Lovesac Q4 sales beat estimates, helped by showroom expansion

Overview

• U.S. home furniture brand's Q4 sales rose 2.7% yr/yr, beating analyst expectations

• Q4 adjusted EBITDA missed consensus, net income declined yr/yr

• Company announced new $40 mln share repurchase authorization

Outlook

• Lovesac sees FY27 net sales between $700 mln and $750 mln

• Company expects FY27 net income of $5 mln to $14 mln

• Lovesac forecasts Q1 net sales between $133 mln and $139 mln

Result Drivers

• SHOWROOM EXPANSION - Q4 sales growth was mainly attributed to the net addition of 21 new showrooms and a slight increase in omni-channel comparable sales

• HIGHER TRANSPORTATION AND TARIFF COSTS - Gross margin declined due to increased inbound transportation and tariff costs, partially offset by product margin improvements from price increases and cost reductions

• INCREASED SG&A COSTS - SG&A expenses rose in Q4 due to higher incentive compensation, new product innovation costs, and other overhead

Company press release: ID:nGNX6zqr3Q

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 6 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the home furnishings peer group is "buy"

• Wall Street's median 12-month price target for Lovesac Co is $25.00, about 121.4% above its March 25 closing price of $11.29

• The stock recently traded at 15 times the next 12-month earnings vs. a P/E of 13 three months ago

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