Arhaus (ARHS) Stock Forecast & Price Target

Arhaus is supported by accelerating demand, with Q2 written comp growth surging to 12.5% year over year and delivered sales rising 7.4% to $385 million, both ahead of expectations as traffic improved and average order value remained strong. Profitability also improved meaningfully, as adjusted EPS of $0.28 beat consensus, adjusted EBITDA reached $70 million, and gross margin expanded to 44.7%, reflecting both operating leverage and the temporary benefit from tariff refunds. Management’s raised 2026 adjusted EBITDA guidance to $160 million-$171 million and positive written order growth in April-May suggest the brand is gaining momentum across upholstery, outdoor, and connected home while still trading at an attractive valuation versus peers.

Arhaus is facing a weaker fundamental backdrop as Q1 revenue of $314.3M and adjusted EBITDA of $18.0M were offset by gross margin compression to 36.4% and a 70bps Y/Y decline, driven by freight headwinds and ongoing infrastructure costs. Demand is softening, with written comp sales decelerating to -5.7% Y/Y, while management also lowered full-year gross margin expectations to flattish Y/Y and flagged continued P&L pressure through 2026. The outlook is further constrained by exposure to affluent consumers, housing market sensitivity, competitive pressure, and execution risk around showroom growth, making the current improvement in QTD trends appear potentially promotional rather than durable.