Fourth Quarter Net Sales of $241.5 million
Fiscal Year Net Sales of $680.6 million
STAMFORD, Conn., April 10, 2025 (GLOBE NEWSWIRE) -- The Lovesac Company (Nasdaq: LOVE) ("Lovesac” or the "Company”), the Designed for Life home and technology brand best known for its Sactionals, The World's Most Adaptable Couch, today announced financial results for the fourth quarter and full year fiscal 2025, which ended February 2, 2025.
Note: Lovesac's prior year fourth quarter and fiscal 2024 results contain an additional, non-comparable week, or the "53rd week”, when compared to the fourth quarter and full year results for the respective 52- and 13-week periods ended February 2, 2025 ("fiscal 2025”), and full year guidance for the 52-week fiscal year ending February 1, 2026 ("fiscal 2026”). Unless stated otherwise, financial metrics discussed in this release, such as net sales, operating income, net income and net income per share, are calculated in accordance with generally accepted accounting principles ("GAAP”) and therefore include the 53rd week for the applicable prior year fiscal 2024 periods.
Shawn Nelson, Chief Executive Officer, stated, "Fiscal 2025 was a milestone year for Lovesac. We had our most prolific year ever for new product launches, having gained significant momentum in innovation and commercialization of Designed for Life (DFL) platform extensions, including an early launch of the Sactionals Reclining Seat. We codified our long-term strategy and value creation model, delivered at our first ever Investor Day, and unveiled the first of three completely new platforms we plan to launch over the next three years: the EverCouch(TM). We strengthened the foundations of our business having reinvented our supply chain and dramatically enhanced our CRM tools to deepen and broaden the moat around our unique omnichannel business model. We believe these strategic actions and developments position us well to profitably scale our brand and business for years to come.”
Mr. Nelson continued, "After a slow start to the holiday selling season, strong execution by our teams dramatically improved conversion of customer quotes to sales throughout the remainder of the fourth quarter. This supported a mid-teens year-over-year increase in net income for the quarter and helped close out another year of market share gains for full year Fiscal 2025. While macro conditions were, and remain, frustratingly challenging, we are optimistic and enter Fiscal 2026 in a position of strength. We believe Lovesac's secular growth potential is massive. Our business model uniquely positions us to capitalize on macro upside whenever it does materialize, and without the need to over commit early during periods of uncertainty. Last, we have a healthy balance sheet and retain optionality for enhancing ROIC and/or accelerating profitable growth as opportunities arise.”
Key Measures for the Fourth Quarter and Fiscal 2025 Ended February 2, 2025:
(Dollars in millions, except per share amounts. Dollar and percentage changes may not recalculate due to rounding.)
| Thirteen weeks
ended February 2, 2025 | Fourteen weeks ended February 4, 2024 | % Inc
(Dec) | Fifty-two weeks
ended February 2, 2025 | Fifty-three
weeks ended February 4, 2024 | % Inc (Dec) | |||||||||||
| Net sales | ||||||||||||||||
| Showrooms | $154.5 | $156.9 | (1.6%) | $425.9 | $437.4 | (2.6%) | ||||||||||
| Internet | $70.5 | $78.1 | (9.7%) | $196.3 | $199.8 | (1.7%) | ||||||||||
| Other | $16.5 | $15.5 | 6.7% | $58.5 | $63.1 | (7.4%) | ||||||||||
| Total net sales | $241.5 | $250.5 | (3.6%) | $680.6 | $700.3 | (2.8%) | ||||||||||
| Gross profit | $145.8 | $149.6 | (2.6%) | $397.8 | $401.0 | (0.8%) | ||||||||||
| Gross margin | 60.4% | 59.7% | 70 bps | 58.5% | 57.3% | 120 bps | ||||||||||
| Total operating expenses | $98.2 | $109.3 | (10.1%) | $384.2 | $371.0 | 3.6% | ||||||||||
| SG&A | $67.6 | $76.3 | (11.4%) | $281.5 | $264.3 | 6.5% | ||||||||||
| SG&A as a % of Net Sales | 28.0% | 30.5% | (250) bps | 41.4% | 37.7% | 370 bps | ||||||||||
| Advertising and marketing | $26.8 | $29.5 | (9.2%) | $88.0 | $94.1 | (6.4%) | ||||||||||
| Advertising & marketing as a % of Net Sales | 11.1% | 11.8% | (70) bps | 12.9% | 13.4% | (50) bps | ||||||||||
| Net income | $35.3 | $31.0 | 14.1% | $11.6 | $23.9 | (51.6%) | ||||||||||
| Basic net income per common share | $2.31 | $1.99 | 16.1% | $0.75 | $1.55 | (51.6%) | ||||||||||
| Diluted net income per common share | $2.13 | $1.87 | 13.9% | $0.69 | $1.45 | (52.4%) | ||||||||||
| Adjusted EBITDA1 | $53.9 | $48.4 | 11.4% | $47.8 | $54.0 | (11.5%) | ||||||||||
| Net cash provided by operating activities | $44.0 | $56.3 | (21.8%) | $39.0 | $76.4 | (49.0%) | ||||||||||
| Percent increase (decrease) except showroom count | ||||
| Thirteen weeks ended February 2, 2025 | Fourteen weeks ended February 4, 2024 | Fifty-two weeks ended February 2, 2025 | Fifty-three weeks ended February 4, 2024 | |
| Omni-channel Comparable Net Sales(1) | (9.4)% | (4.1)% | (9.3)% | (4.1)% |
| Internet Sales | (9.7)% | 2.2% | (1.7)% | 13.2% |
| Ending Showroom Count | 257 | 230 | 257 | 230 |
Highlights for the Fourth Quarter Ended February 2, 2025:
- Net sales decreased $9.0 million, or 3.6%, in the fourth quarter of fiscal 2025 compared to the prior year period primarily driven by a decrease of 9.4% in omni-channel comparable net sales, partially offset by the net addition of 27 new showrooms period over period. During the fourth quarter of fiscal 2025, we did not open any additional showrooms and we closed 1 showroom.
- Gross profit decreased $3.8 million, or 2.6%, in the fourth quarter of fiscal 2025 compared to the prior year period. Gross margin increased 70 basis points to 60.4% of net sales in the fourth quarter of fiscal 2025 from 59.7% of net sales in the prior year period. The increase was primarily driven by decreases of 90 basis points in inbound transportation costs and 30 basis points in outbound transportation and warehousing costs, partially offset by a decrease of 50 basis points in product margin driven by higher promotional discounting.
- SG&A expense decreased $8.7 million, or 11.4%, in the fourth quarter of fiscal 2025 compared to the prior year period primarily due to decreases in credit card fees, professional fees, rent, utilities, and other overhead expenses, partially offset by increases in payroll and equity-based compensation.
- Advertising and marketing expense decreased $2.7 million, or 9.2%, in the fourth quarter of fiscal 2025 compared to the prior year period primarily due to a strategic reduction in media spend.
- Operating income was $47.6 million in the fourth quarter of fiscal 2025 compared to $40.4 million in the prior year period. Operating margin was 19.7% of net sales in the fourth quarter of fiscal 2025 compared to 16.0% of net sales in the prior year period.
- Net income was $35.3 million in the fourth quarter of fiscal 2025, or $2.13 net income per diluted share, compared to $31.0 million, or $1.87 net income per diluted share, in the prior year period. During the fourth quarter of fiscal 2025, the Company recorded an income tax expense of $13.0 million, compared to $10.2 million in the prior year period. The increase is primarily driven by higher net income before taxes and an increase in the effective tax rate.
- Net sales decreased $19.7 million, or 2.8%, in fiscal 2025 compared to fiscal 2024, primarily driven by a decrease of 9.3% in omni-channel comparable net sales, partially offset by the net addition of 27 new showrooms compared to the prior year.
- Gross profit decreased $3.2 million, or 0.8%, in fiscal 2025 compared to fiscal 2024. Gross margin increased 120 basis points to 58.5% of net sales in fiscal 2025 from 57.3% of net sales in fiscal 2024. The increase was primarily driven by a decrease of 240 basis points in inbound transportation costs, partially offset by a decrease of 80 basis points in product margin driven by higher promotional discounting and an increase of 40 basis points in outbound transportation and warehousing costs.
- SG&A expense increased $17.2 million, or 6.5%, in fiscal 2025 compared to fiscal 2024 primarily due to increases in payroll, equity-based compensation, a settlement with the SEC, professional fees, and rent, partially offset by decreases in credit card fees and other overhead costs.
- Advertising and marketing expense decreased $6.1 million, or 6.4%, primarily due to costs related to our 25th anniversary campaign in fiscal 2024 not repeating in fiscal 2025 and a strategic reduction in media spend.
- Operating income was $13.6 million in fiscal 2025 compared to $30.1 million in fiscal 2024. Operating margin was 2.0% of net sales in fiscal 2025 compared to 4.4% of net sales in fiscal 2024.
- Net income was $11.6 million in fiscal 2025, or $0.69 net income per diluted share, compared to $23.9 million, or $1.45 net income per diluted share, in fiscal 2024. During fiscal 2025, the Company recorded an income tax expense of $4.9 million, compared to $8.0 million in fiscal 2024. The decrease is primarily driven by lower net income before taxes, partially offset by an increase in the effective tax rate.
- The cash and cash equivalents balance as of February 2, 2025 was $83.7 million as compared to $87.0 million as of February 4, 2024. There was no balance on the Company's line of credit as of February 2, 2025 and February 4, 2024. The Company's availability under the line of credit was $32.6 million and $36.0 million as of February 2, 2025 and February 4, 2024, respectively. As previously announced, on July 29, 2024, we amended the credit agreement to add an uncommitted accordion feature that allows the Company, subject to certain customary conditions, to increase the size of the revolving credit facility by $10 million and, among other things, extend the maturity date of the loans made under the Amendment from September 30, 2024 to July 29, 2029.
- Total merchandise inventory was $124.3 million as of February 2, 2025 as compared to $98.4 million as of February 4, 2024 primarily related to a planned stock inventory increase of $26.7 million.
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 following outlook incorporates the expected impact from tariffs in place prior to April 2, 2025. Given the fluidity of the recent developments, the Company is not in a position to project the potential impact of new tariffs introduced on April 2, 2025, with reasonable certainty without unreasonable efforts, beyond the first quarter of fiscal 2026, which is expected to have an immaterial impact to the Company's expected financial performance.
The Company currently expects the following for the full year of fiscal 2026:
- Net sales in the range of $700 million to $750 million.
- Adjusted EBITDA1 in the range of $48 million to $60 million.
- Net income in the range of $13 million to $22 million.
- Diluted income per common share in the range of $0.80 to $1.36 on approximately 16.3 million estimated diluted weighted average shares outstanding.
- Net sales in the range of $136 million to $142 million.
- Adjusted EBITDA1 loss in the range of $8 million to $12 million.
- Net loss in the range of $10 million to $13 million.
- Basic loss per common share in the range of $0.66 to $0.85 on approximately 14.8 million estimated weighted average shares outstanding.
Conference Call Information:
A conference call to discuss the financial results for the fourth quarter ended February 2, 2025 is scheduled for today, April 10, 2025, 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.
About The Lovesac Company:
Based in Stamford, Connecticut, The Lovesac Company (NASDAQ: LOVE) is a technology driven company that designs, manufactures and sells unique, high-quality furniture derived through its proprietary Designed for Life approach which results in products that are built to last a lifetime and designed to evolve as customers' lives do. The current product offering is comprised of modular couches called Sactionals, the Sactionals Reclining seat, premium foam beanbag chairs called Sacs, the PillowSac™ Accent Chair, an immersive surround sound home theater system called StealthTech, and an innovative sofa seating solution called EverCouch™. As a recipient of Repreve's 7th Annual Champions of Sustainability Award, responsible production and innovation are at the center of the brand's design philosophy with products protected by a robust portfolio of utility patents. Products are marketed and