Arhaus Reports Third Quarter 2024 Results

Core Insights - Arhaus, Inc. reported a net revenue of $319 million for Q3 2024, reflecting a decrease from $326 million in Q3 2023, primarily due to lower demand and the absence of prior year backlog deliveries [4][6] - The company experienced a comparable growth decline of (9.2)% in Q3 2024, with demand comparable growth at (11.3)% [5][6] - Adjusted EBITDA for Q3 2024 was $23 million, down from $34 million in the same quarter of the previous year, representing 7.2% of net revenue compared to 10.3% in Q3 2023 [7][29] Year-to-Date Performance - For the year-to-date period ending September 30, 2024, Arhaus reported net revenue of $924 million, a decrease from $943 million in the same period of 2023, with a comparable growth of (8.6)% [4][25] - Year-to-date net and comprehensive income was $47 million, down from $94 million in 2023 [26] - Adjusted EBITDA for the nine months ended September 30, 2024, was $92 million, compared to $152 million in the prior year [29] Financial Outlook - The updated outlook for full-year 2024 projects net revenue between $1.23 billion and $1.25 billion, with comparable growth expected to decline by (12.0)% to (11.0)% [2][14] - Net income is anticipated to be between $55 million and $60 million, with adjusted EBITDA projected at $115 million to $125 million [2][14] Operational Highlights - The company opened ten new showrooms in 2024, with an eleventh set to open in Corte Madera, California [2] - As of September 30, 2024, Arhaus maintained a strong balance sheet with cash and cash equivalents totaling $178 million and no long-term debt [8][11] - Client deposits increased by $50 million to $224 million compared to the end of 2023, indicating a positive trend in customer engagement [8] Cost Management - Selling, general, and administrative expenses rose to $112 million in Q3 2024, up from $107 million in Q3 2023, driven by legal costs and marketing investments [6][10] - Gross margin for Q3 2024 was $123 million, down from $131 million in the same quarter of 2023, attributed to lower net revenue and higher showroom costs [5][6]