ARHS - Earnings call transcript Q3 2024

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Operator

Good morning, and welcome to the Arhaus Third Quarter 2021 Earnings Conference Call. [Operator Instructions]. A question-and-answer session will follow the formal remarks. Please note that this call is being recorded, and the reproduction of any part of this call is not permitted written authorization from the company. I will now turn the call over to your host, John Reed, Co-Founder, Chairman and Chief Executive Officer. ahead. go Please

John Reed

of and to Call. everyone, Chief the Third team. and Vice Arhaus Officer; seasoned is Good Relations her Investor with welcome to me Conference professional, President new our On Tara are Phillipson, Relations. today Quarter Tara and a excited morning, we Atwood, to Investor welcome are Financial Arhaus Dawn the

to it I'll over Tara. hand Now

Tara Atwood

the will Arhaus our Good joined Third XXXX for morning, and our After we thank Earnings e-commerce the Porter, prepared Jen joining remarks, and Officer, be you by Call. Marketing Q&A Quarter Chief for session.

please Those hours. release and will one and documents website our Investor are Q&A, before at ended follow-up. press for to our within XX-Q XX XXXX, earnings quarter available A call the on our During the one website replay of our September be Relations limit today. We ir.arhaus.com. on opened question available XX, issued market

future As trends concerning a due objectives, constitute and differ number may or to reminder, results uncertainties. statements. materially a strategies, of or remarks Actual events risks results today expectations, events, forward-looking

required made from or The may law. update are date, statements. the of as with obligation For press a cautionary may as and by statements be no risk summary annual recent and information, and Form our time forward-looking factors and report today's such be updated except to statements in factors these most time release filings risk described the this to in on of company SEC. The our revise please refer XX-Qs to additional and XX-K these morning's undertakes factors subsequent as

to the non-GAAP morning's refer reconciliations. certain financial non-GAAP We this includes measures, relevant press release will and also

the over to I will call back Now turn John.

John Reed

to begin by to execution like our quarter. this the gratitude call I'd with their Tara. exceptional team my expressing Thanks,

dedication their by driven creating showroom products is and delivering to success long-term an inspiring outstanding experience. Our

craftsmanship. builds A most showrooms of highlight collections elevate the compelling we new across experience. our read in client [ quarter, and natural materials making fall artisan designed ] has This is the Aster our chosen with functional each product to from Oak stone to Thoughtfully Marble launch history. commitment the Collection, beautiful presented combines sophisticated leadership launched brown globally Aster stunning the and and product on of which tops, some our and its This and Arhaus beautiful piece ] solid collection for [ rich Expresso elements collection tempted both movement. sourced tone

selections that Our upholstery home. and fall define includes pieces can launch also elegant a curved collectible unique

net net our In to million. a income Moving $XXX of quarter, and EBITDA adjusted delivered performance. of million, quarterly $XX we revenue million $XX the third of

During the a growth in quarter, XX.X%. decline we of comparable demand experienced

well respectively. quarter August, comparable received as month demand compared our held supported demand, in trends single the the demand and to was XX% launches. the storewide our growth comparable growth spring these leverage around mid-teens by performance launches. This single-digit fall a last declined clients, set our we Notably, year's low the period. and history, September key Arhaus This declined and In and each to with to coincide marketing drive sale low January our in October, continue was by campaigns annual engagement promotion and total digits. comparable new a progressed. In Arhaus in to September strong improved However, record as July decline following we recorded up meaningfully teens high biggest in September, demand

As clients brand our digits up with nearly the total resonate pressures. continues as demand double environment was remains ongoing to macro however, consumer despite pressured,

business. believe quarter, our our third over course of demand strategy is Dawn environment, the campaigns. and year remain lowering our call. Despite details fully reflect of the committed on and headwinds, we we're given these tempered offerings innovative discuss While earnings growth to sales our later compelling consumer the to marketing full and we trends outlook long-term product the will the continued improved the fundamentals temporary which

growth first, assortment, expectations and essential exceeding and is premium which reinforcing client include: our home for Our our drivers artisan product elevating crafted enhancing furnishings. key leadership in

to in support brand the awareness improve our key our ensuring new are have business Arhaus to foundation bring increasing to showroom to strong and deepen a with growth. more investments our and clients. we our third, clients And experience markets; Second, which relationships strategic our base making finally, infrastructure existing we our expanding long-term both tools, will upgrade

to showrooms. our Turning

of Corte XXXX will [ in the Cortemadera, opening year, opened [ meet The already XXth with our our goals X West ] end expansion. showrooms California]. We bringing new year the traditional tomorrow year, halfway new high California just total end are target XX showrooms. our this to traditional expect ongoing and our showroom open showrooms, our of the Coast to on be we showrooms in This part XX showroom track Madera XXX opening to of at additional location as to traditional of

[ opened studios lap ] X In design year. house new this addition, X and we locations

mentioned in be we our now past new proud to economics as tomorrow. of XXX formats. in grown our performance all pleased showroom I As to with count continue showrooms We're calls, have of to and our total

Moving to industry leads believe product. design We trends, often emerge. them the seen our before setting in house they

in business looking assortment and the [ been with and now, of you these collection, offerings. spring continued our earlier, aesthetic or months in the include mentioned to catalogs. we're our quality I merchandise about website launch whether Motion the in to of our already on experience excited on hard growth our on within fall ] upcoming expanding which the design, highlights quarter. our we're at third thrilled appeal our see away. Note the time we're And collections. motions showrooms some selection decor, or the furnishings launched just work in encourage As We the for X upholstery We've new

exotic wood well, to across introducing adding dining, character enriches line. our we're bedroom, distinctive Additionally, collections product

our foundations strategic long-term investment growth and the by previously the we upgraded communicated, processes. with for efficiencies setting On improving we front, operational infrastructure, technology as are

at our system now on management manufacturing to new our system upholstery design of pleased focusing are our and warehouse build planning and are the facility. ERP new and new phases have the We implemented

to systems be these XXXX. expect in We implemented

a system planning our our capabilities. margin and help will factory production ERP purchases and will capabilities visibility As upholstery new and the optimize improve forecasting the facility inventory and reminder,

it Before to to over outlook hard and financial Arhaus want I discuss to, the team thank dedication. our of turn I Dawn remainder work XXXX, results the for their and again, for

you, best is driven creating commitment resilience products value to team's long-term of to delivering Their inspiring our and Our to success our shareholders. commitment and highlights our the ongoing our for experience. showroom growth strategy by dedication the Dawn. Over

Dawn Phillipson

in the a X.X% was $XXX quarter deliveries Net decrease backlog compared with of decline. year abnormal in was The total prior quarter. in good revenue million and morning. the the primarily you, and revenue lower prior to non-recurrence to third related the year comp Thank net demand

comp quarter, declines. improving earlier, with comps September's declined low mentioned to demand high XX.X% demand John July's our in single decline August meaningfully from and mid-teen digits the As teen

revenue. primarily costs third revenue primarily decreased $XXX costs costs, lower to gross higher driven net higher million, Our as transportation and driven higher and footprint. Gross percent to Showroom net by margin Showroom of and net as quarter a margin decreased revenue to XX.X% on continue expand lower by deleverage our delivery we

business, to was Nature driven million and to growth donation offset marketing This increased support of of Third drive the supply nonrecurrence costs, by quarter technology legal including the primarily to $XXX strategic expense and investments improvement. the last million SG&A the chain $X investments year's partially by Conservancy. and

third in $XX quarter the quarter versus $XX the million. net was income Third million $XX XXXX was XXXX. Adjusted quarter million in EBITDA of

a Third adjusted revenue adjusted the X.X% $XXX in EBITDA quarter. EBITDA and resulted margin in quarter net $XX of million million of

As we are we reported our morning, for full year this XXXX. lowering outlook

in product we As responded experienced the August. trend single July as sequential In September, marketing reminder, our with low demand decline promotions. demand May negative in into and comps accelerating digits a experienced and clients improvement the well planned assortment, with to the softening comp starting we

As SKUs as XXXX. impact we we're the that strong the a experiencing to pullback of quarter, by to softer demand the half of now action in from the the of last comps reflection believe last starting furnishings year price our we are business, second home lapping is continued related consumer as well mentioned the demand

expect $XXX range to in adjusted $X.XX For EBITDA range of $X.XX and billion now million net the to of $XXX the revenue in we million. the billion year,

approximately of As that and backlog expect the adjusted in to we for XXXX, EBITDA midpoint In the $XXX delivery to of decline as our negative XXXX revenue X% range of the abnormal $XXX to year of we and revenue a lapped the million $XX range net for anticipate million. implies, expect the we comp in net million occurred million $XX of $XX fourth we in in the demand million the quarter year. range

investments and XXXX of system gross experience promotions strategic including demand expect for about other to million focused to comp the double-digit invest current We invest XX% low subscription investments to for investments, of the now in million e-commerce, outlook and business. In margin, $XX include on fourth allows communicated our XXXX. million balance $XX year. and to this for trends in spend the expect Our in fees and gross demand in $XX previously investments client XX% We we for deployed $XX systems, corporate outlook a margin. $XX initiatives around flexibility with strategic in and in in to quarter. million to contemplates the year. We growth investments approximately SG&A expectation and enhancements the These decline strategic support remain the XXXX, drive continued in the approximately million

please want strategy strong challenges. our current our reiterate refer I all details release. In macro For to our our outlook, other to commitment press XXXX despite closing, the to related to growth

competitive share responsible us balance $XXX investments the billion sheet home furniture build market. meaningful Our to make on the in premium allows debt-free advantage our to that fragmented a gains highly is

we environment prepared for of believe happy to service us we well are we for first a navigate and value morning, to current joining you positioned drive continue stakeholders. and to This maintain remarks. strength, like our client With this concludes questions. thank your We are our the all from and I'd take position that, to

Operator

[Operator Instructions].

Guggenheim the Steven with Forbes from comes question first The of Securities. line

Steven Forbes

performance X how Maybe or to plans. those pro relative new how the start environment to -- expand X performing of the and on stores could recent are internal impacting Curious and with estate more current if the showroom are cohorts your XXXX performance. store model cohorts, just start the the forma to real store XXXX, right, you

John Reed

Yes, been very new Sure. to growing. with have seem solid. They They thrilled the be opened we've stores.

that been really Some runs them on right projections. Other home ones have of surprised super us. steady very

far going So also great estate currently. Ad and at real yes, new dated probably we're back runway we're with into our that. future, lot we're have looking to lot And and plan. not only forth maybe lot bigger on a sticking working of We've stores looking forth, are we so we're of so become with of doing and as into got as a A moving happy the existing better, locations locations. but do. that

fact, a be story we're absolutely We're a location. As or in opening building, one success. stunning. moving so of we've it toured XX It's huge, to freestanding tomorrow of A a matter yesterday. best had X for it just Virginia. a And stories. it's as those to in years Fairfax, huge I well going

locations we we're doing as the relevant country at very format well. that a [indiscernible] keeping about So edge excited very our like and around cutting then new and both, current looking fresh. very, all the

Steven Forbes

is investment $XX spend more quick strategic $XX And $XX to $XX look that. of million increment the million? Or $XX in $XX of of an maybe should million for then that rate million million? to The $XX $X of So for at to that follow-up million million? Dawn. $XX -- just million Appreciate year, so we run of top a XX sort next to on is that as of a million, million to addition

Dawn Phillipson

question, Steve. Great

year investment next strategic So $XX million to be $XX will is total the million. it -- spend for

So $XX in million incremental the not is to XXXX. being spent that

number to we provide So comprehensive tried modeling corporal. for a

Operator

Next question comes from the Craig-Hallum. Hamblin line with of Jeremy

Jeremy Hamblin

a get the versus the components in and of and just of investments FY terms wasn't sure in here, you're fees changes. the are sense the staffing was wanted it timing systems going both And kind thinking terms about quick need was or 'XX? of systems million being kind touching different -- I then million And follow-up made cetera? better I that software spend? you kind of $XX really the if $XX $XX $XX requirements much the to of to how teams FY 'XX each million or be that of of that And that to million et a of to of support into of licensing

Dawn Phillipson

Yes, great question.

all answer to I try missed I'll here. me know them, pieces of moving but of lots So let if something. certainly,

planning portion. underway So well build, is with with the the software that

is that for next anticipating we'll in half. timing sometime the year. the the of first manufacturing half first We anticipate That same launch ERP that in the would we are

other X want are For platform to the we are for and other those systems, we're order management systems next talked the And the those X year the about very sure that make system. flawed. doing We financial correctly.

takes some are year. kicked but likely ] launch deployed next Those to will the And not next $XX it be be those systems we million So off [ that are in incorporating CB time. will $XX million. year. they

implementation million still million, next subscription between the split fleshed for as million year. And Those $XX $XX largely being and it $XX are So pertains not to is fees, out. then to costs personnel.

have yet new not vendors. We selected

could like. through what working We are actively of in the that process look

We different but range pieces then included the will and have you year, think numbers more about and is that that the on handle platform, the kind good nailed they there nothing targeting could a we're think we be time. longer-term in here for as a So next something little we've the we need OMS flex, efficiencies. that down. And bit we as financial think of like

we'll once to platform operational likely able count those are have efficiencies, might us especially financial the make head efficiencies, time. over process have deployed, So streamline with that

out, that capture So determine just be will but fleshed longer everything? those. Did a little of bit XX all to months takes than I

Jeremy Hamblin

kind pricing and looked -- presentation on, question terms the saw linkage more back in presentation kind there you color. stores, from pricing wanted of in improvement migrated to kind online notable your the of the to additional like September, in over a company kind September, last trends. Great terms the I which bit Is of coming of the I all Yes. of traditional even was time. trends. to one years and have of that sale the Arhaus hit presentation away like things few look as demand demand to in any pretty a around

off presentation? You're overall in thought percentage running your based And that's it Is to of kind was September storewide promo where typical of degradation before. seeing on and had you've kind to any potentially is in to any online. how demand that of kind you comps linkage going back which there there

Dawn Phillipson

stance shifted we really reflective really presentation to more of Great our noted, want to [indiscernible], Yes. the and on you question. consistent our how Yes. price and value pricing, reflect And pricing, as the that that's we products products of clients. our of to our

it's of or think a that reflected question great sales year about last ] in pleased that in XX it I last September, the [ September. and to really comes that biannual improvement X the storewide terms years time. was doing that of fall with the a strategy we our promotion September. comes do in twice we in spring really were And comps year in

well. in I think is -- what's single-digit the interesting comp at as negative comp looking October low

trends the not our reflect we clients continue we in promotion with deceleration October, isolated that create We're products, active art for that strategies come not paying [indiscernible] something be what's always October. in off into on and that build is product and beautiful, lot seeing We're our on strategies. Pricing will high-quality, retention a trends built going the and price in in value close we that accordingly. our design price market. saw our to that wasn't product. works of a we're going it of saw we then about pricing spoken have a then So engineering similar strategy is an are before pricing here. how September that where We've September and we

what we're now, very right are with we happy think doing we're and close change. we that. And very paying but evolving that carefully constantly attention are So about

Operator

Next with question of the comes Bank Ohmes from America. line Robby of

Robert Ohmes

think, quick questions. Two higher I expecting was little A one, bit the growth, in just were than a we quarter. inventory

think here? the the puts is could And Just -- if further for should don't us fourth we on Dawn, XXXX. about through you and in question gross any just think takes quarter know, we any give how update quarter some on inventories fourth margin into will should trend I my second how

John Reed

That's take on hit question, selling company us I and that Robby the are of things. product on a out direction. collections our the Yes, my new of been and lot growing can inventory of surprising amazing We've pace some

As we're out I mentioned, product launching incredible into coming and some year the this new spring. end of

still just with I it [indiscernible] in playing some selling. because wanted back on things much So up we to, were products a, because so surprises we're much how get catch stock

and hire So our had forth. to so and facilities partners people

everybody and We're to has now. everybody us. done to thrilled what in us grow. So has with with line ready grow we're for

to wanted more some I get inventory. So

everything. So, into a, these b, on XXXX. collections almost we're going are us best-selling really fund And in really propel new to stock we that can

Dawn Phillipson

And Great. the on question. gross then margin

we don't gross encourage last had was be fourth really you you third will in guide I I we of those than abnormal keep you're couple to mind, would margin, than about remember, we're the models the a the half while that backlog So the helpful quarter. was quarter your thinking to with heavier second fourth and heavier the there's And as think million $XX half as quarter. first year. about and thinking for of things

abnormal quarter revenue So just lapping flow-through perspective to from are a backlog. first the we a related

So you're showroom earlier question Steve new related see going the to XXXX. for deleverage to on some and the that. asked

we've so construction. possession. are already mind of keep those, We under in started taken those And just that most

of about talking the through product -- to promotional already how I prior callouts margin P&L, we're those and I and additional really gross just quarter things take. mentioned actual the see some that cadence. to related and would the So like margin good expenses, as about key such compression relative in you'll in year rents are we're as nature the or that flowing of kind the feeling We're fourth

XXXX, so versus come report will we to quarter more we likely now. guidance when fourth And on give

Operator

of from with comes line Matuszewski the Jonathan question Next Jefferies.

Jonathan Matuszewski

The Can maybe throughout demand you first maybe be helpful. the us AOV. thinking one would was insights complexion. I'm conversion, of first things relative to that understand like trended XQ on just help how traffic, half Any

Dawn Phillipson

Yes.

paying were data the choppy like happening across trying those. understand tracking while with year. we're has much see in nicely to the as over consumer. ways, transaction nice the did was quarter, third dice close per actively the mentioned we in down. We And And order that transactions that's orders are been response comp as what average were and did was We're interesting in different third really decline is board the $XX,XXX traffic guys We're and attention. see $X,XXX past, comp down, to up those the about we've quarter the you underlying then units XX in well. slice So over what's those this year-over-year. are interestingly, that

orders to those of increased. total the However, penetration relative

customers those seeing a So the higher at decelerating bid base slower value total rate. but consumer like

So and enter and we interesting and giving as year. the about us the of few some kind the marketing product the of months feelings good last feedback assortment,

Jonathan Matuszewski

you have spend. if just tied the if went is And maybe second update maybe And may us do to helpful. then what Indonesia we really source to China changed extent could which of since COGS and your higher tariffs, my product you on Vietnam to see U.S. public. That's percentage exposure and question, on of the and the reliance

John Reed

Sure.

election we've this know, for in. been As all you who's we now and waiting know

part guys things Eastern States, China, years, very -- about that countries moving kind in relatively on But to X basis. years this and of have doing more than certainly is any we're get United various now, in our us, I'm all manufacture with know, our we Cambodia, significant Europe, globe more Europe. truly a we're our working number over. please out own as from X the left Mexico, things all major was which their of business. And our things the country we China for than any China, of over of upholstery But small have we happy China. migrated all all you business vendors the the large out here even So biggest to not competitors probably -- do, over that on of the very been

So working had a they've this. now of people happen. couple this this a been on working for may of anticipating team years, We've on

shape. So we're in great

Operator

from Stanley. Simeon comes line with Morgan question the Next of Gutman

Unknown Analyst

on more Does in you else? of is, Simeon. are Lauren comp maybe satisfied or it is customer is our you're something intense with trends This maybe question for running? guess the demand weaker, is promotions I the light show first that competition

Jennifer Porter

to in get obviously, dealing a obviously temporary. We really macro want been It election get A the has we lotion believe going industry better. demand. we a here We for been really of to interest that in into on with that. the the around was of the a is lot noise we And macro of lot what's better. furnish our [indiscernible] year leading obviously interesting No We've one see been the back choppy seeing conversations housing has longer for than working have. a market. bought the to market, rates week, of lot this earlier terms

really are our are our in what confident in of we facts. all we are how doing our strategies, So business, monitoring we in

versions, promotions do on. as overall going remained of run and going market, commercial terms you elevated We the strategy activity. in be our has pretty to promotion everything and I'll know, consistent. it continues to that's on an In what's approach

promotions going next We now, but have on about that future. year. forward and have to happy constantly spoken and a launches to prior then But and hear the calls, into that and to lengthening it QX the as evaluating continue we're [indiscernible] we're [indiscernible] looking lever

John Reed

red cylinders. Yes. in that quarter. And incredible have hitting for little on this a we lineup add to an marketing And had stumble that, all new we XXXX products, just and new just are the stores to

last had was XXXX. a I stumble think time we the

years so. or what So is ago that X

credible huge a So we've run. run, had

competitors few Our comps last the up to our way compared years.

it's -- comp a to over. year. out have going plans a but at the going think that hearing comp stack great. we unbelievable. that of we housing all And so the rates little or kinds to stumble yes, we is look of better to be the of on We doing and we X-year some get Hopefully, you If know interest election fall. market, so we here, I a continue forth, love bit start had news incredibly that, into next are

we're So about very and happy excited our future.

Unknown Analyst

on It my newness competitive -- And seems Could you is That's catalog lot landscape. Great. maybe who is the overlap comment that the of follow-up versus have large intensity in just market if you industry? then seeing seen year. and you've or in the a a competitor any helpful. product this driving general, what you're share

John Reed

mean product, new designs more. We're, and which has our sellers, guess, doing Everybody of of product. flatter especially been best that are I Yes. happening our part incredible, that. our But us competition does more the competition. our that's I some

So with that's competition been ours. of market taking very any we whatsoever any on our product our effect similar don't to see share

matter beating a of As fact, ours our has been projections.

best. here. make going exciting most think, the So country. team, design we manufacturers do product of do in business. we've around I the and best. people, to do we And a it's few everybody, to the are copy to course, stuff best we're going the got and and we'll continue world. that's of what stay the lot do we'll the steps Get But coming unique that part guess We've continue in what ahead best of up we us. flattering got of partners And a to anywhere

Operator

of from Telsey comes with Advisory. Fernandez line the question Cristina Next

Cristina Fernandez

outlook give XXXX, on see relates particularly the I in color wanted for the as if change can to to more demand. you it

you the assumption call, talked the last low down half back the demand On for digit. double about being

down came XX%. quarter also down double quarter Fourth is Third outlook digits. low

be to seems same. the it So

understand prior trying things just I'm of falling the outlook. short to are So where

Dawn Phillipson

Great Yes. question, Cristina.

double low digit. So

a there's little Of there. a range course, of bit

just is component right? right? And cadence net just kind and some then component we're December, out mind then for we're to closer sales secondarily, November demand promotional looking at demand timing revenue, -- one as picks we're a looking comp metrics that little tighter the balance get contemplating the flexibility there. up there. if our or range, bit impact of comp in about contemplating keep deliveries this as just There's and thinking that the to just and trajectories that's in So November, different year, to that's and trajectory of December at that as the

X the reasons, are those So though.

Cristina Fernandez

you on just the the but one in with And China on not the exposure us follow-up back then you know a deal others, sourcing XXXX, as remind exposure. -- how can the is as questions of I you your cost bigger Did to you What earlier big the offset organization? could across cuts then And pull did levers to be around? that tariff? extent have prices are to you can time tariffs increase the make this impact? the you that any

John Reed

And China. that Yes, cut then bit. a raised on took Yes, did again, sure. China, same of coming of we the ago, the partners. stuff of The work a prices XX% have a much their margins. little offset out product They tariffs out years few is not of did we that we we our -- with

around keep we it across this mind, product X%, same big think a the of world, then was that. we'll the And cut as [ production is right on here I like us the sales. If in in our Again, thing. board beat do the the But did XX%, a openers in ] happens part miss United gave States. something a well.

So we deal country, we'll are to out that. one should it about offshore this one. say, The I with things that of worry or don't have by

business. better doing product value, such an designers better out that million $XXX incredible than there Our than our are is the competition,

think and to we to our don't affect that's sales. have going we raise So prices, room

Operator

line next Your with comes Piper Sandler. Peter question the Keith of from

Peter Keith

guess response did able in you Apologies, I got of bit on or I our at on to just mid- the demand recent that now hindsight, call a you've QX. fix in anything to had there And for that little look back negative that stumbled August, wrong John, those declines the internal bit benefit a that maybe late. teen you you and mentioned that identified were But you July you you little was gets high comp with track?

John Reed

the And numbers. some also taken clear some inventory for at we previous had of said, volume to obviously, which previous didn't against that. And mean I year, that we Yes. looked up was out big we numbers, we big we've big us. obviously, -- we Yes. And for positive year, didn't a big a up. Dawn markdowns some the some had just this forwards. A, and plan we're lot we assumed could make as backwards just

happen And think with the we the we what of if those little all was we should But and and wanted big of part is at promote big motions see probably that. to we were We the things. were a See promotional biggest didn't prior So those looking going comps forth months. big back, in very on so any couple really out that. quiet product been cold a are to just categories. year, have all were things the clearing the we more

Peter Keith

just Okay. The Dawn. Helpful. for outlook for for question And demand piece then on just negative a to I'm trying comp low QX. guidance double-digit together.

Jen what I November single-digit compares. with believe think I October. December, is to easier negative said continue that trend the or low

that they challenged get view the conservatism, is understand I and choppy, are write-down, but might get more worse things guess, I So very post-election? might why

Dawn Phillipson

November about had think we've to are Yes. us. date dialogue for It's Peter. look what of going lot a and we And ] December internal question, [ like a great do

the although want to sequential in October, pleased, we be. really certainly although So acceleration acceleration where -- not and September

trends I are I December. for have guess, a a because in baked And for caused oriented. but said I conservatism the but when in more other likely potentially year little returns call just choppy, distraction will this consumer data so last on do been the think [indiscernible], sets be the November, trends, it holiday spending, some in because think the of And I it the might be do [indiscernible] choppy to I and really it's quarter -- for. We maybe, underlying also think pullback. categories, I election

as finish we're we for So year kind guide, ourselves a to little prudent. that excited jump pertains does the what think, this to as into look I next and really flexibility is out us. of January giving bit year of it But and like

the with to were reacts in came a We they'll months, X that support introductions trend and out pleased we'll the newness given the consumer -- see Just and those. that campaigns make how marketing to. September and really

question. -- great So

other that asking question the for is we've for quite week. a robustly been Yours each

Operator

comes Blee Blair. with Philip of from question Next William the line

Sabrina Baxamusa

Could has strength been you And potential by is This any any categories? income softening on or for performance some in color notable on Philip. provide particular geography? cohort there Sabrina or by

Jennifer Porter

question, really Sabrina. data, any it shifts demo to months make the our It's you client a month and a to trends when quarter demo. see Yes, great work can't really just we because or of don't X closely. comes in we speak We monitor really particularly really,

there are, a share would where seeing trends that Nothing they we do we obviously, this see significant are, our see obviously, we're but consistent. keep they remain the hurricanes factors weather from North -- seeing of play But clients, what are are Carolina amount updated that. in some shift in Florida area, in pretty and terms who the general, a we were the we'll definitely quarter, to in that We future. any in part date, you in if

Operator

the from Barclays. question Seth line comes Sigman Next of

Seth Sigman

follow-up me. questions A few for

I Obviously, had saw As elasticity. was of you demand waiting you're activity and sure in about the But seeing effectiveness think that or that promotional you for change more that a those the that And consumer promotional has expectations one event? September at more planning more the the sales you type the in September over you budgeting now broadly you recent ago? about pricing quarters to question and thinking that more of maybe then that all promotions? across industry. I'm talked quarter just it to for the it relative for how about does think are think dip there activity. I you a but how then I was just was responded investments, guess scenario, summer, event of not any about if related about guess think scenario do price about

John Reed

is a numbers of that's year against good lot question. we're again, and And Yes, a markdown answer summer, up the these the products. high the before

new it's our true it, are and the well there. you in do us. at all when customers They just They tried certainly don't people mind, know keep customers wait don't we know product. And promotions, But our about look love half product. every I have over our of that are they year. Some to

that just amazing even Our and we anywhere value credible stuff product is else cannot more so quality unique just an a world. the get in

they to. promoting And have people we mean that, want promotions leaders business. We're than any our started not with get of what more we for it. lot by our on we with to planning we margin We're I actually in don't start have in eroding need a been our the One So means. on best product. said, want. not don't that certainly trends we is business, planning because

afford Our afford travel. they customers product, can can to our

that think home the guys are about so. have to with as anything incredible margin think the second. And and we've industry a And furniture, -- taking this than summer, like last the opinion, are got need But they're traveling I is year all travel, are they're or the our it and thinking to do know lineup going of of think because out X. And us think to coming. to better things next by our but for even incredible was business their go had competitors past or They so so that they're everybody we going they're I [indiscernible] more we just that things this I you before. were year. becoming system I and didn't they in if for them COVID, get just over business, I going people going year. product, many Elections dinner no to trying things normalized, believe erode to forth, normalized maybe where and year now my do don't off do get the an going -- buy because the more to out to competition

Jennifer Porter

that we about being to we August Arhaus capabilities. products I that the last pricing doing fall September. We time, brand, the artisan customization what's product able off so then catalog, things on about the lot. October special doing launching quality, show to levers, August the the were of a I incredible promotional opportunities, tell beginning well, that think order the the that We of story, the levers product, the styling the year, just half we talk show were off as all make that make add All new and Arhaus you the special. And the at into show of think is those in as back off end things sales. homes going hit July, from very period think lot September, of drive order to our to to a were June, launched that going period in August into going happening

lot going Those things integrating to July, them. the people. There difference we getting the sometimes able I between of on, on that the the the is think the getting and that we're make big August seeing are floor one to lot we getting are into think period. the And I a home. end in August on a at that going catalog do in the well. inspire things in the people distractions And of into business summer, of of finishing focus that we out that stores Showroom launched doing the a in June, of walk or and results mail be end market and what fall really about a new really set

Seth Sigman

maybe a web look a at you've curious, seen you of traffic, exit when indicators you engagement, improvement sort the housing anything is demand part that demand at like on there gives overall is thinking the So seems from I'm good in just a in confidence . hesitation waiting is just and underlying things that macro. some there, leading business, consumer's store follow-up so your traffic, there's when the on and least customer message perspective. -- think like about it cadence. positive what you the about rate, there is relatively

Jennifer Porter

the great And even and one direction think, looking to into digging seeing that few maybe been I'm every did, we've other see and ago, hesitant questions because mentioned Dawn then and our comment or as a see elements responses you metric on really you something And else. We metric That's to Yes. suggest a positive suggest to specifically thing something buying just all new products John Those everything. about nice put out. the at mentioned, I of well one is is launched those question. else going the that the surprised of we doing us market. new to and we're some indicators in success doing are that we are what response product by working. People that collections of marketing some confirms that seeing to how everything on despite these they're we'd that as the be comments

at. think that look So things big of we one I is the

understanding that behavior behind I of other that to every every I are capabilities, customer things but and smarter really getting and all maybe indicator [indiscernible] to are market day. We're investing think getting better that the on We're our we customer thing would the or isn't a behavior. point about internal capabilities, we're how day. the team, our data talking going indicator, analytics scenes, really

And able when give they us meet there. so what single I every month they want of day, think we and be our being to better clients every to are getting them single want

of lot that positive optimism gives us a so well. going And into XXXX as

Operator

Basham line Seth [Operator Securities. from of Instructions] the with Wedbush Next question comes

Seth Basham

success point to? factors What other in is any because Was think it $XXX you the had over of relative that bigger can drove discounts you about $XX,XXX. of question you terms do first or My just thinking sales that?

John Reed

We have absolutely the getting been stores our that stores our they to room. want And absolutely going concentrating remodeling on, and whole a, with say helps sales. beautiful. are People

stores that's in money. On that, stores average believe. sale, heavily internal we interior blown when our the on very So top I new more spend away focus that number they triples stores, are designers in and our X that, they certainly walk you again, is just people our our walk and of and renovated just and

which gets designers to with larger top month do and for own that, sale a Really to or more our with house, the out and business, us as us. of booming. many many, One been tying a but designers are our well. of put the programs has More together entire those trade the entails entire up are our larger clients, the of of every finding home. On sales. also using plan And those client's outside that work certainly those. And room the

driving the sales. it's is know why larger combination the we those, of So

Seth Basham

That's of talked knocking in about products. helpful of And emulating you John. secondly, product, some competitors out color, terms then some and your

[ that then you environment continue there you to like competing of your products drive collection Aster like legs? price see intensify? sales to you products. for [ to new major ] you a one? do feel need furniture competitive redid and to you And ] more thinking do lot a see as don't You of having And seems Can some two, on aggressive strong confirm of be get the a trend, the highlighted that about

John Reed

answer we people we Yes, And trend really that a started here now playing quite up. is tell, the we for Yes. that any are significant -- and way, in what trend can while. catch from last Yes, question.

They want collection jump off I'm people everybody. now. trend, once and the to copy guessing the next on right collections customers, that but folks to it of gets we're next red because not selling guys probably down to the a follow I'm little lowest once has the down [ us So the everybody to to our us. [ trade lowest they to in be stale. And that's red the ] guessing phase design the ] all next the going the collection way

trends country, on any and here that's of follow love in culture States. United in to we get this the our part -- jump So people

our next great design And new with. handle growth can some we've that grown We've very great we're as that the our so some coming new partners added on team more to folks products. found around one. We've very, to some world the we've up been actually happy

keep those very of has And of folks can time They collections a they But so be model do of lot that. can't out So a competitors. bigger isn't bit different a than pump with factory. up easily keep even these And things our handle and so of that that be that hand we're to products SKU do our what of can can't we innovate kind it. we product at a it. they want quite day made. A going because just manufactured in a folks, X,XXX one these products. the and small to up new one folks best our they're that's copied doing lot But a like come lot can

a is ours very So model. unique

Operator

would question-and-answer like session. to to Ladies and floor gentlemen, end the reached I Atwood, have Tara comments. closing we of the turn over now

Tara Atwood

for call in interest everyone, Arhaus. our you, and in your participation Thank

John Reed

guys. a Thanks, I day. it. appreciate great Have

Operator

you. Thank

Dawn Phillipson

Goodbye.

Operator

and participation interest in your call in our Arhaus. for Everyone,

Arhaus (ARHS) 7 Nov 242024 Q3 Earnings call transcript