Good morning and welcome to the Arhaus first quarter 2025 earnings conference call. Please note that this call is being recorded, and the reproduction of any part of this call is not permitted without written authorization from the company. I will now turn the call over to your host, Tara Atwood, Vice President of Investor Relations. Please go ahead. Good morning, and thank you for joining us for the Arhaus first quarter 2025 earnings call. Joining me on today's call are John Reed, our Founder, Chairman, and Chief Executive Officer; Jennifer Porter, our Chief Marketing and E-commerce Officer; and Ryan Brody, our Senior Vice President of Finance. After our prepared remarks, we will open the line up for a Q&A session. During Q&A, please limit to one question and one follow-up. We issued our press release and 10-Q for the quarter ended March 31st, 2025, before the market opened today. Those documents are available on our investor relations website at ir.arhaus.com. A replay of the call will be available on our website within 24 hours. I would like to remind everyone that our remarks today concerning future expectations, events, objectives, strategies, trends, or results constitute forward-looking statements. Actual results or events may differ materially due to a number of risks and uncertainties. For a summary of these risk factors and additional information, please refer to this morning's press release and the cautionary statements and risk factors described in our most recent annual report on Form 10-K and subsequent 10-Q. As such, factors may be updated from time to time in our filings with the SEC. The forward-looking statements are made as of today's date and except as may be required by law, the company undertakes no obligation to update or revise these statements. We will also refer to certain non-GAAP financial measures, and this morning's press release includes the relevant non-GAAP reconciliations. Now, I will turn the call over to John. Good morning, everyone, and thank you for joining us today. We're pleased with our performance this quarter, delivering first-quarter results in line with our expectations, supported by showroom growth, healthy client engagements across our retail and e-commerce channels, and continued disciplined execution of our operating model. Net revenue grew a healthy 5.5%, and demand comparable growth was up an impressive 4.1%. We ended the quarter with $214 million in cash and cash equivalents and remained debt-free. Our strong financial position provides us the flexibility to invest in strategic growth opportunities and create value for our shareholders. Since the huge uncertainty shock the past couple of months, we're focused on what we can control, executing with discipline, investing strategically, and growing our showroom footprint to support long-term profitable growth. We believe our differentiated model, built on artisan-crafted, high-quality design and a premium client experience, continues to be a distinct competitive advantage. Now, let me walk through seven proof points that give us confidence in the road ahead, starting with our people. We're building Arhaus for the long term, and that begins with talent. I'm incredibly proud of our depth bench of experienced leaders across the company, individuals whose creativity, passion, and discipline continue to drive our success. We're also excited to welcome Michael Lee as our new Chief Financial Officer starting May 12th. Mike brings extensive experience in financial leadership that will be instrumental. Across our showrooms, our team remains our secret sauce. Their expertise and connection with our clients are the key competitive advantage, one that consistently sets Arhaus apart. The strength of our people is reflected in our ability to execute, especially through the agility of our sourcing and supply chain operations, which brings me to my second proof point, our supply chain and sourcing agility. Today, our sourcing footprint is diversified across North America, Europe, and South Asia, enabling us to adapt quickly to global dynamics while upholding the exceptional quality standards that define Arhaus. It's important to emphasize that our diversification strategy has been in place for many years, long before the current headlines, and reflects our commitment to sourcing from a broad range of trusted global vendors. At Arhaus, product development isn't about sourcing diversification as a starting point. It's about going around the world to find the best of the best. That commitment to exceptional craftsmanship, authentic materials, and trusted relationships naturally leads to a sourcing model that is diverse, balanced, and resilient. In April, the United States represented approximately 36% of our total receipts, including our internal manufacturing operation. We continue to invest in U.S. manufacturing, particularly in our domestic upholstery business. Over 70% of our upholstery business comes from the United States, with the largest portion coming from our own North Carolina facility, supporting proprietary design, cost control, and our premium positioning. We also recognize the heightened focus on China sourcing amid evolving tariff dynamics. In April, China represented approximately 13% of our total product receipts. We expect this to decline to approximately 5% or less in the third quarter, and we believe we can reach approximately 1% in the fourth quarter. Our sourcing evolution underscores the agility of our operating model and the successful execution of our teams. Of course, the strength of our supply chain would not be possible without our vendor relationships, my third point. These relationships enable us to maximize agility, minimize financial risk, and move with speed and confidence during times of uncertainty. They are not simply transactional. They're built on mutual trust, shared values, and a long-standing commitment to delivering exceptional quality. My deep-rooted passion for sourcing keeps me closely connected to this work, from scouring hidden gem artisan markets to building direct relationships with vendors and artisans around the world. Over the past month, I've had the opportunity to meet face-to-face with many of our global vendors alongside members of our leadership team. These visits reaffirm what we've long known. When it matters most, our vendors show up as an extension of our team. Our success is mutually beneficial, and many vendors and artisans have scaled with us, in some cases for decades. Whether it's helping to offset cost pressure, prioritizing resources and production, or adapting quickly to the dynamic environment, our vendors consistently help us navigate. Together with our vendors, we continue to deliver exceptional value without ever compromising quality our clients expect and love, which brings me to my fourth proof point, our resilient high-end client base. We believe we are meaningfully over-indexed to an affluent consumer who has historically been less reactive to macro volatility. Importantly, this client has consistently been the last to pull back and the first to return when conditions stabilize. While stock market volatility may be weighing on consumer sentiment more broadly, overall demand was healthy in the first quarter. Our clients remain deeply invested in their homes and consistently prioritize quality, craftsmanship, and long-term value in their purchase decisions. Proof point five, consistent strategic execution. We remain focused on executing our long-term strategy by continuing to invest in what matters most: best-in-class product quality, thoughtful innovation, newness that resonates with our clients. We're expanding our physical footprint while deepening client engagement through a multi-touchpoint model, including our catalogs, which remain among our most powerful storytelling tools. At the same time, we're making strategic investments in technology and e-commerce to further elevate the client experience and strengthen our omnichannel capabilities. This disciplined execution is a key reason we gained market share and recovered faster than many peers coming out of the pandemic, and why we remain confident in our approach going forward. Proof point number six, showroom growth and investment. In 2024, we opened 11 new showrooms, which are performing well, while relocations enhanced brand visibility and deepened client engagements. Looking ahead, we have 28 total showroom projects in the pipeline through the end of 2027, with even more opportunities likely. This momentum reflects our disciplined focus on scaling thoughtfully, elevating the showroom experience, expanding market share, and supporting long-term revenue growth. Underpinning all of this is my seventh and final point, our financial strength. We continue to operate from a position of discipline, debt-free, with ample liquidity and a healthy balance sheet. We believe this strong financial foundation allows us to invest confidently in long-term growth, navigate near-term uncertainty, and deliver long-term value for our shareholders. In short, Arhaus is well-positioned for the future, powered by the strength of our brand, the passion of our people, and the disciplined execution of our strategy. Now, let's take a closer look at our performance in the quarter, beginning with showrooms. In the first quarter, we completed five total showroom projects, one new traditional showroom, and four strategic relocations. The highlights include Winter Park, Florida, a new traditional showroom opened in Winter Park Village in an upscale lifestyle center. Sarasota, Florida, relocated showroom opened in Centerport at Waterside, a key Florida market. In Burlingame, California, we relocated a showroom in downtown Burlingame tailored to the local clientele. Looking ahead, I am pleased to share that we are raising our outlook on this front and now expect to complete approximately 12-15 total showroom projects in 2025. This includes four to six new showrooms, up from the prior three to five, and eight to nine strategic relocation, remodels, and expansions. Our long-term remains an average of five to seven new traditional showrooms annually. Importantly, our timing is driven by readiness, not just the calendar. We open locations when we believe they are prepared to deliver the experience our clients expect. We encourage you to view our footprint growth through the lens of total showroom project activity. For every project, whether new opening, relocation, remodel, or expansion, is evaluated through the same disciplined return on investment approach. Our showroom strategy is clear: target premier locations with strong foot traffic, complementary code tendencies, and opportunities to enhance the brand visibility and grow market share. Every decision is made with the focus on sustainable, high-quality growth and attractive expected returns on investments. Turning to our product, design is the core of who we are. This season, clients are responding to warmer products, softer silhouettes, eclectic use of color and pattern. Highlights include our Outdoor Collection featuring premium teak, all-weather wicker, and our first Italian Upholstery Collection. Upholstery remains a hallmark handcrafted by skilled artisans. Across collections, rich textures, warm woods, and unexpected materials create a fresh yet familiar look and feel. Looking ahead to 2025, we'll continue to innovate in materials, silhouettes, and personalization, keeping us at the forefront of design, comfort, and quality. Turning to demand, as I shared earlier, we delivered an impressive demand comparable growth of 4.1% in the quarter. However, demand comparable growth was not linear through the quarter, with strong performance in January, up approximately 10%, March up approximately 7%, partially offset by February, which was down approximately 6%. As we said before, a week, even a month, does not define a trend. While there was more volatility, we are very pleased with our overall strength of the quarter. Looking ahead to the second quarter, April demand was softer than expected, with demand comparable growth down 10%, impacted by the shock of the tariff news and the stock market. While near-term volatility remains, our model is built on resilience, and we believe our continued unique positioning is a powerful long-term advantage. In closing, our long-term strategy remains clear and focused and anchored by our four key priorities: increasing brand awareness to drive net revenue, growing our showroom footprint, enhancing our omnichannel client experience, and investing in the growth to build scale. As we look ahead, we remain confident. We We have a strong business, a solid foundation, and a strategy that's working. Our team is proactively managing tariffs through sourcing diversification, and we continue to adapt as needed to protect both margin and momentum. With a premium brand, a loyal and growing client base, and a balance sheet that allows us flexibility, we're well-positioned to invest in long-term value creation. I'm proud of what we've accomplished this quarter and even more excited about the opportunities ahead. Thank you to our team, clients, and shareholders. Your continued support drives everything we do. With that, I'll turn it over to Jen Porter, our Chief Marketing and E-commerce Officer. Thank you, John, and good morning, everyone. We had a solid quarter across both our retail and e-commerce channels, despite operating in a more volatile environment. Our omnichannel strategy, designed to meet clients wherever and however they choose to shop, continues to drive meaningful engagement and conversion across all touchpoints. This strategy is anchored in six core pillars: showrooms, e-commerce, catalogs, in-home design services, digital and content, and client personalization. Our showrooms remain a cornerstone of the Arhaus experience, delivering immersive, elevated environments that inspire clients and drive conversion. Approximately 90% of our clients live within 50 mi of a showroom, and that proximity, combined with high-touch personalized service, continues to fuel brand awareness and market share expansion. New showrooms opened in recent quarters are performing well, supported by our long-tenured experience teams. Our showroom growth contributed meaningfully to healthy net revenue in the first quarter, and showroom-driven demand was a key contributor to our overall demand strength. Client engagement remains strong, driven by our unique product mix, refreshed seasonal assortments, and the exceptional performance of our highly trained showroom teams, including our in-home designers who bring trusted expertise to every interaction. These designer-led services continue to be a key competitive differentiator and growth driver. Designer-driven demand was strong both in-store and virtually, and clients who engage with our design team generate order values four times higher than average. In the quarter, we saw meaningful growth in orders above $5,000 and $10,000, along with record-high average order value. These transactions, we believe, deepened loyalty and increased order depth across categories. Just as we deliver elevated personalized experiences in our showrooms and through our design services, we're creating that same level of inspiration and ease online. Online engagement remained healthy throughout the quarter, and our e-commerce business delivered strong performance. Growth was driven by strategic investments in technology, platform enhancements, product storytelling, and a compelling product mix. We continue to invest in e-commerce to further elevate the client experience and drive long-term growth. The online experience is more than transactional. It's a platform to inspire, educate, and connect with our clients. Our digital and content engagement continues to drive impressive traffic and deepen brand engagement across channels. Earlier this spring, I visited several of our global partners in Italy and Romania. Seeing their craftsmanship firsthand was a powerful reminder of the care and precision behind every piece, the foundation of our storytelling and emotional client connection. What sets Arhaus apart and what we do best is clear: exceptional product quality, broad aesthetic appeal, and our artisan-led approach. Even in a more challenged consumer environment, our storytelling resonates. Clients respond not only to how our products look and feel, but also to the intention, values, and meaning behind them, something we take pride in and believe we do better than anyone else. Our pricing and promotion strategy remains unchanged. We continue to drive high-quality growth through a differentiated value proposition, educating clients on what makes Arhaus unique: artisan-crafted, high-quality design, and a premium client experience. This disciplined approach supports margin stability, protects brand integrity, and reinforces the long-term value of our product while preserving flexibility when needed. On tariffs, we are actively monitoring the evolving landscape and remain prepared to respond with discipline. Should targeted pricing adjustments be necessary, we will implement them thoughtfully and communicate clearly, always with a focus on maintaining client trust and delivering exceptional value. In closing, while the environment remains dynamic, we are staying close to our clients, leaning into our unique strengths, and maintaining discipline in how we engage, price, and promote. We remain focused on executing across our six omnichannel pillars to drive sustainable, high-quality growth and deepen client relationships. With that, I'll turn the call over to Ryan Brody, Senior Vice President of Finance, to walk you through our financial results. Ryan, over to you. Thanks, Jen. Good morning, everyone. Today, I will walk through our first quarter 2025 financial performance, key business drivers, and our outlook for the second quarter and full year 2025 before turning it over to Q&A. Key items from our first quarter 2025 income statement include: net revenue was $311 million, up 5.5% year- over- year, landing near the midpoint of our guidance. Growth was primarily driven by increased demand across both our retail and e-commerce channels, supported by continued showroom expansion, partially offset by a comparable growth of -1.5%, which landed near the midpoint of our guidance range. Demand comparable growth was 4.1%, driven by healthy client response to our products and strong engagement across both our retail and e-commerce channels. Gross margin was $116 million, up 0.4% year- over- year. The increase was primarily due to higher net revenue, partially offset by increased product costs of $7.1 million, higher showroom occupancy costs of $5.2 million, and higher delivery and transportation costs of $1.7 million. As a percentage of net revenue, gross margin decreased 190 basis points to 37.1% of net revenue, primarily driven by higher showroom occupancy costs, which increased 120 basis points, and a product margin decrease of 40 basis points. Selling, general, and administrative expenses were $110 million, up 13.9% year- over- year, primarily due to a $7.2 million increase in general and administrative costs, primarily related to warehouse expenses, marketing investments, and strategic investments to support and drive the growth of the business, including supply chain and technology improvements, in addition to a $6.2 million increase in selling expenses primarily related to new showrooms and variable compensation due to higher demand. Net income was $5 million, landing near the midpoint of our guidance. Finally, adjusted EBITDA was $19 million, landing at the lower end of our guidance, resulting in an adjusted EBITDA margin of 6.0%. Turning to our balance sheet, we ended the quarter with $214 million in cash and cash equivalents and remained debt-free. Looking ahead, we remain focused on executing against our long-term strategic priorities, including disciplined growth, strategic investments, and continued expansion of brand awareness, while remaining agile in the face of ongoing macro uncertainty. Given increased volatility driven by tariff shifts and softening consumer sentiment, we are revising and widening our full year 2025 outlook to reflect a more cautious stance. Notably, the midpoint of our previous outlook now represents the high end of the updated range. For full year 2025, we now expect net revenue between $1.29 billion and $1.38 billion, reflecting an updated comparable growth range of -5% to 1.5%. As a reminder, comparable growth and demand comparable growth may diverge over shorter time periods but align more closely over the course of the year. Net income of $48 million-$68 million and adjusted EBITDA between $123 million-$145 million. For second quarter 2025, we anticipate net revenue between $320 million-$350 million, reflecting a comparable growth range of -2% to 5%. Net income of $17 million-$24 million and adjusted EBITDA between $41 million-$48 million. As it relates to tariffs, our outlook includes the full impact of currently implemented tariff actions, including a 170% tariff on goods imported from China, 10% tariff on goods imported from all other countries of origin, and 25% tariffs on imported steel and aluminum. We estimate the total potential P&L impact from incremental 2025 tariffs currently in effect to be net amount of approximately $10 million, which has been factored into the updated guidance. We believe a portion of the larger tariff impact can be mitigated through strategic sourcing shifts to other countries and vendor cost concessions. There are several factors contributing to this number, including the timing of product receipts and deliveries, as well as the mitigation actions already underway. Simply put, there are a lot of moving parts. While pricing remains a potential lever, no targeted increases are currently reflected in our guidance. We are actively monitoring the evolving trade environment and will respond with discipline. Let me briefly highlight the strategic investments we're making to drive long-term growth, operational efficiency, and client experience, and how they're reflected in our 2025 guidance. In 2024, we completed important foundational upgrades, including a new warehouse management system at our Ohio Distribution Center, already delivering measurable improvements. Looking ahead to 2025 and beyond, we're investing in systems and infrastructure to support scalable growth. We're strategically transitioning distribution management at our Dallas Distribution Center in-house, building on proven expertise and implementing our warehouse management system there, with completion expected in the second quarter. We've begun rolling out a new payment platform, expected to be fully implemented across all showrooms by late May, enabling mobile features like Tap to Pay, Apple Pay, and Google Pay, while driving operational and expense efficiencies. We're also implementing a new inventory planning system to improve forecasting and inventory optimization, and a new ERP platform at our North Carolina upholstery manufacturing facility to increase production visibility and improve efficiency as we scale. These strategic investments, as well as other key projects, are expected to be approximately $15-$20 million in SG&A in 2025, mostly in the second half of the year as system implementations ramp up. We are making these investments from a position of strength, debt-free, with a healthy cash position and disciplined capital allocation. We believe these investments are foundational to expanding long-term margin potential and enhancing client experience. With the deep experience team, we're confident in our ability to execute. In closing, our focus is clear. We're executing with discipline and staying agile. We believe our differentiated brand, resilient operating model, and long-term strategic priorities position us to navigate uncertainty and deliver sustainable value for our shareholders. We look forward to sharing continued progress and are pleased to welcome our new CFO, Michael Lee, to the next earnings call. Thank you for joining us. We are happy to take your questions. Thank you. Ladies and gentlemen, we will now be conducting the Q&A session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. The first question comes from the line of Steven Forbes from Guggenheim Securities. Please go ahead. Hi, this is Julio Marquez for Steve. Thank you for taking our question. John, very quickly, just given the balance sheet strength and your comments around receipts from China year-end, can you speak to how Arhaus will manage the holistic value proposition you're bringing to market? I think you mentioned something about pricing. No plans yet, but I guess how is the management thinking about protecting margin during 2025? Or do you see 2025 as a year to drive brand awareness and volume share capture? Yeah, you're going to have to clarify the first part of your question, but the second part is, yeah, we feel good about our margin. With everything going on, it's very, very fluid, as you can all know and imagine. Our plans are to try to hold our margin as it is and proceed as business as usual. We're going to focus on what we can do. We cannot do the things that are going on outside our control, but we know what we can control. We've been in business for decades. We've been through recessions and so on and so forth and crashes. We know how to handle these kinds of things and these kinds of times. We've always been extremely successful at it. We've always come out of them stronger than ever. That is what we're planning on doing. We're focusing on the long term, and that includes healthy margins, healthy sales, and executing our plan. I'm sorry, what was the first part of your question? Just given your balance sheet strength and just some of the comments around the receipts from China by year-end, anything you can provide on just the holistic value proposition and managing that? Yeah, I mean, balance sheet looking great. Again, as I just said, we're in this for the long term. We are investing in the future, and we're going to continue doing that. Certainly, we're going to look at it every 30 days or so, and if we have to tweak something, we will. As far as China goes, we've been working. We never were nearly as heavy in China as most of our competitors, first of all, and being so strong in the United States on production that we're in great shape. Getting down to, we're hoping 1% by the end of the year is amazing. That's thanks to some of our great, great partners we've had overseas and in the country for many, many years and decades. They're truly our partners that are working with us. If we need to move things, we're building new factories in other countries and so forth. We're in great shape there. Excellent. Just a very quick follow-up on consumer behavior. Are you guys seeing any change in engagement trends? I know you mentioned a meaningful step up in sales over $5,000 and $10,000, but anything that's changed since early April that may have informed that change in sales guidance? Curious with the data points that were considered behind the new outlook. Yeah, we had something called Liberation Day in April. We had something called the stock market was crashing in April. Obviously, that affects everybody, including our customers. I mean, they're very intelligent people. They're invested in the stock market. Things like that shake people. It's not going to be long term, but short term, it shakes people up, and they're not sure what to do. That's why we think we had the softer sales. We know that's why we had the softer sales in April. Everything works its way out. It's not like people are going to stop buying furniture. They love their homes. Ever since COVID, it's really been a wonderful thing for the home business, especially the good quality home business. And so there's some pent-up demand that maybe people held off a few weeks, a couple of months. That's it. I don't need to tell you guys what happened in April because you read the news as much as I did. Absolutely. Thank you. Much appreciated. You bet. Thank you. The next question comes from the line of Seth Sigman from Barclays. Please go ahead. Hi, this is Serena on for Seth. Regarding the low end of the comms guidance, can you just give more perspective on how you came up with that negative 5% number? Can you reconcile Q2 versus the drop-off implied for the rest of the year? Yeah, as you've seen with some of the information that we've shared so far for year-to-date trends with demand performance, it's been pretty choppy. The widening of the guidance ranges is to account for the potential that that continues throughout the rest of the year. Really trying to, like John mentioned, every 30 days, kind of read and react to what's going on and adjusting our plans as we need to at that point in time. That's the main driver, just to account for that potentially occurring for the rest of the year. Great. Thanks. Thank you. The next question comes from the line of Cristina Fernandez from Telsey Advisory Group. Please go ahead. Hi, good morning. I wanted to ask about the tariff mitigation strategy. You talked about $10 million embedded in the guidance for the impact. I guess how much of that you think can be mitigated from strategic sourcing shifts and vendor concessions? And can you talk about the timing of how that $10 million flows through the rest of the year? Yeah, sure. I can start, and Ryan can fill us in on the timing of it. But as you know, every country has been put on a 10% tariff other than China, which is 170%. As we've moved stuff out of China, which we've done, I think, brilliantly, we're in great shape there. The other tariffs is the other tariffs. That is what we're planning on. We have worked with our great, great partners to absorb some of that. I'd be thrilled to announce every partner that we've talked to, every meaningful partner has really contributed and has really helped us. What's left is the $10 million. We think that's a pretty darn good number, a very good number, considering all these tariffs all over the world. Do not forget, a big, big part of our business is still produced right here in the United States. That helps quite a bit as well. I do not know when it's going to flow through. Ryan can give you some more specifics on that. Yeah, in regards to timing, as you would know, Q1 would not have been impacted by this, as well as getting into April. We would not have had any of this incremental cost flow through the P&L. Obviously, we are looking into later in the year when that impact would occur. As we have shared, we are targeting China receipts to be about 5% in Q3. As you can imagine, the flow through of the tariff impact would kind of align with that step down coming from China. It is fluid, and it depends on when the inventory is received and then delivered to customers. What we have provided is the approximately $10 million impact and predominantly factored into the second half of the year. My follow-up on the real estate strategy, you are opening one more new showroom. I wanted to see, are you seeing, I guess, better incremental real estate opportunities? I also noticed that you closed two design studios during the quarter. Can you talk about what the strategy is there? Was there any disappointment with that performance? How are you thinking about that format going forward? Sure. As we have been growing the business and opening new showrooms, A, they are profitable. B, it's building brand awareness, and more and more people come to the showrooms. They come to the websites. Again, we are strategically running this business to look more forward than this month and next month and the next six months. I mean, we're in it for the long term. When you work on showrooms and so forth, obviously, you're out a year or so or two on new locations. We're happy to say that we're not slowing down our growth. We must have had an opportunity that fell back into this year that maybe we had originally planned for next year. We're always looking for new opportunities as well. We're a very fluid but disciplined company. We take advantage of opportunities as they come about. We have come up with some incredible new opportunities coming up here in the future that we are really excited about and we think are really going to move the needle on keeping business going forward. Thank you. The next question comes from the line of Robert Ohmes from Bank of America. Please go ahead. Oh, thanks for taking my questions. Maybe one follow-up just on the gross margin, a little help on the occupancy kind of increase, the 120 basis points pressure from occupancy cost, a little color on how we should think about that in modeling a gross margin for the rest of the year and any other kind of thoughts on gross margin in Q1 versus how it could look as you move through the next three quarters. Yeah, as we mentioned on the call last quarter, we expect gross margin to be roughly flat to last year. This is more of just a function of deleveraging off of the fixed cost related to showroom occupancy in Q1 because of the lower revenue versus what you'd see in our Q2 guide for revenue. Gotcha. That's helpful. Then just on the, you talked about the record high average order value. Any more color on how the customers are behaving? Are you seeing sort of bigger ticket hold up better than impulse purchases or any other color you can give on what people were doing during the quarter and then maybe what they're doing in April? Yeah, looking, studying the sales, big tickets, small tickets. We have not seen any drop-off on either side, whether it is coming in and buying a couple of pillows or buying an entire home full of furniture. Jen can give you maybe some more color on that. She follows us very closely. Yeah. I mean, I think that is it. We are really happy seeing those increases in those orders over $5,000 and $10,000. As we spoke, we are continuing to see solid strength as we spoke about end of last year as well with clients who are engaging with interior designers and doing those bigger projects of rooms and homes. As John mentioned, there are no real shifts in consumer behavior across any of our cohorts. I think to give you a little bit more color, just on Q1 in April, as we mentioned, Q1 was good, but it was choppy. We were up in that, January, in March. We were down in February. Obviously, we were down approximately 10% in April. We did see some softness in traffic in April. What we are really excited to see is that as clients are coming in and engaging with us, whether online or in showrooms, they are still responding really well to the product. They are still engaging at the levels that we saw before. We are still seeing those high purchases. We are really happy. There might be some hesitancy due to the macro of people walking through the doors or coming in to commit to that project. As John mentioned earlier, that is a shift in timing. It might delay them a few weeks or a few months. When they are in the doors, they are still responding really well to our products. We are continuing to see those really nice higher average order value sales. I would just add a little color to April. If you think about April, we also exited April a little bit stronger, and that might be slightly helpful. Gotcha. Thank you. Thank you. Thank you. The next question comes from the line of Andrew Carter from Stifel. Please go ahead. Hey, thank you. Good morning. I wanted to ask about the significant disconnect in comparable sales growth and comparable demand. I got that you were like double digits November, December. You said 10% January. That should inform the quarter. And of course, deposits are up. I think the 20% are trailing 12. So anything can you speak to there around kind of the extended delivery times for customers? And do you see any risk of cancellations? Thanks. Yeah, we watch cancellations, and there's been zero change in cancellations. Everybody still wants their products, and even after all the news and excitement in April. Yeah, we're all good there. People have not canceled. I mean, you have the noise of something doesn't fit and things like that, but absolutely zero change in that. I just took a look at that yesterday, year to date. It's all good. Also, just kind of focusing in within that, how much of delivery times or wait times increased for customers? Have you had to go back? This is just focusing on the deposits and the disconnect. Thanks. Yeah, we haven't seen any change in that. A lot of customers still are, if it's the large purchases, they are building or whatever, and we're just waiting for the home to be for us to, say, deliver it. We're sitting on a lot of good product. Again, the percentage has not changed from the past year or so. We are not seeing any significant changes in that as well. There is always an amount that people just do not want yet because they are running late, getting remodeled or whatever it is. When they are ready, we are ready. We are in great shape. Inventory-wise, we are in great shape delivery-wise, and we can get consumers their product when they want it. Speaking to the increase in client deposits that you are referencing, that is basically the difference between what you see on the demand side, which we provided the +4.1% comp in Q1, as well as the lower net revenue performance in Q1. That's been the increase that you saw in Q1, which then looking towards the Q2 guide, how we've guided on the high end of the range to a +5% comp on the delivered side, that's when we're starting to see that flow through the P&L. And then just, I mean, it's 20% are trailing 12. What should deposits be as a percentage of revenue? That would be my last question. I'll pass it on. I would say where we're currently at is not anything out of the ordinary with where it should be trending. You may have some ebbs and flows from quarter to quarter depending on when there's higher demand sales quarters versus delivered or net revenue. Overall, I wouldn't view us as having an increased backlog like we did over the 2022 and 2023 time periods. Thanks. I'll pass it on. Thank you, Andrew. The next question comes from the line of Peter Benedict from Baird. Please go ahead. Oh, hey, guys. Good morning. Thanks for taking the question. I apologize if I missed some of the call. I apologize if this has already been asked. I'm curious just the consumer response to the changes you guys have made in the kind of the discount levels related to the buy more, save more, spend thresholds. I know you've talked about some good strength at some of the higher price points. Are you really seeing that when you go to the 20%-25% off pairing versus the 15%-20% off pairing? Has that really driven a meaningful change in that consumer engagement? Just kind of curious about that and how you're thinking about your pricing architecture going forward. Thank you. Yeah. What we like about this model is it can be incredibly flexible. As we started this model back in the fall of last year, we saw that it's working very well. Customers are responding. They're trading up. If they're close to a threshold, they'll trade up so they can get to it, which makes perfect sense. We love that. The different percentages, we're playing around with to see what responds, what doesn't respond. If 20% or 15% responds just as well as a 25%, then we adjust things every month. That's what's nice about the model. We can adjust it, and we're very flexible. We're seeing certainly the higher percentages. Obviously, customers are going to take it. They've been responding and trading up even more so because of that. We've been pleased with what we've seen. Got it. Thanks for the perspective. You bet, Peter. Thank you. The next question comes from the line of Jeremy Hamblin from Craig-Hallum. Please go ahead. Great. Thanks for taking the questions. Good morning. I wanted to just get into the showroom opening cadence here and just as you've seen a little bit of softening here in kind of overall orders and demand trends, are you seeing some of that show up in newer showrooms? And then as we look ahead to maybe a little bit more macro uncertainty that's probably not going to go away that quickly, are you looking at as we get into 2026 kind of showroom openings, is there this plan to kind of stay the course in terms of the number of openings and kind of the locations, or is there any consideration to maybe a bit more moderate opening schedule? Yeah. As you can imagine, you sign leases years in advance, and you get locked in for the next year or so. With that said, we've decided as a management team that we've got, we think, the best model in the business, we've got the best product, we're executing very well. We see no reason to slow down for 2026 and 2027 and so forth. We're in a great cash position. We can fund these things and not be at all scared about running out of cash or so forth. Again, we're in it for the long term. In 2027, we think business is going to be good. If business slows down for a while here, as I've seen for many, many years, it'll come back, and there's a pent-up demand. When there is a pent-up demand, if you are ready to capture that, you take more market share. If we have new stores, that is even more new market share. That is exactly what we are planning on doing. Just a follow-up question, I think, here for Ryan. You saw occupancy deleverage of 120 basis points in the first quarter. Wanted to get a sense for what you are expecting in terms of occupancy leverage or deleverage over the course of 2025. I think we expect to see maybe slight deleverage, but not as pronounced as what you saw in Q1. Okay. Implying that product margin would be up year- over- year? Approximately, yeah, slightly. Yeah. That is the main other piece that would offset the occupancy side. When I mentioned earlier on the call that we expect the gross margin to be approximately flat year- over- year. Got it. Thanks for the color. Thank you, Jeremy. We take the next question from the line of Simeon Gutman from Morgan Stanley. Please go ahead. Hey. I wanted to follow up on gross margin for a sec. The outlook for the total year of being flat, and yet the sales outlook, it looks like it's getting worse. The main factor for the first quarter was occupancy deleverage. On top of that, you mentioned that you have this $10 million tariff hit, but you're not putting anything back into price. It didn't sound like you're raising price. How does this flat gross margin come out unless you're planning to offset with product margin in other places? Thank you. Yeah. In general, if you recall, the second half of last year wasn't our strongest performance. This year, we're up against some easier comps starting in May from a demand comp perspective. As we talked about earlier, we layered in the volume discount starting in October, and we've been pretty happy with the results so far. There are puts and takes across the P&L and our estimates for the second half of the year, but we still expect it to be roughly flat year- over- year. Okay. As the follow-up, the new space productivity that our models punch out, it's in the 40s. I think you probably have a more accurate number, and you said you're happy with new store performance. What does that look like? I think ours is affected by the timing. If you take mature comp and then imply it in the back half, I think it's somewhere down high single, maybe low double digits. What's happening at non-new stores? Is it maturation? Is it just the soft market? Is there some cannibalization happening? Can you talk about the performance in more mature stores? Thank you. Yeah, you're correct. From the back half, yes, we have an implied on the demand comp side, a high single-digit comp in the back half of the year, which, as I mentioned earlier, that reflects a continuation of the choppiness that we've seen from April year to date. Anything on the new space productivity that our models are computing suggests 40%. I don't think that's, I don't know if that's right or wrong, if you can comment on that. Is it being skewed because of the timing of when galleries or showrooms are opening during the quarters? Yes. There's definitely a component to when they open and when we actually start to see deliveries flow through. Okay. Thanks. Good luck. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to turn the floor over to Tara Atwood for closing comments. Tara? Thank you, everyone, for joining the call. We appreciate your time and have a great day. Thanks, everybody. Thank you, everyone. Thank you. Ladies and gentlemen, thank you for your participation and interest in Arhaus. You may now disconnect your lines. Good.