Financial Performance - For the quarter ended April 2025, Lovesac reported revenue of $138.37 million, reflecting a year-over-year increase of 4.3% [1] - The earnings per share (EPS) was reported at -$0.73, an improvement from -$0.83 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $136.95 million by 1.04% [1] - The EPS surprise was +9.88%, compared to the consensus estimate of -$0.81 [1] Key Metrics - Lovesac's showroom count at the end of the quarter was 267, slightly below the two-analyst average estimate of 269 [4] - Net Sales from Other sources were reported at $8.60 million, significantly lower than the average estimate of $13.91 million, representing a year-over-year decline of 40.4% [4] - Net Sales from Internet channels were $33.30 million, below the average estimate of $36.39 million, indicating a 9% year-over-year decrease [4] - Net Sales from Showrooms reached $96.50 million, surpassing the average estimate of $85.76 million, and showing an 18.2% increase compared to the previous year [4] Stock Performance - Shares of Lovesac have returned +0.6% over the past month, while the Zacks S&P 500 composite increased by +6.6% [3] - The stock currently holds a Zacks Rank 1 (Strong Buy), suggesting potential outperformance against the broader market in the near term [3]

Financial Data and Key Metrics Changes - Total net sales for the first quarter were $138.4 million, reflecting a year-over-year increase of 4.3% despite a 5% decline in the overall category [6][33] - Adjusted EBITDA loss improved by double-digit percentages year-over-year, with net loss decreasing to $10.8 million or negative $0.73 per common share compared to a net loss of $13 million or negative $0.83 per common share in the prior year [7][38] - SG&A expense as a percentage of net sales decreased to 48.5% from 51.6% in the prior year, driven by lower professional fees and higher net sales [35] Business Line Data and Key Metrics Changes - Showroom net sales increased by $14.9 million or 18.2% to $96.5 million, while internet net sales decreased by $3.3 million or 8.9% to $33.3 million [33][34] - Sactional net sales increased by 4.5%, and SAC net sales increased by 6.4%, while other net sales, including decorative pillows and accessories, decreased by 17.1% [34] Market Data and Key Metrics Changes - Total omni-channel comparable net sales increased by 2.8% for the quarter, with additional growth from new and non-comparable touchpoint contributions [6] - The overall market category is estimated to have declined by 5% for the comparable period, indicating market share gains for the company [6] Company Strategy and Development Direction - The company is focused on innovation with the launch of the EverCouch, which is expected to double the total addressable market and provide a solution for customers seeking style and comfort [9][10] - The company aims to be the most loved home brand in America by 2030 while driving profitable sales growth [17] - The exit from the Best Buy partnership is seen as a strategic move to enhance profitability and focus on expanding the Costco relationship [27][61] Management's Comments on Operating Environment and Future Outlook - Management noted that the promotional environment remains aggressive, with discount levels high across the category, but they are leveraging personalized promotions to drive showroom traffic [50][51] - The company is optimistic about future growth despite current market challenges, forecasting growth for the fiscal second quarter and the full year [14][41] - Management is actively working to mitigate tariff impacts and believes they can manage these within existing full-year guidance [15][41] Other Important Information - The company reported a healthy balance sheet with $26.9 million in cash and cash equivalents and $36 million in committed availability [38][39] - The company plans to launch a new resell platform in Texas as part of its commitment to sustainability and innovation in home furnishings [29] Q&A Session Summary Question: Can you discuss the promotional environment and its impact on gross margins? - Management noted that discount levels remain high, with competitors offering promotions around 40-45%, but they are focusing on personalized promotions to drive showroom traffic [50][51] Question: What are the expectations for the EverCouch product? - Management indicated that it is too early to provide detailed sales figures, but initial feedback has been positive, and internal goals are being exceeded [56][58] Question: Can you elaborate on the decision to exit the Best Buy partnership? - Management expressed excitement about new opportunities and emphasized the importance of expanding the Costco relationship while acknowledging the benefits gained from the Best Buy partnership [61][62] Question: How are tariffs influencing manufacturing decisions? - Management stated that they are on a path to exit manufacturing in China and are diversifying production to be closer to consumers, regardless of tariff impacts [66][68] Question: How does the company plan to manage pricing in light of tariffs and promotions? - Management is considering various levers for pricing adjustments and believes their strong brand positioning allows for strategic price increases without compromising competitiveness [76][80]

Financial Data and Key Metrics Changes - Total net sales for Q1 2026 were $138.4 million, reflecting a year-over-year increase of 4.3% despite a 5% decline in the overall category [5][31] - Adjusted EBITDA loss improved by double-digit percentages year-over-year, with net loss for the quarter at $10.8 million, or negative $0.73 per share, compared to a net loss of $13 million, or negative $0.83 per share, in the prior year [5][35] - SG&A expense as a percentage of net sales decreased to 48.5% from 51.6% in the prior year, driven by lower professional fees and higher net sales [33] Business Line Data and Key Metrics Changes - Showroom net sales increased by $14.9 million, or 18.2%, to $96.5 million, driven by a 2.8% increase in omni-channel comparable net sales and the addition of 21 new showrooms [31] - Internet net sales decreased by $3.3 million, or 8.9%, to $33.3 million, while other net sales, including pop-up shops, decreased by $5.8 million, or 40.5% [32] - Sactional net sales increased by 4.5%, while SAC net sales increased by 6.4%, and other net sales, including decorative pillows and accessories, decreased by 17.1% [32] Market Data and Key Metrics Changes - The overall market category is estimated to have declined by 5% for the comparable period, with the company gaining market share despite these headwinds [5][31] - The promotional environment remains aggressive, with competitors offering discounts around 40% to 45%, impacting gross margins [48] Company Strategy and Development Direction - The company is focused on leveraging its innovative product offerings and strong customer relationships to drive growth, even in a challenging category [14] - The launch of the EverCouch product platform is expected to significantly expand the company's total addressable market, with initial positive feedback from customers [9][10] - The company plans to enhance its marketing efforts and expand its showroom presence to support the new product launches [10][24] Management's Comments on Operating Environment and Future Outlook - Management noted that while the category trends are currently negative, they remain optimistic about future growth driven by new product launches and marketing strategies [38] - The company is actively working to mitigate tariff impacts and believes it can manage these within existing guidance [14][39] - Management expressed confidence in the long-term growth potential of the company, particularly as housing turnover and the replacement cycle for comfort seating are expected to improve [42] Other Important Information - The company ended its partnership with Best Buy, estimating a nonrecurring charge of approximately $2 million in Q2, while planning to expand its relationship with Costco [25][40] - The company has made significant progress in diversifying its manufacturing away from China, aiming for a more sustainable supply chain [66] Q&A Session Summary Question: Can you discuss the promotional environment and its impact on gross margins? - Management noted that discount levels remain high, with competitors offering significant promotions, but they are focusing on personalized promotions to drive showroom traffic and conversions [48][49] Question: What are the expectations for EverCouch sales and customer feedback? - Management indicated that it is too early to provide specific sales figures, but initial feedback has been positive, and internal goals are being exceeded [54][56] Question: Can you elaborate on the decision to exit the Best Buy partnership? - Management expressed excitement about new opportunities and emphasized the importance of expanding the Costco relationship, while acknowledging the benefits gained from the Best Buy partnership [60][62] Question: How are tariffs influencing manufacturing decisions? - Management stated that they are on a path to exit manufacturing in China entirely, focusing on producing closer to consumers for sustainability reasons [66][68] Question: How does the guidance account for new product performance? - Management clarified that the guidance does not overly rely on new products, as they can achieve targets even if core products remain flat [72][74] Question: How are price adjustments being considered in light of tariffs and promotions? - Management is continuously assessing pricing strategies, noting that their strong brand allows for surgical price increases without compromising competitive positioning [75][79]

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Unaudited financial statements for Q1 FY2026 detail balance sheets, operations, equity, and cash flows, highlighting key financial shifts and subsequent events Balance Sheets | Financial Metric | May 4, 2025 (in thousands) | February 2, 2025 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $26,900 | $83,734 | | Merchandise inventories, net | $124,926 | $124,333 | | Total Assets | $483,740 | $532,250 | | Total Liabilities | $282,526 | $315,895 | | Stockholders' Equity | $201,214 | $216,355 | Statements of Operations | (amounts in thousands, except per share data) | Thirteen weeks ended May 4, 2025 | Thirteen weeks ended May 5, 2024 | | :--- | :--- | :--- | | Net sales | $138,373 | $132,643 | | Gross profit | $74,370 | $72,045 | | Operating loss | $(14,954) | $(17,856) | | Net loss | $(10,840) | $(12,960) | | Diluted net loss per share | $(0.73) | $(0.83) | Cash Flows | (amounts in thousands) | Thirteen weeks ended May 4, 2025 | Thirteen weeks ended May 5, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(41,377) | $(7,014) | | Net cash used in investing activities | $(8,701) | $(7,304) | | Net cash used in financing activities | $(6,756) | $(356) | | Cash and cash equivalents - Ending | $26,900 | $72,362 | - Subsequent to the quarter end, the company approved a plan to discontinue its partnership with Best Buy, involving winding down shop-in-shop locations, reducing its workforce by approximately **8%**, and incurring estimated costs of **$1.7 million to $2.1 million**[74](index=74&type=chunk) - On June 10, 2025, the Compensation Committee approved a **$1.5 million** performance-based cash incentive award for the CEO, contingent on achieving new product launch and net sales targets during fiscal years 2026, 2027, and 2028[76](index=76&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 FY2026 financial results, highlighting net sales growth, gross margin decline, improved operating loss, and increased cash used in operations Financial Performance Summary | Metric | Q1 FY2026 (ended May 4, 2025) | Q1 FY2025 (ended May 5, 2024) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $138.4M | $132.6M | +4.3% | | Gross Profit | $74.4M | $72.0M | +3.2% | | Gross Margin | 53.7% | 54.3% | -60 bps | | Operating Loss | $(15.0)M | $(17.9)M | Improvement | | Net Loss | $(10.8)M | $(13.0)M | Improvement | - Showroom net sales increased by **$14.9 million (18.2%)**, while internet sales decreased by **$3.3 million (8.9%)**[100](index=100&type=chunk)[101](index=101&type=chunk) - The **60 basis point** decrease in gross margin was driven by a **230 basis point** negative impact from higher promotional discounting, partially offset by improvements in transportation costs[102](index=102&type=chunk) - SG&A expenses decreased by **$1.3 million (1.9%)** due to lower professional fees, insurance, and credit card fees, offsetting increases in payroll, equity-based compensation, and rent[103](index=103&type=chunk) - The company ended the quarter with **267** showrooms, an increase of **21** locations from the prior year, after opening **11** and closing **1** during the quarter[98](index=98&type=chunk) - Net cash used in operating activities was **$41.4 million**, a significant increase from **$7.0 million** in the prior year period, primarily driven by changes in working capital related to vendor payments[112](index=112&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company identifies interest rate and inflation as primary market risks, actively managing their potential impact on financial results - The company is exposed to interest rate risk through its cash equivalents and floating-rate revolving line of credit, but does not expect a material impact on its results[124](index=124&type=chunk)[125](index=125&type=chunk) - Inflationary pressures in the supply chain continued to normalize in Q1 FY2026, with the company monitoring and minimizing effects through pricing, productivity, and cost reductions[126](index=126&type=chunk) [Controls and Procedures](index=26&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of May 4, 2025, the company's disclosure controls and procedures were effective to provide reasonable assurance that required information is recorded, processed, and reported timely[127](index=127&type=chunk) - There were no changes in the company's internal control over financial reporting during the quarter ended May 4, 2025, that have materially affected, or are reasonably likely to materially affect, these controls[129](index=129&type=chunk) [PART II. OTHER INFORMATION](index=27&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company details legal proceedings, including a settled shareholder derivative action and an ongoing putative class action regarding pricing allegations - A shareholder derivative action has a definitive settlement agreement as of May 19, 2025, which received preliminary court approval, and is not expected to have a material financial impact[50](index=50&type=chunk) - The company is facing a putative class action lawsuit filed in March 2024, alleging false advertising of discounts, for which a possible loss cannot be reasonably estimated[51](index=51&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for fiscal year ended February 2, 2025 - There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the fiscal year ended February 2, 2025[132](index=132&type=chunk) [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) Details of share repurchase activity, including 306,325 shares repurchased and $14.1 million remaining under the authorized program Share Repurchase Activity | Period | Total Shares Purchased | Average Price Paid Per Share | Approx. Dollar Value Remaining ($ thousands) | | :--- | :--- | :--- | :--- | | April 7, 2025 to May 4, 2025 | 306,325 | $19.57 | $14,090 | | **Total for Quarter** | **306,325** | **$19.57** | **$14,090** | - The share repurchase program was authorized in June 2024 for up to **$40.0 million**, with **$14.1 million** remaining available as of May 4, 2025[67](index=67&type=chunk)[133](index=133&type=chunk) [Defaults Upon Senior Securities](index=27&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section is not applicable to the company's current financial reporting - Not applicable[134](index=134&type=chunk) [Mine Safety Disclosures](index=27&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not applicable[135](index=135&type=chunk) [Other Information](index=27&type=section&id=Item%205.%20Other%20Information) Key events include Satori Capital's trading plan, discontinuation of the Best Buy partnership, and a performance-based cash award for the CEO - On April 17, 2025, Satori Capital, LLC adopted a Rule 10b5-1 trading plan for the sale of up to **630,698** shares, plus an additional **50,000** shares[136](index=136&type=chunk)[138](index=138&type=chunk) - The company is ending its partnership with Best Buy, resulting in an approximate **8%** workforce reduction and expected costs of **$1.7 million to $2.1 million**, to be completed by Q3 fiscal 2026[139](index=139&type=chunk) - On June 10, 2025, the CEO was approved for a **$1.5 million** performance-based cash incentive award, contingent on achieving specific new product launch and related net sales targets through fiscal 2028[141](index=141&type=chunk) [Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including award agreements, certifications, and XBRL data files - The exhibits filed with this report include a Cash-Based Award Agreement, certifications from the CEO and CFO, and all required Inline XBRL documents[142](index=142&type=chunk)

Exhibit 99.1 THE LOVESAC COMPANY REPORTS FIRST QUARTER FISCAL 2026 FINANCIAL RESULTS Q1 FY26 Net Sales Increased 4.3% to $138.4 Million vs. Q1 FY25 STAMFORD, Conn., June 12, 2025 (GLOBE NEWSWIRE) -- The Lovesac Company (Nasdaq: LOVE) ("Lovesac" or the "Company"), the Designed for Life home and technology brand best known for its Sactionals, The World's Most Adaptable Couch, today announced financial results for the first quarter of fiscal 2026, which ended May 4, 2025. Shawn Nelson, Chief Executive Officer, ...

STAMFORD, Conn., June 12, 2025 (GLOBE NEWSWIRE) -- The Lovesac Company (Nasdaq: LOVE) (“Lovesac” or the “Company”), the Designed for Life home and technology brand best known for its Sactionals, The World's Most Adaptable Couch, today announced financial results for the first quarter of fiscal 2026, which ended May 4, 2025. Shawn Nelson, Chief Executive Officer, stated, “Our first quarter performance was inline with our expectations to capitalize on secular initiatives to drive growth. Notably, we delivered ...

The Lovesac Company LOVE will release its first-quarter financial results before the opening bell on Thursday, June 12. Analysts expect the Stamford, Connecticut-based company to report a quarterly loss at 71 cents per share, versus a year-ago loss of 63 cents per share in the year-ago period. Lovesac projects quarterly revenue of $137.47 million, compared to $132.64 million a year earlier, according to data from Benzinga Pro. On April 10, the company reported a fourth-quarter FY25 revenue decline of 3.6% y ...

Core Insights - Wall Street analysts forecast a quarterly loss of $0.84 per share for Lovesac (LOVE), indicating a year-over-year decline of 1.2% [1] - Anticipated revenues for the quarter are projected to be $136.05 million, reflecting a 2.6% increase compared to the same quarter last year [1] - The consensus EPS estimate has remained unchanged over the past 30 days, suggesting analysts have reassessed their initial projections [1] Revenue Estimates - 'Net Sales- Other' is expected to reach $13.91 million, representing a year-over-year decline of 3.6% [4] - 'Net Sales- Internet' is estimated at $36.39 million, indicating a slight decrease of 0.6% year over year [4] - 'Net Sales- Showrooms' is projected to be $85.76 million, showing an increase of 5.1% from the previous year [4] Showroom Metrics - Analysts expect the 'Ending Showroom Count' to be 269, up from 246 in the same quarter of the previous year [5] Stock Performance - Shares of Lovesac have returned -1.4% over the past month, contrasting with the Zacks S&P 500 composite's increase of 7.2% [5] - Lovesac holds a Zacks Rank 3 (Hold), indicating it is expected to perform in line with the overall market in the near future [5]

Financial Performance - Cannara Biotech reported net revenues of $26.6 million for Q2 2025, a 35% increase from $19.7 million in Q2 2024, driven by national brand growth and product innovation [3][6][11] - Gross profit before fair value adjustments rose 52% to $10.8 million in Q2 2025, with gross margins improving to 41% from 36% [4][11][29] - The company achieved net income of $3.3 million, a significant improvement from a net loss of $3.4 million in the prior year [4][11][29] - Adjusted EBITDA more than doubled to $7.1 million, marking the sixteenth consecutive quarter of positive Adjusted EBITDA, up 102% from $3.5 million in Q2 2024 [4][11][29] Operational Highlights - Cannara activated its 11th grow zone in April 2025, with a 12th zone expected to come online in May, expanding active canopy to over 300,000 sq. ft. and supporting an annual production capacity of up to 40,000 kg [3][4][13] - The company plans to launch over 20 new products in 2025, with a focus on scaling to meet unmet demand [3][4] Market Position - Cannara's estimated national retail market share reached 3.9% in Q2 2025, a 34.5% increase from 2.9% in Q2 2024, with notable gains in Québec, Ontario, and Alberta [3][6][11][23] - The company reported a 40% increase in gross cannabis revenues before excise taxes to $36.8 million, reflecting strong demand across existing and new markets [11][29] Strategic Execution - The company is focused on disciplined execution and brand investment while maintaining low capital expenditures, presenting high return on investment opportunities [4][6] - Cannara's operational model has demonstrated resilience, achieving consistent profitability and growth despite challenges in the market [4][6]

Core Viewpoint - Lovesac has transitioned from a niche foam beanbag chair manufacturer to a premium furniture brand, focusing on modular "Sactionals" and innovative partnerships like the one with Harman Kardon for integrated sound systems [1][2]. Financial Performance - In fiscal Q4 2025, Lovesac reported EPS of $2.13, exceeding estimates by $0.26, while revenues decreased by 3.6% YOY to $241.5 million, surpassing expectations by $11.17 million [6]. - The gross margin improved by 70 basis points to 60.4%, attributed to reduced inbound and outbound transportation costs [6]. - For fiscal 2026, the company anticipates EPS between $0.80 and $1.36, with a midpoint of $1.08, and revenues projected between $700 million and $750 million, with a midpoint of $725 million, exceeding consensus estimates [11]. Product and Market Strategy - Lovesac's Sactionals offer customizable configurations and over 200 cover options, providing a competitive edge over traditional furniture [2][3]. - The company has launched the Sactionals Reclining Seat and plans to introduce two more platforms in the next three years [7]. - Lovesac aims to expand its showroom count from 258 to over 400, targeting affluent consumers, with 82% of buyers earning over $100,000 annually [7]. Supply Chain and Tariff Management - The company has restructured its supply chain to mitigate tariff impacts, diversifying its countries of origin, with Vietnam (50%), Malaysia (28%), China (13%), and Indonesia (6%) [12][13]. - Lovesac is entering fiscal 2026 with higher-than-normal inventory levels to strategically manage potential tariff-related costs [14]. - The company plans to implement selective price increases due to its strong brand and unique product offerings, rather than broad inflationary pressures [15]. Analyst Outlook - Analysts have set a 12-month price target of $31.67 for Lovesac, indicating a potential upside of 57.86% from the current price of $20.06 [10]. - Despite a significant short interest of 24.91%, there is optimism regarding the stock's potential to reach a 65% upside based on analyst consensus [5].