by Company addresses insights into growth opportunities and how it is handling the impact of tariffs
BOSTON HEIGHTS, Ohio — Anyone who has been keeping tabs on Arhaus will not be surprised by the retailer’s recent success of late, including its record sales for its second quarter ended June 30.
As the company reported Aug. 7, second-quarter revenues reached a record $358.4 million, up 15.7% from $309.8 million the same period last year. Comparable-store sales were up 10.5%, “driven by the successful conversion of strong first-quarter demand.”
“This record reflects the strength of our brand, the loyalty of our clients and the exceptional execution of teams across the business,” said John Reed, chief executive officer, as part of the company’s second-quarter earnings release.
For the full first half, net revenues were up 10.7% to $669.8 million, from $604.8 million the same period last year.
Of course, much of its success has to do with its expanded retail footprint which added about a dozen new stores last year.
In the second quarter of this year, it completed three total showroom projects, including two relocations and one renovation. In the first half, through the second quarter, it has completed eight total showroom projects, including one new showroom, six relocations and one renovation.
During the call, Chief Financial Officer Michael Lee said the company is on track to complete 12 to 15 total showroom projects in 2025, consisting of four to six new showroom openings and eight to nine relocations, renovations or expansions.
He added that the company’s long-term strategy is to open five to seven traditional showrooms per year, along with additional Design Studios and showroom relocations.
“Our showroom growth is both disciplined and opportunistic, guided by strong unit economics, operational execution and a clear return framework that supports long-term shareholder value creation.”
He said long term, the company aims to have 165 traditional showrooms and 50 Design Studios across the U.S., which is up from 100 showrooms overall in 29 states (including more than 10 Design Studios).
“Arhaus is one of the few true growth retailers in the high-end home furnishings space, and no other company in our category has the same level of white space opportunity that we do,” Lee said, adding, that the traditional showrooms target at least $10 million in net revenue, “with an average contribution margin of approximately 32% and a payback period of under two years.”
By comparison, he added, Design Studios target lower net revenue, “but higher average contribution margins of approximately 35%, also with a payback of less than two years.”
During the call, the company also discussed its new Arhaus Bath Collection, developed over the past two and a half years by the retailer’s Product Innovation Team. Featuring “vanities, storage pieces crowned with marble and stone, faucets and hardware in antique brass and polished nickel, and Turkish cotton towels,” it will be included in the company’s fall catalog and available online and in select showrooms this fall.
“It’s a powerful reflection of the culture we’ve built at Arhaus: hands-on, purpose-driven and fueled by passion and vision. I’m deeply grateful to the entire team for the incredible work they’ve done to bring this to life,” Reed said.
With all this progress and development, the company also remains profitable with net income of $35 million, or 25 cents per share, compared with $22.2 million, or 16 cents per share, in the second quarter of last year, and first-half income of $40 million, or 28 cents per share, compared with $37.3 million, or 27 cents per share, in the first half of last year.
Of course, much of the company’s continued profitability depends on larger issues such as how it manages tariffs, including the pricing of its finished goods, be it upholstery or case goods.
Here, too, the conference call yielded some insights for analysts, investors and its customers.
Lee noted that the company is planning for an estimated $12 million impact from tariffs for the year, the majority of which he said will impact its second-half results.
Currently, he noted that some 36% of its overall mix and 75% of its upholstery was produced in the U.S., including North Carolina. By year end, he added, the company projects its China sourcing will be around 5% in comparison.
“We continue to monitor the evolving trade landscape, including the most recent tariff announcements,” Lee added. “Thanks to our diversified sourcing model and proactive planning, we believe we are well positioned to navigate this environment. Our teams remain engaged on the ground with key vendors who we have deep relationships with to assess implications and identify mitigation strategies, and we will continue to respond quickly and thoughtfully to future changes.”
“Like many companies, we’ve experienced a highly dynamic and uncertain backdrop this quarter, with shifting tariffs, ongoing macro pressures and broader geopolitical tension, all weighing on the consumer,” Reed added. “These are factors outside our control. What is within our control is how we show up for our clients, and we continue to focus on what we do best, delivering exceptional product, deepening our client relationships and growing the business with discipline.”
Of course, the success will also depend on how the company connects with its consumers in terms of style, value and convenience. Here too the company aims to succeed with a model where it estimates 90% of its clients, across both retail and e-commerce, live within 50 miles of a showroom.
“To expand our client relationships and drive further engagement, we need to be where our clients live. Proximity is key to delivering our high-touch, service-led experience,” Lee added.
Based on these and other factors, including a technology-based distribution network serving its entire customer base, the retailer is projecting success despite challenges ranging from tariffs to ongoing softness in the housing market.
In its outlook for the full year, it projects full-year revenues of $1.29 billion to $1.38 billion, net revenue growth of 1.5% to 8.6% and net income of $48 million to $68 million, compared to $1.27 billion in revenues and $68.5 million in net income last year.
