Lovesac Company Announces Financial Results for First Quarter

June 11, 2026  by Karen Parrish in Business Strategy, Industry   

Shawn David Nelson, chief executive officer, stated, “Lovesac’s solid first quarter performance reflects disciplined execution, including modest market share gains, as we navigate continued industry headwinds while simultaneously preparing the business for our most prolific year of new product introductions in Lovesac’s history. Our focus on reinforcing our already strong position in the living room through a clear small/medium/large product architecture is on track.

The Snugg platform is performing well ahead of substantial innovation coming soon. Our Sactionals platform remains the heart of the living room business, with the reclining seat now included in one out of every three new setups. Finally, our new high-end sectional platform launches later this year as we look to take even more share of the living room. In addition, we’re also advancing our Made in America initiative, with domestic production of Sactionals seat inserts beginning this summer to reduce cost volatility, limit our exposure to overseas shipping disruption, and accelerate delivery times to our customers. With delivery services rolling out nationally, a marketing engine now a full year into its transformation, and a product innovation roadmap building toward the New Room launch in early calendar 2027, we have tremendous confidence in our path to becoming the most loved home brand in America.”

Highlights for the Quarter Ended May 3, 2026:

Net sales decreased $0.2 million, or 0.1%, in the first quarter of fiscal 2027 compared to the prior year period primarily driven by the closure of the Company's Best Buy shop-in-shop locations and a 1.0% decrease in omni-channel comparable net sales, partially offset by 14 net new showrooms. During the first quarter of fiscal 2027, we opened 6 additional showrooms and closed 3 showrooms.

Gross profit decreased $2.4 million, or 3.2% in the first quarter of fiscal 2027 compared to the prior year period. Gross margin decreased 160 basis points to 52.1% of net sales in the first quarter of fiscal 2027 from 53.7% of net sales in the prior year period primarily driven by increases of 380 basis points in inbound transportation and tariff costs and 110 basis points in outbound transportation and warehousing costs, partially offset by an increase of 330 basis points in product margin driven by price increases and cost reduction initiatives, partially offset by higher promotional discounting.

SG&A expense increased $1.5 million, or 2.2%, in the first quarter of fiscal 2027 compared to the prior year period primarily due to increases in payroll associated with higher incentive compensation and other overhead costs.

Advertising and marketing expense decreased $2.0 million, or 10.7% in the first quarter of fiscal 2027 compared to the prior year period, primarily due to the strategic timing of marketing investments and continued emphasis on efficiency.

Operating loss was $17.4 million in the first quarter of fiscal 2027 compared to $15.0 million in the prior year period. Operating margin was (12.5)% of net sales in the first quarter of fiscal 2027 compared to (10.8)% of net sales in the prior year period. 

Net loss was $11.1 million in the first quarter of fiscal 2027 or $(0.76) net loss per common share compared to $10.8 million or $(0.73) net loss per common share in the prior year period. During the first quarter of fiscal 2027, the Company recorded an income tax benefit of $5.6 million, compared to $3.8 million in the prior year period. The change in benefit was primarily driven by a higher net loss before taxes and an increase in the effective tax rate.

Other Financial Highlights as of May 3, 2026:

The cash and cash equivalents balance as of May 3, 2026 was $57.0 million as compared to $26.9 million as of May 4, 2025. There was no balance on the Company’s line of credit as of May 3, 2026 and May 4, 2025. The Company’s availability under the line of credit was $34.9 million and $36.0 million as of May 3, 2026 and May 4, 2025, respectively.

Total merchandise inventory was $109.3 million as of May 3, 2026 as compared to $124.9 million as of May 4, 2025 primarily related to a planned stock inventory decrease of $14.9 million coupled with a decrease in freight capitalization of $0.4 million.

Outlook:

The Company provides guidance of select information related to the Company’s financial and operating performance, and such measures may differ from year to year. The projections are as of this date, and the Company assumes no obligation to update or supplement this information.

The Company’s outlook continues to reflect the latest backdrop for tariffs for the remainder of the year, and are not speculating as to incremental changes that might arise. The Company’s outlook has been updated to reflect approximately $3.6 million of refunds collected related to IEEPA tariffs, including a small amount of interest, which is currently expected to be recognized in the second quarter.

The Company currently expects the following for the full year of fiscal 2027:

Net sales in the range of $700 million to $740 million.

Adjusted EBITDA¹ in the range of $35 million to $46 million.

Net income in the range of $5 million to $12 million.

Diluted income per common share in the range of $0.34 to $0.81 on approximately 14.8 million estimated diluted weighted average shares outstanding.

The Company currently expects the following for the second quarter of fiscal 2027:

Net sales in the range of $157 million to $166 million.

Adjusted EBITDA¹ in the range of a loss of $4 million to income of $2 million.

Net loss in the range of $3 million to 7 million.

Basic loss per common share in the range of $0.20 to $0.48 on approximately 14.7 million estimated basic weighted average shares outstanding.

¹ Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Information” and “Reconciliation of Non-GAAP Financial Measures” included in this press release.

Conference Call Information:

A conference call to discuss the financial results for the first quarter ended May 3, 2026 is scheduled for today, June 11, 2026, at 8:30 a.m. Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-3982 (international callers please dial (201) 493-6780) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at investor.lovesac.com.

A recorded replay of the conference call will be available within two hours of the conclusion of the call and can be accessed online at investor.lovesac.com for 90 days.