ARHS’s multi-channel model and premium positioning are driving above-market growth, especially in the trade and design segments. However, the lack of recurring revenue and margin compression from macro cost headwinds temper the business’s resilience. The company’s aggressive reinvestment in digital…
Our House (ARHS) Q2 2026: Written Sales Surge 12.5% as Premium Home Demand Broadens
Our House delivered a record quarter, driven by a 12.5% jump in comparable written sales and broad-based demand across premium home furnishings. Strategic investments in digital, showrooms, and trade channels are accelerating, funded partly by a one-time $38 million tariff refund. With affluent consumer resilience and a robust fall product pipeline, management signals confidence but maintains a conservative outlook amid ongoing macro cost headwinds.
Summary
- Affluent Consumer Resilience: High-value project demand and no evidence of trade-down are fueling growth.
- Strategic Investment Cycle: Tariff refunds are funding digital, catalog, and POS upgrades to drive future scalability.
- Margin Headwinds Persist: Elevated fuel, shipping, and tariff costs offset by pricing actions and operational levers.
Business Overview
Our House, a premium home furnishings retailer, generates revenue through a multi-channel model spanning physical showrooms, e-commerce, interior design services, and a growing trade program. The business segments include core retail customers, interior design, and trade sales, with showrooms serving as immersive brand destinations. The company’s differentiated assortment emphasizes heirloom-quality, customizable furniture and curated décor, supported by domestic manufacturing and global sourcing.
Performance Analysis
The quarter delivered record net revenue and a 12.5% increase in comparable written sales, indicating robust client engagement and momentum across all demand channels. Notably, the surge in written sales was broad-based, with strength in upholstery, outdoor, and the “collected home” vintage-inspired line. Interior design services and the relaunched trade program contributed to larger, higher-value projects, reflecting both healthy new product introductions and deeper client relationships.
Gross profit received a notable boost from a $23.8 million one-time tariff refund, but excluding this benefit, gross margin would have declined 70 basis points due to higher fuel and shipping costs. SG&A expenses rose 16.1%, driven by new showroom openings and stepped-up investments in technology and marketing, including a doubled catalog circulation. Adjusted EBITDA margin, excluding the tariff benefit, declined 250 basis points, highlighting the near-term cost pressure of the current investment cycle and macro headwinds.
- Demand Channel Expansion: Trade and interior design channels are outpacing core retail, supporting higher average order values and project complexity.
- Tariff and Cost Volatility: Tariff refunds provided a one-time margin lift, but underlying cost inflation remains a drag.
- Inventory Positioning: Bestseller inventory and in-stock rates improved, supporting conversion and fall readiness.
Overall, the business is balancing strong top-line momentum with disciplined expense management and targeted reinvestment, positioning for future growth despite persistent cost headwinds.
Executive Commentary
"We generated record net revenue and strong comparable written sales, reflecting continued client engagement and momentum across our three customer demand channels, which is a testament to the strength of our differentiated model."
John Reed, Founder, Chairman, and Chief Executive Officer
"This marked our seventh consecutive quarter of delivering results at or above our guidance. We delivered results above the high end of our guidance range across all our key financial metrics, and generated strong comparable written sales, reinforcing our confidence in the full year outlook."
Michael Lee, Chief Financial Officer
Strategic Positioning
1. Channel Diversification and Trade Program Scale
Our House is actively broadening its client base by scaling its trade program and interior design services, both of which are driving larger, project-based orders and recurring business. The trade program, enhanced with flexible commission/discount models and a dedicated recruitment team, is adding thousands of new members monthly. This approach deepens engagement with design professionals and positions the company for a greater share of the premium home project market.
2. Product Innovation and Customization
Continuous product newness and customization remain at the core of the brand’s differentiation. The launch of the largest-ever fall catalog and rapid rollout of high-performing new collections reflect a focus on both timeless design and trend responsiveness. Domestic upholstery manufacturing in North Carolina provides supply chain agility and customization at scale, reinforcing brand loyalty and conversion.
3. Operational Leverage and Digital Transformation
A multi-year investment cycle is underway, funded partly by the $38 million tariff refund. Key initiatives include a new POS system (pulled forward to Q4), ongoing ERP and OMS implementations, and expanded digital marketing. These projects are expected to improve operational efficiency, enable omni-channel selling, and elevate the client experience, with early benefits from the new TMS (transportation management system) already contributing to cost savings.
4. Showroom Expansion and Market Penetration
Physical showrooms remain a growth lever, with 10 to 14 projects planned for 2026, including new openings and relocations in key markets. The showroom strategy emphasizes immersive experiences, local talent, and disciplined project evaluation to maximize returns and brand reach.
Key Considerations
The quarter underscores a business at the intersection of premium demand resilience and a deliberate reinvestment phase. Management is threading the needle between capitalizing on affluent consumer strength and absorbing near-term cost inflation to fund long-term capability building.
Key Considerations:
- Affluent Demand Outperformance: No evidence of trade-down or reduced project scope among high-end customers, supporting premium positioning.
- Tariff Recovery as Strategic Fuel: One-time refunds are being reinvested in marketing, digital, and POS upgrades rather than price discounting.
- Cost Headwinds Not Fully Abating: Tariffs, fuel, and shipping remain volatile, with management hedging but not fully offsetting these pressures.
- Showroom Execution Discipline: New locations are opening with trained teams and strong early results, validating the expansion playbook.
- Investment Cycle Impact: SG&A and margin pressure expected to persist until new systems and marketing investments begin to yield scale benefits.
Risks
Persistent macro cost inflation—especially in fuel, shipping, and tariffs—remains a material risk to margins and cash flow. The investment cycle in technology and marketing could pressure near-term profitability if demand softens or project returns lag expectations. Additionally, any downturn in affluent consumer confidence or a reversal in housing-related wealth effects could dampen high-ticket demand, while ongoing geopolitical disruptions may further elevate input costs.
Forward Outlook
For Q3 2026, Our House guided to:
- Net revenue of $355 to $375 million
- Comparable delivered sales of minus 1% to plus 5%
- Net income of $8 to $13 million
- Adjusted EBITDA of $26 to $34 million
For full-year 2026, management maintained revenue guidance of $1.43 to $1.47 billion and updated profitability targets to reflect tariff refunds:
- Net income of $71 to $80 million
- Adjusted EBITDA of $160 to $171 million
Management emphasized that guidance does not assume a meaningful improvement in housing turnover or macro conditions:
- Tariff and cost headwinds will persist, but delivery fee increases and TMS savings will partially offset.
- Fall selling season is expected to be strong, driven by new product launches, expanded catalog reach, and improved inventory availability.
Takeaways
Our House’s Q2 performance validates the strength of the premium home segment and the company’s multi-channel strategy, but also highlights the near-term margin and SG&A pressure from its ongoing investment cycle.
- Affluent Demand Drives Outperformance: Larger projects and no trade-down support continued revenue growth, with trade and design channels gaining share.
- Tariff Refunds Fuel Transformation: Management is reinvesting windfalls into digital, marketing, and operational upgrades to support future scale.
- Watch for Cost Containment and Investment ROI: Investors should monitor margin recovery, e-commerce traction, and returns on new showroom and tech investments in the coming quarters.
Conclusion
Our House is leveraging premium demand and a one-time tariff benefit to accelerate its digital and physical transformation, even as cost headwinds weigh on near-term margins. The brand’s diversified channel strategy and disciplined reinvestment position it well for sustainable growth, but execution on cost control and investment returns will be critical to watch.
Industry Read-Through
The quarter reinforces the resilience of the affluent home furnishings segment, with project-based demand and premium positioning outpacing the broader home category. Competitors reliant on mass-market consumers or lacking multi-channel engagement may face greater headwinds. The strategic use of tariff refunds for capability building, rather than price discounting, signals a sector-wide shift toward reinvestment over short-term margin defense. Ongoing cost volatility and supply chain disruptions remain a structural risk for the industry, underscoring the need for agile sourcing, pricing power, and operational discipline.