Why Lovesac Shares Are Gaining Today

Home furnishing brand Lovesac Co LOVE reported Q1 FY24 net sales growth of 9.1% Y/Y to $141.2 million, beating the consensus of $134.2 million. 

Comparable sales for the quarter grew 15.1% versus last year.

Gross profit rose 7.0% Y/Y to $70.7 million, with the margin contracting 100 basis points to 50.1% owing to higher promotional discounting.

Total operating expenses climbed 20.7% Y/Y to $76.6 million.

The company reported an operating loss of $(5.9) million, vs. an operating income of $2.6 million a year ago.

Adjusted EBITDA loss stood at $(2.4) million compared to a profit of $6.4 million in the prior year. 

LOVE reported an EPS loss of $(0.28) topped the consensus loss of $(0.42).

Lovesac held $45.1 million in cash and equivalents as of April 30, 2023. 

Operating cash flow stood at $6.3 million vs. cash used in the operating activities of $(21.8) million a year ago.

Outlook: Lovesac sees Q2 EPS of $(0.12) - $(0.16) versus the Street view of $0.14 and sales of $149.0 million-$151.0 million against the estimate of $151.82 million.

The company reiterated the outlook for FY24 EPS at $1.83 - $2.24 vs. the estimate of $2.09 and sales at $700 million - $740 million, vs. consensus of $729.08 million.

"While we expect unfavorable macro-economic conditions to continue in the coming quarters, Lovesac continues to operate from a position of strength with a debt free balance sheet and a proven track record of cost discipline and rigor. We believe that we are thus poised to continue investing in the future with an accelerated pace of new product innovation that will expect to drive further customer enthusiasm and uptake," said Shawn Nelson, CEO.

Also, LOVE disclosed the appointment of Keith Siegner as the new CFO and Executive VP, effective June 30, 2023, following the retirement of Donna Dellomo and the transition to a Senior Strategic Advisory role. 

Price Action: LOVE shares are trading higher by 4.33% at $25.55 premarket on the last check Wednesday.