Luxury furniture retailer Arhaus (NASDAQ:ARHS) reported revenue ahead of Wall Street’s expectations in Q2 CY2026, with sales up 7.4% year on year to $384.9 million. On the other hand, next quarter’s revenue guidance of $365 million was less impressive, coming in 1.6% below analysts’ estimates. Its GAAP profit of $0.28 per share was 72.3% above analysts’ consensus estimates.
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Arhaus (ARHS) Q2 CY2026 Highlights:
- Revenue: $384.9 million vs analyst estimates of $366.8 million (7.4% year-on-year growth, 4.9% beat)
- EPS (GAAP): $0.28 vs analyst estimates of $0.16 (72.3% beat)
- Adjusted EBITDA: $70.47 million vs analyst estimates of $46.67 million (18.3% margin, 51% beat)
- The company reconfirmed its revenue guidance for the full year of $1.45 billion at the midpoint
- EBITDA guidance for the full year is $165.5 million at the midpoint, above analyst estimates of $152.7 million
- Operating Margin: 14.1%, up from 13% in the same quarter last year
- Free Cash Flow Margin: 12.5%, up from 5.8% in the same quarter last year
- Locations: 109 at quarter end, up from 103 in the same quarter last year
- Same-Store Sales rose 4% year on year (10.5% in the same quarter last year)
- Market Capitalization: $1.16 billion
Company Overview
With an aesthetic that features natural materials such as reclaimed wood, Arhaus (NASDAQ:ARHS) is a high-end furniture retailer that sells everything from sofas to rugs to bookcases.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.
With $1.41 billion in revenue over the past 12 months, Arhaus is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
As you can see below, Arhaus grew its sales at a sluggish 2.9% compounded annual growth rate over the last three years.
This quarter, Arhaus reported year-on-year revenue growth of 7.4%, and its $384.9 million of revenue exceeded Wall Street’s estimates by 4.9%. Company management is currently guiding for a 5.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 5.8% over the next 12 months, an acceleration versus the last three years. This projection is admirable and indicates its newer products will fuel better top-line performance.
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Store Performance
Number of Stores
The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.
Arhaus operated 109 locations in the latest quarter. It has opened new stores at a rapid clip over the last two years, averaging 7.9% annual growth, much faster than the broader consumer retail sector. This gives it a chance to scale into a mid-sized business over time.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Same-Store Sales
A company’s store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).
Arhaus’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. Arhaus should consider improving its foot traffic and efficiency before expanding its store base.
In the latest quarter, Arhaus’s same-store sales rose 4% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.
Key Takeaways from Arhaus’s Q2 Results
It was good to see Arhaus handily beat analysts’ EBITDA and EPS expectations this quarter. We were also excited its gross margin outperformed Wall Street’s estimates by a wide margin while free cash flow margin improved nicely year on year. Overall, we think this was still a solid quarter with some key areas of upside. The stock traded up 9.1% to $9.00 immediately following the results.
Arhaus had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).