The Lovesac Company (LOVE) Q1 2025 earnings summary

Executive summary

• Net sales for Q1 FY25 were $132.6 million, down 6.1% year-over-year, but at or above the high end of guidance after a strong March and April, driven by a 14.8% decline in omni-channel comparable sales, partially offset by new showroom openings.

• Gross profit increased 2.1% to $72.0 million, with gross margin improving 430 basis points to 54.3% due to lower inbound transportation costs.

• Adjusted EBITDA and net loss were meaningfully lower than the prior year, with net loss widening to $13.0 million ($0.83 per share) from $4.1 million ($0.27 per share), reflecting sales declines and increased investments.

• Strategic focus remains on customer-centric innovation, omni-channel expansion, and operational efficiency, with new product launches and digital initiatives underway.

• 24 new showrooms opened and 3 closed in Q1, bringing the total to 246, up from 211 a year ago.

Financial highlights

• Net sales: $132.6 million, down 6.1% year-over-year, driven by a 14.8% drop in omni-channel comparable net sales.

• Gross margin improved to 54.3% from 50.0%, mainly from reduced inbound transportation costs.

• SG&A expenses rose to $68.4 million (51.6% of net sales), up 21.0% year-over-year.

• Operating loss was $17.9 million, compared to $5.7 million last year.

• Net cash used in operating activities was $7.0 million, compared to $6.3 million provided last year.

Outlook and guidance

• FY25 guidance reaffirmed: net sales of $700–770 million, adjusted EBITDA of $46–60 million, and net income of $18–27 million.

• Gross margin expected at 57–59%, SG&A at ~39% of net sales, and advertising/marketing at ~13%.

• Q2 guidance: net sales of $152–160 million, adjusted EBITDA loss of $2–5 million, gross margin ~58%.

• FY25 diluted EPS guidance is $1.06 to $1.59.

• Assumes a 10% full-year category decline, with potential upside if macro conditions improve.