Lovesac at 2025 Global Consumer Conference: Strategies Amid Challenges

On Wednesday, 08 October 2025, The Lovesac Company (NASDAQ:LOVE) participated in the 2025 Global Consumer & Retail Conference. The company outlined its strategies to counter tariffs and enhance its brand while addressing competitive pressures and financial adjustments. While Lovesac faces challenges from tariffs and a promotional market, it remains optimistic about its long-term growth prospects.

Key Takeaways

• Lovesac is diversifying its sourcing to reduce reliance on China, aiming for near-complete withdrawal by year-end.
• The company is investing in North American production, enhancing automation and supply chain efficiencies.
• Despite a challenging market, Lovesac plans for long-term double-digit sales growth and 25%+ EPS growth.
• New product innovations and a revamped financing program are expected to drive higher average order values.

Financial Results

• Sales Guidance: Lovesac forecasts a 4% to 9% sales growth for the year, with expectations of accelerated growth in the latter half.
• EBITDA: Updated guidance is between $42 million to $55 million, reflecting impacts from tariffs and competitive pricing.
• Gross Margins: Tariffs and a competitive environment have pressured margins, with tariffs alone having an estimated low $30 million annualized impact.

Operational Updates

• Tariff Mitigation: Lovesac is implementing a four-point action plan, including vendor partnerships, shifting production to lower-tariff countries, strategic price increases, and cost control.
• Sourcing: The majority of products are now sourced from Vietnam, Malaysia, and Indonesia, with plans to begin domestic production in the U.S. next year.
• Demand Environment: The market is expected to decline mid-single digits in 2025, with competitive discounting prevalent.

Future Outlook

• Brand Evolution: Lovesac is expanding beyond sectionals and Sacs, planning to enter two new home categories. The brand leverages its design-for-life philosophy and loyal customer base.
• Customer Trends: Core customers, families with $75,000+ income, show resilience with preferences for premium fills and innovative products like the Recliner.
• Financing: Changes in CFPB regulations have led to the reinstatement of a more traditional financing program, enhancing consumer attractiveness.

Q&A Highlights

• "By the end of this year, we’ll be pretty much out of China." - Mary Fox, President
• "We focus on families with an income level of at least $75,000." - Mary Fox, President
• "Going from sectionals and Sacs to now much more, and you’re starting to really see that come to life." - Keith Siegner, CFO

Lovesac continues to adapt its strategies to navigate current challenges while positioning itself for future growth. Readers are encouraged to refer to the full transcript for more detailed insights.

Full transcript - 2025 Global Consumer & Retail Conference:

Unidentified speaker, Analyst, Tulsi Advisory Group: I’m your analyst at Tulsi Advisory Group covering the home furnishing sector, and I have the pleasure today of hosting Lovesac for this fireside chat. Joining me here are President Mary Fox and CFO Keith Siegner. We have a few topics to cover today, given tariffs and sourcing are top of mind, we’ll start with that. Can you talk about where your products are sourced from and how are you mitigating tariffs and perhaps how the latest tariffs that are input in the industry are affecting your business?

Mary Fox, President, Lovesac: I think we’ve got 25 minutes just to cover that topic. Good morning, everyone. It’s so great for you to join us, and thank you for taking the time and interest into Lovesac. I think the first question, obviously, around tariffs, the majority of our product has been sourced overseas. Our biggest country of origin is Vietnam, then followed by Malaysia, Indonesia, and then a very small amount in China. By the end of this year, we’ll be pretty much out of China. That really has been underway through a country of origin transformation that started just over three years ago. As we think about specifically the tariff news that hit in April and then consequent communications that you all know better than many others, we implemented a four-point action plan to help us mitigate some of that impact.

The first for us was a lean-in from all of our core vendors. Every one of them contributed to help support on that. I think a lot of that is the longstanding relationships we’ve had with our vendors for tens of years. That was very important. The second piece was also understanding where the tariff impact is by country and then just mobilizing our production to go to the lowest tariff countries. Kudos to the team because there was a lot of agility to get that done. The benefit of having very long-term partnerships with our vendors is they opened up new factories in lower tariff countries, so again, receiving the benefit of that. The third was through very strategic analysis around our price positioning, thinking about the quality, the value benefits versus our competition.

What became very clear is also that there was room to be able to take a price increase. I think we are always very strategic about how we think about pricing and ensuring that we remain very competitive and relevant. We have acted on a couple of price increases through the year. The fourth, as always, is a very cost-controlled environment. We have many initiatives in the company really thinking about where we can make those efficiencies. That was really dealing in terms of the current tariffs. Particularly, the exit out of China that we are progressing to with pretty much everything by the end of the year really helped us manage in the near term. I think the second piece, which has actually been an initiative that we started over a year ago, was how to onshore our production to North America, specifically in the United States.

That started over a year ago, really with first the design of our product. For those that know us well, we have the sectionals and the chassis, as we would call it, of the sectional, which is the seat, which is really a big amount of our cost of goods. We underwent a complete redesign of that, knowing in terms of customer benefits. Some really great features that we’re going to be launching that we believe will give us an even better couch to anyone in the market and bring new benefits that no one else has. Looking forward to doing that. Within that, we also set it up knowing we can be able to automate it, knowing that we want to be able to bring it to the United States for production.

Through all of that work, and then with two of our very strong partners, we will be next year having a portion of our production here in the United States, and then moving to a very large proportion of our production over that time. Through all of the hard work, not only in the design, but also the value engineering that will be done at a cost-neutral level. A lot of kudos to the team by starting that work. We’ll give customer benefits in the product, but also gives us a lot of benefit through these long-term partners to be able to produce it. By having those partners, we’ve also worked around factory locations. We’re near to our distribution centers. We can then generate a lot of efficiencies in the movement of goods.

For those that know us, we have customer orders that come in and we deliver within a few days to them. All of that will give us a lot more benefit to efficiencies. Expect to see from us onshoring for North America, some portion of our sectional pieces next year, and then a much greater extent after that. Anything else to add?

Keith Siegner, CFO, Lovesac: One thing.

Mary Fox, President, Lovesac: One thing?

Keith Siegner, CFO, Lovesac: Yeah, just one thing.

Mary Fox, President, Lovesac: Many things.

Keith Siegner, CFO, Lovesac: When this product has gone through a fundamental redesign to add features and benefits, as Mary talked about, one of the cool elements of this is it sort of refreshes our intellectual property protection that has been so valuable to us in the past. Better products for the consumer and more protection from competitors come through this process as well. Because we specialize in sameness, unlike merchant-led competitors of ours, we make seats and sides and things like that and Snug components. We make a lot of very few SKUs. What that enables is a more readily accessible or viable automation program that can use different materials than maybe some of the other competitors of ours who are down in High Point looking to make the exact same thing in North Carolina. We are fundamentally doing this differently, which changes the way we are approaching this.

It maybe takes a little longer than what you’re hearing from some others, but it creates a sustainable and viable path for us to achieve our bigger, broader goals, which is a more sustainable, holistic supply chain and customer offering that ships things less distances because it is the right thing to do. All in all, an important part of our brand promise.

Mary Fox, President, Lovesac: Great. Shifting gears a little bit and talking about the demand environment, how would you describe consumers’ appetite today to spend on furniture? You gave a guidance for or a forecast for the industry to be down 5% in 2025. How do expectations for the back half of the year are built in relative to that annual number?

Keith Siegner, CFO, Lovesac: Sure. As we’ve approached the last several years, not just this year, we’ve really tried to come at this from a very pragmatic perspective, not counting on back half accelerations and macro conditions to get us there. It’s a fundamental advantage of ours in managing because we don’t have to make a bet on when the recovery is going to happen. Sometimes with your merchant-led organization, you have to make a call, right? What’s the style that’s going to be in effect that we’re going to push? We are curators of style. Are we going to have a green linen roll-arm couch for this upcoming season? You’d have to order it and commit to it ahead of time. That’s fundamentally not who we are, right?

We sell you products that are designed to last a life, or designed for life, meaning built to last a lifetime and designed to evolve with you. Because of that, we are managing this company in a very prudent and objective way, built around this idea of a secular growth story that is readily accessible to us. When the macro recovers, we are ready to participate. We ship in very short times. We are manufacturing seats and sides and Sacs and Snug all the time, just in different levels. If the demand picks up, we dial up the production with our partners and we serve that demand in near real time. It is an advantage to us. As such, we have not felt the need to stretch on a macro condition.

It’s worked out well for us because last year, the fourth quarter actually ended up being maybe even a little tougher than we had thought it would be versus run rate. This year, we came into the year and said there aren’t a lot of signs that we saw that painted the picture for a big step up. There was uncertainty with changes in the geopolitical environment. We’re glad that we started the year off planning for an industry backdrop of another down mid-single digits. There’s a lot of different data you can look at. We look at actual spending data through credit card portfolios of big banks. You guys can as well. That data has been month to month volatile, but generally bouncing around down mid-single digits all year. That’s still the basis for our outlook for this year. It is tough.

I think at the margin, the one difference maybe is we are continuing to feel competitive discounting promotional intensity, meaning we’re still around this down low single digits as a category, but the category is promoting more aggressively. We have had to respond a little bit to that, as you can imagine. That’s part of this discussion along with tariffs in relation to our gross margins. We’re still managing, I think, quite well through this. Our guidance for this year for gross margins, just to put it in context, is still the second highest we’ve achieved, second only to last year. Managing that promotional discounting backdrop, managing all of the noise that comes with the tariffs and not just these programs that we’re wanting to deal with, I think, to still be the second highest gross margins that we’ve put up on an annual basis is pretty, pretty good.

It would have been a lot more fun if we didn’t have to deal with all this this year, but hopefully that gives you a little bit of comfort.

Mary Fox, President, Lovesac: Yeah, and I think just to add then, to your question on what we’re seeing on the customer trends, we focus on families with an income level of at least $75,000. Generally, what we haven’t seen is a trade down. We have real-time data every hour. We see everything. We’re not seeing a trade down, whether it be choice of fill, because there are different price levels depending on the fill level. Actually, we’re seeing a trend up on the more premium fill. When customers come in and they want to buy, they want to buy the best that they can get for their family. I think the second thing is when we bring in innovation, we launched an amazing innovation back end of last year at Recliner that embeds into our product. That’s been phenomenal for us.

That is a trade up in AOV for them to buy, and we’ve seen a great adoption rate there. As Keith said, we’re definitely seeing more purchasing on a promo and eventing, less outside of those big tempo moments. Originally, before, we saw less of a trend on people buying on financing up until August. You can maybe touch on that a bit more, but we are seeing that pick up a bit more now.

Keith Siegner, CFO, Lovesac: Yeah, about a year ago, there was a change that came out of the CFPB that impacted how lenders could recoup money, for example, in these private label, you know, loan programs, right? We have a financing program we call the Lovesac Credit Card. It’s backed by Synchrony. There were fundamental changes in regulations that limited their ability to charge late fees. One of the industry responses was to put a program fee in place that was charged to everyone upon implementation. The rules have changed this year. Under the new administration, that fee is now gone. To give you some numbers, the amount of revenues that would flow through that financing program for us had been in the high 30s.

At points during this last year, with the 2% program fee for long duration, you know, equal payment, no interest stuff, we were as low as low 30s, which is a meaningful change. We are now back to a more traditional program without that 2% initiation of program fee. We’re seeing more interest in that program as well. As we head into holiday season, we do think that’s something that could be helpful to us as folks look at a very affordable, attractive financing offer as a way to unlock that purchase. Stay tuned for more on that, but it is one of the few, it’s one of the tailwinds in the macro environment as we head into holiday.

Mary Fox, President, Lovesac: I wanted to talk about the potential for the Lovesac brand. It seems like over the past year, you’ve been talking more about evolving the brand, going into new rooms. Do you have some new products? Can you talk about some of the white spaces and where the brand should ultimately go? Yeah. I’ll start, and then Keith can bring a lot more color to it. I think we had our first Investor Day back in December last year. If anybody hasn’t seen that content, it’s a great context over a much longer period of time than we have for a fireside chat about who the brand is, what our ambition is, and the potential that we laid out.

As those that know us well, we’ve really focused on two products for the last nearly 27 years, actually, and had a great deal of success as we’ve kind of built up the company. As we really step back, we see our superpower number one is around our design-for-life product platforms. These are products that are built to last. You can have our product for the rest of your life if you want to, but they are designed to evolve. As everybody goes through their life, you can add on pieces, you can change it, and it gives you so much flexibility to add on, change covers. Versus the rest of the market that you really are stuck with what you have and there isn’t that flexibility, it really does give us a very special value proposition.

For us, knowing that design-for-life philosophy and the foundation of how we run the company, there are many more categories that we can go to and many other rooms that we can enter into. What we shared back in our Investor Day is that we see potential to go into many other rooms, and we committed to two more rooms over the coming years. Sean, our founder and CEO, who’s incredibly active building out this innovation, talks a lot about we really have the potential to go from the mailbox through to the garden fence in terms of just so many other opportunities in terms of categories. We haven’t shared which the rooms are, obviously, but you can start to think about other rooms with product that could have a lot of relevancy to this design-for-life foundation.

The teams have been working actively on it, and we’re testing products and trying it out. I feel very good in terms of that runway. I think particularly one of the strengths for our brand is that as people get to live with our product, they really love it. Our number one purchase awareness driver is word of mouth. Keith, before he even joined Lovesac, had our product. He would tell his friends, their friends come into our showrooms and buy it. They don’t cross-shop us with anyone because they’ve got to try the product out at their friends’ homes. That really is about the strengths of the brand because there’s nothing else like it. As you think about us entering into new rooms, you have that installed base that know us, love us, trust us because the product really is superior to others.

Therefore, we have them in our database. We’re able to access them and tell them about the new product. That foundation of that base of customers is going to give us the room to be able to then enter into new rooms and be able to tell them about the product as well.

Keith Siegner, CFO, Lovesac: Nothing to add. That was well done.

Mary Fox, President, Lovesac: Great. This might be more for you, Keith. I wanted to talk about.

Give him a hug.

Give him a hug.

Financial expectations for the year so that 2025 sales start with sales. Sales guidance you gave for 4% to 9% growth. The first half a little bit below that, 3%, calling for accelerated growth in the back half. Can you talk about the drivers and what gives you confidence in this forecast?

Keith Siegner, CFO, Lovesac: Yeah, as we just talked about, the company is at this point right now living through this moment of transcending product and becoming a true home and lifestyle brand, right? Going from sectionals and Sacs to now much more, and you’re starting to really see that come to life. As you think about the growth rates and the applied growth rates in Q4 versus what you’ve seen, I mean, we’ve been growing. Q1, we grew. We’re guiding to growth for the full year. It’s not huge. It’s all little bits around the edges. We have new product innovation that was last year that’s still yet to anniversary. We have fundamental new product platforms. Our latest product platform that we’ve launched is a product called the Snug, which is chairs, love seats, and couches, which is a funny product to launch for a company you probably think is a couch company.

Really what we’ve sold have been sectionals, really impressive, amazing, do everything kind of sectionals. Not a lot of customers use those for chair, love seat, and sofa solutions. There’s a whole bunch of reasons why we don’t have time to get into, but we have a whole new product platform that’s launched. We have now gained clarity as an organization around our product and channel hierarchies, meaning what are we going to sell and how do we go to market and bring it to life. We have a new Chief Marketing Officer who started earlier this year, Heidi Cooley, and her team, and they’ve been working on all this. Just two weeks ago, three weeks ago, two, three weeks ago, we launched that new advertising campaign that’s to support the Snug.

We have this whole product platform that we literally just turned the advertising on for two to three weeks ago. That also gives you the first glimpse, not the final glimpse, the first glimpse of how the brand might start showing up differently than it has in the past. These are big drivers for us if you think about it. The category within which the Snug fits, couches, love seats, and chairs, is actually a larger category of total addressable market than is sectionals where we do the Welcome Our Business today. We need to gain some momentum with this. We need to let the world know we have it and then actively sell it. This is the first major example, even if it feels really close to what we already do. It’s the first major example.

As you heard from Mary, we’ve already talked about new rooms to come, which will be even more exciting and further reinforce the brand. We have financing as a tailwind as the offers are more compelling than they have been. I mean, I can go down the list. We have more showrooms than we’ve had in the past. We’ve revamped our real estate strategy program. We have more effective real estate and physical presence expressions than we’ve had in the past. Through our partner Costco, we’ve revamped the offerings that we have at Costco. How many Costco pop-up shops? We typically show up for about 10 days. Think of it as a weekend, a week in the middle, and a weekend. We have more of those with a more compelling solution for Costco than we had in the past. It now includes Snug, which is perfect for Costco.

I can go through a whole bunch of other examples like this, but at the margin, these little things can add up to what we believe is more growth in Q4 on a year-over-year basis. Another thing to highlight is in relation to both sales and to margins. Last year in Q4, after a tough start to Black Friday, which we were very public about, we leaned in on adding some incremental discount to convert customers to purchase. It was several hundred basis points of effective average discount off of MSRP. Now we’ll be lapping that, so we lose the impact of higher discounts into revenues. It also impacts gross margins. If we are now going to lap several hundred basis points higher effective discount off of MSRP, it takes a lot of pressure off the year-over-year gross margin trend.

Happy to get into more details on that, but at a high level, those are some of the things.

Mary Fox, President, Lovesac: On the profit side, your latest EBITDA forecast is $42 million to $55 million. I know you reduced it because of tariffs. Can you talk about what else on the profit side has changed since the beginning of the year? Can you quantify the impact of tariffs in that guidance?

Keith Siegner, CFO, Lovesac: Two pieces to this. The EBITDA guidance was impacted largely by the gross margins. The gross margins are affected by both the issues that you mentioned. Competitive intensity around promotions has stayed high and in some cases gone higher. What we mean by that is whether the headline discount has gone higher or what % of total SKU count is now flowing through clearance. That’s higher than it used to be as well. We have had to respond somewhat to stay competitive, particularly with new customers. That is a big piece of this. The other piece is the tariffs. The tariffs for us, roughly speaking, let’s put it on an annual basis before any of this happened, thinking about this year, would have been in the high single-digit millions of dollars.

Prior to all of this new upholstered furniture stuff that we’re sorting through, it would have been in the low $30 million range in terms of annualized. Not this year because it’s not all happening the full year, but on an annualized basis, a bit in the low $30 million range. As we get into next year, we’ll have less in China, right? We will now have to have some considerations around upholstered tariff and certain of our SKUs will qualify for that. That being said, as Mary went through earlier, we are actively and aggressively accelerating our efforts to onshore production of many of our core SKUs, particularly around the sectionals platform. This work has been in place for a while. We are pulling it forward. As you heard before, it’s a product redesign, not just a simple shift in geographic location of production, right?

We gain features and benefits core to the consumer that makes it a better offering for them, reinforces our patent protections, and provides for more automatability of the manufacturing process, which makes it even more viable to produce in the U.S. All of these things you’re hearing from us are us going after both top line and margin considerations.

Mary Fox, President, Lovesac: I think I have time for one more question. You’ve given long-term guidance, or I guess guidance for a normalized year, which is pretty attractive, double-digit sales growth, EPS growth of 25% plus. I know the environment right now, you know, it’s hard to get to those targets, but what do you view as a normal environment and what is it, macro, or what needs to happen for you to hit those targets?

Keith Siegner, CFO, Lovesac: We have not changed how we think about the medium-term viability of this business model. That was built around a flat category performance. We are still not in a flat category performance, right? It’s still, as we talked about earlier on, we are still seeing hardcore spending data coming through credit card portfolios showing down. In response to that, there is still increased promotional intensity, meaning either more discount or more clearance than is normal, which puts pressure on all of this to some extent. If we can get to a flat category, then I think the business model we discussed is very doable.

Mary Fox, President, Lovesac: Great. I think that’s all the time we have today for questions. Thank you so much.

Thank you for the great questions. Thank you guys for joining us today. Thank you.

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