The Lovesac Company (LOVE) Reports Better than Expected Q4 Results

The Lovesac Company (NASDAQ: LOVE) announced its financial results for the fourth quarter of fiscal 2025, ending February 2, 2025. The company reported net sales of $241.5 million, a decrease of 3.6% from the previous year’s $250.5 million. This decline was primarily attributed to a 9.4% drop in omni-channel comparable net sales, which was partially offset by the addition of 27 new showrooms.

Despite the decline in net sales, Lovesac’s gross profit stood at $145.8 million, a slight decrease from the prior year’s $149.6 million. However, the company improved its gross margin to 60.4% from 59.7% in the previous year, driven by reductions in inbound and outbound transportation costs.

Operating income for the quarter was $47.6 million, up from $40.4 million in the previous year. The operating margin also improved to 19.7% from 16.0%. Lovesac’s net income for the fourth quarter was $35.3 million, or $2.13 per diluted share, compared to $31.0 million, or $1.87 per diluted share, in the prior year.

The increase in net income was supported by a reduction in SG&A expenses and advertising costs, which decreased by 11.4% and 9.2%, respectively. CEO Shawn Nelson highlighted the company’s strategic initiatives, including product launches and supply chain enhancements, as key contributors to this performance.

The Lovesac Company Reports Double Beat for Q4

In the fourth quarter, Lovesac exceeded market expectations for earnings per share (EPS), achieving $2.13 per diluted share compared to the anticipated $1.87. The company’s net sales of $241.5 million also surpassed the expected revenue of $230.33 million.

This outperformance was driven by effective execution in converting customer quotes to sales, particularly during the holiday season. Despite a slow start, the company managed to close the quarter with a mid-teens increase in net income year-over-year.

Compared to the prior fiscal year, Lovesac faced a challenging environment, with net sales decreasing by 2.8% for the full fiscal year 2025. The decline was primarily due to a 9.3% drop in omni-channel comparable net sales. However, the company managed to offset some of these challenges by opening new showrooms and improving its gross margin by 120 basis points. While the fiscal year net income decreased to $11.6 million from $23.9 million in fiscal 2024, the company remains optimistic about its growth potential and strategic positioning.

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Lovesac Expects Net Sales to Range Between $700M to $750M for Full Year FY’26

Looking ahead to fiscal 2026, The Lovesac Company has provided guidance that reflects cautious optimism. The company expects net sales to range between $700 million and $750 million for the full year. Adjusted EBITDA is projected to be between $48 million and $60 million, while net income is expected to range from $13 million to $22 million. The company anticipates diluted earnings per share to be between $0.80 and $1.36, based on approximately 16.3 million estimated diluted weighted average shares outstanding.

For the first quarter of fiscal 2026, Lovesac expects net sales to be between $136 million and $142 million. The company anticipates an adjusted EBITDA loss ranging from $8 million to $12 million, with a net loss projected between $10 million and $13 million.

Basic loss per share is expected to range from $0.66 to $0.85, based on approximately 14.8 million estimated weighted average shares outstanding. The company remains focused on its long-term strategy, emphasizing its ability to capitalize on growth opportunities while navigating macroeconomic challenges.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.