On August 8, 2024, Arhaus Inc (ARHS, Financial) released its 8-K filing for the second quarter of 2024. Arhaus Inc, a growing lifestyle brand and omnichannel retailer of premium home furniture, reported financial results that fell short of analyst expectations and revised its full-year outlook downward.
Company Overview
Arhaus Inc is a rapidly growing lifestyle brand and omnichannel retailer of premium home furniture. The company offers merchandise in various categories, including furniture, outdoor, lighting, textiles, and decor through its Retail and eCommerce sales channels.
Q2 2024 Financial Performance
Arhaus Inc reported net revenue of $310 million for the second quarter of 2024, slightly below the analyst estimate of $314.31 million. The company also reported a net income of $22 million and an adjusted EBITDA of $40 million. Despite opening five new showrooms in the quarter, the company experienced a comparable growth decline of 7.1%.
Year-to-Date 2024 Highlights
For the first half of 2024, Arhaus Inc reported net revenue of $605 million, a comparable growth decline of 8.3%, net income of $37 million, and adjusted EBITDA of $69 million. The company has opened eight new showrooms in six states so far this year and aims to open nine to eleven new showrooms by the end of 2024.
Updated 2024 Outlook
Arhaus Inc has revised its full-year 2024 outlook, lowering its net revenue expectations to a range of $1.25 billion to $1.29 billion, down from the previous guidance of $1.33 billion to $1.37 billion. The company also adjusted its net income forecast to a range of $55 million to $75 million, compared to the previous estimate of $95 million to $105 million.
| Metric | Current Guidance | Previous Guidance |
|---|---|---|
| Net Revenue | $1.25B - $1.29B | $1.33B - $1.37B |
| Comparable Growth | (11)% to (8)% | (4)% to (2)% |
| Net Income | $55M - $75M | $95M - $105M |
| Adjusted EBITDA | $125M - $145M | $185M - $200M |
CEO Commentary
"Our team delivered another quarter of solid operational execution, with several new showroom openings, successful new product development, and important strategic investments to support our long-term growth," said John Reed, Co-Founder and Chief Executive Officer. "Given the consumer and demand comparable growth trends we have seen for the past three months, we are adjusting our expectations for the second half of the year and lowering our full-year outlook."
Financial Statements Overview
Arhaus Inc's balance sheet remains strong, with cash and cash equivalents totaling $174 million and no long-term debt as of June 30, 2024. Net merchandise inventory increased to $274 million, and client deposits rose to $210 million. For the six months ended June 30, 2024, net cash provided by operating activities was $84 million, while net cash used in investing activities was approximately $62 million.
Analysis
Arhaus Inc's Q2 2024 financial performance highlights several challenges, including a decline in comparable growth and increased expenses related to new showroom openings and strategic initiatives. Despite these challenges, the company's strong balance sheet and continued investment in growth initiatives position it well for long-term success. However, the lowered full-year outlook indicates potential headwinds in the near term, which investors should monitor closely.
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Explore the complete 8-K earnings release (here) from Arhaus Inc for further details.
