How Does Arhaus Company Work?

Arhaus specializes in a wide array of furniture and decor, including living room, dining room, bedroom, and home office furniture, alongside outdoor pieces, lighting, textiles, and decorative items. The company's Arhaus business model emphasizes natural materials and unique designs, catering to affluent consumers.

A key aspect of how Arhaus works is its direct sourcing strategy, partnering with over 400 global vendors and artisans. This vertical integration means approximately 95% of its products are exclusive to Arhaus, offering unique assortments without traditional markups.

The company utilizes a multi-channel approach, combining physical showrooms with a robust e-commerce platform and catalogs. By the end of 2024, Arhaus had expanded its presence to 103 showrooms across 30 states, including traditional stores, design studios, and outlets.

Arhaus enhances its customer experience through complimentary in-home design services, provided by a dedicated team of interior designers. This personalized service aims to elevate the customer journey and often leads to increased average order values.

In 2024, Arhaus opened 11 new showrooms and relocated 5, a key part of its strategy to boost brand visibility and market reach. The company plans to continue this momentum in 2025 with 12 to 15 showroom projects, including new openings and strategic updates.

Despite facing macroeconomic volatility and a demand slowdown in the latter half of 2024, which resulted in a 2.2% decline in comparable demand growth for the full year, Arhaus maintained a robust financial position. The company ended 2024 with $198 million in cash and no long-term debt.

Arhaus differentiates itself through its commitment to artisan-crafted, sustainably sourced products and unique direct global sourcing relationships that ensure product exclusivity. This is complemented by a strong omnichannel experience, product innovation, and ongoing investments in technology and supply chain improvements.

Arhaus competes in the premium segment of the U.S. home furnishings market, an estimated $100 billion sector. While smaller than some major players, it has built a loyal customer base drawn to its distinctive aesthetic and quality. Its strategy focuses on balancing physical retail expansion with digital platform investments for an omnichannel experience.

The company faces risks from macroeconomic volatility, changing consumer spending, and potential supply chain disruptions. The furniture sector has seen low-single-digit negative growth, indicating a challenging market. Increased operating expenses from expansion and marketing could lead to future operating losses.

Arhaus plans to expand its showroom footprint, targeting 165 traditional showrooms and additional design studios, opening an average of five to seven new showrooms annually. For 2025, net revenue is projected between $1.36 billion and $1.40 billion, with comparable growth of 0% to 3%.

Key initiatives include enhancing digital marketing, optimizing product assortments, and investing in supply chain infrastructure and technology. The company is confident in its business model, supported by a strong balance sheet and operational agility, aiming to deliver premium products and value.