income before provision for income taxes. The effective tax rate for the thirteen weeks ended April 3, 2022 differs from the federal income tax rate of 21% primarily due to non-deductible equity-based compensation expenses.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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+ Details

Equity-Based Compensation

3 Months Ended

Apr. 02, 2023

Equity-Based Compensation

Equity-Based Compensation

10.Equity-Based Compensation

Omnibus Equity Plan and Employee Stock Purchase Plan

In connection with the closing of the IPO, the Company adopted the Omnibus Equity Plan and ESPP.

Under the Omnibus Equity Plan, incentive awards may be granted to employees, directors, and consultants of the Company. The Company initially reserved 3,719,000 shares of common stock for future issuance under the Omnibus Equity Plan, including any shares subject to awards under the 2021 Equity Incentive Plan (the “2021 Equity Plan”) that are forfeited or lapse unexercised. The number of shares reserved for issuance under the Omnibus Equity Plan will automatically increase on the first day of each fiscal year, starting in 2022 and continuing through 2031, by a number of shares equal to (a) 4% of the total number of shares of the Company’s common stock outstanding on the last day of the immediately preceding fiscal year or (b) such smaller number of shares as determined by the Company’s board of directors.

Under the ESPP, the Company initially reserved 743,803 shares of common stock for future issuance. The number of shares of common stock reserved for issuance will automatically increase on the first day of each fiscal year beginning in 2022 and ending in 2031, by a number of shares equal to (a) 1% of the total number of shares of the Company’s common stock outstanding on the last day of the immediately preceding fiscal year or (b) such smaller number of shares as determined by the Company’s board of directors.

On April 1, 2022, the Company filed a Registration Statement on Form S-8 (the “Form S-8”) with the SEC for the purpose of registering an additional 5,921,056 shares of the Company’s common stock, inclusive of 1,536,845 and 384,211 shares associated with automatic increases that occurred on January 3, 2022 under the Omnibus Equity Plan and ESPP, respectively. This registration also included 3,200,000 and 800,000 shares for the Omnibus Equity Plan and the ESPP, respectively, representing two years’ worth of estimated future automatic increases in availability for these plans.

As of April 2, 2023, the Company had 285,378 and 1,473,106 shares available for issuance under the Omnibus Equity Plan and ESPP, respectively. The compensation committee of the Company’s board of directors (the “compensation committee”) administers the Omnibus Equity Plan and determines to whom awards will be granted, the exercise price of any options, the vesting schedule and the other terms and conditions of the awards granted under the Omnibus Equity Plan. The compensation committee may or may not issue the full number of shares that are reserved for issuance. The

compensation committee has recommended, and the Board has unanimously approved, an amendment to the Omnibus Equity Plan, which would increase the authorized number of shares available for grant by 2,000,000 (the “Amendment”). The Amendment would become effective on June 13, 2023, if approved by stockholders at the 2023 Annual Meeting of Stockholders (the “Annual Meeting”).

The Company’s initial ESPP offering period commenced on August 26, 2022. The ESPP consists of consecutive, overlapping 12-month offering periods that begin on each August 26 and February 26 during the term of the ESPP, and end on each August 25 and February 25 occurring 12 months later, as applicable. Each offering period is comprised of two consecutive six-month purchase periods that begin on each August 26 and February 26 within each offering period and end on each February 25 and August 25, respectively, thereafter. The duration and timing of offering periods and purchase periods may be changed by the Company’s board of directors or compensation committee at any time. The ESPP allows participants to purchase shares of the Company’s common stock at a 15 percent discount from the lower of the Company’s stock price on (i) the first day of the offering period or on (ii) the last day of the purchase period and includes a rollover mechanism for the purchase price if the stock price on the purchase date is less than the stock price on the offering date. The ESPP also allows participants to reduce their percentage election once during the offering period, but they cannot increase their election until the next offering period.

Under the Company’s ESPP, if the closing market price of the Company’s common stock on the offering date of a new offering period falls below the closing market price of the Company’s common stock on the offering date of an ongoing offering period, the ongoing offering period terminates immediately following the settlement of shares on the purchase date. Participants in the terminated offering period are automatically enrolled in the new offering period, triggering a modification and assessment of incremental stock-based compensation expense to be recognized over the new offering period if the incremental expense is greater than the original grant date expense. Additionally, the ESPP also provides a rollover feature for an offering period to be rolled over into a new lower-priced offering if the offering price of the new offering period is less than that of the current offering period.

During the quarter ended April 2, 2023, the fair market value of the Company’s stock on the purchase date, February 25, 2023, was lower than the fair market value of the Company’s stock on the initial offering date. As a result, the initial ESPP offering period was reset and the new lower price became the new offering price. The reset was treated as a modification resulting in immaterial incremental stock-based compensation that will be recognized over the remaining requisite service period. Additionally, the initial ESPP offering period rolled over to a new 12 months offering period on February 25, 2023.

The Company recognizes equity-based compensation expense related to shares issued pursuant to the ESPP on a graded vesting approach over each offering period. For the thirteen weeks ended April 2, 2023, equity-based compensation expense related to our ESPP was $0.1 million. During the thirteen weeks ended April 2, 2023, the Company issued 47,502 shares pursuant to the ESPP six-month purchase period ended February 25, 2023.

The Company used the Black-Scholes model to estimate the fair value of the purchase rights under the ESPP. For the thirteen weeks ended April 2, 2023, the Company utilized the following assumptions:


Expected term (in years)		0.05 to 1.00
Expected volatility		87.86 to 109.93	%
Risk-free interest rate		5.05 to 5.06	%
Dividend yield		-
Weighted average fair value per share of ESPP awards granted	$	0.54 to 1.57

2021 Equity Plan

In April 2021, the Company’s board of directors adopted the 2021 Equity Plan. The 2021 Equity Plan provides for the issuance of incentive stock options, restricted stock, restricted stock units and other stock-based and cash-based awards to the Company’s employees, directors, and consultants. The maximum aggregate number of shares reserved for issuance under the 2021 Equity Plan was 925,000 shares. The options outstanding under the 2021 Equity Plan expire ten years from the date of grant. The Company issues new shares of common stock to satisfy stock option exercises. In connection with the closing of the IPO, no further awards will be granted under the 2021 Equity Plan.

Former CEO Stock Options and Special Compensation Awards

In April 2021, the Company entered into an Employment Agreement (the “McCreight IPO Employment Agreement”) with the former CEO, David McCreight, and granted stock options under the 2021 Equity Plan to purchase 322,793 shares of common stock with an exercise price of $11.35 per share, which vest based on service and performance conditions. 275,133 of these stock options have only service vesting conditions, and 47,660 of these stock options have both service and performance vesting conditions. In addition, a portion of these stock options were subject to accelerated vesting conditions upon the occurrence of certain future events, which were satisfied upon the closing of the IPO. As previously disclosed on a Form 8-K filed on February 13, 2023 (the “February 13 8-K”), Mr. McCreight voluntarily forfeited 161,396 unvested stock options of the Company. During the thirteen weeks ended April 2, 2023, the forfeiture of 161,396 unvested stock resulted in immediate acceleration of the remaining $1.2 million of compensation expense which was recorded to general and administrative expense. As previously disclosed in the February 13 8-K, the Company and David McCreight also entered into the First Amendment to Lulu’s Fashion Lounge Holdings, Inc. 2021 Equity Incentive Plan Stock Option Agreement that extends the post-termination exercise period of 161,397 vested stock options from 90 days to three (3) years from a termination of service other than for cause, death or disability.

Under the McCreight IPO Employment Agreement and subject to ongoing employment, and in light of the closing of the IPO, the former CEO received two bonuses which were settled in fully-vested shares of the Company’s common stock equal to $3.0 million each ($6.0 million in aggregate) on March 31, 2022 and March 31, 2023. The Company initially concluded that the two bonuses were subject to the guidance within ASC 718 and were liability-classified upon issuance. Upon the completion of the IPO, the two bonuses became equity-classified as they no longer met the criteria for liability classification. The Company recorded the equity-based compensation expense on a straight-line basis over the requisite service periods through March 31, 2022 and March 31, 2023. During the thirteen weeks ended April 2, 2023 and April 3, 2022, the Company recognized equity-based compensation expense related to the two bonuses of $0.4 million and $1.1 million, respectively. During the thirteen weeks ended April 2, 2023 and April 3, 2022, the Company issued 208,914 and 208,914 fully-vested shares, respectively, upon satisfaction of the service performed through March 31, 2023 and March 31, 2022, respectively.

Stock Options

A summary of stock option activity is as follows (in thousands, except per share amounts and years):


		Weighted-		Weighted-
		Average		Average
		Exercise		Remaining	Aggregate
	Options	Price per		Contractual	Intrinsic
	Outstanding	Option		Life (years)	Value
Balance as of January 1, 2023	322,793	$	11.35	8.29
Granted	—		—	—
Forfeited	(161,396)	$	11.35	—
Outstanding as of April 2, 2023	161,397	$	11.35	8.04
Exercisable as of April 2, 2023	161,397	$	11.35	8.04	$	—
Vested and expected to vest as of April 2, 2023	161,397	$	11.35	8.04	$	—

Restricted Stock and Restricted Stock Units (“RSUs”)

Immediately before the completion of the IPO, the LP was liquidated and the Class P unit holders of the LP (current and former employees or service providers of the Company) received shares of the Company’s common stock in exchange for their units of the LP. The Class P unit holders received 1,964,103 shares of common stock, comprised of 1,536,304 shares of vested common stock and 427,799 shares of unvested restricted stock. Any such shares of restricted stock received in respect of unvested Class P units of the LP are subject to vesting and a risk of forfeiture to the same extent as the corresponding Class P units. The Company recorded equity-based compensation expense of $0.2 million and $0.8 million during the thirteen weeks ended April 2, 2023 and April 3, 2022, respectively, related to the exchanged restricted stock. As of April 2, 2023, the unrecognized equity-based compensation expense for all restricted stock is $0.9 million and will be recognized over a weighted-average period of 1.45 years.

The following table summarizes the rollforward of unvested restricted stock during the thirteen weeks ended April 2, 2023:


	Unvested	Weighted-
	Restricted	Average Fair
	Stock	Value per Share
Balance at January 1, 2023	78,303	$	5.38
Restricted stock granted	—		—
Restricted stock vested	(9,270)		5.37
Restricted stock forfeited	(2,720)		5.37
Balance at April 2, 2023	66,313	$	5.38

During the thirteen weeks ended April 2, 2023, the Company entered into employment agreements with Crystal Landsem, the Chief Executive Officer, (the “CEO Employment Agreement”) and Tiffany Smith, the Chief Financial Officer, (the “CFO Employment Agreement”), under which 1,811,572 and 161,088 RSUs were granted, respectively. Under the CEO Employment Agreement, Ms. Landsem received a grant of 1,811,572 RSUs, which vest in quarterly installments beginning on June 30, 2023 through December 31, 2026 and are subject to continued service requirements. Under the CFO Employment Agreement, Ms. Smith received 161,088 RSUs, granted in two parts, with 118,025 and 43,063 RSUs granted on March 17, 2023 and April 30, 2023, respectively, which in combination will vest in three equal installments on March 8, 2024, March 7, 2025 and March 6, 2026, and are subject to continued service requirements. On March 5, 2023, Mr. McCreight received a grant of 25,873 RSUs pursuant to the McCreight IPO Employment Agreement. These RSUs vest in 12 equal installments from April 30, 2023 through March 31, 2024, and are subject to continued service requirements. In addition, under Mr. McCreight’s employment agreement for his Executive Chairman role, entered into on November 11, 2022 (the “Executive Chairman Employment Agreement”), Mr. McCreight was entitled to receive a grant of RSUs equivalent to $2 million. The Company initially concluded that the award was subject to the guidance within ASC 718 and was liability-classified upon issuance. On March 17, 2023, the number of RSUs associated with the award became determinable, and the award became equity-classified as it no longer met the criteria for liability classification. Mr. McCreight’s 836,820 RSUs were granted in two parts, with 613,116 RSUs granted on March 17, 2023 and 223,704 RSUs granted on April 30, 2023, the combination of which vest in equal, quarterly installments on the date immediately following the last day of each calendar quarter, starting April 1, 2023, and are subject to continued service requirements.

During the thirteen weeks ended April 2, 2023, the Company granted 2,520,541 RSUs to certain executives (inclusive of the aforementioned RSU grants to Ms. Landsem and Ms. Smith) and employees which vest over a three- year service period, and 694,536 RSUs to certain directors (inclusive of the aforementioned RSU grants to the Executive Chairman) which vest over a three-month to three-year service period pursuant to the Company’s Non-Employee Director Compensation Program and the Executive Chairman Employment Agreement. The Company recognized equity-based

compensation expense of $2.8 million and $2.1 million during the thirteen weeks ended April 2, 2023 and April 3, 2022, respectively, related to the RSUs. As of April 2, 2023, the unrecognized equity-based compensation expense is $17.5 million and will be recognized over a weighted-average period of 2.19 years.

The following table summarizes the roll forward of unvested RSUs during the thirteen weeks ended April 2, 2023:


		Weighted-
	Unvested	Average Fair
	RSUs	Value per Share
Balance at January 1, 2023	1,336,674	$	8.94
RSUs granted	3,215,077		2.76
RSUs vested	(491,769)		6.05
RSUs forfeited	(35,472)		7.68
Balance at April 2, 2023	4,024,510	$	4.37

Performance Stock Units (“PSUs”)

Under the CEO Employment Agreement, Ms. Landsem received a grant of 1,811,571 PSUs on March 5, 2023 which vest in three equal annual installments of 603,857 subject to the achievement of trailing ten day volume-weighted average price targets of the Company’s common stock and her continued employment on the vesting dates. The Company recognized equity-based compensation expense of $0.2 million during the thirteen weeks ended April 2, 2023, related to the PSUs. As of April 2, 2023, the unrecognized equity-based compensation expense is $4.5 million and will be recognized over a weighted-average period of 2.93 years.

The following table summarizes the rollforward of unvested PSUs during the thirteen weeks ended April 2, 2023:


		Weighted-
	Unvested	Average Fair
	PSUs	Value per Share
Balance at January 1, 2023	—	$	—
PSUs granted	1,811,571		2.65
PSUs vested	—		—
PSUs forfeited	—		—
Balance at April 2, 2023	1,811,571	$	2.65

Class P Units

384,522 of the outstanding Class P units included both a service condition and a performance condition, while the remainder of the Class P units only included a service condition. The performance-based vesting condition was satisfied upon completion of the IPO. Equity-based compensation expense of $0.4 million and $1.3 million related to the Class P units was recorded to general and administrative expense in the condensed consolidated statements of operations and comprehensive income for the thirteen and thirty-nine weeks ended October 3, 2021, respectively.

During October 2021, the LP modified the vesting schedule related to 763,178 outstanding Class P units for two senior executives to accelerate vesting if the two senior executives perform service after the completion of the IPO over the subsequent 12-month period. The Company concluded that the amendment to the Class P units was a modification under ASC 718 and there was no incremental equity-based compensation expense to recognize. With the completion of the Company’s IPO, the remaining unrecognized expense associated with the restricted stock, received in exchange at the IPO for the modified Class P units, was recognized over the subsequent 12-month period through November 2022.

Class P Distributions

Distributions payable to former Class P unit holders (“FCPUs”) triggered upon the completion of the Company’s 2021 IPO were determined to be settled in the thirteen weeks ended April 3, 2022 as a result of agreements reached with the FCPUs, and were recorded as an increase to additional paid-in capital. The agreements provided for contingent payments to the FCPUs of up to $0.6 million if certain conditions were met, which were recorded as equity-based compensation expense and accrued expenses and other current liabilities in the thirteen weeks ended April 3, 2022. The $0.6 million accrual was subsequently reversed during the thirteen weeks ended July 3, 2022, when the timeframe for the payment conditions expired.

Description of Business, Organization and Liquidity

3 Months Ended

Apr. 02, 2023

Description of Business, Organization and Liquidity

Description of Business, Organization and Liquidity

1.Description of Business, Organization and Liquidity

Organization and Business

Pursuant to a reorganization, Lulu’s Fashion Lounge Holdings, Inc., a Delaware Corporation (“Lulus”, or the “Company”), was formed on August 25, 2017 as a holding company and its primary asset is an indirect membership interest in Lulu’s Fashion Lounge, LLC (“Lulus LLC”). Prior to the sale of the Company’s Series A convertible preferred stock in April 2018, the Company was wholly-owned by Lulu’s Holdings, L.P. (the “LP”). Prior to the Company’s initial public offering in November 2021, the Company was majority-owned by the LP.

Lulus LLC was founded in 1996, starting as a vintage boutique in Chico, CA that began selling online in 2005 and transitioned to a purely online business in 2008. The LP was formed in 2014 as a holding company and purchased 100% of Lulus LLC’s outstanding common stock in 2014. The Company, through Lulus LLC, is an online retailer of women’s clothing, shoes and accessories headquartered in Chico, CA.

Impact of Macroeconomic Trends on Business

Changing macroeconomic factors, including inflation, interest rates, fuel prices, and overall consumer confidence with respect to current and future economic conditions, have directly impacted our sales in the first quarter of 2023 as discretionary consumer spending levels and shopping behavior fluctuate with these factors. During the first quarter of 2023, we have responded to these factors by taking appropriate pricing, promotional and other actions to stimulate customer demand. These factors are expected to continue to have an impact on our business, results of operations, our growth and financial condition. Additionally, the COVID-19 pandemic has had and may continue to have a materially adverse impact on the macroeconomic environment.

Significant Accounting Policies - Basic and Diluted Weighted Average Shares (Details) - shares	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items]
Weighted average shares used to compute net (loss) income per share attributable to common stockholders - Basic	39,233,953	38,098,073
Dilutive securities:
Weighted average shares used to compute net (loss) income per share attributable to common stockholders - Diluted	39,233,953	38,385,765
Unvested restricted stock
Dilutive securities:
Dilutive securities		94,659
Unvested RSUs
Dilutive securities:
Dilutive securities		4,854
Special compensation awards
Dilutive securities:
Dilutive securities		188,179

Balance Sheet Components - Property and Equipment, net (Details) - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022	Jan. 01, 2023
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 8,671		$ 8,377
Less: accumulated depreciation and amortization	(4,352)		(3,986)
Property and equipment, net	4,319		4,391
Depreciation and amortization	1,121	$ 841
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 3,859		3,802
Leasehold improvements \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in years)	3 years
Leasehold improvements \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in years)	9 years
Equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 2,778		2,659
Equipment \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in years)	3 years
Equipment \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in years)	7 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 1,888		1,880
Furniture and fixtures \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in years)	3 years
Furniture and fixtures \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Lives (in years)	7 years
Construction in progress
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 146		$ 36
Property and equipment, net
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 700	$ 400

Debt - Outstanding Debt under the Revolving Facility (Details) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended
	Nov. 15, 2021	Nov. 30, 2021	Apr. 02, 2023	Apr. 03, 2022
Line of Credit Facility [Line Items]
Repaid outstanding balance			$ 7,000	$ 10,000
New Revolving Credit Facility
Line of Credit Facility [Line Items]
Revolving line of credit		$ 50,000	29,700
Increase in maximum borrowing capacity amount		25,000
Borrowed amount			2,000
Repaid outstanding balance			$ 7,000
Variable commitment fee percent	0.375%
Interest rate at period end			6.60%
Effective interest rate			7.00%
Expected increase in interest rate per annum			2.00%
New Revolving Credit Facility \| Maximum
Line of Credit Facility [Line Items]
Revolving line of credit		75,000
New Revolving Credit Facility \| Secured overnight financing ("SOFR") rate
Line of Credit Facility [Line Items]
Debt instrument applicable margin percent	1.75%
New Revolving Credit Facility \| Base Rate
Line of Credit Facility [Line Items]
Debt instrument applicable margin percent	0.75%
New Revolving Credit Facility \| Federal funds rate
Line of Credit Facility [Line Items]
Debt instrument applicable margin percent	0.50%
New Revolving Credit Facility \| One month SOFR
Line of Credit Facility [Line Items]
Debt instrument applicable margin percent	1.00%
Letters of credit
Line of Credit Facility [Line Items]
Revolving line of credit		7,500	$ 7,200
Credit facility outstanding			$ 300
Revolving credit facility
Line of Credit Facility [Line Items]
Revolving line of credit		$ 50,000

Balance Sheet Components

3 Months Ended

Apr. 02, 2023

Balance Sheet Components

Balance Sheet Components

4.Balance Sheet Components

Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):


	Estimated Useful Lives	April 2,		January 1,
	in Years	2023		2023
Leasehold improvements	3-9	$	3,859	$	3,802
Equipment	3-7		2,778		2,659
Furniture and fixtures	3-7		1,888		1,880
Construction in progress			146		36
Total property and equipment			8,671		8,377
Less: accumulated depreciation and amortization			(4,352)		(3,986)
Property and equipment, net		$	4,319	$	4,391

Depreciation and amortization of property and equipment for the thirteen weeks ended April 2, 2023 and April 3, 2022 was $0.7 million and $0.4 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	April 2,		January 1,
	2023		2023
Accrued compensation and benefits	$	4,746	$	6,751
Accrued marketing		6,387		3,206
Accrued inventory		9,648		3,411
Other		5,897		4,608
Accrued expenses and other current liabilities	$	26,678	$	17,976

Equity-Based Compensation - Class P Units (Details) - Class P Units $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended	9 Months Ended
	Oct. 31, 2021 employee shares	Oct. 03, 2021 USD ($)	Sep. 30, 2020	Oct. 03, 2021 USD ($)	Oct. 02, 2022 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units outstanding					384,522
Equity based compensation \| $		$ 0.4		$ 1.3
Accelerate vesting shares	763,178
Number of senior executives, shares accelerated vesting \| employee	2
Required service period after completion of IPO		12 months	12 months

Subsequent Events (Details) - shares						1 Months Ended	3 Months Ended
Subsequent Events (Details) - shares	Apr. 30, 2023	Mar. 17, 2023	Mar. 06, 2023	Mar. 05, 2023	Apr. 01, 2022	May 10, 2023	Apr. 02, 2023	Jan. 01, 2023
Omnibus Equity Plan
Subsequent Event [Line Items]
Additional shares registered					3,200,000
RSUs
Subsequent Event [Line Items]
Stock granted							3,215,077
Restricted shares outstanding							4,024,510	1,336,674
RSUs \| Mr. McCreight
Subsequent Event [Line Items]
Stock granted		613,116	836,820	25,873
RSUs \| Tiffany Smith
Subsequent Event [Line Items]
Stock granted		118,025	161,088
Subsequent event \| Omnibus Equity Plan
Subsequent Event [Line Items]
Additional shares registered						2,000,000
Subsequent event \| RSUs \| Mr. McCreight
Subsequent Event [Line Items]
Stock granted	223,704
Restricted shares outstanding	836,820
Subsequent event \| RSUs \| Tiffany Smith
Subsequent Event [Line Items]
Stock granted	43,063
Restricted shares outstanding	161,088
Subsequent event \| RSUs \| Non-executive officer employees
Subsequent Event [Line Items]
Stock granted	206,218

Equity-Based Compensation - Stock Option Activity (Details) - Stock options - $ / shares	3 Months Ended	12 Months Ended
	Apr. 02, 2023	Jan. 01, 2023
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options Outstanding, Beginning balance	322,793
Options Outstanding, Forfeited	(161,396)
Options Outstanding, Ending balance	161,397	322,793
Options Outstanding, exercisable	161,397
Options Outstanding, Expected to vest	161,397
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Weighted-Average Exercise Price per Option, Beginning balance (in dollars per share)	$ 11.35
Weighted-Average Exercise Price per Option, Forfeited (in dollars per share)	11.35
Weighted-Average Exercise Price per Option, Ending balance (in dollars per share)	11.35	$ 11.35
Weighted-Average Exercise Price per Option, exercisable (in dollars per share)	11.35
Weighted-Average Exercise Price per Option, Expected to vest (in dollars per share)	$ 11.35
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted-Average Remaining Contractual Life (years)	8 years 14 days	8 years 3 months 14 days
Weighted-Average Remaining Contractual Life (years), Vested and exercisable	8 years 14 days
Weighted-Average Remaining Contractual Life (years), Expected to vest	8 years 14 days

Condensed Consolidated Statements of Redeemable Preferred Stock, Convertible Preferred Stock and Stockholders' Equity - USD ($) $ in Thousands	Common Stock.	Additional Paid-In Capital	Accumulated Deficit	Total
Balance at Jan. 02, 2022	$ 38	$ 222,080	$ (177,596)	$ 44,522
Balance (in shares) at Jan. 02, 2022	38,421,124
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for vesting of restricted stock units (RSUs)	$ 1	(1)
Issuance of common stock for vesting of restricted stock units (RSUs) (shares)	228,387
Issuance of common stock for special compensation award (shares)	208,914
Shares withheld for withholding tax on RSUs		(265)		(265)
Shares withheld for withholding tax on RSUs (in shares)	(28,295)
Offering costs related to Initial Public Offering (IPO)		(290)		(290)
Settlement of distributions payable to former Class P unit holders		2,648		2,648
Equity-based compensation expense		5,126		5,126
Net (loss) income and comprehensive (loss) income			2,043	2,043
Balance at Apr. 03, 2022	$ 39	229,298	(175,553)	53,784
Balance (in shares) at Apr. 03, 2022	38,830,130
Balance at Jan. 01, 2023	$ 39	238,725	(173,871)	64,893
Balance (in shares) at Jan. 01, 2023	39,259,328
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for vesting of restricted stock units (RSUs)	$ 1			1
Issuance of common stock for vesting of restricted stock units (RSUs) (shares)	491,769
Issuance of common stock for special compensation award (shares)	208,914
Issuance of common stock for employee stock purchase plan (ESPP)		269		269
Issuance of common stock for employee stock purchase plan (ESPP) (in shares)	47,502
Shares withheld for withholding tax on RSUs		(662)		(662)
Shares withheld for withholding tax on RSUs (in shares)	(277,606)
Forfeited shares of restricted stock (in shares)	(2,720)
Equity-based compensation expense		4,892		4,892
Net (loss) income and comprehensive (loss) income			(5,618)	(5,618)
Balance at Apr. 02, 2023	$ 40	$ 243,224	$ (179,489)	$ 63,775
Balance (in shares) at Apr. 02, 2023	39,727,187

Significant Accounting Policies (Tables)

3 Months Ended

Apr. 02, 2023

Significant Accounting Policies

Summary of significant changes in contract liabilities balances

The following table summarizes the significant changes in the contract liabilities balances included in accrued expenses and other current liabilities during the thirteen weeks ended April 2, 2023 and April 3, 2022 (in thousands):


	Deferred		Stored-Value
	Revenue		Cards
Balance as of January 1, 2023	$	69	$	10,828
Revenue recognized that was included in contract liability balance at the beginning of the period		(69)		(1,720)
Increase due to cash received, excluding amounts recognized as revenue during the period		122		2,022
Balance as of April 2, 2023	$	122	$	11,130


	Deferred		Stored-Value
	Revenue		Cards
Balance as of January 2, 2022	$	145	$	7,240
Revenue recognized that was included in contract liability balance at the beginning of the period		(145)		(1,786)
Increase due to cash received, excluding amounts recognized as revenue during the period		315		1,838
Balance as of April 3, 2022	$	315	$	7,292

Schedule of basic and diluted weighted average shares used to compute net (loss) income per share


	Thirteen Weeks Ended
	April 2, 2023	April 3, 2022
Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Basic	39,233,953	38,098,073
Dilutive securities:
Unvested restricted stock	—	94,659
Unvested restricted stock units (RSUs)	—	4,854
Special compensation awards	—	188,179
Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Diluted	39,233,953	38,385,765

Schedule of securities that were excluded from computation of diluted net (loss) income per share


	Thirteen Weeks Ended
	April 2, 2023	April 3, 2022
Stock options	161,397	322,793
Unvested restricted stock	66,313	234,169
Unvested RSUs	4,024,510	1,417,657
Performance stock units	1,811,571	—
Employee stock purchase plan shares	146,535	—
Total	6,210,326	1,974,619

Commitments and Contingencies

3 Months Ended

Apr. 02, 2023

Commitments and Contingencies.

Commitments and Contingencies

7.Commitments and Contingencies

Litigation and Other

From time to time, the Company may be a party to litigation and subject to claims incurred in the ordinary course of business, including personal injury and indemnification claims, labor and employment claims, threatened claims, breach of contract claims, and other matters. The Company accrues a liability when management believes information available prior to the issuance of the condensed consolidated financial statements indicates it is probable a loss has been incurred as of the date of the condensed consolidated financial statements and the amount of loss can be reasonably estimated. The Company adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Legal costs are expensed as incurred.

During the normal course of business, the Company may be a party to claims that are not covered by insurance. While the ultimate liability, if any, arising from these claims cannot be predicted with certainty, management does not believe that the resolution of any such claims would have a material adverse effect on the Company’s condensed consolidated financial statements. As of April 2, 2023, the Company was not aware of any currently pending legal matters or claims, individually or in the aggregate, that are expected to have a material adverse impact on its condensed consolidated financial statements.

Indemnification

The Company also maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify the Company’s directors. To date, the Company has not incurred any material costs and has not accrued any liabilities in the condensed consolidated financial statements as a result of these provisions.

Income Taxes (Tables)

3 Months Ended

Apr. 02, 2023

Income Taxes

Schedule of components of benefit (provision) for income taxes

All of the Company’s (loss) income before income taxes is from the United States. The following table presents the components of the benefit (provision) for income taxes (in thousands):


	Thirteen Weeks Ended
	April 2,			April 3,
	2023			2022
(Loss) income before benefit (provision) for income taxes	$	(6,326)		$	3,104
Benefit (provision) for income taxes		708			(1,061)
Effective tax rate		(11.2)	%		(34.18)	%

Equity-Based Compensation - Summary of Restricted Stock and Restricted Stock Units (Details)	3 Months Ended
	Apr. 02, 2023 $ / shares shares
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Balance at the beginning of period \| shares	78,303
Stock vested \| shares	(9,270)
Stock forfeited \| shares	(2,720)
Balance at the end of period \| shares	66,313
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted average fair value, beginning \| $ / shares	$ 5.38
Weighted average fair value, vested \| $ / shares	5.37
Weighted average fair value, forfeited \| $ / shares	5.37
Weighted average fair value, end \| $ / shares	$ 5.38
Unvested RSUs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Balance at the beginning of period \| shares	1,336,674
Stock granted \| shares	3,215,077
Stock vested \| shares	(491,769)
Stock forfeited \| shares	(35,472)
Balance at the end of period \| shares	4,024,510
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted average fair value, beginning \| $ / shares	$ 8.94
Weighted average fair value, granted \| $ / shares	2.76
Weighted average fair value, vested \| $ / shares	6.05
Weighted average fair value, forfeited \| $ / shares	7.68
Weighted average fair value, end \| $ / shares	$ 4.37
Performance Stock Units
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Stock granted \| shares	1,811,571
Balance at the end of period \| shares	1,811,571
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Weighted average fair value, granted \| $ / shares	$ 2.65
Weighted average fair value, end \| $ / shares	$ 2.65

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Cash Flows from Operating Activities
Net (loss) income	$ (5,618)	$ 2,043
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	1,121	841
Noncash lease expense	864	789
Amortization of debt discount and debt issuance costs	40	40
Equity-based compensation expense	4,698	5,758
Deferred income taxes	(2,105)	(554)
Changes in operating assets and liabilities:
Accounts receivable	(3,326)	(2,213)
Inventories	(8,644)	(19,892)
Assets for recovery	(2,862)	(2,928)
Income taxes (receivable) payable	1,388	1,636
Prepaid and other current assets	(295)	(499)
Accounts payable	1,719	7,136
Accrued expenses and other current liabilities	17,572	28,554
Operating lease liabilities	(803)	7
Other noncurrent liabilities	(44)	(470)
Net cash provided by operating activities	3,705	20,248
Cash Flows from Investing Activities
Capitalized software development costs	(551)	(600)
Purchases of property and equipment	(518)	(976)
Other		(78)
Net cash used in investing activities	(1,069)	(1,654)
Cash Flows from Financing Activities
Proceeds from borrowings on revolving line of credit	2,000
Repayments on revolving line of credit	(7,000)	(10,000)
Proceeds from issuance of common stock under employee stock purchase plan (ESPP)	269
Principal payments on finance lease obligations	(245)
Payment of offering costs related to the IPO		(542)
Withholding tax payments related to vesting of RSUs	(43)
Other	(7)	(21)
Net cash used in financing activities	(5,026)	(10,563)
Net (decrease) increase in cash, cash equivalents and restricted cash	(2,390)	8,031
Cash, cash equivalents and restricted cash at beginning of period	10,219	11,908
Total cash, cash equivalents and restricted cash at end of period	7,829	19,939
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	7,829	19,433
Restricted cash		506
Total cash, cash equivalents and restricted cash at end of period	7,829	19,939
Supplemental Disclosure
Income taxes, net	9	(20)
Interest	497	164
Operating leases	1,298	510
Finance leases	245
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Addition of right-of-use assets, including prepaid rent, net of deferred rent recorded upon adoption of ASC 842		28,018
Addition of lease liabilities recorded upon adoption of ASC 842		28,599
Right-of-use assets acquired under operating lease obligations	17
Assets acquired under finance lease obligations	69	3,763
Purchases of property and equipment included in accounts payable and accrued expenses	$ 35	99
Offering costs included in accrued expenses		$ 290

Equity-Based Compensation - Restricted Stock and Restricted Stock Units (Details) $ in Millions						3 Months Ended
	Apr. 30, 2023 shares	Mar. 17, 2023 shares	Mar. 06, 2023 item installment shares	Mar. 05, 2023 installment shares	Nov. 15, 2021 shares	Apr. 02, 2023 USD ($) shares	Apr. 03, 2022 USD ($)	Nov. 11, 2022 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Converted from class P units of the Company upon LP liquidation					1,964,103
Vested common stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Converted from class P units of the Company upon LP liquidation					1,536,304
Unvested restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Converted from class P units of the Company upon LP liquidation					427,799
Equity based compensation \| $						$ 0.2	$ 0.8
Unvested restricted stock \| Service vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized equity based compensation \| $						$ 0.9
Unrecognized equity-based compensation expected to be recognized period						1 year 5 months 12 days
Unvested RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted						3,215,077
Equity based compensation \| $						$ 2.8	$ 2.1
Unrecognized equity-based compensation expense \| $						$ 17.5
Unrecognized equity-based compensation expected to be recognized period						2 years 2 months 8 days
Unvested RSUs \| Executives and Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted						2,520,541
Vesting period						3 years
Unvested RSUs \| Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted						694,536
Unvested RSUs \| Directors \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period						3 months
Unvested RSUs \| Directors \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period						3 years
Unvested RSUs \| Crystal Landsem
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted			1,811,572			1,811,572
Unvested RSUs \| Tiffany Smith
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of grants \| item			2
Stock granted		118,025	161,088
Vest installments \| installment			3
Unvested RSUs \| Mr. McCreight
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of grants \| item			2
Stock granted		613,116	836,820	25,873
Stock grant issuable \| $								$ 2.0
Vest installments \| installment				12
Unvested RSUs \| Forecast \| Tiffany Smith
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted	43,063
Unvested RSUs \| Forecast \| Mr. McCreight
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted	223,704
Performance Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted						1,811,571
Equity based compensation \| $						$ 0.2
Unrecognized equity-based compensation expense \| $						$ 4.5
Unrecognized equity-based compensation expected to be recognized period						2 years 11 months 4 days
Performance Stock Units \| Crystal Landsem
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock granted				1,811,571
Number of equal annual installments \| installment				3
Annual installment value				603,857

Significant Accounting Policies

3 Months Ended

Apr. 02, 2023

Significant Accounting Policies

Significant Accounting Policies

2.Significant Accounting Policies

Basis of Presentation and Fiscal Year

The Company’s fiscal year consists of a 52-week or 53-week period ending on the Sunday nearest December 31. The fiscal years ended December 31, 2023 and January 1, 2023 consisted of 52-weeks.

The condensed consolidated financial statements and accompanying notes include the accounts of the Company and its wholly owned subsidiaries, after elimination of all intercompany balances and transactions. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the Unites States of America (“GAAP”) and the requirements of the SEC for interim reporting. As permitted under these rules, certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The interim condensed consolidated financial statements are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position as of April 2, 2023 and its results of operations for the thirteen weeks ended April 2, 2023 and April 3, 2022 and its cash flows for the thirteen weeks ended April 2, 2023 and April 3, 2022. The results of operations for the thirteen weeks ended April 2, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2023 or for any other future annual or interim period.

The condensed consolidated balance sheet as of January 1, 2023 was derived from the Company’s audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 14, 2023.

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements are consistent with those discussed in Note 2 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended January 1, 2023, except as noted below and within the "Adopted and Recently Issued Accounting Pronouncements" section.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The significant estimates and assumptions made by management relate to sales return reserves and related assets for recovery, lease right-of-use assets and related lease liabilities, and income tax valuation allowance. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions.

Concentration of Credit Risks

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents and restricted cash. At times, such amounts may exceed federally insured limits. The Company reduces credit risk by depositing its cash with a major credit-worthy financial institution within the United States. To date, the Company has not experienced any losses on its cash deposits. As of April 2, 2023 and January 1, 2023, a single wholesale customer represented 14% and 15%, respectively, of the Company’s accounts receivable balance. No customer accounted for greater than 10% of the Company’s net revenue during the thirteen weeks ended April 2, 2023 and April 3, 2022.

Leases

Contracts that have been determined to convey the right to use an identified asset are evaluated for classification as an operating or finance lease. For the Company’s operating and finance leases, the Company records a lease liability based on the present value of the lease payments at lease inception. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate (“IBR”). The determination of the IBR requires judgment and is primarily based on publicly-available information for companies within similar industries and with similar credit profiles. We adjust the rate for the impact of collateralization, the lease term and other specific terms included in each lease arrangement. The IBR is determined at the lease commencement and is subsequently reassessed upon a modification to the lease arrangement. The right-of-use asset is recorded based on the corresponding lease liability at lease inception, adjusted for payments made to the lessor at or before the commencement date, initial direct costs incurred and any tenant incentives allowed for under the lease. The Company does not include optional renewal terms or early termination provisions unless the Company is reasonably certain such options would be exercised at the inception of the lease. Lease right-of-use assets, current portion of lease liabilities, and lease liabilities, net of current portion are included on the condensed consolidated balance sheets.

Fixed lease expense for operating leases is recognized on a straight-line basis, unless the right-of-use assets have been impaired, over the reasonably assured lease term based on the total lease payments and is included in operating expenses in the condensed consolidated statements of operations and comprehensive (loss) income. Fixed and variable lease expense on operating leases is recognized within operating expenses in the condensed consolidated statements of operations and

comprehensive (loss) income. Finance lease expenses are recognized on a straight-line basis. Fixed and variable expenses are captured within interest expense and depreciation expense, which has components within general and administrative expenses and cost of revenue. The Company’s non-lease components are primarily related to maintenance, insurance and taxes, which varies based on future outcomes and is thus recognized in lease expense when incurred.

Revenue Recognition

The Company generates revenue primarily from the sale of merchandise products directly to end customers. The sale of products is a distinct performance obligation, and revenue is recognized at a point in time when control of the promised product is transferred to customers, which the Company determined occurs upon shipment based on its evaluation of the related shipping terms. Revenue is recognized in an amount that reflects the transaction price consideration that the Company expects to receive in exchange for those products. The Company’s payment terms are typically at the point of sale for merchandise product sales.

The Company elected to exclude from revenue taxes assessed by governmental authorities, including value-added and other sales-related taxes, that are imposed on and concurrent with revenue-producing activities. The Company has elected to apply the practical expedient, relative to e-commerce sales, which allows an entity to account for shipping and handling as fulfillment activities, and not a separate performance obligation. Accordingly, the Company recognizes revenue for only one performance obligation, the sale of the product, at shipping point (when the customer gains control). Shipping and handling costs associated with outbound freight are accounted for as fulfillment costs and are included in cost of goods sold. The Company has elected to apply the practical expedient to expense costs as incurred for incremental costs to obtain a contract when the amortization period would have been one year or less.

Revenue from merchandise product sales is reported net of sales returns, which includes an estimate of future returns based on historical return rates, with a corresponding reduction to cost of sales. There is judgment in utilizing historical trends for estimating future returns. The Company’s refund liability for sales returns is included in the returns reserve on its condensed consolidated balance sheets and represents the expected value of the refund that will be due to the Company’s customers. The Company also has corresponding assets for recovery that represent the expected net realizable value of the merchandise inventory to be returned.

The Company sells stored-value gift cards to customers and offers merchandise credit stored-value cards for certain returns. Such stored-value cards do not have an expiration date. The Company recognizes revenue from stored-value cards when the card is redeemed by the customer. The Company has determined that sufficient evidence exists to support an estimate for stored-value card breakage. Subject to requirements to remit balances to governmental agencies, breakage is recognized as revenue in proportion to the pattern of rights exercised by the customer, which is substantially within thirty-six months from the date of issuance. The amount of breakage recognized in revenue during the thirteen weeks ended April 2, 2023 and April 3, 2022 was not material.

The Company has two types of contractual liabilities: (i) cash collections from its customers prior to delivery of products purchased (“deferred revenue”), which are initially recorded within accrued expenses and recognized as revenue when the products are shipped, (ii) unredeemed gift cards and online store credits, which are initially recorded as a stored-value card liability and are recognized as revenue in the period they are redeemed.


	Deferred		Stored-Value
	Revenue		Cards
Balance as of January 1, 2023	$	69	$	10,828
Revenue recognized that was included in contract liability balance at the beginning of the period		(69)		(1,720)
Increase due to cash received, excluding amounts recognized as revenue during the period		122		2,022
Balance as of April 2, 2023	$	122	$	11,130


	Deferred		Stored-Value
	Revenue		Cards
Balance as of January 2, 2022	$	145	$	7,240
Revenue recognized that was included in contract liability balance at the beginning of the period		(145)		(1,786)
Increase due to cash received, excluding amounts recognized as revenue during the period		315		1,838
Balance as of April 3, 2022	$	315	$	7,292

Selling and Marketing Expenses

Advertising costs included in selling and marketing expenses were $15.1 million and $16.9 million for the thirteen weeks ended April 2, 2023 and April 3, 2022, respectively.

Net (Loss) Income Per Share Attributable to Common Stockholders

Basic net (loss) income per share attributable to common stockholders is computed using net (loss) income attributable to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted net (loss) income per share attributable to common stockholders represents net (loss) income attributable to common stockholders divided by the weighted average number of common shares outstanding during the period, including the effects of any dilutive securities outstanding.

The following table presents the calculation of basic and diluted weighted average shares used to compute net (loss) income per share attributable to common stockholders:


	Thirteen Weeks Ended
	April 2, 2023	April 3, 2022
Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Basic	39,233,953	38,098,073
Dilutive securities:
Unvested restricted stock	—	94,659
Unvested restricted stock units (RSUs)	—	4,854
Special compensation awards	—	188,179
Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Diluted	39,233,953	38,385,765

The following securities were excluded from the computation of diluted net (loss) income per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (on an as-converted basis):


	Thirteen Weeks Ended
	April 2, 2023	April 3, 2022
Stock options	161,397	322,793
Unvested restricted stock	66,313	234,169
Unvested RSUs	4,024,510	1,417,657
Performance stock units	1,811,571	—
Employee stock purchase plan shares	146,535	—
Total	6,210,326	1,974,619

Recently Adopted Accounting Pronouncements

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which amends guidance on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities from an incurred loss methodology to an expected loss methodology. For assets held at amortized cost basis, the guidance eliminates the probable initial recognition threshold and instead requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses are recorded through an allowance for credit losses, rather than a write-down, limited to the amount by which fair value is below amortized cost. Additional disclosures about significant estimates and credit quality are also required. The guidance is effective for the Company for fiscal years beginning after December 15, 2022. The Company adopted this guidance on January 2, 2023, and it did not have a material impact on its consolidated financial statements or disclosure requirements.

Recently Issued Accounting Pronouncements

There are no new recent accounting pronouncements that are expected to have a material impact on our consolidated financial statements.

Preferred Stock

3 Months Ended

Apr. 02, 2023

Preferred Stock

Preferred Stock

8.Preferred Stock

Pursuant to the Company’s amended and restated certificate of incorporation, the Company is authorized to issue 10,000,000 shares of preferred stock having a par value of $0.001 per share. The Company’s board of directors has the authority to issue preferred stock and to determine the rights, preferences, privileges, and restrictions, including voting rights, of those shares. As of April 2, 2023 and January 1, 2023, no shares of preferred stock were issued and outstanding.

Related Party Transactions

3 Months Ended

Apr. 02, 2023

Related Party Transactions

Related Party Transactions

12.Related Party Transactions

Significant Shareholders

The Company identified three shareholders with aggregate ownership interest in the Company greater than 10%. The Company reviewed the respective investment portfolio holdings of these shareholders and identified investments in other entities that the Company engages in business with. All of these business relationships were obtained without the support of these shareholders, and as such, are believed to be at terms comparable to those that would be obtained through arm’s length dealings with unrelated third parties.

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Apr. 02, 2023	Jan. 01, 2023
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock issued	0	0
Preferred stock outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	39,727,187	39,259,328
Common stock, shares outstanding	39,727,187	39,259,328

Fair Value Measurements (Details) $ in Millions	Nov. 30, 2021 USD ($)
Revolving credit facility
Fair Value Measurements
Revolving line of credit	$ 50.0

Preferred Stock (Details) - $ / shares	Apr. 02, 2023	Jan. 01, 2023
Temporary Equity [Line Items]
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock issued	0	0
Preferred stock outstanding	0	0

Equity-Based Compensation - 2021 Equity Plan (Details) - 2021 Equity Incentive Plan	3 Months Ended
	Apr. 02, 2023 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum aggregate number of shares reserved for issuance	925,000
Options expiration period	10 years

Description of Business, Organization and Liquidity (Details)	Dec. 31, 2014
Description of Business, Organization and Liquidity
Acquired percentage of outstanding common stock of subsidiary by LP	100.00%

Subsequent Events

3 Months Ended

Apr. 02, 2023

Subsequent Events

Subsequent Events

13.Subsequent Events

The compensation committee has recommended, and the Board has unanimously approved, an amendment to the Omnibus Equity Plan, which would increase the authorized number of shares available for grant by 2,000,000. The Amendment would become effective on June 13, 2023, if approved by stockholders at the Annual Meeting.

On April 30, 2023, upon the recommendation of the compensation committee, the Board approved a grant of 223,704 RSUs to Mr. McCreight which is the balance of 836,820 RSUs granted pursuant to the Executive Chairman Employment Agreement and a grant of 43,063 RSUs to Ms. Smith, which is the balance of the 161,088 RSUs granted pursuant to the CFO Employment Agreement.

On April 30, 2023, upon the recommendation of the compensation committee, the Board approved an aggregate grant of 206,218 RSUs to certain non-executive officer employees, subject to obtaining stockholder approval of the Amendment to the Omnibus Equity Plan at the Company’s Annual Meeting. If stockholder approval is not obtained, then the recipients will receive the awards by July 15, 2023 as a result of additional shares becoming available for issuance under the Omnibus Equity Plan.

Debt

3 Months Ended

Apr. 02, 2023

Debt

Debt

5.Debt

Revolving Facility

During November 2021, the Company entered into a Credit Agreement with Bank of America (the “Credit Agreement”) to provide the Revolving Facility that provides for borrowings up to $50.0 million (the "Revolving Facility"). During the term of the Credit Agreement, the Company can increase the aggregate amount of the Revolving Facility up to an additional $25.0 million (for maximum aggregate lender commitments of up to $75.0 million), subject to the satisfaction of certain conditions under the Credit Agreement, including obtaining the consent of the administrative agent and an increased commitment from existing or new lenders. In addition, the Credit Agreement may be used to issue letters of credit up to $7.5 million (“Letter of Credit”). During the thirteen weeks ended April 2, 2023, the Company borrowed $2.0 million under the Revolving Facility and repaid $7.0 million of the outstanding balance. The Revolving Facility matures on November 15, 2024, while the Letter of Credit matures on November 8, 2024. As of April 2, 2023, we had $0.3 million outstanding under the Letter of Credit. As of April 2, 2023, we had $29.7 million available for borrowing under the Revolving Facility and $7.2 million available to issue letters of credit.

All borrowings under the Credit Agreement accrue interest at a rate equal to, at the Company’s option, either (x) the term daily SOFR, plus the applicable SOFR adjustment plus a margin of 1.75% per annum or (y) the base rate plus a margin of 0.75% (with the base rate being the highest of the federal funds rate plus 0.50%, the prime rate and term SOFR for a period of one month plus 1.00%). Additionally, a commitment fee of 37.5 basis points will be assessed on unused commitments under the Revolving Facility, taking into account the sum of outstanding borrowings and Letter of Credit obligations. As of April 2, 2023, the interest rate for the Revolving Facility was 6.6%. During the thirteen weeks ended April 2, 2023, the effective interest rate for the Revolving Facility was 7.0%.

Amounts borrowed under the Credit Agreement are collateralized by all assets of the Company and contains various financial and non-financial covenants for reporting, protecting and obtaining adequate insurance coverage for assets collateralized and for coverage of business operations, and complying with requirements, including the payment of all necessary taxes and fees for all federal, state and local government entities. Immediately upon the occurrence and during the continuance of an event of default, including the noncompliance with the above covenants, the lender may increase the interest rate per annum by 2.0% above the rate that would be otherwise applicable. As of April 2, 2023, management has determined that the Company was in compliance with all financial covenants.

Debt Discounts and Issuance Costs

Debt discounts and issuance costs are deferred and amortized over the life of the related loan using the effective interest method. The associated expense is included in interest expense in the condensed consolidated statements of operations and comprehensive (loss) income. Debt discounts and issuance costs are presented as a reduction of long-term debt with the exception of debt issuance costs related to the Revolving Facility, which are included in other non-current assets in the condensed consolidated balance sheets. As of April 2, 2023 and January 1, 2023, unamortized debt issuance costs recorded within other non-current assets were $0.3 million and $0.3 million, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI https://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Balance Sheet Components (Tables)

3 Months Ended

Apr. 02, 2023

Balance Sheet Components

Schedule of property and equipment, net

Property and equipment, net consisted of the following (in thousands):


	Estimated Useful Lives	April 2,		January 1,
	in Years	2023		2023
Leasehold improvements	3-9	$	3,859	$	3,802
Equipment	3-7		2,778		2,659
Furniture and fixtures	3-7		1,888		1,880
Construction in progress			146		36
Total property and equipment			8,671		8,377
Less: accumulated depreciation and amortization			(4,352)		(3,986)
Property and equipment, net		$	4,319	$	4,391

Schedule of accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	April 2,		January 1,
	2023		2023
Accrued compensation and benefits	$	4,746	$	6,751
Accrued marketing		6,387		3,206
Accrued inventory		9,648		3,411
Other		5,897		4,608
Accrued expenses and other current liabilities	$	26,678	$	17,976

Significant Accounting Policies - Anti-dilutive Securities (Details) - shares	3 Months Ended
	Apr. 02, 2023	Apr. 03, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	6,210,326	1,974,619
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	161,397	322,793
Unvested restricted stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	66,313	234,169
Unvested RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	4,024,510	1,417,657
Performance stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	1,811,571
Employee stock purchase plan shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	146,535

Balance Sheet Components - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Apr. 02, 2023	Jan. 01, 2023
Accrued Expenses and Other Current Liabilities
Accrued compensation and benefits	$ 4,746	$ 6,751
Accrued marketing	6,387	3,206
Accrued inventory	9,648	3,411
Other	5,897	4,608
Accrued expenses and other current liabilities	$ 26,678	$ 17,976

Equity-Based Compensation - Class P Distributions (Details) - USD ($) $ in Millions	3 Months Ended
	Jul. 03, 2022	Apr. 03, 2022
Distribution Class P Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity-based compensation expense	$ (0.6)	$ 0.6

Leases (Details) - USD ($) $ in Millions	Apr. 02, 2023	Apr. 03, 2022
Leases
Remaining obligations for short-term leases	$ 0.0	$ 0.5

Leases

3 Months Ended

Apr. 02, 2023

Leases

Leases

6.Leases

On January 3, 2022, the Company adopted ASC 842 using the alternative transition method and applied the standard only to leases that existed at that date. Under the alternative transition method, the Company did need to restate the comparative periods in transition and will continue to present financial information and disclosures for periods before January 3, 2022, in accordance with FASB ASC 840, Leases. The Company elected the practical expedient package, which among other practical expedients, includes the option to retain the historical classification of leases entered into prior to

January 3, 2022, and allows entities to recognize lease payments on a straight-line basis over the lease term for leases with a term of 12 months or less. The Company also elected the practical expedient to combine lease and non-lease components.

The Company is a lessee under various lease agreements. The determination of whether an arrangement contains a lease and the lease classification is made at lease commencement (date on which a lessor makes an underlying asset available for use by the lessee). At lease commencement, the Company also measures and recognizes a right-of-use asset, representing the Company’s right to use the underlying asset, and a lease liability, representing the Company’s obligation to make lease payments under the terms of the arrangement. The lease term is defined as the noncancelable portion of the lease term plus any periods covered by an option to extend the lease if it is reasonably certain that the option will be exercised. For the purposes of recognizing right-of-use assets and lease liabilities associated with the Company’s leases, the Company has elected the practical expedient of not recognizing a right-of-use asset or lease liability for short-term leases, which are leases with a term of 12 months or less. The Company has multiple finance leases and operating leases that are combined and included in the lease right-of-use assets, lease liabilities, current, and lease liabilities, noncurrent on the Company’s condensed consolidated balance sheets.

The Company primarily leases its distribution facilities and corporate offices under operating lease agreements expiring on various dates through December 2031, most of which contain options to extend. In addition to payment of base rent, the Company is also required to pay property taxes, insurance, and common area maintenance expenses. The Company records lease expense on a straight-line basis over the term of the lease. The Company had zero and $0.5 million remaining obligations for the base rent related to the short-term leases as of April 2, 2023 and April 3, 2022, respectively.

The Company also leases equipment under finance lease agreements expiring on various dates through May 2028.

As of April 2, 2023, the future minimum lease payments for the Company’s operating and finance leases for each of the fiscal years were as follows (in thousands):


Fiscal Year:		Operating Leases	Finance Leases		Total
2023 (remaining nine months)	$	3,894	$	993	$	4,887
2024		5,283		1,267		6,550
2025		5,844		1,268		7,112
2026		4,605		14		4,619
2027		5,138		15		5,153
Thereafter		11,632		6		11,638
Total undiscounted lease payment		36,396		3,563		39,959
Present value adjustment		(7,275)		(148)		(7,423)
Total lease liabilities		29,121		3,415		32,536
Less: lease liabilities, current		(3,428)		(1,347)		(4,775)
Lease liabilities, noncurrent	$	25,693	$	2,068	$	27,761

Under the terms of the remaining lease agreements, the Company is also responsible for certain variable lease payments that are not included in the measurement of the lease liability, including non-lease components such as common area maintenance fees, taxes, and insurance.



		Thirteen Weeks Ended
		April 2,
		2023
Finance lease cost
Amortization of ROU assets	$	304
Interest on lease liabilities		27
Operating lease cost		1,201
Short-term lease cost		159
Variable lease cost		216
Total lease cost	$	1,907

Lease cost included in cost of revenue	$	1,387
Lease cost included in general and administrative expenses	$	520

Weighted-average remaining lease term - finance leases		37 months
Weighted-average remaining lease term - operating leases		84 months
Weighted-average discount rate - finance leases		3.05%
Weighted-average discount rate - operating leases		6.50%

Leases - Future Minimum Lease Payments (Details) $ in Thousands	Apr. 02, 2023 USD ($)
Operating Leases
2023 (remaining nine months)	$ 3,894
2024	5,283
2025	5,844
2026	4,605
2027	5,138
Thereafter	11,632
Total undiscounted lease payment	36,396
Present value adjustment	(7,275)
Total lease liabilities	29,121
Less: lease liabilities, current	$ (3,428)
Operating lease liability current balance sheet position	Lease liabilities, current
Lease liabilities, noncurrent	$ 25,693
Operating lease liability non-current balance sheet position	Lease liabilities, noncurrent
Finance Leases
2023 (remaining nine months)	$ 993
2024	1,267
2025	1,268
2026	14
2027	15
Thereafter	6
Total undiscounted lease payment	3,563
Present value adjustment	(148)
Total lease liabilities	3,415
Less: lease liabilities, current	$ (1,347)
Finance lease liability current balance sheet position	Lease liabilities, current
Lease liabilities, noncurrent	$ 2,068
Finance lease liability non-current balance sheet position	Lease liabilities, noncurrent
Total operating and finance lease liabilities
2023 (remaining nine months)	$ 4,887
2024	6,550
2025	7,112
2026	4,619
2027	5,153
Thereafter	11,638
Total undiscounted lease payment	39,959
Present value adjustment	(7,423)
Total lease liabilities	32,536
Less: lease liabilities, current	(4,775)
Lease liabilities, noncurrent	$ 27,761

Fair Value Measurements

3 Months Ended

Apr. 02, 2023

Fair Value Measurements

Fair Value Measurements

3.Fair Value Measurements

The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts payable, accrued expenses and revolving line of credit. As of April 2, 2023 and January 1, 2023, the carrying values of cash and cash equivalents, restricted cash, accounts payable and accrued expenses approximate fair value due to their short-term maturities. The fair value of the Company’s Revolving Facility that provides for borrowings up to $50.0 million (see Note 5, Debt) approximates its carrying value as the stated interest rates reset daily at the daily secured overnight financing rate (“SOFR”) plus an applicable margin and, as such, approximate market rates currently available to the Company. The Company does not have any financial instruments that were determined to be Level 3.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Significant Accounting Policies - Concentration of Credit Risks (Details) - Customer concentration risk - customer	3 Months Ended	12 Months Ended
	Apr. 02, 2023	Jan. 01, 2023	Apr. 03, 2022
Accounts receivable \| Single wholesale customer
Concentration Risk [Line Items]
Concentration risk percentage	14.00%	15.00%
Revenue \| Maximum
Concentration Risk [Line Items]
Concentration risk percentage	10.00%
Number of customers	0		0

Equity-Based Compensation - Former CEO Stock Options and Special Compensation Awards (Details) $ / shares in Units, $ in Millions		1 Months Ended	3 Months Ended
	Feb. 13, 2023 shares	Apr. 30, 2021 $ / shares shares	Apr. 02, 2023 USD ($) item shares	Apr. 03, 2022 USD ($) shares	Nov. 15, 2021 item
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Forfeited			161,396
Options Outstanding, Expected to vest			161,397
Mr. McCreight
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options grants in period		322,793
Stock option exercise price \| $ / shares		$ 11.35
Number of bonus available \| item			2
Value of each bonus available \| $			$ 3.0
Aggregate value of bonus available \| $			6.0
Equity based compensation \| $			$ 0.4	$ 1.1
Equity-based compensation expense (in shares)			208,914	208,914
Accelerated expenses \| $			$ 1.2
Options Outstanding, Forfeited	161,396		161,396
Options Outstanding, Expected to vest			161,397
Mr. McCreight \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Termination of service			90 days
Mr. McCreight \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Termination of service			3 years
Mr. McCreight \| IPO
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of bonus available \| item					2
Mr. McCreight \| Service vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options grants in period		275,133
Mr. McCreight \| Service and performance vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options grants in period		47,660

Significant Accounting Policies (Policies)

3 Months Ended

Apr. 02, 2023

Significant Accounting Policies

Basis of Presentation and Fiscal Year

The Company’s fiscal year consists of a 52-week or 53-week period ending on the Sunday nearest December 31. The fiscal years ended December 31, 2023 and January 1, 2023 consisted of 52-weeks.

Use of Estimates

Concentration of Credit Risks

Leases

Revenue Recognition


	Deferred		Stored-Value
	Revenue		Cards
Balance as of January 1, 2023	$	69	$	10,828
Revenue recognized that was included in contract liability balance at the beginning of the period		(69)		(1,720)
Increase due to cash received, excluding amounts recognized as revenue during the period		122		2,022
Balance as of April 2, 2023	$	122	$	11,130


	Deferred		Stored-Value
	Revenue		Cards
Balance as of January 2, 2022	$	145	$	7,240
Revenue recognized that was included in contract liability balance at the beginning of the period		(145)		(1,786)
Increase due to cash received, excluding amounts recognized as revenue during the period		315		1,838
Balance as of April 3, 2022	$	315	$	7,292

Selling and Marketing Expenses

Advertising costs included in selling and marketing expenses were $15.1 million and $16.9 million for the thirteen weeks ended April 2, 2023 and April 3, 2022, respectively.

Net (Loss) Income Per Share Attributable to Common Stockholders

The following table presents the calculation of basic and diluted weighted average shares used to compute net (loss) income per share attributable to common stockholders:


	Thirteen Weeks Ended
	April 2, 2023	April 3, 2022
Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Basic	39,233,953	38,098,073
Dilutive securities:
Unvested restricted stock	—	94,659
Unvested restricted stock units (RSUs)	—	4,854
Special compensation awards	—	188,179
Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Diluted	39,233,953	38,385,765


	Thirteen Weeks Ended
	April 2, 2023	April 3, 2022
Stock options	161,397	322,793
Unvested restricted stock	66,313	234,169
Unvested RSUs	4,024,510	1,417,657
Performance stock units	1,811,571	—
Employee stock purchase plan shares	146,535	—
Total	6,210,326	1,974,619

Recently Adopted and Issued Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

There are no new recent accounting pronouncements that are expected to have a material impact on our consolidated financial statements.

- Definition

Disclosure of accounting policy for revenue from contract with customer.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 17
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130561-203045

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 20
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130566-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130563-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI https://asc.fasb.org/topic&trid=49130388

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130566-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
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-Paragraph 4
-Subparagraph (e)
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
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-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130566-203045

+ Details

Income Taxes - Federal Income Tax Rate (Details)	3 Months Ended
Income Taxes - Federal Income Tax Rate (Details)	Apr. 02, 2023	Apr. 03, 2022
Income Taxes
Federal income tax rate	21.00%	21.00%