Arhaus (ARHS) Q1 Earnings Beat Estimates, Revenues Decline Y/Y

Core Viewpoint - Arhaus, Inc. reported first-quarter 2024 results with both earnings and revenues exceeding Zacks Consensus Estimates, although both metrics declined compared to the previous year. The company is focusing on expanding its physical and digital presence to enhance customer experience and is optimistic about future performance due to strong consumer demand for its products [1]. Financial Performance - Earnings per share for Q1 2024 were 11 cents, surpassing the Zacks Consensus Estimate of 2 cents, but down from 25 cents in the same quarter last year [2]. - Net revenues reached $295.2 million, a decrease of 3.1% year-over-year, yet above the Zacks Consensus Estimate of $263 million [2]. - Gross profit was $115.1 million, down 10.3% from $128.2 million a year ago, with a gross margin contraction of 310 basis points to 39% [2]. Expenses and Profitability - Selling and administrative expenses increased by 16.8% year-over-year to $96.7 million, primarily due to higher selling expenses from new showrooms and corporate investments [3]. - Adjusted EBITDA fell 46.9% to $29.1 million from $54.8 million in Q1 2023, with the adjusted EBITDA margin decreasing by 810 basis points to 9.9% [3]. Cash Position and Guidance - As of March 31, 2024, Arhaus had cash and cash equivalents of $233.2 million and no long-term debt, with net cash from operating activities at $37 million compared to $11 million in the same period last year [4]. - For Q2 2024, the company expects net revenues of $310-$320 million and a net income of $14-$18 million, with adjusted EBITDA projected at $33-$38 million [5]. - For the full year 2024, net revenues are anticipated to be between $1.33-$1.37 billion, with a net income forecast of $95-$105 million and adjusted EBITDA of $185-$200 million [5]. Market Performance - Arhaus shares have increased by 28% over the past three months, contrasting with a 2.3% decline in the industry [6].