The Lovesac Company (NASDAQ:LOVE) reported second-quarter fiscal 2027 results Thursday, posting sales growth and improved GAAP profitability.
Shares traded lower after the report as investors weighed a sales miss and reduced full-year sales outlook against an adjusted EPS beat and higher GAAP EPS guidance.
Tariff Refunds Lift Profitability
Adjusted EPS was a 35-cent loss, beating the 36-cent loss estimate, while sales of $161.245 million missed the $165.485 million estimate. Net sales rose 0.4% year over year.
GAAP diluted EPS was 51 cents, compared with a 45-cent loss a year earlier.
Net income was $7.4 million versus a $6.7 million loss. EPS included an 86-cent net benefit from tariff refunds.
Gross profit increased 21.7% to $110.3 million, while gross margin expanded 1,200 basis points to 68.4%. Excluding IEEPA tariff recoveries, gross margin was 56.0%, down 40 basis points.
Operating income was $10.9 million versus an $8.8 million loss.
Showrooms Outpace Online Sales
Showroom sales rose 4.6% to $114.1 million, while internet sales fell 5.3% to $40.2 million.
Other sales declined 23.2% to $6.9 million, and omni-channel comparable net sales decreased 1.9%.
Lovesac ended the quarter with 284 showrooms.
Quarterly operating cash flow rose to $23.9 million from $12.2 million. Cash and equivalents totaled $68.8 million, with no outstanding debt.
Lovesac Cuts Sales Outlook
Lovesac raised fiscal 2027 GAAP EPS guidance to 98 cents-$1.26 from 34 cents-81 cents, versus an estimate of $1.09.
It lowered sales guidance to $690 million-$710 million from $700 million-$740 million, below the $715.275 million estimate.
Adjusted EBITDA is expected at $31.5 million-$35.5 million.
For the third quarter, Lovesac expects sales of $140 million-$150 million, below the $159.835 million estimate, and a GAAP loss of 62 cents-83 cents per share versus an estimated 53-cent loss.
Conference Call Insights
Management said the lower outlook primarily reflects product-launch timing rather than a worsening macro view.
Snug extensions should contribute late in the third quarter, while a Sactionals innovation tied to onshoring and a large-format premium sectional are expected to have a more meaningful impact in the fourth quarter.
Configurations above $6,000 grew double digits, while the under-$6,000 segment has not returned to growth despite pricing and promotional changes.
Management also said its national White Glove and Room of Choice delivery rollout could temporarily delay revenue recognition because customers can schedule deliveries.
Nelson said Lovesac assumes no macro recovery and expects SG&A to remain relatively flat.
LOVE Stock Price Activity: Lovesac shares were down 11.67% at $14.16 on Thursday, according to Benzinga Pro data.
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