The Lovesac Company · NASDAQ:LOVE
The Lovesac — Q1 2024 Earnings Presentation
49 slides from The Lovesac's earnings presentation, June 2023
Slide 1: Investor Presentation June 2023
Investor Presentation June 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation by The Lovesac Company (the “Company,” “we,” “us,” and “our”) includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securi
Slide 3: LOVE's Unique Product Philosophy: Designed For Life
LOVE’s Unique Product Philosophy: Designed For Life Changeable Maintainable Moveable Rearrangeable Upgradable Waste-less We intend to become one of the biggest, the most innovative, and the most beloved furniture brands in the world. 3
Slide 4: LOVESAC's Senior Executive Management Team
LOVESAC’s Senior Executive Management Team Shawn Nelson Mary Fox Jack Krause Donna Dellomo Todd Duran John Legg Founder & CEO President & COO Chief Strategy Officer* EVP & CFO* CIO Chief Supply 20+ Years at 1+ Years at Lovesac 7+ Years at Lovesac 6+ Years at Lovesac 1+ Years at Lovesac Chain Officer
Slide 5: Lovesac at a Glance FY2023 Key Financial Metrics
Lovesac at a Glance FY2023 Key Financial Metrics NET SALES NET SALES GROWTH $651.5 million 30.8% (89.8% of Net Sales = Sactionals) (5 YEAR CAGR of 31.5%) GROSS PROFIT GROSS MARGIN $345.8 million 53.1% ADJ. EBITDA1 BALANCE SHEET $60.4 million $43.5 million cash and cash equivalents GEOGRAPHIC PRESENC
Slide 6: Key Business Highlights
Key Business Highlights Mid-luxury positioning target customer is 25 to 45 Proven omni-channel advantage with strong year-old “young parent want-it-alls” with our key ecommerce performance, highly productive customer between ages of 35 to 39 years old showrooms and touchpoints, expanding marketing R
Slide 7: Recent Developments
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Slide 8: Q1 2024 Operational Accomplishments
Q1 2024 Operational Accomplishments • Product Innovation • Soft launched highly anticipated angled side in May • Omni Channel Experience • Opened 16 new showrooms and 1 Best Buy Shop-In-Shop • E-commerce channel +28.7% • Given unique omni channel experience, customer satisfaction scores continue to
Slide 9: FY 2024 Q1 Results
FY 2024 Q1 Results Y/Y Growth • Revenue increased 9.1% 20% • Total comparable sales increased 15.1% • Showroom net sales increased 2.9% 15.1% • Internet channel net sales increased 28.7% • “Other” channel net sales increased 3.1% • 7.0% increase in gross margin dollars; 100 basis point decrease in g
Slide 10: Outlook: FY24 Q2 Guidance and FY 2024 Guidance
Outlook FY24 Q2 Guidance FY 2024 Guidance The Company expects: The Company expects: • Net sales in the $149M and $151M range, which • Net sales in the $700M and $740M range, which includes planned opening of approximately 7 new includes planned opening of ~30 new showrooms showrooms and launch of ou
Slide 11: FY 2024 Q1 Operations Update: Touchpoints
FY 2024 Q1 Operations Update Touchpoints • In FY24 Q1, opened • Operated 95 temporary • Opened 1 Best Buy 16 showrooms, no online pop-up-shops shop-in-shops bringing closures or remodels and physical roadshows total count to 23 in Q1 locations • Targeting to open approximately 30 • Physical roadshow
Slide 12: Disruptive Model
Disruptive Model
Slide 13: Disrupting a Stale Category
Disrupting a Stale Category Traditional Model Long lead time, inventory & personnel heavy delivery Direct to consumer with ability to ship next day Low excitement and mundane products Patented, inventive, Designed For Life products Non-engaged commodity shoppers Highly engaged brand advocates Numero
Slide 14: Massive, Untapped Addressable Market
Massive, Untapped Addressable Market Furniture expenditures are expected to grow 4.96% per year through 2025 from $148.4 billion to $189 billion and the home audio segment is expected to reach $4.9 billion by 2025. Lovesac captures a small portion of this $46+ billion, representing a greenfield of o
Slide 15: Sactionals Overview
Sactionals Overview Next-gen premium modular couch with two simple pieces – seats and sides Patented modular system makes it easy to assemble & change over time Enables endless permutations of a sectional couch FY 2023 89.8% Over 200 customizable, machine washable removable covers Net Sales that fit
Slide 16: Sactionals is a Platform, Not a Product
Sactionals is a Platform, Not a Product Comfort Decor Function/Upgrade Platform Extension Drink Holder Seat Table Custom Covers & Dec Pillows Sactionals StealthTech Sound + Outdoor Sactionals Charge Footsac Blanket Coaster & Couch Bowl Roll Arm Power Hub 45.6% of Lovesac transactions are from repeat
Slide 17: Beautiful, Changeable, Washable & Comfortable
Beautiful, Changeable, Washable & Comfortable • 28 quick-ship covers constitute more • Fabrics manufactured for wash • Hardwood frames + sinuous springs enable than 94% of all covers sales1 • Fabrics engineered & tested for proper sit • Approximately 200 custom covers offer durability • 3 cushion-ty
Slide 18: StealthTech is an Ingredient Brand
StealthTech™ is an Ingredient Brand that Enhances Without Impacting Style LOVESAC STEALTHTECH • StealthTech is an ingredient brand under the Lovesac trademark • Enhances user experience of Lovesac products by embedding premium technology that addresses key consumer use cases for activities on or aro
Slide 19: StealthTech comes with core bundle and can be augmented
StealthTech™ comes w/ core bundle and can be augmented for any configuration 6 Speaker Immersive Sound + Charge System Add-On Enhancement Satellite Sound Side MSRP $3,700 MSRP: $500 *Pricing includes cost of the Side inserts. Net increase Up to 4 Satellite Sound Sides can be purchased to customer is
Slide 20: Sacs Overview
Sacs Overview • Category leader in oversized beanbags • DurafoamTM filling • Product line offers 6 different sizes ranging from FY 2023 • Sacs shrink to 1/8 original volume for shipping 25lbs to 95lbs 8.5% Net Sales • Multiple shapes, sizes with washable, changeable covers • Capacity to seat 3+ peop
Slide 21: Our Innovative Product Portfolio Continues to Expand
Our Innovative Product Portfolio Continues to Expand Sacs Sactionals Accessories FY 2023 Net Sales Custom Covers & 1.7% Footsac Blanket Drink Holder Seat Table Dec Pillows 21
Slide 22: Balanced Omni-Channel Strategy
Balanced Omni- Channel Strategy
Slide 23: Balanced Omni-Channel Strategy
Balanced Omni-Channel Strategy Diversifying Channel Mix 12.7% 7.3% 9.8% 11.7% FY 2020 FY 2021 45.6% FY 2022 27.1% FY 2023 23.9% 30.2% Net Sales Net Sales1 Net Sales Net Sales 47.1% 60.0% 61.2% 63.4% Showrooms Internet Other Showrooms and Touchpoints Internet Other • Small-footprint retail locations
Slide 24: Superior Touchpoint Strategy & Productivity
Superior Touchpoint Strategy & Productivity 38 49 28 new showrooms, 8 kiosks, and 2 Net addition of 44 showrooms and mobile concierges opened in FY2022 5 kiosks in FY2023 Lovesac Showroom Features Economics of Showroom Model • Turns product inside-out to reveal technology • Low merchandising, aesthe
Slide 25: Superior Customer Experience: In Showrooms & Online
Superior Customer Experience: In Showrooms & Online Easy to Purchase • Mobile & Lovesac App purchases are easy • In-showroom checkout via iPad technology—never leave the couch • 34.5% of sales through in-house financing facilitated by a leading third-party consumer financing company1 Easy to Ship •
Slide 26: Immersive Experience
Immersive Experience See It Touch It Buy It Physical retail locations and Social Media Showrooms / Shop-in-shops Lovesac.com / online pop-ups / other direct / Kiosks BestBuy.com marketing Social Media efforts drive conversion Advertising Mobile Concierge Showrooms / Shop-in-shops / Kiosks 26
Slide 27: Return on Advertising Spend is High and Ready to Grow
Return on Advertising Spend is High and Ready to Grow + (Eventual) International Additional Showrooms New Product Innovation More Shop-in-Shop Partners Expansion Our investments in national advertising are increasingly amplified by the above Initiatives, driving ROI’s up Awareness* Marketing Convers
Slide 28: Large and Growing Social Media Presence
Large and Growing Social Media Presence Social Engagement Metrics FY2023 863K followers 555K followers Lifetime views apx. 49MM • Unsolicited celebrity endorsements and promotion • Lovesac’s founder has a strong online following 28
Slide 29: Strong Customer Lifetime Value
Strong Customer Lifetime Value New Customer Count Lifetime Value of Customers 133,941 120,351 105,336 79,252 64,686 51,858 38,423 42,550 42,732 2015 2016 2017 2018 2019 2020 2021 2022 2023 • 89.8% of revenues now driven by Sactionals sales, which are priced higher and induce repeat and supplemental
Slide 30: "Designed for Life" Platform
“Designed for Life” Platform
Slide 31: "Designed For Life" Driven By Sustainable Inputs
“Designed For Life” Driven By Sustainable Inputs 82 966 3 Plastic Bottles 1 Plastic Plastic Bottles Bottles From April 2018 to January 2023, Lovesac repurposed more than 150 million plastic water bottles to make Sactionals 31
Slide 32: Evolution of Lovesac into a Circular Economy Business
Evolution of Lovesac into a Circular Economy Business Eliminates Looped Waste Sustainability Revolutionary CTC Commitment to “Circle to Consumer” Circle to Customer Sustainability Business Model Modular products built Delivers high-value products to last a lifetime and evolve to consumers, leveragin
Slide 33: Implementation of Circle To Consumer
Implementation of Circle To Consumer CTC Framework Targeting Long-term Localized Looped Operations Higher Customer Accelerated Ability to New Revenue Streams Inherently Efficient Long-term Sustainable & Ecosystem and ESG-Centric Life-time Value Deliver Value to the Growth Development Operations Cust
Slide 34: ESG Initiatives
ESG Initiatives FY22 ESG Report 0 waste, 0 emissions by 2040 Published E We intend to demonstrate our sustainable commitments through measurable actions. This is why we’ve developed a Zero Emissions and Zero Waste roadmap to guide us to our goals. Our planetary impact is integral to our highest Love
Slide 35: Strategic Priorities
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Slide 36: FY23 Operational Accomplishments
FY23 Operational Accomplishments • Opened 44 net showrooms and 5 kiosks, and remodeled 4 showrooms in fiscal 2023 • Operated a total of 22 new Best Buy shop-in-shops in addition to online pop-up-shops with Costco • Continued to gain share with Stealthtech sound-plus-charge product in partnership wit
Slide 37: Our Fiscal 2024 Strategic Priorities
Our Fiscal 2024 Strategic Priorities Product Marketing Omni-channel Supply Chain/ Sustainability Distribution Infrastructure • Continue to increase • Drive growth spending • Continue partnership • Leverage diversified • Designed For Life ethos Sactionals StealthTech ~12% of net sales on with Best Bu
Slide 38: Infrastructure: Built For Scale & Efficiency
Infrastructure: Built For Scale & Efficiency Large format motion screens and interactive touchpads to Showroom Technology enhance CX Data Warehouse & CRM Scalable foundation for ERP and CRM Concentrated inventory without shelf-life, at high carry to Logistics Optimization facilitate growth and flex
Slide 39: Summary
Summary • Large Addressable Market: Significant opportunity to disrupt a huge, and transitioning home furnishing market • Increasing Marketing Effectiveness: Still low brand awareness + strong marketing ROIs = Leaning into traditional, digital and social marketing strategies • Disruptive Omni-channe
Slide 40: Financials
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Slide 41: Fiscal 2024 Q1 Results
Fiscal 2024 Q1 Results Key Measures for the First Quarter of Fiscal 2024 Ending April 30, 2023: (Dollars in millions, except per share amounts. Dollar and percentage changes may not recalculate due to rounding.) Thirteen weeks ended April 30, 2023 May 1, 2022 % Inc (Dec) Net Sales $141.2 $129.4 9.1%
Slide 42: Fiscal 2024 Q1 Comparable Sales Metrics
Fiscal 2024 Q1 Comparable Sales Metrics Percent Increase except showroom count Thirteen weeks ended April 30, 2023 May 1, 2022 Total Comparable Sales 1 15.1% 42.2% Comparable Showroom Sales 2 8.4% 53.2% Internet Sales 28.7% 24.1% Ending Showroom Count 211 162 1 Total comparable sales include showroo
Slide 43: Fiscal 2024 Q1 Adjusted EBITDA Non-GAAP Reconciliation
Fiscal 2024 Q1 Adjusted EBITDA Non-GAAP Reconciliation Thirteen weeks ended April 30, May 1, (amounts in thousands) 2023 2022 Net (loss) income $ (4,230) $ 1,895 Interest (income) expense, net (341) 35 Income tax (benefit) expense (1,298) 715 Depreciation and amortization 2,822 2,661 EBITDA (3,047)
Slide 44: FY2023 Q1 and FY2024 Q1 Metrics
FY2023 Q1 and FY2024 Q1 Metrics Net Sales Gross Profit Operating Expenses ($ in millions) ($ in millions) ($ in millions) $70.7 $66.1 $0.7 $2.8 $1.1 $16.9 $2.7 $15.9 51.1% of 50.1% of Net Sales(1) Net Sales(1) SG&A YoY $56.1 Growth: $43.8 35.3% Q1 FY23 Q1 FY24 Q1 FY23 Q1 FY24 Other non-recurring exp
Slide 45: Fiscal 2022 and Fiscal 2023 Metrics
Fiscal 2022 and Fiscal 2023 Metrics Net Sales Gross Profit Operating Expenses ($ in millions) ($ in millions) ($ in millions) $651.5 $345.8 $10.8 $498.2 $79.9 $273.3 $2.3 $7.9 $65.1 53.1% of Net Sales(1) YoY 54.9% of Growth: $216.1 Net Sales(1) 35.3% $159.7 Fiscal 2022 Fiscal 2023 Fiscal 2022 Fiscal
Slide 46: Appendix
Appendix
Slide 47: FY 2024 Q1 Balance Sheet (Unaudited)
FY 2024 Q1 Balance Sheet (Unaudited) April 30, January 29, 2023 2023 (amounts in thousands, except share and per share amounts) (unaudited) Assets Current Assets Cash and cash equivalents $ 45,125 $ 43,533 Trade accounts receivable 18,447 9,469 Merchandise inventories, net 106,819 119,962 Prepaid ex
Slide 48: FY 2024 Q1 Statement of Cash Flows (Unaudited)
FY 2024 Q1 Statement of Cash Flows (Unaudited) Thirteen weeks ended April 30, May 1, (amounts in thousands) 2023 2022 Cash Flows from Operating Activities Net (loss) income $ (4,230) $ 1,895 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization o
Slide 49: FY2022/2023 Income Statement & Non-GAAP Reconciliation
FY2022/2023 Income Statement & Non-GAAP Reconciliation* 49