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Luxury furniture retailer Arhaus (NASDAQ:ARHS) fell short of the market’s revenue expectations in Q1 CY2025, but sales rose 5.5% year on year to $311.4 million. Its non-GAAP EPS of $0.03 per share was 51% below analysts’ consensus estimates.
Is now the time to buy ARHS? Find out in our full research report (it’s free).
Arhaus’s first quarter results were shaped by continued expansion of its showroom footprint and a resilient affluent customer base, despite volatility in consumer demand. Management pointed to strong engagement in both retail and e-commerce channels, with designer-led services driving higher average order values. CEO John Reed attributed the quarter’s performance to the company’s diversified supply chain, noting that over 70% of upholstery products were sourced and manufactured in the United States, minimizing exposure to shifting tariffs. Reed also emphasized the importance of long-standing vendor partnerships, which have allowed Arhaus to adapt sourcing strategies quickly in response to global trade developments. The company remained disciplined in its promotional and pricing approach, focusing on product quality and customer experience rather than broad-based discounts.
Looking ahead, management expects near-term volatility due to evolving tariff policies and shifts in consumer sentiment, but remains focused on strategic investments and showroom growth to drive long-term performance. CEO John Reed stated that Arhaus will continue to prioritize expanding its physical footprint, with 12 to 15 showroom projects planned for the year and additional relocations to enhance brand visibility. CFO Ryan Brody outlined plans to mitigate the estimated $10 million impact from new tariffs through further sourcing diversification and vendor concessions, rather than broad price increases. Management highlighted ongoing investments in technology and operational infrastructure, such as upgraded warehouse management and payment systems, to support scalability and enhance client experience. They believe these efforts, combined with a debt-free balance sheet, will position Arhaus to navigate uncertainty and capitalize on future demand.
Management cited showroom expansion, supply chain agility, and a loyal client base as key factors supporting the quarter’s growth, while tariff-related cost pressures and consumer uncertainty weighed on margins.
Arhaus’s outlook for the next quarter and the full year is shaped by tariff costs, continued showroom expansion, and operational investments to support growth and margin resilience.
Going forward, the StockStory team will be monitoring (1) the impact of further tariff mitigation and sourcing diversification on margins; (2) execution and returns from new showroom openings and relocations; and (3) the effectiveness of operational investments in technology and supply chain infrastructure. Shifts in consumer sentiment and the company’s ability to sustain higher average order values will also be important signposts.
Arhaus currently trades at a forward P/E ratio of 17.7×. At this valuation, is it a buy or sell post earnings? See for yourself in our full research report (it’s free).
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