The Lovesac Company (LOVE) investor relations material

Executive summary

• Achieved record Q2 net sales of $161.2 million, up 0.4% year-over-year, driven by new showroom openings despite a 1.9% decrease in omni-channel comparable sales and closure of Best Buy shop-in-shops.

• Gross profit rose 21.7% to $110.3 million, with gross margin expanding to 68.4% (up 1,200 bps), primarily due to $21 million in IEEPA tariff refunds and improved product margins.

• Operating income was $10.9 million, reversing a loss of $8.8 million last year; net income was $7.4 million ($0.51 per diluted share), including $0.86 per share benefit from tariff refunds.

• Launched multiple product innovations, including Snugg and reclining Sactionals, with strong early adoption and plans for a record innovation roadmap in the second half.

• Ended Q2 with $68.8 million in cash, no debt, and $34 million in available credit, positioning for future growth.

Financial highlights

• Showroom net sales grew 4.6% to $114.1 million, while internet sales declined 5.3% to $40.2 million; other sales fell 23.2% due to Best Buy partnership exit.

• SG&A expense was $72.3 million (44.8% of sales), nearly flat year-over-year; advertising and marketing expense declined to $22.8 million.

• Adjusted EBITDA (excluding tariff refunds) was a loss of $1.3 million, compared to income of $0.8 million last year.

• Cash and cash equivalents at quarter-end were $68.8 million; inventory increased to $130.2 million, supporting upcoming launches.

• Interest and other income increased to $1.2 million, mainly from interest on tariff refunds.

Outlook and guidance

• Q3 net sales expected at $140–$150 million, with gross margin of 54.5%–55.5%.

• Q3 net loss projected at $9–$12 million; adjusted EBITDA loss of $7–$10 million.

• Full-year net sales guidance of $690–$710 million; net income expected at $14.5–$18.5 million; adjusted EBITDA of $31.5–$35.5 million.

• Guidance reflects conservative assumptions due to timing of product launches and ongoing promotional environment.

• Management expects macroeconomic headwinds, including inflation and housing market softness, to continue impacting demand.