Analyst Downgrades Impact

Arhaus (NASDAQ:ARHS) experienced a notable decline in afternoon trading as Jefferies downgraded the retailer’s rating from Buy to Hold. The move by analyst Jonathan Matuszewski and his team was spurred by various factors affecting the company’s performance.

Factors Behind the Decline

Matuszewski cited slowing site traffic growth, decreasing e-commerce conversion rates, and an increase in the percentage of browsing activity related to sale items as reasons for lowering estimates on Arhaus (ARHS). Furthermore, data revealed a deceleration in web traffic for Arhaus, with the company losing market share to competitors, notably RH (RH).

Cautious Outlook

Looking ahead, Matuszewski expressed concern that 2025 could mark the third consecutive year without EBITDA expansion for Arhaus. He also highlighted a potential risk of investors opting to reduce their stakes in the company following a 33% year-to-date increase, aligning with a broader cautious sentiment toward housing-related stocks.

Market Response

Shares of Arhaus (ARHS) plummeted by 7.1% at 1:20 p.m., marking a decline of more than 22% over the past six weeks. Short interest in the stock currently accounts for 8.7% of the total float. Despite the recent downturn, the Seeking Alpha Quant Rating on Arhaus (ARHS) remains optimistic with a Buy recommendation.