Arhaus saw a mixed third quarter, with the market reacting negatively to results that missed Wall Street’s revenue and profit expectations despite year-on-year sales growth. Management pointed to strong demand from affluent clients and successful new product introductions as key drivers. CEO John Reed highlighted that "comparable written sales increased 13.9% year-over-year," attributing this to expanded marketing efforts, especially the fall catalog, and a pipeline of new, customizable products. However, higher transportation, fuel, and showroom occupancy costs weighed on profitability.
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Arhaus (ARHS) Q3 2026 highlights:
- Revenue $368.1 million vs S&P analyst consensus of $370.6 million (6.8% year-on-year growth, 0.7% miss)
- Adjusted EPS $0.05 vs S&P analyst consensus of $0.09 (41.2% miss)
- Adjusted EBITDA $27.39 million vs analyst estimates of $31.86 million (7.4% margin, 14.1% miss)
- Revenue guidance $408 million at the midpoint for Q4 2026, above analyst estimates of $391.8 million
- EBITDA guidance $165.5 million at the midpoint for the full year, in line with analyst expectations
- Operating margin 2.7%, down from 4.8% in the same quarter last year
- Locations 109 at quarter end, up from 103 in the same quarter last year
- Same-store sales rose 2.6% year on year (4.1% in the same quarter last year)
- Market capitalization $2.01 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from Arhaus’s Q3 earnings call
- Jonathan Matuszewski (Jefferies LLC) asked about new customer demographics and whether recent growth signals a shift toward more affluent buyers. CEO John Reed said growth was broad-based, with increased activity in both mature and new markets, and CFO Michael Lee noted new customers had 30% higher average order value than existing ones.
- Jake Nivasch (Guggenheim Securities) questioned the effectiveness of expanded catalog marketing and whether brand awareness uplift was similar in established and new markets. Reed responded that catalog-driven gains were strong across geographies, and product launches also played a key role in boosting demand.
- Peter Keith (Piper Sandler) inquired about catalog costs and how investments are being allocated between mature and emerging markets. Lee explained that expenses are recognized when catalogs are shipped, and noted a balanced approach with heavier targeting in newer regions like California.
- Adam (Morgan Stanley, for Simeon Gutman) asked if customers were buying more complete room packages or single pieces. Reed said both grew, but larger transactions and multi-piece orders saw notable increases, supported by an uptick in special order sales.
- Cristina Fernández (Telsey Advisory Group) requested clarity on the balance between reinvesting demand-driven gains versus allowing them to flow to the bottom line. Lee emphasized a balanced approach, with a bias toward investment in growth, but underscored the need for operational execution and supply chain management.
Catalysts in upcoming quarters
In the coming quarters, the StockStory team will be watching (1) the success of expanded catalog and marketing initiatives in sustaining new customer growth, (2) the ramp-up and profitability impact of ongoing digital and e-commerce investments, and (3) progress on transportation and supply chain efficiency measures. Additionally, we will monitor how quickly margin pressures ease as new showrooms mature and cost-saving technologies are fully implemented.
Arhaus currently trades at $13.84, up from $13.15 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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