Arhaus, Inc. Q1 FY2026 earnings call

Continues to make meaningful progress on strategic investments like transportation management system phase one go live in April. Also making progress on order management system and enterprise resource planning initiatives. Cultural shift underway to increase accountability and standardization. Actively evaluating tariff implications including potential refunds from IEPA-related tariffs and uncertain expiration of 10% global tariff. Diversified sourcing strategy and domestic manufacturing footprint positioned well.

Gross margin decreased 70 basis points to 36.4% due to higher fuel prices and showroom occupancy costs. Selling general and administrative expenses increased 1.9% to $112 million. Adjusted EBITDA was $18 million. Comparable delivered sales decreased 1.7%, comparable written sales decreased 5.7% but improved in the back half of March and into April and May. Net merchandise inventory totaled $369 million, up 9% from December 31st, 2025, with increase due to higher product costs and inventory investments.

Full-year 2026 net income expected $66 million to $75 million, adjusted EBITDA $150 million to $161 million. Q2 2026 net revenue expected $350 million to $370 million, adjusted EBITDA $40 million to $49 million. Continued near-term pressure on demand in Q2 but with potential benefits from inventory availability and increased marketing activity.

Severe weather caused more than half of showrooms to close temporarily, reducing selling days. Delayed catalog impacted comparable written sales. Macro and geopolitical uncertainty weighed on sales. Trade policy fluid with tariffs, including uncertain expiration of 10% global tariff and evolving CBP refund process.

Q: In terms of your reiteration of guidance, the guidance implies, I think, 3% to kind of 6.5% comparable growth in the second half of the year. In terms of where your written trends are today, comparable, are they supportive of that kind of outlook, or do they need to accelerate from here to get to the low end, high end, et cetera?

A: Good morning. Thanks, Andrew. Look, let me first take a step back...

Q: I was wondering if you could remind us the timeline of your order management system and ERP rollout. Are you still targeting 1Q2027 for deployment? And can you remind us the P&L impact from that investment in 26?

A: Yeah, thanks for the question. Look, we're really excited about the progress we're making on our digital transformation...

Q: With S&P at all-time highs and the wealth effect historically being a key driver of your consumer, what's the broader macro and housing environment you're embedding in the back half?

A: It's a great question. The stock market volatility and its impact on our business, it is real...