The Lovesac Company · NASDAQ:LOVE
The Lovesac — Investor Presentation (January 2024)
47 slides from The Lovesac's investor presentation, January 2024
Slide 1: Investor Presentation January 2024
Investor Presentation January 2024
Slide 2: Safe Harbor Statement
Safe Harbor Statement This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other legal authority. Forward-looking statements can be identified by words such as “may,” “continue(s),” “believe,” “anticipate,” “could,” “sh
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 Keith Siegner Todd Duran John Legg Carly Kawaja Founder & CEO President & COO EVP & CFO CIO Chief Supply Chief People Officer 25+ Years at Lovesac 2+ Years at Lovesac Under 1 Year at Lovesac 1+ Years at Lovesac Chain Officer Under 1 Ye
Slide 5: Lovesac at a Glance
Lovesac at a Glance FY2023 Key Financial Metrics NET SALES NET SALES GROWTH $651.2 million 30.7% (89.8% of Net Sales = Sactionals) (5 YEAR CAGR of 31.46%) GROSS PROFIT GROSS MARGIN $343.7 million 52.8% ADJ. EBITDA1 BALANCE SHEET $58.3 million $43.5 million cash and cash equivalents GEOGRAPHIC PRESEN
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: Q3 FY 2024 Operational Accomplishments
Q3 FY 2024 Operational Accomplishments Product Innovation • Expanded distribution of angle side, which is now available across Showrooms and our E-commerce platform • Partnered with Swarovski Crystal offering a luxurious gift for the holiday season exclusively at Nordstrom's Omni Channel Experience
Slide 9: Q3 FY 2024 Results
Q3 FY 2024 Results Y/Y Growth 20% • Revenue increased 14.3% • Total Omni-channel Comparable Net Sales increased 2.0% • Showroom net sales increased 18.9% 14.3% • Internet channel net sales increased 20.1% • “Other” channel net sales decreased 17.1% primary due to a reduction in open box inventory tr
Slide 10: FY 2024 Q3 Operations Update
FY 2024 Q3 Operations Update Touchpoints • In FY24 Q3, opened • Operated 3 • Opened 16 Best Buy 10 showrooms, 3 temporary online shop-in-shops closures (1 pop-up-shops and bringing total count to showroom and 2 147 physical pop-up 41 locations kiosks) and no roadshows in Q3 • Look forward to remodel
Slide 11: Disruptive Model
Disruptive Model
Slide 12: 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 13: 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 14: 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 89.7% Over 200 customizable, machine washable removable covers Net Sales that fit
Slide 15: 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 16: 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 17: StealthTech is an Ingredient Brand that Enhances Without Impacting Style
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 18: 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 19: Sacs Overview
Sacs® Overview • Category leader in oversized beanbags • Durafoam® 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 20: Our Innovative Product Portfolio Continues to Expand
Our Innovative Product Portfolio Continues to Expand Sacs Sactionals Accessories FY 2023 Net Sales Custom Covers & 1.8% Footsac Blanket Drink Holder Seat Table Decorative Pillows 20
Slide 21: Balanced Omni-Channel Strategy
Balanced Omni- Channel Strategy
Slide 22: 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 23: 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 24: Superior Customer Experience: In Showrooms & Online
Superior Customer Experience: In Showrooms & Online Easy to Purchase • Mobile 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 • Can be deliver
Slide 25: Immersive Experience
Immersive Experience See It Touch It Buy It Physical retail locations and Social Media Showrooms / Shop-in-shops Lovesac.com / BestBuy.com / other direct / Kiosks / Costco pop-ups Costco.com online pop-ups marketing Social Media efforts drive conversion Advertising Mobile Concierge Showrooms / Best
Slide 26: 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 27: Large and Growing Social Media Presence
Large and Growing Social Media Presence Social Engagement Metrics FY 2023 863K followers 555K followers Lifetime views apx. 49MM • Unsolicited celebrity endorsements and promotion • Lovesac’s founder has a strong online following 27
Slide 28: 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 29: "Designed for Life" Platform
“Designed for Life” Platform
Slide 30: "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 30
Slide 31: 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 32: 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 33: ESG Initiatives
ESG Initiatives FY23 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 34: Strategic Priorities
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Slide 35: FY 2023 Operational Accomplishments
FY 2023 Operational Accomplishments • Opened 44 net showrooms and 5 kiosks, and remodeled 4 showrooms in fiscal 2023 • Opened 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 wi
Slide 36: Our FY 2024 Strategic Priorities
Our FY 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 ~13% of net sales on with Best Buy su
Slide 37: 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 38: 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 39: Financials
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Slide 40: Fiscal 2024 Q3 Results
Fiscal 2024 Q3 Results Key Measures for the Third Quarter of Fiscal 2024 Ending October 29, 2023: (Dollars in millions, except per share amounts. Dollar and percentage changes may not recalculate due to rounding.) Q3 FY 2024 Q3 FY 2023 Δ Net sales $154.0 $134.8 14.3% Gross profit $88.4 $64.9 36.3% G
Slide 41: Fiscal 2024 Q3 Comparable Sales Metrics
Fiscal 2024 Q3 Comparable Sales Metrics Q3 FY 2024 Q3 FY 2023 Omni-channel Comparable Net Sales(1)(2) 2.0% -5.6% Internet Sales 20.1% -6.3% Ending Showroom Count 230 189 Note: Percent increase (decrease) except showroom count 1. Omni-channel Comparable Net Sales includes sales at all retail location
Slide 42: Q3 FY 2024 Adjusted EBITDA Non-GAAP Reconciliation
Q3 FY 2024 Adjusted EBITDA Non-GAAP Reconciliation (amounts in thousands) Q3 FY 2024 Q3 FY 2023 Net (loss) income $ (2,341) $ (7,362) Interest (income) expense, net (269) 69 Income tax (benefit) expense (999) (2,832) Depreciation and amortization 3,311 2,459 EBITDA (298) (7,666) Equity-based compens
Slide 43: Q3 FY 2023 and Q3 FY 2024 Metrics
Q3 FY 2023 and Q3 FY 2024 Metrics Net Sales Gross Profit Operating Expenses ($ in millions) ($ in millions) ($ in millions) YoY Growth: 14.3% YoY Growth: 36.3% YoY Growth: 22.2% $154.0 $1.1 $3.3 $134.8 $0.7 $21.1 $2.5 $19.1 48.2% of 57.4% of Net Sales(1) Net Sales(1) SG&A YoY $63.2 $50.3 Growth: 25.
Slide 44: FY 2022 and FY 2023 Metrics
FY 2022 and FY 2023 Metrics Net Sales Gross Profit Operating Expenses ($ 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 2023 Fi
Slide 45: Appendix
Appendix
Slide 46: Q3 FY 2024 Balance Sheet (Unaudited)
Q3 FY 2024 Balance Sheet (Unaudited) (amounts in thousands, except share and per share amounts) October 29, 2023 January 29, 2023 Assets Current Assets Cash and cash equivalents $ 37,738 $ 43,533 Trade accounts receivable $ 13,013 $ 9,103 Merchandise inventories, net $ 116,625 $ 119,627 Prepaid expe
Slide 47: Q3 FY 2024 Statement of Cash Flows (Unaudited)
Q3 FY 2024 Statement of Cash Flows (Unaudited) Thirty-nine weeks ended October 29, October 30, (amounts in thousands) 2023 2022 Cash Flows from Operating Activities N Net (loss) income $ (7,091) $ 273 Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities: Depr
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