Arhaus, Inc. (ARHS): Business Model Canvas [Dec-2025 Updated]

You're looking for the real story behind that high-end furniture retailer, the one with the debt-free balance sheet and a 2025 net revenue outlook hitting $1.35 billion to $1.38 billion. Honestly, after two decades analyzing balance sheets, what stands out here isn't just the $262 million in cash they had as of Q3 2025, but how they lock in exclusivity-95% of their products are proprietary, sourced directly from artisans. We'll break down the Business Model Canvas right now, showing you exactly how their high-touch service and aggressive showroom expansion-targeting 4-6 new spots this year-translates into those premium sales and client deposits nearing $233 million. Dive in below to see the mechanics of their premium model, from sourcing costs to their unique customer relationships.

Arhaus, Inc. (ARHS) - Canvas Business Model: Key Partnerships

You're looking at the core of Arhaus, Inc.'s competitive moat-how they build and maintain their product supply chain. This is where the high-touch, premium positioning gets its operational backbone.

Direct, long-standing global sourcing relationships with artisans form the foundation of the proprietary model. These trusted relationships are anchored across a global sourcing footprint spanning North America, Europe, and Southeast Asia. Some of these vendor relationships span 3 to 4 decades. For the third quarter of 2025, approximately 30% of total receipts and nearly 70% of upholstery were sourced domestically within the U.S..

The exclusivity derived from these partnerships is critical. Based on 2024 net revenue data, approximately 95% of Arhaus, Inc.'s products could only be purchased from the company. The top 10 vendors, which include the internal manufacturer, represented approximately 60% of net revenue as of December 31, 2024.

The logistics and freight carriers network is a necessary partner for delivering large, premium items. In 2025, Arhaus, Inc. made strategic investments in its distribution network, including transitioning the Dallas Distribution Center to an in-sourced model during the year. Historically, the company's distribution from its Cleveland location involved routing 45 drivers from one DC and 10 hubs to handle between 4,000 to 5,000 deliveries per month.

Lifestyle-driven brand collaborations serve to reinforce the brand as a lifestyle choice where clients live and gather. A notable example is the partnership that resulted in The Arhaus Terrace at L'Ermitage Beverly Hills, which was unveiled on May 7, 2025. This terrace is furnished with selections from Arhaus, Inc.'s new Outdoor 2025 Collection.

Here is a quick look at the sourcing geography based on the latest available data:

The structure of the vendor base shows concentration among the top partners:

• Top 10 vendors represent approximately 60% of net revenue (as of 12/31/2024).
• Only 1 external vendor accounts for more than 10% of net revenue (as of 12/31/2024).
• 2 other external vendors each account for more than 5% of net revenue (as of 12/31/2024).

The company is making specific investments in its infrastructure to support these partnerships and deliveries in 2025, representing approximately $10 million of investment, with the majority in the back half of the year.

Finance: draft 13-week cash view by Friday.

Arhaus, Inc. (ARHS) - Canvas Business Model: Key Activities

You're looking at the core actions Arhaus, Inc. takes to deliver its value proposition in late 2025. This isn't just about selling furniture; it's about the complex choreography of design, sourcing, and delivery that supports their premium positioning.

Global product sourcing and proprietary design development

Arhaus, Inc. focuses on curating and creating heirloom quality, artisan-made furniture. A key activity is maintaining direct global sourcing relationships, which in 2024 allowed approximately 95% of their products (based on net revenue) to be exclusively available through Arhaus. Proprietary design development is supported by internal upholstery manufacturing capabilities, with over 70% of the upholstery business coming from the United States, including their North Carolina facility.

The company actively manages its supply chain exposure. For instance, in Q1 2025, the expectation was to reduce China sourcing to approximately 1% of Total Receipts by the fourth quarter of 2025. However, by the Q2 2025 earnings call, management projected this exposure would be closer to 5% by year-end 2025 due to shifts in U.S. tariff policy.

The sourcing footprint remains diversified across North America, Europe, and Southeast Asia. In April 2025, the United States accounted for approximately 36% of total receipts, inclusive of internal manufacturing.

Here's a look at the sourcing exposure targets:

Strategic expansion of the showroom footprint, targeting 4-6 new openings in 2025

Physical presence remains a critical activity, driving client engagement and sales conversion. As of the first quarter of 2025, Arhaus, Inc. operated 103 Showrooms across 30 states. The 2025 plan centers on disciplined expansion, targeting approximately 12 to 15 Total Showroom Projects for the year.

This total project count is broken down into the following key activities:

• Opening 4 to 6 new Showrooms.
• Completing 8 to 9 strategic relocations, remodels, or expansions.

The long-term goal is to scale the physical footprint to approximately 165 Traditional Showrooms and 50 Design Studios across the U.S. The company's long-term strategy targets opening an average of five to seven new Traditional Showrooms annually.

The expected financial performance for new locations underpins this activity:

Managing an omni-channel distribution network, including in-house operations

Managing the flow of goods is a major operational focus, especially with investments in internalizing logistics. A significant step in 2025 was the successful transition of the Dallas Distribution Center to in-house operations during the second quarter, which management noted was ramping effectively and driving improvements in delivery performance.

The omni-channel performance is reflected in the financial results:

• Q2 2025 Net Revenue reached a record of over $358 million, marking a 15.7% increase year-over-year.
• Q3 2025 Net Revenue was $345 million, an 8.0% increase year-over-year.
• The full-year 2025 net revenue outlook is reaffirmed between $1.29 billion and $1.38 billion.

These results demonstrate the conversion of demand across retail and eCommerce channels, supported by the expanding showroom footprint.

Providing complimentary interior design and personalization services

The in-home design program is a key activity for driving higher-value transactions. Arhaus, Inc. provides complimentary interior design services to enhance the client experience both in-store and online. This high-touch service model directly impacts transaction size.

The financial impact of this service is substantial:

• Orders placed with a designer generate an Average Order Value (AOV) nearly four times higher than those without.
• In the third quarter of 2025, designer-assisted orders generated order values roughly 4x higher than those without.

The third quarter of 2025 saw record results from this in-home designer program, showing strong client engagement with personalization options.

Arhaus, Inc. (ARHS) - Canvas Business Model: Key Resources

You're looking at the tangible and intangible assets that make Arhaus, Inc. run, and honestly, they've built a solid foundation. The physical presence, for instance, is a major asset.

The showroom real estate footprint is extensive, giving clients a place to experience the product firsthand. As of the end of the third quarter of 2025, Arhaus, Inc. operated 103 Showrooms across 30 states in the United States. The company was actively investing in this, planning for approximately 12 to 15 Total Showroom Projects in 2025, which included new openings, relocations, renovations, or expansions.

Here's a quick look at some of those key physical and financial anchors as of September 30, 2025:

The product itself is a core resource, driven by a proprietary approach. Arhaus, Inc. uses a differentiated proprietary model where they directly design and source products from leading manufacturers and artisans globally. This results in what they offer as an exclusive assortment of heirloom quality products. This design-led sourcing strategy is key to differentiating the offering from competitors.

Financially, the balance sheet provides serious flexibility. You see this in their liquidity position, which was strong at the close of Q3 2025. They reported $262 million in cash and cash equivalents. Plus, the company maintained a debt-free balance sheet, meaning no long-term debt, which is a huge advantage when managing capital expenditures or navigating market uncertainty. This strong liquidity is also supported by client deposits, which grew to $254 million as of September 30, 2025.

You can see the strength in these supporting assets:

• Client deposits increased 15.0% from December 31, 2024, to September 30, 2025.
• Net cash provided by operating activities was $128 million for the first nine months of 2025.
• The company expects to complete between 12 to 15 Total Showroom Projects in 2025.

Finance: draft 13-week cash view by Friday.

Arhaus, Inc. (ARHS) - Canvas Business Model: Value Propositions

You're looking at the core reasons clients choose Arhaus, Inc. over competitors, grounded in the numbers from late 2025.

Heirloom-quality, artisan-crafted home furnishings.

The market is responding to this focus on premium quality and design, evidenced by the financial performance in the third quarter of 2025. Net revenue for Q3 2025 hit $345 million, an 8.0% year-over-year increase, setting a new record for that quarter. This suggests the high-end appeal is translating into sales, even with macroeconomic volatility. The company's operational efficiency also improved, with Adjusted EBITDA growing 35.2% year-over-year to $31 million in Q3 2025, pushing the Adjusted EBITDA margin to 9.1%.

Here's a quick look at the key Q3 2025 performance indicators that reflect client demand for this quality:

Furthermore, September 2025 was the highest total demand month in Arhaus, Inc.'s history. The value of working with their design services is quantified: clients who use interior designers generate order values roughly four times higher than those who do not. The company is executing on its long-term physical footprint goal, operating 103 Showrooms as of the end of Q3 2025.

Commitment to sustainability and ethically sourced materials.

Arhaus, Inc. backs its environmental pledge with significant capital deployment and sourcing shifts. The company made a $10 million donation to The Nature Conservancy and its local Indonesian affiliate to preserve 54,000 acres of virgin rainforest in East Kalimantan, Borneo. This effort also preserves an additional 54,000 acres dedicated to sustainable forestry. Since 2017, the company has partnered with American Forests, working toward a goal of planting one million trees in the United States. Operationally, Arhaus, Inc. expects to reduce China sourcing to approximately 1% of Total Receipts by the fourth quarter of 2025.

• Pledge since 1986: Never use wood harvested from the rainforest.
• Rainforest acres preserved in Borneo: 54,000.
• Goal for US trees planted with American Forests: one million.

Unique, curated designs with broad aesthetic appeal.

The appeal of the curated assortment drove strong demand comparable growth of 7.4% in Q3 2025. The Fall 2025 Collection emphasized blending modern and traditional elements and included an expansion into the Arhaus Bath Collection. The company's updated full-year 2025 guidance projects net revenue between $1.35 billion and $1.38 billion.

Innovative customization tools, like the 2025 3D customizer.

While specific internal adoption rates for Arhaus, Inc.'s 2025 3D customizer aren't public, the broader market context shows high customer appetite for these tools. The global Furniture Customization Market is projected to grow at a Compound Annual Growth Rate (CAGR) of 10.1% from 2025 to 2033, reaching $22.3 billion by 2033, up from an estimated $9.9 billion in 2025.

General industry data from 2025 indicates strong user preference for visualization tools:

• 72% of furniture shoppers customize their purchases.
• 88% of users found a 3D product configurator very helpful.
• 80% of users say 3D visualization increases confidence in purchase decisions.
• 64% of shoppers who skipped a 3D tool wished they had used one.

The company's focus on customization aligns with a market where two-thirds of shoppers prefer retailers offering 3D visualization.

Arhaus, Inc. (ARHS) - Canvas Business Model: Customer Relationships

You're looking at how Arhaus, Inc. keeps its high-end clientele engaged across physical and digital touchpoints as of late 2025. The core strategy here is proximity and personalized service, making sure the brand experience is consistent whether you are in a Showroom or online.

Complimentary in-home and in-showroom design consultations.

Arhaus, Inc. heavily relies on its design services as a key relationship driver. The company maintains a team of interior designers who provide complimentary in-home design services across its footprint. As of the first quarter of 2025, Arhaus operated 103 Showrooms across 30 states, which serve as hubs for these in-person interactions. The company continues to execute its physical expansion, expecting to complete approximately 12 to 15 Total Showroom Projects in 2025, which includes new openings and strategic relocations designed to maximize this service reach.

The physical footprint supports the service model:

• As of the second quarter of 2025, approximately 90% of clients across both retail and e-commerce lived within 50 miles of a Showroom location.
• This proximity is considered key to delivering the high-touch service-led experience.
• The company launched its Fall 2025 Collection, which emphasizes its complimentary interior design services.

High-touch, personalized service to drive higher order values.

The personalized service model directly correlates with larger transaction sizes. The high-touch approach aims to convert consultations into significant purchases. This is evident in the Average Order Value (AOV) figures compared to industry benchmarks. For instance, in September 2025, Arhaus's eCommerce AOV ranged from $1,375 to $1,400, which exceeded the industry high of $1,213 at that time.

Here's a look at some of the digital service metrics from September 2025:

The focus on client engagement is also reflected in demand metrics. For example, Demand comparable growth was up an impressive 15.7% in July 2025, highlighting strong client engagement.

Building long-term brand loyalty with a high-end client base.

Arhaus, Inc. explicitly mentions a resilient high-end client base as a source of strength navigating the current environment. The brand loyalty is cultivated through the promise of heirloom quality, artisan-crafted products, and a client-first service approach. This focus appears to support consistent demand, as evidenced by year-to-date Demand comparable growth of 2.8% through the third quarter of 2025.

Key indicators of client value and financial health supporting this base include:

• Client deposits totaled $262 million as of September 30, 2025, up 15.0% from December 31, 2024.
• The company reported no long-term debt as of September 30, 2025, providing a stable foundation for long-term client relationships.
• Q3 2025 Net Revenue was $344.6 million, an 8.0% increase year-over-year.

Digital engagement via e-commerce and digital media.

Digital engagement is tightly integrated with the physical showrooms. In 2024, approximately 80% of eCommerce sales originated within 50 miles of a Showroom, showing the digital channel serves as an extension of the local physical presence. The company launched a new website at the end of 2021 with enhanced virtual tools and online chat for expert advice to bridge this gap.

Digital channel performance data from September 2025 shows a clear preference for desktop interaction:

• Desktop devices accounted for 92% of sales finalized on arhaus.com.
• Mobile devices accounted for 8.5% of sales (mobile web only).

While annual eCommerce revenue was $266.9M in 2024, the forecast for 2025 suggested a decline of 5-10%. Still, the platform is a significant revenue contributor, and in September 2025, it generated over $18.5 million in online sales.

Arhaus, Inc. (ARHS) - Canvas Business Model: Channels

You're looking at how Arhaus, Inc. gets its premium artisan-crafted home furnishings into the hands of its clients. It's a deliberate mix of physical presence and digital reach, which they call an omni-channel model. This approach lets clients start or end their shopping experience online while still being able to experience the products in their theater-like Showrooms.

Traditional Showrooms and smaller Design Studios (103+ total)

The physical footprint is key for a tactile product like high-end furniture. Arhaus, Inc. uses these locations as brand awareness vehicles. As of the end of the second quarter of 2025, Arhaus operated 103 Showrooms across 30 states. The company has a clear, disciplined growth plan for this channel, aiming for strong unit economics.

Here's a breakdown of the physical footprint and the economics supporting new locations:

For the full year 2025, Arhaus, Inc. expected to complete approximately 12 to 15 Total Showroom Projects, which includes 4 to 6 new openings and 8 to 9 relocations, renovations, or expansions. Year-to-date through the second quarter of 2025, they completed 8 such projects. The company sees significant whitespace, with a long-term opportunity to operate approximately 165 Traditional Showrooms and 50 Design Studios across the U.S.

E-commerce platform for national reach and online sales

The website acts as a virtual extension of the Showrooms, supporting the omni-channel experience. Arhaus, Inc. launched a new eCommerce platform in 2021. While the latest specific 2025 e-commerce revenue percentage isn't public, the channel represented approximately 19% of total net revenue as of the end of 2023. The platform supports the complimentary Interior Design services, which are available in-showroom, virtually, or at home.

Print and digital media, including the Home & Style issue

The brand uses print and digital media to reach clients. A key piece of this is the annual style issue, Home & Style. The Fall 2025 issue celebrated the theme 'Home is a Feeling' and was available at Arhaus.com and in their nationwide showrooms.

Integrated distribution network with regional centers like Dallas

Arhaus, Inc. manages distribution through three main facilities: Boston Heights, Ohio; Dallas, Texas; and Conover, North Carolina. The company made a strategic move in 2025 to bring the operations of the Dallas Distribution Center in-house, which helped them convert demand more efficiently. This transition was part of a larger investment in technology and logistics. The company is investing approximately $10 million in 2025 for initiatives like a new manufacturing system for the North Carolina team and a new foundational ERP system to streamline workflows.

Key distribution center capacities and actions:

• Ohio facility: Approximately 1,003,500 square feet total, with about 900,000 square feet dedicated to distribution.
• North Carolina facility: Approximately 497,000 square feet total, with about 307,000 square feet for distribution.
• Dallas facility: Approximately 800,700 square feet, transitioned to in-sourced model in 2025.
• Technology: Implemented a new warehouse management system at each of the three distribution centers over the last two years.

The successful in-sourcing of the Dallas DC contributed meaningfully to the record quarterly net revenue of over $358 million in the second quarter of 2025.

Arhaus, Inc. (ARHS) - Canvas Business Model: Customer Segments

You're looking at the core buyers for Arhaus, Inc. as of late 2025. Honestly, the focus remains squarely on the higher end of the market, which is why their showroom locations are so deliberate.

The primary group is the affluent homeowners and families. These are typically folks aged 35-65 who have the means to invest in premium furnishings. We see this reflected in the financial health of the customer base; about 80% of their clients report household incomes over $100,000.

Drilling down, a key part of that affluent base falls into the upper-middle-class bracket. Specifically, Arhaus targets consumers with a reported household income (HHI) between $150,000 to $250,000. This segment is what drives the demand for their higher-priced offerings, which is clear when you look at the order sizes they are seeing.

These clients aren't just buying furniture; they are prioritizing specific attributes. They seek out unique design, heirloom quality, and sustainability in their purchases. This focus helps Arhaus compete in the premium segment of the U.S. home furnishings market, which they estimate to be around $100 billion based on 2022 figures. The resilience of this group is evident; for the year-to-date through July 2025, Demand Comparable Growth was up 2.2%, and July alone saw a strong 15.7% increase.

Then you have the professional trade clients. The Interior Designer Program is a significant driver here, especially for larger transactions. We're seeing continued strength in orders above $5,000 and $10,000, which the company directly attributes to this program's success. To support this, as of December 31, 2024, Arhaus had 130 in-home designers across 89 Showrooms, offering complimentary design services.

Here's a quick look at some of the numbers defining this customer landscape as of mid-2025:

The company's strategy is clearly designed to capture and retain these high-value clients through specific engagement points:

• Showrooms strategically located in affluent areas.
• Complimentary in-home design services.
• Focus on artisan-made, heirloom quality products.
• Growing the to-the-trade program for designers.

The success in converting demand, even amidst macro uncertainty, shows the stickiness of this customer base. For instance, Q2 2025 net revenue hit a record $358 million, up 15.7% year-over-year. Finance: draft 13-week cash view by Friday.

Arhaus, Inc. (ARHS) - Canvas Business Model: Cost Structure

You're looking at the core expenses driving Arhaus, Inc.'s operations as of late 2025. Understanding these costs is key to seeing where the margin pressure and investment focus truly lie.

Cost of Goods Sold (COGS) tied to global sourcing and logistics

The cost structure heavily reflects the global nature of sourcing premium, artisan-crafted goods. Arhaus, Inc. has been actively managing this by diversifying its supply chain; for instance, the plan was to reduce China sourcing to about 1% of Total Receipts by the fourth quarter of 2025. This focus on logistics and sourcing directly impacts the Cost of Goods Sold.

For the second quarter of 2025, the Gross margin showed strength, increasing 19.1% to $148 million compared to the second quarter of 2024. Furthermore, transportation costs, a key component of logistics expense, decreased by 30 basis points in that same quarter. This suggests some mitigation efforts in logistics were effective during Q2 2025.

Selling, General, and Administrative (SG&A) expenses, including showroom rent

SG&A expenses are a significant area of focus, reflecting investments in corporate infrastructure, warehouse operations, and the physical footprint. In the second quarter of 2025, Selling, General, and Administrative expenses grew 6.8%, reaching $101 million year-over-year. To be fair, this growth was tied to strategic investments supporting growth, but the efficiency gain is visible in the load percentage.

The SG&A load-that is, SG&A as a percentage of net revenue-improved, decreasing 240 basis points to 28.3% of net revenue for the second quarter of 2025. This improvement shows that revenue growth outpaced the growth in fixed and variable operating costs.

Here are the key Q2 2025 expense and margin figures:

Capital expenditures for showroom projects and technology

Arhaus, Inc. continues to invest in its physical presence and digital backbone. Company-funded capital expenditures (CapEx) for the first six months of 2025 (YTD Q2 2025) were approximately $31 million. Landlord contributions toward these projects totaled approximately $11 million during the same period.

The company is executing on a plan that includes showroom expansion, with 3 total showroom projects completed in Q2 2025 (2 relocations and 1 renovation). However, the full-year CapEx outlook for 2025 was trimmed. Management modestly reduced the full-year capital expenditures outlook by $10 million, citing updated timing on certain investments.

The investment focus includes:

• Showroom projects, with a long-term plan of 5-7 new showrooms per year.
• Technology investments, including an 18-month-long digital transformation project.
• Inventory build to support best sellers and new product introductions, with net merchandising inventory at $311 million as of June 30, 2025.

Impact of incremental 2025 tariffs, estimated at $12 million net of mitigation

Geopolitical trade dynamics present a direct cost headwind. The outlook for the full year 2025 explicitly accounts for the estimated impact of incremental tariffs. This impact is currently quantified at $12 million net of mitigation efforts. You should note that mitigation strategies include strategic sourcing shifts and securing vendor cost concessions.

This $12 million estimate for 2025 is a key input into the cost planning. Looking ahead, the expected net tariff impact for the full year 2026 is significantly higher, estimated to be in the range of $50 million to $60 million annually, before factoring in further pricing actions or operational savings. Finance: draft 13-week cash view by Friday.

Arhaus, Inc. (ARHS) - Canvas Business Model: Revenue Streams

You're looking at the core ways Arhaus, Inc. brings in cash, which is primarily through the sale of its premium furniture and décor. This happens across its established omnichannel approach, meaning both through physical showrooms and the e-commerce sales channel. For instance, the third quarter of 2025 saw net revenue hit $345 million, which was a record for any third quarter in the company's history. This sales engine is supported by a physical footprint that, as of the end of the second quarter of 2025, included 103 Showrooms across 30 states.

Here's a quick look at how the full-year 2025 expectations stack up against the latest reported quarterly performance:

Management is definitely confident in hitting the top line, updating the full-year 2025 guidance for net revenue to be between $1.35 billion and $1.38 billion. This reflects a year-over-year growth rate expectation of plus 6.2% to plus 8.6% for the full year. Still, they are maintaining a measured stance on the upper end given the macro uncertainty, which is smart planning. The third quarter results showed strong profit flow-through, with the SG&A load decreasing to 34% of net revenue.

Revenue streams are also being intentionally broadened through product category expansion. A key move here is the introduction of new offerings designed to capture more of the client's home spending. You saw the launch of the Arhaus Bath Collection during the second quarter of 2025. This expansion into a new, personal space in the home is a strategic play to drive larger order sizes from high-value clients seeking whole-home solutions.

Another significant component impacting cash flow, which underpins future sales fulfillment, is customer pre-payments. As of June 30, 2025, Arhaus, Inc. held $233 million in client deposits. This amount represented a 5.5% increase from the balance recorded on December 31, 2024. This liability represents committed future revenue, and the company's ability to manage and use these deposits is critical to its operations.

• Client deposits balance as of June 30, 2025: $233 million.
• Cash and cash equivalents balance as of the end of Q3 2025: $262 million.
• Net merchandise inventory as of the end of Q3 2025: $329 million.
• The company remains debt-free.

Finance: draft 13-week cash view by Friday.