Arhaus Inc

Arhaus reported second quarter results on August 6 that beat its own guidance on nearly every line, with net revenue for the quarter ended June 30 climbing 7.4% to $385 million. Comparable Written Sales, which track new orders rather than completed deliveries, jumped 12.5%, a sharp reversal from a 5.7% decline in the first quarter of 2026, pushing the year-to-date figure positive at 2.8%, while client deposits grew 11.8% from the end of 2025 to $264 million as of June 30. A large piece of the quarter's profit growth came from a one-time tariff recovery rather than improved operations: of the $23.8 million tariff benefit that flowed through cost of goods sold, $15.5 million was tied to inventory already sold before April 2026, and the company has now collected the full $37.8 million it sought in tariff refunds plus $1.3 million in interest as of August 6. Selling, general and administrative expenses grew 16.1% to $118 million, more than double the pace of revenue growth, and free cash flow for the first six months of 2026 fell to $22.9 million from $39.8 million a year earlier, even as reported net income rose. Arhaus carries no long-term debt, completed four showroom projects in the quarter including new locations in Ashburn, Virginia, and Ontario, California, and still expects 10 to 14 total showroom projects in 2026, while Comparable Delivered Sales are up just 1.4% for the year with third-quarter guidance ranging from negative 1% to positive 5%.

Arhaus has launched its Fall 2026 Collection in celebration of its 40th anniversary, introducing bold design directions with fresh colors and materials across key furniture and décor lines. The company is expanding personalization through its Made-to-Order Stone program and broader customization options, positioning the launch as a milestone in its evolution. Arhaus, a premium home furnishings retailer with a market cap of about $1.2 billion, aims to reinforce its position in higher-end home goods. The collection features statement pieces with saturated greens, reds, and heritage blues, along with distinctive woods and stones, appealing to design-focused consumers. Investors should watch how the collection contributes to the company's guided 2026 net revenue range of US$1.43 billion to US$1.47 billion and net income of US$71 million to US$80 million, with Q3 and Q4 2026 results serving as key reference checks.

Shopify's business-to-business gross merchandise volume surged 76% year over year in the second quarter of 2026, far outpacing the company's overall GMV growth of 32%. The company extended its native B2B capabilities beyond Shopify Plus for the first time, allowing more merchants to manage wholesale and direct-to-consumer operations through the same admin. Management highlighted cross-selling success, with merchants like Arhaus expanding from online to point-of-sale, B2B, and payments. Large retailers, the fastest-growing segment, are also adopting Shopify's unified system. While sustaining 76% growth may become harder as the base grows, the expansion of B2B tools and increasing adoption support continued momentum. Total GMV reached $116 billion in Q2, with B2B becoming an increasingly important contributor. Shopify faces competition from eBay and Etsy, which reported strong results, but Shopify's stock has underperformed the sector year to date, and its valuation remains high at a forward price-to-sales of 11.18X.

Arhaus is making strategic investments in technology licensing and other costs to support its broader business transformation, totaling approximately $3 million in the second quarter. The company successfully launched its Transportation Management System during the quarter, while its Enterprise Resource Planning and Order Management System implementations remain on track for a February 2027 go-live. Arhaus is also pulling forward the implementation of its new modern point-of-sale platform into the fourth quarter of 2026, ahead of its original timeline. Management expects TMS benefits to contribute to its margin outlook during the balance of the year, projecting approximately $4 million to $5 million of annualized run-rate savings once the system is fully operational. The company expects $4 million to $6 million of incremental technology spending versus its initial digital transformation plans, with the accelerated POS rollout adding $2 million to $3 million to this year's P&L and another $2 million to $3 million deployed toward additional IT resources.

Arhaus reported record second-quarter net revenue of approximately $385 million, up 7.4% from a year earlier, and raised its full-year adjusted EBITDA guidance to $160 million to $171 million. The luxury furniture retailer recognized a $23.8 million tariff-recovery benefit, which lifted gross margin to 44.7% and adjusted EBITDA to $70 million. Excluding the $15.5 million portion of the benefit tied to inventory sold before April 2026, adjusted EBITDA would have declined 8.9% year over year. The company maintained its 2026 revenue outlook of $1.43 billion to $1.47 billion and cited strong demand for larger home projects, upholstery, and outdoor products. Arhaus also plans to open four to six new showrooms and accelerate its point-of-sale rollout while pursuing cost savings to offset tariffs and higher shipping expenses.