Built on a foundation of community and comfort, Lovesac products aim to bring family and friends together through extraordinary experiences at home. The Mother's Day Nomination program shifts the spotlight to the mother figures in our lives that support us throughout all stages of life. "At Lovesac, we recognize that mothers play an invaluable role in shaping our futures," said Shawn Nelson, Founder and CEO of Lovesac. "This Mother's Day, we are excited to give back and shine a light on these incredible mot ...

Lovesac store frontCourtesy of LovesacAs the furniture industry reels from a dramatic drop in consumer demand, Lovesac overcame market headwinds to report 7.5% growth in revenue in fiscal year 2024, reaching $700 million from $651 million the previous year.Lovesac’s LOVE advance is remarkable, given that furniture retail revenues dropped 5.7% in 2023 to $75.2 billion from an historic high of $80 billion in 2022. And the home furnishings retail sector continued to slide in the first quarter 2024 from previou ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Lovesac is a technology-driven furniture retailer specializing in modular Sactionals and Sacs, sold via an omni-channel platform Net Sales by Product (Fiscal Years 2022-2024) | Product | FY 2024 Sales % | FY 2023 Sales % | FY 2022 Sales % | | :--- | :--- | :--- | :--- | | Sactionals | 91.0% | 89.8% | 87.6% | | Sacs | 7.4% | 8.5% | 10.5% | Net Sales by Channel (Fiscal Years 2022-2024) | Channel | FY 2024 Sales % | FY 2023 Sales % | FY 2022 Sales % | | :--- | :--- | :--- | :--- | | Showrooms | 62.5% | 61.2% | 60.0% | | Ecommerce | 28.5% | 27.1% | 30.2% | | Other | 9.0% | 11.7% | 9.8% | - The company's supply chain is globally diversified, with manufacturing partners in the United States, China, Vietnam, Malaysia, Mexico, Taiwan, Indonesia, and India to mitigate concentration risk[37](index=37&type=chunk) - As of February 4, 2024, the company had **909 full-time** and **1,082 part-time** associates. The workforce was **55% female**, with women holding **46% of leadership roles**[56](index=56&type=chunk) - Lovesac has set long-term environmental goals, including reaching **zero waste** and **zero emissions by 2040** and repurposing **1 billion plastic bottles** in its products[47](index=47&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including growth management, supply chain reliance, internal control weaknesses, and cybersecurity threats - Business risks include the inability to manage growth, potential declines in discretionary consumer spending due to macroeconomic factors, and intense competition from a wide range of retailers[66](index=66&type=chunk)[71](index=71&type=chunk)[78](index=78&type=chunk) - The company is dependent on a **small number of third-party suppliers**, with manufacturing facilities located in countries like China, Vietnam, Malaysia, and Mexico, exposing it to supply chain, tariff, and geopolitical risks[88](index=88&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk) - Significant financial risks stem from a **restatement of prior financial statements** due to **material weaknesses in internal controls**. This has led to an **ongoing, non-public SEC investigation** and a putative **securities class action lawsuit** filed in December 2023[138](index=138&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - The company is subject to legal and regulatory risks, including unauthorized disclosure of sensitive data through security breaches, compliance with evolving data privacy laws (e.g., CCPA), and the need to protect its intellectual property[86](index=86&type=chunk)[149](index=149&type=chunk)[153](index=153&type=chunk) [Unresolved Staff Comments](index=35&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the SEC - None[182](index=182&type=chunk) [Cybersecurity](index=35&type=section&id=Item%201C.%20Cybersecurity) Lovesac manages cybersecurity risk through a formal strategy overseen by the CIO and Board's Audit Committee - The company's cybersecurity risk management program involves annual reviews of its IT control environment and engages third-party experts for risk assessments and penetration testing[184](index=184&type=chunk) - Oversight is provided by the Board of Directors and its Audit Committee, which receives **quarterly updates** from senior management, including the Chief Information Officer, on cybersecurity risks and initiatives[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk) - The Chief Information Officer, with **over 35 years of experience**, leads the assessment and management of cybersecurity risks[185](index=185&type=chunk) [Properties](index=36&type=section&id=Item%202.%20Properties) The company leases all its properties, including corporate offices and 230 showrooms across the U.S - The company's principal executive offices are leased in Stamford, CT (**22,480 sq ft**) and St. George, UT (**10,696 sq ft**)[189](index=189&type=chunk) - Lovesac leases retail space for **230 showrooms** throughout the majority of U.S. states[189](index=189&type=chunk) [Legal Proceedings](index=36&type=section&id=Item%203.%20Legal%20Proceedings) This section refers to Note 7 of the financial statements for a description of the company's legal proceedings - Information regarding legal proceedings is detailed in Note 7 to the financial statements[190](index=190&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - Not applicable[191](index=191&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "LOVE"; it retains earnings for growth and does not pay dividends - The company's common stock is traded on **Nasdaq** under the symbol **"LOVE"**[194](index=194&type=chunk) - The company has **never paid cash dividends** and does not intend to pay them in the foreseeable future, retaining earnings for growth[195](index=195&type=chunk) Cumulative Total Stockholder Return Comparison (2/1/2019 - 2/4/2024) | Company/Index | Feb 1, 2019 | Feb 4, 2024 | | :--- | :--- | :--- | | The Lovesac Company | $100.00 | $96.97 | | Russell 2000 | $100.00 | $139.82 | | S&P 500 | $100.00 | $199.42 | [[Reserved]](index=38&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and not applicable - Not applicable[200](index=200&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial condition and results, highlighting sales growth, gross margin improvement, and decreased operating income [Results of Operations (Fiscal 2024 vs. 2023)](index=41&type=section&id=7.1%20Results%20of%20Operations) Fiscal 2024 saw net sales increase by **7.5%** to **$700.3 million**, gross margin improve by **450 basis points**, but operating income declined due to higher expenses Key Financial Results (Fiscal 2024 vs. 2023) (in thousands) | Metric | Fiscal 2024 (in thousands) | Fiscal 2023 (in thousands) | Change % | | :--- | :--- | :--- | :--- | | Total Net Sales | $700,265 | $651,179 | 7.5% | | Gross Profit | $401,043 | $343,651 | 16.7% | | Gross Margin | 57.3% | 52.8% | +450 bps | | Operating Income | $30,076 | $36,966 | (18.6)% | | Net Income | $23,861 | $26,488 | (9.9)% | - The increase in net sales was driven by new showroom openings, with **46 openings** and **11 closures** during fiscal 2024, resulting in **230 total showrooms**[224](index=224&type=chunk)[226](index=226&type=chunk) - The **450 basis point increase** in gross margin was primarily driven by a **670 basis point decrease** in inbound transportation costs, partially offset by a **100 basis point decrease** in product margin from higher promotional discounting[229](index=229&type=chunk) - SG&A expenses increased by **$48.3 million (22.4%)**, driven by higher employment costs (**$21.3M**), increased overhead including professional fees for the financial restatement (**$18.6M**), and higher selling-related expenses (**$6.0M**)[230](index=230&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=7.2%20Liquidity%20and%20Capital%20Resources) The company's liquidity is strong, with cash and equivalents at **$87.0 million** driven by operating cash flow, and an undrawn **$40.0 million** credit facility Cash Flow Summary (in thousands) | Cash Flow Activity | Fiscal 2024 | Fiscal 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $76,441 | $(21,375) | | Net cash used in investing activities | $(29,211) | $(25,549) | | Net cash used in financing activities | $(3,727) | $(1,935) | | **Cash and cash equivalents at end of period** | **$87,036** | **$43,533** | - The company believes cash from operations, its credit facility, and existing cash balances are sufficient to meet working capital and capital expenditure needs for at least the next 12 months[235](index=235&type=chunk) - As of February 4, 2024, the company had no outstanding borrowings under its **$40.0 million credit facility** and had **$36.0 million of availability**[245](index=245&type=chunk) [Critical Accounting Policies and Estimates](index=44&type=section&id=7.3%20Critical%20Accounting%20Policies%20and%20Estimates) Management identifies critical accounting policies involving significant estimates, including Barter Arrangements, Impairment of Long-Lived Assets, and Merchandise Inventories - The company has a barter arrangement to exchange open-box inventory for media credits. In fiscal 2024, it recognized **$12.3 million** in barter sales. Estimating the fair value of these credits is a critical estimate[249](index=249&type=chunk) - Long-lived assets, primarily showroom property and equipment, are reviewed for impairment if events indicate the carrying amount may not be recoverable. **No impairment charges** were recognized in fiscal 2024 or 2023[250](index=250&type=chunk)[251](index=251&type=chunk) - Merchandise inventories are carried at the lower of cost or net realizable value, with cost determined on a weighted-average basis. The company adjusts for obsolescence based on historical trends and future sales estimates[252](index=252&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks, primarily from interest rate fluctuations and inflation, which it mitigates through pricing and cost controls - The primary interest rate risk is from the floating-rate revolving line of credit, though **no material impact** on results is anticipated[259](index=259&type=chunk) - The company experienced inflationary pressures in fiscal 2024 and monitors its effects, using pricing strategies and cost reductions to minimize impact[260](index=260&type=chunk) [Financial Statements and Supplementary Data](index=46&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited financial statements and notes, with an unqualified audit opinion on both financials and internal controls Balance Sheet Summary (in thousands) | Account | Feb 4, 2024 | Jan 29, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$482,180** | **$408,626** | | Total Current Assets | $214,448 | $187,715 | | Merchandise Inventories, net | $98,440 | $119,627 | | **Total Liabilities** | **$264,684** | **$215,532** | | Total Current Liabilities | $106,356 | $82,041 | | **Total Stockholders' Equity** | **$217,496** | **$193,094** | Statement of Operations Summary (in thousands) | Account | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | | :--- | :--- | :--- | :--- | | Net Sales | $700,265 | $651,179 | $498,239 | | Gross Profit | $401,043 | $343,651 | $273,532 | | Operating Income | $30,076 | $36,966 | $40,578 | | **Net Income** | **$23,861** | **$26,488** | **$47,488** | | Diluted EPS | $1.45 | $1.66 | $2.96 | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=46&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports that there have been no changes in or disagreements with its accountants on any matter of accounting principles or practices, or financial statement disclosure - None[262](index=262&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, having successfully remediated previously identified material weaknesses as of February 4, 2024 - Management concluded that disclosure controls and procedures were **effective** as of the end of the period covered by this report (February 4, 2024)[264](index=264&type=chunk) - The previously disclosed material weaknesses related to an ineffective control environment have been **fully remediated** as of February 4, 2024[267](index=267&type=chunk)[268](index=268&type=chunk) - Remediation actions included enhancing the accounting function with experienced hires, updating the reporting structure, and implementing improved controls over manual journal entries and the transportation accrual process[268](index=268&type=chunk) - The independent registered public accounting firm, Deloitte & Touche LLP, issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting as of February 4, 2024[271](index=271&type=chunk) [Other Information](index=50&type=section&id=Item%209B.%20Other%20Information) CEO Shawn D. Nelson adopted a Rule 10b5-1 trading plan for the potential sale of up to **42,000** shares of common stock, expiring December 11, 2024 - CEO Shawn D. Nelson adopted a Rule 10b5-1 trading plan for the sale of up to **42,000 shares** of common stock, effective from December 12, 2023, to December 11, 2024[277](index=277&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=50&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[278](index=278&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=51&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section provides information on the company's executive officers; further details will be incorporated by reference from the 2024 Proxy Statement Executive Officers (as of April 11, 2024) | Name | Age | Position | | :--- | :--- | :--- | | Shawn Nelson | 47 | Chief Executive Officer and Director | | Mary Fox | 51 | President and Chief Operating Officer | | Keith Siegner | 49 | Executive Vice President and Chief Financial Officer | - Additional required information will be incorporated by reference from the 2024 Proxy Statement[282](index=282&type=chunk) [Executive Compensation](index=52&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation will be incorporated by reference from the company's definitive 2024 Proxy Statement - The information required by this Item will appear in the 2024 Proxy Statement and is incorporated by reference herein[284](index=284&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=52&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details securities authorized for issuance under equity compensation plans, with **996,749** securities remaining available Equity Compensation Plan Information (as of February 4, 2024) | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by shareholders | 1,567,306 | $38.10 | 996,749 | - The remaining information required by this Item will be incorporated by reference from the 2024 Proxy Statement[287](index=287&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=53&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence will be incorporated by reference from the company's definitive 2024 Proxy Statement - The information required by this Item will appear in the 2024 Proxy Statement and is incorporated by reference herein[288](index=288&type=chunk) [Principal Accounting Fees and Services](index=53&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services will be incorporated by reference from the company's definitive 2024 Proxy Statement - The information required by this Item will appear in the 2024 Proxy Statement and is incorporated by reference herein[289](index=289&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=54&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Form 10-K report, including financial statements, audit reports, and an index of all exhibits - This section lists the financial statements and exhibits filed with the report. Financial statement schedules are omitted as they are not required, not applicable, or the information is included elsewhere[292](index=292&type=chunk)[293](index=293&type=chunk) [Form 10-K Summary](index=54&type=section&id=Item%2016.%20Form%2010-K%20Summary) This optional disclosure section was not included in the Annual Report on Form 10-K - Optional disclosure not included in this Annual Report on Form 10-K[294](index=294&type=chunk)

Exhibit 99.1 THE LOVESAC COMPANY REPORTS FOURTH QUARTER AND FISCAL 2024 FINANCIAL RESULTS Fourth Quarter Net Sales Growth of 5.0% Fiscal Year Net Sales Growth of 7.5% STAMFORD, Conn., April 11, 2024 (GLOBE NEWSWIRE) -- The Lovesac Company (Nasdaq: LOVE) ("Lovesac" or the "Company"), the home furnishing brand best known for its Sactionals, The World's Most Adaptable Couch, today announced financial results for the fourth quarter and fiscal 2024, which ended February 4, 2024. Note: Lovesac's fourth quarter an ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 29, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38555 THE LOVESAC COMPANY (Exact name of registrant as specified in its charter) | Delaware | 32-0514958 | | --- | --- ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed financial statements, including Balance Sheets, Statements of Operations, Changes in Stockholders' Equity, and Cash Flows, for the period ended April 30, 2023 [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) | Metric | April 30, 2023 (in thousands) | January 29, 2023 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $45,125 | $43,533 | | Total Current Assets | $187,697 | $194,041 | | Total Assets | $428,036 | $418,054 | | Total Current Liabilities | $96,922 | $88,839 | | Total Liabilities | $238,790 | $224,794 | | Total Stockholders' Equity | $189,246 | $193,260 | [Condensed Statements of Operations](index=5&type=section&id=Condensed%20Statements%20of%20Operations) | Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Net sales | $141,193 | $129,380 | | Cost of merchandise sold | $70,489 | $63,272 | | Gross profit | $70,704 | $66,108 | | Total operating expenses | $76,573 | $63,463 | | Operating (loss) income | $(5,869) | $2,645 | | Net (loss) income | $(4,230) | $1,895 | | Basic Net (loss) income per common share | $(0.28) | $0.13 | | Diluted Net (loss) income per common share | $(0.28) | $0.12 | [Condensed Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) | Metric | January 29, 2023 (in thousands) | April 30, 2023 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Balance - January 29, 2023 | $193,260 | - | | Net loss | - | $(4,230) | | Equity based compensation | - | $686 | | Taxes paid for net share settlement of equity awards | - | $(470) | | Balance - April 30, 2023 | - | $189,246 | [Condensed Statements of Cash Flows](index=7&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) | Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Net Cash Provided by (Used in) Operating Activities | $6,291 | $(21,786) | | Net Cash Used in Investing Activities | $(4,177) | $(6,018) | | Net Cash Used in Financing Activities | $(522) | $(208) | | Net Change in Cash and Cash Equivalents | $1,592 | $(28,012) | | Cash and Cash Equivalents - Ending | $45,125 | $64,380 | [Notes to Financial Statements](index=8&type=section&id=Notes%20to%20Financial%20Statements) [Note 1. Basis of Presentation and Summary of Significant Accounting Policies](index=8&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of presentation for interim unaudited financial statements, highlighting the seasonal business nature and the Company's 'Designed for Life' furniture approach - The Company's business is seasonal, with the majority of activity occurring in the fourth fiscal quarter, meaning interim results are not necessarily indicative of full-year results[26](index=26&type=chunk) - The Lovesac Company designs, manufactures, and sells high-quality furniture using a 'Designed for Life' approach, marketing products through showrooms (**211 locations** as of April 30, 2023) and its e-commerce website[27](index=27&type=chunk) [Note 2. Revenue Recognition](index=9&type=section&id=Note%202.%20Revenue%20Recognition) This note details revenue recognition policies, including product net sales, shipping, returns, customer deposits, and disaggregation of net sales by channel - Revenue is recognized when control of products transfers to the customer, typically upon delivery to a third-party carrier[32](index=32&type=chunk) Shipping and Handling Costs and Customer Deposits | Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Shipping and handling costs | $37,800 | $34,900 | | Customer deposit liabilities (period end) | $15,400 | $6,800 | | Customer deposits recognized as revenue | $6,800 | $13,300 | Sales Channel Disaggregation | Sales Channel | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Showrooms | $83,574 | $81,254 | | Internet | $40,225 | $31,255 | | Other | $17,394 | $16,871 | | Total Net Sales | $141,193 | $129,380 | - The Company engages in barter arrangements, repurposing returned inventory for media credits to support advertising, with barter sales recognized at **$4.1 million** for the thirteen weeks ended April 30, 2023, up from **$2.6 million** in the prior year[38](index=38&type=chunk)[39](index=39&type=chunk) [Note 3. Income Taxes](index=10&type=section&id=Note%203.%20Income%20Taxes) This note details income tax benefit/expense, effective tax rates, influencing factors, and addresses unrecognized tax benefits and penalties Income Tax Benefit (Expense) and Effective Tax Rate | Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Income tax (benefit) expense | $1,298 (benefit) | $(715) (expense) | | Effective tax rate | 23.5% | 27.4% | - The effective tax rate for the thirteen weeks ended April 30, 2023, was **23.5%**, compared to **27.4%** for the prior year, primarily due to state taxes varying from the **21%** federal statutory rate[41](index=41&type=chunk) [Note 4. Basic and Diluted Net (Loss) Income Per Common Share](index=10&type=section&id=Note%204.%20Basic%20and%20Diluted%20Net%20(Loss)%20Income%20Per%20Common%20Share) This note explains basic and diluted net (loss) income per common share calculation, detailing the exclusion of antidilutive securities during net loss periods - For the thirteen weeks ended April 30, 2023, **1,283,449** restricted stock units, **495,366** stock options, and **281,750** warrants were excluded from diluted EPS calculation as their inclusion would be antidilutive due to the net loss[44](index=44&type=chunk) [Note 5. Leases](index=11&type=section&id=Note%205.%20Leases) This note details lease expenses, weighted average lease terms, discount rates for operating leases, and future minimum lease payments Lease Expenses | Lease Expense Type | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Operating lease expense | $7,004 | $5,334 | | Variable lease expense | $2,041 | $2,197 | | Short term lease expense | $240 | $179 | | Total lease expense | $9,285 | $7,710 | Weighted Average Lease Terms and Discount Rates | Metric | April 30, 2023 | May 1, 2022 | | :-------------------------------- | :------------- | :---------- | | Weighted average remaining lease term (years) | 7.5 | 7.2 | | Weighted average discount rate | 4.42% | 3.97% | Future Minimum Lease Payments | Future Minimum Lease Payments (as of April 30, 2023, in thousands) | Amount | | :------------------------------------------------ | :----- | | Total undiscounted future minimum lease payments | $195,486 | | Total present value of lease obligations | $164,028 | | Operating lease liability - long term | $141,868 | [Note 6. Commitments and Contingencies](index=12&type=section&id=Note%206.%20Commitments%20and%20Contingencies) This note addresses legal proceedings, with management believing their resolution will not materially adversely affect the Company's financial position or cash flows - Management believes that the ultimate resolution of current legal proceedings will not materially adversely affect the Company's financial position, results of operations, or cash flows[50](index=50&type=chunk) [Note 7. Financing Arrangements](index=12&type=section&id=Note%207.%20Financing%20Arrangements) This note details the Company's revolving line of credit with Wells Fargo, including its extended maturity to September 2024 and borrowing availability - The Company's line of credit with Wells Fargo was amended on March 24, 2023, extending its maturity date to **September 2024**[52](index=52&type=chunk) - As of April 30, 2023, the Company had **$36.0 million** in borrowing availability under the line of credit, with no outstanding borrowings[52](index=52&type=chunk) [Note 8. Stockholders' Equity](index=12&type=section&id=Note%208.%20Stockholders'%20Equity) This note provides information on common stock warrants, equity incentive plan, stock options, and restricted stock units, including compensation expense - As of April 30, 2023, **281,750** common stock warrants remain outstanding with an average exercise price of **$19.20** and a weighted average remaining contractual life of **0.16 years**[53](index=53&type=chunk) - The 2017 Equity Incentive Plan was amended in fiscal 2024, increasing authorized shares for issuance by **225,000** to a total of **2,879,889** shares[54](index=54&type=chunk) - **495,366** non-statutory stock options granted in June 2019 vested on June 5, 2022, after meeting employment and market conditions (average closing price of **$75** for 40 consecutive trading days)[55](index=55&type=chunk) Restricted Stock Units | Restricted Stock Units | April 30, 2023 | May 1, 2022 | | :-------------------------------- | :------------- | :---------- | | Unvested at period end | 1,283,449 | 767,023 | | Weighted average grant date fair value | $30.07 | $34.31 | | Equity based compensation expense (in thousands) | $686 | $1,163 | - Total unrecognized equity-based compensation cost related to unvested awards was approximately **$7.0 million** as of April 30, 2023, to be recognized over a weighted average period of **2.4 years**[58](index=58&type=chunk) - In March 2023, the CEO received a one-time grant of **235,000** Restricted Stock Units, vesting on the fifth or seventh anniversary of the grant date, contingent on continuous service and achievement of specified share price and net sales performance levels[59](index=59&type=chunk) [Note 9. Segment Information](index=14&type=section&id=Note%209.%20Segment%20Information) This note clarifies the Company operates as a single reportable segment, with sales disaggregated by Sactionals, Sacs, and Other product categories - The Company's operating segments are aggregated into one reportable segment, as the chief operating decision makers review results for sales channels that share similar economic and qualitative characteristics[60](index=60&type=chunk) Net Sales by Product Category | Product Category | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Sactionals | $127,903 | $115,002 | | Sacs | $10,737 | $11,927 | | Other | $2,553 | $2,451 | | Total Net Sales | $141,193 | $129,380 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Company's financial condition and results of operations for the thirteen weeks ended April 30, 2023, covering key performance indicators, macro-economic factors, product offerings, sales channels, and liquidity [Overview](index=15&type=section&id=Overview) This section provides an overview of The Lovesac Company's business model, product offerings, omni-channel platform, and the impact of macro-economic factors on its operations - The Lovesac Company is a technology-driven furniture company known for its modular Sactionals and premium foam Sacs, designed for life-long adaptability and protected by utility patents[64](index=64&type=chunk) - The Company operates an omni-channel platform, combining direct-to-consumer showrooms (including mobile concierge and kiosks) with a strong e-commerce presence[64](index=64&type=chunk) - Macro-economic factors such as increased inflation, rising interest rates, and housing market conditions have contributed to a slowdown in demand, which may continue to impact the business[65](index=65&type=chunk) [Product Overview](index=16&type=section&id=Product%20Overview) This section details the Company's core product lines, Sactionals and Sacs, highlighting their features, market positioning, and contribution to net sales - Sactionals, comprising modular couches with patented features, represented **90.6%** of net sales for the thirteen weeks ended April 30, 2023 (up from **88.9%** in prior year), emphasizing adaptability and durability[67](index=67&type=chunk) - The Sactionals StealthTech Sound + Charge product line, introduced in October 2021, integrates immersive surround sound by Harman Kardon and wireless charging into the modular platform[67](index=67&type=chunk) - Sacs, oversized beanbag chairs filled with Durafoam, accounted for **7.6%** of net sales for the thirteen weeks ended April 30, 2023 (down from **9.2%** in prior year)[68](index=68&type=chunk) - The 'Other' product line includes accessories like drink holders, Footsac blankets, and the Sactionals Power Hub, complementing core products and enhancing customization[68](index=68&type=chunk) [Sales Channels](index=16&type=section&id=Sales%20Channels) This section describes the Company's omni-channel sales strategy, including showrooms, e-commerce, and other touchpoints, and their respective contributions to net sales - Showrooms, totaling **211 locations** as of April 30, 2023, accounted for **59.2%** of total net sales for the thirteen weeks ended April 30, 2023 (down from **62.8%** in prior year), with the Company updating showrooms to a new concept emphasizing technology for experiential engagement[68](index=68&type=chunk) - E-commerce sales increased to **28.5%** of total net sales for the thirteen weeks ended April 30, 2023 (up from **24.2%** in prior year), driven by strong promotional campaigns and leveraging robust technological capabilities[73](index=73&type=chunk) - Other touchpoints, including online pop-up-shops (e.g., Costco.com) and shop-in-shops (e.g., Best Buy), contributed **12.3%** of total net sales (down from **13.0%** in prior year), also including barter inventory transactions as part of ESG initiatives[73](index=73&type=chunk) [SELECTED CONDENSED FINANCIAL INFORMATION](index=17&type=section&id=SELECTED%20CONDENSED%20FINANCIAL%20INFORMATION) This section presents selected condensed financial information, including statements of operations, balance sheet data, cash flow data, and a reconciliation of non-GAAP measures like EBITDA and Adjusted EBITDA Condensed Statements of Operations Data | Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Total net sales | $141,193 | $129,380 | | Gross profit | $70,704 | $66,108 | | Operating (loss) income | $(5,869) | $2,645 | | Net (loss) income | $(4,230) | $1,895 | | Basic EPS | $(0.28) | $0.13 | | Diluted EPS | $(0.28) | $0.12 | | EBITDA | $(3,047) | $5,306 | | Adjusted EBITDA | $(2,356) | $6,373 | Condensed Balance Sheet Data | Metric | April 30, 2023 (in thousands) | January 29, 2023 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $45,125 | $43,533 | | Working capital | $90,775 | $105,202 | | Total assets | $428,036 | $418,054 | | Total liabilities | $238,790 | $224,794 | | Total stockholders' equity | $189,246 | $193,260 | Condensed Cash Flow Data | Cash Flow Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Net Cash Provided by (Used in) Operating Activities | $6,291 | $(21,786) | | Net Cash Used in Investing Activities | $(4,177) | $(6,018) | | Net Cash Used in Financing Activities | $(522) | $(208) | | Net change in cash and cash equivalents | $1,592 | $(28,012) | | Cash and cash equivalents at period end | $45,125 | $64,380 | - EBITDA and Adjusted EBITDA are non-GAAP measures used to evaluate operating performance by excluding non-cash and certain other items not reflective of underlying business performance[75](index=75&type=chunk)[77](index=77&type=chunk) Reconciliation of Net (Loss) Income to EBITDA and Adjusted EBITDA | Reconciliation Item | Thirteen Weeks Ended April 30, 2023 (in thousands) | Thirteen Weeks Ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Net (loss) income | $(4,230) | $1,895 | | Interest (income) expense, net | $(341) | $35 | | Income tax (benefit) expense | $(1,298) | $715 | | Depreciation and amortization | $2,822 | $2,661 | | **EBITDA** | **$(3,047)** | **$5,306** | | Equity-based compensation | $744 | $1,172 | | Other non-recurring expenses | $(53) | $(105) | | **Adjusted EBITDA** | **$(2,356)** | **$6,373** | [How We Assess the Performance of Our Business](index=20&type=section&id=How%20We%20Assess%20the%20Performance%20of%20Our%20Business) This section outlines the key financial metrics and operational indicators used by management to evaluate the Company's business performance [Net Sales](index=20&type=section&id=Net%20Sales) Net sales comprise merchandise sales, shipping, and handling revenue, less returns and discounts, recognized upon shipment from various channels - Net sales are recognized when title transfers upon shipment of goods from Company-operated showrooms, shop-in-shops, pop-up-shops, and web channels[80](index=80&type=chunk) [Gross Profit](index=20&type=section&id=Gross%20Profit) Gross profit is net sales less cost of merchandise sold, with gross margin representing this profit as a percentage of net sales - Gross profit is defined as net sales less cost of merchandise sold, with gross margin being the percentage of gross profit to net sales[81](index=81&type=chunk) [Selling, General and Administrative Expenses](index=20&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) SG&A expenses include payroll, showroom occupancy, headquarters costs, equity-based compensation, and credit card fees, expected to increase with growth but leverage as a percentage of net sales - SG&A expenses include payroll, showroom occupancy, headquarters costs, equity-based compensation, public company expenses, and credit card fees[82](index=82&type=chunk) - SG&A as a percentage of net sales is typically higher in lower volume quarters and lower in higher volume quarters due to a significant portion of fixed costs[82](index=82&type=chunk) - The Company expects SG&A expenses to increase with business growth, particularly payroll and rent, but aims to leverage these as a percentage of net sales through continued growth and investments in R&D and technology[83](index=83&type=chunk) [Advertising and Marketing Expense](index=21&type=section&id=Advertising%20and%20Marketing%20Expense) Advertising and marketing expenses cover digital, social, and traditional initiatives, expected to increase as a percentage of net sales to support growth - Advertising and marketing expenses include digital, social, and traditional initiatives across all business channels and are expected to increase as a percentage of net sales to support growth[84](index=84&type=chunk) [Depreciation and Amortization](index=21&type=section&id=Depreciation%20and%20Amortization) Depreciation and amortization expenses are recognized for property, equipment, and intangible assets [Basis of Presentation and Results of Operations](index=21&type=section&id=Basis%20of%20Presentation%20and%20Results%20of%20Operations) This section provides the basis of financial presentation and analyzes the Company's results of operations for the reported periods Statement of Operations Data (% of Net Sales) | Statement of Operations Data (% of Net Sales) | Thirteen weeks ended April 30, 2023 | Thirteen weeks ended May 1, 2022 | | :-------------------------------------------- | :---------------------------------- | :------------------------------- | | Net sales | 100 % | 100 % | | Cost of merchandise sold | 50 % | 49 % | | Gross profit | 50 % | 51 % | | Selling, general and administrative expenses | 40 % | 35 % | | Advertising and marketing | 12 % | 12 % | | Depreciation and amortization | 2 % | 2 % | | Operating (loss) income | -4 % | 2 % | | Interest expense, net | 0 % | 0 % | | Net (loss) income before taxes | -4 % | 2 % | | Benefit from (provision for) income taxes | 1 % | -1 % | | Net (loss) income | -3 % | 1 % | [Thirteen weeks ended April 30, 2023 Compared to the thirteen weeks ended May 1, 2022](index=22&type=section&id=Thirteen%20weeks%20ended%20April%2030,%202023%20Compared%20to%20the%20thirteen%20weeks%20ended%20May%201,%202022) This section compares financial performance for the thirteen weeks ended April 30, 2023, against the prior year, detailing changes in net sales, gross profit, operating expenses, and net income/loss [Net sales](index=22&type=section&id=Net%20sales) This section analyzes the changes in net sales across various channels for the thirteen weeks ended April 30, 2023, compared to the prior year - Net sales increased by **$11.8 million**, or **9.1%**, to **$141.2 million**, driven by growth across all channels and a **19.7%** increase in new customers[87](index=87&type=chunk) - Showroom net sales increased by **2.9%** to **$83.6 million**, primarily due to comparable sales growth of **8.4%** and the addition of **50** new showrooms, despite a **15.8%** decrease in total units sold[87](index=87&type=chunk) - Internet net sales surged by **28.7%** to **$40.2 million**, attributed to strong promotional campaigns[87](index=87&type=chunk) - Other net sales grew by **3.1%** to **$17.4 million**, mainly due to inventory barter transactions and **95** Costco in-store pop-up-shops, partially offset by lower productivity from online pop-up-shops[87](index=87&type=chunk) [Gross profit](index=22&type=section&id=Gross%20profit) This section analyzes the changes in gross profit and gross margin for the thirteen weeks ended April 30, 2023, compared to the prior year - Gross profit increased by **$4.6 million**, or **7.0%**, to **$70.7 million**, but gross margin decreased by **100 basis points** to **50.1%** of net sales[88](index=88&type=chunk) - The gross margin decrease was primarily due to a **120 basis point** drop in product margin from higher promotional discounting, partially offset by a **20 basis point** decrease in total distribution and related tariff expenses[88](index=88&type=chunk) [Selling, general and administrative expenses](index=22&type=section&id=Selling,%20general%20and%20administrative%20expenses) This section analyzes the changes in selling, general, and administrative expenses for the thirteen weeks ended April 30, 2023, compared to the prior year - SG&A expenses increased by **$11.9 million**, or **26.6%**, to **$56.8 million**, driven by higher employment costs (**$5.9 million**), overhead expenses (**$2.9 million**), and rent (**$1.4 million**) from new showrooms[89](index=89&type=chunk) - As a percentage of net sales, SG&A increased by **560 basis points** to **40.3%**, mainly due to deleverage in employment costs, continuous growth investments, and increased selling-related expenses[90](index=90&type=chunk) [Advertising and Marketing](index=23&type=section&id=Advertising%20and%20Marketing) This section analyzes the changes in advertising and marketing expenses for the thirteen weeks ended April 30, 2023, compared to the prior year - Advertising and marketing expenses increased by **$1.0 million**, or **6.4%**, to **$16.9 million**, reflecting ongoing investments to support net sales growth[91](index=91&type=chunk) - As a percentage of net sales, advertising and marketing expenses slightly decreased to **12.0%** from **12.3%** in the prior year[91](index=91&type=chunk) [Depreciation and amortization expenses](index=23&type=section&id=Depreciation%20and%20amortization%20expenses) This section analyzes the changes in depreciation and amortization expenses for the thirteen weeks ended April 30, 2023, compared to the prior year - Depreciation and amortization expenses increased by **$0.1 million**, or **6.1%**, to **$2.8 million**, primarily due to capital investments in new and remodeled showrooms[92](index=92&type=chunk) [Interest income (expense), net](index=23&type=section&id=Interest%20income%20(expense),%20net) This section analyzes the changes in net interest income (expense) for the thirteen weeks ended April 30, 2023, compared to the prior year - The Company reported interest income of **$0.3 million**, a favorable change from an interest expense of less than **$0.1 million** in the prior year, driven by higher interest rates on cash balances[93](index=93&type=chunk) [Benefit (provision) for income taxes](index=23&type=section&id=Benefit%20(provision)%20for%20income%20taxes) This section analyzes the changes in income tax benefit (provision) for the thirteen weeks ended April 30, 2023, compared to the prior year - The Company recorded an income tax benefit of **$1.3 million**, a shift from an income tax expense of **$0.7 million** in the prior year, primarily due to a net loss before taxes of **$5.5 million**[94](index=94&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's liquidity sources, capital needs, and management's assessment of its ability to meet future financial obligations [General](index=23&type=section&id=General) The Company's liquidity sources include cash flows from operations, a revolving line of credit, and securities issuances, supporting key needs like marketing, inventory, and capital expenditures - Primary liquidity sources are cash flows from operations, a revolving line of credit, and securities issuances[95](index=95&type=chunk) - Key cash needs include marketing, inventory, payroll, showroom rent, capital expenditures for new/updated showrooms, and IT investments[95](index=95&type=chunk) - The Company believes existing cash, operational cash flow, and credit line availability are sufficient for working capital and capital expenditures for at least the next 12 months[95](index=95&type=chunk) [Cash Flow Analysis](index=24&type=section&id=Cash%20Flow%20Analysis) This section analyzes the Company's cash flows from operating, investing, and financing activities, detailing drivers of changes in cash and cash equivalents Cash Flow Summary | Cash Flow Metric | Thirteen weeks ended April 30, 2023 (in thousands) | Thirteen weeks ended May 1, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------- | :------------------------------------ | | Net Cash Provided by (Used in) Operating Activities | $6,291 | $(21,786) | | Net Cash Used in Investing Activities | $(4,177) | $(6,018) | | Net Cash Used in Financing Activities | $(522) | $(208) | | Net change in cash and cash equivalents | $1,592 | $(28,012) | | Cash and cash equivalents at period end | $45,125 | $64,380 | [Net Cash Provided by (Used in) Operating Activities](index=24&type=section&id=Net%20Cash%20Provided%20by%20(Used%20in)%20Operating%20Activities) This section analyzes the net cash provided by or used in operating activities, detailing the primary factors influencing these changes - Net cash provided by operating activities was **$6.3 million** for the thirteen weeks ended April 30, 2023, a significant improvement from **$21.8 million** used in the prior year[99](index=99&type=chunk)[100](index=100&type=chunk) - The positive operating cash flow in 2023 was driven by decreases in merchandise inventories (**$13.1 million**) and prepaid expenses (**$6.0 million**), and increases in customer deposits (**$8.6 million**)[99](index=99&type=chunk) [Net Cash Used in Investing Activities](index=24&type=section&id=Net%20Cash%20Used%20in%20Investing%20Activities) This section analyzes the net cash used in investing activities, primarily focusing on capital expenditures for showrooms and intangible assets - Net cash used in investing activities decreased to **$4.2 million** for the thirteen weeks ended April 30, 2023, from **$6.0 million** in the prior year, primarily due to lower capital expenditures for new/remodeled showrooms and intangible assets[101](index=101&type=chunk)[102](index=102&type=chunk) [Net Cash Used in Financing Activities](index=24&type=section&id=Net%20Cash%20Used%20in%20Financing%20Activities) This section analyzes the net cash used in financing activities, primarily due to taxes paid for net share settlement of equity awards - Net cash used in financing activities increased to **$0.5 million** for the thirteen weeks ended April 30, 2023, mainly due to taxes paid for net share settlement of equity awards[103](index=103&type=chunk) [Revolving Line of Credit](index=24&type=section&id=Revolving%20Line%20of%20Credit) The Company's revolving credit facility with Wells Fargo was extended to September 2024, with $36.0 million borrowing availability and no outstanding borrowings - The revolving credit facility with Wells Fargo was extended to mature on **September 30, 2024**, with a maximum commitment of **$40.0 million**[105](index=105&type=chunk)[106](index=106&type=chunk) - As of April 30, 2023, the Company had **$36.0 million** in borrowing availability and no outstanding borrowings on the line of credit[105](index=105&type=chunk) [Off Balance Sheet Arrangements](index=25&type=section&id=Off%20Balance%20Sheet%20Arrangements) As of April 30, 2023, the Company has no material off-balance sheet arrangements, other than ordinary course employment agreements - The Company has no material off-balance sheet arrangements as of April 30, 2023, other than ordinary course employment agreements[107](index=107&type=chunk) [Critical Accounting Policies and Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section refers to the Annual Report on Form 10-K for accounting policies, noting no material changes during the thirteen weeks ended April 30, 2023 - No material changes to significant accounting policies occurred during the thirteen weeks ended April 30, 2023[108](index=108&type=chunk) [Recent Accounting Pronouncements](index=25&type=section&id=Recent%20Accounting%20Pronouncements) Recent accounting pronouncements are not expected to have a material impact on the Company's financial statements - Recent accounting pronouncements are not expected to have a material impact on the Company's financial statements[29](index=29&type=chunk)[109](index=109&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the Company's exposure to market risks, including interest rate, inflation, and liquidity, and the strategies employed for their management [Interest Rate Risk](index=25&type=section&id=Interest%20Rate%20Risk) This section discusses the Company's exposure to interest rate fluctuations on cash and investments, and the expected impact on operations - The Company's cash, cash equivalents, and short-term investments are subject to interest rate fluctuations, but changes in prevailing interest rates are not expected to materially impact results of operations[111](index=111&type=chunk)[112](index=112&type=chunk) [Inflation](index=26&type=section&id=Inflation) This section discusses the Company's experience with inflationary pressures and its strategies to mitigate their impact on costs and supply chain - The Company experienced inflationary pressures in fiscal year 2023 across wholesale costs and supply chain, and monitors these impacts to minimize effects through pricing strategies, productivity improvements, and cost reductions[113](index=113&type=chunk) [Liquidity Risk](index=26&type=section&id=Liquidity%20Risk) This section discusses the Company's approach to managing liquidity risk, including partnerships with strong banking institutions and access to credit markets - In response to 2023 global bank failures, the Company reinforced its commitment to a strong balance sheet and minimizing liquidity risk by partnering with strong banking institutions and ensuring access to credit markets[114](index=114&type=chunk) [Item 4. Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=26&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section presents management's conclusion on the effectiveness of the Company's disclosure controls and procedures as of April 30, 2023 - Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of April 30, 2023, concluding they provide reasonable assurance of achieving their objectives[115](index=115&type=chunk) [Changes in Internal Control Over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in internal control over financial reporting during the thirteen weeks ended April 30, 2023 - There were no material changes in internal control over financial reporting during the thirteen weeks ended April 30, 2023[116](index=116&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 6 for information on legal proceedings, which management believes will not materially adversely affect the Company - Information on legal proceedings is incorporated by reference from Note 6, Commitments and Contingencies, in Part I, Item 1 of this report[119](index=119&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) This section states no material changes to risk factors previously disclosed in the Company's Annual Report on Form 10-K - No material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2023[120](index=120&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period [Item 3. Defaults Upon Senior Securities](index=27&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable for the reporting period [Item 4. Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable for the reporting period [Item 5. Other Information](index=27&type=section&id=Item%205.%20Other%20Information) This item is not applicable for the reporting period [Item 6. Exhibits](index=28&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including equity incentive plan amendments, employment agreements, and certifications - Exhibits include Amendment No. 1 to The Lovesac Company Second Amended and Restated 2017 Equity Incentive Plan, employment agreements for Keith Siegner, and certifications by the CEO and CFO[126](index=126&type=chunk)

Financial Data and Key Metrics Changes - Total sales increased by $11.8 million or 9.1% to $141.2 million in Q1 2024 compared to the prior year, driven by growth across all channels [101] - Adjusted EBITDA was a loss of $2.4 million for the quarter, reflecting ongoing investments in the business [76] - Gross margin decreased by 100 basis points to 50.1% of net sales, primarily due to higher promotional discounting [105] - Net loss for the quarter was $4.2 million or $0.28 per diluted share, compared to net income of $1.9 million or $0.12 per diluted share in the prior year [140] Business Line Data and Key Metrics Changes - Sactionals net sales increased by 11.2%, while Sacs net sales decreased by 10% [136] - Internet net sales increased by $8.9 million or 28.7% to $40.2 million, significantly outperforming the category [102] - Showroom net sales increased by $2.3 million or 2.9% to $83.6 million, driven by higher point-of-sale transactions [133] Market Data and Key Metrics Changes - The overall home category was reported to be down 20% in Q1, contrasting with the company's sales growth [75] - The company continues to capture market share in a fragmented upholstery category, with only low single-digit penetration despite significant growth [57] Company Strategy and Development Direction - The company aims to innovate continuously, with the recent launch of the Angled Side expected to drive significant upside among new and existing customers [77][125] - The focus remains on building a brand that resonates with consumers, leveraging a unique product platform that combines home and technology [58][118] - Investments in technology and research and development are prioritized to fuel growth and enhance customer experience [130] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the future, despite a challenging macro environment impacting consumer spending [80][124] - The company expects to continue outperforming the category, with a strong focus on growth and ROI-driven investment discipline [112] - The competitive landscape is highly promotional, but the company has maintained promotional intensity below pre-pandemic levels, indicating strong demand for its products [82] Other Important Information - The company celebrated its 25th anniversary with a significant media campaign, generating over 3 billion impressions [34][97] - The company has a strong balance sheet with $45.1 million in cash and cash equivalents, positioning it well for future growth [141] Q&A Session Summary Question: Insights on consumer trends and discretionary spending - Management noted no significant trade-down trends, with a flat or slightly elevated mix of premium upgrades in purchases [24][25] Question: Update on tech and R&D investments - Investments in technology include optimizing inventory levels and enhancing customer service through AI platforms [27][29] Question: Brand awareness and social media engagement - Unaided brand awareness remains low, indicating a significant opportunity for growth, while aided awareness has increased substantially [16] Question: Gross margin and freight costs - Management expects a 200 basis points increase in gross margin due to lower freight costs, with benefits expected to fully materialize in Q4 [39][40] Question: Sales pull forward from Q2 to Q1 - A shift in demand was noted, with strong performance in Q1 leading to a pull forward of some projected demand from Q2 [45][46]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 29, 2023 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission File Number: 001-38555 THE LOVESAC COMPANY (Exact Name of Registrant as Specified in Its Charter) | Delaware | 32-05149 ...

The Lovesac Company (NASDAQ:LOVE) Q4 2023 Earnings Conference Call March 28, 2023 8:30 AM ET Company Participants Rachel Schacter - Investor Relations, ICR Shawn Nelson - Chief Executive Officer Mary Fox - President and Chief Operating Officer Donna Dellomo - Executive Vice President and Chief Financial Officer, Treasurer and Secretary Conference Call Participants Brian Nagel - Oppenheimer & Co. Thomas Forte - D.A. Davidson Maria Ripps - Canaccord Genuity Matt Koranda - ROTH MKM Alex Fuhrman - Craig-Hallum ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38555 THE LOVESAC COMPANY (Exact name of registrant as specified in its charter) | Delaware | 32-0514958 | | --- | --- ...