The Lovesac pany(US:LOVE)2024-06-13 16:27Financial Data and Key Metrics Changes - Total net sales for Q1 2025 were $132.6 million, reflecting a year-over-year decline of 6% [5][28] - Adjusted EBITDA for the quarter was a loss of $10.3 million compared to a loss of $2.1 million in the prior year [56] - Net loss for the quarter was $13 million or negative $0.83 per common share, compared to a net loss of $4.1 million or negative $0.27 per common share in the prior year [56] - SG&A expense as a percentage of net sales was 51.6% in Q1 2025, up from 40.0% in the prior year [29] Business Line Data and Key Metrics Changes - Omnichannel comparable net sales declined 14.8% for the quarter, primarily due to a challenging first month [5] - Internet net sales decreased by $3.6 million or 9% to $36.6 million compared to the prior year [53] - Sactional net sales decreased by 5%, while Sacs net sales decreased by 17% [54] Market Data and Key Metrics Changes - The overall category experienced a decline of about 12% in Q1, consistent with the company's assumption of a 10% decline for the full year [59] - The company noted that it has gained market share even in a declining category [23][72] Company Strategy and Development Direction - The company is focused on product innovation, with the recent launch of the PillowSac Accent Chair and plans for more innovations in the future [7][75] - The company is expanding its physical and digital accessibility through new touch points and CRM tools [8] - The company aims to capitalize on a potential category rebound and is making disciplined investments to support growth [59][64] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the macroeconomic environment, expecting no recovery this year but is prepared to capitalize on any improvements [39] - The company is not relying on macro conditions for its performance and is focused on maintaining customer engagement and satisfaction [17][64] - Management reiterated its guidance for fiscal 2025, estimating net sales of $700 million to $770 million and adjusted EBITDA between $46 million and $60 million [61] Other Important Information - The company ended Q1 with $72.4 million in cash and cash equivalents and $34 million available on its revolving line of credit [57] - The company is enhancing its inbound logistics strategy to minimize reliance on spot rates, which is expected to lead to cost savings [41] Q&A Session Summary Question: What steps were taken to fuel the business inflection in March and April? - Management highlighted adjustments in promotional strategies and a focus on targeting specific customer segments as key factors in the improved performance [36][37] Question: Is the market backdrop getting worse, particularly for lower-income consumers? - Management noted that while there are concerns about lower-income consumers, their customer base remains stable and affluent, with no significant changes in purchasing behavior observed [39] Question: Can you provide more details on the marketing efforts and the new media agency's impact? - Management expressed satisfaction with the onboarding of the new agency, which has improved customer targeting and overall marketing effectiveness [44][45] Question: What is the outlook for showroom openings and overall sales growth? - Management confirmed plans to open about 40 showrooms for the year, with a lighter cadence of openings expected in the latter half [95] Question: How does the company view the promotional environment compared to competitors? - Management acknowledged increased promotional activity in the category but emphasized their brand's strength and customer loyalty, allowing them to maintain competitive pricing without excessive discounting [99]