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From Home Furnishing Business
ARHAUS Announces 2nd Quarter 2023 Results Financial
August 9,
2023 by HFBusiness Staff in Business Strategy, Industry 
John Reed, co-founder and CEO, commented, “The second quarter of 2023 marks another quarter of exceptional demand comparable growth, up 11.6%. In July, our demand comparable growth was up high-single-digits. We also had another quarter of very strong earnings, despite lower than expected net revenue in the quarter.”
“Net revenue was lower due to delivery delays as we scale our distribution and IT systems in response to the rapid and substantial growth we have experienced over the past few years.”
“We continue to execute on our Showroom expansion this year, adding three new Showrooms during the second quarter in Naperville, Illinois, Topanga, California and Grapevine, Texas, and we are very pleased with the strong performance of our new Showrooms. Last week we opened a new Showroom in Peabody, Massachusetts and expect to open six more over the balance of the year.”
"With a successful first half of 2023 behind us, we are narrowing our full year 2023 net revenue outlook and increasing our net income and adjusted EBITDA outlook.”
“We are also announcing today that Tim Kuckelman, who has served as our Chief Operating Officer since September 2022, left the Company effective August 8, 2023. I would like to thank Tim for his contributions to Arhaus over the past year, and we wish him the best.
“Finally, I am proud to announce that we have committed to make a $10 million donation to The Nature Conservancy to support global forest conservation.”
Second Quarter 2023 Results
Net revenue increased 2.2% to $313 million, compared to $306 million in the second quarter of 2022. Comparable growth was (0.8)% and demand comparable growth was 11.6% in the second quarter of 2023.
Gross margin increased 5.3% to $140 million, compared to $133 million in the second quarter of 2022, driven primarily by higher net revenue and lower product costs, partially offset by higher fixed Showroom costs and credit card fees related to increased interest rates and demand.
Selling, general and administrative expenses increased 4.1%, to $86 million, compared to $83 million in the second quarter of 2022, primarily driven by increased corporate expense to support the growth of the business and higher selling expense related to new Showrooms and demand, partially offset by lower warehouse expense.
Net and comprehensive income was $40 million compared to $37 million in the second quarter of 2022. This increase was driven by the factors described above. Adjusted net income was $40 million in the second quarter of 2023 compared to $39 million in the second quarter of 2022.
Adjusted EBITDA increased 5.5% to $64 million compared to $60 million in the second quarter of 2022. Adjusted EBITDA as a percent of net revenue improved 70 basis points to 20.4% in the second quarter of 2023, compared to 19.7% in the second quarter of 2022.
The Company ended the quarter with 85 total Showrooms across 29 states.