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Arhaus (ARHS) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Discretionary· Aug 6, 2026

Source: earnings call transcript

Executive summary

Arhaus Q2 FY26 — Record Revenue and Strong Written Sales Driven by Affluent Consumer Resilience

Arhaus delivered record Q2 FY26 net revenue and strong comparable written sales, driven by resilient affluent consumer spending and effective product strategy. The company is navigating significant cost pressures from tariffs, fuel, and shipping, partially offset by tariff recoveries and a delivery fee increase. Strategic investments in technology and marketing are being accelerated to support long-term growth, with a positive outlook for the upcoming fall selling season.

Highlights

5

  • Generated record net revenue of $385 million, exceeding the high end of guidance.

  • Comparable written sales increased 12.5% in the quarter, reflecting strong client engagement.

  • Gross profit rose 16.1% to $172 million, including a $23.8 million tariff recovery benefit.

  • Adjusted EBITDA increased 16.8% to $70 million, above the high end of guidance.

  • Maintained a strong liquidity position with $226 million in cash and cash equivalents.

Concerns

5

  • SG&A load increased 230 basis points to 30.6% due to strategic investments and increased selling expenses.

  • Gross margin, excluding the tariff benefit, was 40.7%, down 70 basis points YoY, driven by higher fuel and shipping costs.

  • Adjusted EBITDA margin, excluding the tariff benefit, was 14.3%, down 250 basis points YoY, impacted by higher costs and strategic investments.

  • Estimated 2026 tariff impact remains $30 million to $40 million, with $10 million of elevated fuel expense and $10 million of higher shipping costs for the year.

  • Q3 FY26 net income guidance is $8 million to $13 million, reflecting continued cost pressures and investments.

Guidance & targets

CategoryTargetConfidence
Full-year Net Revenue
$1.43 billion to $1.47 billion
high materiality
High
Full-year Comparable Delivered Sales
flat to plus 3%
high materiality
High
Full-year Net Income
$71 million to $80 million
high materiality
High
Full-year Adjusted EBITDA
$160 million to $171 million
high materiality
High
Q3 FY26 Net Revenue
$355 million to $375 million
high materiality
High
Q3 FY26 Comparable Delivered Sales
minus 1% to plus 5%
high materiality
High
Q3 FY26 Net Income
$8 million to $13 million
high materiality
High
Q3 FY26 Adjusted EBITDA
$26 million to $34 million
high materiality
High
Incremental Investments from Tariff Recovery
$7 million to $10 million
medium materiality
High
Fuel Expense Impact
approximately $10 million
medium materiality
High
Higher Shipping Costs
approximately $10 million
medium materiality
High
Remaining Tariff Benefit to Adjusted EBITDA
approximately $10 million
medium materiality
High
Q3/Q4 Tariff Flow-Through Benefit
$5 million to $7 million
medium materiality
Medium
Annualized Run Rate Savings from TMS
$4 million to $5 million
medium materiality
High
Annualized Run Rate Benefit from Delivery Fee Increase
$5 million to $6 million
medium materiality
High
POS System Pull Forward P&L Impact
$2 million to $3 million
medium materiality
High
IT Additional Resources P&L Impact
$2 million to $3 million
medium materiality
High

Risks & headwinds

Dynamic broader environment ongoing

unquantified

Mitigation:Focused on factors within control: driving demand, improving conversion, managing costs, building scalable business.

Tariff impact FY26

Estimated $30 million to $40 million for 2026

Mitigation:Diversified global sourcing strategy, vendor negotiations, pricing actions, ongoing operational efficiencies.

Elevated fuel and shipping costs into Q3 and Q4

Approximately $10 million of elevated fuel expense and $10 million of higher shipping costs for the year

Mitigation:Delivery fee increase in June, transportation productivity initiatives (TMS benefits), disciplined expense management.

Strategic investments near-term expense pressure near-term

SG&A load increased 230 basis points to 30.6% in Q2

Mitigation:Investments are deemed important for strengthening client experience, improving scalability, and supporting long-term profitable growth.

Macroeconomic uncertainty and variability in written to delivered sales conversion ongoing

unquantified

Mitigation:Outlook supported by healthy product availability, strength across interior design/trade channels, new product introductions, and marketing efforts.

Ongoing labor and inflationary pressures ongoing

unquantified

Mitigation:Preserving economy and flexibility as tariff environment evolves.

What to watch in Q3 FY26

Fall Catalog & New Product Sales

Q3 FY26 / Fall selling season
Current just getting started with it
Target Strong sales, continued resonance with clients

Why it matters

The 40th Anniversary Fall Catalog and new product introductions are expected to be key drivers for demand and revenue in the important fall selling season.

When we launched the September catalog, we think it's by far the best ever. I mean, the most the best looking catalog, but absolutely the best lineup of new products we truly have ever had. And we think it's going to carry us through the certainly third, fourth quarter into next year for sure.

Find out whether ARHS delivers this. Inve re-checks your case every morning.

Q&A highlights

How much of the Q2 demand acceleration was driven by new customers, pricing adjustments, or mix towards higher-value projects?

Management stated no meaningful change in new vs. existing customer mix, but saw larger sales per customer due to product assortment and home renovation trends. Traffic rebounded significantly from Q1, with strong average order value and units per transaction, particularly for large sales ($10k+, $25k+, $100k+).

“looking at things like order, average order value, units per transaction. You know, those all continue to perform quite strong. And then even looking at order sizes and order counts for large sales, we were very happy with Q2 looking at orders above 10%. orders above 25,000, orders above 100,000.”

asked by Jonathan Matuszewski · answered by Michael Lee

2 min read 5 chapters

Detailed narrative

Affluent Consumer Resilience & Demand Channels

The high-end consumer continues to demonstrate resilience, supported by a healthy U.S. economy and positive wealth effects. Arhaus observed no meaningful trade-down, with clients investing in larger, higher-value home projects. Demand was strong across core customers, interior design services, and the relaunched trade program, which has added thousands of new members monthly. This diversified demand model, coupled with differentiated products, positions the company for sustainable long-term growth.

Product Strategy & Innovation

Arhaus's philosophy of responsibly sourced, handcrafted, and heirloom-quality furnishings continues to drive client demand. The company saw strength across its product assortment, including upholstery, outdoor, and the 'collected home' vintage-inspired collection. New product introductions and extensive customization capabilities resonated well. The upcoming 40th Anniversary Fall Catalog, with more than double the household reach, and a September semi-annual sale are expected to drive the important fall selling season.

Showroom Expansion & Performance

Showrooms remain a critical competitive advantage, driving awareness, engagement, and conversion. During Q2, Arhaus opened a new 20,000 sq ft showroom in Ashburn, VA, relocated its Westlake, OH showroom, expanded Park Meadows, CO, and opened a 35,000 sq ft relocated Charlotte, NC showroom. For FY26, the company expects 10-14 total showroom projects, including 4-6 new openings and 6-8 relocations/expansions, with new openings performing ahead of expectations.

Tariff Recovery & Strategic Reinvestment

Arhaus recognized a $23.8 million benefit in cost of goods sold from IEPA tariff recovery, with $15.5 million related to inventory sold prior to April 2026. The total requested refund was $37.8 million, with $32.7 million recognized as a receivable and $5.1 million received in cash. The company is reinvesting $7-10 million of this recovery into strategic growth initiatives, including expanding catalog distribution and accelerating technology implementations, while also offsetting approximately $20 million in elevated fuel and shipping costs.

Operational Excellence & Technology Investments

The company is focused on enhancing its operating model through technology. It successfully launched its Transportation Management System (TMS) in Q2, and its ERP and OMS implementations are on track for a February 2027 go-live. Notably, the implementation of a new modern POS platform is being pulled forward to Q4 2026, ahead of schedule, to simplify the technology roadmap, accelerate legacy system transition, and equip showroom teams with a more intuitive selling platform.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.