The Lovesac Company Q1 FY2026 earnings call

Shawn Nelson started by highlighting first quarter results, innovation on product platforms like the recliner and EverCouch, and mentioned focus on what they can control. Mary Fox discussed customer acquisition engines including brand and performance marketing, digital configurations, showroom experience, and partnership model. Keith Siegner reviewed financial performance and gave outlook. They also talked about new product innovations, customer acquisition strategies, and supply chain improvements.

Total net sales were $138.4 million, up 4.3% year-over-year. Total omnichannel comparable net sales increased 2.8%. Showroom net sales increased $14.9 million or 18.2% to $96.5 million. Internet net sales decreased $3.3 million or 8.9% to $33.3 million. Other net sales decreased $5.8 million or 40.5% to $8.6 million. Sack net sales increased 4.5%, SAC net sales increased 6.4%, other net sales (decorative pillows, blankets, accessories) decreased 17.1%. Gross margin decreased 60 basis points to 53.7% of net sales. SG&A expense as a percent of net sales was 48.5%. Adjusted EBITDA loss for the quarter was $8.4 million.

Full-year fiscal 2026 net sales estimate $700 million to $750 million, adjusted EBITDA $48 million to $60 million, net income $13 million to $22 million, diluted income per common share $0.80 to $1.36. Fiscal second quarter net sales estimate $157 million to $166 million, adjusted EBITDA loss $2 million to $7 million, net loss $8 million to $12 million, basic loss per common share $0.58 to $0.83.

Discussion of tariffs as a risk, including mitigating efforts like working with vendors, diversifying manufacturing, price increases, and looking at cost efficiencies. Also, category trends uncertainty.

Q: About promotional environment and gross margin.

A: Mary and Keith discussed competitive promotions and timing of levers like vendor contributions, pricing, and geographic reliance.

Q: About exiting Best Buy partnership.

A: Shawn and Mary talked about new opportunities, gratitude for Best Buy partnership, and expansion of Costco relationship.

Q: About tariffs and manufacturing in China.

A: Shawn said they are on a path to reduce manufacturing in China.

Q: About new products and guidance.

A: Keith said guidance is balanced with different scenarios.

Q: About EverCouch marketing and distribution.

A: Mary talked about marketing engine turning on later and expanding showroom distribution.

Q: About working capital and gross margin.

A: Keith explained working capital changes and gross margin drivers.

Q: About Memorial Day performance and pricing.

A: Mary talked about Memorial Day performance and pricing actions.

Q: About new products bringing new customers and selling Stealth Tech in showrooms.

A: Shawn talked about new products bringing new customers and confidence in selling Stealth Tech in showrooms