The Lovesac 2026 Q3 Earnings Misses Expectations as Loss Widens 114%

The Lovesac reported Q3 2026 earnings that missed revenue estimates, with a 114% wider net loss than the previous year. The company revised its full-year guidance downward, reflecting ongoing challenges in the furniture market.

Revenue

Total revenue for The Lovesac’s Q3 2026 rose marginally by 0.2% to $150.17 million, narrowly edging past the prior year’s $149.91 million. Sactionals, the company’s modular seating line, drove the majority of sales at $135.64 million, though this represented a 1.0% decline year-over-year. The Sacs segment, which includes its signature beanbag-style furniture, saw a sharper 9.0% drop to $9.84 million. Meanwhile, the “Other” category, encompassing pop-up shops, barter transactions, and the Loved by Lovesac program, surged 126.3% to $4.69 million, offsetting some of the declines in core segments.

Earnings/Net Income

The company’s losses deepened significantly, with a net loss of $10.55 million in Q3 2026, a 114% increase from the $4.93 million loss in the same period the prior year. Earnings per share (EPS) fell to -$0.72, a 125% wider loss compared to -$0.32 in 2025 Q3. The deteriorating profitability was driven by higher transportation and tariff costs, which compressed gross margins by 240 basis points to 56.1%.

Post-Earnings Price Action Review

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CEO Commentary

Shawn Nelson, CEO, acknowledged “consumer uncertainty leading to meaningful choppiness” in lower-dollar transactions, resulting in $150.2 million in net sales—slightly below guidance. Despite the softness, he highlighted “slight year-over-year growth in net sales” amid a declining category, crediting “Design for Life product innovation” and marketing evolution. Strategic priorities include accelerating domestic Sactionals manufacturing to “lower costs and improve margins,” launching new product platforms like the Snug sofa extension, and enhancing customer acquisition through tailored marketing.

Guidance

For fiscal 2026, The Lovesac provided net sales guidance of $685–705 million, 56–57% gross margin, $37–43 million adjusted EBITDA, and $2–8 million net income. Q4 guidance includes $236–256 million net sales, 57.5–58.5% gross margin, $51–56 million adjusted EBITDA, and $30–36 million net income. Leadership expects “low to mid-single-digit category declines” in Q4 but plans to offset with promotional intensity.

Additional News

The Lovesac announced strategic shifts, including slowing showroom expansion to ~10 net openings in fiscal 2027 and prioritizing domestic Sactionals manufacturing to achieve “gross margin-neutral or favorable” outcomes by summer 2027. CEO Shawn Nelson emphasized a cautious outlook, stating the company will not base plans on consumer recovery but aims to drive “modest market share gains” through Design for Life innovations. The company also appointed Jacob Pat as Chief Technology Officer and Wan Ling Martello to the Board of Directors, both bringing digital and global expertise.