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Can Arhaus Offset Tariff Headwinds With Domestic Manufacturing?
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Key Takeaways
ARHS estimates fiscal 2026 tariff-related impacts of $30 million to $40 million.
Arhaus highlights domestic upholstery sourcing as a key operational advantage.
ARHS uses global artisan partnerships and sourcing flexibility to support pricing.
Arhaus, Inc. (ARHS - Free Report) is leveraging its diversified sourcing strategy and substantial domestic manufacturing footprint to position itself relatively well across different policy environments. Based on current policy assumptions, management continues to estimate fiscal 2026 tariff-related impacts of approximately $30 million to $40 million. The estimate also reflects mitigation efforts through vendor negotiations, sourcing adjustments and operational efficiencies. Management also noted that the company will continue monitoring pricing conditions and plans to respond quickly as the operating environment evolves.
The company highlighted its custom upholstery business as an important competitive advantage, noting that the majority of upholstery production is sourced domestically. Management stated that this domestic sourcing approach provides greater control over product quality, costs and lead times while also enhancing the overall customer experience. The company believes these capabilities help strengthen operational flexibility and support more consistent execution across its upholstery category.
Beyond domestic production, Arhaus also utilizes its vertically integrated sourcing model that includes direct partnerships with artisans across North America, Europe and South Asia, many of which have been maintained for decades through responsible sourcing practices and traditional craftsmanship techniques. The company’s unique sourcing model allows it to remain highly competitive on pricing in many cases. Overall, Arhaus appears relatively well-positioned to navigate tariff uncertainty through domestic upholstery production, diversified sourcing partnerships and operational flexibility, helping protect margins.
The Zacks Rundown for ARHS
Shares of ARHS have lost 23.4% in the past three months compared with the industry’s decline of 18.3%. ARHS currently carries a Zacks Rank #4 (Sell).
Image Source: Zacks Investment Research
From a valuation standpoint, ARHS trades at a forward price-to-earnings ratio of 12.74X, lower than the industry’s average of 15.66X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ARHS’ current fiscal year earnings implies a 2.1% year-over-year decline, while the same for next fiscal year earnings implies a 13.3% year-over-year increase.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
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 sports a Zacks Rank of 1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TPR’s current fiscal-year sales and earnings implies growth of 13.2% and 36.3%, respectively, from the year-ago figures. TPR has delivered a trailing four-quarter earnings surprise of 15.6%, on average.
Victoria’s Secret & Co. (VSCO - Free Report) operates as a specialty retailer of women's intimate apparel and other apparel and beauty products worldwide. At present, VSCO carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Victoria's Secret’s current fiscal-year sales and earnings indicates growth of 6.2% and 16.3%, respectively, from the year-ago figures. VSCO delivered a trailing four-quarter earnings surprise of 55.1%, on average.
Urban Outfitters, Inc. (URBN - Free Report) offers lifestyle products and services in the United States and internationally. At present, URBN carries a Zacks Rank of 2.
The Zacks Consensus Estimate for URBN’s current fiscal-year sales and earnings implies growth of 8.5% and 9.7%, respectively, from the year-ago figures. URBN has delivered a trailing four-quarter earnings surprise of 12.2%, on average.
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Can Arhaus Offset Tariff Headwinds With Domestic Manufacturing?
Key Takeaways
Arhaus, Inc. (ARHS - Free Report) is leveraging its diversified sourcing strategy and substantial domestic manufacturing footprint to position itself relatively well across different policy environments. Based on current policy assumptions, management continues to estimate fiscal 2026 tariff-related impacts of approximately $30 million to $40 million. The estimate also reflects mitigation efforts through vendor negotiations, sourcing adjustments and operational efficiencies. Management also noted that the company will continue monitoring pricing conditions and plans to respond quickly as the operating environment evolves.
The company highlighted its custom upholstery business as an important competitive advantage, noting that the majority of upholstery production is sourced domestically. Management stated that this domestic sourcing approach provides greater control over product quality, costs and lead times while also enhancing the overall customer experience. The company believes these capabilities help strengthen operational flexibility and support more consistent execution across its upholstery category.
Beyond domestic production, Arhaus also utilizes its vertically integrated sourcing model that includes direct partnerships with artisans across North America, Europe and South Asia, many of which have been maintained for decades through responsible sourcing practices and traditional craftsmanship techniques. The company’s unique sourcing model allows it to remain highly competitive on pricing in many cases. Overall, Arhaus appears relatively well-positioned to navigate tariff uncertainty through domestic upholstery production, diversified sourcing partnerships and operational flexibility, helping protect margins.
The Zacks Rundown for ARHS
Shares of ARHS have lost 23.4% in the past three months compared with the industry’s decline of 18.3%. ARHS currently carries a Zacks Rank #4 (Sell).
Image Source: Zacks Investment Research
From a valuation standpoint, ARHS trades at a forward price-to-earnings ratio of 12.74X, lower than the industry’s average of 15.66X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for ARHS’ current fiscal year earnings implies a 2.1% year-over-year decline, while the same for next fiscal year earnings implies a 13.3% year-over-year increase.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
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 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 TPR’s current fiscal-year sales and earnings implies growth of 13.2% and 36.3%, respectively, from the year-ago figures. TPR has delivered a trailing four-quarter earnings surprise of 15.6%, on average.
Victoria’s Secret & Co. (VSCO - Free Report) operates as a specialty retailer of women's intimate apparel and other apparel and beauty products worldwide. At present, VSCO carries a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Victoria's Secret’s current fiscal-year sales and earnings indicates growth of 6.2% and 16.3%, respectively, from the year-ago figures. VSCO delivered a trailing four-quarter earnings surprise of 55.1%, on average.
Urban Outfitters, Inc. (URBN - Free Report) offers lifestyle products and services in the United States and internationally. At present, URBN carries a Zacks Rank of 2.
The Zacks Consensus Estimate for URBN’s current fiscal-year sales and earnings implies growth of 8.5% and 9.7%, respectively, from the year-ago figures. URBN has delivered a trailing four-quarter earnings surprise of 12.2%, on average.