The Lovesac Company Reports Mixed Financial Results Amid Challenging Market Conditions

The Lovesac Company reported its financial results for the thirteen and twenty-six weeks ended August 4, 2024, showing mixed performance amid challenging market conditions. For the thirteen weeks, net sales reached $156.6 million, a slight increase of 1.3% from $154.5 million in the same period last year. However, for the twenty-six weeks, net sales declined by 2.2% to $289.2 million from $295.7 million in the prior year.

The company experienced a significant increase in operating losses, reporting an operating loss of $8.4 million for the thirteen weeks, compared to a loss of $1.0 million in the same period last year. For the twenty-six weeks, the operating loss escalated to $26.2 million from $6.7 million in the previous year. The net loss for the thirteen weeks was $5.9 million, compared to a loss of $0.6 million in the prior year, while the net loss for the twenty-six weeks was $18.8 million, up from $4.8 million.

Selling, general, and administrative (SG&A) expenses rose significantly, increasing by 15.4% to $73.7 million for the thirteen weeks and by 18.0% to $190.6 million for the twenty-six weeks. This increase was attributed to higher payroll and rent costs, as well as investments in new showrooms. The gross profit for the twenty-six weeks increased slightly to $164.4 million, with a gross margin improvement to 56.8% from 55.1% in the prior year.

The company’s cash and cash equivalents decreased to $72.1 million as of August 4, 2024, down from $87.0 million at the beginning of the period. Net cash used in operating activities was $0.8 million, a stark contrast to the $27.3 million provided in the prior year. The company also reported a significant increase in tax benefits, totaling $6.0 million for the twenty-six weeks, compared to $1.3 million in the previous year.

Strategically, Lovesac has been expanding its showroom presence, operating 254 locations across the U.S. as of August 4, 2024. The company launched new products, including the PillowSac Accent Chair Frame, and continues to focus on its Sactionals product line, which accounted for 91.3% of net sales in the most recent quarter. The company is also navigating macroeconomic challenges, including inflation and reduced consumer spending, which have impacted demand for home furnishings.

In June 2024, the Board of Directors approved a $40 million share repurchase program, although no shares have been repurchased to date. The company maintains a $40 million revolving line of credit, with $36 million available as of August 4, 2024.