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Arhaus Q1 revenue hit a record $314.3M, while comparable delivered sales fell 1.7%.
ARHS gross margin contracts 70 bps as higher fuel and showroom costs pressured profits.
Arhaus maintains FY26 outlook and plans 10-14 showroom projects during the year.
Arhaus, Inc. (ARHS - Free Report) posted first-quarter fiscal 2026 with top line slightly surpassing the Zacks Consensus Estimate and bottom line meeting the same. The top line showed a modest year-over-year increase, while the bottom line declined compared with the prior-year period.
ARHS Q1 Key Performance Insights
The company reported earnings of 2 cents per share, which were in line with the Zacks Consensus Estimate. The bottom line fell 33.3% from 3 cents in the prior-year quarter.
Net revenues rose 0.9% year over year to $314.3 million from $311.4 million and edged past the Zacks Consensus Estimate of $313 million by 0.6%. The performance was achieved despite ongoing tariff uncertainty, macroeconomic volatility and geopolitical disruption.
Comparable delivered sales decreased 1.7%. Results during the quarter were impacted by severe weather conditions, a delayed catalog and broader consumer softness tied to macroeconomic uncertainty, which pressured delivery volumes. Comparable written sales declined 5.7%, reflecting weather-related disruptions in key markets that reduced traffic during major promotional periods. More than half of the company’s showrooms experienced temporary closures during the quarter due to adverse weather conditions.
At the end of the quarter, the company operated 107 showrooms across 31 states. In April 2026, the company opened a new traditional showroom in Ashburn, and in early May completed the expansion of its Park Meadows showroom in Colorado.
ARHS’ Margin & Cost Performance
Gross profit dipped 1% year over year to $114.4 million from $115.6 million in the prior-year period, and gross margin contracted 70 basis points to 36.4% from 37.1% in the prior-year period. Management attributed the decline primarily to higher fuel prices and showroom occupancy costs, each creating a meaningful headwind versus last year.
Selling, general and administrative expenses increased 1.9% year over year to $112.2 million from $110.1 million in the prior-year period, due to strategic investments aimed at supporting long-term growth, including supply chain and technology initiatives. As a percentage of net revenue, SG&A increased 40 basis points to 35.7% from 35.3% in the prior-year period.
Operating income fell 60.6% to $2.1 million from $5.4 million a year ago, reflecting the combination of lower gross profit and higher operating expenses.
Adjusted EBITDA totaled $18 million, declining 3.1% from $18.6 million in the prior-year period, and adjusted EBITDA margin declined 30 basis points year over year to 5.7% from 6% in the prior-year period, primarily reflecting seasonal margin pressure during the first quarter, which typically carries lower net revenue and reduced operating leverage.
Arhaus’ Financial Position
As of March 31, 2026, the company had cash and cash equivalents of $177 million, with no long- term debt, reflecting a 30.1% decline from Dec. 31, 2025, primarily due to the payment of a $49 million special cash dividend in March.
Net merchandise inventory increased 9% to $369 million, while client deposits rose 15% to $271 million. Net cash used in operating activities totaled $10 million during the quarter, while investing activities used $16 million, including $13 million in company-funded capital expenditures. The company also paid a special cash dividend of 35 cents per share on March 31, 2026.
Arhaus Reaffirms 2026 Outlook
The company maintained its fiscal 2026 outlook, expecting net revenues between $1.43 billion and $1.47 billion, representing year-over-year growth of 3.7% to 6.6%. Management projects comparable delivered sales ranging from flat to up 3%, net income of $66 million to $75 million and adjusted EBITDA of $150 million to $161 million.
For fiscal 2026, the company expects to complete approximately 10 to 14 showroom projects, including four to six new showroom openings and six to eight relocations, renovations or expansions. representing Net Unit Growth of mid-single-digits for the year.
For the second quarter of fiscal 2026, the company expects continued near-term demand pressure amid macroeconomic and geopolitical uncertainty. For the same quarter, net revenue is projected to be between $350 million and $370 million, reflecting a year-over-year decline of 2.4% to growth of 3.2%, with comparable delivered sales ranging from down 5% to flat. The company also expects net income in the range of $19 million to $24 million and adjusted EBITDA between $40 million and $49 million.
Shares of this Zacks Rank 4 (Sell) company have plunged 28.7% in the past three months compared with the industry’s 17.3% decline.
Image Source: Zacks Investment Research
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The Zacks Consensus Estimate for WOOF’s current fiscal-year sales and earnings indicates growth of 1% and 58.3%, respectively, from the year-ago figures. WOOF delivered a trailing four-quarter earnings surprise of 275%, on average.
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Arhaus Q1 Earnings Meet Estimates, Gross Margin Contracts
Key Takeaways
Arhaus, Inc. (ARHS - Free Report) posted first-quarter fiscal 2026 with top line slightly surpassing the Zacks Consensus Estimate and bottom line meeting the same. The top line showed a modest year-over-year increase, while the bottom line declined compared with the prior-year period.
ARHS Q1 Key Performance Insights
The company reported earnings of 2 cents per share, which were in line with the Zacks Consensus Estimate. The bottom line fell 33.3% from 3 cents in the prior-year quarter.
Arhaus, Inc. Price, Consensus and EPS Surprise
Arhaus, Inc. price-consensus-eps-surprise-chart | Arhaus, Inc. Quote
Net revenues rose 0.9% year over year to $314.3 million from $311.4 million and edged past the Zacks Consensus Estimate of $313 million by 0.6%. The performance was achieved despite ongoing tariff uncertainty, macroeconomic volatility and geopolitical disruption.
Comparable delivered sales decreased 1.7%. Results during the quarter were impacted by severe weather conditions, a delayed catalog and broader consumer softness tied to macroeconomic uncertainty, which pressured delivery volumes. Comparable written sales declined 5.7%, reflecting weather-related disruptions in key markets that reduced traffic during major promotional periods. More than half of the company’s showrooms experienced temporary closures during the quarter due to adverse weather conditions.
At the end of the quarter, the company operated 107 showrooms across 31 states. In April 2026, the company opened a new traditional showroom in Ashburn, and in early May completed the expansion of its Park Meadows showroom in Colorado.
ARHS’ Margin & Cost Performance
Gross profit dipped 1% year over year to $114.4 million from $115.6 million in the prior-year period, and gross margin contracted 70 basis points to 36.4% from 37.1% in the prior-year period. Management attributed the decline primarily to higher fuel prices and showroom occupancy costs, each creating a meaningful headwind versus last year.
Selling, general and administrative expenses increased 1.9% year over year to $112.2 million from $110.1 million in the prior-year period, due to strategic investments aimed at supporting long-term growth, including supply chain and technology initiatives. As a percentage of net revenue, SG&A increased 40 basis points to 35.7% from 35.3% in the prior-year period.
Operating income fell 60.6% to $2.1 million from $5.4 million a year ago, reflecting the combination of lower gross profit and higher operating expenses.
Adjusted EBITDA totaled $18 million, declining 3.1% from $18.6 million in the prior-year period, and adjusted EBITDA margin declined 30 basis points year over year to 5.7% from 6% in the prior-year period, primarily reflecting seasonal margin pressure during the first quarter, which typically carries lower net revenue and reduced operating leverage.
Arhaus’ Financial Position
As of March 31, 2026, the company had cash and cash equivalents of $177 million, with no long- term debt, reflecting a 30.1% decline from Dec. 31, 2025, primarily due to the payment of a $49 million special cash dividend in March.
Net merchandise inventory increased 9% to $369 million, while client deposits rose 15% to $271 million. Net cash used in operating activities totaled $10 million during the quarter, while investing activities used $16 million, including $13 million in company-funded capital expenditures. The company also paid a special cash dividend of 35 cents per share on March 31, 2026.
Arhaus Reaffirms 2026 Outlook
The company maintained its fiscal 2026 outlook, expecting net revenues between $1.43 billion and $1.47 billion, representing year-over-year growth of 3.7% to 6.6%. Management projects comparable delivered sales ranging from flat to up 3%, net income of $66 million to $75 million and adjusted EBITDA of $150 million to $161 million.
For fiscal 2026, the company expects to complete approximately 10 to 14 showroom projects, including four to six new showroom openings and six to eight relocations, renovations or expansions. representing Net Unit Growth of mid-single-digits for the year.
For the second quarter of fiscal 2026, the company expects continued near-term demand pressure amid macroeconomic and geopolitical uncertainty. For the same quarter, net revenue is projected to be between $350 million and $370 million, reflecting a year-over-year decline of 2.4% to growth of 3.2%, with comparable delivered sales ranging from down 5% to flat. The company also expects net income in the range of $19 million to $24 million and adjusted EBITDA between $40 million and $49 million.
Shares of this Zacks Rank 4 (Sell) company have plunged 28.7% in the past three months compared with the industry’s 17.3% decline.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
Petco Health & Wellness Company, Inc. (WOOF - Free Report) operates as a pet specialty retailer, focusing on enhancing the lives of pets, pet parents, and its Petco partners in the United States, Mexico, Puerto Rico, and Chile. At present, WOOF sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WOOF’s current fiscal-year sales and earnings indicates growth of 1% and 58.3%, respectively, from the year-ago figures. WOOF delivered a trailing four-quarter earnings surprise of 275%, on average.
Five Below, Inc. (FIVE - Free Report) operates as a specialty value retailer in the United States. At present, Five Below carries a Zacks Rank of 1.
The Zacks Consensus Estimate for FIVE’s current fiscal-year sales and earnings implies growth of 11.3% and 19.2%, respectively, from the year-ago figures. FIVE delivered a trailing four-quarter earnings surprise of 63.4%, on average.
Tapestry, Inc. (TPR - Free Report) provides accessories and lifestyle brand products in North America, Greater China, the rest of Asia, and internationally. At present, TPR flaunts a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for TPR’s current fiscal-year sales and earnings implies growth of 11.2% and 32.2%, respectively, from the year-ago figures. TPR has delivered a trailing four-quarter earnings surprise of 15.6%, on average.