Lovesac’s Q1 sales drop, but outlook remains on track

STAMFORD, Conn. — Net sales for home furnishings brand and Top 100 retailer Lovesac decreased by just more than 6% for its first quarter in fiscal 2025 to $132.6 million, with Internet sales down 9% and showrooms off by 2.3%.

Although sales were down, CEO Shawn Nelson said: “We are pleased to deliver first quarter performance in line to slightly above the high end of our expectations. Our results reflect continued outperformance compared to the industry and demonstrate our commitment to executing against our objectives.”

In the company’s earnings call, Nelson noted while Lovesac hasn’t experienced the drop off in business associated with constraints placed on lower-income consumers, Lovesac’s customers are being “more thoughtful” on their choices when it comes to size configurations and accessory purchases.

The company has seen a positive response to its latest launch, the PillowSac accent chair, which could spur its own product extensions as a new platform. “We’re really energized by it,” he said.

Mary Fox, president and COO at Lovesac, said during the call that the company also is working a resale and trade-in program, components of which it has been testing internally prior to a roll out at a later date.

For the quarter ended May 5, Lovesac saw net sales in its showrooms drop to $81.6 million vs. $83.6 million in Q1 a year ago, while Iternet sales fell by to $36.6 million of the total from $40.2 million the prior year. Sales within the “other” category, which primarily covers pop-ups and shop-in-shop sales, were down 17.1%, which CFO Keith Siegner attributed to lower performance from pop-up shops on Costco.com.

During the first quarter, Lovesac opened 24 showrooms and closed three, bringing its total at quarter’s end to 246 compared with 211 in 2023. It closed five kiosks as well during the quarter. Siegner said Lovesac is on track open 40 showrooms this year.

Gross profit jumped by 2.1% to $72.6 million for the quarter and gross margin rose by 430 basis points to 54.3% vs. 50% in Q1 of fiscal 2024. The loss per common share was 83 cents  and the net loss for the quarter was $13 million. The adjusted EBITDA loss was $10.3 million vs. a loss of $2.1 million in the prior year’s first quarter.

A planned stock inventory decrease of $10.2 million, coupled with a decrease in freight capitalization of $1.4 million, brought the inventory total to $94.7 million for Q1 vs. $104.5 million for the quarter ended April 30, 2023.

The company hasn’t changed its fiscal year assumptions and is reaffirming its guidance, said Siegner.

Lovesac’s outlook for full fiscal 2025 includes net sales in the $700 million to $770 million range; adjusted EBITDA between $46 million and $60 million; and net income of $18 million to $27 million. The outlook for Q2 in fiscal 2025 calls for net sales of $152 million to $160 million; an adjusted EBITDA loss of $2 million to $5 million; and a net loss of $6 million to $8 million.

See also:

  • Lovesac bags record haul at 45th annual Telly Awards
  • One for every year: Lovesac CEO’s 25 steps for success

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