STAMFORD, Conn., Sept. 12, 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 second quarter of fiscal 2025, which ended August 4, 2024.
Shawn Nelson, Chief Executive Officer, stated, "Our second quarter results were inline with our expectations as we continued to drive market share gains amidst a challenging industry backdrop. We are pleased with the incredible reception we have seen with the product innovation we have delivered recently through our PillowSac Accent Chair as well as our newly launched AnyTable. We are excited to continue to build on the momentum we are driving through expanding our offering, and while we are prudently planning for the second half of the year given the category headwinds, we believe we are well positioned to deliver on our objectives for both the near- and long-term."
Key Measures for the Second Quarter and First Half of Fiscal 2025 Ending August 4, 2024:(Dollars in millions, except per share amounts. Dollar and percentage changes may not recalculate due to rounding.)
Thirteen weeks ended
Twenty-six weeks ended
August 4,2024
July 30,2023
% Inc (Dec)
August 4,2024
July 30,2023
% Inc (Dec)
Net sales
Showrooms
$98.8
$98.2
0.6%
$180.4
$181.8
(0.8%)
Internet
$44.3
$41.4
7.0%
$80.9
$81.7
(0.9%)
Other
$13.5
$14.9
(9.3%)
$27.9
$32.3
(13.5%)
Total net sales
$156.6
$154.5
1.3%
$289.2
$295.7
(2.2%)
Gross profit
$92.4
$92.4
—%
$164.4
$163.0
0.9%
Gross margin
59.0%
59.8%
(80) bps
56.8%
55.1%
170 bps
Total operating expenses
$100.7
$93.4
7.9%
$190.6
$169.7
12.4%
SG&A
$73.7
$63.8
15.4%
$142.1
$120.4
18.0%
SG&A as a % of Net Sales
47.0%
41.3%
570 bps
49.1%
40.7%
840 bps
Advertising and marketing
$23.3
$26.5
(12.2%)
$41.3
$43.4
(4.9%)
Advertising & marketing as a % of Net Sales
14.9%
17.2%
(230) bps
14.3%
14.7%
(40) bps
Net loss
$(5.9)
$(0.6)
(823.0%)
$(18.8)
$(4.8)
(296.2%)
Basic net loss per common share
$(0.38)
$(0.04)
(850.0%)
$(1.21)
$(0.31)
(290.3%)
Diluted net loss per common share
$(0.38)
$(0.04)
(850.0%)
$(1.21)
$(0.31)
(290.3%)
Adjusted EBITDA 1
$1.5
$5.3
(71.7%)
$(8.8)
$3.2
(373.5%)
Net cash provided by (used in) operating activities
$6.2
$21.1
(70.6%)
$(0.8)
$27.3
(103.0%)
1 Adjusted EBITDA is a non-GAAP measure. See "Non-GAAP Information" and "Reconciliation of Non-GAAP Financial Measures" included in this press release.
Percent increase (decrease) except showroom count
Thirteen weeks ended
Twenty-six weeks ended
August 4,2024
July 30,2023
August 4,2024
July 30,2023
Omni-channel Comparable Net Sales(1)
(5.4)%
(5.8)%
(10.0)%
(6.2)%
Internet Sales
7.0%
16.6%
(0.9)%
22.3%
Ending Showroom Count
254
223
254
223
1 Omni-channel Comparable Net Sales includes sales at all retail locations and online, open greater than 12 months (including remodels and relocations) and excludes closed stores.
Highlights for the Quarter Ended August 4, 2024:
Net sales increased $2.1 million, or 1.3%, in the second quarter of fiscal 2025 compared to the prior year period primarily driven by the net addition of 31 new showrooms, partially offset by a decrease of 5.4% in omni-channel comparable net sales. During the second quarter of fiscal 2025, we opened 10 additional showrooms and closed 2 showrooms.
Gross profit remained flat in the second quarter of fiscal 2025 compared to the prior year period. Gross margin decreased 80 basis points to 59.0% of net sales in the second quarter of fiscal 2025 from 59.8% of net sales in the prior year period primarily driven by a decrease of 110 basis points in product margin driven by higher promotional discounting and an increase of 50 basis points in outbound transportation and warehousing costs, partially offset by a decrease of 80 basis points in inbound transportation costs.
SG&A expense increased $9.9 million, or 15.4%, in the second quarter of fiscal 2025 compared to the prior year period due to investments in payroll, equity-based compensation, professional fees, rent, and infrastructure.
Advertising and marketing expense decreased $3.2 million, or 12.2% in the second quarter of fiscal 2025 compared to the prior year period primarily due to costs related to our 25th anniversary campaign in FY24 not repeating in FY25.
Operating loss was $8.4 million in the second quarter of fiscal 2025 compared to $1.0 million in the prior year period. Operating margin was (5.3)% of net sales in the second quarter of fiscal 2025 compared to (0.7)% of net sales in the prior year period.
Net loss was $5.9 million in the second quarter of fiscal 2025 or $(0.38) net loss per common share compared to $0.6 million or $(0.04) net loss per common share in the prior year period. During the second quarter of fiscal 2025, the Company recorded an income tax benefit of $1.8 million, compared to less than $0.1 million in the prior year period. The change in benefit is primarily driven by higher net loss before taxes and an increase in the effective tax rate.
Highlights for the Year-to-date Period Ended August 4, 2024:
Net sales decreased $6.5 million, or 2.2%, in the first half of fiscal 2025 compared to the prior year period primarily driven by a decrease of 10.0% in omni-channel comparable net sales, partially offset by the net addition of 31 new showrooms compared to the prior year period.
Gross profit increased $1.4 million, or 0.9%, in the first half of fiscal 2025 compared to the prior year period. Gross margin increased 170 basis points to 56.8% of net sales in the first half of fiscal 2025 from 55.1% of net sales in the prior year period primarily driven by a decrease of 420 basis points in inbound transportation costs, partially offset by an increase of 130 basis points in outbound transportation and warehousing costs and a decrease of 120 basis points in product margin driven by higher promotional discounting.
SG&A expense increased $21.7 million, or 18.0%, in the first half of fiscal 2025 compared to the prior year period due to investments in payroll, professional fees, equity-based compensation, infrastructure, and rent.
Advertising and marketing expense decreased $2.1 million, or 4.9% in the first half of fiscal 2025 compared to the prior year period primarily due to costs related to our 25th anniversary campaign in FY24 not repeating in FY25.
Operating loss was $26.2 million in the first half of fiscal 2025 compared to $6.7 million in the prior year period. Operating margin was (9.1)% of net sales in the first half of fiscal 2025 compared to (2.3)% of net sales in the prior year period.
Net loss was $18.8 million in the first half of fiscal 2025 or $(1.21) net loss per diluted share compared to $4.8 million or $(0.31) net loss per diluted share in the prior year period. During the first half of fiscal 2025, the Company recorded an income tax benefit of $6.0 million, compared to $1.3 million for the prior year period. The change in benefit is primarily driven by higher net loss before taxes and an increase in the effective tax rate.
Other Financial Highlights as of August 4, 2024:
The cash and cash equivalents balance as of August 4, 2024 was $72.1 million as compared to $54.7 million as of July 30, 2023. There was no balance on the Company's line of credit as of August 4, 2024 and July 30, 2023. The Company's availability under the line of credit was $36.0 million as of August 4, 2024 and July 30, 2023. As previously announced, on July 29, 2024, we amended the credit agreement to add an uncommitted accordion feature that allows the Company, subject to certain customary conditions, to increase the size of the revolving credit facility by $10 million and, among other things, extend the maturity date of the loans made under the Amendment from September 30, 2024 to July 29, 2029.
Total merchandise inventory was $88.3 million as of ...
