Arhaus Raises Full-Year Sales Outlook After Third-Quarter Profit Drop

The Tip Desk · November 11, 2026 · 3 min read

Net revenue was $368 million in the third quarter as the company lifted 2026 sales and delivered-sales guidance while holding net income and Adjusted EBITDA ranges.

Arhaus, Inc. (ARHS), a premium home furnishing brand, raised its full-year 2026 net revenue and Comparable Delivered Sales outlook after third-quarter net revenue of $368 million, a 6.8% increase from a year earlier and within the company’s guidance range.

The sequential pace of top-line growth slowed from a 7.4% year-over-year increase to $385 million in the second quarter. Gross margin rose 8.2% to $144 million. Second-quarter gross margin had increased 16.1% to $172 million and included a $23.8 million benefit from IEEPA tariff recoveries.

Profitability reversed. Net and comprehensive income decreased 36.0% to $8 million, or $0.05 a share on a diluted basis, after a 13.1% increase to $40 million in the second quarter. Adjusted EBITDA decreased 12.3% to $27 million, after a 16.8% increase to $70 million that reflected the tariff-recovery benefit. Adjusted EBITDA as a percentage of net revenue was 7.4%, down from 9.1% in the year-ago quarter.

Selling, general and administrative expenses increased 14.8% to $134 million. Income from operations was $10.1 million.

Comparable Delivered Sales increased 2.6% in the third quarter, within guidance, after a 4.0% increase in the second quarter that exceeded the high end of that period’s range. Year-to-date Comparable Delivered Sales were 1.8% through the third quarter. Comparable Written Sales increased 13.9%, after a 12.5% increase in the second quarter, bringing year-to-date Comparable Written Sales to 6.7%.

Chief Executive Officer John Reed said continued investment in new collections and expanded customization was resonating with clients, as reflected in the 13.9% Comparable Written Sales growth. Chief Financial Officer Michael Lee said third-quarter performance reflected strong client demand, disciplined execution, and progress across strategic priorities.

The company is raising its full-year 2026 net revenue and Comparable Delivered Sales outlook, reflecting strength in client demand and momentum in Comparable Written Sales. It is maintaining its full-year net income and Adjusted EBITDA outlook, following an increase last quarter, citing continued fuel and transportation cost pressures and strategic investment into expanded marketing initiatives.

Full-year 2026 net revenue guidance is $1.465 billion to $1.485 billion, with net revenue growth of 6.2% to 7.7%. Comparable Delivered Sales guidance is 2.5% to 4%. Net income is $71 million to $80 million and Adjusted EBITDA is $160 million to $171 million.

For the fourth quarter, the company guides net revenue of $398 million to $418 million, with net revenue growth of 9.1% to 14.6%, Comparable Delivered Sales of 6% to 12%, net income of $21 million to $30 million, and Adjusted EBITDA of $44 million to $55 million.

At the end of the third quarter, Arhaus operated 109 Showrooms across 31 states. During the quarter it completed 2 Total Showroom Projects, including a relocated Traditional Showroom in Charlotte, North Carolina, and a renovated Showroom in Atlanta, Georgia. The Charlotte location spans approximately 35,000 square feet.

For 2026, the company continues to expect approximately 10 to 14 Total Showroom Projects, consisting of 4 to 6 new openings and 6 to 8 relocations, renovations, or expansions, representing mid-single-digit Net Unit Growth.

Cash and cash equivalents totaled $318 million as of September 30, 2026, a 25.5% increase from December 31, 2025. Client deposits were $325 million, a 37.7% increase from year-end 2025. Net merchandise inventory was $360 million. The company reported no long-term debt.

Net cash provided by operating activities was $173 million for the nine months ended September 30, 2026. Free cash flow was $115 million for the nine months, versus $68 million a year earlier. Company-funded capital expenditures were $46 million and landlord contributions were $12 million for those nine months.

The company remains focused on disciplined expense management, operational efficiencies, and long-term profitable growth, it said.