Cristina Fernandez: And then my second question is around the new stores. You have a lot of exciting locations coming up. I wanted to ask about the staffing for those stores, how you see and what’s the process to make sure you have the right store managers and designers? Are you moving people from other stores, or is it more training and looking for new employees in those new markets?
John Reed: Sure. Good question. Yes, we not only are looking forward to the new stores opening, but we have just opened a quite a few new stores in the last six, eight months as well. And how it works for us is, a, we always move a store manager to a new location. An existing store manager, experienced store manager has proven to be a great leader and understand our culture. With that, we typically, in most of the stores, and depends on where they are — but most of them, we have a few handful of folks that want to move to them. And so we’ll move some experienced folks there as well. In addition to that, then, of course, we have to hire a whole new staff. We’ve got a phenomenal university of Arhaus training team that gives them, I believe, six weeks of training before they opened the doors.
So they are thoroughly trained. They’ll go work out of another store, get them on the floor of not only talking to clients, but then getting behind a desk and learning how to write up the sale and so forth, and assisting our clients. So they are very, very well trained by day one when we opened up the door and when our clients come in.
Operator: Your next question comes from the line of Jeffrey Walter with Jefferies.
Jeffrey Walter: Good morning, Jeffrey Walter on for Jonathan Matuszewski. Thanks for taking our question. It sounds like train design momentum continues to build. Can you just update us on the plan for deepening the trade channel presence with interior designers and then discuss any near-term opportunity within the contract business? Thank you.
John Reed: Yeah, you bet. Yeah, the trade business is one that we focus to continue to grow. These are folks that have their own business, and they have their own clients. And we’re encouraging them to bring their clients and themselves into our showrooms. We have we have added folks internally to do nothing but help seize these trade folks, assist with the sale, make it easier just to make it seamless so they don’t have to spend a lot of their time on it. And that’s what they — we learned. They’re time crunched. And if we can help them with that, we’ve got the products for sure, or a one-stop shop for them. They don’t have to go to 10 different vendors to buy things for a room. We’ve got the lighting. We’ve got the rug. We’ve got this furniture.
We can do it all. So we do it all. We take care of it. We guarantee it if there’s any issues, it gets repair, their fixture exchanged. And we’re seeing is growing nicely. We’re adding quite a few new trade members every single month. The trade business is outpacing the average growth of our business total. So we see a big, big future in that. We think we’ve only started that. We think we’ve got a huge runway ahead of us. So it is something we definitely are focusing on and very excited about.
Operator: Your next question comes from the line of Robbie Ohmes with Bank of America.
Unidentified Analyst: Hi, this is Maddie check on for Robby Ohmes. Thanks for taking our questions. Just first, you highlighted that demand comps grew mid-single digits in February and high single digits in March. Can you give any color on how April trended, given that strong exit rate? Thank you.
Dawn Sparks: Yeah, April was up mid-single digits. So pleased with the response we’re seeing to some of our new collections, particularly in outdoor. We have the Beaumont, which is doing really well. Our tie and collections are performing very well. So we’re continuing to be very excited about the product introductions. We know January was impacted by weather. But we also know folks got to decide not to purchase home furnishings because it’s cold or snowy one month. So they will come back, they will come in. And we know that we resonate in various markets across the country. And so as we continue to drive our brand awareness up, we do expect to continue to see some great results. So very pleased with April and how it’s trending, and we’re looking forward to the balance the year.
Unidentified Analyst: Great. Thank you. And then maybe just to dive a little deeper into your plans with e-commerce this year, are you adding SKUs online, maybe a larger assortment of like tabletop soft goods, lower AOV products as well, AOV products? And have you seen a relationship between growth in the e-commerce business as you’re opening new stores, given you’re building awareness, people are in actual showrooms, and then maybe buying online? Thank you.
Jennifer Porter: Yes. Hi, good morning. Great question. I think the simple answer is we’re excited about everything with e-commerce. There is — as with the rest of our business, there’s just so much opportunity. So as we are working on introducing new products and growing the assortment, as John mentioned earlier, some of those categories that we’re looking at, you will see that probably on the website as well. In addition to that, as you know I’ll be talking, we’re constantly learning and testing and evaluating how we present the product to our clients digitally as well. So not only we’ll be introducing those new products online as those seasons launched, but we’re also getting better and smarter every single day about how we serve up that product assortment to the clients and so how we can bring that retention at the right time during the product’s journey.
I think one of the really exciting things digitally, as John mentioned, people are starting to like more color and like more variety in their assortments. There are all sort of amazing really incredible ways to inspire people and surface color and show maybe the wild super colorful, super [indiscernible] on site, but then also show the two core items, which are a little bit easier to get to on a weekly basis. So a lot more to come there as we just figure out the product assortment, both visually and what it looks like. We haven’t spoken specifically to the product mix to your question about looking at specific categories and AOV and e-com. What we have talked about is how often AOV higher than all our competitors for the reasons that you mentioned.
We don’t have as much about the core or smaller on tabletop type items in our assortment. We are more predominantly weighted to furniture. As I mentioned, there’s opportunity everywhere. But for now, we’re really happy. We’re continuing to use our digital channels to support our full omnichannel brand. We really see our digital channels not only as a sales channel but also as an experienced channel, a brand awareness channel where we can introduce what makes Arhaus special, but also the full assortment to our clients. We’re really focused on trying to be there however our clients want to interact with us and so looking to improve conversion in both showrooms and on e-com, and we’re making those decisions. So a lot more to come. I think you touched on the upper part of your question but let me know if I miss anything there.
Operator: Your next question comes from the line of Justin Kleber with Baird.
Justin Kleber: Hey, good morning, everyone. Thanks for taking the questions. First one for me, Dawn, you mentioned the increase in the in-home designer penetration. Can you just provide us any updated benchmarks on that and where you sit today, how that’s evolved maybe relative to the time of the IPO? Just trying to get a sense for what inning you think that initiative is in because it seems like it remains a nice driver for the business here.
Dawn Sparks: Yeah. So we don’t disclose the actual demand penetration, but what we are really pleased about is how it’s continuing to grow. And so as we’re continuing to test different staffing levels in the various volume locations that we have, we’re trying to see how high it’s high. And so I would say we’re probably in inning four or five, but really pleased with the performance that we’re seeing. We’re also, as John mentioned, digging deeper into the trade program and how can we continue to drive that business. And we know that the trade and our in-home designer program, there’s some nice overlap there. Some great creative collaboration that happens when you get equal like-minded folks in a room really thinking about a client safe.
So we do expect some nice growth in the business in the in-home designer program as trade program increases, but also just as we continue to evaluate and fine tune our staffing model with regards to that program. So more to come but really, really excited at how those programs are both performing.
Justin Kleber: It’s great to hear. Thanks. Thanks for all that color. And then my follow-up is on demand. And if you could just remind us or give us a sense for what your guidance assumes from a demand comp perspective. And let’s say, if demand ends up exceeding your internal plan, would you let the upside flow through? Or are there certain investments you would choose to maybe pull forward into this year from future years? Thank you.
Dawn Sparks: Yeah, that’s a great question. We have not guided to demand. And so as we move into next year, we’re excited for that demand comp and the comp to converge a little bit more to give you better clarity. But as we think about the investments that we need to make and want to make in the organization, whether it’s corporate strategic investments in systems and processes or whether it’s growth driving initiatives such as e-commerce traded in-home designer, there’s a whole host of opportunity for us from a growth perspective that we haven’t even started to really dive into like contract as well. So it’s a decision that management will be making as we go. And so we feel good about the guidance that we have out there for the year.
And we’re very optimistic in what’s going to happen in the industry, what can happen with the consumer. That being said, I’m a very conservative person, so I’m always contemplating what the downside is. But we have great strength in our balance sheet with great cash position, so we feel really confident in this year, how we’re going to perform. And I’d say more to come in later quarters about what any changes that we might have. At this point in time, we think that our guide is achievable, and we feel good about the investments we’re making at the moment and contemplated for the year.
Operator: Your next question comes from the line of Max Rakhlenko with TD Cowen.
Max Rakhlenko: Hey, thanks a lot for squeezing me in. I’m sorry if I missed this earlier, I just hopped on, but how are you thinking about your value proposition and maintaining price gaps that you’re comfortable with — for the brand to succeed? And then what could your response look like if some of your peers are permanently cut their prices and it’s not just the holiday promotions?
Dawn Sparks: Yeah, so we feel great about our value proposition. We’re constantly evaluating how we’re positioned within the competitive set. But I’ll turn it over to John in a second, but we believe very strongly in our product quality aesthetic, and we feel great about how we’re positioned. But John, do you want to [indiscernible]?
John Reed: Yeah. If you understand our business model, it is and always has been — we go direct to manufacturers who actually make products, buy from them, comes on either containers or trucks, comes into one of our distribution centers and then right out to the consumer. We don’t buy from middleman, people with — that mark the product up in any way, whatsoever. We don’t use very expensive designer folks who want some huge royalty on every single piece we sell, things like that. So we really have the best model out there, certainly, in the high end business. And we believe we give great values. But we’re not worried about other folks cutting their prices and so forth because you can’t buy our products from other people. It’s exclusive to us.
