Bullish indicating open at $55-$60, IPO prices at $37
The Lovesac Company (NASDAQ:LOVE) saw its stock plummet 20% after the home furnishing brand reported third-quarter earnings that missed analyst expectations and provided disappointing guidance for the crucial fourth quarter.
Lovesac posted a Q3 loss of $0.32 per share, $0.04 worse than the analyst estimate of a $0.28 loss. Revenue fell 2.7% YoY to $149.9 million, below the consensus of $155.26 million. The company cited "near-term headwinds" in its category that "clearly persisted through the pre-election period."
For Q4, typically Lovesac's strongest quarter, the company expects revenue between $221-241 million, well below analyst estimates of $268.5 million. Q4 EPS guidance of $1.67-$2.14 also fell short of the $2.59 consensus.
"We gained market share and strengthened our competitive position through our relentless focus on product innovation and operational excellence," said CEO Shawn Nelson. However, investors appeared more focused on the weak near-term outlook.
Gross margin improved 110 basis points to 58.5%, helped by lower transportation costs. However, this was offset by higher promotional discounting and increased operating expenses.
For the full fiscal year 2025, Lovesac now projects revenue of $660-680 million and adjusted EBITDA of $37.5-48.5 million.
The significant stock drop reflects investor concerns about Lovesac's growth trajectory and profitability in a challenging economic environment for home furnishings retailers.
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