Arhaus Stock (ARHS): Why The Price Jumped Today

By Amit Chowdhry ● Dec 9, 2021
  • The stock price of Arhaus Inc (NASDAQ: ARHS) increased by over 11% during intraday trading today. This is why it happened.

The stock price of Arhaus Inc (NASDAQ: ARHS) – a rapidly growing lifestyle brand and omni-channel retailer of premium home furnishings – increased by over 11% during intraday trading today. Investors are responding positively to Arhaus reporting the financial results for the third quarter ended September 30, 2021.

Q3 2021 Results

— Net revenue increased 68.7% to $203 million, compared to $121 million in the third quarter of 2020. The increase was driven primarily by increased demand in both Showroom and e-commerce channels as well as the delivery of orders in the backlog as the supply chain begins to catch up with client demand.

— Comparable growth in the quarter was 61.3%, compared to a decrease of 3.7% in the third quarter of 2020.

— Income from operations increased 281.9% to $16 million, compared to $4 million in the third quarter of 2020, primarily driven by the increase in net revenue and associated leverage of fixed costs, partially offset by higher production and transportation costs related to the increased net revenue, higher SG&A expenses to support the growth of the business, higher commissions in the Showrooms related to strong demand, and one-time initial public offering expenses.

— Net and comprehensive income of $14 million was a 1736.9% increase compared to $1 million in the third quarter of 2020. The increase was driven primarily by the above factors as well as decreased interest expense. Net and comprehensive income as a percent of net revenue increased 600 basis points to 7% in the third quarter of 2021, compared to 1% in the third quarter of 2020.

— Adjusted EBITDA increased 215.3% to $31 million, compared to $10 million in the third quarter of 2020, driven by the factors above. And adjusted EBITDA as a percent of net revenue increased 700 basis points to 15% in the third quarter of 2021, compared to 8% in the third quarter of 2020.

— Importantly, the company continued to invest in the growth in the third quarter by opening a new traditional Showroom in Salem, New Hampshire and a new Design Studio in Burlingame, California. 

Outlook

The metrics below presents the expectation for the selected fiscal full-year 2021 and implied fourth quarter 2021 financial operating results.

Full Year 2021

Net revenue: $764 to $774 million

Comparable growth: 44% to 47%

Net income: $1 to $6 million

Adjusted EBITDA: $102 to $107 million

Company-funded capital expenditures: $32 to $34 million

Implied 4Q 2021

Net revenue: $205 to $215 million

Comparable growth: 20% to 25%

Net income: $(30) to $(25) million

Adjusted EBITDA: $12 to $17 million

KEY QUOTES:

“We are extremely pleased with our third-quarter results and underlying trends in our business. During the third quarter, we generated record quarterly revenue and continued to see very strong demand for our products. In the quarter, net revenue increased 68.7%, comparable growth was 61.3%, net and comprehensive income was up 1736.9%, adjusted EBITDA increased 215.3%, and we ended the quarter with 77 total showrooms across 28 states.”

“At a time when consumers are investing in their homes and looking for more functional living spaces, our globally curated assortment of hand-crafted products made by leading artisan vendors around the world is clearly resonating with consumers. We have an incredible team of people dedicated to building the Arhaus brand, and we are making investments across the organization to scale our business and capitalize on the strong demand trends. We believe we are in a position to significantly increase our showroom footprint and drive profitable long-term growth.”

— John Reed, Co-Founder and Chief Executive Officer

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.