Arhaus (ARHS) Q1 2025 earnings summary

Executive summary

• Net revenue for Q1 2025 increased 5.5% year-over-year to $311–$311.4 million, driven by higher demand in both showroom and e-commerce channels.

• Net and comprehensive income declined to $4.9–$5 million, reflecting higher SG&A expenses and lower gross margin percentage.

• Gross margin rose slightly in dollars but decreased as a percentage of revenue to 37.1% from 39.0% year-over-year, mainly due to higher occupancy and product costs.

• Adjusted EBITDA was $18.6–$19 million (6.0% of revenue), down from $29.1 million (9.9%) in the prior year quarter.

• The company operated 103 showrooms as of March 31, 2025, with five showroom projects completed in Q1.

Financial highlights

• Net revenue: $311–$311.4 million, up 5.5% year-over-year, near the midpoint of guidance.

• Gross margin: $115.6–$116 million, up 0.4% year-over-year; gross margin rate fell 190 bps to 37.1%.

• SG&A expenses rose 13.9% year-over-year to $110–$110.1 million, driven by warehouse, marketing, and new showroom costs.

• Net income was $4.9–$5 million (1.6% of revenue), down from $15.1 million (5.1%) in Q1 2024.

• Adjusted EBITDA margin was 6.0% for the quarter, down from 9.9% in the prior year.

Outlook and guidance

• Full-year 2025 net revenue guidance revised to $1.29–$1.38 billion, with comparable growth of -5% to 1.5%.

• Adjusted EBITDA guidance lowered to $123–$145 million; net income expected between $48–$68 million.

• Q2 2025 net revenue expected at $320–$350 million, with comparable growth of -2% to 5%.

• Guidance includes $10 million estimated impact from tariffs, mainly in the second half of the year.

• 12 to 15 showroom projects planned for 2025, with 4 to 6 new showrooms and reduced China sourcing to ~1% by Q4.