Why Lovesac Stock Sagged by 37% in December

Core Viewpoint - Lovesac's stock experienced a significant decline of over 37% in December 2024, primarily due to disappointing quarterly earnings and negative analyst updates [1] Financial Performance - In the third quarter of fiscal 2025, Lovesac reported net sales of $149.9 million, a decrease of nearly 3% year over year [2] - The company faced a net loss of $4.9 million, or $0.32 per share, compared to a loss of $2.3 million in the same quarter of fiscal 2024 [2][3] - Analysts had anticipated better performance, expecting sales to exceed $155 million and a net loss of $0.24 per share [3] Sales and Growth Outlook - The decline in sales was attributed to a more than 9% drop in omnichannel sales, although this was partially offset by the addition of 28 new company showrooms [3] - Lovesac provided guidance for fiscal 2025, projecting total sales between $660 million and $680 million, lower than the $700 million achieved in the previous year [5] - The company expects to achieve annual net income between $4.5 million and $12.5 million [5] Future Expectations - Lovesac aims for annual net sales growth of 10% to 15% and a 25% improvement in annual profitability [6] - CEO Shawn Nelson expressed optimism about the company's innovative product portfolio, highlighting a recently launched reclining seat as a key growth driver [4] Analyst Sentiment - Analyst Thomas Forte from DA Davidson significantly reduced his price target for Lovesac from $44 to $35 per share following the earnings report, reflecting skepticism about the company's ability to meet its targets [7]