Arhaus, Inc. reported its financial results for the first quarter of 2025, revealing a net revenue of $311.4 million, a 5.5% increase from $295.2 million in the same period last year. The company's gross margin rose slightly to $115.6 million, up from $115.1 million, although the gross margin percentage decreased to 37.1% from 39.0% due to rising product and occupancy costs. Net and comprehensive income for the quarter was $4.9 million, a significant decline from $15.1 million in the prior year, reflecting increased selling, general, and administrative expenses, which rose to $110.1 million from $96.7 million.
The company's operational metrics showed a mixed performance. While the total number of Showrooms remained stable at 103, the comparable growth rate for revenue was negative at -1.5%, contrasting with a -9.5% decline in the previous year. Demand comparable growth, however, improved to 4.1% from 1.3%, indicating a positive trend in customer orders. The increase in client deposits, which rose by $42.3 million, suggests a strong pipeline of future revenue as these deposits are expected to convert to sales within the next year.
Arhaus has been actively investing in its infrastructure, with capital expenditures for the quarter amounting to $27.6 million, primarily for Showroom openings and technology improvements. The company anticipates total capital expenditures for the fiscal year to be between $90 million and $110 million, reflecting its commitment to growth and expansion. Additionally, the company has made strategic investments in supply chain and technology enhancements to support its operations.
Despite the challenges faced in the current fiscal period, Arhaus maintains a positive outlook. The company ended the quarter with $214.4 million in cash and cash equivalents, providing a solid liquidity position to support ongoing operations and future growth initiatives. Management expressed confidence in the ability to meet working capital needs through operating cash flows, although they may consider future borrowing arrangements to capitalize on new opportunities. The company continues to focus on enhancing its operational efficiency and customer engagement to drive long-term growth.
About Arhaus, Inc.
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