The Lovesac Company (LOVE) Q3 2026 earnings summary

Executive summary

• Net sales for Q3 FY26 were $150.2 million, up 0.2% year-over-year, driven by new showroom openings but offset by a 1.2% decline in omni-channel comparable net sales and a decrease in new and repeat customers.

• Showroom sales grew 12.8% while internet sales fell 16.9%, and other sales dropped due to discontinued barter transactions and Best Buy shop-in-shop closures.

• Gross margin declined 240 bps to 56.1% due to higher tariffs and transportation costs, partially offset by price increases and cost savings.

• Operating loss was $15.8 million, net loss was $10.6 million (-$0.72/share), and adjusted EBITDA loss was $6.0 million.

• Strategic focus is on core living room products, new product innovation, and optimizing marketing and omnichannel strategies.

Financial highlights

• Q3 gross profit was $84.2 million, down 3.9% year-over-year, with gross margin at 56.1%.

• SG&A expenses were $75.0 million (49.9% of net sales), up from 47.9% prior year, mainly from payroll, rent, and licenses.

• Advertising and marketing expenses were $21.1 million (14.0% of net sales), up 5.7% year-over-year.

• Cash and cash equivalents at quarter-end were $23.7 million, with $36 million in credit availability and no borrowings.

• Year-to-date net sales rose 2.3% to $449.1 million, but net loss increased to $28.0 million.

Outlook and guidance

• FY26 net sales expected at $685–$705 million, adjusted EBITDA $37–$43 million, net income $2–$8 million.

• Q4 net sales guidance is $236–$256 million, with adjusted EBITDA $51–$56 million and net income $30–$36 million.

• Gross margin for Q4 expected at 57.5–58.5%, with increased promotional activity to drive competitiveness.

• Management expects continued macroeconomic headwinds, including inflation, high interest rates, and weak housing market conditions, to impact demand.

• The company believes its liquidity and available credit are sufficient for at least the next 12 months.