Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 02, 2023 | Aug. 04, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jul. 02, 2023 | |
Entity File Number | 001-41059 | |
Entity Registrant Name | Lulu’s Fashion Lounge Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-8442468 | |
Entity Address, Address Line One | 195 Humboldt Avenue | |
Entity Address, City or Town | Chico | |
Entity Address State Or Province | CA | |
Entity Address, Postal Zip Code | 95928 | |
City Area Code | 530 | |
Local Phone Number | 343-3545 | |
Title of 12(b) Security | Common stock, $0.001 par value per share | |
Trading Symbol | LVLU | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 40,159,169 | |
Entity Central Index Key | 0001780201 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 02, 2023 | Jan. 01, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 5,947 | $ 10,219 |
Accounts receivable | 3,111 | 3,908 |
Inventory, net | 46,232 | 43,186 |
Assets for recovery | 4,749 | 3,890 |
Income tax refund receivable | 3,459 | 4,078 |
Prepaids and other current assets | 4,104 | 3,738 |
Total current assets | 67,602 | 69,019 |
Property and equipment, net | 4,134 | 4,391 |
Goodwill | 35,430 | 35,430 |
Tradename | 18,509 | 18,509 |
Intangible assets, net | 3,212 | 3,090 |
Lease right-of-use assets | 31,119 | 32,514 |
Other noncurrent assets | 4,696 | 4,251 |
Total assets | 164,702 | 167,204 |
Current liabilities: | ||
Accounts payable | 9,235 | 5,320 |
Accrued expenses and other current liabilities | 18,394 | 17,976 |
Returns reserve | 11,998 | 9,066 |
Stored-value card liability | 12,356 | 10,828 |
Lease liabilities, current | 5,054 | 4,456 |
Total current liabilities | 57,037 | 47,646 |
Revolving line of credit | 15,000 | 25,000 |
Lease liabilities, noncurrent | 27,187 | 29,042 |
Other noncurrent liabilities | 804 | 623 |
Total liabilities | 100,028 | 102,311 |
Commitments and Contingencies (Note 7) | ||
Stockholders' equity: | ||
Preferred stock: $0.001 par value, 10,000,000 shares authorized, and no shares issued or outstanding | ||
Common stock: $0.001 par value, 250,000,000 shares authorized; and 40,140,911 and 39,259,328 shares issued and outstanding as of July 2, 2023 and January 1, 2023, respectively | 40 | 39 |
Additional paid-in capital | 246,720 | 238,725 |
Accumulated deficit | (182,086) | (173,871) |
Total stockholders' equity | 64,674 | 64,893 |
Total liabilities and stockholders' equity | $ 164,702 | $ 167,204 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 02, 2023 | Jan. 01, 2023 |
Condensed Consolidated Balance Sheets | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock issued | 0 | 0 |
Preferred stock outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 40,140,911 | 39,259,328 |
Common stock, shares outstanding | 40,140,911 | 39,259,328 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income | ||||
Net revenue | $ 106,122 | $ 131,512 | $ 197,098 | $ 243,414 |
Cost of revenue | 58,726 | 71,345 | 111,741 | 130,269 |
Gross profit | 47,396 | 60,167 | 85,357 | 113,145 |
Selling and marketing expenses | 24,670 | 25,851 | 44,159 | 47,737 |
General and administrative expenses | 24,396 | 23,392 | 48,744 | 51,226 |
(Loss) income from operations | (1,670) | 10,924 | (7,546) | 14,182 |
Interest expense | 426 | 157 | 949 | 365 |
Other income, net | (373) | (27) | (446) | (81) |
(Loss) income before provision for income taxes | (1,723) | 10,794 | (8,049) | 13,898 |
Income tax provision | 874 | 4,795 | 166 | 5,856 |
Net (loss) income and comprehensive (loss) income | $ (2,597) | $ 5,999 | $ (8,215) | $ 8,042 |
Basic earnings per share | $ (0.07) | $ 0.16 | $ (0.21) | $ 0.21 |
Diluted earnings per share | $ (0.07) | $ 0.15 | $ (0.21) | $ 0.21 |
Basic weighted-average shares outstanding | 39,680,908 | 38,535,409 | 39,457,607 | 38,316,895 |
Diluted weighted-average shares outstanding | 39,680,908 | 38,992,901 | 39,457,607 | 38,555,919 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock. | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Jan. 02, 2022 | $ 38 | $ 222,080 | $ (177,596) | $ 44,522 |
Balance (in shares) at Jan. 02, 2022 | 38,421,124 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock for vesting of restricted stock units (RSUs) | $ 1 | (1) | ||
Issuance of common stock for vesting of restricted stock units (RSUs) (shares) | 228,387 | |||
Issuance of common stock for special compensation award (shares) | 208,914 | |||
Shares withheld for withholding tax on RSUs | (265) | (265) | ||
Shares withheld for withholding tax on RSUs (in shares) | (28,295) | |||
Offering costs related to Initial Public Offering (IPO) | (290) | (290) | ||
Settlement of distributions payable to former Class P unit holders | 2,648 | 2,648 | ||
Equity-based compensation expense | 5,126 | 5,126 | ||
Net (loss) income and comprehensive (loss) income | 2,043 | 2,043 | ||
Balance at Apr. 03, 2022 | $ 39 | 229,298 | (175,553) | 53,784 |
Balance (in shares) at Apr. 03, 2022 | 38,830,130 | |||
Balance at Jan. 02, 2022 | $ 38 | 222,080 | (177,596) | 44,522 |
Balance (in shares) at Jan. 02, 2022 | 38,421,124 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net (loss) income and comprehensive (loss) income | 8,042 | |||
Balance at Jul. 03, 2022 | $ 39 | 231,940 | (169,554) | 62,425 |
Balance (in shares) at Jul. 03, 2022 | 38,931,050 | |||
Balance at Apr. 03, 2022 | $ 39 | 229,298 | (175,553) | 53,784 |
Balance (in shares) at Apr. 03, 2022 | 38,830,130 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock for vesting of restricted stock units (RSUs) (shares) | 196,808 | |||
Shares withheld for withholding tax on RSUs | (805) | (805) | ||
Shares withheld for withholding tax on RSUs (in shares) | (73,195) | |||
Forfeited shares of restricted stock (in shares) | (22,693) | |||
Equity-based compensation expense | 3,447 | 3,447 | ||
Net (loss) income and comprehensive (loss) income | 5,999 | 5,999 | ||
Balance at Jul. 03, 2022 | $ 39 | 231,940 | (169,554) | 62,425 |
Balance (in shares) at Jul. 03, 2022 | 38,931,050 | |||
Balance at Jan. 01, 2023 | $ 39 | 238,725 | (173,871) | 64,893 |
Balance (in shares) at Jan. 01, 2023 | 39,259,328 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock for vesting of restricted stock units (RSUs) | $ 1 | 1 | ||
Issuance of common stock for vesting of restricted stock units (RSUs) (shares) | 491,769 | |||
Issuance of common stock for special compensation award (shares) | 208,914 | |||
Issuance of common stock for employee stock purchase plan (ESPP) | 269 | 269 | ||
Issuance of common stock for employee stock purchase plan (ESPP) (in shares) | 47,502 | |||
Shares withheld for withholding tax on RSUs | (662) | (662) | ||
Shares withheld for withholding tax on RSUs (in shares) | (277,606) | |||
Forfeited shares of restricted stock (in shares) | (2,720) | |||
Equity-based compensation expense | 4,892 | 4,892 | ||
Net (loss) income and comprehensive (loss) income | (5,618) | (5,618) | ||
Balance at Apr. 02, 2023 | $ 40 | 243,224 | (179,489) | 63,775 |
Balance (in shares) at Apr. 02, 2023 | 39,727,187 | |||
Balance at Jan. 01, 2023 | $ 39 | 238,725 | (173,871) | 64,893 |
Balance (in shares) at Jan. 01, 2023 | 39,259,328 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Net (loss) income and comprehensive (loss) income | (8,215) | |||
Balance at Jul. 02, 2023 | $ 40 | 246,720 | (182,086) | 64,674 |
Balance (in shares) at Jul. 02, 2023 | 40,140,911 | |||
Balance at Apr. 02, 2023 | $ 40 | 243,224 | (179,489) | 63,775 |
Balance (in shares) at Apr. 02, 2023 | 39,727,187 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock for vesting of restricted stock units (RSUs) (shares) | 634,567 | |||
Shares withheld for withholding tax on RSUs | (558) | (558) | ||
Shares withheld for withholding tax on RSUs (in shares) | (220,843) | |||
Equity-based compensation expense | 4,054 | 4,054 | ||
Net (loss) income and comprehensive (loss) income | (2,597) | (2,597) | ||
Balance at Jul. 02, 2023 | $ 40 | $ 246,720 | $ (182,086) | $ 64,674 |
Balance (in shares) at Jul. 02, 2023 | 40,140,911 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 02, 2023 | Jul. 03, 2022 | |
Cash Flows from Operating Activities | ||
Net (loss) income | $ (8,215) | $ 8,042 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 2,306 | 1,850 |
Noncash lease expense | 1,753 | 1,545 |
Amortization of debt discount and debt issuance costs | 78 | 79 |
Equity-based compensation expense | 9,029 | 8,591 |
Deferred income taxes | (1,569) | (1,298) |
Loss on disposal of property and equipment | 6 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 797 | (858) |
Inventories | (3,046) | (26,399) |
Assets for recovery | (859) | (1,637) |
Income taxes payable | 1,653 | 2,845 |
Prepaid and other current assets | (497) | 396 |
Accounts payable | 3,916 | 4,188 |
Accrued expenses and other current liabilities | 4,756 | 14,730 |
Operating lease liabilities | (1,635) | (1,038) |
Other noncurrent liabilities | (116) | (454) |
Net cash provided by operating activities | 8,351 | 10,588 |
Cash Flows from Investing Activities | ||
Capitalized software development costs | (1,026) | (1,247) |
Purchases of property and equipment | (726) | (1,394) |
Other | (97) | |
Net cash used in investing activities | (1,752) | (2,738) |
Cash Flows from Financing Activities | ||
Proceeds from borrowings on revolving line of credit | 5,000 | 10,000 |
Repayments on revolving line of credit | (15,000) | (20,000) |
Proceeds from issuance of common stock under employee stock purchase plan (ESPP) | 269 | |
Principal payments on finance lease obligations | (497) | (344) |
Payment of offering costs related to the IPO | (542) | |
Withholding tax payments related to vesting of RSUs | (637) | |
Other | (6) | (23) |
Net cash used in financing activities | (10,871) | (10,909) |
Net decrease in cash, cash equivalents and restricted cash | (4,272) | (3,059) |
Cash, cash equivalents and restricted cash at beginning of period | 10,219 | 11,908 |
Total cash, cash equivalents and restricted cash at end of period | 5,947 | 8,849 |
Reconciliation of cash, cash equivalents and restricted cash | ||
Cash and cash equivalents | 5,947 | 8,343 |
Restricted cash | 506 | |
Total cash, cash equivalents and restricted cash at end of period | 5,947 | 8,849 |
Supplemental Disclosure | ||
Income taxes, net | 82 | 4,309 |
Interest | 918 | 242 |
Operating leases | 2,595 | |
Finance leases | 549 | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities | ||
Addition of right-of-use assets, including prepaid rent, net of deferred rent recorded upon adoption of ASC 842 | 28,018 | |
Addition of lease liabilities recorded upon adoption of ASC 842 | 28,599 | |
Right-of-use assets acquired under operating lease obligations | 17 | 1,839 |
Assets acquired under finance lease obligations | 983 | 3,763 |
Purchases of property and equipment included in accounts payable and accrued expenses | $ 29 | 188 |
Offering costs included in accrued expenses | $ 290 |
Description of Business, Organi
Description of Business, Organization and Liquidity | 6 Months Ended |
Jul. 02, 2023 | |
Description of Business, Organization and Liquidity | |
Description of Business, Organization and Liquidity | 1. Organization and Business Pursuant to a reorganization, Lulu’s Fashion Lounge Holdings, Inc., a Delaware Corporation (“Lulus”, or the “Company”), was formed on August 25, 2017 as a holding company and its primary asset is an indirect membership interest in Lulu’s Fashion Lounge, LLC (“Lulus LLC”). Prior to the sale of the Company’s Series A convertible preferred stock in April 2018, the Company was wholly-owned by Lulu’s Holdings, L.P. (the “LP”). Prior to the Company’s initial public offering in November 2021, the Company was majority-owned by the LP. Lulus LLC was founded in 1996, starting as a vintage boutique in Chico, CA that began selling online in 2005 and transitioned to a purely online business in 2008. The LP was formed in 2014 as a holding company and purchased 100% of Lulus LLC’s outstanding common stock in 2014. The Company, through Lulus LLC, is an online retailer of women’s clothing, shoes and accessories headquartered in Chico, CA. Impact of Macroeconomic Trends on Business Changing macroeconomic factors, including inflation, interest rates, and overall consumer confidence with respect to current and future economic conditions, have directly impacted our sales in the second quarter of 2023 as discretionary consumer spending levels and shopping behavior fluctuate with these factors. During the first half of 2023, we have responded to these factors by taking appropriate pricing, promotional and other actions to stimulate customer demand. These factors are expected to continue to have an impact on our business, results of operations, our growth and financial condition. Additionally, the COVID-19 pandemic has had and may continue to have a materially adverse impact on the macroeconomic environment. |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jul. 02, 2023 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Basis of Presentation and Fiscal Year The Company’s fiscal year consists of a 52-week or 53-week period ending on the Sunday nearest December 31. The fiscal years ending December 31, 2023 and ended January 1, 2023 consisted of 52-weeks. The condensed consolidated financial statements and accompanying notes include the accounts of the Company and its wholly owned subsidiaries, after elimination of all intercompany balances and transactions. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the Unites States of America (“GAAP”) and the requirements of the SEC for interim reporting. As permitted under these rules, certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The interim condensed consolidated financial statements are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position as of July 2, 2023 and its results of operations for the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022 and its cash flows for the twenty-six weeks ended July 2, 2023 and July 3, 2022. The results of operations for the twenty-six weeks ended July 2, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2023 or for any other future annual or interim period. The condensed consolidated balance sheet as of January 1, 2023 was derived from the Company’s audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 14, 2023. Significant Accounting Policies The significant accounting policies used in preparation of these condensed consolidated financial statements are consistent with those discussed in Note 2 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended January 1, 2023, except as noted below and within the "Adopted and Recently Issued Accounting Pronouncements" section. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The significant estimates and assumptions made by management relate to sales return reserves and related assets for recovery, lease right-of-use assets and related lease liabilities, and income tax valuation allowance. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions. Concentration of Credit Risks Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents and restricted cash. At times, such amounts may exceed federally insured limits. The Company reduces credit risk by depositing its cash with a major credit-worthy financial institution within the United States. To date, the Company has not experienced any losses on its cash deposits. As of July 2, 2023 and January 1, 2023, a single wholesale customer represented 12% and 15%, respectively, of the Company’s accounts receivable balance. No customer accounted for greater than 10% of the Company’s net revenue during the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022. Leases Contracts that have been determined to convey the right to use an identified asset are evaluated for classification as an operating or finance lease. For the Company’s operating and finance leases, the Company records a lease liability based on the present value of the lease payments at lease inception. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate (“IBR”). The determination of the IBR requires judgment and is primarily based on publicly-available information for companies within similar industries and with similar credit profiles. We adjust the rate for the impact of collateralization, the lease term and other specific terms included in each lease arrangement. The IBR is determined at the lease commencement and is subsequently reassessed upon a modification to the lease arrangement. The right-of-use asset is recorded based on the corresponding lease liability at lease inception, adjusted for payments made to the lessor at or before the commencement date, initial direct costs incurred and any tenant incentives allowed for under the lease. The Company does not include optional renewal terms or early termination provisions unless the Company is reasonably certain such options would be exercised at the inception of the lease. Lease right-of-use assets, current portion of lease liabilities, and lease liabilities, net of current portion are included on the condensed consolidated balance sheets. Fixed lease expense for operating leases is recognized on a straight-line basis, unless the right-of-use assets have been impaired, over the reasonably assured lease term based on the total lease payments and is included in operating expenses in the condensed consolidated statements of operations and comprehensive (loss) income. Fixed and variable lease expense on operating leases is recognized within operating expenses in the condensed consolidated statements of operations and comprehensive (loss) income. Finance lease expenses are recognized on a straight-line basis. Fixed and variable expenses are captured within interest expense and depreciation expense, which has components within general and administrative expenses and cost of revenue. The Company’s non-lease components are primarily related to maintenance, insurance and taxes, which varies based on future outcomes and is thus recognized in lease expense when incurred. Revenue Recognition The Company generates revenue primarily from the sale of merchandise products directly to end customers. The sale of products is a distinct performance obligation, and revenue is recognized at a point in time when control of the promised product is transferred to customers, which the Company determined occurs upon shipment based on its evaluation of the related shipping terms. Revenue is recognized in an amount that reflects the transaction price consideration that the Company expects to receive in exchange for those products. The Company’s payment terms are typically at the point of sale for merchandise product sales. The Company elected to exclude from revenue taxes assessed by governmental authorities, including value-added and other sales-related taxes, that are imposed on and concurrent with revenue-producing activities. The Company has elected to apply the practical expedient, relative to e-commerce sales, which allows an entity to account for shipping and handling as fulfillment activities, and not a separate performance obligation. Accordingly, the Company recognizes revenue for only one performance obligation, the sale of the product, at shipping point (when the customer gains control). Shipping and handling costs associated with outbound freight are accounted for as fulfillment costs and are included in cost of goods sold. The Company has elected to apply the practical expedient to expense costs as incurred for incremental costs to obtain a contract when the amortization period would have been one year or less. Revenue from merchandise product sales is reported net of sales returns, which includes an estimate of future returns based on historical return rates, with a corresponding reduction to cost of sales. There is judgment in utilizing historical trends for estimating future returns. The Company’s refund liability for sales returns is included in the returns reserve on its condensed consolidated balance sheets and represents the expected value of the refund that will be due to the Company’s customers. The Company also has corresponding assets for recovery that represent the expected net realizable value of the merchandise inventory to be returned. The Company sells stored-value gift cards to customers and offers merchandise credit stored-value cards for certain returns. Such stored-value cards do not have an expiration date. The Company recognizes revenue from stored-value cards when the card is redeemed by the customer. The Company has determined that sufficient evidence exists to support an estimate for stored-value card breakage. Subject to requirements to remit balances to governmental agencies, breakage is recognized as revenue in proportion to the pattern of rights exercised by the customer, which is substantially within thirty-six months from the date of issuance. The amount of breakage recognized in revenue during the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022 was not material. The Company has two types of contractual liabilities: (i) cash collections from its customers prior to delivery of products purchased (“deferred revenue”), which are initially recorded within accrued expenses and recognized as revenue when the products are shipped, (ii) unredeemed gift cards and online store credits, which are initially recorded as a stored-value card liability and are recognized as revenue in the period they are redeemed. The following table summarizes the significant changes in the contract liabilities balances included in accrued expenses and other current liabilities during the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022 (in thousands): Deferred Stored-Value Revenue Cards Balance as of January 1, 2023 $ 69 $ 10,828 Revenue recognized that was included in contract liability balance at the beginning of the period (69) (1,720) Increase due to cash received, excluding amounts recognized as revenue during the period 122 2,022 Balance as of April 2, 2023 122 11,130 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 Deferred Stored-Value Revenue Cards Balance as of January 2, 2022 $ 145 $ 7,240 Revenue recognized that was included in contract liability balance at the beginning of the period (145) (1,786) Increase due to cash received, excluding amounts recognized as revenue during the period 315 1,838 Balance as of April 3, 2022 315 7,292 Revenue recognized that was included in contract liability balance at the beginning of the period (315) (2,330) Increase due to cash received, excluding amounts recognized as revenue during the period 101 3,140 Balance as of July 3, 2022 $ 101 $ 8,102 Selling and Marketing Expenses Advertising costs included in selling and marketing expenses were $19.5 million and $20.2 million for the thirteen weeks ended , respectively, and $34.5 million and $37.2 million for the twenty-six weeks ended , respectively. Net (Loss) Income Per Share Attributable to Common Stockholders Basic net (loss) income per share attributable to common stockholders is computed using net (loss) income attributable to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted net (loss) income per share attributable to common stockholders represents net (loss) income attributable to common stockholders divided by the weighted average number of common shares outstanding during the period, including the effects of any dilutive securities outstanding. The following table presents the calculation of basic and diluted weighted average shares used to compute net (loss) income per share attributable to common stockholders: Thirteen Weeks Ended Twenty-Six Weeks Ended July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Basic 39,680,908 38,535,409 39,457,607 38,316,895 Dilutive securities: Unvested restricted stock — 69,519 — 83,329 Unvested restricted stock units (RSUs) — 286,616 — 1,950 Special compensation awards — 101,357 — 153,745 Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Diluted 39,680,908 38,992,901 39,457,607 38,555,919 The following securities were excluded from the computation of diluted net (loss) income per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (on an as-converted basis): Thirteen Weeks Ended Twenty-Six Weeks Ended July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Stock options 161,397 322,793 161,397 322,793 Unvested restricted stock 57,287 187,635 57,287 187,635 Unvested RSUs 4,033,576 16,950 4,033,576 1,513,510 Performance stock units 1,811,571 — 1,811,571 — Employee stock purchase plan shares 137,847 — 137,847 — 2023 stock-based bonus plan 210,381 — 210,381 — Total 6,412,059 527,378 6,412,059 2,023,938 Recently Adopted Accounting Pronouncements The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which amends guidance on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities from an incurred loss methodology to an expected loss methodology. For assets held at amortized cost basis, the guidance eliminates the probable initial recognition threshold and instead requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses are recorded through an allowance for credit losses, rather than a write-down, limited to the amount by which fair value is below amortized cost. Additional disclosures about significant estimates and credit quality are also required. The guidance is effective for the Company for fiscal years beginning after December 15, 2022. The Company adopted this guidance on January 2, 2023, and it did not have a material impact on its consolidated financial statements or disclosure requirements. Recently Issued Accounting Pronouncements There are no new recent accounting pronouncements that are expected to have a material impact on our consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jul. 02, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | 3. The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts payable, accrued expenses and revolving line of credit. As of July 2, 2023 and January 1, 2023, the carrying values of cash and cash equivalents, restricted cash, accounts payable and accrued expenses approximate fair value due to their short-term maturities. The fair value of the Company’s Revolving Facility that provides for borrowings up to $50.0 million (see Note 5, Debt |
Balance Sheet Components
Balance Sheet Components | 6 Months Ended |
Jul. 02, 2023 | |
Balance Sheet Components | |
Balance Sheet Components | 4. Property and Equipment, net Property and equipment, net consisted of the following (in thousands): Estimated Useful Lives July 2, January 1, in Years 2023 2023 Leasehold improvements 3 – 9 $ 3,939 $ 3,802 Equipment 3 – 7 2,880 2,659 Furniture and fixtures 3 – 7 2,023 1,880 Construction in progress 22 36 Total property and equipment 8,864 8,377 Less: accumulated depreciation and amortization (4,730) (3,986) Property and equipment, net $ 4,134 $ 4,391 Depreciation and amortization of property and equipment for the thirteen weeks ended July 2, 2023 and July 3, 2022 was $0.7 million and $0.6 million, respectively and for the twenty-six weeks ended , was $1.4 million and $1.0 million, respectively Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): July 2, January 1, 2023 2023 Accrued compensation and benefits $ 5,897 $ 6,751 Accrued marketing 4,933 3,206 Accrued inventory 3,549 3,411 Other 4,015 4,608 Accrued expenses and other current liabilities $ 18,394 $ 17,976 |
Debt
Debt | 6 Months Ended |
Jul. 02, 2023 | |
Debt | |
Debt | 5. Revolving Facility During November 2021, the Company entered into a Credit Agreement with Bank of America (the “Credit Agreement”) to provide the Revolving Facility that provides for borrowings up to $50.0 million (the "Revolving Facility"). During the term of the Credit Agreement, the Company can increase the aggregate amount of the Revolving Facility up to an additional $25.0 million (for maximum aggregate lender commitments of up to $75.0 million), subject to the satisfaction of certain conditions under the Credit Agreement, including obtaining the consent of the administrative agent and an increased commitment from existing or new lenders. In addition, the Credit Agreement may be used to issue letters of credit up to $7.5 million (“Letter of Credit”). During the twenty-six weeks ended July 2, 2023, the Company borrowed $5.0 million under the Revolving Facility and repaid $15.0 million of the outstanding balance. The Revolving Facility matures on November 15, 2024, while the Letter of Credit matures on November 8, 2024. As of July 2, 2023, we had $0.3 million outstanding under the Letter of Credit. As of July 2, 2023, we had $34.7 million available for borrowing under the Revolving Facility and $7.2 million available to issue letters of credit. All borrowings under the Credit Agreement accrue interest at a rate equal to, at the Company’s option, either (x) the term daily SOFR, plus the applicable SOFR adjustment plus a margin of 1.75% per annum or (y) the base rate plus a margin of 0.75% (with the base rate being the highest of the federal funds rate plus 0.50%, the prime rate and term SOFR for a period of one month plus 1.00%). Additionally, a commitment fee of 37.5 basis points will be assessed on unused commitments under the Revolving Facility, taking into account the sum of outstanding borrowings and Letter of Credit obligations. As of July 2, 2023, the interest rate for the Revolving Facility was 7.0%. During the thirteen and twenty-six weeks ended July 2, 2023, the weighted average interest rate for the Revolving Facility was 7.8% and 7.3%, respectively. Amounts borrowed under the Credit Agreement are collateralized by all assets of the Company and contains various financial and non-financial covenants for reporting, protecting and obtaining adequate insurance coverage for assets collateralized and for coverage of business operations, and complying with requirements, including the payment of all necessary taxes and fees for all federal, state and local government entities. Immediately upon the occurrence and during the continuance of an event of default, including the noncompliance with the above covenants, the lender may increase the interest rate per annum by 2.0% above the rate that would be otherwise applicable. As of July 2, 2023, management has determined that the Company was in compliance with all financial covenants. Debt Discounts and Issuance Costs Debt discounts and issuance costs are deferred and amortized over the life of the related loan using the effective interest method. The associated expense is included in interest expense in the condensed consolidated statements of operations and comprehensive (loss) income. Debt discounts and issuance costs are presented as a reduction of long-term debt with the exception of debt issuance costs related to the Revolving Facility, which are included in other non-current assets in the condensed consolidated balance sheets. As of July 2, 2023 and January 1, 2023, unamortized debt issuance costs recorded within other non-current assets were $0.2 million and $0.3 million, respectively. |
Leases
Leases | 6 Months Ended |
Jul. 02, 2023 | |
Leases | |
Leases | 6 . On January 3, 2022, the Company adopted ASC 842 using the alternative transition method and applied the standard only to leases that existed at that date. Under the alternative transition method, the Company did need to restate the comparative periods in transition and will continue to present financial information and disclosures for periods before January 3, 2022, in accordance with FASB ASC 840, Leases among other practical expedients, includes the option to retain the historical classification of leases entered into prior to January 3, 2022, The Company is a lessee under various lease agreements. The determination of whether an arrangement contains a lease and the lease classification is made at lease commencement (date on which a lessor makes an underlying asset available for use by the lessee). At lease commencement, the Company also measures and recognizes a right-of-use asset, representing the Company’s right to use the underlying asset, and a lease liability, representing the Company’s obligation to make lease payments under the terms of the arrangement. The lease term is defined as the noncancelable portion of the lease term plus any periods covered by an option to extend the lease if it is reasonably certain that the option will be exercised. For the purposes of recognizing right-of-use assets and lease liabilities associated with the Company’s leases, the Company has elected the practical expedient of not recognizing a right-of-use asset or lease liability for short-term leases, which are leases with a term of 12 months or less. The Company has multiple finance leases and operating leases that are combined and included in the lease right-of-use assets, lease liabilities, current, and lease liabilities, noncurrent on the Company’s condensed consolidated balance sheets. The Company primarily leases its distribution facilities and corporate offices under operating lease agreements expiring on various dates through December 2031, most of which contain options to extend. In addition to payment of base rent, the Company is also required to pay property taxes, insurance, and common area maintenance expenses. The Company records lease expense on a straight-line basis over the term of the lease. The Company had immaterial and $0.6 million remaining obligations for the base rent related to the short-term leases as of July 2, 2023 and July 3, 2022, respectively. The Company also leases equipment under finance lease agreements expiring on various dates through May 2028. As of July 2, 2023, the future minimum lease payments for the Company’s operating and finance leases for each of the fiscal years were as follows (in thousands): Fiscal Year: Operating Leases Finance Leases Total 2023 (remaining six months) $ 2,597 $ 832 $ 3,429 2024 5,283 1,502 6,785 2025 5,844 1,502 7,346 2026 4,605 250 4,855 2027 5,138 73 5,211 Thereafter 11,632 8 11,640 Total undiscounted lease payment 35,099 4,167 39,266 Present value adjustment (6,811) (214) (7,025) Total lease liabilities 28,288 3,953 32,241 Less: lease liabilities, current (3,505) (1,549) (5,054) Lease liabilities, noncurrent $ 24,783 $ 2,404 $ 27,187 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. The following information represents supplemental disclosure of lease costs, components of the statement of cash flows related to operating and finance leases and components of right-of-use assets (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended July 2, July 2, 2023 2023 Finance lease cost Amortization of ROU assets $ 344 $ 648 Interest on lease liabilities 34 61 Operating lease cost 1,348 2,696 Short-term lease cost — 12 Variable lease cost 210 426 Total lease cost $ 1,936 $ 3,843 Lease cost included in cost of revenue $ 1,624 $ 3,011 Lease cost included in general and administrative expenses $ 312 $ 832 Weighted-average remaining lease term - finance leases 36 months 36 months Weighted-average remaining lease term - operating leases 81 months 81 months Weighted-average discount rate - finance leases 3.63% 3.63% Weighted-average discount rate - operating leases 6.50% 6.50% |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 02, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 7 . 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, contractual and commercial disputes and other matters that arise in the ordinary course of our business 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, 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 July 2, 2023, the Company was not aware of any currently pending legal matters or claims, individually or in the aggregate, that are expected to have a material adverse impact on its condensed consolidated financial statements. Indemnification The Company also maintains director and officer insurance, which may cover certain liabilities arising from its obligation to indemnify the Company’s directors. To date, the Company has not incurred any material costs and has not accrued any liabilities in the condensed consolidated financial statements as a result of these provisions. |
Preferred Stock
Preferred Stock | 6 Months Ended |
Jul. 02, 2023 | |
Preferred Stock | |
Preferred Stock | 8. 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 July 2, 2023 and January 1, 2023, no shares of preferred stock were issued and outstanding . |
Common Stock
Common Stock | 6 Months Ended |
Jul. 02, 2023 | |
Common Stock | |
Common Stock | 9. The Company has authorized the issuance of 250,000,000 shares of common stock, $0.001 par value ("common stock") as of July 2, 2023 and January 1, 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 July 2, 2023, the Company has reserved 161,397 shares of common stock for issuance upon the exercise of stock options, and 1,862,587 shares of common stock available for future issuance under the Lulu's Fashion Lounge Holdings, Inc. Omnibus Equity Plan (the “Omnibus Equity Plan”) and 1,473,106 shares of common stock available for future issuance under the 2021 Employee Stock Purchase Plan (the “ESPP”), respectively. Both equity plans are further described in Note 10, Equity-Based Compensation. |
Equity-Based Compensation
Equity-Based Compensation | 6 Months Ended |
Jul. 02, 2023 | |
Equity-Based Compensation | |
Equity-Based Compensation | 10 . 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 (“2023 Bonus Plan”) that will grant RSUs to eligible employees, instead of the typical cash bonus. For the thirteen and twenty-six weeks ended July 2, 2023, equity-based compensation expense for the 2023 Bonus Plan was $0.1 million. A s of July 2, 2023, the unrecognized equity-based compensation expense for 2023 Bonus Plan is $0.6 million and will be recognized over a weighted-average period of 0.79 years 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 July 2, 2023, the Company had 1,862,587 and 1,473,106 shares available for issuance under the Omnibus Equity Plan and ESPP, respectively. The compensation committee of the Company’s board of directors (the “compensation committee”) administers the Omnibus Equity Plan and determines to whom awards will be granted, the exercise price of any options, the vesting schedule and the other terms and conditions of the awards granted under the Omnibus Equity Plan. The compensation committee may or may not issue the full number of shares that are reserved for issuance. The 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 twenty-six weeks ended July 2, 2023, equity-based compensation expense related to our ESPP was $0.1 million and 0.2 million, respectively. During the thirteen weeks ended April 2, 2023, the Company issued 47,502 shares pursuant to the ESPP six -month purchase period ended February 25, 2023. The Company used the Black-Scholes model to estimate the fair value of the purchase rights under the ESPP. For the thirteen and twenty-six weeks ended July 2, 2023, the Company utilized the following assumptions: Expected term (in years) 0.05 to 1.00 Expected volatility 87.86 to 109.93 % Risk-free interest rate 5.05 to 5.06 % Dividend yield - Weighted average fair value per share of ESPP awards granted $ 0.54 to 1.57 2021 Equity Plan In April 2021, the Company’s Board of Directors adopted the 2021 Equity Plan. The 2021 Equity Plan provides for the issuance of incentive stock options, restricted stock, restricted stock units and other stock-based and cash-based awards to the Company’s employees, directors, and consultants. The maximum aggregate number of shares reserved for issuance under the 2021 Equity Plan was 925,000 shares. The options outstanding under the 2021 Equity Plan expire ten years from the date of grant. The Company issues new shares of common stock to satisfy stock option exercises. In connection with the closing of the IPO, no further awards will be granted under the 2021 Equity Plan. Former CEO Stock Options and Special Compensation Awards In April 2021, the Company entered into an Employment Agreement (the “McCreight IPO Employment Agreement”) with the former CEO, David McCreight, and granted stock options under the 2021 Equity Plan to purchase 322,793 shares of common stock with an exercise price of $11.35 per share, which vest based on service and performance conditions. 275,133 of these stock options have only service vesting conditions, and 47,660 of these stock options have both service and performance vesting conditions. In addition, a portion of these stock options were subject to accelerated vesting conditions upon the occurrence of certain future events, which were satisfied upon the closing of the IPO. As previously disclosed on a Form 8-K filed on February 13, 2023 (the “February 13 8-K”), Mr. McCreight voluntarily forfeited 161,396 unvested stock options of the Company. During the thirteen weeks ended July 2, 2023, the forfeiture of 161,396 unvested stock resulted in immediate acceleration of the remaining $1.2 million of compensation expense which was recorded to general and administrative expense. As previously disclosed in the February 13 8-K, the Company and David McCreight also entered into the First Amendment to Lulu’s Fashion Lounge Holdings, Inc. 2021 Equity Incentive Plan Stock Option Agreement that extends the post-termination exercise period of 161,397 vested stock options from 90 days to three ( 3 ) years from a termination of service other than for cause, death or disability. Under the McCreight IPO Employment Agreement and subject to ongoing employment, and in light of the closing of the IPO, the former CEO received two bonuses which were settled in fully-vested shares of the Company’s common stock equal to $3.0 million each ($6.0 million in aggregate) on March 31, 2022 and March 31, 2023. The Company initially concluded that the two bonuses were subject to the guidance within ASC 718 and were liability-classified upon issuance. Upon the completion of the IPO, the two bonuses became equity-classified as they no longer met the criteria for liability classification. The Company recorded the equity-based compensation expense on a straight-line basis over the requisite service periods through March 31, 2022 and March 31, 2023. The Company recorded equity-based compensation expense related to the two bonuses of zero and $0.4 million during the thirteen and twenty-six weeks ended July 2, 2023, respectively, and $0.4 million and $1.5 million for the thirteen and twenty-six weeks ended July 3, 2022. During the thirteen weeks ended April 2, 2023 and April 3, 2022, the Company issued 208,914 and 208,914 fully-vested shares, respectively, upon satisfaction of the service performed through March 31, 2023 and March 31, 2022, respectively. Stock Options A summary of stock option activity is as follows (in thousands, except per share amounts and years): Weighted- Weighted- Average Average Exercise Remaining Aggregate Options Price per Contractual Intrinsic Outstanding Option Life (years) Value Balance as of January 1, 2023 322,793 $ 11.35 8.29 Granted — — — Forfeited (161,396) $ (11.35) — Outstanding as of July 2, 2023 161,397 $ 11.35 7.79 Exercisable as of July 2, 2023 161,397 $ 11.35 7.79 $ — Vested and expected to vest as of July 2, 2023 161,397 $ 11.35 7.79 $ — Restricted Stock and Restricted Stock Units (“RSUs”) Immediately before the completion of the IPO, the LP was liquidated and the Class P unit holders of the LP (current and former employees or service providers of the Company) received shares of the Company’s common stock in exchange for their units of the LP. The Class P unit holders received 1,964,103 shares of common stock, comprised of 1,536,304 shares of vested common stock and 427,799 shares of unvested restricted stock. Any such shares of restricted stock received in respect of unvested Class P units of the LP are subject to vesting and a risk of forfeiture to the same extent as the corresponding Class P units. s of July 2, 2023, the unrecognized equity-based compensation expense for all restricted stock is $0.7 million and will be recognized over a weighted-average period of 1.28 years The following table summarizes the rollforward of unvested restricted stock during the twenty-six weeks ended July 2, 2023: Unvested Weighted- Restricted Average Fair Stock Value per Share Balance at January 1, 2023 78,303 $ 5.38 Restricted stock granted — — Restricted stock vested (18,296) 5.38 Restricted stock forfeited (2,720) 5.37 Balance at July 2, 2023 57,287 $ 5.38 During the thirteen weeks ended April 2, 2023, the Company entered into employment agreements with Crystal Landsem, the Chief Executive Officer, (the “CEO Employment Agreement”) and Tiffany Smith, the Chief Financial Officer, (the “CFO Employment Agreement”), under which 1,811,572 and 161,088 RSUs were granted, respectively. Under the CEO Employment Agreement, Ms. Landsem received a grant of 1,811,572 RSUs, which vest in quarterly installments beginning on June 30, 2023 through December 31, 2026 and are subject to continued service requirements. Under the CFO Employment Agreement, Ms. Smith received 161,088 RSUs, granted in two parts, with 118,025 and 43,063 RSUs granted on March 17, 2023 and April 30, 2023, respectively, which in combination will vest in three equal installments on March 8, 2024, March 7, 2025 and March 6, 2026, and are subject to continued service requirements. On March 5, 2023, Mr. McCreight received a grant of 25,873 RSUs pursuant to the McCreight IPO Employment Agreement. These RSUs vest in 12 equal installments from April 30, 2023 through March 31, 2024, and are subject to continued service requirements. In addition, under Mr. McCreight’s employment agreement for his Executive Chairman role, entered into on November 11, 2022 (the “Executive Chairman Employment Agreement”), Mr. McCreight was entitled to receive a grant of RSUs equivalent to $2 million. The Company initially concluded that the award was subject to the guidance within ASC 718 and was liability-classified upon issuance. On March 17, 2023, the number of RSUs associated with the award became determinable, and the award became equity-classified as it no longer met the criteria for liability classification. Mr. McCreight’s 836,820 RSUs were granted in two parts, with 613,116 RSUs granted on March 17, 2023 and 223,704 RSUs granted on April 30, 2023, the combination of which vest in equal, quarterly installments on the date immediately following the last day of each calendar quarter, starting April 1, 2023, and are subject to continued service requirements. During the thirteen weeks ended April 2, 2023, the Company granted 2,520,541 RSUs to certain executives (inclusive of the aforementioned RSU grants to Ms. Landsem and Ms. Smith) and employees which vest over a three -year service period, and 694,536 RSUs to certain directors (inclusive of the aforementioned RSU grants to the Executive Chairman) which vest over a three -month to three -year service period pursuant to the Company’s Non-Employee Director Compensation Program and the Executive Chairman Employment Agreement. The Company recognized equity-based compensation expense of $3.2 million and $6.0 million during the thirteen and twenty-six weeks ended July 2, 2023, and $2.2 million and $4.3 million during thirteen and twenty-six weeks ended July 3, 2022, respectively, related to the RSUs. As of July 2, 2023, the unrecognized equity-based compensation expense is $14.8 million and will be recognized over a weighted-average period of 2.13 years. The following table summarizes the roll forward of unvested RSUs during the twenty-six weeks ended July 2, 2023: Weighted- Unvested Average Fair RSUs Value per Share Balance at January 1, 2023 1,336,674 $ 8.94 RSUs granted 3,903,031 2.70 RSUs vested (1,126,336) 5.83 RSUs forfeited (79,792) 6.25 Balance at July 2, 2023 4,033,577 $ 3.82 Performance Stock Units (“PSUs”) Under the CEO Employment Agreement, Ms. Landsem received a grant of 1,811,571 PSUs on March 5, 2023 which vest in three equal annual installments of 603,857 subject to the achievement of trailing ten day volume-weighted average price targets of the Company’s common stock and her continued employment on the vesting dates. The Company recognized equity-based compensation expense of $0.7 million and $0.9 million during the thirteen and twenty-six weeks ended July 2, 2023, related to the PSUs. As of July 2, 2023, the unrecognized equity-based compensation expense is $3.8 million and will be recognized over a weighted-average period of 2.68 years. The following table summarizes the rollforward of unvested PSUs during the twenty-six weeks ended July 2, 2023: Weighted- Unvested Average Fair PSUs Value per Share Balance at January 1, 2023 — $ — PSUs granted 1,811,571 2.65 PSUs vested — — PSUs forfeited — — Balance at July 2, 2023 1,811,571 $ 2.65 Class P Units 384,522 of the outstanding Class P units included both a service condition and a performance condition, while the remainder of the Class P units only included a service condition. The performance-based vesting condition was satisfied upon completion of the IPO. Equity-based compensation expense of $0.4 million and $1.3 million related to the Class P units was recorded to general and administrative expense in the condensed consolidated statements of operations and comprehensive income for the thirteen and thirty-nine weeks ended October 3, 2021, respectively. During October 2021, the LP modified the vesting schedule related to 763,178 outstanding Class P units for two senior executives to accelerate vesting if the two senior executives perform service after the completion of the IPO over the subsequent 12-month 12-month Class P Distributions Distributions payable to former Class P unit holders (“FCPUs”) triggered upon the completion of the Company’s 2021 IPO were determined to be settled in the thirteen weeks ended April 3, 2022 as a result of agreements reached with the FCPUs, and were recorded as an increase to additional paid-in capital. The agreements provided for contingent payments to the FCPUs of up to $0.6 million if certain conditions were met, which were recorded as equity-based compensation expense and accrued expenses and other current liabilities in the thirteen weeks ended April 3, 2022. The $0.6 million accrual was subsequently reversed during the thirteen weeks ended July 3, 2022, when the timeframe for the payment conditions expired. |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 02, 2023 | |
Income Taxes | |
Income Taxes | 11. All of the Company’s (loss) income before income taxes is from the United States. The following table presents the components of the benefit (provision) for income taxes (in thousands): Thirteen Weeks Ended July 2, July 3, 2023 2022 (Loss) income before provision for income taxes $ (1,723) $ 10,794 Provision for income taxes 874 4,795 Effective tax rate (50.7) % 44.4 % Twenty-Six Weeks Ended July 2, July 3, 2023 2022 (Loss) income before provision for income taxes $ (8,049) $ 13,898 Provision for income taxes 166 5,856 Effective tax rate (2.1) % 42.1 % 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. When projected “ordinary” income or loss for the full year is close to breakeven, the estimated annual effective tax rate can become volatile due to small changes, resulting in an unreliable estimate of tax for the reporting period. In such instances, the Company will calculate the interim income tax provision or benefit using a discrete effective tax rate method, as allowed by ASC 740-270 “Income Taxes, Interim Reporting,” based solely on the year-to-date pretax income or loss as adjusted for permanent differences on a pro rata basis. We utilized a discrete effective tax rate method to calculate taxes for the thirteen weeks ended April 2, 2023 due to circumstances described above where the estimated annual effective tax rate did not provide a reliable estimate. In the second quarter of fiscal 2023, the Company determined that due to updated projected pre-tax results for fiscal 2023 the estimated annual effective tax rate method was no longer subject to the volatility computed in the first quarter. 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 July 2, 2023. Therefore, a true-up adjustment was required in the second quarter to record the year-to-date income tax provision consistent with the estimated annual effective tax rate. The Company’s pre-tax loss for the period ended July 2, 2023 relative to the Company’s projected pre-tax income for fiscal 2023 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 July 2, 2023. The effective tax rate for the thirteen and twenty-six weeks ended July 2, 2023 differs from the federal income tax rate of 21% primarily due to non-deductible executive compensation and non-deductible equity-based compensation expense. The effective tax rate for the thirteen and twenty-six weeks ended July 3, 2022 differs from the federal income tax rate of 21% primarily due to state taxes, non-deductible executive compensation, and non-deductible equity-based compensation expenses. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jul. 02, 2023 | |
Related Party Transactions | |
Related Party Transactions | 12. 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. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jul. 02, 2023 | |
Subsequent Events | |
Subsequent Events | 13. No material events have occurred that required recognition or disclosure in these financial statements . |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 02, 2023 | |
Significant Accounting Policies | |
Basis of Presentation and Fiscal Year | Basis of Presentation and Fiscal Year The Company’s fiscal year consists of a 52-week or 53-week period ending on the Sunday nearest December 31. The fiscal years ending December 31, 2023 and ended January 1, 2023 consisted of 52-weeks. The condensed consolidated financial statements and accompanying notes include the accounts of the Company and its wholly owned subsidiaries, after elimination of all intercompany balances and transactions. The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the Unites States of America (“GAAP”) and the requirements of the SEC for interim reporting. As permitted under these rules, certain information and disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The interim condensed consolidated financial statements are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position as of July 2, 2023 and its results of operations for the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022 and its cash flows for the twenty-six weeks ended July 2, 2023 and July 3, 2022. The results of operations for the twenty-six weeks ended July 2, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2023 or for any other future annual or interim period. The condensed consolidated balance sheet as of January 1, 2023 was derived from the Company’s audited consolidated financial statements, which are included in the Company’s Annual Report on Form 10-K as filed with the SEC on March 14, 2023. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The significant estimates and assumptions made by management relate to sales return reserves and related assets for recovery, lease right-of-use assets and related lease liabilities, and income tax valuation allowance. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. The Company adjusts such estimates and assumptions when facts and circumstances dictate. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. As future events and their effects cannot be determined with precision, actual results could materially differ from those estimates and assumptions. |
Concentration of Credit Risks | Concentration of Credit Risks Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents and restricted cash. At times, such amounts may exceed federally insured limits. The Company reduces credit risk by depositing its cash with a major credit-worthy financial institution within the United States. To date, the Company has not experienced any losses on its cash deposits. As of July 2, 2023 and January 1, 2023, a single wholesale customer represented 12% and 15%, respectively, of the Company’s accounts receivable balance. No customer accounted for greater than 10% of the Company’s net revenue during the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022. |
Leases | Leases Contracts that have been determined to convey the right to use an identified asset are evaluated for classification as an operating or finance lease. For the Company’s operating and finance leases, the Company records a lease liability based on the present value of the lease payments at lease inception. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate (“IBR”). The determination of the IBR requires judgment and is primarily based on publicly-available information for companies within similar industries and with similar credit profiles. We adjust the rate for the impact of collateralization, the lease term and other specific terms included in each lease arrangement. The IBR is determined at the lease commencement and is subsequently reassessed upon a modification to the lease arrangement. The right-of-use asset is recorded based on the corresponding lease liability at lease inception, adjusted for payments made to the lessor at or before the commencement date, initial direct costs incurred and any tenant incentives allowed for under the lease. The Company does not include optional renewal terms or early termination provisions unless the Company is reasonably certain such options would be exercised at the inception of the lease. Lease right-of-use assets, current portion of lease liabilities, and lease liabilities, net of current portion are included on the condensed consolidated balance sheets. Fixed lease expense for operating leases is recognized on a straight-line basis, unless the right-of-use assets have been impaired, over the reasonably assured lease term based on the total lease payments and is included in operating expenses in the condensed consolidated statements of operations and comprehensive (loss) income. Fixed and variable lease expense on operating leases is recognized within operating expenses in the condensed consolidated statements of operations and comprehensive (loss) income. Finance lease expenses are recognized on a straight-line basis. Fixed and variable expenses are captured within interest expense and depreciation expense, which has components within general and administrative expenses and cost of revenue. The Company’s non-lease components are primarily related to maintenance, insurance and taxes, which varies based on future outcomes and is thus recognized in lease expense when incurred. |
Revenue Recognition | 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 twenty-six weeks ended July 2, 2023 and July 3, 2022 was not material. The Company has two types of contractual liabilities: (i) cash collections from its customers prior to delivery of products purchased (“deferred revenue”), which are initially recorded within accrued expenses and recognized as revenue when the products are shipped, (ii) unredeemed gift cards and online store credits, which are initially recorded as a stored-value card liability and are recognized as revenue in the period they are redeemed. The following table summarizes the significant changes in the contract liabilities balances included in accrued expenses and other current liabilities during the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022 (in thousands): Deferred Stored-Value Revenue Cards Balance as of January 1, 2023 $ 69 $ 10,828 Revenue recognized that was included in contract liability balance at the beginning of the period (69) (1,720) Increase due to cash received, excluding amounts recognized as revenue during the period 122 2,022 Balance as of April 2, 2023 122 11,130 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 Deferred Stored-Value Revenue Cards Balance as of January 2, 2022 $ 145 $ 7,240 Revenue recognized that was included in contract liability balance at the beginning of the period (145) (1,786) Increase due to cash received, excluding amounts recognized as revenue during the period 315 1,838 Balance as of April 3, 2022 315 7,292 Revenue recognized that was included in contract liability balance at the beginning of the period (315) (2,330) Increase due to cash received, excluding amounts recognized as revenue during the period 101 3,140 Balance as of July 3, 2022 $ 101 $ 8,102 |
Selling and Marketing Expenses | Selling and Marketing Expenses Advertising costs included in selling and marketing expenses were $19.5 million and $20.2 million for the thirteen weeks ended , respectively, and $34.5 million and $37.2 million for the twenty-six weeks ended , respectively. |
Net (Loss) Income Per Share Attributable to Common Stockholders | Net (Loss) Income Per Share Attributable to Common Stockholders Basic net (loss) income per share attributable to common stockholders is computed using net (loss) income attributable to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted net (loss) income per share attributable to common stockholders represents net (loss) income attributable to common stockholders divided by the weighted average number of common shares outstanding during the period, including the effects of any dilutive securities outstanding. The following table presents the calculation of basic and diluted weighted average shares used to compute net (loss) income per share attributable to common stockholders: Thirteen Weeks Ended Twenty-Six Weeks Ended July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Basic 39,680,908 38,535,409 39,457,607 38,316,895 Dilutive securities: Unvested restricted stock — 69,519 — 83,329 Unvested restricted stock units (RSUs) — 286,616 — 1,950 Special compensation awards — 101,357 — 153,745 Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Diluted 39,680,908 38,992,901 39,457,607 38,555,919 The following securities were excluded from the computation of diluted net (loss) income per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (on an as-converted basis): Thirteen Weeks Ended Twenty-Six Weeks Ended July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Stock options 161,397 322,793 161,397 322,793 Unvested restricted stock 57,287 187,635 57,287 187,635 Unvested RSUs 4,033,576 16,950 4,033,576 1,513,510 Performance stock units 1,811,571 — 1,811,571 — Employee stock purchase plan shares 137,847 — 137,847 — 2023 stock-based bonus plan 210,381 — 210,381 — Total 6,412,059 527,378 6,412,059 2,023,938 |
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 consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which amends guidance on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities from an incurred loss methodology to an expected loss methodology. For assets held at amortized cost basis, the guidance eliminates the probable initial recognition threshold and instead requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses are recorded through an allowance for credit losses, rather than a write-down, limited to the amount by which fair value is below amortized cost. Additional disclosures about significant estimates and credit quality are also required. The guidance is effective for the Company for fiscal years beginning after December 15, 2022. The Company adopted this guidance on January 2, 2023, and it did not have a material impact on its consolidated financial statements or disclosure requirements. Recently Issued Accounting Pronouncements There are no new recent accounting pronouncements that are expected to have a material impact on our consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Significant Accounting Policies | |
Summary of significant changes in contract liabilities balances | The following table summarizes the significant changes in the contract liabilities balances included in accrued expenses and other current liabilities during the thirteen and twenty-six weeks ended July 2, 2023 and July 3, 2022 (in thousands): Deferred Stored-Value Revenue Cards Balance as of January 1, 2023 $ 69 $ 10,828 Revenue recognized that was included in contract liability balance at the beginning of the period (69) (1,720) Increase due to cash received, excluding amounts recognized as revenue during the period 122 2,022 Balance as of April 2, 2023 122 11,130 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 Deferred Stored-Value Revenue Cards Balance as of January 2, 2022 $ 145 $ 7,240 Revenue recognized that was included in contract liability balance at the beginning of the period (145) (1,786) Increase due to cash received, excluding amounts recognized as revenue during the period 315 1,838 Balance as of April 3, 2022 315 7,292 Revenue recognized that was included in contract liability balance at the beginning of the period (315) (2,330) Increase due to cash received, excluding amounts recognized as revenue during the period 101 3,140 Balance as of July 3, 2022 $ 101 $ 8,102 |
Schedule of basic and diluted weighted average shares used to compute net (loss) income per share | Thirteen Weeks Ended Twenty-Six Weeks Ended July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Basic 39,680,908 38,535,409 39,457,607 38,316,895 Dilutive securities: Unvested restricted stock — 69,519 — 83,329 Unvested restricted stock units (RSUs) — 286,616 — 1,950 Special compensation awards — 101,357 — 153,745 Weighted average shares used to compute net (loss) income per share attributable to common stockholders – Diluted 39,680,908 38,992,901 39,457,607 38,555,919 |
Schedule of securities that were excluded from computation of diluted net (loss) income per share | Thirteen Weeks Ended Twenty-Six Weeks Ended July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Stock options 161,397 322,793 161,397 322,793 Unvested restricted stock 57,287 187,635 57,287 187,635 Unvested RSUs 4,033,576 16,950 4,033,576 1,513,510 Performance stock units 1,811,571 — 1,811,571 — Employee stock purchase plan shares 137,847 — 137,847 — 2023 stock-based bonus plan 210,381 — 210,381 — Total 6,412,059 527,378 6,412,059 2,023,938 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Balance Sheet Components | |
Schedule of property and equipment, net | Property and equipment, net consisted of the following (in thousands): Estimated Useful Lives July 2, January 1, in Years 2023 2023 Leasehold improvements 3 – 9 $ 3,939 $ 3,802 Equipment 3 – 7 2,880 2,659 Furniture and fixtures 3 – 7 2,023 1,880 Construction in progress 22 36 Total property and equipment 8,864 8,377 Less: accumulated depreciation and amortization (4,730) (3,986) Property and equipment, net $ 4,134 $ 4,391 |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands): July 2, January 1, 2023 2023 Accrued compensation and benefits $ 5,897 $ 6,751 Accrued marketing 4,933 3,206 Accrued inventory 3,549 3,411 Other 4,015 4,608 Accrued expenses and other current liabilities $ 18,394 $ 17,976 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Leases | |
Schedule of future minimum lease payments for the Company's operating and financing lease | Fiscal Year: Operating Leases Finance Leases Total 2023 (remaining six months) $ 2,597 $ 832 $ 3,429 2024 5,283 1,502 6,785 2025 5,844 1,502 7,346 2026 4,605 250 4,855 2027 5,138 73 5,211 Thereafter 11,632 8 11,640 Total undiscounted lease payment 35,099 4,167 39,266 Present value adjustment (6,811) (214) (7,025) Total lease liabilities 28,288 3,953 32,241 Less: lease liabilities, current (3,505) (1,549) (5,054) Lease liabilities, noncurrent $ 24,783 $ 2,404 $ 27,187 |
Schedule of supplemental disclosure of lease costs and other information | The following information represents supplemental disclosure of lease costs, components of the statement of cash flows related to operating and finance leases and components of right-of-use assets (in thousands): Thirteen Weeks Ended Twenty-Six Weeks Ended July 2, July 2, 2023 2023 Finance lease cost Amortization of ROU assets $ 344 $ 648 Interest on lease liabilities 34 61 Operating lease cost 1,348 2,696 Short-term lease cost — 12 Variable lease cost 210 426 Total lease cost $ 1,936 $ 3,843 Lease cost included in cost of revenue $ 1,624 $ 3,011 Lease cost included in general and administrative expenses $ 312 $ 832 Weighted-average remaining lease term - finance leases 36 months 36 months Weighted-average remaining lease term - operating leases 81 months 81 months Weighted-average discount rate - finance leases 3.63% 3.63% Weighted-average discount rate - operating leases 6.50% 6.50% |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Equity-Based Compensation | |
Schedule of estimate fair value of purchase rights under ESPP | Expected term (in years) 0.05 to 1.00 Expected volatility 87.86 to 109.93 % Risk-free interest rate 5.05 to 5.06 % Dividend yield - Weighted average fair value per share of ESPP awards granted $ 0.54 to 1.57 |
Summary of stock option activity | A summary of stock option activity is as follows (in thousands, except per share amounts and years): Weighted- Weighted- Average Average Exercise Remaining Aggregate Options Price per Contractual Intrinsic Outstanding Option Life (years) Value Balance as of January 1, 2023 322,793 $ 11.35 8.29 Granted — — — Forfeited (161,396) $ (11.35) — Outstanding as of July 2, 2023 161,397 $ 11.35 7.79 Exercisable as of July 2, 2023 161,397 $ 11.35 7.79 $ — Vested and expected to vest as of July 2, 2023 161,397 $ 11.35 7.79 $ — |
Summary of restricted stock and restricted stock units | Unvested Weighted- Restricted Average Fair Stock Value per Share Balance at January 1, 2023 78,303 $ 5.38 Restricted stock granted — — Restricted stock vested (18,296) 5.38 Restricted stock forfeited (2,720) 5.37 Balance at July 2, 2023 57,287 $ 5.38 Weighted- Unvested Average Fair RSUs Value per Share Balance at January 1, 2023 1,336,674 $ 8.94 RSUs granted 3,903,031 2.70 RSUs vested (1,126,336) 5.83 RSUs forfeited (79,792) 6.25 Balance at July 2, 2023 4,033,577 $ 3.82 |
Summary of performance stock units | Weighted- Unvested Average Fair PSUs Value per Share Balance at January 1, 2023 — $ — PSUs granted 1,811,571 2.65 PSUs vested — — PSUs forfeited — — Balance at July 2, 2023 1,811,571 $ 2.65 |
Income Taxes (Tables)
Income Taxes (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Income Taxes | |
Schedule of components of benefit (provision) for income taxes | All of the Company’s (loss) income before income taxes is from the United States. The following table presents the components of the benefit (provision) for income taxes (in thousands): Thirteen Weeks Ended July 2, July 3, 2023 2022 (Loss) income before provision for income taxes $ (1,723) $ 10,794 Provision for income taxes 874 4,795 Effective tax rate (50.7) % 44.4 % Twenty-Six Weeks Ended July 2, July 3, 2023 2022 (Loss) income before provision for income taxes $ (8,049) $ 13,898 Provision for income taxes 166 5,856 Effective tax rate (2.1) % 42.1 % |
Description of Business, Orga_2
Description of Business, Organization and Liquidity (Details) | Dec. 31, 2014 |
Description of Business, Organization and Liquidity | |
Acquired percentage of outstanding common stock of subsidiary by LP | 100% |
Significant Accounting Polici_4
Significant Accounting Policies - Concentration of Credit Risks (Details) - Customer concentration risk - customer | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | Jan. 01, 2023 | |
Accounts receivable | Single wholesale customer | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 12% | 15% | |||
Revenue | Maximum | |||||
Concentration Risk [Line Items] | |||||
Concentration risk percentage | 10% | 10% | 10% | 10% | |
Number of customers | 0 | 0 | 0 | 0 |
Significant Accounting Polici_5
Significant Accounting Policies - Revenue Recognition (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2023 USD ($) item | Apr. 02, 2023 USD ($) | Jul. 03, 2022 USD ($) | Apr. 03, 2022 USD ($) | Jul. 02, 2023 USD ($) item | |
Disaggregation of Revenue [Line Items] | |||||
Number of performance obligation | item | 1 | 1 | |||
Practical expedient | true | ||||
Number of contractual liabilities | item | 2 | 2 | |||
Maximum | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenue duration period | 36 months | ||||
Deferred Revenue | |||||
Significant changes in the contract liabilities balances | |||||
Beginning Balance | $ 122 | $ 69 | $ 315 | $ 145 | $ 69 |
Revenue recognized that was included in contract liability balance at the beginning of the period | (122) | (69) | (315) | (145) | |
Increase due to cash received, excluding amounts recognized as revenue during the period | 98 | 122 | 101 | 315 | |
Ending Balance | 98 | 122 | 101 | 315 | 98 |
Stored-Value Cards | |||||
Significant changes in the contract liabilities balances | |||||
Beginning Balance | 11,130 | 10,828 | 7,292 | 7,240 | 10,828 |
Revenue recognized that was included in contract liability balance at the beginning of the period | (1,129) | (1,720) | (2,330) | (1,786) | |
Increase due to cash received, excluding amounts recognized as revenue during the period | 2,355 | 2,022 | 3,140 | 1,838 | |
Ending Balance | $ 12,356 | $ 11,130 | $ 8,102 | $ 7,292 | $ 12,356 |
Significant Accounting Polici_6
Significant Accounting Policies - Selling and Marketing Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Selling and Marketing Expense. | ||||
Accounting Policies [Line Items] | ||||
Advertising costs | $ 19.5 | $ 20.2 | $ 34.5 | $ 37.2 |
Significant Accounting Polici_7
Significant Accounting Policies - Basic and Diluted Weighted Average Shares (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||||
Basic weighted-average shares outstanding | 39,680,908 | 38,535,409 | 39,457,607 | 38,316,895 |
Dilutive securities: | ||||
Diluted weighted-average shares outstanding | 39,680,908 | 38,992,901 | 39,457,607 | 38,555,919 |
Unvested restricted stock | ||||
Dilutive securities: | ||||
Dilutive securities | 69,519 | 83,329 | ||
Unvested RSUs | ||||
Dilutive securities: | ||||
Dilutive securities | 286,616 | 1,950 | ||
Special compensation awards | ||||
Dilutive securities: | ||||
Dilutive securities | 101,357 | 153,745 |
Significant Accounting Polici_8
Significant Accounting Policies - Anti-dilutive Securities (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 6,412,059 | 527,378 | 6,412,059 | 2,023,938 |
Employee Stock Option | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 161,397 | 322,793 | 161,397 | 322,793 |
Unvested restricted stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 57,287 | 187,635 | 57,287 | 187,635 |
Unvested RSUs | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 4,033,576 | 16,950 | 4,033,576 | 1,513,510 |
Performance stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 1,811,571 | 1,811,571 | ||
Employee stock purchase plan shares | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 137,847 | 137,847 | ||
2023 stock-based bonus plan | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Total | 210,381 | 210,381 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Nov. 30, 2021 |
Revolving credit facility | ||
Fair Value Measurements | ||
Revolving line of credit | $ 34.7 | $ 50 |
Balance Sheet Components - Prop
Balance Sheet Components - Property and Equipment, net (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | Jan. 01, 2023 | |
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 8,864 | $ 8,864 | $ 8,377 | ||
Less: accumulated depreciation and amortization | (4,730) | (4,730) | (3,986) | ||
Property and equipment, net | 4,134 | 4,134 | 4,391 | ||
Depreciation and amortization | 2,306 | $ 1,850 | |||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 3,939 | $ 3,939 | 3,802 | ||
Leasehold improvements | Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated Useful Lives (in years) | 3 years | 3 years | |||
Leasehold improvements | Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated Useful Lives (in years) | 9 years | 9 years | |||
Equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 2,880 | $ 2,880 | 2,659 | ||
Equipment | Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated Useful Lives (in years) | 3 years | 3 years | |||
Equipment | Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated Useful Lives (in years) | 7 years | 7 years | |||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 2,023 | $ 2,023 | 1,880 | ||
Furniture and fixtures | Minimum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated Useful Lives (in years) | 3 years | 3 years | |||
Furniture and fixtures | Maximum | |||||
Property, Plant and Equipment [Line Items] | |||||
Estimated Useful Lives (in years) | 7 years | 7 years | |||
Construction in progress | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 22 | $ 22 | $ 36 | ||
Property and equipment, net | |||||
Property, Plant and Equipment [Line Items] | |||||
Depreciation and amortization | $ 700 | $ 600 | $ 1,400 | $ 1,000 |
Balance Sheet Components - Accr
Balance Sheet Components - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Jul. 02, 2023 | Jan. 01, 2023 |
Accrued Expenses and Other Current Liabilities | ||
Accrued compensation and benefits | $ 5,897 | $ 6,751 |
Accrued marketing | 4,933 | 3,206 |
Accrued inventory | 3,549 | 3,411 |
Other | 4,015 | 4,608 |
Accrued expenses and other current liabilities | $ 18,394 | $ 17,976 |
Debt - Outstanding Debt under t
Debt - Outstanding Debt under the Revolving Facility (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Nov. 15, 2021 | Nov. 30, 2021 | Jul. 02, 2023 | Jul. 02, 2023 | Jul. 03, 2022 | |
Line of Credit Facility [Line Items] | |||||
Repaid outstanding balance | $ 15,000 | $ 20,000 | |||
Letters of credit | |||||
Line of Credit Facility [Line Items] | |||||
Revolving line of credit | $ 7,500 | $ 7,200 | 7,200 | ||
Credit facility outstanding | 300 | 300 | |||
Revolving credit facility | |||||
Line of Credit Facility [Line Items] | |||||
Revolving line of credit | 50,000 | $ 34,700 | 34,700 | ||
Increase in maximum borrowing capacity amount | 25,000 | ||||
Borrowed amount | 5,000 | ||||
Repaid outstanding balance | $ 15,000 | ||||
Variable commitment fee percent | 0.375% | ||||
Interest rate at period end | 7% | 7% | |||
Weighted average interest rate | 7.80% | 7.30% | |||
Expected increase in interest rate per annum | 2% | ||||
Revolving credit facility | Maximum | |||||
Line of Credit Facility [Line Items] | |||||
Revolving line of credit | $ 75,000 | ||||
Revolving credit facility | Secured overnight financing ("SOFR") rate | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument applicable margin percent | 1.75% | ||||
Revolving credit facility | Base Rate | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument applicable margin percent | 0.75% | ||||
Revolving credit facility | Federal funds rate | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument applicable margin percent | 0.50% | ||||
Revolving credit facility | One month SOFR | |||||
Line of Credit Facility [Line Items] | |||||
Debt instrument applicable margin percent | 1% |
Debt - Debt Discounts and Issua
Debt - Debt Discounts and Issuance Costs (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Other non-current assets | ||
Debt Instrument [Line Items] | ||
Unamortized debt issuance costs | $ 0.2 | $ 0.3 |
Leases (Details)
Leases (Details) $ in Millions | Jul. 03, 2022 USD ($) |
Leases | |
Remaining obligations for short-term leases | $ 0.6 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) $ in Thousands | Jul. 02, 2023 USD ($) |
Operating Leases | |
2023 (remaining six months) | $ 2,597 |
2024 | 5,283 |
2025 | 5,844 |
2026 | 4,605 |
2027 | 5,138 |
Thereafter | 11,632 |
Total undiscounted lease payment | 35,099 |
Present value adjustment | (6,811) |
Total lease liabilities | 28,288 |
Less: lease liabilities, current | $ (3,505) |
Operating lease liability current balance sheet position | Lease liabilities, current |
Lease liabilities, noncurrent | $ 24,783 |
Operating lease liability non-current balance sheet position | Lease liabilities, noncurrent |
Finance Leases | |
2023 (remaining six months) | $ 832 |
2024 | 1,502 |
2025 | 1,502 |
2026 | 250 |
2027 | 73 |
Thereafter | 8 |
Total undiscounted lease payment | 4,167 |
Present value adjustment | (214) |
Total lease liabilities | 3,953 |
Less: lease liabilities, current | $ (1,549) |
Finance lease liability current balance sheet position | Lease liabilities, current |
Lease liabilities, noncurrent | $ 2,404 |
Finance lease liability non-current balance sheet position | Lease liabilities, noncurrent |
Total operating and finance lease liabilities | |
2023 (remaining six months) | $ 3,429 |
2024 | 6,785 |
2025 | 7,346 |
2026 | 4,855 |
2027 | 5,211 |
Thereafter | 11,640 |
Total undiscounted lease payment | 39,266 |
Present value adjustment | (7,025) |
Total lease liabilities | 32,241 |
Less: lease liabilities, current | (5,054) |
Lease liabilities, noncurrent | $ 27,187 |
Leases - Lease Cost and Other I
Leases - Lease Cost and Other Information (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jul. 02, 2023 USD ($) | Jul. 02, 2023 USD ($) | |
Lease cost | ||
Amortization of ROU assets | $ 344 | $ 648 |
Interest on lease liabilities | 34 | 61 |
Operating lease cost | 1,348 | 2,696 |
Short-term lease cost | 12 | |
Variable lease cost | 210 | 426 |
Total lease cost | $ 1,936 | $ 3,843 |
Weighted-average remaining lease term - finance leases | 36 months | 36 months |
Weighted-average remaining lease term - operating leases | 81 months | 81 months |
Weighted-average discount rate - finance leases | 3.63% | 3.63% |
Weighted-average discount rate - operating leases | 6.50% | 6.50% |
Cost of revenue | ||
Lease cost | ||
Total lease cost | $ 1,624 | $ 3,011 |
General and administrative expenses | ||
Lease cost | ||
Total lease cost | $ 312 | $ 832 |
Preferred Stock (Details)
Preferred Stock (Details) - $ / shares | Jul. 02, 2023 | Jan. 01, 2023 |
Temporary Equity [Line Items] | ||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock issued | 0 | 0 |
Preferred stock outstanding | 0 | 0 |
Common Stock (Details)
Common Stock (Details) | 6 Months Ended | ||
Jul. 02, 2023 Vote $ / shares shares | Jan. 01, 2023 $ / shares shares | Nov. 15, 2021 shares | |
Common stock, shares authorized | 250,000,000 | 250,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |
Number of votes per common stock | Vote | 1 | ||
Dividends declared | $ / shares | $ 0 | ||
Employee Stock Option [Member] | |||
Common stock reserved for issuance | 161,397 | ||
Employee Stock Purchase Plan | |||
Common stock reserved for issuance | 1,473,106 | 743,803 | |
Omnibus Equity Plan | |||
Common stock reserved for issuance | 1,862,587 | 3,719,000 |
Equity-Based Compensation - Omn
Equity-Based Compensation - Omnibus Equity Plan and ESPP (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 29, 2023 shares | Apr. 01, 2022 shares | Jul. 02, 2023 USD ($) shares | Apr. 02, 2023 shares | Jul. 02, 2023 USD ($) item shares | Nov. 15, 2021 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Aggregate shares registered | 5,921,056 | |||||
Employee Stock Purchase Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Aggregate shares registered | 384,211 | |||||
Additional shares registered | 800,000 | |||||
Maximum aggregate number of shares reserved for issuance | 1,473,106 | 1,473,106 | 743,803 | |||
Percentage of increase in shares reserved for issuance | 1% | |||||
Number of purchase period for awards | item | 2 | |||||
Stock-based compensation expense | $ | $ 0.1 | $ 0.2 | ||||
Issuance of common stock for employee stock purchase plan (ESPP) (in shares) | 47,502 | |||||
Purchase period | 6 months | |||||
Percentage of discount from lower of stock price | 15% | |||||
Employee Stock Purchase Plan | Tranche 1 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Offering period for awards | 12 months | |||||
Employee Stock Purchase Plan | Tranche 2 | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Offering period for awards | 12 months | |||||
Purchase period for awards | 6 months | |||||
Omnibus Equity Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Aggregate shares registered | 1,536,845 | |||||
Additional shares registered | 2,000,000 | 3,200,000 | ||||
Maximum aggregate number of shares reserved for issuance | 1,862,587 | 1,862,587 | 3,719,000 | |||
Percentage of increase in shares reserved for issuance | 4% | |||||
2023 Bonus | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock-based compensation expense | $ | $ 0.1 | $ 0.1 | ||||
Unrecognized equity based compensation | $ | $ 0.6 | $ 0.6 | ||||
Unrecognized equity-based compensation expected to be recognized period | 9 months 14 days |
Equity-Based Compensation - Ass
Equity-Based Compensation - Assumptions (Details) - Employee Stock Purchase Plan | 6 Months Ended |
Jul. 02, 2023 $ / shares | |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 18 days |
Expected volatility | 87.86% |
Risk-free interest rate | 5.05% |
Weighted average fair value of stock-based awards granted | $ 0.54 |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected term (in years) | 1 year |
Expected volatility | 109.93% |
Risk-free interest rate | 5.06% |
Weighted average fair value of stock-based awards granted | $ 1.57 |
Equity-Based Compensation - 202
Equity-Based Compensation - 2021 Equity Plan (Details) - 2021 Equity Incentive Plan | 6 Months Ended |
Jul. 02, 2023 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Maximum aggregate number of shares reserved for issuance | 925,000 |
Options expiration period | 10 years |
Equity-Based Compensation - For
Equity-Based Compensation - Former CEO Stock Options and Special Compensation Awards (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||
Mar. 31, 2023 USD ($) | Feb. 13, 2023 shares | Mar. 31, 2022 USD ($) | Apr. 30, 2021 USD ($) $ / shares shares | Jul. 02, 2023 USD ($) item shares | Apr. 02, 2023 shares | Jul. 03, 2022 USD ($) | Apr. 03, 2022 shares | Jul. 02, 2023 USD ($) item shares | Jul. 03, 2022 USD ($) | Nov. 15, 2021 item | |
Employee Stock Option [Member] | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Options Outstanding, Forfeited | 161,396 | ||||||||||
Options Outstanding, Expected to vest | 161,397 | 161,397 | |||||||||
Mr. McCreight | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock options grants in period | 322,793 | ||||||||||
Stock option exercise price | $ / shares | $ 11.35 | ||||||||||
Number of bonus available | item | 2 | 2 | |||||||||
Value of each bonus available | $ | $ 3 | $ 3 | |||||||||
Aggregate value of bonus available | $ | $ 6 | ||||||||||
Equity based compensation | $ | $ 0 | $ 0.4 | $ 0.4 | $ 1.5 | |||||||
Equity-based compensation expense (in shares) | 208,914 | 208,914 | |||||||||
Accelerated expenses | $ | $ 1.2 | ||||||||||
Options Outstanding, Forfeited | 161,396 | 161,396 | |||||||||
Options Outstanding, Expected to vest | 161,397 | 161,397 | |||||||||
Mr. McCreight | Minimum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Termination of service | 90 days | ||||||||||
Mr. McCreight | Maximum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Termination of service | 3 years | ||||||||||
Mr. McCreight | IPO | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of bonus available | item | 2 | ||||||||||
Mr. McCreight | Service vesting | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock options grants in period | 275,133 | ||||||||||
Mr. McCreight | Service and performance vesting | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock options grants in period | 47,660 |
Equity-Based Compensation - Sto
Equity-Based Compensation - Stock Option Activity (Details) - Employee Stock Option [Member] | 6 Months Ended | 12 Months Ended |
Jul. 02, 2023 $ / shares shares | Jan. 01, 2023 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Options Outstanding, Beginning balance | shares | 322,793 | |
Options Outstanding, Forfeited | shares | (161,396) | |
Options Outstanding, Ending balance | shares | 161,397 | 322,793 |
Options Outstanding, exercisable | shares | 161,397 | |
Options Outstanding, Expected to vest | shares | 161,397 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Weighted-Average Exercise Price per Option, Beginning balance (in dollars per share) | $ / shares | $ 11.35 | |
Weighted-Average Exercise Price per Option, Forfeited (in dollars per share) | $ / shares | (11.35) | |
Weighted-Average Exercise Price per Option, Ending balance (in dollars per share) | $ / shares | 11.35 | $ 11.35 |
Weighted-Average Exercise Price per Option, exercisable (in dollars per share) | $ / shares | 11.35 | |
Weighted-Average Exercise Price per Option, Expected to vest (in dollars per share) | $ / shares | $ 11.35 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||
Weighted-Average Remaining Contractual Life (years) | 7 years 9 months 14 days | 8 years 3 months 14 days |
Weighted-Average Remaining Contractual Life (years), Vested and exercisable | 7 years 9 months 14 days | |
Weighted-Average Remaining Contractual Life (years), Expected to vest | 7 years 9 months 14 days |
Equity-Based Compensation - Sum
Equity-Based Compensation - Summary of Restricted Stock and Restricted Stock Units (Details) | 6 Months Ended |
Jul. 02, 2023 $ / shares shares | |
Restricted Stock | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Balance at the beginning of period | shares | 78,303 |
Stock vested | shares | (18,296) |
Stock forfeited | shares | (2,720) |
Balance at the end of period | shares | 57,287 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted average fair value, beginning | $ / shares | $ 5.38 |
Weighted average fair value, vested | $ / shares | 5.38 |
Weighted average fair value, forfeited | $ / shares | 5.37 |
Weighted average fair value, end | $ / shares | $ 5.38 |
Unvested RSUs | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Balance at the beginning of period | shares | 1,336,674 |
Stock granted | shares | 3,903,031 |
Stock vested | shares | (1,126,336) |
Stock forfeited | shares | (79,792) |
Balance at the end of period | shares | 4,033,577 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted average fair value, beginning | $ / shares | $ 8.94 |
Weighted average fair value, granted | $ / shares | 2.70 |
Weighted average fair value, vested | $ / shares | 5.83 |
Weighted average fair value, forfeited | $ / shares | 6.25 |
Weighted average fair value, end | $ / shares | $ 3.82 |
Performance Stock Units | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Stock granted | shares | 1,811,571 |
Balance at the end of period | shares | 1,811,571 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Weighted average fair value, granted | $ / shares | $ 2.65 |
Weighted average fair value, end | $ / shares | $ 2.65 |
Equity-Based Compensation - Res
Equity-Based Compensation - Restricted Stock and Restricted Stock Units (Details) $ in Millions | 3 Months Ended | 6 Months Ended | |||||||||
Apr. 30, 2023 shares | Mar. 17, 2023 shares | Mar. 06, 2023 installment item shares | Mar. 05, 2023 installment shares | Nov. 15, 2021 shares | Jul. 02, 2023 USD ($) | Apr. 02, 2023 item shares | Jul. 03, 2022 USD ($) | Jul. 02, 2023 USD ($) shares | Jul. 03, 2022 USD ($) | Nov. 11, 2022 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Converted from class P units of the Company upon LP liquidation | 1,964,103 | ||||||||||
Vested common stock | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Converted from class P units of the Company upon LP liquidation | 1,536,304 | ||||||||||
Unvested restricted stock | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Converted from class P units of the Company upon LP liquidation | 427,799 | ||||||||||
Equity based compensation | $ | $ 0.2 | $ 0.7 | $ 0.4 | $ 1.5 | |||||||
Unrecognized equity based compensation | $ | 0.7 | $ 0.7 | |||||||||
Unrecognized equity-based compensation expected to be recognized period | 1 year 3 months 10 days | ||||||||||
Unvested RSUs | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock granted | 3,903,031 | ||||||||||
Equity based compensation | $ | 3.2 | $ 2.2 | $ 6 | $ 4.3 | |||||||
Unrecognized equity-based compensation expense | $ | 14.8 | $ 14.8 | |||||||||
Unrecognized equity-based compensation expected to be recognized period | 2 years 1 month 17 days | ||||||||||
Unvested RSUs | Executives and Employees | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock granted | 2,520,541 | ||||||||||
Vesting period | 3 years | ||||||||||
Unvested RSUs | Directors | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock granted | 694,536 | ||||||||||
Unvested RSUs | Directors | Minimum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Vesting period | 3 months | ||||||||||
Unvested RSUs | Directors | Maximum | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Vesting period | 3 years | ||||||||||
Unvested RSUs | Crystal Landsem | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock granted | 1,811,572 | ||||||||||
Unvested RSUs | Tiffany Smith | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of grants | item | 2 | ||||||||||
Stock granted | 43,063 | 118,025 | 161,088 | ||||||||
Vest installments | installment | 3 | ||||||||||
Unvested RSUs | Mr. McCreight | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Number of grants | item | 2 | ||||||||||
Stock granted | 223,704 | 613,116 | 836,820 | 25,873 | |||||||
Stock grant issuable | $ | $ 2 | ||||||||||
Vest installments | installment | 12 | ||||||||||
Performance Stock Units | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock granted | 1,811,571 | ||||||||||
Equity based compensation | $ | 0.7 | $ 0.9 | |||||||||
Unrecognized equity-based compensation expense | $ | $ 3.8 | $ 3.8 | |||||||||
Unrecognized equity-based compensation expected to be recognized period | 2 years 8 months 4 days | ||||||||||
Performance Stock Units | Crystal Landsem | |||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||||
Stock granted | 1,811,571 | ||||||||||
Number of equal annual installments | installment | 3 | ||||||||||
Annual installment value | 603,857 |
Equity-Based Compensation - Cla
Equity-Based Compensation - Class P Units (Details) - Class P Units $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Oct. 31, 2021 employee shares | Oct. 03, 2021 USD ($) | Oct. 03, 2021 USD ($) | Oct. 02, 2022 shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Units outstanding | 384,522 | |||
Equity based compensation | $ | $ 0.4 | $ 1.3 | ||
Accelerate vesting shares | 763,178 | |||
Number of senior executives, shares accelerated vesting | employee | 2 | |||
Required service period after completion of IPO | 12 months | 12 months |
Equity-Based Compensation - C_2
Equity-Based Compensation - Class P Distributions (Details) - USD ($) $ in Millions | 3 Months Ended | |
Jul. 03, 2022 | Apr. 03, 2022 | |
Distribution Class P Awards | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Equity-based compensation expense | $ (0.6) | $ 0.6 |
Income Taxes - Components of Pr
Income Taxes - Components of Provision for Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Income Taxes | ||||
(Loss) income before provision for income taxes | $ (1,723) | $ 10,794 | $ (8,049) | $ 13,898 |
Provision for income taxes | $ 874 | $ 4,795 | $ 166 | $ 5,856 |
Effective tax rate | (50.70%) | 44.40% | (2.10%) | 42.10% |
Income Taxes - Federal Income T
Income Taxes - Federal Income Tax Rate (Details) | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Income Taxes | ||||
Federal income tax rate | 21% | 21% | 21% | 21% |
Related Party Transactions (Det
Related Party Transactions (Details) | 6 Months Ended |
Jul. 02, 2023 item | |
Related Party Transactions | |
Shareholders with ownership interest greater than 10% | 3 |
Aggregate ownership interest | 10% |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jul. 02, 2023 | Apr. 02, 2023 | Jul. 03, 2022 | Apr. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Pay vs Performance Disclosure | ||||||
Net Income (Loss) | $ (2,597) | $ (5,618) | $ 5,999 | $ 2,043 | $ (8,215) | $ 8,042 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jul. 02, 2023 shares | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | Securities Trading Plans of Directors and Executive Officers The following table describes contracts, instructions or written plans for the sale or purchase of our securities adopted by our executive officers and directors that are currently in effect, including one trading plan entered into during the quarter ended July 2, 2023. Each of the trading plans described below were entered into during an open insider trading window and are intended to satisfy Rule 10b5-1(c) under the Exchange Act and the Company’s policies regarding insider trading. Each of the trading plans are intended to permit the orderly disposition of a portion of each of the executive officer’s and director's holdings as part of their long-term financial and tax plan. Date of Adoption of Rule 10b5-1 Name and Title Trading Plan Duration of Rule 10b5-1 Trading Plan (1) Aggregate Number of Securities to Be Sold Crystal Landsem 9/1/2022 11/28/2022 – 11/29/2023 125,000 Chief Executive Officer and Director David McCreight 5/19/2023 8/31/2023 – 5/22/2024 297,288 Executive Chairman Mark Vos 9/1/2022 11/28/2022 – 11/29/2023 125,000 President and Chief Information Officer Tiffany Smith 3/17/2023 6/20/2023 – 3/18/2024 11,333 Chief Financial Officer (1) In each case, a trading plan may also expire on such earlier date as all transactions under the trading plan are completed. During the quarter ended July 2, 2023, none of our executive officers or directors terminated a Rule 10b5-1 trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K). |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Crystal Landsem | |
Trading Arrangements, by Individual | |
Name | Crystal Landsem |
Title | Chief Executive Officer and Director |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | Sep. 01, 2022 |
Aggregate Available | 125,000 |
Expiration Date | Nov. 29, 2023 |
David McCreight | |
Trading Arrangements, by Individual | |
Name | David McCreight |
Title | Executive Chairman |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | May 19, 2023 |
Aggregate Available | 297,288 |
Expiration Date | May 22, 2024 |
Mark Vos | |
Trading Arrangements, by Individual | |
Name | Mark Vos |
Title | President and Chief Information Officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | Sep. 01, 2022 |
Aggregate Available | 125,000 |
Expiration Date | Nov. 29, 2023 |
Tiffany Smith | |
Trading Arrangements, by Individual | |
Name | Tiffany Smith |
Title | Chief Financial Officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | Mar. 17, 2023 |
Aggregate Available | 11,333 |
Expiration Date | Mar. 18, 2024 |