by Company also reports growth in store footprints with 2 new showrooms opening in Florida and New York this month and 3 new California showrooms opening in December
BOSTON HEIGHTS, Ohio — Lifestyle furniture retailer Arhaus Inc. reported a 1.9% increase in net revenues for the third quarter ended Sept. 30.
The company’s net revenues for the quarter totaled $326.2 million, compared to $320 million for the same period in 2022. Its adjusted net income totaled $20.2 million, or 14 cents per share, compared to $38.4 million, or 27 cents per share, the same period last year.
Year-to-date revenues totaled $943.7 million compared to $872.6 million the same period last year, an 8.1% increase.
The company also reported that its gross margins fell 4% to $136 million. This was due to the sale of goods at lower prices than container costs as well as higher delivery costs and increased fixed showroom costs as the company expanded its showroom footprint. It had 86 showrooms across 29 states as of Sept. 30.
Its selling and general administrative expenses increased 20% to $107 million, compared to $89 million in the third quarter of 2022. The company attributed this to a $10 million donation to the Nature Conservancy, higher selling expenses related to new showrooms and strong demand and higher corporate expenses to support its growth initiatives.
John Reed, co-founder and chief executive officer, said that the company is “very pleased with our third-quarter financial performance and are raising the midpoint of our full-year outlook for net revenue, net income and adjusted EBITDA. We had another exceptional quarter of demand comparable growth in the third quarter, up 11.7%. We experienced strong demand across all regions, products and channels. Our new product launches in September have been incredibly well received by our clients, and these industry-leading product designs elevated both our fall catalog and the look and feel of our inspirational showrooms.”
He added that the company has opened six new showrooms this year, including a new location in West Hartford, Connecticut.
“Tomorrow, we are opening showrooms in Coral Gables, Florida, and Huntington Station, New York, followed by three new California showroom locations in December,” he said. “We are thrilled with the strong performance of our new showrooms and excited to add these great new locations to our showroom portfolio.”
Other highlights of the report were as follows:
+ The company reported cash and cash equivalents of $237 million with no long-term debt as of Sept. 30.
+ Its net merchandise inventory decreased 6.1% to $269 million compared to $286 million as of Dec. 31, 2022.
+ Client deposits increased 4.8% to $212 million.
+ For the first nine months of the year, net cash from operating activities was $31 million, compared to $58 million for the first nine months ending Sept. 30, 2022.
+ For the first nine months of the year, the company said that net cash used in investing activities was $42 million, which includes landlord contributions of $11 million and company-funded capital expenditures of $31 million. This compares to net cash used in investing activities of $37 million for the same period last year as well as landlord contributions of $11 million and company-funded capital expenditures of $26 million.
“As we close out this year and begin to look to 2024, we are focused on continuing to expand our collections of heirloom quality, artisan-crafted furniture, growing our showroom footprint with several more exciting new locations to come in 2024, and improving our systems and making the necessary investments to support our growth for many years into the future,” Reed concluded.
