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Lovesac Co (LOVE)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 net sales were $149.9M, down 2.7% YoY; diluted EPS was $(0.32) and adjusted EBITDA was $2.7M as gross margin expanded 110 bps to 58.5% while SG&A deleveraged on lower sales .
  • The company lowered FY25 guidance across revenue and profit metrics (net sales to $660–$680M; EPS to $0.27–$0.74), citing ongoing category headwinds and conversion softness despite double-digit quote growth; it introduced Q4 guidance (net sales $221–$241M; EPS $1.67–$2.14) .
  • Management highlighted accelerating product innovation (soft launch of Sactionals Reclining Seat; StealthTech Charge Side) and continued share gains vs a category down high single digits, while noting Cyber 5 weakness and elevated promotions in the industry .
  • The balance sheet remains healthy with $61.7M cash, no revolver borrowings, and inventory of $113.4M; the company repurchased ~131K shares for ~$3.4M in Q3 .
  • Street consensus from S&P Global was unavailable at time of analysis; we compare actuals versus company guidance and prior quarters instead (S&P Global estimates unavailable).

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded 110 bps to 58.5% on lower inbound freight (-120 bps) and outbound/warehousing (-40 bps), partially offset by product margin pressure from promotions (-50 bps) .
  • Innovation cadence accelerated: soft launch of Sactionals Reclining Seat in Q4 and StealthTech Charge Side; AnyTable launched in Q2 with refreshed accessories, supporting repeat purchases and platform stickiness .
  • Market share gains vs category down high single digits; strong omnichannel model and cash position enable disciplined investing and buybacks (~131K shares at $26.13, $3.4M) .

Management quotes:

  • “We gained market share... Our expanding portfolio of innovative products is resonating...” – CEO Shawn Nelson .
  • “We successfully entered the case goods category with AnyTable... pulled forward and soft launched the long-awaited Sactionals recliner.” – CEO Shawn Nelson .

What Went Wrong

  • Net sales declined 2.7% YoY; omnichannel comparable sales fell 8.3% and showroom sales decreased 7.8%, reflecting category pressure and conversion issues despite double-digit quote growth .
  • SG&A rose 6.1% YoY and reached 47.9% of sales due to payroll, equity comp, and rent; operating loss widened to $(7.7)M (from $(3.6)M) .
  • FY25 guidance cut across revenue and profits; management cited Cyber 5 weakness and a ~500 bps decline in financing program utilization post industry fee changes, impacting conversion .

Financial Results

MetricQ3 FY2024Q1 FY2025Q2 FY2025Q3 FY2025
Net Sales ($USD Millions)$154.0 $132.6 $156.6 $149.9
Gross Margin (%)57.4% 54.3% 59.0% 58.5%
Operating Loss ($USD Millions)$(3.6) $(17.9) $(8.4) $(7.7)
Operating Margin (%)(2.3)% (13.5)% (5.3)% (5.1)%
Diluted EPS ($USD)$(0.15) $(0.83) $(0.38) $(0.32)
Adjusted EBITDA ($USD Millions)$2.5 $(10.3) $1.5 $2.7

Segment breakdown (Q3 FY2025 vs prior year):

SegmentQ3 FY2024Q3 FY2025
Showrooms ($USD Millions)$98.7 $91.0
Internet ($USD Millions)$40.0 $44.9
Other ($USD Millions)$15.4 $14.0
Total Net Sales ($USD Millions)$154.0 $149.9

Selected KPIs (Q3 FY2025):

KPIQ3 FY2024Q3 FY2025
Omnichannel Comparable Net Sales YoY+2.0% (8.3)%
Internet Sales YoY+20.1% +12.1%
Ending Showroom Count230 258
SG&A as % of Net Sales43.9% 47.9%
Advertising & Marketing as % of Net Sales13.7% 13.3%
Cash & Cash Equivalents ($USD Millions)$37.7 $61.7
Merchandise Inventory ($USD Millions)$116.6 $113.4
Net Loss ($USD Millions)$(2.3) $(4.9)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Millions)FY2025$700–$735 $660–$680 Lowered
Adjusted EBITDA ($USD Millions)FY2025$52–$59 $37.5–$48.5 Lowered
Net Income ($USD Millions)FY2025$17–$21 $4.5–$12.5 Lowered
Diluted EPS ($USD)FY2025$1.01–$1.26 $0.27–$0.74 Lowered
Net Sales ($USD Millions)Q4 FY2025N/A$221–$241 New
Adjusted EBITDA ($USD Millions)Q4 FY2025N/A$43–$55 New
Net Income ($USD Millions)Q4 FY2025N/A$28–$36 New
Diluted EPS ($USD)Q4 FY2025N/A$1.67–$2.14 New
Net Sales ($USD Millions)Q3 FY2025$152–$160 Actual: $149.9 Miss vs guidance

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Product innovationPillowSac Accent Chair launch; strong response and sell-outs; AnyTable + refreshed accessories Soft launch of Sactionals Reclining Seat; StealthTech Charge Side; continued platform expansions Accelerating cadence; broadening into case goods/tech integrations
Supply chain & logisticsDirect carrier for inbound freight; last-mile pilots; expected gross margin benefits in H2 Gross margin up 110 bps; inbound and outbound cost reductions; continued last-mile expansion Structural savings partially offset by higher promotions
Promotional environmentElevated industry discounts; Lovesac holding near ~30% headline vs peers at 40–60% Reiterated disciplined promo stance; not heavily discounting new innovations Persistent industry pressure; brand protection focus
Financing programLower utilization due to industry program fees; testing alternative offers ~500 bps lower utilization; Synchrony partnership testing shorter duration offers Headwind to conversion; experiments underway
Macro/election/Cyber 5Planning prudently; category down ~10% baseline Pre-election headwinds; Cyber 5 challenging; post-election trends steady; FY guide cut Ongoing demand caution with improved pipeline but slower conversion
Showroom expansion+24 in Q1; +10 in Q2; target ~40 gross for FY +5 opened, 1 closed in Q3; track to “at/or just over 30 net new” Continued footprint expansion
CRM/MyHub & omnichannelMyHub phase enhancements; Adobe Edge replatform for performance Additional MyHub improvements; stronger account creation and post-purchase journey Enhancing conversion and customer relationship
Services (resale/trade-in)Beta infrastructure; associates pilot Beta resale site for associates showing strong results; moving to customer-facing Progressing toward circular operations

Management Commentary

  • “The third quarter still represented market share gains against a category that was down high single digits and saw us end the quarter with our highest pre-holiday cash balance in years.” – CEO Shawn Nelson .
  • “We were able to pull forward and soft launch the long-awaited Sactionals recliner... the world's most innovative power recliner.” – CEO Shawn Nelson .
  • “We delivered material inbound freight improvement... and introduced local parcel providers in key markets, lowering cost and improving customer satisfaction.” – President/COO Mary Fox .
  • “For the full year fiscal ’25, we are lowering our guidance ranges... Net sales of $660M to $680M; adjusted EBITDA $37.5M to $48.5M.” – CFO Keith Siegner .
  • “During the quarter, we repurchased approximately 131,000 shares... for approximately $3.4 million.” – CFO Keith Siegner .

Q&A Highlights

  • Guidance reset: Q4 guidance lowered vs prior assumptions; biggest delta driven by category trends and slower conversion of larger configurations despite double-digit quote growth .
  • Promotions: Lovesac aims to keep a “3” in front of headline discounts and avoid deep discounting of new inventions; peers at 40–60% off; gross margin for Reclining Seat targeted to be in line with company profile .
  • Recliner early reads: Over 4,000 units sold in first ~3 weeks; roughly 50/50 mix of existing vs new customers; strong attach without media support yet .
  • Financing: ~500 bps decline in financing program utilization YoY post industry fee changes; testing shorter-duration offers with partner to bolster conversion .
  • Cyber 5 and macro: Cyber 5 challenging; post-election no major behavior shift; continued cautious outlook embedded in Q4/FY guidance .

Estimates Context

  • Wall Street consensus via S&P Global for Q3 FY2025 and FY/Q4 FY2025 was unavailable at time of analysis due to provider rate limits. We therefore benchmark results versus company guidance and prior periods (S&P Global estimates unavailable).
  • Implication: Street models likely require downward revisions to FY25 revenue, EBITDA, and EPS to reflect lowered ranges, while Q4 guidance provides updated near-term guardrails .

Key Takeaways for Investors

  • Guidance reset is the primary negative catalyst; FY25 net sales cut to $660–$680M and EPS to $0.27–$0.74 underscores persistent category pressure and conversion challenges .
  • Innovation momentum is a tangible offset: Reclining Seat and StealthTech Charge Side expand the Sactionals platform and support repeat purchasing, aiding mix and AOV over time .
  • Margin defense is working: Gross margin expansion from freight/logistics efficiencies continues, but promotional pressure and SG&A investment weigh on operating margins near term .
  • Conversion levers—CRM/MyHub, targeted events, financing offer tweaks—are central to Q4 execution; watch attach rates and backlog catch-up (StealthTech/PillowSac accessories) .
  • Strong liquidity and buybacks provide downside support; $61.7M cash, no debt draw, and remaining repurchase authorization (~$36.6M) enable opportunistic capital deployment .
  • Trading setup: Near term, stock reaction hinges on holiday/Q4 conversion and receptivity to Reclining Seat; medium term, thesis rests on platform stickiness, repeat economics, and category normalization.
  • Monitor industry promotions and macro tailwinds (rates, housing turnover) given Lovesac’s exposure to home furnishing cycles and its decision to protect brand over discounting .

Additional Notes

  • Other relevant press releases: AnyTable launch (Sept. 17, 2024) and Sactionals Reclining Seat launch (Nov. 20, 2024) expand platform and tech integration .
  • Q3 press release exhibits include detailed P&L, balance sheet, cash flow, and non-GAAP reconciliations .