The Lovesac Company (LOVE) Q3 2025 earnings summary

Executive summary

• Q3 net sales declined 2.7% year-over-year to $149.9 million, with omni-channel comparable net sales down 8.3%, partially offset by new showroom openings.

• Gross margin improved by 110 basis points to 58.5% due to lower transportation costs, despite higher promotional discounting.

• Operating loss widened to $7.7 million from $3.6 million last year; net loss was $4.9 million, or -$0.32 per share, versus $2.3 million, or -$0.15 per share, last year.

• Market share gains were achieved despite category headwinds, supported by product innovation and new launches such as the AnyTable and power recliner.

• Ended the quarter with $61.7 million in cash and no outstanding borrowings on the credit facility.

Financial highlights

• Year-to-date net sales were $439.1 million, down 2.4% year-over-year; gross profit was $252.1 million, up 0.3%, with gross margin rising to 57.4% from 55.9% last year.

• SG&A expenses rose to 47.9% of net sales in Q3, up from 43.9% last year, due to higher payroll, equity-based compensation, rent, and legal/professional fees.

• Adjusted EBITDA for Q3 was $2.7 million, up from $2.5 million in the prior year; year-to-date Adjusted EBITDA was -$6.1 million versus $5.7 million prior year.

• Cash used in operating activities was $5.0 million year-to-date, compared to $20.1 million provided in the prior year.

• Showroom sales fell 7.8% to $91 million, internet sales grew 12.1% to $44.9 million, and other channels declined 8.6%.

Outlook and guidance

• Full-year fiscal 2025 net sales guidance is $660–$680 million, with adjusted EBITDA expected between $37.5–$48.5 million.

• Q4 net sales expected at $221–$241 million, with adjusted EBITDA of $43–$55 million.

• Gross margins for the year projected at 58–59%, with Q4 gross margin at approximately 60.5%.

• Net income for the year estimated at $4.5–$12.5 million; Q4 net income expected at $28–$36 million.

• Management expects macroeconomic headwinds, including inflation, weak housing, and reduced discretionary spending, to continue impacting demand.