0001558370-24-015517 | 10-Q | XBRL Viewer | Lulus Fashion Lounge Holdings INC

Common Stock	9 Months Ended
Sep. 29, 2024
Common Stock
Common Stock	9.Common Stock The Company has authorized the issuance of 250,000,000 shares of common stock, $0.001 par value ("common stock") as of September 29, 2024 and December 31, 2023, respectively. 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 September 29, 2024, the Company has reserved 161,397 shares of common stock for issuance upon the exercise of stock options, and 1,522,874 shares of common stock available for future issuance under the Lulu's Fashion Lounge Holdings, Inc. Omnibus Equity Plan (the “Omnibus Equity Plan”) and 1,310,595 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.

Common Stock

9 Months Ended

Sep. 29, 2024

9.Common Stock

The Company has authorized the issuance of 250,000,000 shares of common stock, $0.001 par value ("common stock") as of September 29, 2024 and December 31, 2023, respectively. 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 September 29, 2024, the Company has reserved 161,397 shares of common stock for issuance upon the exercise of stock options, and 1,522,874 shares of common stock available for future issuance under the Lulu's Fashion Lounge Holdings, Inc. Omnibus Equity Plan (the “Omnibus Equity Plan”) and 1,310,595 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 equity.

+ References

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+ Details

Balance Sheet Components (Tables)

9 Months Ended

Sep. 29, 2024

Balance Sheet Components

Schedule of property and equipment, net

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


	Estimated Useful Lives	September 29,		December 31,
	in Years	2024		2023
Leasehold improvements	3 – 9	$	5,014	$	4,314
Equipment	3 – 7		3,802		3,053
Furniture and fixtures	3 – 7		2,092		2,151
Construction in progress			—		688
Total property and equipment			10,908		10,206
Less: accumulated depreciation and amortization			(6,532)		(5,494)
Property and equipment, net		$	4,376	$	4,712

Schedule of accrued expenses and other current liabilities

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


	September 29,		December 31,
	2024		2023
Accrued compensation and benefits	$	3,693	$	5,057
Accrued marketing		4,185		5,002
Accrued inventory		8,098		4,151
Accrued freight		2,329		1,940
Accrued legal contingent liability		4,781		—
Other		3,535		2,193
Accrued expenses and other current liabilities	$	26,621	$	18,343

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 29, 2024	Oct. 01, 2023
Cash Flows from Operating Activities
Net loss	$ (23,411)	$ (12,104)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	4,102	3,546
Noncash lease expense	2,958	2,699
Amortization of debt discount and debt issuance costs	137	117
Loss on disposal of property and equipment	6
Equity-based compensation expense	6,150	13,366
Deferred income taxes	3,802	(2,281)
Changes in operating assets and liabilities:
Accounts receivable	(925)	470
Inventories	(3,005)	1,696
Assets for recovery	(1,741)	(1,853)
Income taxes (receivable) payable	(52)	2,243
Prepaid and other current assets	(3,276)	527
Accounts payable	2,512	3,620
Accrued expenses and other current liabilities	19,183	11,636
Operating lease liabilities	(2,931)	(2,464)
Other noncurrent liabilities	1,624	(118)
Net cash provided by operating activities	5,133	21,100
Cash Flows from Investing Activities
Capitalized software development costs	(1,144)	(1,550)
Purchases of property and equipment	(1,271)	(1,393)
Other		(66)
Net cash used in investing activities	(2,415)	(3,009)
Cash Flows from Financing Activities
Proceeds from borrowings on revolving line of credit	31,500	10,000
Repayments on revolving line of credit	(28,000)	(24,000)
Proceeds from issuance of common stock under Employee Stock Purchase Plan (ESPP)	239	487
Principal payments on finance lease obligations	(1,374)	(726)
Withholding tax payments related to vesting of RSUs and 2023 Bonus Plan	(1,005)	(1,199)
Repurchase of common stock	(276)
Other		(6)
Net cash provided by (used in) financing activities	1,084	(15,444)
Net increase in cash and cash equivalents	3,802	2,647
Cash and cash equivalents at beginning of period	2,506	10,219
Cash and cash equivalents at end of period	6,308	12,866
Supplemental Disclosure
Income taxes, net	390	82
Interest	770	1,325
Operating leases	4,199	3,885
Finance leases	1,450	807
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Right-of-use assets acquired under operating lease obligations		1,053
Assets acquired under finance lease obligations	42	983
Purchases of property and equipment included in accounts payable and accrued expenses	$ 8	$ 98

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 29, 2024 shares
David McCreight
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On August 19, 2024, David McCreight, who was a director of the Company at the time, entered into an amendment to the Rule 10b5-1 trading plan dated June 13, 2024 intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The amendment, which was entered into during an open trading window under the Company’s insider trading policy, provides for the sale of up to 62,500 shares of common stock, amended from 633,000 shares of common stock. The trading plan is intended to permit the orderly disposition of a portion of the former director’s holdings as part of his long-term financial and tax plan. The amendment becomes effective on November 18, 2024 and will terminate on the earlier of November 18, 2025, the date all shares covered under the 10b5-1 sales plan are sold, or the date a termination event occurs as provided in the amended 10b5-1 sales plan. The 10b5-1 sales plan can be modified or amended by Mr. McCreight during any open trading window under the Company’s insider trading policy. No sales of shares have been made under the original or amended 10b5-1 sales plan.
Name	David McCreight
Title	director
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	Aug. 19, 2024
Expiration Date	Nov. 18, 2025
Rule 10b5-1 Arrangement Modified	true
Tiffany Smith
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	On August 19, 2024, Tiffany Smith, Chief Financial Officer of the Company, entered into a Rule 10b5-1 trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The trading plan, which was entered into during an open trading window under the Company’s insider trading policy, provides for the sale of up to 24,400 shares of common stock. The trading plan is intended to permit the orderly disposition of a portion of the officer’s holdings as part of her long-term financial and tax plan. The trading plan becomes effective on November 20, 2024 and will terminate on the earlier of November 21, 2025, the date all shares covered under the 10b5-1 sales plan are sold, or the date a termination event occurs as provided in the 10b5-1 sales plan. The 10b5-1 sales plan can be modified or amended by Ms. Smith during any open trading window under the Company’s insider trading policy. No sales of shares have been made under the 10b5-1 sales plan.
Name	Tiffany Smith
Title	Chief Financial Officer
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	Aug. 19, 2024
Expiration Date	Nov. 21, 2025
Aggregate Available	24,400
Rule 10b5-1 Arrangement Modified	true
Sale Of Common Stock, Original Plan \| David McCreight
Trading Arrangements, by Individual
Aggregate Available	633,000
Sale Of Common Stock, Amendment Plan \| David McCreight
Trading Arrangements, by Individual
Aggregate Available	62,500

Significant Accounting Policies - Goodwill and Intangible Assets (Details)	9 Months Ended
	Sep. 29, 2024 USD ($)
Significant Accounting Policies
Percentage of Fair Value Exceeding Carrying Value Goodwill and Intangible Assets	17.00%
Goodwill and intangibles impairment	$ 0

Related Party Transactions

9 Months Ended

Sep. 29, 2024

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.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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-URI https://asc.fasb.org/1943274/2147480990/946-20-50-2

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+ Details

Preferred Stock (Details) - $ / shares	Sep. 29, 2024	Dec. 31, 2023
Preferred Stock
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

Preferred Stock

9 Months Ended

Sep. 29, 2024

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 September 29, 2024 and December 31, 2023, no shares of preferred stock were issued and outstanding.

Subsequent Events (Details) - USD ($) $ in Millions	Nov. 12, 2024	Nov. 11, 2024	Jul. 22, 2024	Nov. 15, 2021	Mar. 31, 2025	Nov. 30, 2021
Secured overnight financing ("SOFR") rate
Subsequent Event [Line Items]
Debt instrument, basis spread adjustment on variable rate			0.10%
Secured overnight financing ("SOFR") rate \| Maximum
Subsequent Event [Line Items]
Debt instrument, basis spread adjustment on variable rate			0.71513%
Secured overnight financing ("SOFR") rate \| Minimum
Subsequent Event [Line Items]
Debt instrument, basis spread adjustment on variable rate			0.11448%
Credit Facility
Subsequent Event [Line Items]
Revolving line of credit			$ 15.0	$ 50.0		$ 50.0
Credit Facility \| Base Rate
Subsequent Event [Line Items]
Debt instrument applicable margin percent			1.25%	0.75%
Credit Facility \| Secured overnight financing ("SOFR") rate
Subsequent Event [Line Items]
Debt instrument applicable margin percent			2.25%	1.75%
Debt instrument, basis spread adjustment on variable rate				0.10%
Letters of credit
Subsequent Event [Line Items]
Revolving line of credit			$ 5.0	$ 7.5
Subsequent event \| Credit Facility
Subsequent Event [Line Items]
Revolving line of credit					$ 10.0
Subsequent event \| Credit Facility \| Base Rate
Subsequent Event [Line Items]
Debt instrument applicable margin percent	2.75%	1.25%
Subsequent event \| Credit Facility \| Secured overnight financing ("SOFR") rate
Subsequent Event [Line Items]
Debt instrument applicable margin percent	3.75%	2.25%
Debt instrument, basis spread adjustment on variable rate	0.10%

Significant Accounting Policies - Revenue Recognition (Details) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 29, 2024 USD ($) item	Jun. 30, 2024 USD ($)	Mar. 31, 2024 USD ($)	Oct. 01, 2023 USD ($)	Jul. 02, 2023 USD ($)	Apr. 02, 2023 USD ($)	Sep. 29, 2024 USD ($) item
Disaggregation of Revenue
Number of performance obligation \| item	1						1
Practical expedient							true
Number of contractual liabilities \| item	2						2
Maximum
Disaggregation of Revenue
Revenue duration period							36 months
Deferred Revenue
Significant changes in the contract liabilities balances
Beginning Balance	$ 89	$ 230	$ 50	$ 98	$ 122	$ 69	$ 50
Revenue recognized that was included in contract liability balance at the beginning of the period	(89)	(230)	(50)	(98)	(122)	(69)
Increase due to cash received, excluding amounts recognized as revenue during the period	110	89	230	71	98	122
Ending Balance	110	89	230	71	98	122	110
Stored-Value Cards
Significant changes in the contract liabilities balances
Beginning Balance	15,143	13,209	13,142	12,356	11,130	10,828	13,142
Revenue recognized that was included in contract liability balance at the beginning of the period	(619)	(1,042)	(1,549)	(631)	(1,129)	(1,720)
Increase due to cash received, excluding amounts recognized as revenue during the period	1,518	2,976	1,616	944	2,355	2,022
Ending Balance	$ 16,042	$ 15,143	$ 13,209	$ 12,669	$ 12,356	$ 11,130	$ 16,042

Income Taxes (Tables)

9 Months Ended

Sep. 29, 2024

Income Taxes

Schedule of components of the provision for income taxes

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


	Thirteen Weeks Ended
	September 29,			October 1,
	2024			2023
Loss before benefit (provision) for income taxes	$	(6,868)		$	(5,047)
Benefit (provision) for income taxes		(11)			1,158
Effective tax rate		0.2	%		(22.9)	%


	Thirty-Nine Weeks Ended
	September 29,			October 1,
	2024			2023
Loss before benefit (provision) for income taxes	$	(17,648)		$	(13,096)
Benefit (provision) for income taxes		(5,763)			992
Effective tax rate		32.7	%		(7.6)	%

Fair Value Measurements

9 Months Ended

Sep. 29, 2024

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 September 29, 2024 and December 31, 2023, the carrying values of cash and cash equivalents, restricted cash, accounts payable and accrued expenses and other current liabilities approximate fair value due to their short-term maturities. The fair value of the Company’s 2024 Amended Credit Agreement that provides for borrowings up to $15.0 million, which decreases to $10.0 million on March 31, 2025 (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

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
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+ Details

Equity-Based Compensation - Assumptions (Details) - Employee Stock Purchase Plan	9 Months Ended
	Sep. 29, 2024 $ / shares
Minimum
Share-based Compensation Arrangement by Share-based Payment Award
Expected term (in years)	6 months
Expected volatility	83.90%
Risk-free interest rate	4.38%
Weighted average fair value per share of ESPP awards granted	$ 0.31
Maximum
Share-based Compensation Arrangement by Share-based Payment Award
Expected term (in years)	1 year
Expected volatility	86.05%
Risk-free interest rate	4.91%
Weighted average fair value per share of ESPP awards granted	$ 0.56

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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+ Details

Fair Value Measurements (Details) - Credit Facility - USD ($) $ in Millions	Mar. 31, 2025	Jul. 22, 2024	Nov. 30, 2021	Nov. 15, 2021
Fair Value Measurements
Revolving line of credit		$ 15.0	$ 50.0	$ 50.0
Subsequent event
Fair Value Measurements
Revolving line of credit	$ 10.0

Common Stock (Details)	9 Months Ended
Common Stock (Details)	Sep. 29, 2024 Vote $ / shares shares	Dec. 31, 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
Omnibus Equity Plan
Common stock reserved for issuance	1,522,874		3,719,000
Employee Stock Option
Common stock reserved for issuance	161,397
Employee Stock Purchase Plan
Common stock reserved for issuance	1,310,595		743,803

Description of Business, Organization and Liquidity (Details) - USD ($) $ in Thousands	3 Months Ended							9 Months Ended
	Dec. 29, 2024	Sep. 29, 2024	Jun. 30, 2024	Mar. 31, 2024	Oct. 01, 2023	Jul. 02, 2023	Apr. 02, 2023	Sep. 29, 2024	Oct. 01, 2023	Mar. 31, 2025	Jul. 22, 2024	Dec. 31, 2023	Nov. 30, 2021	Nov. 15, 2021	Dec. 31, 2014
Description of Business, Organization and Liquidity
Acquired percentage of outstanding common stock of subsidiary by LP															100.00%
Net Income (Loss)		$ (6,879)	$ (10,796)	$ (5,736)	$ (3,889)	$ (2,597)	$ (5,618)	$ (23,411)	$ (12,104)
Cash and cash equivalents		6,308						6,308				$ 2,506
Revolving line of credit		11,500						11,500				$ 8,000
Credit Facility
Description of Business, Organization and Liquidity
Principal amount of credit facility											$ 15,000		$ 50,000	$ 50,000
Borrowed amount								31,500
Revolving line of credit		$ 11,500						$ 11,500
Credit Facility \| Subsequent event
Description of Business, Organization and Liquidity
Principal amount of credit facility										$ 10,000
Borrowed amount	$ 1,600

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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-URI https://asc.fasb.org/1943274/2147483499/205-20-50-7

Reference 34: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 230
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 28
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482740/230-10-45-28

Reference 35: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 1A
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482790/220-10-45-1A

Reference 36: http://www.xbrl.org/2003/role/disclosureRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section 45
-Paragraph 1B
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482790/220-10-45-1B

Reference 37: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 942
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.9-04(22))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478524/942-220-S99-1

+ Details

Leases

9 Months Ended

Sep. 29, 2024

Leases

Leases

6.Leases

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, corporate offices and retail stores 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 immaterial remaining obligations for the base rent related to the short-term leases as of September 29, 2024 and October 1, 2023.

The Company also leases equipment under finance lease agreements expiring on various dates through April 2029.

As of September 29, 2024, 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
2024 (remaining three months)	$	1,429	$	336	$	1,765
2025		6,263		1,516		7,779
2026		4,971		263		5,234
2027		5,138		84		5,222
2028		5,252		13		5,265
Thereafter		6,380		2		6,382
Total undiscounted lease payment		29,433		2,214		31,647
Present value adjustment		(4,752)		(82)		(4,834)
Total lease liabilities		24,681		2,132		26,813
Less: lease liabilities, current		(4,338)		(1,455)		(5,793)
Lease liabilities, noncurrent	$	20,343	$	677	$	21,020

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.

Significant Accounting Policies - Selling and Marketing Expenses (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2024	Oct. 01, 2023	Sep. 29, 2024	Oct. 01, 2023
Selling and Marketing Expense
Significant Accounting Policies
Advertising costs	$ 13.1	$ 12.4	$ 46.2	$ 46.9

Equity-Based Compensation - Summary of Restricted Stock, Restricted Stock Units and Performance Stock Units (Details)	9 Months Ended
	Sep. 29, 2024 $ / shares shares
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares
Balance at the beginning of period \| shares	23,379
Stock vested \| shares	(17,397)
Stock forfeited \| shares	(1,445)
Balance at the end of period \| shares	4,537
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value
Weighted average fair value, beginning \| $ / shares	$ 4.54
Weighted average fair value, vested \| $ / shares	4.54
Weighted average fair value, forfeited \| $ / shares	4.54
Weighted average fair value, end \| $ / shares	$ 4.17
RSUs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares
Balance at the beginning of period \| shares	3,568,406
Stock granted \| shares	2,487,914
Stock vested \| shares	(1,685,667)
Stock forfeited \| shares	(335,277)
Balance at the end of period \| shares	4,035,376
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value
Weighted average fair value, beginning \| $ / shares	$ 3.14
Weighted average fair value, granted \| $ / shares	1.97
Weighted average fair value, vested \| $ / shares	2.85
Weighted average fair value, forfeited \| $ / shares	2.24
Weighted average fair value, end \| $ / shares	$ 2.61
Performance Stock Units
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares
Balance at the beginning of period \| shares	1,811,571
Stock granted \| shares	350,000
Balance at the end of period \| shares	2,161,571
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value
Weighted average fair value, beginning \| $ / shares	$ 2.65
Weighted average fair value, granted \| $ / shares	1.81
Weighted average fair value, end \| $ / shares	$ 2.51

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 29, 2024

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 to December 31. The fiscal years ending December 29, 2024 and ended December 31, 2023 consist 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 September 29, 2024 and its results of operations for the thirteen and thirty-nine weeks ended September 29, 2024 and October 1, 2023 and its cash flows for the thirty-nine weeks ended September 29, 2024 and October 1, 2023. The results of operations for the thirty-nine weeks ended September 29, 2024 are not necessarily indicative of the results to be expected for the fiscal year ending December 29, 2024 or for any other future annual or interim period.

The condensed consolidated balance sheet as of December 31, 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 6, 2024.

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, income tax valuation allowance and fair value of equity awards. 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. 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 September 29, 2024 and December 31, 2023, no single customer represented greater than 10% of the Company’s accounts receivable balance. No customer accounted for greater than 10% of the Company’s net revenue during the thirteen and thirty-nine weeks ended September 29, 2024 and October 1, 2023.

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. The Company adjusts 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. Fixed and variable lease expense on operating leases is recognized within operating expenses in the condensed consolidated statements of operations and comprehensive loss. 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 and thirty-nine weeks ended September 29, 2024 and October 1, 2023 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.

The following table summarizes the significant changes in the contract liabilities balances included in accrued expenses and other current liabilities during the thirteen and thirty-nine weeks ended September 29, 2024 and October 1, 2023 (in thousands):


	Deferred		Stored-Value
	Revenue		Cards
Balance as of December 31, 2023	$	50	$	13,142
Revenue recognized that was included in contract liability balance at the beginning of the period		(50)		(1,549)
Increase due to cash received, excluding amounts recognized as revenue during the period		230		1,616
Balance as of March 31, 2024		230		13,209
Revenue recognized that was included in contract liability balance at the beginning of the period		(230)		(1,042)
Increase due to cash received, excluding amounts recognized as revenue during the period		89		2,976
Balance as of June 30, 2024		89		15,143
Revenue recognized that was included in contract liability balance at the beginning of the period		(89)		(619)
Increase due to cash received, excluding amounts recognized as revenue during the period		110		1,518
Balance as of September 29, 2024		110		16,042


	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
Revenue recognized that was included in contract liability balance at the beginning of the period		(122)		(1,129)
Increase due to cash received, excluding amounts recognized as revenue during the period		98		2,355
Balance as of July 2, 2023		98		12,356
Revenue recognized that was included in contract liability balance at the beginning of the period		(98)		(631)
Increase due to cash received, excluding amounts recognized as revenue during the period		71		944
Balance as of October 3, 2023	$	71	$	12,669

Selling and Marketing Expenses

Advertising costs included in selling and marketing expenses were $13.1 million and $12.4 million for the thirteen weeks ended September 29, 2024 and October 1, 2023, respectively, and $46.2 million and $46.9 million for the thirty-nine weeks ended September 29, 2024 and October 1, 2023, respectively.

Net Loss Per Share Attributable to Common Stockholders

Basic net loss per share attributable to common stockholders is computed using net loss attributable to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted net loss per share attributable to common stockholders represents net loss 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. Due to the net loss for all periods presented, no potentially dilutive securities had an impact on diluted loss per share for any period.

The following securities were excluded from the computation of diluted net loss 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		Thirty-Nine Weeks Ended
	September 29, 2024	October 1, 2023	September 29, 2024	October 1, 2023
Stock options	161,396	161,397	161,396	161,397
Unvested restricted stock	4,537	36,167	4,537	36,167
Unvested RSUs	4,035,376	3,772,622	4,035,376	3,772,622
PSUs	2,161,571	1,811,571	2,161,571	1,811,571
ESPP shares	109,403	117,511	109,403	117,511
2023 Bonus Plan	—	202,307	—	202,307
Total	6,472,283	6,101,575	6,472,283	6,101,575

2024 Stock Repurchase Program

On May 3, 2024, the Company's Board of Directors authorized a stock repurchase program to repurchase up to $2.5 million of our common stock (the “2024 Repurchase Program”). The actual timing, number, and value of shares repurchased in the future will be determined by the Company in its discretion and will depend on a number of factors, including market conditions, applicable legal requirements, our capital needs, and whether there is a better alternative use of capital.

As of September 29, 2024, $2.2 million remained available under the 2024 Repurchase Program authorization. The table below summarizes the share repurchase activity during the thirteen and thirty-nine weeks ended September 29, 2024 under our 2024 Repurchase Program:


							Maximum Dollar Value
	Total Number	Weighted		Aggregate			of Shares that May Yet
	of Shares	Average Price		Purchase			Be Purchased Under
Period	Purchased ⁽¹⁾	Paid Per Share		Price ⁽²⁾			the Plan
Thirteen weeks ended June 30, 2024	47,850	$	1.82	$	87,243	$	2,412,757
Thirteen weeks ended September 29, 2024	130,293	$	1.45	$	188,452	$	2,224,305
Total	178,143				275,695

(1)

The shares of common stock were purchased in open market transactions pursuant to a 10b5-1 purchase plan entered into by the Company.

(2)

Amount includes broker commissions

Goodwill and Intangible Assets

The Company tests for goodwill impairment at the reporting unit level on the first day of the fourth quarter of each year and between annual tests if significant indicators exist that would suggest the Company's goodwill and intangible assets could potentially be impaired. The Company monitors changing business conditions as well as industry and economic factors, among others, for events which could trigger the need for an interim impairment analysis. The Company concluded that a sustained decline in its stock price coupled with continuing net losses, were significant enough factors to warrant an impairment analysis of its goodwill, tradename and intangible assets (which constitutes the Company's sole reporting unit) during the thirteen weeks ended March 31, 2024.

Accordingly, the Company performed an interim quantitative assessment as of March 31, 2024 using a market-based quantitative assessment utilizing a combination of (i) the guideline public company method applying revenue and EBITDA multiples of similar companies and (ii) the discounted cash flow method. The fair value determination used in the impairment assessment requires estimates of the fair values based on present value or other valuation techniques or a combination thereof, necessitating subjective judgments and assumptions by management. These estimates and assumptions could result in significant differences to the amounts reported if underlying circumstances were to change. The results from the quantitative assessment indicated that the fair value exceeded the carrying value by approximately 17%.

As of September 29, 2024, the Company performed a qualitative assessment of its goodwill, tradename and intangible assets and determined that it is more likely than not that the fair value of its reporting unit exceeds the carrying value of the reporting unit. As a result, there was no impairment relating to the goodwill, tradename and intangible assets as of September 29, 2024.

Recently Adopted and Issued Accounting Pronouncements

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 condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Recently Issued Accounting Pronouncements

In November 2023, FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. We are currently evaluating the effects of this pronouncement on our consolidated financial statements and related disclosures.

In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which amends existing income tax disclosure guidance, primarily requiring more detailed disclosure for income taxes paid and the effective tax rate reconciliation. ASU 2023-09 is effective for annual reporting periods beginning

after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis. We are currently evaluating this pronouncement to determine its impact on our income tax disclosures.

In March 2024, FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards, which is intended to reduce complexity in determining whether a profits interest award is subject to the guidance in Topic 718 and existing diversity in practice. ASU 2024-01 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis. We are currently evaluating this pronouncement to determine its impact on our stock compensation.

In March 2024, FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements, which is intended to simplify the Codification and draw a distinction between authoritative and nonauthoritative literature. ASU 2024-02 is effective for annual reporting periods beginning after December 15, 2024, with early adoption permitted and can be applied on either a prospective or retroactive basis. We are currently evaluating this pronouncement to determine its impact on our stock compensation.

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 29, 2024	Dec. 31, 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	41,912,709	40,618,206
Common stock, shares outstanding	41,912,709	40,618,206
Treasury stock, shares	178,143	0

Income Taxes - Federal Income Tax Rate (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 29, 2024	Oct. 01, 2023	Sep. 29, 2024	Oct. 01, 2023	Jun. 30, 2024	Dec. 31, 2023
Income Taxes
Federal income tax rate	21.00%	21.00%	21.00%	21.00%
Valuation allowance	$ 5.4		$ 5.4		$ 5.4	$ 5.7
Change in valuation allowance			$ (0.3)

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2024	Oct. 01, 2023	Sep. 29, 2024	Oct. 01, 2023
Condensed Consolidated Statements of Operations and Comprehensive Loss
Net revenue	$ 80,515	$ 83,118	$ 249,740	$ 280,216
Cost of revenue	49,866	49,593	144,562	161,334
Gross profit	30,649	33,525	105,178	118,882
Selling and marketing expenses	17,624	16,825	60,231	60,984
General and administrative expenses	19,869	21,575	62,416	70,319
Loss from operations	(6,844)	(4,875)	(17,469)	(12,421)
Other income (expense), net:
Interest expense	(305)	(442)	(958)	(1,391)
Other income, net	281	270	779	716
Loss before benefit (provision) for income taxes	(6,868)	(5,047)	(17,648)	(13,096)
Income tax benefit (provision)	(11)	1,158	(5,763)	992
Net loss and comprehensive loss	$ (6,879)	$ (3,889)	$ (23,411)	$ (12,104)
Basic loss per share (In dollars per share)	$ (0.16)	$ (0.10)	$ (0.57)	$ (0.31)
Diluted loss per share (In dollars per share)	$ (0.16)	$ (0.10)	$ (0.57)	$ (0.31)
Basic weighted-average shares outstanding (In shares)	41,702,122	40,103,152	41,358,919	39,672,938
Diluted weighted-average shares outstanding (In shares)	41,702,122	40,103,152	41,358,919	39,672,938

Equity-Based Compensation - Stock Option Activity (Details) - Employee Stock Option - $ / shares	9 Months Ended	12 Months Ended
	Sep. 29, 2024	Dec. 31, 2023
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding
Beginning balance	161,397
Ending balance	161,397	161,397
Options exercisable	161,397
Options, Vested and expected to vest	161,397
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price
Weighted-average exercise price per option, beginning balance (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, vested and expected to vest (in dollars per share)	$ 11.35
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures
Weighted-average remaining contractual life (years)	6 years 6 months 14 days	7 years 3 months 14 days
Weighted-average remaining contractual life (years), vested and exercisable	6 years 6 months 14 days
Weighted-average remaining contractual life (years), expected to vest	6 years 6 months 14 days

Significant Accounting Policies - Anti-dilutive Securities (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 29, 2024	Oct. 01, 2023	Sep. 29, 2024	Oct. 01, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share
Potentially dilutive securities potentially dilutive securities			0
Total	6,472,283	6,101,575	6,472,283	6,101,575
Employee Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total	161,396	161,397	161,396	161,397
Unvested restricted stock
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total	4,537	36,167	4,537	36,167
Unvested RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total	4,035,376	3,772,622	4,035,376	3,772,622
PSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total	2,161,571	1,811,571	2,161,571	1,811,571
ESPP shares
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total	109,403	117,511	109,403	117,511
2023 Bonus Plan
Antidilutive Securities Excluded from Computation of Earnings Per Share
Total		202,307		202,307

Balance Sheet Components - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Sep. 29, 2024	Dec. 31, 2023
Accrued Expenses and Other Current Liabilities
Accrued compensation and benefits	$ 3,693	$ 5,057
Accrued marketing	4,185	5,002
Accrued inventory	8,098	4,151
Accrued freight	2,329	1,940
Accrued legal contingent liability	4,781
Other	3,535	2,193
Accrued expenses and other current liabilities	$ 26,621	$ 18,343

Income Taxes - Components of the provision for income taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2024	Oct. 01, 2023	Sep. 29, 2024	Oct. 01, 2023
Income Taxes
Loss before benefit (provision) for income taxes	$ (6,868)	$ (5,047)	$ (17,648)	$ (13,096)
Benefit (provision) for income taxes	$ (11)	$ 1,158	$ (5,763)	$ 992
Effective tax rate	0.20%	(22.90%)	32.70%	(7.60%)

- 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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- Definition

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

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+ Details

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 29, 2024	Nov. 08, 2024
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 29, 2024
Document Transition Report	false
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	Non-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		42,030,938
Entity Central Index Key	0001780201
Current Fiscal Year End Date	--12-29
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 29, 2024	Jun. 30, 2024	Mar. 31, 2024	Oct. 01, 2023	Jul. 02, 2023	Apr. 02, 2023	Sep. 29, 2024	Oct. 01, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (6,879)	$ (10,796)	$ (5,736)	$ (3,889)	$ (2,597)	$ (5,618)	$ (23,411)	$ (12,104)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Equity-Based Compensation

9 Months Ended

Sep. 29, 2024

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 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.

On March 8, 2023, the Company’s Board of Directors approved the Fiscal 2023 Bonus Plan (the “2023 Bonus Plan”) that granted RSUs to eligible employees on April 1, 2024, in lieu of a cash bonus. On April 1, 2024, 95,912 RSUs were awarded to eligible employees under the 2023 Bonus Plan, and all such RSUs vested fully on that date subject to any forfeitures.

On June 29, 2023, the Company filed a Registration Statement on Form S-8 with the SEC for the purpose of registering an additional 2,000,000 shares of the Company's common stock under the Omnibus Equity Plan corresponding to the increase in shares approved by stockholders at the 2023 annual meeting of stockholders.

As of September 29, 2024, the Company had 1,522,874 and 1,310,595 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 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.

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 and thirty-nine weeks ended September 29, 2024, equity-based compensation expense related to our ESPP was immaterial. During the thirteen weeks ended September 29, 2024 and October 1, 2023, the Company issued 57,693 shares and 52,775 shares, respectively, pursuant to the ESPP six-month purchase periods ended August 26, 2024 and August 24, 2023, respectively.

The Company used the Black-Scholes model to estimate the fair value of the purchase rights under the ESPP. For the thirteen and thirty-nine weeks ended September 29, 2024, the Company utilized the following assumptions:


Expected term (in years)		0.50 to 1.00
Expected volatility		83.90 to 86.05	%
Risk-free interest rate		4.38 to 4.91	%
Dividend yield		-
Weighted average fair value per share of ESPP awards granted	$	0.31 to 0.56

2021 Equity Plan

During April 2021, the Company’s Board of Directors adopted the 2021 Equity Plan. The 2021 Equity Plan provided 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 2023 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 options 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 2023 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 extended 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 in light of the closing of the IPO, the former CEO received two bonuses, each of which were settled in 208,914 fully-vested shares of the Company’s common stock. The Company recognized the final $0.4 million of equity-based compensation expense related to this award in the thirteen weeks ended April 2, 2023.

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 December 31, 2023	161,397	$	11.35	7.29
Granted	—		—	—
Forfeited	—		—	—
Outstanding as of September 29, 2024	161,397	$	11.35	6.54
Exercisable as of September 29, 2024	161,397	$	11.35	6.54	$	—
Vested and expected to vest as of September 29, 2024	161,397	$	11.35	6.54	$	—

Restricted Stock and Restricted Stock Units (“RSUs”)

Immediately before the completion of the IPO, the LP was liquidated and the unit holders of the LP 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 $0.1 million and $0.3 million during the thirteen and thirty-nine weeks ended September 29, 2024, respectively, and $0.2 million and $0.6 million during the thirteen and thirty-nine weeks ended October 1, 2023, respectively, related to the exchanged restricted stock. As of September 29, 2024, the unrecognized equity-based compensation expense for all restricted stock is immaterial and will be recognized over a weighted-average period of 0.08 years.

The following table summarizes the rollforward of unvested restricted stock during the thirty-nine weeks ended September 29, 2024:


	Unvested	Weighted-
	Restricted	Average Fair
	Stock	Value per Share
Balance at December 31, 2023	23,379	$	4.54
Restricted stock granted	—		—
Restricted stock vested	(17,397)		4.54
Restricted stock forfeited	(1,445)		4.54
Balance at September 29, 2024	4,537	$	4.17

During the thirteen weeks ended March 31, 2024, the Company entered into a second amendment to the employment agreement with Mark Vos, the President and Chief Information Officer (the “2024 President & CIO Employment Agreement”), under which 660,000 RSUs were initially granted, subject to various vesting schedules as set forth in the 2024 President & CIO Employment Agreement. On February 16, 2024, Tiffany Smith, the Chief Financial Officer received 175,000 RSUs pursuant to the applicable RSU Award Agreement, which vest over a three-year service period. On February 16, 2024, Laura Deady, the Chief Merchandising Officer, received 152,273 RSUs pursuant to her employment agreement entered into in December 2023 (“2024 CMO Employment Agreement”) and the applicable RSU Award Agreement, which vest over a three-year service period.

During the thirteen and thirty-nine weeks ended September 29, 2024, the Company granted 76,821 and 2,028,166 RSUs, respectively, to certain executives (inclusive of the aforementioned RSU grants to Mr. Vos, Ms. Deady and Ms. Smith) and employees, which are subject to various vesting schedules as set forth in the applicable employment agreement or RSU Award Agreements. During the thirteen and thirty-nine weeks ended September 29, 2024, the Company granted 10,014 and 459,748 RSUs, respectively, to certain directors which vested immediately or pursuant to the Company’s Non-Employee Director Compensation Program. During the thirteen weeks ended September 29, 2024, the Company reduced the size of its Board and accelerated the vesting of a total of 54,398 RSUs which had been previously granted to directors. A total of 163,166 RSUs were forfeited by the same directors in connection with their resignations. The Company recognized equity-based compensation expense of $1.5 million and $4.8 million during the thirteen and thirty-nine weeks ended September 29, 2024, respectively, and $3.2 million and $9.2 million during the thirteen and thirty-nine weeks ended October 1, 2023, respectively, related to the RSUs. As of September 29, 2024, the unrecognized equity-based compensation expense is $8.4 million and will be recognized over a weighted-average period of 1.91 years.

The following table summarizes the rollforward of unvested RSUs during the thirty-nine weeks ended September 29, 2024:


		Weighted-
	Unvested	Average Fair
	RSUs	Value per Share
Balance at December 31, 2023	3,568,406	$	3.14
RSUs granted	2,487,914		1.97
RSUs vested	(1,685,667)		2.85
RSUs forfeited	(335,277)		2.24
Balance at September 29, 2024	4,035,376	$	2.61

Performance Stock Units (“PSUs”)

Under Crystal Landsem’s 2023 employment agreement (“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 PSUs 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. Under the 2024 President & CIO Employment Agreement, Mr. Vos received a grant of 300,000 PSUs on January 9, 2024 which vest subject to the achievement of trailing ten day volume-weighted average price targets of the Company’s common stock and his continued employment on the vesting dates. Under the 2024 CMO Employment Agreement, Ms. Deady received a grant of 50,000 PSUs on February 16, 2024, which vest subject to the achievement of specified Company trailing twelve month net revenue growth targets and her continued employment on the vesting dates.

The Company recognized equity-based compensation expense of $0.5 million and $1.5 million during the thirteen and thirty-nine weeks ended September 29, 2024, and $0.6 million and $1.5 million during the thirteen and thirty-nine weeks ended October 1, 2023, related to the PSUs. As of September 29, 2024, the unrecognized equity-based compensation expense is $1.2 million for the financial milestones that were considered probable of achievement, which will be recognized over a weighted-average period of 1.30 years.

The following table summarizes the rollforward of unvested PSUs during the thirty-nine weeks ended September 29, 2024:


		Weighted-
	Unvested	Average Fair
	PSUs	Value per Share
Balance at December 31, 2023	1,811,571	$	2.65
PSUs granted	350,000		1.81
PSUs vested	—		—
PSUs forfeited	—		—
Balance at September 29, 2024	2,161,571	$	2.51

Significant Accounting Policies (Tables)

9 Months Ended

Sep. 29, 2024

Significant Accounting Policies

Summary of significant changes in contract liabilities balances


	Deferred		Stored-Value
	Revenue		Cards
Balance as of December 31, 2023	$	50	$	13,142
Revenue recognized that was included in contract liability balance at the beginning of the period		(50)		(1,549)
Increase due to cash received, excluding amounts recognized as revenue during the period		230		1,616
Balance as of March 31, 2024		230		13,209
Revenue recognized that was included in contract liability balance at the beginning of the period		(230)		(1,042)
Increase due to cash received, excluding amounts recognized as revenue during the period		89		2,976
Balance as of June 30, 2024		89		15,143
Revenue recognized that was included in contract liability balance at the beginning of the period		(89)		(619)
Increase due to cash received, excluding amounts recognized as revenue during the period		110		1,518
Balance as of September 29, 2024		110		16,042


	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
Revenue recognized that was included in contract liability balance at the beginning of the period		(122)		(1,129)
Increase due to cash received, excluding amounts recognized as revenue during the period		98		2,355
Balance as of July 2, 2023		98		12,356
Revenue recognized that was included in contract liability balance at the beginning of the period		(98)		(631)
Increase due to cash received, excluding amounts recognized as revenue during the period		71		944
Balance as of October 3, 2023	$	71	$	12,669

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


	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	September 29, 2024	October 1, 2023	September 29, 2024	October 1, 2023
Stock options	161,396	161,397	161,396	161,397
Unvested restricted stock	4,537	36,167	4,537	36,167
Unvested RSUs	4,035,376	3,772,622	4,035,376	3,772,622
PSUs	2,161,571	1,811,571	2,161,571	1,811,571
ESPP shares	109,403	117,511	109,403	117,511
2023 Bonus Plan	—	202,307	—	202,307
Total	6,472,283	6,101,575	6,472,283	6,101,575

Schedule of 2024 Stock Repurchase Program


							Maximum Dollar Value
	Total Number	Weighted		Aggregate			of Shares that May Yet
	of Shares	Average Price		Purchase			Be Purchased Under
Period	Purchased ⁽¹⁾	Paid Per Share		Price ⁽²⁾			the Plan
Thirteen weeks ended June 30, 2024	47,850	$	1.82	$	87,243	$	2,412,757
Thirteen weeks ended September 29, 2024	130,293	$	1.45	$	188,452	$	2,224,305
Total	178,143				275,695

(1)

The shares of common stock were purchased in open market transactions pursuant to a 10b5-1 purchase plan entered into by the Company.

(2)

Amount includes broker commissions

Description of Business, Organization and Liquidity

9 Months Ended

Sep. 29, 2024

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”, “we”, “our”, 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 Company’s initial public offering, the Company was majority-owned by Lulu’s Holdings, L.P. (the “LP”). In connection with the Company’s initial public offering, the LP was liquidated.

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 a customer-driven, primarily online, digitally-native, attainable luxury fashion brand for women, offering modern, unapologetically feminine designs at accessible prices for all of life’s fashionable moments.

Impact of Macroeconomic Trends on Business

Changing macroeconomic factors, including inflation, interest rates, student loan repayment resumption, as well as world events, wars and domestic and international conflicts, affect overall consumer confidence with respect to current and future economic conditions and continue to impact our sales as discretionary consumer spending levels and shopping behavior fluctuate with these factors. We continue to respond to these factors, as needed, by taking appropriate pricing, promotional and other actions to stimulate customer demand. These factors may continue to have an impact on our business, results of operations, our growth and financial condition.

Liquidity

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. During the thirteen and thirty-nine weeks ended September 29, 2024, the Company incurred net losses of $6.9 million and $23.4 million, respectively.

In November 2021, the Company entered into a Credit Agreement (the “2021 Credit Agreement”) with Bank of America to provide a Revolving Facility (the “2021 Revolving Facility”) for borrowings up to $50.0 million. On July 22, 2024, the Company entered into the First Amendment to the Credit Agreement (the “2024 Amended Credit Agreement”) which extended the maturity date to August 15, 2025 and reduced the 2021 Revolving Facility to $15.0 million with a further reduction to $10.0 million on March 31, 2025, as further described in Note 5, Debt. As of September 29, 2024, the Company had total cash and cash equivalents of $6.3 million and $11.5 million due under the 2024 Amended Credit Agreement classified within total current liabilities. The Company borrowed an additional $1.6 million under the terms of the 2024 Amended Credit Agreement subsequent to September 29, 2024.

As of September 29, 2024, the Company was not in compliance with its preliminary financial covenants for the third quarter 2024 required by its 2024 Amended Credit Agreement. On November 12, 2024, the Company entered into a second amendment to the 2021 Credit Agreement (the “November 2024 Amended Credit Agreement”) as described in Note 13, Subsequent Events. The November 2024 Amended Credit Agreement extended the Company's reporting deadline for its financial statements and covenant compliance certificate for the third quarter 2024 to December 16, 2024, and required that the financial covenants be tested on the earlier of the date the financial statements and compliance certificate are delivered or December 16, 2024. The November 2024 Amended Credit Agreement also provided that the failure to deliver the financial statements and covenant compliance certificate within the original time period required by the 2024 Amended Credit Agreement will not constitute an event of default. Further, the filing of this Form 10-Q with the SEC

shall not be deemed to constitute delivery of the financial statements and compliance certificate for the third quarter 2024. The November 2024 Amended Credit Agreement also revised the applicable interest rates for borrowings for the period commencing on November 12, 2024, as described in Note 13, Subsequent Events. Until the earlier of the date the financial statements and compliance certificate are delivered or December 16, 2024, the Company has no further access to the revolving commitments under the November 2024 Amended Credit Agreement. If the Company has not refinanced the revolving credit facility or obtained a further waiver or amendment prior to December 16, 2024, the Company expects to be in default of its 2024 Amended Credit Agreement, and as a result, its lenders would have the right in such circumstances to terminate any commitments to provide further borrowings and to elect to declare all outstanding borrowings, together with accrued interest and other fees, to be immediately due and payable.

The Company is actively seeking alternative debt financing and continues to take certain cash conservation measures, including adjustments to marketing and other fixed and variable costs and capital spend to meet its obligations as needed. As the ability to raise additional debt financing is outside of management’s control, the Company cannot conclude that management’s plans will be effectively implemented within twelve months from the date the condensed consolidated financial statements are issued. Accordingly, the Company has concluded that these plans do not alleviate substantial doubt about the Company's ability to continue as a going concern. The condensed consolidated financial statements do not reflect any adjustments relating to the outcome of this uncertainty.

Equity-Based Compensation - Restricted Stock. Restricted Stock Units, and Performance Stock Units Narrative (Details) $ in Millions					3 Months Ended			9 Months Ended
	Feb. 16, 2024 shares	Jan. 09, 2024 shares	Mar. 05, 2023 installment shares	Nov. 15, 2021 shares	Sep. 29, 2024 USD ($) shares	Mar. 31, 2024 shares	Oct. 01, 2023 USD ($)	Sep. 29, 2024 USD ($) shares	Oct. 01, 2023 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award
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
Converted from class P units of the Company upon LP liquidation				1,536,304
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award
Converted from class P units of the Company upon LP liquidation				427,799
Stock forfeited								1,445
Equity based compensation \| $					$ 0.1		$ 0.2	$ 0.3	$ 0.6
Unrecognized equity-based compensation expected to be recognized period								29 days
RSUs
Share-based Compensation Arrangement by Share-based Payment Award
Stock granted								2,487,914
Stock forfeited								335,277
Equity based compensation \| $					1.5		3.2	$ 4.8	9.2
Unrecognized equity-based compensation expense \| $					$ 8.4			$ 8.4
Unrecognized equity-based compensation expected to be recognized period								1 year 10 months 28 days
RSUs \| Executives and Employees
Share-based Compensation Arrangement by Share-based Payment Award
Stock granted					76,821			2,028,166
RSUs \| Directors
Share-based Compensation Arrangement by Share-based Payment Award
Stock granted					10,014			459,748
Accelerate vesting shares					54,398
Stock forfeited					163,166
RSUs \| Tiffany Smith
Share-based Compensation Arrangement by Share-based Payment Award
Stock granted	175,000
Vesting period	3 years
RSUs \| Mark Vos
Share-based Compensation Arrangement by Share-based Payment Award
Stock granted						660,000
RSUs \| Laura Deady
Share-based Compensation Arrangement by Share-based Payment Award
Stock granted	152,273
Vesting period	3 years
Performance Stock Units
Share-based Compensation Arrangement by Share-based Payment Award
Stock granted								350,000
Equity based compensation \| $					$ 0.5		$ 0.6	$ 1.5	$ 1.5
Unrecognized equity-based compensation option \| $					$ 1.2			$ 1.2
Unrecognized equity-based compensation expected to be recognized period								1 year 3 months 18 days
Performance Stock Units \| Crystal Landsem
Share-based Compensation Arrangement by Share-based Payment Award
Stock granted			1,811,571
Number of equal annual installments \| installment			3
Annual installment value			603,857
Performance Stock Units \| Mark Vos
Share-based Compensation Arrangement by Share-based Payment Award
Stock granted		300,000
Performance Stock Units \| Laura Deady
Share-based Compensation Arrangement by Share-based Payment Award
Stock granted	50,000

Equity-Based Compensation - 2021 Equity Plan (Details) - 2021 Equity Incentive Plan	9 Months Ended
	Sep. 29, 2024 shares
Share-based Compensation Arrangement by Share-based Payment Award
Maximum aggregate number of shares reserved for issuance	925,000
Options expiration period	10 years

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Balance Sheet Components - Property and Equipment, net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 29, 2024	Oct. 01, 2023	Sep. 29, 2024	Oct. 01, 2023	Dec. 31, 2023
Property, Plant and Equipment
Total property and equipment	$ 10,908		$ 10,908		$ 10,206
Less: accumulated depreciation and amortization	(6,532)		(6,532)		(5,494)
Property and equipment, net	4,376		4,376		4,712
Depreciation and amortization			4,102	$ 3,546
Leasehold improvements
Property, Plant and Equipment
Total property and equipment	$ 5,014		$ 5,014		4,314
Leasehold improvements \| Minimum
Property, Plant and Equipment
Estimated Useful Lives (in years)	3 years		3 years
Leasehold improvements \| Maximum
Property, Plant and Equipment
Estimated Useful Lives (in years)	9 years		9 years
Equipment
Property, Plant and Equipment
Total property and equipment	$ 3,802		$ 3,802		3,053
Equipment \| Minimum
Property, Plant and Equipment
Estimated Useful Lives (in years)	3 years		3 years
Equipment \| Maximum
Property, Plant and Equipment
Estimated Useful Lives (in years)	7 years		7 years
Furniture and fixtures
Property, Plant and Equipment
Total property and equipment	$ 2,092		$ 2,092		2,151
Furniture and fixtures \| Minimum
Property, Plant and Equipment
Estimated Useful Lives (in years)	3 years		3 years
Furniture and fixtures \| Maximum
Property, Plant and Equipment
Estimated Useful Lives (in years)	7 years		7 years
Construction in progress
Property, Plant and Equipment
Total property and equipment					$ 688
Property and equipment
Property, Plant and Equipment
Depreciation and amortization	$ 900	$ 800	$ 2,500	$ 2,200

Significant Accounting Policies - 2024 Stock Repurchase Program (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 29, 2024	Jun. 30, 2024	Sep. 29, 2024	May 03, 2024
Significant Accounting Policies
Stock repurchase program to repurchase				$ 2,500,000
Total Number of Shares Purchased	130,293	47,850	178,143
Weighted Average Price Paid Per Share	$ 1.45	$ 1.82
Aggregate Purchase Price	$ 188,452	$ 87,243	$ 275,695
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plan	$ 2,224,305	$ 2,412,757	$ 2,224,305

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 29, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 6,308	$ 2,506
Accounts receivable	4,467	3,542
Inventory, net	38,477	35,472
Assets for recovery	4,852	3,111
Income tax refund receivable	2,562	2,510
Prepaids and other current assets	8,655	5,379
Total current assets	65,321	52,520
Property and equipment, net	4,376	4,712
Goodwill	35,430	35,430
Tradename	18,509	18,509
Intangible assets, net	2,850	3,263
Lease right-of-use assets	25,508	29,516
Other noncurrent assets	1,539	5,495
Total assets	153,533	149,445
Current liabilities:
Accounts payable	11,371	8,900
Accrued expenses and other current liabilities	26,621	18,343
Returns reserve	15,308	7,854
Stored-value card liability	16,042	13,142
Revolving line of credit	11,500	8,000
Lease liabilities, current	5,793	5,648
Total current liabilities	86,635	61,887
Lease liabilities, noncurrent	21,020	25,427
Other noncurrent liabilities	2,109	1,179
Total liabilities	109,764	88,493
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 41,912,709 and 40,618,206 shares issued and outstanding as of September 29, 2024 and December 31, 2023, respectively	42	41
Additional paid-in capital	260,619	254,116
Accumulated deficit	(216,616)	(193,205)
Treasury stock, at cost, 178,143 shares and zero shares as of September 29, 2024 and December 31, 2023, respectively	(276)
Total stockholders' equity	43,769	60,952
Total liabilities and stockholders' equity	$ 153,533	$ 149,445

Equity-Based Compensation - Omnibus Equity Plan and ESPP (Details)				3 Months Ended		9 Months Ended
	Apr. 01, 2024 shares	Jun. 29, 2023 shares	Apr. 01, 2022 shares	Sep. 29, 2024 shares	Oct. 01, 2023 shares	Sep. 29, 2024 item shares	Nov. 15, 2021 shares
Share-based Compensation Arrangement by Share-based Payment Award
Aggregate shares registered			5,921,056
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award
Aggregate shares registered			384,211
Additional shares registered			800,000
Maximum aggregate number of shares reserved for issuance				1,310,595		1,310,595	743,803
Percentage of increase in shares reserved for issuance							1.00%
Number of purchase period for awards \| item						2
Issuance of common stock for employee stock purchase plan (ESPP) (in shares)				57,693	52,775
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
Offering period for awards						12 months
Employee Stock Purchase Plan \| Tranche 2
Share-based Compensation Arrangement by Share-based Payment Award
Offering period for awards						12 months
Purchase period for awards						6 months
RSUs
Share-based Compensation Arrangement by Share-based Payment Award
Unrecognized equity-based compensation expected to be recognized period						1 year 10 months 28 days
Omnibus Equity Plan
Share-based Compensation Arrangement by Share-based Payment Award
Aggregate shares registered			1,536,845
Additional shares registered		2,000,000	3,200,000
Maximum aggregate number of shares reserved for issuance				1,522,874		1,522,874	3,719,000
Percentage of increase in shares reserved for issuance							4.00%
2023 Bonus Plan \| RSUs
Share-based Compensation Arrangement by Share-based Payment Award
Vested RSUs were awarded to eligible employees	95,912

Debt - Outstanding Debt under the New Revolving Facility (Details) $ in Thousands					3 Months Ended		9 Months Ended
	Nov. 12, 2024	Nov. 11, 2024	Jul. 22, 2024 USD ($)	Nov. 15, 2021 USD ($)	Dec. 29, 2024 USD ($)	Sep. 29, 2024 USD ($)	Sep. 29, 2024 USD ($)	Oct. 01, 2023 USD ($)	Mar. 31, 2025 USD ($)	Nov. 30, 2021 USD ($)
Line of Credit Facility
Repaid outstanding balance							$ 28,000	$ 24,000
Secured overnight financing ("SOFR") rate
Line of Credit Facility
Debt instrument, basis spread adjustment on variable rate			0.10%
Secured overnight financing ("SOFR") rate \| Minimum
Line of Credit Facility
Debt instrument, basis spread adjustment on variable rate			0.11448%
Secured overnight financing ("SOFR") rate \| Maximum
Line of Credit Facility
Debt instrument, basis spread adjustment on variable rate			0.71513%
Credit Facility
Line of Credit Facility
Revolving line of credit			$ 15,000	$ 50,000						$ 50,000
Borrowed amount							31,500
Credit facility outstanding						$ 11,500	11,500
Line of credit remaining borrowing capacity			$ 10,000
Repaid outstanding balance							$ 28,000
Fixed charge coverage ratio.			1.50
Debt instrument effective interest rate during the period						9.80%	9.20%
Variable commitment fee percent				0.375%
Weighted average interest rate							7.50%
Expected increase in interest rate per annum							2.00%
Credit Facility \| Subsequent event
Line of Credit Facility
Revolving line of credit									$ 10,000
Borrowed amount					$ 1,600
Credit Facility \| Maximum
Line of Credit Facility
Fixed charge coverage ratio.			1.15
Debt Instrument Covenant Consolidated Leverage Ratio			2.00
Credit Facility \| Secured overnight financing ("SOFR") rate
Line of Credit Facility
Debt instrument applicable margin percent			2.25%	1.75%
Debt instrument, basis spread adjustment on variable rate				0.10%
Credit Facility \| Secured overnight financing ("SOFR") rate \| Subsequent event
Line of Credit Facility
Debt instrument applicable margin percent	3.75%	2.25%
Debt instrument, basis spread adjustment on variable rate	0.10%
Credit Facility \| Base Rate
Line of Credit Facility
Debt instrument applicable margin percent			1.25%	0.75%
Credit Facility \| Base Rate \| Subsequent event
Line of Credit Facility
Debt instrument applicable margin percent	2.75%	1.25%
Credit Facility \| Federal funds rate
Line of Credit Facility
Debt instrument applicable margin percent				0.50%
Credit Facility \| One-month SOFR
Line of Credit Facility
Debt instrument applicable margin percent				1.00%
Letters of credit
Line of Credit Facility
Revolving line of credit			$ 5,000	$ 7,500
Credit facility outstanding						$ 500	$ 500

Equity-Based Compensation - CEO Stock Options and Special Compensation Awards (Details) $ / shares in Units, $ in Millions		1 Months Ended	3 Months Ended	9 Months Ended	12 Months Ended
	Feb. 13, 2023 shares	Apr. 30, 2021 $ / shares shares	Apr. 02, 2023 USD ($) shares	Sep. 29, 2024 shares	Dec. 31, 2023 item shares
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award
Options, Vested and expected to vest				161,397
Mr. McCreight
Share-based Compensation Arrangement by Share-based Payment Award
Stock options grants in period		322,793
Stock option exercise price \| $ / shares		$ 11.35
Number of bonus available \| item					2
Equity based compensation \| $			$ 0.4
Equity-based compensation (in shares)					208,914
Accelerated expenses \| $			$ 1.2
Options Outstanding, Forfeited	161,396		161,396
Options, Vested and expected to vest				161,397
Mr. McCreight \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award
Post-termination vesting exercise period				90 days
Mr. McCreight \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award
Post-termination vesting exercise period				3 years
Mr. McCreight \| Service vesting
Share-based Compensation Arrangement by Share-based Payment Award
Stock options grants in period		275,133
Mr. McCreight \| Service and performance vesting
Share-based Compensation Arrangement by Share-based Payment Award
Stock options grants in period		47,660

Commitments and Contingencies

9 Months Ended

Sep. 29, 2024

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, including employment claims, wage and hour claims, intellectual property claims, privacy claims, contractual and commercial disputes and other matters that arise in the ordinary course of our business. 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.

As disclosed in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, we received a cease and desist letter alleging intellectual property infringement. This matter was resolved by the parties at a confidential mediation subsequent to the quarter ended September 29, 2024. As of September 29, 2024, the Company had accrued a liability net of anticipated insurance receivable related to resolution of this matter in an amount that was not material to the Company’s condensed consolidated financial statements.

During the normal course of business, the Company may be a party to claims that may not be covered wholly or partially by insurance. While the ultimate liability, if any, arising from these claims cannot be predicted with certainty, other than as discussed above, 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 September 29, 2024, other than as discussed above, 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 and officers. 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.

Related Party Transactions (Details)	9 Months Ended
Related Party Transactions (Details)	Sep. 29, 2024 shareholder
Related Party Transactions
Shareholders with ownership interest greater than 10%	3
Aggregate ownership interest	10.00%

Equity-Based Compensation (Tables)

9 Months Ended

Sep. 29, 2024

Equity-Based Compensation

Schedule of estimate fair value of purchase rights under ESPP


Expected term (in years)		0.50 to 1.00
Expected volatility		83.90 to 86.05	%
Risk-free interest rate		4.38 to 4.91	%
Dividend yield		-
Weighted average fair value per share of ESPP awards granted	$	0.31 to 0.56

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 December 31, 2023	161,397	$	11.35	7.29
Granted	—		—	—
Forfeited	—		—	—
Outstanding as of September 29, 2024	161,397	$	11.35	6.54
Exercisable as of September 29, 2024	161,397	$	11.35	6.54	$	—
Vested and expected to vest as of September 29, 2024	161,397	$	11.35	6.54	$	—

Summary of restricted stock and restricted stock units


	Unvested	Weighted-
	Restricted	Average Fair
	Stock	Value per Share
Balance at December 31, 2023	23,379	$	4.54
Restricted stock granted	—		—
Restricted stock vested	(17,397)		4.54
Restricted stock forfeited	(1,445)		4.54
Balance at September 29, 2024	4,537	$	4.17


		Weighted-
	Unvested	Average Fair
	RSUs	Value per Share
Balance at December 31, 2023	3,568,406	$	3.14
RSUs granted	2,487,914		1.97
RSUs vested	(1,685,667)		2.85
RSUs forfeited	(335,277)		2.24
Balance at September 29, 2024	4,035,376	$	2.61

Summary of performance stock units


		Weighted-
	Unvested	Average Fair
	PSUs	Value per Share
Balance at December 31, 2023	1,811,571	$	2.65
PSUs granted	350,000		1.81
PSUs vested	—		—
PSUs forfeited	—		—
Balance at September 29, 2024	2,161,571	$	2.51

Debt - Debt Discounts and Issuance Costs (Details) - USD ($) $ in Millions	Sep. 29, 2024	Dec. 31, 2023
Other non-current assets
Debt Instrument
Unamortized debt issuance costs	$ 0.1	$ 0.1

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1E

Reference 20: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1E
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1E

Reference 21: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1F
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1F

Reference 22: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1F
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1F

Reference 23: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1F
-Subparagraph (b)(1)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1F

Reference 24: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1F
-Subparagraph (b)(2)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1F

Reference 25: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481139/470-20-50-1I

Reference 26: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 835
-SubTopic 30
-Name Accounting Standards Codification
-Section 45
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482925/835-30-45-2

Reference 27: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 835
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482900/835-30-50-1

+ Details

- Definition

Amount of unamortized debt discount (premium) and debt issuance costs.

+ References + Details

Leases - Future Minimum Lease Payments (Details) $ in Thousands	Sep. 29, 2024 USD ($)
Operating Leases
2024 (remaining three months)	$ 1,429
2025	6,263
2026	4,971
2027	5,138
2028	5,252
Thereafter	6,380
Total undiscounted lease payment	29,433
Present value adjustment	(4,752)
Total lease liabilities	24,681
Less: lease liabilities, current	$ (4,338)
Operating lease liability current balance sheet position	Lease liabilities, current
Lease liabilities, noncurrent	$ 20,343
Operating lease liability non-current balance sheet position	Lease liabilities, noncurrent
Finance Leases
2024 (remaining three months)	$ 336
2025	1,516
2026	263
2027	84
2028	13
Thereafter	2
Total undiscounted lease payment	2,214
Present value adjustment	(82)
Total lease liabilities	2,132
Less: lease liabilities, current	$ (1,455)
Finance lease liability current balance sheet position	Lease liabilities, current
Lease liabilities, noncurrent	$ 677
Finance lease liability non-current balance sheet position	Lease liabilities, noncurrent
Total operating and finance lease liabilities
2024 (remaining three months)	$ 1,765
2025	7,779
2026	5,234
2027	5,222
2028	5,265
Thereafter	6,382
Total undiscounted lease payment	31,647
Present value adjustment	(4,834)
Total lease liabilities	26,813
Less: lease liabilities, current	(5,793)
Lease liabilities, noncurrent	$ 21,020

Significant Accounting Policies

9 Months Ended

Sep. 29, 2024

Significant Accounting Policies

Significant Accounting Policies

2.Significant Accounting Policies

Basis of Presentation and Fiscal Year

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 December 31, 2023, except as noted below and within the "Recently Issued Accounting Pronouncements" section.

Use of Estimates

Concentration of Credit Risks

Leases

Revenue Recognition


	Deferred		Stored-Value
	Revenue		Cards
Balance as of December 31, 2023	$	50	$	13,142
Revenue recognized that was included in contract liability balance at the beginning of the period		(50)		(1,549)
Increase due to cash received, excluding amounts recognized as revenue during the period		230		1,616
Balance as of March 31, 2024		230		13,209
Revenue recognized that was included in contract liability balance at the beginning of the period		(230)		(1,042)
Increase due to cash received, excluding amounts recognized as revenue during the period		89		2,976
Balance as of June 30, 2024		89		15,143
Revenue recognized that was included in contract liability balance at the beginning of the period		(89)		(619)
Increase due to cash received, excluding amounts recognized as revenue during the period		110		1,518
Balance as of September 29, 2024		110		16,042


	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
Revenue recognized that was included in contract liability balance at the beginning of the period		(122)		(1,129)
Increase due to cash received, excluding amounts recognized as revenue during the period		98		2,355
Balance as of July 2, 2023		98		12,356
Revenue recognized that was included in contract liability balance at the beginning of the period		(98)		(631)
Increase due to cash received, excluding amounts recognized as revenue during the period		71		944
Balance as of October 3, 2023	$	71	$	12,669

Selling and Marketing Expenses

Net Loss Per Share Attributable to Common Stockholders


	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	September 29, 2024	October 1, 2023	September 29, 2024	October 1, 2023
Stock options	161,396	161,397	161,396	161,397
Unvested restricted stock	4,537	36,167	4,537	36,167
Unvested RSUs	4,035,376	3,772,622	4,035,376	3,772,622
PSUs	2,161,571	1,811,571	2,161,571	1,811,571
ESPP shares	109,403	117,511	109,403	117,511
2023 Bonus Plan	—	202,307	—	202,307
Total	6,472,283	6,101,575	6,472,283	6,101,575

2024 Stock Repurchase Program


							Maximum Dollar Value
	Total Number	Weighted		Aggregate			of Shares that May Yet
	of Shares	Average Price		Purchase			Be Purchased Under
Period	Purchased ⁽¹⁾	Paid Per Share		Price ⁽²⁾			the Plan
Thirteen weeks ended June 30, 2024	47,850	$	1.82	$	87,243	$	2,412,757
Thirteen weeks ended September 29, 2024	130,293	$	1.45	$	188,452	$	2,224,305
Total	178,143				275,695

(1)

The shares of common stock were purchased in open market transactions pursuant to a 10b5-1 purchase plan entered into by the Company.

(2)

Amount includes broker commissions

Goodwill and Intangible Assets

Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

Leases (Tables)

9 Months Ended

Sep. 29, 2024

Leases

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

As of September 29, 2024, 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
2024 (remaining three months)	$	1,429	$	336	$	1,765
2025		6,263		1,516		7,779
2026		4,971		263		5,234
2027		5,138		84		5,222
2028		5,252		13		5,265
Thereafter		6,380		2		6,382
Total undiscounted lease payment		29,433		2,214		31,647
Present value adjustment		(4,752)		(82)		(4,834)
Total lease liabilities		24,681		2,132		26,813
Less: lease liabilities, current		(4,338)		(1,455)		(5,793)
Lease liabilities, noncurrent	$	20,343	$	677	$	21,020

Subsequent Events

9 Months Ended

Sep. 29, 2024

Subsequent Events

Subsequent Events

13.Subsequent Events

November 2024 Amended Credit Agreement

On November 12, 2024, the Company entered into the November 2024 Amended Credit Agreement. The November 2024 Amended Credit Agreement extends the time period required by the 2024 Amended Credit Agreement to provide the lenders the financial statements and compliance certificate for the third quarter 2024 from November 13, 2024 to December 16, 2024. It also requires that the consolidated total leverage ratio and consolidated fixed charge coverage ratio financial convenants for the third quarter 2024 be tested on the earlier of the date the Company delivers the financial statements and compliance certificate for the third quarter of 2024 or December 16, 2024. The November 2024 Amended Credit Agreement provides that the failure to deliver the financial statements and compliance certificate for the third quarter 2024 within the original time period required by the 2024 Amended Credit Agreement will not constitute an event of default. Further, the filing of this Form 10-Q with the SEC shall not be deemed to constitute delivery of the financial statements and compliance certificate for the third quarter 2024.

The November 2024 Amended Credit Agreement prohibits the Company from requesting any additional borrowing or letter of credit extension until the financial statements and the compliance certificate for the third quarter of 2024 have been delivered. The November 2024 Amended Credit Agreement also revised the applicable interest rates for borrowings for the period commencing on November 12, 2024 as follows: at the Company’s option, the base rate plus 2.75% (increased from 1.25%) or Term SOFR (subject to a credit spread adjustment of 10 basis points) plus 3.75% (increased from 2.25%). The November 2024 Amended Credit Agreement also added a requirement to deliver certain cash flow information on a weekly basis commencing November 22, 2024.

Significant Accounting Policies - Concentration of Credit Risks (Details) - Customer concentration risk - Maximum - customer	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 29, 2024	Oct. 01, 2023	Sep. 29, 2024	Oct. 01, 2023	Dec. 31, 2023
Accounts receivable
Concentration Risk
Number of customers	0		0		0
Concentration risk percentage			10.00%		10.00%
Revenue
Concentration Risk
Number of customers	0	0	0	0
Concentration risk percentage	10.00%	10.00%	10.00%	10.00%

Condensed Consolidated Statements of Stockholders' Equity - USD ($)	Common Stock RSUs	Common Stock 2023 Bonus Plan	Common Stock	Additional Paid-In Capital RSUs	Additional Paid-In Capital 2023 Bonus Plan	Additional Paid-In Capital	Accumulated Deficit	Treasury Stock	RSUs	2023 Bonus Plan	Total
Balance at Jan. 01, 2023			$ 39,000			$ 238,725,000	$ (173,871,000)				$ 64,893,000
Balance (in shares) at Jan. 01, 2023			39,259,328
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for vesting of RSUs			$ 1,000								1,000
Issuance of common stock for vesting of RSUs (in shares)			491,769
Issuance of common stock for special compensation award (shares)			208,914
Issuance of common stock for employee stock purchase plan (ESPP)						269,000					269,000
Issuance of common stock for employee stock purchase plan (ESPP) (in shares)			47,502
Shares withheld for withholding tax				$ (662,000)					$ (662,000)
Shares withheld for withholding tax (in shares)	(277,606)
Forfeited shares of restricted stock (in shares)			(2,720)
Equity-based compensation						4,892,000					4,892,000
Net loss and comprehensive loss							(5,618,000)				(5,618,000)
Balance at Apr. 02, 2023			$ 40,000			243,224,000	(179,489,000)				63,775,000
Balance (in shares) at Apr. 02, 2023			39,727,187
Balance at Jan. 01, 2023			$ 39,000			238,725,000	(173,871,000)				64,893,000
Balance (in shares) at Jan. 01, 2023			39,259,328
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss and comprehensive loss											(12,104,000)
Balance at Oct. 01, 2023			$ 40,000			250,671,000	(185,975,000)				64,736,000
Balance (in shares) at Oct. 01, 2023			40,464,483
Balance at Apr. 02, 2023			$ 40,000			243,224,000	(179,489,000)				63,775,000
Balance (in shares) at Apr. 02, 2023			39,727,187
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for vesting of RSUs (in shares)			634,567
Shares withheld for withholding tax				(558,000)					(558,000)
Shares withheld for withholding tax (in shares)	(220,843)
Equity-based compensation						4,054,000					4,054,000
Net loss and comprehensive loss							(2,597,000)				(2,597,000)
Balance at Jul. 02, 2023			$ 40,000			246,720,000	(182,086,000)				64,674,000
Balance (in shares) at Jul. 02, 2023			40,140,911
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for vesting of RSUs (in shares)			505,172
Issuance of common stock for employee stock purchase plan (ESPP)						218,000					218,000
Issuance of common stock for employee stock purchase plan (ESPP) (in shares)			52,775
Shares withheld for withholding tax				(467,000)					(467,000)
Shares withheld for withholding tax (in shares)	(232,465)
Forfeited shares of restricted stock (in shares)			(1,910,000)
Equity-based compensation						4,200,000					4,200,000
Net loss and comprehensive loss							(3,889,000)				(3,889,000)
Balance at Oct. 01, 2023			$ 40,000			250,671,000	(185,975,000)				64,736,000
Balance (in shares) at Oct. 01, 2023			40,464,483
Balance at Dec. 31, 2023			$ 41,000			254,116,000	(193,205,000)				$ 60,952,000
Balance (in shares) at Dec. 31, 2023			40,618,206
Balance, treasury shares at Dec. 31, 2023											0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for vesting of RSUs (in shares)			983,460
Issuance of common stock for employee stock purchase plan (ESPP)						167,000					$ 167,000
Issuance of common stock for employee stock purchase plan (ESPP) (in shares)			52,043
Shares withheld for withholding tax				(660,000)					(660,000)
Shares withheld for withholding tax (in shares)	(396,708)
Forfeited shares of restricted stock (in shares)			(1,035)
Equity-based compensation						3,023,000					3,023,000
Net loss and comprehensive loss							(5,736,000)				(5,736,000)
Balance at Mar. 31, 2024			$ 41,000			256,646,000	(198,941,000)				57,746,000
Balance (in shares) at Mar. 31, 2024			41,255,966
Balance at Dec. 31, 2023			$ 41,000			254,116,000	(193,205,000)				$ 60,952,000
Balance (in shares) at Dec. 31, 2023			40,618,206
Balance, treasury shares at Dec. 31, 2023											0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Repurchase of common stock											$ (275,695)
Repurchase of common stock (in shares)											(178,143)
Net loss and comprehensive loss											$ (23,411,000)
Balance at Sep. 29, 2024			$ 42,000			260,619,000	(216,616,000)	$ (276,000)			$ 43,769,000
Balance (in shares) at Sep. 29, 2024			41,912,709
Balance, treasury shares at Sep. 29, 2024								(178,143)			178,143
Balance at Mar. 31, 2024			$ 41,000			256,646,000	(198,941,000)				$ 57,746,000
Balance (in shares) at Mar. 31, 2024			41,255,966
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for vesting of RSUs			$ 1,000								1,000
Issuance of common stock for vesting of RSUs (in shares)			575,697
Issuance of common stock under 2023 Bonus Plan						10,000					10,000
Issuance of common stock under 2023 Bonus Plan (in shares)			95,588
Shares withheld for withholding tax				(280,000)	$ (54,000)				(280,000)	$ (54,000)
Shares withheld for withholding tax (in shares)	(151,001)	(36,375)
Equity-based compensation						2,171,000					2,171,000
Repurchase of common stock								$ (87,000)			$ (87,243)
Repurchase of common stock (in shares)								(47,850)			(47,850)
Net loss and comprehensive loss							(10,796,000)				$ (10,796,000)
Balance at Jun. 30, 2024			$ 42,000			258,493,000	(209,737,000)	$ (87,000)			48,711,000
Balance (in shares) at Jun. 30, 2024			41,739,875
Balance, treasury shares at Jun. 30, 2024								(47,850)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for vesting of RSUs (in shares)			122,792
Issuance of common stock for employee stock purchase plan (ESPP)						72,000					72,000
Issuance of common stock for employee stock purchase plan (ESPP) (in shares)			57,693
Shares withheld for withholding tax				$ (11,000)					$ (11,000)
Shares withheld for withholding tax (in shares)	(7,651)
Equity-based compensation						2,065,000					2,065,000
Repurchase of common stock								$ (188,000)			$ (188,452)
Repurchase of common stock (in shares)								(130,293)			(130,293)
Net loss and comprehensive loss							(6,879,000)				$ (6,879,000)
Balance at Sep. 29, 2024			$ 42,000			$ 260,619,000	$ (216,616,000)	$ (276,000)			$ 43,769,000
Balance (in shares) at Sep. 29, 2024			41,912,709
Balance, treasury shares at Sep. 29, 2024								(178,143)			178,143

Balance Sheet Components

9 Months Ended

Sep. 29, 2024

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	September 29,		December 31,
	in Years	2024		2023
Leasehold improvements	3 – 9	$	5,014	$	4,314
Equipment	3 – 7		3,802		3,053
Furniture and fixtures	3 – 7		2,092		2,151
Construction in progress			—		688
Total property and equipment			10,908		10,206
Less: accumulated depreciation and amortization			(6,532)		(5,494)
Property and equipment, net		$	4,376	$	4,712

Depreciation and amortization of property and equipment for the thirteen weeks ended September 29, 2024 and October 1, 2023 was $0.9 million and $0.8 million, respectively, and for the thirty-nine weeks ended September 29, 2024 and October 1, 2023, was $2.5 million and $2.2 million, respectively.

Accrued Expenses and Other Current Liabilities

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


	September 29,		December 31,
	2024		2023
Accrued compensation and benefits	$	3,693	$	5,057
Accrued marketing		4,185		5,002
Accrued inventory		8,098		4,151
Accrued freight		2,329		1,940
Accrued legal contingent liability		4,781		—
Other		3,535		2,193
Accrued expenses and other current liabilities	$	26,621	$	18,343

Income Taxes

9 Months Ended

Sep. 29, 2024

Income Taxes

Income Taxes

11.Income Taxes

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


	Thirteen Weeks Ended
	September 29,			October 1,
	2024			2023
Loss before benefit (provision) for income taxes	$	(6,868)		$	(5,047)
Benefit (provision) for income taxes		(11)			1,158
Effective tax rate		0.2	%		(22.9)	%


	Thirty-Nine Weeks Ended
	September 29,			October 1,
	2024			2023
Loss before benefit (provision) for income taxes	$	(17,648)		$	(13,096)
Benefit (provision) for income taxes		(5,763)			992
Effective tax rate		32.7	%		(7.6)	%

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.

The Company’s pre-tax loss for the period ended September 29, 2024 relative to the Company’s projected pre-tax income for fiscal 2024 yielded an annual effective tax rate, which was deemed to be appropriate or meaningful. Based on this fact, the Company determined that the historical estimated annual effective tax rate method would provide a reliable estimate and was used for calculating the interim provision for the period ended September 29, 2024.

For the thirteen and thirty-nine weeks ended September 29, 2024, the Company's effective tax rate differs from the federal income tax rate of 21% primarily due to the Company’s valuation allowance resulting from the lack of sufficient positive evidence that the deferred taxes will be more-likely-than-not realized in the future. For the thirteen and thirty-nine weeks ended October 1, 2023, the Company's effective tax rate differs from the federal income tax rate of 21% primarily due to non-deductible executive compensation and non-deductible equity-based compensation expense.

The Company regularly assesses the realizability of deferred tax assets and records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. This evidence includes, but is not limited to, historical earnings, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income. Due to the weight of objectively verifiable negative evidence, the Company established a valuation allowance of $5.4 million during the thirteen weeks ended June 30, 2024 and maintained such valuation allowance for the thirty-nine weeks ended September 29, 2024. This was comprised of a valuation allowance of $5.7 million for the net deferred taxes as of December 31, 2023 and an adjustment of $0.3 million for the thirty-nine week period through September 29, 2024. The significant piece of objectively verifiable negative evidence evaluated was the recent cumulative losses. The Company’s ability to use its deferred tax assets depends on the amount of taxable income in future periods.

- Definition

The entire disclosure for income tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 231
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482663/740-10-55-231

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12C
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12B
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477891/740-270-50-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 6.I.5.Q1)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-13

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/740/tableOfContent

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-14

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Debt

9 Months Ended

Sep. 29, 2024

Debt

Debt

5.Debt

Credit Facility

On November 15, 2021, the Company entered into the 2021 Credit Agreement with Bank of America (the “lender”) to provide the 2021 Revolving Facility that provided for borrowings up to $50.0 million with a maturity date of November 15, 2024. All borrowings under the 2021 Credit Agreement accrued 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%).

On July 22, 2024, the Company entered into the 2024 Amended Credit Agreement which extended the maturity date from November 15, 2024 to August 15, 2025 and reduced the 2021 Revolving Facility from $50.0 million to $15.0 million, with a further reduction to $10.0 million on March 31, 2025. Under the 2024 Amended Credit Agreement, the Company can increase the aggregate amount of the facility by $10.0 million, subject to the satisfaction of certain conditions, including an asset coverage ratio of at least 1.50:1.00, recalculated as of the last day of the most recently ended month for which financial statements are internally available. The 2024 Amended Credit Agreement also reduced the previous letters of credit sublimit from $7.5 million to $5.0 million.

The 2024 Amended Credit Agreement revised the applicable interest rates for borrowings for the period commencing on July 22, 2024 through (but excluding) November 15, 2024 as follows: at the Company’s option, the base rate plus 1.25% (increased from 0.75%) or Term SOFR (subject to a credit spread adjustment of 10 basis points) plus 2.25% (increased from 1.75%). Additionally, the 2024 Amended Credit Agreement reduced the SOFR credit spread adjustment to 0.10%, which previously ranged from 0.11448% to 0.71513% depending on the SOFR tenor. The previous Commitment Fee of 37.5 basis points to be assessed on unused commitments, including the sum of outstanding borrowings and letter of credit obligations, remained unchanged under the 2024 Amended Credit Agreement. Capitalized terms used without definition are as defined in the 2024 Amended Credit Agreement.

During the thirty-nine weeks ended September 29, 2024, the Company borrowed $31.5 million under the 2021 Credit Agreement and the 2024 Amended Credit Agreement and repaid $28.0 million of the outstanding balance. The weighted average interest rate on the $11.5 million outstanding balance as of September 29, 2024 was 7.5%, and during the thirteen and thirty-nine weeks ended September 29, 2024, the effective interest rate was 9.8% and 9.2%, respectively. As of September 29, 2024, the Company had $0.5 million letters of credit outstanding. The Company borrowed an additional $1.6 million under the terms of the 2024 Amended Credit Agreement subsequent to September 29, 2024.

Amounts borrowed under the 2021 Credit Agreement and the 2024 Amended Credit Agreement are collateralized by all assets of the Company and contain 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.

The 2024 Amended Credit Agreement retained the previous maximum total leverage ratio covenant of 2.00:1.00 and added a financial covenant that requires a fixed charge coverage ratio as of the end of any period of four consecutive quarters, commencing June 30, 2024, to be less than 1.15:1.00.

As of September 29, 2024, the Company was not in compliance with its preliminary financial covenants for the third quarter 2024 as required by its 2024 Amended Credit Agreement. On November 12, 2024, the Company entered into the November 2024 Amended Credit Agreement as described in Note 13, Subsequent Events. The November 2024 Amended Credit Agreement extended the Company's reporting deadline for its financial statements and covenant compliance certificate for the third quarter 2024 to December 16, 2024, and required that the financial covenants be tested on the earlier of the date the financial statements and compliance certificate for the third quarter 2024 are delivered or December 16, 2024. The November 2024 Amended Credit Agreement also provided that the failure to deliver the financial statements and covenant compliance certificate within the original time period required by the 2024 Amended Credit Agreement will not constitute an event of default. Further, the filing of this Form 10-Q with the SEC shall not be deemed to constitute delivery of the financial statements and compliance certificate for the third quarter 2024. The November 2024 Amended Credit Agreement also revised the applicable interest rates for borrowings for the period commencing on November 12, 2024, as described in Note 13, Subsequent Events. Until the earlier of the date the financial statements and compliance certificate for the third quarter 2024 are delivered or December 16, 2024, the Company has no further access to the revolving commitments under the November 2024 Amended Credit Agreement. If the Company has not refinanced the revolving credit facility or obtained a further waiver or amendment prior to December 16, 2024, the Company expects to be in default of its 2024 Amended Credit Agreement. Immediately upon the occurrence and during the continuance of an event of default, the lender could take any or all of the following actions: terminate the available borrowings, declare the unpaid principal and interest on outstanding loans immediately due and payable, require that the Company cash collateralize the letter of credit obligations, increase the interest rate per annum by 2.0% above the rate that would be otherwise applicable, and exercise any other right and remedy available under the loan documents, law, or equity.

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 consolidated statements of operations and comprehensive loss. Debt issuance costs related to the 2021 Revolving Facility and 2024 Amended Credit Agreement are included in prepaids and other current assets in the consolidated balance sheets. As of September 29, 2024 and December 31, 2023, unamortized debt issuance costs recorded within prepaids and other current assets were $0.1 million and $0.1 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

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+ Details