The Lovesac Company Reports Third Quarter Fiscal 2026 Financial Results

Q3 FY26 Net Sales Increased 0.2% to $150.2 Million vs. Q3 FY25

STAMFORD, Conn., Dec. 11, 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 third quarter of fiscal 2026, which ended November 2, 2025.

Shawn Nelson, Chief Executive Officer, stated, “Our focus on secular growth initiatives such as new products and the beginnings of a major evolution in our marketing, enabled slight year-over-year growth in net sales in the third quarter, reflecting market share gains as compared to our category. As we transitioned into our fiscal fourth quarter, we adjusted our marketing strategies and have seen solid growth quarter-to-date, inclusive of the Black Friday and Cyber Monday holiday events. Lovesac is inventing and investing steadily, even through these tough times for our category, while balancing cash flow generation and profitability. Our tall ambitions begin with reaching our goal of three million Lovesac households by 2030: Households that will have ever-more Designed For Life products across ever-more rooms of the house. We are totally focused and committed to this goal that we believe can produce meaningful growth over the next few years—regardless of what happens in the macro environment.”

Key Measures for the Third Quarter of Fiscal 2026 Ending November 2, 2025:
(Dollars in millions, except per share amounts. Dollar and percentage changes may not recalculate due to rounding.)

¹ Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Information” and “Reconciliation of Non-GAAP Financial Measures” included in this press release.

¹ Omni-channel Comparable Net Sales includes sales at all retail locations and online, open greater than 12 months (including remodels and relocations) and excludes closed showrooms.

Highlights for the Quarter Ended November 2, 2025:

• Net sales increased $0.3 million, or 0.2%, in the third quarter of fiscal 2026 compared to the prior year period primarily driven by the net addition of 17 new showrooms, partially offset by a decrease of 1.2% in omni-channel comparable net sales. During the third quarter of fiscal 2026, we opened 5 additional showrooms and did not close any showrooms.
  
  

• Gross profit decreased $3.4 million, or 3.9% in the third quarter of fiscal 2026 compared to the prior year period. Gross margin decreased 240 basis points to 56.1% of net sales in the third quarter of fiscal 2026 from 58.5% of net sales in the prior year period primarily driven by increases of 320 basis points in inbound transportation and tariff costs and 20 basis points in outbound transportation and warehousing costs, partially offset by an increase of 100 basis points in product margin driven by cost reduction initiatives from our vendors in response to changes in the tariff environment.
  
  

• SG&A expense increased $3.2 million, or 4.5%, in the third quarter of fiscal 2026 compared to the prior year period primarily due to increases in payroll, including an out-of-period expense pertaining to prior periods employee benefits, licenses and registrations, rent, and other overhead costs, partially offset by decreases in legal and professional fees, and equity-based compensation.
  

• Advertising and marketing expense increased $1.1 million, or 5.7% in the third quarter of fiscal 2026 compared to the prior year period, primarily driven by costs associated with the launch of a new product marketing campaign.

• Operating loss was $15.8 million in the third quarter of fiscal 2026 compared to $7.7 million in the prior year period. Operating margin was (10.5)% of net sales in the third quarter of fiscal 2026 compared to (5.1)% of net sales in the prior year period.
  
  

• Net loss was $10.6 million in the third quarter of fiscal 2026 or $(0.72) net loss per common share compared to $4.9 million or $(0.32) net loss per common share in the prior year period. During the third quarter of fiscal 2026, the Company recorded an income tax benefit of $5.0 million, compared to $2.1 million in the prior year period. The change in benefit was primarily driven by a higher net loss before taxes.
  

Highlights for the Year-to-date Period Ended November 2, 2025:

• Net sales increased $9.9 million, or 2.3%, in the year-to-date period ended November 2, 2025 compared to the prior year period primarily driven by an increase of 0.4% in omni-channel comparable net sales and the net addition of 17 new showrooms compared to the prior year period.
  
  

• Gross profit decreased $2.8 million, or 1.1%, in the year-to-date period ended November 2, 2025 compared to the prior year period. Gross margin decreased 190 basis points to 55.5% of net sales in the year-to-date period ended November 2, 2025 from 57.4% of net sales in the prior year period primarily driven by increases of 110 basis points in inbound transportation and tariff costs and 10 basis points in outbound transportation and warehousing costs, and a decrease of 70 basis points in product margin driven by higher promotional discounting.
  
  

• SG&A expense increased $0.4 million, or 0.2%, in the year-to-date period ended November 2, 2025 compared to the prior year period primarily due to increases in payroll, including an out-of-period expense pertaining to prior periods employee benefits, rent, equity-based compensation, and impairment charges related to the Best Buy partnership discontinuation, partially offset by decreases in legal and professional fees, credit card fees, and other overhead costs.
  
  

• Advertising and marketing expense increased $1.9 million, or 3.1% in the year-to-date period ended November 2, 2025 compared to the prior year period primarily driven by costs associated with the launch of a new product marketing campaign.
  
  

• Operating loss was $39.6 million in the year-to-date period ended November 2, 2025 compared to $34.0 million in the prior year period. Operating margin was (8.8)% of net sales in the year-to-date period ended November 2, 2025 compared to (7.7)% of net sales in the prior year period.
  
  

• Net loss was $28.0 million in the year-to-date period ended November 2, 2025 or $(1.91) net loss per diluted share compared to $23.8 million or $(1.53) net loss per diluted share in the prior year period. During the year-to-date period ended November 2, 2025, the Company recorded an income tax benefit of $10.9 million, compared to $8.1 million for the prior year period. The change in benefit was primarily driven by a higher net loss before taxes.
  

Other Financial Highlights as of November 2, 2025:

• The cash and cash equivalents balance as of November 2, 2025 was $23.7 million as compared to $61.7 million as of November 3, 2024. There was no balance on the Company’s line of credit as of November 2, 2025 and November 3, 2024. The Company’s availability under the line of credit was $36.0 million as of November 2, 2025 and November 3, 2024.
  
  

• Total merchandise inventory was $129.7 million as of November 2, 2025 as compared to $113.4 million as of November 3, 2024 primarily related to an increase in freight capitalization of $10.7 million coupled with a planned stock inventory increase of $5.5 million.
  

Outlook:

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 Company currently expects the following for the full year of fiscal 2026:

• Net sales in the range of $685 million to $705 million.

• Adjusted EBITDA¹ in the range of $37 million to $43 million.

• Net income in the range of $2 million to $8 million.

• Diluted income per common share in the range of $0.15 to $0.49 on approximately 16.2 million estimated diluted weighted average shares outstanding.

The Company currently expects the following for the fourth quarter of fiscal 2026:

• Net sales in the range of $236 million to $256 million.

• Adjusted EBITDA¹ in the range of $51 million to $56 million.

• Net income in the range of $30 million to $36 million.

• Diluted income per common share in the range of $1.88 to $2.22 on approximately 16.2 million estimated diluted weighted average shares outstanding.

¹ Adjusted EBITDA is a non-GAAP measure. See “Non-GAAP Information” and “Reconciliation of Non-GAAP Financial Measures” included in this press release.

Conference Call Information:

A conference call to discuss the financial results for the third quarter ended November 2, 2025 is scheduled for today, December 11, 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™ Chair, an immersive surround sound home theater system called StealthTech, and an innovative sofa seating solution called Snugg™. 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 sold primarily online directly at www.lovesac.com, supported by a physical retail presence in the form of Lovesac branded showrooms, as well as through shop-in-shops and pop-up-shops with third party retailers. LOVESAC, DESIGNED FOR LIFE, SACTIONALS, SAC, STEALTHTECH, and THE WORLD'S MOST ADAPTABLE COUCH are trademarks of The Lovesac Company and are Registered in the U.S. Patent and Trademark Office.

Non-GAAP Information:

Adjusted EBITDA is defined as a non-GAAP financial measure by the Securities and Exchange Commission (the “SEC”) that is a supplemental measure of financial performance not required by, or presented in accordance with, GAAP. We define “Adjusted EBITDA” as earnings before interest, taxes, depreciation and amortization, adjusted for the impact of certain non-cash and other items that we do not consider in our evaluation of ongoing operating performance. These items include management fees, equity-based compensation expense, write-offs of property and equipment, deferred rent, financing expenses and certain other charges and gains that we do not believe reflect our underlying business performance. We have reconciled this non-GAAP financial measure with the most directly comparable GAAP financial measure within the schedules attached hereto. Statements regarding our expectations as to fiscal 2026 Adjusted EBITDA do not include certain charges and costs. These items include equity-based compensation expense and certain other charges and gains that we do not believe reflect our underlying business performance. We are not able to provide a reconciliation of our non-GAAP financial guidance to the corresponding GAAP measures without unreasonable effort because of the uncertainty and variability of the nature and amount of these future charges and costs. This is due to the inherent difficulty of forecasting the timing of certain events that have not yet occurred and are out of the Company’s control.

We believe that these non-GAAP financial measures not only provide its management with comparable financial data for internal financial analysis but also provide meaningful supplemental information to investors. Specifically, these non-GAAP financial measures allow investors to better understand the performance of our business, facilitate a more meaningful comparison of our actual results on a period-over-period basis and provide for a more complete understanding of factors and trends affecting our business. We have provided this information as a means to evaluate the results of our ongoing operations alongside GAAP measures such as gross profit, operating income (loss) and net income (loss). Other companies in our industry may calculate these items differently than we do. These non-GAAP measures should not be considered as a substitute for the most directly comparable financial measures prepared in accordance with GAAP, such as net income (loss) or net income (loss) per share as a measure of financial performance, cash flows from operating activities as a measure of liquidity, or any other performance measure derived in accordance with GAAP. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.

Cautionary Statement Concerning Forward-Looking Statements

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,” “should,” “intend,” “plan,” “will,” “aim(s),” “can,” “would,” “expect(s),” “expectation(s),” “estimate(s),” “project(s),” “projections,” “forecast(s)”, “positioned,” “approximately,” “potential,” “goal,” “pro forma,” “strategy,” “outlook” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. All statements, other than statements of historical facts, included in this press release under the heading “Outlook” and all statements regarding strategy, future operations and launch of new products, the pace and success of new products, future financial position or projections, future revenue, projected expenses, sustainability goals, prospects, plans and objectives of management are forward-looking statements. These statements are based on management’s current expectations, beliefs and assumptions concerning the future of our business, anticipated events and trends, the economy and other future conditions. We may not actually achieve the plans, carry out the intentions or meet the expectations disclosed in the forward-looking statements and you should not rely on these forward-looking statements. Actual results and performance could differ materially from those projected in the forward-looking statements as a result of many factors. Among the key factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: business disruptions or other consequences of economic instability, recession, political instability, civil unrest, armed hostilities and global conflicts, natural and man-made disasters, pandemics or other public health crises, or other catastrophic events; the impact of changes or declines in consumer spending and increases in interest rates and inflation on our business, sales, results of operations and financial condition; cybersecurity and vulnerability to electronic break-ins and other similar disruptions; active pending or threatened litigation; our ability to manage and sustain our growth and profitability effectively, including in our ecommerce business, forecast our operating results, and manage inventory levels; our cash flows, changes in the market price of our common stock, global economic and market conditions and other considerations that could impact the specific timing, price and size of repurchases under our stock repurchase program or our ability to fund any stock repurchases; our ability to improve our products and develop and launch new products; our ability to successfully open and operate new showrooms; our ability to advance, implement or achieve the goals set forth in our ESG Report; our ability to realize the expected benefits of investments in our supply chain and infrastructure; disruption in our supply chain and dependence on foreign manufacturing and imports for our products; execution of our share repurchase program and its expected benefits for enhancing long-term shareholder value; our ability to acquire new customers and engage existing customers; reputational risk associated with increased use of social media; our ability to attract, develop and retain highly skilled associates and employees; system interruption or failures in our technology infrastructure needed to service our customers, process transactions and fulfill orders; any inability to implement and maintain effective internal control over financial reporting; unauthorized disclosure of sensitive or confidential information through breach of our computer system; the ability of third-party providers to continue uninterrupted service; the impact of changes in diplomatic and trade relations, as well as tariffs and the countermeasures and tariff mitigation initiatives; the regulatory environment in which we operate; our ability to maintain, grow and enforce our brand and intellectual property rights and avoid infringement or violation of the intellectual property rights of others; and our ability to compete and succeed in a highly competitive and evolving industry, as well as those risks and uncertainties disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our most recent Form 10-K and in our Form 10-Qs filed with the Securities and Exchange Commission, and similar disclosures in subsequent reports filed with the SEC, which are available on our investor relations website at investor.lovesac.com and on the SEC website at www.sec.gov. Any forward-looking statement made by us in this press release speaks only as of the date on which we make it. We disclaim any intent or obligation to update these forward-looking statements to reflect events or circumstances that exist after the date on which they were made.

Investor Relations Contact:
Caitlin Churchill, ICR
(203) 682-8200
InvestorRelations@lovesac.com

(a) Represents expenses, such as compensation expense and employer taxes related to RSU equity vesting and exercises associated with stock options and restricted stock units granted to our associates and board of directors. Employer taxes are included as part of selling, general and administrative expenses on the Statements of Operations.

(b) Represents loss on disposal of property and equipment.

(c) Other non-recurring expenses in the thirteen weeks ended November 2, 2025 represents severance, professional fees related to the restatement of previously issued financial statements, an out-of-period expense pertaining to prior periods employee benefits, and expenses associated with other legal matters, partially offset by benefits related to insurance proceeds. Other non-recurring expenses in the thirty-nine weeks ended November 2, 2025 also represents impairment charges and other costs related to the Best Buy partnership discontinuation. Other non-recurring expenses in the thirteen weeks ended November 3, 2024 represents professional fees related to the restatement of previously issued financial statements, infrequent and unusual production costs, and expenses associated with other legal matters. Other non-recurring expenses in the thirty-nine weeks ended November 3, 2024 also includes severance, partially offset by benefits related to insurance proceeds.