What Happened:
Shares of luxury furniture retailer Arhaus (NASDAQ:ARHS) jumped 11.8% in the morning session after fellow home furnishing retailer RH (NYSE: RH) reported impressive second-quarter earnings results. RH beat analysts' gross margin expectations. In addition, RH's revenue and EPS narrowly outperformed Wall Street's estimates. The result is encouraging, especially in a challenging housing market that has been frozen by high interest rates and waiting to thaw as the Fed's rate cuts are upcoming.
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What is the market telling us:
Arhaus’s shares are quite volatile and over the last year have had 23 moves greater than 5%. But moves this big are very rare even for Arhaus and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The biggest move we wrote about over the last year was about a month ago, when the stock dropped 26.3% on the news that the company reported second-quarter earnings results. It cited a soft consumer landscape and lowered its full-year revenue and EBITDA guidance, which fell short of Wall Street's estimates. In addition, revenue came in below expectations during the quarter. Overall, this was a weaker quarter for the company.
Arhaus is up 7.2% since the beginning of the year, but at $12.52 per share it is still trading 36.4% below its 52-week high of $19.68 from June 2024. Investors who bought $1,000 worth of Arhaus’s shares at the IPO in November 2021 would now be looking at an investment worth $977.34.
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