Arhaus, Inc. Reports Third Quarter Results

November 7, 2024  by Karen Parrish in Business Strategy, Industry   

Third Quarter 2024

• Net revenue of $319 million
• Comparable growth⁽¹⁾ of (9.2)%
• Net and comprehensive income of $10 million
• Adjusted EBITDA of $23 million

Year-to-Date 2024, through September 30

• Net revenue of $924 million
• Comparable growth of (8.6)%
• Net and comprehensive income of $47 million
• Adjusted EBITDA of $92 million

2024 Outlook (Updated)

• Net revenue of $1.23 billion to $1.25 billion
• Comparable growth of (12.0)% to (11.0)%
• Net and comprehensive income of $55 million to $60 million
• Adjusted EBITDA⁽⁵⁾ of $115 million to $125 million

John Reed, co-founder and CEO, said, “Our third-quarter results demonstrate our team’s commitment to operational excellence in a challenging environment. We remain focused on our long-term growth strategy grounded in our premium, livable luxury offerings and exceptional client experience. With ten new showrooms opened already this year and an eleventh opening tomorrow in Corte Madera, California, we remain committed to expanding our presence in key markets."

“While demand trends improved throughout the third quarter, we’re adjusting our full-year sales and earnings outlook to reflect a continued tempered consumer environment, which we believe is temporary given our innovative product offerings and compelling marketing campaigns. Despite near term headwinds, our strong, debt-free balance sheet enables us to continue prudent investment in strategic priorities."

“Our long-term success is driven by our teams’ dedication to delivering the best products and an inspiring showroom experience. I want to thank each of them for their ongoing commitment, which highlights the resilience of our growth strategy and our commitment to creating value for our shareholders.”

Results and Highlights

Net revenue in the third quarter was $319 million, compared to $326 million in the third quarter of 2023. The decrease was primarily related to the non-recurrence of prior year abnormal backlog deliveries and lower total demand.

Comparable growth⁽¹⁾ was (9.2)% and demand comparable growth⁽²⁾ was (11.3)% in the third quarter of 2024.

Gross margin was $123 million, compared to $131 million in the third quarter of 2023, driven primarily by lower net revenue and higher Showroom costs as we continue to expand our footprint.

Selling, general and administrative expenses were $112 million, compared to $107 million in the third quarter of 2023, primarily driven by legal costs, marketing investments, and strategic investments to support and drive the growth of the business, including supply chain and technology improvements. This was partially offset by the non-recurrence of last year’s donation to The Nature Conservancy.

Net and comprehensive income was $10 million compared to $20 million in the third quarter of 2023.

Adjusted EBITDA was $23 million compared to $34 million in the third quarter of 2023. Adjusted EBITDA as a percent of net revenue was 7.2% in the third quarter of 2024, compared to 10.3% in the third quarter of 2023.

Conference Call

A recorded replay of the conference call will be available within approximately three hours of the conclusion of the call and can be accessed online at http://ir.arhaus.com for approximately twelve months.