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Arhaus (ARHS)
NASDAQ:ARHS
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Arhaus
(NASDAQ:ARHS)
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Rating:70Outperform
Price Target:
$11.50
▲(19.67% Upside)
Arhaus receives a score of 70, driven by strong financial performance and positive earnings call highlights. However, technical analysis and valuation present moderate concerns. The company's resilience amidst macroeconomic challenges and strategic initiatives are positive, but declining profit margins and high debt reliance need attention.
Positive Factors
Revenue Growth
Record-breaking revenue growth indicates strong market demand and effective sales strategies, reinforcing Arhaus's competitive position in the home furnishings sector.
Product Expansion
The launch of the Bath Collection diversifies Arhaus's product offerings, potentially attracting new customer segments and enhancing long-term revenue streams.
Cash Flow Health
Strong cash flow generation supports Arhaus's ability to invest in growth initiatives and manage financial obligations, ensuring operational stability.
Negative Factors
Tariff Impact
Anticipated tariff impacts could increase costs and pressure margins, challenging profitability and pricing strategies in the competitive retail market.
Declining Profit Margins
Declining profit margins suggest rising operational costs or pricing pressures, which could undermine long-term profitability if not addressed.
High Debt Reliance
High reliance on debt can strain financial flexibility and increase risk, potentially impacting Arhaus's ability to invest in future growth opportunities.
Arhaus (ARHS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.35B
Dividend YieldN/A
Average Volume (3M)1.82M
Price to Earnings (P/E)19.0
Beta (1Y)1.67
Revenue Growth4.76%
EPS Growth-19.79%
CountryUS
Employees2,390
SectorConsumer Cyclical
Sector Strength84
IndustryHome Improvement
Share Statistics
EPS (TTM)0.25
Shares Outstanding53,859,215
10 Day Avg. Volume1,836,932
30 Day Avg. Volume1,818,149
Financial Highlights & Ratios
PEG Ratio-0.42
Price to Book (P/B)3.83
Price to Sales (P/S)1.04
P/FCF Ratio33.13
Enterprise Value/Market Cap1.13
Enterprise Value/Revenue1.15
Enterprise Value/Gross Profit2.92
Enterprise Value/Ebitda9.60
Forecast
1Y Price Target
$12.45Price Target Upside29.55% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
Arhaus Business Overview & Revenue Model
Company DescriptionArhaus, Inc. operates as a lifestyle brand and premium retailer in the home furnishings market. It provides merchandise assortments across various categories, including furniture, lighting, textiles, décor, and outdoor. The company's furniture products comprise bedroom, dining room, living room, and home office furnishings, which includes sofas, dining tables and chairs, accent chairs, console and coffee tables, beds, headboards, dressers, desks, bookcases and modular storage, etc.; and outdoor products include outdoor dining tables, chairs, chaises and other furniture, lighting, textiles, décor, umbrellas, and fire pits. It also offers lighting products, such as various distinct and artistic lighting fixtures, including chandeliers, pendants, table and floor lamps, and sconces; textile products comprising handcrafted indoor and outdoor rugs, bed linens, and pillows and throws; and décor products, including various wall art to mirrors, vases to candles, and other decorative accessories. The company distributes its products through an omni-channel model comprising showrooms, e-commerce platform, catalog, and in-home designer services. As of December 31, 2021, it operated through a network of 71 traditional showrooms, 5 Design Studios, and 3 Outlets, as well as 58 showrooms with in-home interior designers. The company was founded in 1986 and is headquartered in Boston Heights, Ohio.
How the Company Makes MoneyArhaus generates revenue primarily through the sale of its furniture and home decor products via its retail showrooms and e-commerce platform. The company operates a network of physical retail locations across the United States, which serve as both sales channels and brand experience centers. Key revenue streams include direct product sales, custom orders for furniture, and online sales, which have seen significant growth due to the increasing trend towards digital shopping. Additionally, Arhaus may benefit from partnerships with designers and artisans, enhancing its product offerings and brand appeal. The company also emphasizes an omnichannel approach, integrating online and offline shopping experiences, which helps to drive sales and customer loyalty.
Arhaus Earnings Call Summary
Earnings Call Date:Aug 07, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong financial results and strategic advancements, such as record net revenue and a successful product launch. However, challenges from macroeconomic pressures and tariff impacts were noted. Despite these challenges, the company showed resilience with a solid client base and strategic operational improvements.Q2-2025 Updates
Positive Updates
Record-Breaking Revenue
Arhaus achieved the highest quarterly net revenue in its history, exceeding $358 million, up 15.7% compared to the previous year.
Strong Comparable Growth
Comparable growth was up 10.5%, driven by the successful conversion of strong first quarter demand.
Resilient Client Base
Despite macroeconomic pressures, July demand comparable growth increased 15.7%, reflecting the resilience of the high-end client base.
Launch of Arhaus Bath Collection
Arhaus announced the launch of its Bath Collection, marking a significant expansion into a new space within the home.
Strategic Distribution Center Transition
The Dallas Distribution Center was successfully brought in-house, enhancing productivity and customer service, contributing to the record net revenue.
Strong Financial Performance
Net income was $35 million, growing 57.7% from the previous year, and adjusted EBITDA was $60 million, an increase of 51.2%.
Negative Updates
Decline in Demand Comparable Growth
Demand comparable growth, a measure of written orders, decreased 3.6% due to macroeconomic and geopolitical uncertainties.
Challenging Macroeconomic Environment
The company faced a highly dynamic backdrop with shifting tariffs, ongoing macro pressures, and geopolitical tensions impacting consumer sentiment.
Expected Tariff Impact
The company anticipates a $12 million tariff impact for the year, with a significant portion affecting the second half.
Continued Choppiness in Demand
Near-term demand is expected to remain choppy due to external volatility, impacting purchase timing.
Company Guidance
During the Arhaus Second Quarter 2025 Earnings Conference Call, notable guidance included achieving a record quarterly net revenue of over $358 million, a 15.7% increase, despite macroeconomic challenges. Comparable growth was up 10.5%, although second-quarter demand comparable growth declined by 3.6%. July demand comparable growth rebounded, increasing by 15.7%, with year-to-date demand comparable growth at 2.2%. The company reaffirmed its full-year 2025 outlook, projecting net revenue between $1.29 billion and $1.38 billion, with net income anticipated between $48 million and $68 million, and adjusted EBITDA expected to range from $123 million to $145 million. Additionally, Arhaus is investing approximately $10 million in strategic initiatives for the year, primarily in the latter half, and expects continued choppiness in demand trends due to external volatility.Arhaus Financial Statement Overview
Summary
Arhaus demonstrates solid financial performance with consistent revenue growth and strong cash flow generation. However, declining profit margins and high reliance on debt pose potential risks. The company needs to focus on improving profitability and managing debt levels for long-term stability.Income Statement
Arhaus has demonstrated consistent revenue growth over the years, with a solid revenue increase from 2021 to TTM (Trailing-Twelve-Months). However, there has been a decline in EBIT margin and net profit margin in the TTM, which suggests rising operational costs or pricing pressures. The gross profit margin remains strong, indicating effective cost management in production.75
Positive
Balance Sheet
The balance sheet shows a stable equity base with an improving debt-to-equity ratio, indicating balanced leverage. However, the equity ratio is relatively low, suggesting that the company relies significantly on debt for financing. Return on equity has seen a decline in recent periods, which could impact investor confidence if not addressed.70
Positive
Cash Flow
Arhaus displays robust operating cash flow, consistently covering its capital expenditures. The free cash flow has shown positive growth, although the free cash flow to net income ratio indicates some volatility in cash generation relative to profits. Overall, cash flow health remains strong, supporting ongoing operations and growth initiatives.78
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.34B | 1.27B | 1.29B | 1.23B | 796.92M | 507.43M |
| Gross Profit | 525.08M | 501.23M | 540.42M | 525.06M | 329.93M | 199.50M |
| EBITDA | 159.92M | 161.83M | 227.06M | 238.62M | 57.74M | 48.12M |
| Net Income | 71.17M | 68.55M | 125.24M | 136.63M | 36.93M | 17.84M |
Balance Sheet | ||||||
| Total Assets | 1.32B | 1.21B | 1.11B | 931.79M | 586.55M | 315.94M |
| Cash, Cash Equivalents and Short-Term Investments | 238.42M | 197.51M | 223.10M | 145.18M | 123.78M | 50.74M |
| Total Debt | 550.28M | 499.50M | 462.93M | 381.98M | 50.52M | 47.60M |
| Total Liabilities | 932.76M | 862.57M | 773.86M | 722.10M | 516.78M | 352.04M |
| Stockholders Equity | 385.61M | 343.75M | 340.24M | 209.69M | 69.77M | -36.09M |
Cash Flow | ||||||
| Free Cash Flow | 57.40M | 39.74M | 75.24M | 21.80M | 98.37M | 137.42M |
| Operating Cash Flow | 144.23M | 147.11M | 172.30M | 74.45M | 146.24M | 150.44M |
| Investing Cash Flow | -79.00M | -99.53M | -96.72M | -52.66M | -47.87M | -13.01M |
| Financing Cash Flow | -4.21M | -72.95M | -1.80M | -177.00K | -31.47M | -98.33M |
Arhaus Technical Analysis
Negative
9.61
Price Trends
11.16
Negative
10.00
Negative
9.87
Negative
Market Momentum
-0.26
Positive
32.14
Neutral
13.01
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ARHS, the sentiment is Negative. The current price of 9.61 is below the 20-day moving average (MA) of 10.74, below the 50-day MA of 11.16, and below the 200-day MA of 9.87, indicating a bearish trend. The MACD of -0.26 indicates Positive momentum. The RSI at 32.14 is Neutral, neither overbought nor oversold. The STOCH value of 13.01 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ARHS.
Arhaus Risk Analysis
Arhaus disclosed 60 risk factors in its most recent earnings report. Arhaus reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Arhaus Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $1.35B | 19.03 | 20.48% | ― | 4.76% | -19.79% | |
69 Neutral | $374.02B | 25.52 | 193.95% | 2.44% | 8.52% | -0.97% | |
66 Neutral | $326.16M | 16.99 | 6.40% | 6.40% | -8.93% | -50.32% | |
64 Neutral | $1.30B | 14.41 | 9.09% | 2.80% | 2.18% | -22.35% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
56 Neutral | $7.20B | 34.29 | 9.73% | ― | 4.88% | 0.05% | |
40 Underperform | $40.00M | ― | 12.90% | ― | -8.36% | -2950.63% |
* Consumer Cyclical Sector Average
ARHS
Arhaus
9.61
-0.73
-7.06%
HVT
Haverty
19.99
-4.15
-17.19%
HD
Home Depot
375.75
-30.05
-7.41%
LZB
La-Z-Boy Incorporated
31.46
-7.73
-19.72%
FND
Floor & Decor Holdings
66.83
-45.92
-40.73%
LESL
Leslie's
4.31
-49.29
-91.96%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.