Key Arhaus Metrics
With more frequent questions being asked about the direction of the U.S. housing market, we thought we’d revisit Arhaus and compare its performance to the broader home furnishing retail category. Not surprisingly, we’ve started to see the same bifurcation in consumer behavior that other retail executive teams have referenced in recent weeks begin to impact the home furnishing category as well. YoY visit per location trends (a proxy for industry comparable traffic) turned negative during 1Q22, while Arhaus continues to see double-digit growth (though at a slower pace than it did in 4Q21). Arhaus’ management team has previously noted that its higher-income consumers are less sensitive to economic headwinds, though some of the recent visitation deceleration could be because of recent stock market declines, as this demographic tends to take its spending cues from "wealth effect" factors.
- We expect Arhaus visitation trends to remain ahead of category averages over the near future, but not just because of the company’s more-affluent customer base. In fact, many of the reasons we highlighted Arhaus as one of our Top Brands to Watch in 2022 remain intact, including impressive post-pandemic visitor acquisition trends, a re-designed theater-like retail showroom format, and opportunities to extend its brand reach through smaller-footprint Design Studio formats (which average 4,000 square feet compared to the chain’s 17,000 square foot legacy showrooms). Arhaus smaller-format stores continue to post impressive visitation figures, including the Design Studio in Burlingame, CA (which has seen 2X the visitors of the chain average year-to-date according to Placer.ai data).