Delving Into Arhaus (ARHS) Ahead of Q1 Earnings Release

Core Viewpoint - Arhaus, Inc. is expected to report a decline in both revenue and earnings for the first quarter of 2024, with revenues estimated at $263.2 million, reflecting a 13.6% decrease year-over-year, and earnings per share projected at 2 cents, down from 25 cents in the prior year [1] Group 1: Revenue and Earnings Expectations - The Zacks Consensus Estimate for first-quarter revenues is $263.2 million, indicating a 13.6% decline from the previous year's figure of $304.6 million [1][2] - The company has guided first-quarter 2024 revenues between $260 million and $270 million, with a comparable sales decline projected in the range of 20%-23% [2] - The earnings per share estimate has remained stable at 2 cents, suggesting a significant drop from 25 cents reported in the same quarter last year [1] Group 2: Operational Challenges - The implementation of a new warehouse management system in March may disrupt operations, leading to logistical challenges and delays in order processing and fulfillment [2] - Adverse weather conditions in January negatively impacted client traffic, contributing to the anticipated revenue decline [2] Group 3: Adjusted EBITDA and Cost Factors - Arhaus is projecting adjusted EBITDA deleverage in the first quarter of 2024, with approximately one-third of this decrease attributed to gross margin pressures due to fixed cost deleverage amid declining revenues [3] - The remaining adjusted EBITDA deleverage is linked to SG&A expenses, which are affected by the revenue decline and ongoing strategic investments [3] Group 4: Earnings Prediction Model - The Zacks model does not predict an earnings beat for Arhaus, as it currently holds a Zacks Rank 3 and an Earnings ESP of 0.00% [4]