Arhaus Stock Drops to 52-Week Low After Q1 Earnings

Key Points

• Arhaus posted record first-quarter revenue of $314 million that topped Wall Street estimates, but weakening comparable sales and margin pressure weighed heavily on investor sentiment.
• The company issued cautious second-quarter guidance, citing ongoing near-term headwinds, including macroeconomic uncertainty, which has contributed to softer consumer demand.
• Following a sharp sell-off that pushed shares to a 52-week low, Arhaus is trading at a noticeable valuation discount to higher-end home furnishing peers Williams-Sonoma and RH.

Arhaus NASDAQ: ARHS shares have been under heavy pressure since the high-end home furnishings company reported first-quarter earnings on May 7. Although the company posted record net revenue for a first quarter, investors seemed to focus on weakening comparable sales and margin pressure, largely stemming from severe weather and softer demand amid broader macroeconomic uncertainty.

The decline extended what has already been a difficult stretch for the stock, which has fallen nearly 70% since hitting an all-time high above $19 about two years ago.

Record Q1 Revenue Overshadowed by Comp Sales, Margin Concerns

Arhaus reported revenue of $314 million for the quarter, up 0.9% year over year. The number topped Wall Street estimates by just over $300,000 and came in above the midpoint of the company’s guidance.

During the earnings call, Chief Financial Officer Michael Lee said, “This performance is particularly notable as we lapped a prior year period that did not face the same tariff uncertainty, macro volatility, or geopolitical disruption. Despite these ongoing headwinds, including the recent escalation in global conflict, we continue to deliver net revenue growth through a volatile environment.”

While showroom growth pushed revenue higher, weather disruptions and weakened consumer sentiment tied to macroeconomic uncertainty weighed on comparable sales. Comparable delivered sales, which measure delivered orders net of returns, fell 1.7% year over year, while comparable written sales, which measure orders placed, declined 5.7% from the prior year. The latter was further pressured by the delayed release of the company’s Spring catalog.

Profitability also weakened during the quarter. Gross margin declined 70 basis points to 36.4%, and net income dropped 54.5% to $2 million. Earnings per share of 2 cents were in line with analyst estimates but fell from 3 cents in the prior-year period.

Q2 Guidance Adds to Investor Concerns

The company also provided cautious second-quarter guidance, with Lee noting, “We expect continued near-term pressure on demand as consumers remain cautious amid ongoing macroeconomic and geopolitical uncertainty.” He added that the company is also lapping a particularly strong second quarter from the prior year.

Arhaus expects Q2 net revenue of $350 million to $370 million, representing a year-over-year change of down 2.4% to up 3.2%. The company also forecast comparable delivered sales ranging from down 5% to flat, net income of $19 million to $24 million, and adjusted EBITDA of $40 million to $49 million.

Lee noted that the second quarter outlook “reflects a range of outcomes, with the low end assuming continued pressure on demand trends and the high end incorporating benefits from improved inventory availability, strong in-stock positions, client deposit conversion, and the positive impact of our increased marketing and promotional activity.”

Arhaus reiterated its full-year 2026 outlook, expecting net revenue of $1.43 billion to $1.47 billion, representing year-over-year growth of 3.7% to 6.6%. The company expects comparable delivered sales to range from flat to up 3%, while forecasting net income of $66 million to $75 million and adjusted EBITDA of $150 million to $161 million.

Shares Continue to Slide After Earnings

Shares of Arhaus fell nearly 7% following the Q1 report and continued to tumble in five of the next seven trading sessions. The stock is down more than 22% since the earnings release and recently fell to a 52-week low of $5.63.

The stock is down roughly 35% over the last three months and 50% over the last year.

Several negative analyst reactions have added to the pressure, with four analysts lowering their price targets on the stock following earnings. The current consensus rating is Hold, with eight analysts rating it Hold and three rating it Buy.

The average 12-month price target of $9.58 suggests the stock could see more than 60% upside from its current price of around $5.70. Even the lowest price target of $7.25 implies additional upside potential. The remaining price targets range from $8 to $13.

Arhaus Now Trades Below Key Peers

Following the steep sell-off, Arhaus is trading at a discount to some of its competitors. The stock currently trades at roughly 12X earnings, versus the retail industry average of about 17.6X. Peers Williams-Sonoma Inc. NYSE: WSM and RH NYSE: RH are both trading around 19X earnings.

Arhaus stock has a price-to-sales ratio of roughly 0.6X, which is generally in line with RH and well below Williams-Sonoma’s sales multiple of about 2.6X.

It’s worth noting that the recent sell-off hasn’t been isolated to Arhaus. Other high-end home furnishing retailers have also felt the pinch from a slower housing market and a more cautious consumer environment. Shares of RH are down more than 40% over the last three months, while Williams-Sonoma shares have fallen roughly 20% over the same period.

Although Arhaus remains profitable and continues to grow revenue, softer comparable sales and cautious near-term guidance have weighed on investor sentiment. Still, with the stock trading well below prior highs and at a discount to peers, some investors may be starting to question whether the sell-off has become overdone.