Arhaus (ARHS) Q1 2026 earnings summary

Executive summary

• Achieved record first-quarter net revenue of $314.3 million, up 0.9% year-over-year, despite macroeconomic headwinds, weather disruptions, and delayed catalog release, with showroom growth offsetting declines in comparable sales.

• Net and comprehensive income fell to $2.2 million, down 54.5% year-over-year, reflecting increased costs and a higher effective tax rate.

• Adjusted EBITDA was $18 million (5.7% of net revenue), slightly down from the prior year.

• Maintained a strong, debt-free balance sheet and ended Q1 with $177 million in cash, down 30% from year-end due to a $49 million special dividend.

• Reaffirmed full-year 2026 guidance and continued focus on long-term strategy, including product innovation, showroom expansion, infrastructure investment, and omni-channel growth.

Financial highlights

• Gross margin was $114 million (36.4% of revenue), down 1% year-over-year, impacted by higher product, occupancy, and fuel costs.

• SG&A expenses rose 1.9% to $112 million, with SG&A as a percentage of revenue at 35.7%.

• Comparable delivered sales decreased 1.7%; comparable written sales declined 5.7%.

• Net merchandise inventory increased 9% to $369 million, reflecting tariff impacts and inventory investments.

• Free cash flow was negative $25.6 million for the quarter, compared to positive $18.9 million a year ago.

Outlook and guidance

• Full-year 2026 guidance: net revenue $1.43–$1.47 billion (3.7%–6.6% growth), comparable delivered sales flat to +3%, net income $66–$75 million, adjusted EBITDA $150–$161 million.

• Q2 2026 guidance: net revenue $350–$370 million, comparable delivered sales -5% to flat, net income $19–$24 million, adjusted EBITDA $40–$49 million.

• 4–6 new showroom openings and 10–14 total showroom projects planned for 2026.

• Guidance assumes continued macro uncertainty, with improvement expected in H2 driven by inventory availability, promotional activity, and strong design/trade channels.

• No tariff refund benefits included in outlook; will update if clarity is gained.