Arhaus (ARHS) Morgan Stanley Global Consumer & Retail Conference 2025 summary

Business overview and differentiation

• Operates as a high-end, design-led furnishings brand with a resilient model and affluent, engaged clientele.

• Over 90% of products are exclusive, designed in-house, and sourced through long-term artisan partnerships.

• Omnichannel approach includes 100+ showrooms, e-commerce, in-home design, and a growing trade business.

• Free interior design services drive order values four times higher than non-designer transactions.

• Trade channel, serving third-party designers, is a major growth area.

Recent performance and demand drivers

• Q3 saw strong growth, with July up 15.7% in demand and September achieving record sales and customization.

• Fall 2025 collection and catalog launch drove significant upside, with record newness and trade business.

• Customization and large assortment, including 600+ fabrics, are key differentiators.

• Demand is less tied to housing turnover, more to wealth effect and home equity among affluent clients.

• Healthy replacement and renovation cycles continue despite lower housing turnover.

Digital transformation and AI initiatives

• Undergoing an $30M digital transformation to modernize tech stack, improve scalability, and enhance EBITDA margins.

• AI is integrated as an enabler for personalized experiences, product recommendations, and operational efficiency.

• New ERP, transportation, and order management systems to drive ROI, with go-live targeted for Q1 2027.

• Expected benefits include $8M/year SG&A savings by 2028, $4-5M/year transportation savings, and improved internal controls.

• Strong executive sponsorship, dedicated teams, and robust change management to minimize execution risk.