ARHS Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Net Revenue: $385 million, up 7.4% year-over-year, marking a record high.

Comparable Written Sales: Increased by 12.5% in Q2, with a year-to-date increase of 2.8%.

Gross Profit: $172 million, up 16.1% year-over-year, benefiting from $23.8 million in recovered IEEPA tariffs.

Gross Margin: 44.7%, up 330 basis points, but would be 40.7% without the tariff benefit.

Net Income: $40 million, up 13.1% year-over-year.

Adjusted EBITDA: $70 million, up 16.8% year-over-year; without the tariff benefit, it would be $55 million, down 8.9%.

SG&A Expenses: $118 million, up 16.1% due to increased general and administrative costs and selling expenses related to new showrooms.

2Strategic Updates and Business Highlights

Product Strategy: Strong demand across all product categories, particularly upholstery and outdoor collections. New product introductions and customization options are driving client engagement.

Showroom Expansion: Opened a new 20,000-square-foot showroom in Ashburn, Virginia, and relocated/expanded others. Plans for 10-14 showroom projects in 2026.

Interior Design and Trade Program: Continued growth in the interior design channel, with a successful relaunch of the trade program attracting new design professionals.

Technology Investments: Implementation of new systems (TMS, ERP, POS) to enhance operational efficiency and customer experience.

3Forward Guidance and Outlook

Full-Year Revenue Guidance: Expected between $1.43 billion and $1.47 billion, representing 3.7% to 6.6% growth.

Net Income Guidance: Updated to $71 million to $80 million; adjusted EBITDA expected between $160 million and $171 million.

Third Quarter Expectations: Revenue projected between $355 million and $375 million, with comparable delivered sales of -1% to +5%.

4Challenges and Points of Concern

Cost Pressures: Ongoing impacts from tariffs, elevated fuel and shipping costs, and inflationary pressures are expected to affect profitability.

SG&A Load: Increased expenses due to strategic investments, which may pressure margins in the short term.

Macroeconomic Uncertainty: The company remains cautious about external factors affecting consumer confidence and housing turnover.

5Notable Q&A Insights

Demand Trends: Management noted a consistent level of engagement from both new and existing customers, with larger project sizes indicating strong high-end consumer spending.

Trade Program Performance: The trade program is gaining traction, with thousands of new members joining since its relaunch, and the company is optimistic about its long-term potential.

Promotional Strategy: The company is implementing targeted promotions to drive traffic and manage inventory effectively, with a focus on long-dated inventory.

E-commerce Growth: There is a strong internal belief in the potential for e-commerce growth, which is currently lagging behind overall performance. Overall, Arhaus reported strong financial results in Q2 2026, driven by robust demand across its product offerings and strategic initiatives. However, the company faces challenges from rising costs and macroeconomic uncertainties, prompting a cautious outlook for the remainder of the year.