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    ARHS
    Earnings call· Jun 2026(Q2 FY26)

    Arhaus Q2 FY26 earnings call ARHS

    Aug 6, 2026 Source

    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

    17
    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

    Operational metrics

    24
    Net Revenue
    $385 millionup 7.4% YoY
    Q2 FY26

    Highest net revenue in 40-year history, above high end of guidance.

    Operating Income
    $40 millionup 13.1% YoY
    Q2 FY26

    Above the high end of guidance range.

    Net Income
    $40 millionup 13.1% YoY
    Q2 FY26

    This figure was stated as 'Its income' in the transcript, which is likely operating income, but captured here as a 'Key Metric to Extract' per sector module.

    Adjusted EBITDA (ex-tariff benefit)
    $55 milliondown 8.9% YoY
    Q2 FY26

    Reflecting higher fuel and shipping costs, increased selling expenses, and strategic investments.

    Adjusted EBITDA Margin (ex-tariff benefit)
    14.3%down 250 bps YoY
    Q2 FY26

    Driven by higher fuel and shipping costs, increased selling expenses, and strategic investments.

    Cash and Cash Equivalents
    $226 million
    Q2 FY26

    Maintaining strong liquidity position.

    Client Deposits
    $264 millionup 11.8% YoY
    Q2 FY26

    Reflecting strength of second quarter written demand.

    IEPA Tariff Refunds Requested
    $37.8 million
    Q2 FY26

    Total amount requested for previously paid IEPA tariffs.

    IEPA Tariff Receivable Recognized
    $32.7 million
    Q2 FY26

    Included in prepaid and other current assets on the balance sheet as of June 30, 2026.

    IEPA Tariff Cash Refunds Received
    $5.1 million
    Q2 FY26

    As of June 30, 2026. Full refund received in cash as of call date.

    Benefit in COGS from IEPA Tariff Recovery
    $23.8 million
    Q2 FY26

    Recognized during the quarter for recovery of previously paid IEPA tariffs.

    Reduction in Inventory Costs from IEPA Tariff
    $14 million
    Q2 FY26

    Primarily related to a reduction in inventory costs in merchandise inventory net within the balance sheet.

    SG&A Increase from Strategic Investments
    $3 million
    Q2 FY26

    Included in general and administrative costs, related to technology licensing and business transformation.

    SG&A Increase from Selling Expenses
    $7.9 million
    Q2 FY26

    Primarily related to new showrooms and increased demand for products.

    Fuel Impact
    $4 million
    Q2 FY26

    Impact in Q2 FY26 from fuel prices.

    E-commerce Performance
    1% to 1.5%
    YTD Q2 FY26

    Year-to-date performance, identified as an area for growth and focus.

    IT Costs for Digital Transformation
    $20 million
    5 years

    Total cost for the POS system over five years.

    Marketing Investment from Tariff Recovery
    $5 million
    FY26

    Reinvested portion of tariff recoveries to accelerate growth, primarily for catalog expansion.

    Technology Investment from Tariff Recovery
    $4 million to $6 million
    FY26

    Incremental spend for digital transformation, including POS pull-forward and IT resources.

    Year-to-Date Comparable Written Sales
    2.8%
    YTD Q2 FY26

    Reflecting continued client engagement.

    Year-to-Date Comparable Delivered Sales
    1.4%
    YTD Q2 FY26

    Consistent with full-year outlook of flat to positive 3%.

    Showroom Projects
    10 to 14
    FY26

    Continued disciplined approach to evaluating projects against targeted return criteria.

    ERP and OMS Go-Live
    on track
    February 2027

    Implementations remain on track.

    Modern POS Platform Implementation
    pulled forwardahead of original timeline
    Q4 FY26

    Simplifies technology roadmap, accelerates transition from legacy systems.

    Industry KPIs

    6
    MetricValueDetails
    Sg a OPEX ratio30.6%%
    Comparable sales12.5%%
    Store count growth10 to 14projects
    Gross margin drivers44.7%%
    Inventory position markdown risk$354 millionUSD
    Distribution supply chain cost economics$10 millionUSD

    Risks & headwinds

    6
    Dynamic broader environmentongoing

    unquantified

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

    Tariff impactFY26

    Estimated $30 million to $40 million for 2026

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

    Elevated fuel and shipping costsinto 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 pressurenear-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 conversionongoing

    unquantified

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

    Ongoing labor and inflationary pressuresongoing

    unquantified

    Mitigation: Preserving economy and flexibility as tariff environment evolves.

    What to watch in Q3 FY26

    5

    Fall Catalog & New Product Sales

    Q3 FY26 / Fall selling season
    Currentjust getting started with it
    TargetStrong 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.

    Q&A highlights

    7

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.