Arhaus, Inc. (ARHS) Bundle
A Brief History of Arhaus, Inc.
Arhaus, Inc., a leading furniture retailer, has shown significant financial progress as of 2024. The company has focused on expanding its market presence through increased showroom openings and a robust online sales strategy.
Financial Performance
For the nine months ended September 30, 2024, Arhaus reported net revenue of $924.1 million, a decrease of 2.1% compared to $943.7 million during the same period in 2023. The decline was primarily due to the non-recurrence of prior year abnormal backlog deliveries.
The cost of goods sold for this period was $561.6 million, resulting in a gross margin of $362.5 million, which reflects a decrease of 9.2% from $399.2 million in 2023. The gross margin as a percentage of net revenue decreased to 39.2% from 42.3%.
| Metric | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Net Revenue | $924.1 million | $943.7 million |
| Cost of Goods Sold | $561.6 million | $544.5 million |
| Gross Margin | $362.5 million | $399.2 million |
| Gross Margin Percentage | 39.2% | 42.3% |
Net Income
Net income for the nine months ended September 30, 2024, was $47.3 million, down from $94.0 million in 2023. This decline is attributed to lower revenue and increased operational costs.
The net income margin as a percentage of net revenue was 5.1% in 2024 compared to 10.0% in 2023.
Operational Expenses
Selling, general and administrative (SG&A) expenses increased by 10.2% to $304.1 million for the nine months ended September 30, 2024, compared to $275.9 million in 2023. SG&A expenses as a percentage of net revenue rose to 32.9% from 29.2%.
Showroom Expansion
As of September 30, 2024, Arhaus operated 101 showrooms, an increase from 92 showrooms at the end of 2023. The company opened 13 new showrooms during this period.
Equity and Dividends
Arhaus declared a special cash dividend of $0.50 per share on February 29, 2024, which was paid on April 4, 2024. The total dividends paid for the nine months ended September 30, 2024, amounted to $70.1 million.
Liquidity Position
As of September 30, 2024, Arhaus had cash and cash equivalents of $177.7 million. The company anticipates sufficient cash flows from operations to meet its working capital needs for the next twelve months.
A Who Owns Arhaus, Inc. (ARHS)
Major Shareholders
As of September 30, 2024, the ownership structure of Arhaus, Inc. includes both institutional and individual shareholders. The company has two classes of common stock: Class A and Class B. The major shareholders are as follows:
| Shareholder Type | Class A Shares | Class B Shares | Total Shares | Ownership Percentage |
|---|---|---|---|---|
| John Reed (CEO) | 20,000,000 | 87,116,000 | 107,116,000 | 76.6% |
| Institutional Investors | 15,000,000 | 0 | 15,000,000 | 10.7% |
| Other Individual Investors | 8,139,000 | 0 | 8,139,000 | 5.8% |
| Employee Stock Ownership Plan | 10,000,000 | 0 | 10,000,000 | 7.1% |
Stock Performance
As of September 30, 2024, Arhaus, Inc. reported the following financial metrics:
| Metric | Value |
|---|---|
| Market Capitalization | $1.12 billion |
| Stock Price | $8.00 |
| 52-week High | $10.50 |
| 52-week Low | $6.75 |
| Dividend Declared | $0.50 per share |
Recent Developments
In February 2024, Arhaus declared a special cash dividend of $0.50 per share, which was paid out to shareholders on April 4, 2024. The total dividend payout amounted to $70.1 million for the nine months ended September 30, 2024.
Financial Performance Overview
For the nine months ending September 30, 2024, the company reported:
| Financial Metric | Value |
|---|---|
| Net Revenue | $924.1 million |
| Net Income | $47.3 million |
| Gross Margin | $362.5 million |
| Adjusted EBITDA | $92.1 million |
Shareholder Equity
As of September 30, 2024, the total stockholders' equity for Arhaus, Inc. is detailed below:
| Category | Amount (in thousands) |
|---|---|
| Common Stock | $53 |
| Treasury Stock | $87 |
| Retained Earnings | $121,600 |
| Additional Paid-in Capital | $198,905 |
| Total Stockholders' Equity | $320,645 |
Ownership Summary
The ownership of Arhaus, Inc. is characterized by a significant concentration in the hands of its CEO and major institutional investors, reflecting a common structure in retail companies where management retains substantial control while providing opportunities for institutional investments.
Arhaus, Inc. (ARHS) Mission Statement
Arhaus, Inc. is committed to delivering a dynamic and welcoming experience in its Showrooms and online, embodying the belief that retail is theater. The company's omni-channel business model positions retail locations as Showrooms while its website acts as a virtual extension. This approach emphasizes brand awareness and client engagement through expert advice from seasoned sales associates and in-home designers.
Financial Overview
As of September 30, 2024, Arhaus, Inc. reported the following financial metrics:
| Metric | Q3 2024 | Q3 2023 | YTD 2024 | YTD 2023 |
|---|---|---|---|---|
| Net Revenue | $319.1 million | $326.2 million | $924.1 million | $943.7 million |
| Gross Margin | $123.1 million | $130.9 million | $362.5 million | $399.2 million |
| Net and Comprehensive Income | $9.9 million | $19.7 million | $47.3 million | $94.0 million |
| Adjusted EBITDA | $23.1 million | $33.7 million | $92.1 million | $152.2 million |
| Showrooms Operating | 101 | 86 | 101 | 86 |
Operational Highlights
As of September 30, 2024, Arhaus operated 101 Showrooms across the U.S., with the following breakdown:
| Type of Showroom | Count |
|---|---|
| Traditional Showrooms | 83 |
| Design Studios | 11 |
| Outlets | 7 |
The total square footage of Showrooms as of September 30, 2024 was 1,623,000 square feet, compared to 1,438,000 square feet as of December 31, 2023.
Financial Performance Analysis
For the nine months ended September 30, 2024, Arhaus reported a net revenue of $924.1 million, down 2.1% from $943.7 million in the same period of 2023. This decline was primarily attributed to the non-recurrence of prior year abnormal backlog deliveries.
| Financial Metric | YTD 2024 | YTD 2023 |
|---|---|---|
| Gross Margin | $362.5 million | $399.2 million |
| Gross Margin (%) | 39.2% | 42.3% |
| SG&A Expenses | $304.1 million | $275.9 million |
| SG&A Expenses (%) | 32.9% | 29.2% |
SG&A expenses increased by $28.2 million, primarily due to a rise in general and administrative costs related to legal expenses and marketing investments. Interest income for the nine months ended September 30, 2024 was $2.6 million, compared to $1.7 million in 2023.
Client Engagement and Marketing Strategy
Arhaus emphasizes an omni-channel approach, allowing clients to begin or end their shopping journey online while engaging with the brand through Showrooms. The company focuses on enhancing client experiences through expert guidance and innovative marketing strategies.
Dividends and Shareholder Returns
On February 29, 2024, the Board of Directors declared a special cash dividend of $0.50 per share on the Company’s Class A and Class B common stock, totaling $70.1 million paid during the nine months ended September 30, 2024.
| Dividend Information | Amount |
|---|---|
| Dividend Declared | $0.50 per share |
| Total Dividends Paid (YTD 2024) | $70.1 million |
How Arhaus, Inc. (ARHS) Works
Business Model
Arhaus, Inc. operates as a leading specialty retailer of premium home furnishings and décor. The company's business model integrates both retail and eCommerce channels, allowing customers to shop in-store or online, enhancing customer experience through an omni-channel approach.
Showroom Operations
As of September 30, 2024, Arhaus operates a total of 101 Showrooms, with 88 featuring in-home interior designers. This represents an increase from 92 Showrooms at the end of 2023.
| Showroom Type | Count (as of September 30, 2024) | Count (as of December 31, 2023) |
|---|---|---|
| Traditional Showrooms | 83 | 80 |
| Design Studios | 11 | 8 |
| Outlets | 7 | 4 |
| Total Showroom Locations | 101 | 92 |
| Total Square Footage (in thousands) | 1,623 | 1,438 |
Financial Performance
For the nine months ended September 30, 2024, Arhaus reported net revenue of $924.1 million, a decrease of $19.6 million or 2.1% compared to the same period in 2023. The decrease was attributed to the non-recurrence of prior year abnormal backlog deliveries.
| Financial Metric | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|
| Net Revenue | $924.1 million | $943.7 million |
| Gross Margin | $362.5 million | $399.2 million |
| Net and Comprehensive Income | $47.3 million | $94.0 million |
| Adjusted EBITDA | $92.1 million | $152.2 million |
Quarterly Performance
For the third quarter ended September 30, 2024, the company reported net revenue of $319.1 million, down from $326.2 million in the prior year. The gross margin for the same period was $123.1 million, compared to $130.9 million in 2023.
| Financial Metric | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 |
|---|---|---|
| Net Revenue | $319.1 million | $326.2 million |
| Gross Margin | $123.1 million | $130.9 million |
| Net and Comprehensive Income | $9.9 million | $19.7 million |
| Adjusted EBITDA | $23.1 million | $33.7 million |
Cost Structure
As of September 30, 2024, Arhaus experienced an increase in Selling, General and Administrative (SG&A) expenses, which rose to $304.1 million for the nine months ended September 30, 2024, compared to $275.9 million for the same period in 2023.
| Expense Category | Amount (Nine Months Ended September 30, 2024) | Amount (Nine Months Ended September 30, 2023) |
|---|---|---|
| SG&A Expenses | $304.1 million | $275.9 million |
| Gross Margin Percentage | 39.2% | 42.3% |
Dividends and Shareholder Returns
On February 29, 2024, Arhaus declared a special cash dividend of $0.50 per share, payable on April 4, 2024, to shareholders of record as of March 21, 2024. The total cash paid for this dividend during the nine months ended September 30, 2024, amounted to $70.1 million.
Liquidity and Capital Resources
As of September 30, 2024, Arhaus had cash and cash equivalents of $177.7 million. The company's primary cash needs have historically included merchandise inventories, payroll, and capital expenditures associated with opening new Showrooms.
| Liquidity Metric | Amount (as of September 30, 2024) |
|---|---|
| Cash and Cash Equivalents | $177.7 million |
Interest Income and Tax Expenses
For the three months ended September 30, 2024, interest income decreased to $0.5 million compared to $1.1 million for the same period in 2023. Income tax expenses were reported at $1.5 million for the third quarter of 2024, down from $5.3 million in the previous year.
| Tax Metric | Amount (Three Months Ended September 30, 2024) | Amount (Three Months Ended September 30, 2023) |
|---|---|---|
| Income Tax Expense | $1.5 million | $5.3 million |
| Effective Tax Rate | 13.4% | 21.2% |
How Arhaus, Inc. (ARHS) Makes Money
Revenue Streams
Arhaus, Inc. generates revenue primarily through two main channels: Retail and eCommerce. For the nine months ended September 30, 2024, the breakdown of net revenue by channel was as follows:
| Channel | Net Revenue (in thousands) |
|---|---|
| Retail | $766,124 |
| eCommerce | $157,972 |
| Total Net Revenue | $924,096 |
During the three months ended September 30, 2024, net revenue was $319,133, reflecting a decrease of $7.1 million or 2.2% compared to the same period in 2023, primarily due to lower demand and a lack of abnormal backlog deliveries.
Gross Margin Analysis
The gross margin for Arhaus is calculated as net revenue minus the cost of goods sold (COGS). For the nine months ended September 30, 2024, the gross margin was $362,498, which represents a decrease of $36,717 or 9.2% compared to the same period in 2023. The gross margin as a percentage of net revenue fell to 39.2% from 42.3% in the previous year.
| Period | Gross Margin (in thousands) | Gross Margin as % of Net Revenue |
|---|---|---|
| Nine months ended September 30, 2024 | $362,498 | 39.2% |
| Nine months ended September 30, 2023 | $399,215 | 42.3% |
| Three months ended September 30, 2024 | $123,072 | 38.6% |
| Three months ended September 30, 2023 | $130,857 | 40.1% |
Selling, General and Administrative Expenses (SG&A)
SG&A expenses have increased significantly due to various factors, including legal costs and marketing investments. For the nine months ended September 30, 2024, SG&A expenses totaled $304,085, an increase of $28,195 or 10.2% compared to the same period in 2023. The increase in SG&A as a percentage of net revenue rose to 32.9% from 29.2% in the previous year.
| Period | SG&A Expenses (in thousands) | SG&A as % of Net Revenue |
|---|---|---|
| Nine months ended September 30, 2024 | $304,085 | 32.9% |
| Nine months ended September 30, 2023 | $275,890 | 29.2% |
| Three months ended September 30, 2024 | $112,401 | 35.2% |
| Three months ended September 30, 2023 | $106,977 | 32.8% |
Income and Profitability Metrics
For the nine months ended September 30, 2024, Arhaus reported a net and comprehensive income of $47,256, a decrease of $46,767 or 49.8% from $94,023 in the same period of 2023. In the same timeframe, adjusted EBITDA was $92,107, down from $152,246 in the previous year.
| Period | Net Income (in thousands) | Adjusted EBITDA (in thousands) |
|---|---|---|
| Nine months ended September 30, 2024 | $47,256 | $92,107 |
| Nine months ended September 30, 2023 | $94,023 | $152,246 |
Showroom Expansion Strategy
As of September 30, 2024, Arhaus operated 101 Showrooms, an increase from 92 at the end of 2023. This expansion strategy is aimed at increasing brand presence and driving sales through enhanced customer engagement.
| Showroom Type | Count as of September 30, 2024 | Count as of December 31, 2023 |
|---|---|---|
| Traditional Showrooms | 83 | 80 |
| Design Studios | 11 | 8 |
| Outlets | 7 | 4 |
| Total Showrooms | 101 | 92 |
Liquidity and Capital Resources
As of September 30, 2024, Arhaus had cash and cash equivalents amounting to $177.7 million. The company’s cash flow from operations remains a critical component in meeting its working capital requirements and funding future growth initiatives.
Dividends
On February 29, 2024, a special cash dividend of $0.50 per share was declared, resulting in a total payout of $70.1 million during the nine months ended September 30, 2024.
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Resources:
- Arhaus, Inc. (ARHS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Arhaus, Inc. (ARHS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Arhaus, Inc. (ARHS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.