Arhaus' 4Q22 Strong But FY23 Outlook Disappoints, Says Analyst

Telsey Advisory Group analyst Crisna Fernandez reiterated an Outperform rating on the shares of Arhaus Inc ARHS with a price target of $16.00.
Q4 sales increased 49.6% to $356 million versus TAG at $355 million, driven by comparable brand growth of 47% versus TAG at 46.0%.
By channel, retail sales rose 51% and e-commerce sales rose 44% to 17.4% of sales versus 18.0% last year.
Arhaus had a very strong 4Q22, as it delivered more of its backlog and demand remained relatively strong, up 10% in 4Q22, the analyst said.
The company had pre-announced better-than-expected sales in early January; therefore, the incremental details today were on profitability.
However, the company's 2023 sales and EBITDA guidance fell short of expectations.
Year-to-date, demand remains solid, up high single digit, reflecting good reception to its products, said the analyst.
The company seems to be taking a cautious outlook with regard to demand trends for the year, given the uncertain macro environment and softened housing market.
Arhaus also is absorbing incremental capacity and distribution costs that are weighing on profitability, added the analyst.
Price Action: ARHS shares are trading lower by 18.7% at $10.41 on the last check Thursday.