Arhaus FY 2025 results set the tone for the next chapter

Arhaus (ARHS) has wrapped up FY 2025 with fourth quarter revenue of US$364.8 million and basic EPS of US$0.11, while net income excluding extra items came in at US$15.1 million. The company has seen quarterly revenue move from US$347.0 million in Q4 2024 to US$364.8 million in Q4 2025, with basic EPS shifting from US$0.15 to US$0.11 over the same period. With trailing twelve month net income of US$67.3 million and margins that have eased compared to last year, the latest print puts profitability and efficiency firmly in focus for investors.

See our full analysis for Arhaus.

With the headline numbers on the table, the next step is to see how these results line up against the dominant stories around Arhaus, where some narratives will be confirmed and others may need a rethink.

Margins Slip To 5.4% On Trailing Basis

• On a trailing 12 month view, Arhaus earned US$67.3 million of net income on US$1.38b of revenue, which works out to a 5.4% net margin compared with 6.2% a year earlier.
• Consensus narrative points to premium, customizable and sustainable furnishings as a long term support for pricing power. However, the shift from a 6.2% to 5.4% net margin shows cost and pricing pressures are still coming through, even as FY 2025 revenue over the last 12 months has risen from US$1.27b to US$1.38b.
  • Record level trailing revenue of US$1.38b lines up with the idea of a growing premium brand, while the lower margin highlights that volume alone has not translated into proportionate profit.
  • With trailing net income at US$67.3 million versus US$68.6 million a year earlier, the weaker profitability directly tests the consensus view that margin expansion will be easy to sustain from here.

TTM EPS Of US$0.48 Versus 5 Year Growth Story

• Trailing 12 month basic EPS is US$0.48, compared with US$0.49 a year earlier, which sits against a longer term record that includes five year compounded earnings growth of 23.2% per year.
• Bulls argue that investments in omnichannel, supply chain and showroom rollout can support higher earnings over time. Yet the step down in trailing EPS and net income shows recent performance has not kept pace with that 23.2% long run growth rate.
  • The quarterly pattern inside FY 2025 is uneven, with basic EPS ranging from about US$0.03 in Q1 to about US$0.25 in Q2 and US$0.11 in Q4. This fits a premium discretionary business that can have lumpy demand rather than a straight line growth path.
  • Given trailing net income has eased to US$67.3 million from US$68.6 million, the historical compounding story is intact on a five year view, but the latest 12 months give bulls less recent momentum to point to.

Have bulls got the premium growth story right when margins are under pressure, or is this just a pause in a longer climb? 🐂 Arhaus Bull Case

P/E Of 17.8x And Analyst Target Gap

• Arhaus trades on a trailing P/E of 17.8x, which sits below the broader US market at 19.4x, the US Specialty Retail group at 20.1x and a peer average of 24.3x, while the current share price of US$9.26 is below an analyst price target of US$11.42.
• Bears point to softer recent earnings and margin compression as reasons to be cautious. The move from a 6.2% to 5.4% trailing net margin together with year on year earnings declines gives that cautious view concrete numbers, even though the P/E discount and the gap to the US$11.42 target suggest the market is not pricing in a collapse in profitability.
  • With revenue over the last 12 months growing around 6.3% per year, slower than the US market forecast of 10.4%, critics highlight that paying up for a premium retailer on 17.8x earnings relies on the brand and store model continuing to justify that multiple.
  • At the same time, the combination of a lower P/E than industry and peers and an analyst target above the current US$9.26 price indicates there is still a built in expectation that earnings can at least hold or improve from the current 5.4% margin base.

Do recent margin trends back up the cautious view, or does the valuation gap to targets point to overdone worries? 🐻 Arhaus Bear Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Arhaus on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

If this combination of pressure on margins and long term optimism seems contradictory, do not wait for a consensus to develop. Instead, review the underlying drivers yourself and compare them to 3 key rewards.

See What Else Is Out There

With net margin easing from 6.2% to 5.4% and trailing EPS slightly lower, Arhaus is feeling the strain of weaker profitability against its growth story.

If those margin pressures make you want a stronger value cushion, check out our 53 high quality undervalued stocks that may offer more earnings support for the price you pay today.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.