Earnings Call Insights: Arhaus, Inc. (ARHS) Q1 2026
MANAGEMENT VIEW
* "The first quarter marked the highest first quarter net revenue in our history" (Founder, Chairman, President & CEO John Reed), while attributing softer demand to temporary disruptions: "more than half of our showrooms experienced weather-related disruptions," "a delay in our Spring catalog release," and "the conflict in Iran" (CEO Reed).
* "Comparable written sales... decreased a little over 5% during the quarter" (CEO Reed), but he pointed to a turn in trends: "when we look at the second half of March and trends continuing through April and into May, we saw meaningful improvement and stronger momentum" (CEO Reed).
* "As of today, we operate 108 showrooms" and Arhaus "continue[s] to expect to complete approximately 10 to 14 showroom projects" in 2026 (CEO Reed).
* "We are debt-free and operating from a position of strength" (CEO Reed).
* "Net revenue was $314 million in the first quarter, up 0.9% year-over-year" (Chief Financial Officer Michael Lee) and "gross margin decreasing 70 basis points to 36.4%" (CFO Lee).
* "We ended the quarter with $177 million in cash and cash equivalents" and "this primarily reflects the $49 million special cash dividend paid in March" (CFO Lee).
OUTLOOK
* "For the full year, we continue to expect net revenue between $1.43 billion and $1.47 billion" (CFO Lee).
* "For the second quarter of 2026... we expect net revenue between $350 million to $370 million" and "comparable delivered sales of minus 5% to flat" (CFO Lee).
* "Based on current policy, we continue to estimate 2026 tariff impacts to be in the range of $30 million to $40 million" (CFO Lee), while adding: "our current outlook does not include any benefits from potential IEEPA tariff refunds" (CFO Lee).
FINANCIAL RESULTS
* "Gross profit was $114 million" and "selling, general and administrative expenses increased 1.9% to $112 million" (CFO Lee).
* "Net income was $2.2 million" and "adjusted EBITDA was $18 million" (CFO Lee).
* "Comparable Delivered Sales decreased 1.7%" and "Comparable Written Sales decreased 5.7%" (CFO Lee).
* "Net merchandise inventory totaled $369 million, up 9% from December 31, 2025" (CFO Lee), and he said the increase "reflects higher product costs, including the impact of tariffs" plus depth in best sellers and outdoor build (CFO Lee).
Q&A
* W. Andrew Carter, Stifel: asked if current written trends support second-half assumptions; CFO Lee said "we did see a meaningful improvement in showroom traffic and client engagement" and added "we're trending toward the high end of our Q2 guide" while noting guidance was held "based on somewhat of an elevated risk profile" (CFO Lee).
* Madeline Cech, BofA: asked about OMS/ERP timing and 2026 P&L impact; CFO Lee said Arhaus is "still tracking for a Q1 launch" for OMS and ERP, and for TMS benefits "we expect to see $4 million to $5 million a year in annualized benefits" and "for FY '26, we're forecasting $1 million to $2 million of benefits" (CFO Lee).
* Cristina Fernandez, Telsey: asked if demand has turned positive and response to newness; CEO Reed said "the results have been phenomenal" on new product (CEO Reed), while CFO Lee said "it absolutely has turned positive" and called April "more like a V-shaped recovery" (CFO Lee).
* Steven Forbes, Guggenheim: asked about promotions and the trade model; Chief Marketing & eCommerce Officer Jennifer Porter said "going into April, we purposely elevated our promotional activity" (CMO Porter), and CEO Reed said the trade update offers professionals "a commission" or "a discount... one or the other" (CEO Reed).
* Zachary Beeck, Baird: asked about gross margin assumptions and fuel; CFO Lee said "fuel costs are highly, highly uncertain" and cited "a lag effect" between mitigations and P&L timing (CFO Lee).
* Andres (for Jonathan Matuszewski), Jefferies: asked about macro embedded in the back half; CFO Lee said "we're certainly not building into our full year guide a recession" and pointed to "high-end housing continues to perform well" (CFO Lee).
* Alexia Morgan, Piper Sandler: asked about foam shortages; CFO Lee said "we are very comfortable, confident with our foam supply" and noted "we've even added a second shift in manufacturing" (CFO Lee).
* Simeon Gutman, Morgan Stanley: asked about written visibility and gallery productivity; CEO Reed said new and relocated/renovated galleries have been "hitting our plans and exceeding them" (CEO Reed), and CFO Lee reiterated "an acceleration into April and May" (CFO Lee).
SENTIMENT ANALYSIS
* Analyst tone was slightly negative to neutral, pressing on the durability of guidance, margins/fuel, and supply chain risk, including: "Can you help us understand the change" (Zachary Beeck, Baird) and "Could you frame up your exposure" (Alexia Morgan, Piper Sandler).
* Management tone was slightly positive in prepared remarks and more confident in Q&A on demand inflection, with: "it absolutely has turned positive" (CFO Lee) and "we are very, very encouraged by the momentum" (CFO Lee).
* Versus the prior quarter’s emphasis on structural drivers and long-run margin expansion, this call more frequently referenced near-term disruptions and mitigation timing, including "weather-related disruptions" (CEO Reed) and "fuel costs are highly, highly uncertain" (CFO Lee).
QUARTER-OVER-QUARTER COMPARISON
* Q1 highlighted demand pressure and a sharper near-term shock set (weather, catalog delay, "war in Iran") than Q4’s focus on promotional timing shifts and post-holiday softness (CEO Reed; CFO Lee).
* The full-year 2026 framework was reiterated, while Q2 guidance replaced the prior quarter’s Q1 guidance as the key near-term lens (CFO Lee).
* Technology/distribution updates progressed from planning to implementation, with "go-live of Phase 1 of our transportation management system in April" (CFO Lee) versus the prior quarter describing a multiyear platform replacement program (CFO Lee).
RISKS AND CONCERNS
* "Trade policy remains fluid" and the company is evaluating "the rollout of the CBP refund process" and whether Section 122 "is currently scheduled to expire in July" (CFO Lee).
* "Fuel costs are highly, highly uncertain" and management cited a "lag effect" before mitigations flow through results (CFO Lee).
* Demand risk remained tied to macro and geopolitics: "continued near-term pressure on demand" amid "macroeconomic and geopolitical uncertainty" (CFO Lee).
FINAL TAKEAWAY
Arhaus management described Q1 as the highest first-quarter net revenue in company history, while attributing weaker comparable written sales to weather closures, a delayed spring catalog, and geopolitical-driven consumer caution. Management reiterated full-year 2026 targets, outlined a wide Q2 range amid uncertainty, and emphasized actions to stimulate demand through elevated promotions and marketing. The company also highlighted progress in operational modernization, including an April go-live of Phase 1 TMS and a continued plan for OMS/ERP launch in Q1, while flagging ongoing variability in tariffs and fuel costs and excluding potential IEEPA refunds from current guidance.
Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/arhs/earnings/transcripts]
MORE ON ARHAUS
* Arhaus, Inc. (ARHS) Q1 2026 Earnings Call Transcript [https://seekingalpha.com/article/4900858-arhaus-inc-arhs-q1-2026-earnings-call-transcript]
* Arhaus: Shares Are Cheap Enough And Prospects Strong Enough To Justify A Bullish Outlook [https://seekingalpha.com/article/4898310-arhaus-stock-cheap-enough-prospects-strong-enough-justify-bullish-outlook]
* Arhaus, Inc. 2025 Q4 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4876308-arhaus-inc-2025-q4-results-earnings-call-presentation]
* Arhaus beats top-line estimates; initiates Q2 and reaffirms FY26 outlook [https://seekingalpha.com/news/4588103-arhaus-beats-top-line-estimates-initiates-q2-and-reaffirms-fy26-outlook]
* Arhaus outlines $1.43B–$1.47B 2026 revenue target while advancing showroom expansion and navigating tariffs [https://seekingalpha.com/news/4558290-arhaus-outlines-1_43b-1_47b-2026-revenue-target-while-advancing-showroom-expansion-and]
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