Luxury furniture retailer Arhaus (NASDAQ: ARHS) met Wall Street’s revenue expectations in Q1 CY2026, but sales were flat year on year at $314.3 million. On the other hand, next quarter’s revenue guidance of $360 million was less impressive, coming in 2% below analysts’ estimates. Its GAAP profit of $0.02 per share was in line with analysts’ consensus estimates.
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Arhaus (ARHS) Q1 CY2026 Highlights:
- Revenue: $314.3 million vs analyst estimates of $314.4 million (flat year on year, in line)
- EPS (GAAP): $0.02 vs analyst estimates of $0.02 (in line)
- Adjusted EBITDA: $18 million vs analyst estimates of $16.54 million (5.7% margin, 8.8% beat)
- The company reconfirmed its revenue guidance for the full year of $1.45 billion at the midpoint
- EBITDA guidance for the full year is $155.5 million at the midpoint, above analyst estimates of $153.5 million
- Operating Margin: 0.7%, down from 1.7% in the same quarter last year
- Free Cash Flow was -$26.58 million, down from $18.89 million in the same quarter last year
- Locations: 107 at quarter end, up from 103 in the same quarter last year
- Same-Store Sales fell 5.7% year on year (-1.5% in the same quarter last year)
- Market Capitalization: $1.07 billion
Company Overview
With an aesthetic that features natural materials such as reclaimed wood, Arhaus (NASDAQ: ARHS) is a high-end furniture retailer that sells everything from sofas to rugs to bookcases.
Revenue Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $1.38 billion in revenue over the past 12 months, Arhaus is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
As you can see below, Arhaus’s sales grew at a sluggish 2.4% compounded annual growth rate over the last three years.
This quarter, Arhaus’s $314.3 million of revenue was flat year on year and in line with Wall Street’s estimates. Company management is currently guiding for flat sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 6.5% over the next 12 months, an acceleration versus the last three years. This projection is noteworthy and indicates its newer products will spur better top-line performance.
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Store Performance
Number of Stores
The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.
Arhaus sported 107 locations in the latest quarter. Over the last two years, it has opened new stores at a rapid clip by averaging 8.9% annual growth, among the fastest in the consumer retail sector. This gives it a chance to scale into a mid-sized business over time.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
Arhaus’s demand has been shrinking over the last two years as its same-store sales have averaged 1.7% annual declines. This performance is concerning - it shows Arhaus artificially boosts its revenue by building new stores. We’d like to see a company’s same-store sales rise before it takes on the costly, capital-intensive endeavor of expanding its store base.
In the latest quarter, Arhaus’s same-store sales fell by 5.7% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.
Key Takeaways from Arhaus’s Q1 Results
We were impressed by how significantly Arhaus blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS was in line with Wall Street’s estimates. On the other hand, its EBITDA guidance for next quarter missed and its revenue guidance for next quarter fell short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock remained flat at $7.64 immediately after reporting.
So do we think Arhaus is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
