Arhaus (ARHS) Stock Forecast & Price Target

Arhaus is benefiting from accelerating demand, with Q2 demand comp improving to +12.5% Y/Y and delivered sales rising 7.4% to $385M, both ahead of expectations, while broader category strength in upholstery, outdoor, and connected home suggests healthy underlying consumer appetite. The company also demonstrated strong earnings leverage as adj. EPS reached $0.28 versus $0.16 consensus, adj. EBITDA reached $70M, and gross margin expanded to 44.7%, supported by tariff refunds, higher delivery fees, and disciplined SG&A at 30.6% of sales. With inventory positioning described as the best in over a year, improved in-stocks, and 2026 adj. EBITDA guidance raised to $160M-$171M, the fundamentals point to durable operational momentum and improving profitability.

Arhaus is facing a weakening fundamental backdrop as written demand comp sales decelerated to -5.7% Y/Y and management lowered full-year gross margin expectations to flattish Y/Y after gross margin fell 70 bps to 36.4% in Q1 2026. Although revenue of $314.3M and adjusted EBITDA of $18.0M beat expectations, those results were supported by SG&A leverage rather than durable demand strength, while higher freight, fuel, and showroom occupancy costs continued to pressure profitability. Its outlook is further constrained by exposure to high-income consumers, sensitivity to housing trends, vendor disruptions, and execution risk tied to re-accelerating new showroom growth, making recent demand improvement appear promotional rather than sustainable.