The Lovesac Company · NASDAQ:LOVE
The Lovesac — ICR Conference 2023
60 slides from The Lovesac's conference presentation, January 2023
Slide 1: Investor Presentation January 2023
Investor Presentation January 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: Lovesac has a unique, highly differentiated model
Lovesac has a unique, highly differentiated model Products are… Changeable Maintainable Moveable Rearrangeable Traditional model Lovesac model Long lead times with heavy delivery Omni-channel direct with next day ship option Upgradable Non-engaged commodity shoppers Highly engaged brand advocates Nu
Slide 4: Lovesac at a Glance
Lovesac at a Glance FY2023 YTD Q3 Key Financial Metrics NET SALES NET SALES GROWTH $412.7 million 36.6% (89.9% of Net Sales = Sactionals) (first 39 weeks of FY 23/22) GROSS PROFIT GROSS MARGIN $210.6 million 51.0% ADJ. EBITDA1 ADJ. EBITDA1 MARGIN $12.1 million 2.9% Strong performance in challenging
Slide 5: FY 2023 Q3 and Q4 Financial Update
FY 2023 Q3 and Q4 Financial Update Q3 year-over-year highlights Outlook: FY23 Q4 guidance +16% +9% •Expect net sales growth in the high single Comparable sales Net sales growth growth digits to mid-teens •Gross margin expected to be up ~115 bps +22% from prior year Demand growth •Anticipate adjusted
Slide 6: See it Touch it Expand it
Unique omnichannel business model with flywheel unlike anyone else Advertising Physical locations grows consideration thru national Local awareness-enable engagement TV etc & all digital formats / trial (< 1 year showroom payback (38% of customers do not cross- period)1 and LOVE showrooms 5x shop ag
Slide 7: Sactionals: The World's Most Adaptable Couch
SACTIONALS The World’s Most Adaptable Couch
Slide 8: Mies ie
Mies ie =| =
Slide 9: Slide 9
Slide 10: Slide 10
Slide 11: |
| 1
Slide 12: Slide 12
Slide 13: Slide 13
Slide 14: Sactionals
Sactionals..... LOVESAC
Slide 15: Sactionals
Sactionals.... LOVESAC ie eon | a a f i A LL Lon ae ’ a te i | i 3 mm: 3 \ & 5 4 oF 2 4 a E . ,
Slide 16: Slide 16
Slide 17: 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 May 2018 to April 2021, Lovesac repurposed more than 100 million plastic water bottles to make Sactionals 16
Slide 18: P22? Ii YY
P22? Ii YY
Slide 19: Slide 19
Slide 20: Slide 20
Slide 21: Slide 21
Slide 22: Slide 22
Slide 23: Slide 23
Slide 24: Slide 24
Slide 25: Slide 25
Slide 26: Slide 26
Slide 27: Slide 27
Slide 28: Slide 28
Slide 29: Slide 29
Slide 30: Slide 30
Slide 31: Slide 31
Slide 32: Slide 32
Slide 33: Speaker Proximity
SPEAKER PROXIMITY ———— SOUND BY harman/kardon”
Slide 34: Slide 34
Slide 35: Lovesac StealthTech
LOV E SAC STEALTHTECH LOVESAC CONTROLLABLE SOUND BY harman/kardon”
Slide 36: Slide 36
Slide 37: Slide 37
Slide 38: Slide 38
Slide 39: Slide 39
Slide 40: Don't Just Hear it. Feel it.
Don’t Just Hear it. Feel it.
Slide 41: Revenue has grown at 41% CAGR vs. market 4%
Revenue has grown at 41% CAGR vs. market 4% Consensus Lovesac revenue, FY2017-FY20231 ($M) 41% CAGR 6301 498 Stealth 321 tech 233 launch 166 76 102 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY20231 # of showrooms 50+ ~70 75 91 108 146 ~180 EBITDA margin -4% -3% -1% -4% 7% 9% ~8.5%1 1. FY23 consensus
Slide 42: Key investment highlights
Key investment highlights 1 Large $46B seating and home audio market in the U.S., where 48% of households have income over $75,000 48% U.S. households > $75k HHI1 2 Growth from ~$80M to ~$630M2 in 6 years (+41% CAGR FY17- FY231 ), outpacing the broader market by ~37 percentage points, +41% while ach
Slide 43: Significant runway
Significant runway Lovesac Market Share, 1.0% 30% couches, seating, chairs, and home audio 48% $153B $46B U.S. households > $75k HHI 2022 furniture market1 2022 Seating + Home Audio Market 1. Includes home audio Source: Mintel; CTA U.S. Consumer Technology Five-Year Industry Forecast 2020-2025 (Janu
Slide 44: Key investment highlights
Key investment highlights 1 Large $46B seating and home audio market in the U.S., where 48% of households have income over $75,000 48% U.S. households > $75k HHI1 2 Growth from ~$80M to ~$630M2 in 6 years (+41% CAGR FY17- FY231 ), outpacing the broader market by ~37 percentage points, +41% while ach
Slide 45: Outperforming decelerating market by ~50 percentage points
Outperforming decelerating market by ~50 percentage points Q3 YTD Sales Demand Growth1 U.S. furniture market -17% +51pp +34% Note: YoY growth from YTD FY22 Q3 to YTD FY23 Q3 Source: Lovesac; Earnest sales demand data for furniture market
Slide 46: Key investment highlights
Key investment highlights 1 Large $46B seating and home audio market in the U.S., where 48% of households have income over $75,000 48% U.S. households > $75k HHI1 2 Growth from ~$80M to ~$630M2 in 6 years (+41% CAGR FY17- FY231 ), outpacing the broader market by ~37 percentage points, +41% while ach
Slide 47: Leading market and continuing to grow in productivity
Leading market and continuing to grow in productivity Well balanced omni- Unique showroom model Growing productivity supports physical channel strategy drives productivity above peers location runway potential Sales/sq ft1 ~100 ~450 ~700 Pop-up events $413M ~$2,8002 ~80 Shop-in-shop 24% Internet 24%
Slide 48: Key investment highlights
Key investment highlights 1 Large $46B seating and home audio market in the U.S., where 48% of households have income over $75,000 48% U.S. households > $75k HHI1 2 Growth from ~$80M to ~$630M2 in 6 years (+41% CAGR FY17- FY231 ), outpacing the broader market by ~37 percentage points, +41% while ach
Slide 49: Product innovation
Robust innovation pipeline yields unparalleled productivity Unlocking future runway for next 10 years and beyond $100M+ future potential Product innovation $500M+ growing platform 8 Future launches in the next 2-3 years Sactional platform continues Recent innovation with Disruptive DFL innovations s
Slide 50: Strong Customer Lifetime Value
Strong Customer Lifetime Value
Slide 51: Near-in certainty and longer-term opportunity
Near-in certainty and longer-term opportunity Proven near-term growth levers Further growth runway in the future 400+ Showroom expansion Home + Tech New product categories Showrooms in 5 years Services to drive accelerated / Other touchpoint expansion recurring revenue Product innovation Internation
Slide 52: Lovesac team has delivered and will drive next era of growth
Lovesac team has delivered and will drive next era of growth Mary Fox Jack Krause John Legg Shawn Nelson Donna Dellomo Todd Duran Founder & CEO President & COO Chief Strategy Officer Chief Supply 1+ Years at Lovesac 6+ Years at Lovesac EVP & CFO CIO 20+ Years at Lovesac (Previous Lovesac Board (New
Slide 53: Appendix
Appendix
Slide 54: Lovesac showroom productivity eclipses category competitors
Lovesac showroom productivity eclipses category competitors Compact showrooms with industry-leading productivity Traditional model $2,800 $6201 Annual sales per square foot Annual sales per square foot ~800 180+ ~16,000 79 Avg. sq ft Total showrooms Avg. sq ft Total showrooms • Compact, inventory-li
Slide 55: Lovesac has developed a balanced omni-channel strategy
Lovesac has developed a balanced omni-channel strategy Diversifying Channel Mix 11.9% 12.7% 7.3% 9.8% 19.9% FY 2019 23.9% FY 2020 FY 2021 45.6% 30.2% FY 2022 Net Sales Net Sales Net Sales1 Net Sales 47.1% 60.0% 63.4% 68.2% Showrooms Internet Other Showrooms and Touchpoints Internet Other • Small-foo
Slide 56: 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 57: 100 million plastic water bottles to make Sactionals
Lovesac is a sustainability leader beyond traditional ESG 82 966 3 Plastic Bottles 1 Plastic Plastic Bottles Bottles From April 2018 to January 2022, Lovesac repurposed more than 100 million plastic water bottles to make Sactionals
Slide 58: StealthTech is key differentiator and growth opportunity
StealthTech™ is key differentiator and growth opportunity 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 around our respecti
Slide 59: Lovesac has built scalable infrastructure and capabilities
Lovesac has built scalable infrastructure and capabilities Large format motion screens and interactive touchpads to Showroom Technology enhance CX Data Warehouse & CRM Scalable foundation for ERP and CRM Concentrated evergreen inventory without shelf-life, at high Logistics Optimization carry to fac
Slide 60: Fiscal 2023 Q3 and Q3 YTD Adjusted EBITDA Non-GAAP Reconciliation
Fiscal 2023 Q3 and Q3 YTD Adjusted EBITDA Non-GAAP Reconciliation