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Why Arhaus' Showroom Expansion Strategy Still Looks Attractive
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Key Takeaways
ARHS expands its showroom footprint by more than 50% from fiscal 2019 to 2025.
Arhaus opens a new Ashburn showroom and expands its Park Meadows luxury location.
ARHS plans 10 to 14 showroom projects in fiscal 2026 despite softer consumer trends.
Arhaus, Inc. (ARHS - Free Report) continues to focus on its long-term showroom expansion strategy, which management views as a disciplined investment approach with attractive returns and significant white space opportunities. From fiscal 2019 to 2025, the company has expanded its showroom footprint by more than 50%, with locations opened during this period contributing 37% of overall net revenue growth.
Arhaus currently operates 108 showrooms, including a newly opened traditional showroom in Ashburn, Virginia which opened last month. Management highlighted Ashburn as one of the most affluent markets in the country and noted that the location represents a premium lifestyle destination that aligns closely with the company’s target customer base and long-term showroom expansion strategy. The company also completed the expansion of its Park Meadows showroom in Lone Tree, which management identified as an important luxury retail market for it.
Management said the expanded showroom reflects strong local engagement and showroom productivity while creating opportunities to deepen long-term client relationships. It also noted that the larger format enables broader product presentations, expanded design services and a more enhanced showroom experience for customers. Management reiterated confidence in the company’s long-term showroom strategy, emphasizing that physical proximity remains important for driving customer engagement, improving conversion and building long-term client relationships, with showrooms continuing to serve as a key entry point to the brand.
However, Arhaus faced weather-related disruptions, catalog delivery delays and weaker consumer sentiment during the first quarter of fiscal 2026, which reduced selling days and pressured comparable written sales and showroom traffic. Despite these near-term challenges, management reported improving showroom traffic and client engagement toward the end of the quarter and into the fiscal second quarter. ARHS also remains committed to its showroom expansion strategy, with plans to complete approximately 10 to 14 showroom projects in fiscal 2026, including 4 to 6 new showroom openings and 6 to 8 relocations, renovations or expansions as part of its long-term growth strategy.
The Zacks Rundown for ARHS
Shares of ARHS have lost 36.6% in the past three months compared with the industry’s decline of 21.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, ARHS trades at a forward price-to-earnings ratio of 11.25X, lower than the industry’s average of 15.22X. ARHS currently carries a Zacks Rank #4 (Sell).
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ARHS’ current and next-fiscal year earnings has been revised down 4 cents each over the past seven days, to 47 cents and 53 cents per share, respectively. ARHS’ current fiscal-year earnings estimate is expected to remain flat year over year, while the estimate for next fiscal-year earnings implies a roughly 12% year-over-year increase.
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 flaunts 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.
Advance Auto Parts, Inc. (AAP - Free Report) provides automotive aftermarket parts in the United States, Canada, Puerto Rico, the U.S. Virgin Islands, Mexico, and various Caribbean islands. At present, AAP holds a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for AAP’s current fiscal-year sales implies a decline of 0.7%, and earnings for the same imply growth of 22.6%, from the year-ago figures. AAP has delivered a trailing four-quarter earnings surprise of 56%, on average.
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Why Arhaus' Showroom Expansion Strategy Still Looks Attractive
Key Takeaways
Arhaus, Inc. (ARHS - Free Report) continues to focus on its long-term showroom expansion strategy, which management views as a disciplined investment approach with attractive returns and significant white space opportunities. From fiscal 2019 to 2025, the company has expanded its showroom footprint by more than 50%, with locations opened during this period contributing 37% of overall net revenue growth.
Arhaus currently operates 108 showrooms, including a newly opened traditional showroom in Ashburn, Virginia which opened last month. Management highlighted Ashburn as one of the most affluent markets in the country and noted that the location represents a premium lifestyle destination that aligns closely with the company’s target customer base and long-term showroom expansion strategy. The company also completed the expansion of its Park Meadows showroom in Lone Tree, which management identified as an important luxury retail market for it.
Management said the expanded showroom reflects strong local engagement and showroom productivity while creating opportunities to deepen long-term client relationships. It also noted that the larger format enables broader product presentations, expanded design services and a more enhanced showroom experience for customers. Management reiterated confidence in the company’s long-term showroom strategy, emphasizing that physical proximity remains important for driving customer engagement, improving conversion and building long-term client relationships, with showrooms continuing to serve as a key entry point to the brand.
However, Arhaus faced weather-related disruptions, catalog delivery delays and weaker consumer sentiment during the first quarter of fiscal 2026, which reduced selling days and pressured comparable written sales and showroom traffic. Despite these near-term challenges, management reported improving showroom traffic and client engagement toward the end of the quarter and into the fiscal second quarter. ARHS also remains committed to its showroom expansion strategy, with plans to complete approximately 10 to 14 showroom projects in fiscal 2026, including 4 to 6 new showroom openings and 6 to 8 relocations, renovations or expansions as part of its long-term growth strategy.
The Zacks Rundown for ARHS
Shares of ARHS have lost 36.6% in the past three months compared with the industry’s decline of 21.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, ARHS trades at a forward price-to-earnings ratio of 11.25X, lower than the industry’s average of 15.22X. ARHS currently carries a Zacks Rank #4 (Sell).
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ARHS’ current and next-fiscal year earnings has been revised down 4 cents each over the past seven days, to 47 cents and 53 cents per share, respectively. ARHS’ current fiscal-year earnings estimate is expected to remain flat year over year, while the estimate for next fiscal-year earnings implies a roughly 12% year-over-year increase.
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 flaunts 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.
Advance Auto Parts, Inc. (AAP - Free Report) provides automotive aftermarket parts in the United States, Canada, Puerto Rico, the U.S. Virgin Islands, Mexico, and various Caribbean islands. At present, AAP holds a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for AAP’s current fiscal-year sales implies a decline of 0.7%, and earnings for the same imply growth of 22.6%, from the year-ago figures. AAP has delivered a trailing four-quarter earnings surprise of 56%, on average.