Q2 2024 Arhaus Inc Earnings Call Transcript
Key Points
- Arhaus Inc (ARHS) delivered a net revenue of $310 million, net income of $22 million, and adjusted EBITDA of $40 million in the second quarter.
- The company opened eight new showrooms in six states this year, reaching a milestone of 100 locations, which is expected to drive brand awareness and long-term growth.
- Arhaus Inc (ARHS) continues to see solid growth in new customers and transactions, with orders over $5,000 and $10,000 growing nicely.
- The company is making strategic investments in infrastructure, technology, and processes to support long-term growth, including a new warehouse management system and upcoming planning system.
- Arhaus Inc (ARHS) maintains a strong and debt-free balance sheet, allowing it to continue executing strategic growth plans even during economic softening.
- Demand comparable growth softened to a decline of 3% in the second quarter, with July experiencing a high 10s decline.
- The company lowered its full-year outlook due to recent demand trends and macroeconomic challenges.
- Gross margin decreased to 40.1% due to higher showroom costs, lower product margin from promotional activity, and increased delivery and transportation costs.
- Second quarter SG&A expenses increased by $9 million, driven by higher selling expenses related to new showrooms and increased corporate expenses.
- Arhaus Inc (ARHS) experienced softening demand comps starting in May, with the negative trend accelerating into July, reflecting a pullback by home furnishing consumers.
Good morning, and welcome to the our Arhaus second quarter 2024 earnings conference call. (Operator Instructions) 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, Wendy Watson, Senior Vice President of Investor Relations. Please go ahead.
Good morning and thank you for joining the Arhaus second quarter 2024 earnings call. And with me today are John Reed, Co-Founder, Chairman and Chief Executive Officer, and Dawn Phillipson, Chief Financial Officer. After prepared remarks, they will be joined by Jenn Porter, our Chief Marketing and e-commerce officer for the Q&A session.
During Q&A, please limit to one question and one follow-up. If you have additional questions, please return to the queue. We issued our earnings press release and our 10-Q for the quarter ended June 30, 2024, before market opened today. Those documents are
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