The Lovesac pany(LOVE) - 2026 Q3 - Quarterly Results

Financial Performance - Q3 FY26 net sales increased by 0.2% to $150.2 million compared to Q3 FY25, driven by showroom growth despite declines in internet and other sales channels[1][3][7] - Showroom sales rose by 12.8% to $102.7 million, while internet sales decreased by 16.9% to $37.3 million in Q3 FY26[3][7] - Gross profit decreased by $3.4 million, or 3.9%, with gross margin declining 240 basis points to 56.1% due to increased transportation and tariff costs[3][7] - SG&A expenses increased by 4.5% to $75.0 million, primarily due to payroll and overhead costs[3][7] - The operating loss for Q3 FY26 was $15.8 million, compared to a loss of $7.7 million in the prior year, resulting in an operating margin of (10.5)%[3][7] - Net loss for Q3 FY26 was $10.6 million, or $(0.72) per share, compared to a net loss of $4.9 million, or $(0.32) per share, in Q3 FY25[3][7] - The operating loss for the thirteen weeks ended November 2, 2025, was $15.804 million, compared to a loss of $7.723 million in the prior year, indicating a significant increase in losses[22] - The net loss for the thirty-nine weeks ended November 2, 2025, was $28.041 million, compared to a net loss of $23.751 million for the same period in 2024, representing an increase of approximately 18%[22] - For the thirteen weeks ended November 2, 2025, the net loss was $10,551,000 compared to a net loss of $4,930,000 for the same period in 2024, representing a year-over-year increase in losses of approximately 114%[26] - The total net loss for the thirty-nine weeks ended November 2, 2025 was $28,041,000, compared to a net loss of $23,751,000 for the same period in 2024, indicating an increase in losses of about 18%[26] Cash and Assets - Cash and cash equivalents decreased to $23.7 million as of November 2, 2025, down from $61.7 million a year earlier[9] - Cash and cash equivalents decreased to $23.722 million as of November 2, 2025, down from $83.734 million at the beginning of the period[24] - Total current assets decreased to $185.986 million as of November 2, 2025, compared to $246.597 million as of February 2, 2025[20] - Total merchandise inventory increased to $129.7 million as of November 2, 2025, primarily due to increased freight capitalization and planned stock inventory[9] - Total liabilities as of November 2, 2025, were $306.207 million, a decrease from $315.895 million as of February 2, 2025[20] Future Outlook - The company aims to reach three million Lovesac households by 2030, focusing on product innovation and marketing evolution[2] - For the full year of fiscal 2026, the company expects net sales in the range of $685 million to $705 million and adjusted EBITDA between $37 million and $43 million[14] Expenses and Other Financial Metrics - The company reported a net cash used in operating activities of $34.093 million for the thirty-nine weeks ended November 2, 2025, compared to $5.046 million for the same period in 2024[24] - The company incurred $18.211 million in capital expenditures for property and equipment during the thirty-nine weeks ended November 2, 2025[24] - Interest income, net for the thirty-nine weeks ended November 2, 2025 was $(632,000), down from $(2,139,000) in the same period of 2024, indicating a decrease of approximately 70%[26] - Depreciation and amortization expenses for the thirty-nine weeks ended November 2, 2025 totaled $11,451,000, up from $10,924,000 in the same period of 2024, marking an increase of about 4.8%[26] - Equity-based compensation expenses for the thirty-nine weeks ended November 2, 2025 were $8,337,000, an increase from $6,748,000 in the same period of 2024, representing a growth of approximately 23.5%[26] Non-Recurring Expenses - The company reported a total of $3,397,000 in other non-recurring expenses for the thirteen weeks ended November 2, 2025, which included severance and professional fees related to financial statement restatements[27] - Other non-recurring expenses for the thirty-nine weeks ended November 2, 2025 included impairment charges related to the Best Buy partnership discontinuation[27] - The company incurred a loss on disposal of assets amounting to $2,000 for the thirteen weeks ended November 2, 2025, compared to $12,000 for the same period in 2024[27] Tax and Income - The income tax benefit for the thirteen weeks ended November 2, 2025 was $(5,047,000), compared to $(2,092,000) for the same period in 2024, reflecting an increase in tax benefits of approximately 141%[26]