NASDAQ:LOVE

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Lovesac Falls 10% Despite Stable Sales as Margin Pressure and Losses Weigh on Outlook

Shares of Lovesac (NASDAQ: LOVE) dropped about 10% after the furniture retailer reported first-quarter fiscal 2027 results that highlighted ongoing profitability challenges despite resilient sales and an ambitious product expansion strategy.

Net sales were essentially flat at $138.2 million, slipping just 0.1% from a year earlier. While internet sales increased 7.1% and the company continued to expand its showroom footprint, a 1.0% decline in comparable sales and the closure of Best Buy shop-in-shop locations limited overall growth.

Investors appeared focused on weakening margins and higher losses. Gross margin fell 160 basis points to 52.1%, largely due to higher transportation, warehousing, and tariff-related costs. Operating loss widened to $17.4 million from $15.0 million a year ago, while net loss increased to $11.1 million, or $0.76 per share.

Adjusted EBITDA also deteriorated, falling to a loss of $10.5 million compared with a loss of $8.4 million in the prior-year period. The results suggest that cost pressures continue to offset the benefits of pricing actions and efficiency initiatives.

Despite the earnings pressure, management emphasized long-term growth opportunities, including a record pipeline of new product launches, domestic manufacturing initiatives, nationwide delivery expansion, and the upcoming launch of a new premium sectional platform. The company also maintained its full-year outlook, forecasting revenue of $700 million to $740 million and adjusted EBITDA of $35 million to $46 million.

While Lovesac remains financially healthy with $57 million in cash, no debt outstanding on its credit facility, and lower inventory levels, investors appear concerned that profitability improvements may take longer to materialize amid a challenging consumer and tariff environment.
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Author
European Investor 06-11-26
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10-08-25WS Investor