Executive Summary

Q4 FY2025 delivered a clean beat versus consensus: revenue $241.5M vs $230.3M*, EPS (Primary) $2.24 vs $1.87*, and EBITDA $51.4M vs $48.2M*; diluted EPS was $2.13, up 13.9% YoY .
Gross margin expanded 70 bps YoY to 60.4% on lower inbound and outbound logistics costs, despite higher promotional discounting .
Management initiated FY2026 guidance (net sales $700–$750M; adjusted EBITDA $48–$60M; diluted EPS $0.80–$1.36) and Q1 FY2026 guidance (net sales $136–$142M; adj. EBITDA loss $8–$12M), highlighting tariff mitigation flexibility and strong product momentum .
Strategic catalysts: Reclining Seat sold >18,500 units since launch with strong attach rates and 50-50 mix new/repeat customers; “Recline of Civilization” campaign has ~5B earned impressions .
Balance sheet optionality preserved: $83.7M cash, $33M committed availability, no debt; inventory deliberately built (+26% YoY to $124.3M) to buffer tariff risks; FY25 buybacks totaled $19.9M .

Values retrieved from S&P Global*

What Went Well and What Went Wrong

What Went Well

Gross margin expanded to 60.4% (+70 bps YoY) on reduced inbound (−90 bps) and outbound (−30 bps) transportation costs, offsetting promo headwinds .
Operating leverage: operating income rose to $47.6M (19.7% margin) from $40.4M (16.0%) YoY; adjusted EBITDA increased to $53.9M from $48.4M .
Product momentum: “Since launch, the Reclining Seat has sold over 18,500 units with attachment rates and customer feedback exceeding our expectations, as well as a nearly 50-50 split between new and repeat customers” .

What Went Wrong

Net sales declined 3.6% YoY to $241.5M on −9.4% omni-channel comps; showroom −1.6%, internet −9.7% .
Product margin compressed (−50 bps) due to higher promotional discounting, partially offsetting logistics savings .
Category softness and conversion challenges: “We have double-digit pipeline growth year-over-year…lower conversion rates particularly at very large configurations” ; Q4 demand was volatile around holiday timing .

Financial Results

Headline P&L and Profitability (oldest → newest)

Metric	Q4 2024	Q3 2025	Q4 2025
Net Sales ($USD Millions)	$250.5	$149.9	$241.5
Gross Margin (%)	59.7%	58.5%	60.4%
SG&A (% Net Sales)	30.5%	47.9%	28.0%
Operating Income ($USD Millions)	$40.4	$(7.7)	$47.6
Net Income ($USD Millions)	$31.0	$(4.9)	$35.3
Diluted EPS ($USD)	$1.87	$(0.32)	$2.13
Adjusted EBITDA ($USD Millions)	$48.4	$2.7	$53.9

Segment and Mix

Metric	Q4 2024	Q3 2025	Q4 2025
Showrooms ($USD Millions)	$156.9	$91.0	$154.5
Internet ($USD Millions)	$78.1	$44.9	$70.5
Other ($USD Millions)	$15.5	$14.0	$16.5
Omni-Channel Comparable Net Sales (%)	−4.1%	−8.3%	−9.4%
Product Category: Sactionals YoY	—	−2%	−3.8%
Product Category: Sacs YoY	—	−4%	−3.0%
Product Category: Other YoY	—	−16%	+2.7%

KPIs and Balance Sheet

KPI	Q4 2024	Q3 2025	Q4 2025
Ending Showroom Count	230	258	257
Cash & Equivalents ($USD Millions)	$87.0	$61.7	$83.7
Merchandise Inventory ($USD Millions)	$98.4	$113.4	$124.3
Share Repurchases (Shares / $USD)	—	131K / $3.4M	646K / $16.5M (FY total $19.9M)

Results vs Wall Street Consensus (S&P Global)

Metric	Consensus	Actual	Beat/Miss
Revenue ($USD)	$230.3M*	$241.5M	Beat*
Primary EPS ($USD)	$1.87*	$2.24*	Beat*
EBITDA ($USD)	$48.2M*	$51.4M*	Beat*

Values retrieved from S&P Global*

Notes: EPS in consensus reflects Primary EPS; company-reported diluted EPS was $2.13 .

Guidance Changes

Metric	Period	Previous Guidance	Current/Actual	Change
Net Sales	Q4 FY2025	$221–$241M	$241.5M	Delivered at high end
Diluted EPS	Q4 FY2025	$1.67–$2.14	$2.13	In range (high end)
Adjusted EBITDA	Q4 FY2025	$43–$55M	$53.9M	Near top of range
Net Sales	Q1 FY2026	—	$136–$142M	New
Gross Margin	Q1 FY2026	—	~54.5%	New
Advertising & Marketing (% sales)	Q1 FY2026	—	~13.5%	New
SG&A (% sales)	Q1 FY2026	—	~50%	New
Adjusted EBITDA	Q1 FY2026	—	$(8)–$(12)M	New
Net Loss	Q1 FY2026	—	$(10)–$(13)M	New
Net Sales	FY2026	—	$700–$750M	New
Gross Margin	FY2026	—	~59%	New
Advertising & Marketing (% sales)	FY2026	—	~12.5%	New
SG&A (% sales)	FY2026	—	~41%	New
Adjusted EBITDA	FY2026	—	$48–$60M	New
Net Income	FY2026	—	$13–$22M	New
Diluted EPS	FY2026	—	$0.80–$1.36	New

Note: FY2026 guidance excludes incremental impacts from April 2, 2025 tariff updates beyond the old regime; Q1 FY2026 expected tariff impact immaterial .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 FY2025)	Current Period (Q4 FY2025)	Trend
Supply chain diversification	Shift to direct carrier; reduced spot reliance; outbound pilots; leveraging MyHub for omnichannel	Sourcing split: Vietnam ~50%, Malaysia ~28%, China down to 13%, Indonesia ~6%; task forces to drive China <10%; redundant identical sourcing across countries	Strengthening redundancy; active tariff mitigation
Tariffs/macro	Category down ~10%; promo intensity rising; cautious outlook; financing program fees reduced utilization by several hundred bps	Planning FY26 on ~−5% category; multiple levers (vendor concessions, surgical price increases, promo intensity, efficiencies); higher margins mean smaller price increases needed	Pragmatic; multiple offsets
Product innovation	PillowSac Accent Chair; AnyTable; redesigned accessories; soft launch recliner late Q3	Recliner momentum (>18,500 units; high attach; 50-50 new/repeat); EverCouch testing; more platforms in next 3 years	Accelerating cadence; platform expansion
Marketing/brand	Media agency transition; ROI improvements; YouTube expansion; influencer collabs (Olivia Rodrigo tour)	“Recline of Civilization” campaign ~5B impressions; MrBeast collab 97M views; appointment of Chief Brand & Marketing Officer Heidi Cooley	Brand amplification; leadership upgrade
Omnichannel/CRM	MyHub replatform; Adobe Edge; improved digital conversion; showroom openings	Improved quote conversion late Dec–Jan via personalized offers; performance-based compensation in field; Costco roadshows +15%	Execution improving
Financing	Utilization declined due to program fees; testing alternative offers	Continued testing (shorter-duration offers) to aid conversion	Optimizing
Inventory strategy	Reduced inventory Q2; built for holiday Q3	Purposeful inventory build (+26% YoY) as safety stock against tariffs/disruptions	Defensive buffer

Management Commentary

“It was a solid end to fiscal 2025…sales slightly outpaced the high end of our guidance range.”
“Since launch, the Reclining Seat has sold over 18,500 units…with a nearly 50-50 split between new and repeat customers.”
“Prior to the recent news, our country of origin estimates for fiscal ’26 were Vietnam ~50%; Malaysia ~28%; China down to 13%; Indonesia ~6%…working to get China under 10%.”
“We reported $83.7 million in cash…retaining $33 million in committed availability and no borrowings.”
“We estimate net sales of $700 million to $750 million…adjusted EBITDA $48 million to $60 million…diluted EPS $0.80 to $1.36.”

Q&A Highlights

Tariff mitigation: price increases likely “mid-single” digits; competitors already took 5–10% MSRP increases in Feb–Mar; leverage vendor concessions and promo intensity judiciously .
Sourcing agility: “We do see a path to getting down below 10% [China] this year…happening so fast, in days really.” .
Conversion dynamics: strong quote pipelines; quieter weeks between promotions; expect stronger event-driven closes; focus on personalized outreach .
Showroom strategy: current footprint can showcase EverCouch; ~30 new showrooms planned; omnichannel approach remains tight and efficient .
Financing program: lower utilization tied to industry program fees; testing alternative offers to improve conversion .

Estimates Context

Q4 FY2025 beat vs S&P consensus across revenue, EPS (Primary), and EBITDA (see table above). Given the company reports diluted EPS ($2.13), note that consensus and “Primary EPS” use a different EPS construct; both indicate a beat .
Prior quarters showed mixed performance vs estimates: Q3 FY2025 missed revenue ($149.9M vs $155.3M*) but beat Primary EPS (−$0.01 vs −$0.35*); Q2 FY2025 slightly beat revenue ($156.6M vs $155.1M*) and beat Primary EPS (−$0.08 vs −$0.44*).
Values retrieved from S&P Global

Key Takeaways for Investors

Q4 delivered high-quality beats and margin expansion despite category softness; operational efficiencies in logistics are durable offsets to promo pressure .
FY2026 guide is prudent, excludes new tariff impacts; multiple mitigation levers and high gross margins position LOVE to pass through modest price increases without derailing demand .
Product engine is accelerating: Reclining Seat demonstrates strong attachments and repeat purchase behavior; EverCouch and future platforms broaden TAM and support multiyear growth .
CRM/omnichannel investments (MyHub, performance comp, Costco roadshows) are improving conversion; targeted offers after compressed holiday season boosted closes .
Balance sheet flexibility (net cash, inventory buffer, undrawn revolver) enables opportunistic buybacks and growth investments while managing tariffs .
Near-term: watch conversion cadence and financing offer tweaks; Q1 FY2026 guide implies seasonally weak quarter with planned EBITDA loss but healthy gross margins .
Medium-term: estimate revisions likely move up modestly on Q4 beats; monitor tariff developments and pricing actions across peers (MSRP up 5–10%) .

Additional Relevant Q4 Materials

Q4 press release (Item 2.02 furnished in 8-K) with detailed financials and FY2026 outlook .
Q4 call transcript with sourcing mix, guidance detail, and marketing campaign metrics .
Marketing leadership appointment press release (Heidi Cooley) .
Recliner campaign press release (“Recline of Civilization”) .

Lovesac Co (LOVE)·Q4 2025 Earnings Summary