Q2 2026 Arhaus Inc Earnings Call Transcript
Key Points
- Arhaus Inc (ARHS) delivered record net revenue of $385 million in Q2 2026, exceeding the high end of its guidance range and marking its highest net revenue in company history.
- Comparable written sales surged 12.5% in the second quarter, a significant acceleration from the first quarter, driven by broad-based strength across product categories and all showroom formats.
- The company received a one-time $37.8 million refund on IEPA tariffs, which it is strategically reinvesting in marketing, technology, and offsetting cost pressures, while still boosting full-year profitability guidance.
- The relaunched trade program is gaining traction, adding thousands of new members monthly, and is seen as a significant long-term growth opportunity for recurring project-driven business.
- Arhaus Inc (ARHS) maintains a strong balance sheet with $226 million in cash and a healthy inventory position, with bestseller in-stock levels improving and aged inventory down sequentially and year-over-year.
- The company is investing in growth initiatives, including doubling its fall catalog circulation and pulling forward its new POS system implementation, which management believes will drive future demand and operational efficiency.
- Excluding the one-time tariff refund benefit, adjusted EBITDA declined 8.9% year-over-year, and adjusted EBITDA margin contracted 250 basis points, reflecting significant cost pressures.
- The company faces elevated fuel and shipping costs, estimated at $10 million each for the year, driven by Middle East disruptions and inflationary pressures, which are pressuring margins.
- Gross margin, excluding the tariff benefit, decreased 70 basis points year-over-year, primarily due to higher fuel and shipping costs, despite a recent delivery fee increase.
- SG&A expenses increased 16.1% year-over-year, with SG&A load up 230 basis points, driven by strategic investments in technology, new showrooms, and increased selling expenses.
- The company's full-year net revenue guidance of $1.43 billion to $1.47 billion remains unchanged, implying a potential deceleration in demand in the second half of the year, reflecting management's cautious outlook.
- Arhaus Inc (ARHS) continues to face a significant tariff impact of $30 million to $40 million for 2026, which it is actively trying to mitigate through sourcing strategies and pricing actions.
Good morning and welcome to the Our House second quarter 2026 earnings call. Please note that this call is being recorded and the reproduction of any part of this call is not permitted without written authorization from the company.
I will now turn the call over to your host, Tara Atwood-Seja, Vice President and Head of Investor Relations. Please go ahead.
Good morning, and thank you for joining us for the Our House Second Quarter 2026 Earnings Call.
Joining me on today's call for prepared remarks are John Reed, our Founder, Chairman, and Chief Executive Officer, and Michael Lee, our Chief Financial Officer.
During Q&A, we kindly ask that you limit yourself to one question only. This will allow us to get to as many callers as possible within our one-hour window. You are welcome to re-queue for additional questions if time permits.
We issued our earnings press release and Form 10-Q for the quarter ended June 30, 2026, before the market
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