The Lovesac Company (LOVE) Q2 2025 earnings summary

Executive summary

• Q2 net sales increased 1.3% year-over-year to $156.6 million, driven by new showroom openings despite a 5.4% decline in omni-channel comparable sales.

• Gross profit was flat at $92.4 million, with gross margin down 80 bps to 59.0% due to higher promotional discounting and outbound costs.

• SG&A expenses rose 15.4% to $73.7 million, reflecting investments in payroll, equity compensation, rent, and infrastructure.

• Net loss widened to $5.9 million ($0.38 per share) from $0.6 million last year, due to gross margin pressure and higher SG&A.

• Adjusted EBITDA fell 71.7% to $1.5 million, and operating loss increased to $8.4 million.

Financial highlights

• Quarterly net sales: $156.6 million, up 1.3% year-over-year; six-month net sales: $289.2 million, down 2.2%.

• Gross margin for the quarter: 59.0% (down 80 bps); first half gross margin: 56.8% (up 170 bps year-over-year).

• SG&A expenses were 47.0% of net sales for the quarter, up from 41.3% a year ago.

• Advertising and marketing expenses were 14.9% of net sales, down from 17.2% a year ago.

• Cash and cash equivalents at quarter-end: $72.1 million; no outstanding borrowings on the $40 million credit facility.

Outlook and guidance

• FY25 net sales guidance tightened to $700–$735 million, with Adjusted EBITDA of $52–$59 million and net income of $17–$21 million.

• Q3 net sales expected at $152–$160 million, with Adjusted EBITDA between a $3 million loss and $1 million income.

• Gross margin expected at 58–59%, SG&A at ~40% of net sales, and advertising/marketing at ~13%.

• Management expects continued macroeconomic headwinds, including inflation, weak housing, and reduced consumer discretionary spending.

• The company believes its cash, credit availability, and expected cash flows are sufficient to meet working capital and capital expenditure needs for at least the next 12 months.