Arhaus Reports First Quarter 2025 Financial Results

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Insights

Arhaus delivers mixed Q1 results with revenue growth but significant profit declines, lowering guidance amid macroeconomic challenges while maintaining expansion plans.

Arhaus delivered a 5.5% revenue increase to $311 million in Q1, but profitability metrics deteriorated significantly. Net income plummeted 67.6% to $5 million while Adjusted EBITDA fell 36.2% to $19 million. This profit compression stems primarily from selling, general and administrative expenses surging 13.9%, significantly outpacing revenue growth.

The divergence between delivered sales (comparable growth of -1.5%) and future demand (demand comparable growth of 4.1%) creates an intriguing narrative. While current sales slightly declined, the positive demand metrics suggest the brand remains resilient despite market challenges.

Arhaus maintains exceptional financial flexibility with $214 million in cash and zero long-term debt. Client deposits increased 19.2% from December 2024, indicating a healthy backlog that should convert to revenue in coming quarters.

Management has prudently lowered full-year 2025 guidance, citing "increased tariff-related volatility and softening consumer sentiment." Key revisions include:

Revenue: $1.29B-$1.38B (down from $1.36B-$1.40B)
Comparable growth: -5% to 1.5% (down from 0% to 3%)
Net income: $48M-$68M (down from $63M-$73M)

Despite near-term headwinds, Arhaus continues executing its expansion strategy with plans for 12-15 total showroom projects in 2025. Their initiative to reduce China sourcing to approximately 1% of Total Receipts by Q4 demonstrates proactive supply chain management, though this transition may temporarily pressure margins.

05/08/2025 - 06:30 AM

BOSTON HEIGHTS, Ohio, May 08, 2025 (GLOBE NEWSWIRE) -- Arhaus, Inc. (鈥淎rhaus鈥� or the 鈥淐ompany鈥�) (NASDAQ: ARHS), a growing lifestyle brand and omni-channel retailer of premium artisan-crafted home furnishings, reported first quarter 2025 results for the period ended March听31, 2025. Highlights include:

Net revenue increased 5.5% to $311 million compared to the same period in 2024
Gross margin increased 0.4% to $116 million compared to the same period in 2024
Selling, general and administrative expenses increased 13.9% to $110 million compared to the same period in 2024
Net and comprehensive income decreased 67.6% to $5 million compared to the same period in 2024
Adjusted EBITDA decreased 36.2% to $19 million compared to the same period in 2024
Comparable growth⁽¹⁾ of (1.5)%
Demand comparable growth⁽²⁾ of 4.1%
Total Showroom Projects⁽³⁾ of 5 locations, inclusive of 1 new Traditional Showroom opening and 4 strategic relocations.

John Reed, Co-Founder and Chief Executive Officer, said:

鈥淲e鈥檙e pleased with our first quarter performance, which met our expectations despite continued macroeconomic volatility鈥攗nderscoring the strength of our brand and the resilience of our business model.

As we look ahead, we鈥檙e focused on what we can control: executing with discipline, investing strategically, and expanding our showroom footprint to support long-term, profitable growth. In 2025, we plan to have 12 to 15 Total Showroom Projects⁽³⁾ and expect to reduce China sourcing to approximately 1% of Total Receipts⁽⁴⁾ in the fourth quarter.

While we revised our full-year outlook to reflect the broader uncertainty, we remain confident in our business鈥攕upported by a strong balance sheet, operational agility, and the momentum of our growth strategy. I鈥檓 proud of what we鈥檝e accomplished and even more excited about the opportunities ahead.鈥�

Operational Highlights

First quarter comparable growth⁽¹⁾ was (1.5)%, near the midpoint of the Company鈥檚 expectations. Demand comparable growth⁽²⁾was 4.1%, driven by healthy client engagement and the ongoing success of the Company鈥檚 product assortment, marketing initiatives, and planned promotions. The Company is pleased with the overall strength of the quarter.

Showroom Highlights

In the first quarter 2025, the Company鈥檚 showroom footprint was 103 Showrooms across 30 states and all four geographic regions. The Company completed 5 Showroom Projects, including 1 new showroom opening and 4 strategic relocations. Showroom highlights include:

Winter Park, Florida 鈥� A new Traditional showroom opened in Winter Park Village, an upscale lifestyle center.
Sarasota, Florida 鈥� A relocated showroom opened in Center Point at Waterside, a key Florida market.
Burlingame, California 鈥� A relocated showroom in downtown Burlingame tailored to the local clientele.

Including these 5 Showroom Projects, the Company expects to complete approximately 12 to 15 Total Showroom Projects⁽³⁾ in 2025, opening 4 to 6 new Showrooms, along with 8 to 9 strategic relocations, remodels, or expansions.

The Company鈥檚 long-term strategy remains focused on opening an average of five to seven new Traditional Showrooms annually, along with additional Design Studios and showroom relocations. The Company has a robust pipeline in place toward its goal of 165 Traditional Showrooms.

Balance Sheet and Liquidity

As of March听31, 2025, the Company reported the following:

No long-term debt.
Cash and cash equivalents totaled $214 million.
Net merchandise inventory of $301 million, a 1.5% increase from December听31, 2024 to March听31, 2025.
Client deposits of $263 million, a 19.2% increase from December听31, 2024 to March听31, 2025.
Net cash provided by operating activities totaled $47 million for the first quarter 2025.
Net cash used in investing activities was approximately $28 million. Company-funded capital expenditures⁽⁵⁾ were approximately $22 million and landlord contributions were approximately $6 million.

Outlook

In response to increased tariff-related volatility and softening consumer sentiment, the Company is updating its full-year 2025 outlook and introducing second-quarter 2025 outlook for select financial and operating metrics to reflect a more cautious stance. The midpoint of the prior full-year outlook now represents the high-end of the updated range. This outlook reflects currently implemented tariff actions in effect as of the date hereof.

听	Full Year 2025			听	听
听	Current Guidance	听	Previous Guidance	听	Q2 2025
Net revenue	$1.29 billion to $1.38 billion	听	$1.36 billion to $1.40 billion	听	$320 million to $350 million
Comparable growth⁽¹⁾	(5)% to 1.5%	听	0% to 3%	听	(2)% to 5%
Net income⁽⁶⁾	$48 million to $68 million	听	$63 million to $73 million	听	$17 million to $24 million
Adjusted EBITDA⁽⁷⁾	$123 million to $145 million	听	$140 million to $150 million	听	$41 million to $48 million
听	听	听	听	听	听
*Other Estimates*	听	听	听	听	听
Company-funded capital expenditures⁽⁵⁾	$90听million to $110听million	听	$90 million to $110 million	听	听
Depreciation & amortization	$47 million to $52 million	听	听	听	听
Fully diluted shares	~141 million	听	~141 million	听	听
Effective tax rate	~ 26%	听	~ 26%	听	听
Showroom openings	4 to 6 new showrooms	听	3 to 5 new showrooms	听	听
Total Showroom Projects⁽³⁾	12 to 15 showroom projects	听	听	听	听
听
⁽¹⁾ Comparable growth is a key performance indicator and is defined as the year-over-year percentage change of the dollar value of orders delivered (based on purchase price), net of the dollar value of returns (based on amount credited to client), from our comparable Showrooms and eCommerce, including through our catalogs and other mailings.
⁽²⁾Demand comparable growth is a key performance indicator and is defined as the year-over-year percentage change of demand from our comparable Showrooms and eCommerce, including through our catalogs and other mailings.
⁽³⁾ Total Showroom Projects is defined as the number of showroom projects completed during the period, including new showroom openings, strategic relocations, remodels, and expansions. The Company considers all showroom projects integral to its long-term growth strategy, with each evaluated based on strategic relevance and expected return on investment.
⁽⁴⁾ Total Receipts is a sourcing indicator measured by the total dollar value of product received excluding tariffs and freight. This metric offers a more accurate, forward-looking view of the Company鈥檚 sourcing mix, supporting real-time monitoring and a go-forward basis of tariff exposure and supply chain diversity.
⁽⁵⁾ Company-funded capital expenditures is defined as total net cash used in investing activities less landlord contributions.
⁽⁶⁾ U.S. GAAP net income (loss).
⁽⁷⁾ We have not reconciled guidance for Adjusted EBITDA to the corresponding GAAP financial measure because we do not provide guidance for the various reconciling items. These items include, but are not limited to, future share-based compensation expense, income taxes, interest income, and transaction costs. We are unable to provide guidance for these reconciling items because we cannot determine their probable significance, as certain items are outside of our control and cannot be reasonably predicted due to the fact that these items could vary significantly from period to period. Accordingly, reconciliations to the corresponding GAAP financial measure is not available without unreasonable effort.
听

Conference Call

You are invited to listen to Arhaus鈥� conference call to discuss the first quarter 2025 financial results scheduled for today, May听8, 2025, at 8:30 a.m. Eastern Time. The call will be available over the Internet on our website () or by dialing (877) 407-3982 within the U.S., or 1 (201) 493-6780, outside the U.S. The conference ID number is 13748991.

A recorded replay of the conference call will be available within approximately three hours of the conclusion of the call and can be accessed online at 听for approximately twelve months.

About Arhaus

Founded in 1986, Arhaus is a growing lifestyle brand and omni-channel retailer of premium home furnishings. Through a differentiated proprietary model that directly designs and sources products from leading manufacturers and artisans around the world, Arhaus offers an exclusive assortment of heirloom quality products that are sustainably sourced, lovingly made, and built to last. With more than 100 showroom and design studio locations across the United States, a team of interior designers providing complimentary in-home design services, and robust online and eCommerce capabilities, Arhaus is known for innovative design, responsible sourcing, and client-first service. For more information, please visit .

Investor Contact:

Tara Louise Atwood
Vice President, Investor Relations
(440) 439-7700
[email protected]

Non-GAAP Financial Measures

In addition to the results provided in accordance with U.S. GAAP, this press release and related tables include adjusted EBITDA and adjusted EBITDA as a percentage of net revenue, which present operating results on an adjusted basis.

We use non-GAAP measures to help assess the performance of our business, identify trends affecting our business, formulate business plans and make strategic decisions. In addition to our results determined in accordance with U.S. GAAP, we believe that providing these non-GAAP financial measures is useful to our investors as they present an informative supplemental view of our results from period to period by removing the effect of non-recurring items. However, our inclusion of these adjusted measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items or that the items for which we have made adjustments are unusual or infrequent or will not recur. These non-U.S. GAAP measures are not a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company. These measures should only be read together with the corresponding U.S. GAAP measures. Please refer to the reconciliations of adjusted EBITDA to the most directly comparable financial measures prepared in accordance with U.S. GAAP below.

Forward-Looking Statements

Certain statements contained herein, including statements under the heading 鈥淥utlook鈥� are not based on historical fact and are 鈥渇orward-looking statements鈥� within the meaning of applicable securities laws.

Forward-looking statements can generally be identified by the use of forward-looking terminology, including, but not limited to, 鈥渕ay,鈥� 鈥渃ould,鈥� 鈥渟eek,鈥� 鈥済uidance,鈥� 鈥減redict,鈥� 鈥減otential,鈥� 鈥渓ikely,鈥� 鈥渂elieve,鈥� 鈥渨ill,鈥� 鈥渆xpect,鈥� 鈥渁nticipate,鈥� 鈥渆stimate,鈥� 鈥減lan,鈥� 鈥渋ntend,鈥� 鈥渇orecast,鈥� or variations of these terms and similar expressions, or the negative of these terms or similar expressions. Past performance is not a guarantee of future results or returns and no representation or warranty is made regarding future performance. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond our control that could cause our actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: our ability to manage and maintain the growth rate of our business; our ability to obtain quality merchandise in sufficient quantities; disruption in our receiving and distribution system, including delays in the integration of our distribution centers and the possibility that we may not realize the anticipated benefits of multiple distribution centers; effects of new or proposed tariffs and changes to international trade policies and agreements; the possibility of cyberattacks and our ability to maintain adequate cybersecurity systems and procedures; loss, corruption and misappropriation of data and information relating to clients and employees; changes in and compliance with applicable data privacy rules and regulations; risks as a result of constraints in our supply chain; a failure of our vendors to meet our quality standards; declines in general economic conditions that affect consumer confidence and consumer spending that could adversely affect our revenue; our ability to anticipate changes in consumer preferences; risks related to maintaining and increasing Showroom traffic and sales; our ability to compete in our market; our ability to adequately protect our intellectual property; compliance with applicable governmental regulations; effectively managing our eCommerce sales channel and digital marketing efforts; our reliance on third-party transportation carriers and risks associated with freight and transportation costs; and compliance with SEC rules and regulations as a public reporting company. These factors should not be construed as exhaustive. Further information on potential factors that could affect the financial results of the Company and its forward-looking statements is included in the Company鈥檚 filings with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking statement, except as may be required by law. These forward-looking statements speak only as of the date of this release. All forward-looking statements are qualified in their entirety by this cautionary statement.

Arhaus, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited, amounts in thousands, except share and per share data)
听
听	March 31, 2025		听	December 31, 2024
Assets	听		听	听
Current assets	听		听	听
Cash and cash equivalents	$	214,394	听	$	197,511	听
Restricted cash	听	3,520	听	听	3,418	听
Accounts receivable, net	听	1,050	听	听	1,252	听
Merchandise inventory, net	听	301,403	听	听	297,010	听
Prepaid and other current assets	听	32,391	听	听	31,852	听
Total current assets	听	552,758	听	听	531,043	听
Operating right-of-use assets	听	345,661	听	听	322,302	听
Financing right-of-use assets	听	34,608	听	听	36,105	听
Property, furniture and equipment, net	听	297,538	听	听	282,520	听
Deferred tax assets	听	21,449	听	听	21,091	听
Goodwill	听	10,961	听	听	10,961	听
Other noncurrent assets	听	1,967	听	听	2,294	听
Total assets	$	1,264,942	听	$	1,206,316	听
听	听		听	听
Liabilities and Stockholders鈥� Equity	听		听	听
Current liabilities	听		听	听
Accounts payable	$	59,709	听	$	68,621	听
Accrued taxes	听	10,835	听	听	10,480	听
Accrued wages	听	14,221	听	听	11,538	听
Accrued other expenses	听	39,832	听	听	47,668	听
Client deposits	听	263,206	听	听	220,873	听
Current portion of operating lease liabilities	听	48,916	听	听	42,247	听
Current portion of financing lease liabilities	听	600	听	听	1,024	听
Total current liabilities	听	437,319	听	听	402,451	听
Operating lease liabilities, long-term	听	422,848	听	听	402,916	听
Financing lease liabilities, long-term	听	52,550	听	听	53,312	听
Other long-term liabilities	听	3,397	听	听	3,892	听
Total liabilities	$	916,114	听	$	862,571	听
听	听		听	听
Commitments and contingencies	听		听	听
听	听		听	听
Stockholders鈥� equity	听		听	听
Class A shares, par value $0.001 per share (600,000,000 shares authorized, 54,265,837 shares issued and 53,783,985 outstanding as of March听31, 2025; 53,788,036 shares issued and 53,514,062 outstanding as of December听31, 2024)	听	54	听	听	53	听
Class B shares, par value $0.001 per share (100,000,000 shares authorized, 87,115,600 shares issued and outstanding as of March听31, 2025; 87,115,600 shares issued and outstanding as of December听31, 2024)	听	87	听	听	87	听
Retained earnings	听	147,840	听	听	142,898	听
Additional paid-in capital	听	200,847	听	听	200,707	听
Total stockholders鈥� equity	听	348,828	听	听	343,745	听
Total liabilities and stockholders鈥� equity	$	1,264,942	听	$	1,206,316	听
听

Arhaus, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (Unaudited, amounts in thousands, except share and per share data)
听
听	Three months ended
听	March 31,
听	听	2025	听	听	听	2024	听
Net revenue	$	311,372	听	听	$	295,162	听
Cost of goods sold	听	195,785	听	听	听	180,108	听
Gross margin	听	115,587	听	听	听	115,054	听
Selling, general and administrative expenses	听	110,058	听	听	听	96,693	听
Loss on disposal of assets	听	108	听	听	听	鈥�	听
Income from operations	$	5,421	听	听	$	18,361	听
Interest income, net	听	(573	)	听	听	(1,432	)
Other income	听	(86	)	听	听	(122	)
Income before taxes	听	6,080	听	听	听	19,915	听
Income tax expense	听	1,198	听	听	听	4,816	听
Net and comprehensive income	$	4,882	听	听	$	15,099	听
听	听			听	听
Net and comprehensive income per share, basic	听			听	听
Weighted-average number of common shares outstanding, basic	听	140,361,588	听	听	听	139,816,792	听
Net and comprehensive income per share, basic	$	0.03	听	听	$	0.11	听
Net and comprehensive income per share, diluted	听			听	听
Weighted-average number of common shares outstanding, diluted	听	141,090,633	听	听	听	140,556,031	听
Net and comprehensive income per share, diluted	$	0.03	听	听	$	0.11	听

Arhaus, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited, amounts in thousands)
听	听
听	Three months ended
听	March 31,
听	听	2025	听	听	听	2024	听
Cash flows from operating activities	听			听	听
Net income	$	4,882	听	听	$	15,099	听
Adjustments to reconcile net income to net cash provided by operating activities	听			听	听
Depreciation and amortization	听	11,362	听	听	听	8,603	听
Amortization of operating lease right-of-use asset	听	10,046	听	听	听	8,738	听
Amortization of deferred financing fees, interest on finance lease in excess of principal paid and interest on operating leases	听	6,902	听	听	听	6,233	听
Equity based compensation	听	1,595	听	听	听	2,024	听
Deferred tax assets	听	(358	)	听	听	174	听
Amortization of cloud computing arrangements	听	413	听	听	听	310	听
Loss on disposal of property, furniture and equipment	听	108	听	听	听	鈥�	听
Amortization and write-off of lease incentives	听	鈥�	听	听	听	(80	)
Changes in operating assets and liabilities	听			听	听
Accounts receivable	听	202	听	听	听	589	听
Merchandise inventory	听	(4,393	)	听	听	(14,118	)
Prepaid and other assets	听	(380	)	听	听	(5,758	)
Other noncurrent liabilities	听	(377	)	听	听	18	听
Accounts payable	听	(8,685	)	听	听	(4,819	)
Accrued expenses	听	(3,209	)	听	听	(5,092	)
Operating lease liabilities	听	(13,926	)	听	听	(4,207	)
Client deposits	听	42,333	听	听	听	29,114	听
Net cash provided by operating activities	听	46,515	听	听	听	36,828	听
Cash flows from investing activities	听			听	听
Purchases of property, furniture and equipment	听	(27,621	)	听	听	(25,932	)
Net cash used in investing activities	听	(27,621	)	听	听	(25,932	)
Cash flows from financing activities	听			听	听
Principal payments under finance leases	听	(212	)	听	听	(221	)
Repurchase of shares for payment of withholding taxes for equity based compensation	听	(1,458	)	听	听	(540	)
Cash dividend payments	听	(239	)	听	听	鈥�	听
Net cash used in financing activities	听	(1,909	)	听	听	(761	)
Net increase in cash, cash equivalents and restricted cash	听	16,985	听	听	听	10,135	听
Cash, cash equivalents and restricted cash	听			听	听
Beginning of period	听	200,929	听	听	听	226,305	听
End of period	$	217,914	听	听	$	236,440	听
听	听			听	听
Supplemental disclosure of cash flow information	听			听	听
Interest paid in cash	$	1,258	听	听	$	840	听
Interest received in cash	听	1,938	听	听	听	2,871	听
Income taxes paid in cash	听	541	听	听	听	991	听
Noncash investing activities:	听			听	听
Purchase of property, furniture and equipment in current liabilities	听	6,648	听	听	听	15,250	听
听	听	听	听	听	听	听	听

Arhaus, Inc. and Subsidiaries Reconciliation of Net Income to Adjusted EBITDA (Unaudited, amounts in thousands)
听	听
听	Three months ended
听	March 31,
听	听	2025	听	听	听	2024	听
Net and comprehensive income	$	4,882	听	听	$	15,099	听
Interest income, net	听	(573	)	听	听	(1,432	)
Income tax expense	听	1,198	听	听	听	4,816	听
Depreciation and amortization	听	11,362	听	听	听	8,603	听
EBITDA	听	16,869	听	听	听	27,086	听
Equity based compensation	听	1,595	听	听	听	2,024	听
Other expenses⁽¹⁾	听	108	听	听	听	鈥�	听
Adjusted EBITDA	$	18,572	听	听	$	29,110	听
听	听			听	听
Net revenue	$	311,372	听	听	$	295,162	听
Net and comprehensive income as a % of net revenue	听	1.6	%	听	听	5.1	%
Adjusted EBITDA as a % of net revenue	听	6.0	%	听	听	9.9	%
听	听			听	听
_{⁽¹⁾Other expenses represent costs and investments not indicative of ongoing business performance, such as loss on disposal of assets.}
听

FAQ

What were Arhaus (ARHS) key financial results for Q1 2025?

In Q1 2025, Arhaus reported net revenue growth of 5.5% to $311 million, while net income decreased 67.6% to $5 million. Adjusted EBITDA declined 36.2% to $19 million, and comparable growth was -1.5%.

How many showrooms does Arhaus (ARHS) currently operate and what are their expansion plans?

Arhaus operates 103 showrooms across 30 states. The company plans to complete 12-15 Total Showroom Projects in 2025, including 4-6 new showrooms and 8-9 strategic relocations, with a long-term goal of 165 Traditional Showrooms.

What is Arhaus (ARHS) updated guidance for full-year 2025?

Arhaus revised its 2025 guidance, now expecting net revenue of $1.29-$1.38 billion, comparable growth of -5% to 1.5%, and net income of $48-$68 million, down from previous guidance due to increased tariff-related volatility and softening consumer sentiment.

What is Arhaus (ARHS) current financial position?

As of March 31, 2025, Arhaus has no long-term debt, $214 million in cash and cash equivalents, and net merchandise inventory of $301 million. Client deposits increased 19.2% to $263 million from December 31, 2024.

How is Arhaus (ARHS) addressing supply chain concerns?

Arhaus is strategically reducing its China sourcing to approximately 1% of Total Receipts by Q4 2025, demonstrating efforts to diversify its supply chain and minimize tariff-related impacts.

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