The Lovesac 2026 Q3 Earnings Widened Net Loss of 114% as Revenue Slightly Rises

The Lovesac (LOVE) reported fiscal 2026 Q3 earnings on Dec 11, 2025, with revenue rising slightly but missing estimates by $4M. The company cut full-year guidance, reflecting weaker demand and margin pressures. Shares fell over 10% post-earnings amid concerns over profitability and macroeconomic challenges.

Revenue

Sactionals drove the majority of revenue at $135.64 million, while Sacs and Other segments contributed $9.84 million and $4.69 million, respectively. Total net sales increased by 0.2% to $150.17 million year-over-year, with showroom sales growing 12.8% due to 17 new locations, partially offset by a 16.9% decline in internet sales.

Earnings/Net Income

The company’s net loss widened to $10.55 million ($0.72 per share) in 2026 Q3, a 114.0% increase from the $4.93 million ($0.32 per share) loss in 2025 Q3. The EPS and net loss worsened significantly, with the loss per share doubling and the net loss nearly doubling, indicating a challenging quarter.

Post-Earnings Price Action Review

The strategy of buying LOVE when revenues beat expectations and holding for 30 days delivered strong results. The strategy achieved an overall return of 181.20%, significantly outperforming the benchmark return of 138.65%. With a maximum drawdown of 0.00% and a Sharpe ratio of 0.83, the strategy also demonstrated robust risk management capabilities.

CEO Commentary

CEO Shawn Nelson cited macroeconomic headwinds, particularly in lower-dollar transactions, and a 240-basis-point gross margin decline from tariffs and transportation costs. Strategic priorities include deferring a new room launch to 2027 and accelerating domestic Sactional manufacturing. Nelson expressed cautious optimism about modest market share gains in a down category.

Guidance

The Lovesac provided FY2026 revenue guidance of $685–705 million and adjusted EBITDA of $37–43 million, down from prior ranges. CFO Keith Siegner highlighted Q4 gross margin pressures from promotions and fixed-cost deleverage. The company expects to end FY2026 with optimized inventory and no borrowings.

Additional News

DA Davidson lowered Lovesac’s price target to $18 from $24, citing delayed product launches and increased promotional spending. The firm maintained a Buy rating despite the reduction. CEO Shawn Nelson emphasized a focus on core living room offerings and domestic manufacturing to improve margins. Meanwhile, the company’s cash reserves dropped to $23.7 million, down from $61.7 million a year earlier, amid inventory growth to $129.7 million.