• Net Revenue (Q4 2024): $347 million, up 0.9% year-over-year.
• Net Revenue (Full Year 2024): $1.271 billion, down 1.3% year-over-year.
• Comparable Growth (Q4 2024): Decline of 6.4%.
• Demand Comparable Growth (Q4 2024): 5.7%.
• Gross Margin (Q4 2024): $139 million, decreased by 1.8%.
• Gross Margin Percentage (Q4 2024): 40.6%, down 100 basis points.
• SG&A Expense (Q4 2024): $111 million, increased by 11.1%.
• Net Income (Q4 2024): $21 million, decreased by 31.8%.
• Adjusted EBITDA (Q4 2024): $41 million, decreased by 19.6%.
• Adjusted EBITDA Margin (Q4 2024): 11.9%.
• Comparable Growth (Full Year 2024): Decline of 8%.
• Demand Comparable Growth (Full Year 2024): Decline of 2.2%.
• Gross Margin (Full Year 2024): $501 million, decreased by 7.3%.
• Gross Margin Percentage (Full Year 2024): 39.4%, down 260 basis points.
• SG&A Expense (Full Year 2024): $415 million, increased by 10.5%.
• Net Income (Full Year 2024): $69 million, decreased by 45.3%.
• Adjusted EBITDA (Full Year 2024): $133 million, decreased by 34.5%.
• Adjusted EBITDA Margin (Full Year 2024): 10.5%.
• Cash and Cash Equivalents (End of 2024): $198 million, debt-free.
• Store Locations: Expanded to 103 locations across 30 states.
• 2025 Revenue Outlook: $1.36 billion to $1.4 billion.
• 2025 Adjusted EBITDA Outlook: $140 million to $150 million.

• Warning! GuruFocus has detected 2 Warning Sign with UTHR.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Arhaus Inc (NASDAQ:ARHS) achieved a record year of showroom growth in 2024, opening 11 new locations and relocating five, expanding their footprint to 103 locations across 30 states.
• The company reported strong demand comparable growth of 5.7% in Q4 2024, driven by a robust product assortment and effective marketing initiatives.
• Arhaus Inc (NASDAQ:ARHS) maintains a debt-free balance sheet with $198 million in cash and cash equivalents, providing financial flexibility for strategic investments.
• The company continues to focus on product innovation and brand differentiation, with plans to introduce new designs and technology in 2025.
• Arhaus Inc (NASDAQ:ARHS) has a strong omnichannel strategy, integrating showrooms, e-commerce, and in-home design services to enhance customer engagement and drive growth.

Negative Points

• Net revenue for the full year 2024 decreased by 1.3% year-over-year, with a decline in comparable growth of 8% due to lapping the impact of abnormal backlog fulfillment in the prior year.
• Gross margin for the full year 2024 decreased by 260 basis points to 39.4%, primarily due to higher showroom occupancy costs and increased delivery and transportation expenses.
• SG&A expenses increased by 10.5% in 2024, driven by higher showroom-related costs and strategic investments, impacting overall profitability.
• Net income for the full year 2024 decreased by 45.3% to $69 million, while adjusted EBITDA declined by 34.5% to $133 million.
• The company anticipates flat to negative comparable growth in Q1 2025, reflecting ongoing macroeconomic challenges and potential delivery delays.

Q & A Highlights

Q: Can you discuss the new product lineup for 2025 and how it compares to previous years? A: John Reed, CEO, stated that the 2025 product lineup is very strong, with a focus on new styles, designs, and colors. The company is confident that 2025 will feature as much or more new product than in previous years, aligning with changing consumer tastes and styles.

Q: How did demand trend across different price points in Q4, and what is the outlook for 2025? A: Jennifer Porter, Chief Marketing Officer, noted that the pricing and promotional strategy has remained consistent, focusing on quality and value. The company was pleased with Q4 results and expects to continue this strategy into 2025, despite a highly promotional market environment.

Q: Can you explain the guidance for flat to negative comps in Q1 2025 despite solid demand? A: John Reed, CEO, explained that the company has moved beyond the abnormal backlog from 2023, and comps should align more closely with demand comps starting in 2025. There may be timing differences quarter to quarter, but overall alignment is expected for the year.

Q: What are the plans for store openings in 2025, and how do they compare to previous years? A: John Reed, CEO, mentioned that the company plans to open 3 to 5 new stores in 2025, which is slightly lower than the previous year due to the high number of openings in 2024. The focus will be on strategic locations, with flexibility in design studio openings.

Q: How is the company preparing for potential tariffs, and what impact might they have? A: John Reed, CEO, stated that the company is well-prepared for potential tariffs, having engaged with partners to mitigate impacts. The guidance includes potential tariff impacts known today, and the company remains flexible with a diverse global supply network.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.