ARHS · Arhaus, Inc.

Arhaus delivered its highest first-quarter net revenue in history at $314 million, a modest 0.9% increase year-over-year, driven by the strength of its operating model and resilient client base amid macro uncertainty. However, profitability faced headwinds, with gross margin slipping 1.0% to $114 million and SG&A expenses rising 1.9% to $112 million, resulting in net income plummeting 54.5% to $2 million and Adjusted EBITDA declining 3.1% to $18 million. Comparable metrics showed pressure, with Delivered Sales down 1.7% and Written Sales down 5.7%, though management noted sequential improvement through the quarter. CEO John Reed highlighted disciplined execution and long-term confidence in product leadership, while CFO Michael Lee emphasized cost control, high-return investments, and flexibility. The balance sheet remains robust with zero long-term debt and $177 million in cash, despite a 30.1% sequential drop primarily due to a $49 million special cash dividend of $0.35 per share paid in March. Inventory rose 9.0% to $369 million and client deposits grew 15.0% to $271 million, signaling sustained demand. Showroom expansion continues, operating 107 locations at quarter-end, with new openings in Ashburn, VA and Park Meadows, CO expansion, targeting 10-14 projects for mid-single-digit net unit growth. Critically, Arhaus reaffirmed its full-year 2026 outlook for net revenue of $1.43-$1.47 billion and Adjusted EBITDA of $150-$161 million, expressing confidence despite a tough Q2 prior-year comp from Dallas DC efficiencies. Q2 guidance anticipates net revenue of $350-$370 million. This reaffirmation amid challenges underscores management's conviction in the business trajectory, supported by strong liquidity and strategic investments.