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- **Revenue resilience**: 2.5% YoY growth ($160.5M) in a 4% down furniture category, driven by Snugg launch and brand evolution.
- **Gross margin challenges**: Q2 gross margin 56.4% (down 260bps YoY) due to tariffs and promotions, with recovery to high 50s% expected by end of FY26.
- **Tariff mitigation**: China sourcing reduced to <15%, with 4-point plan (vendor concessions, diversification, pricing, cost cuts) limiting impact.
- **Snugg success**: 100+ showrooms carrying rebranded Snugg, with digital engagement and conversion rates at record highs.
- **FY26 outlook**: $710M-$740M net sales (4%-9% growth), targeting $42M-$55M adjusted EBITDA despite near-term pressures.

**【CEO Summary Section】**
- Q2 net sales: $160.5M (2.5% YoY growth) despite a 4% decline in the furniture category.
- Omnichannel comparable sales +0.9%, driven by new product launches and non-competing touchpoints.
- Introduced Snugg (rebranded EverCouch), a compact, adaptable sofa line, with 100+ showrooms now carrying the product.
- Brand evolution work completed, establishing a clear product hierarchy and merchandising strategy for long-term growth.
- FY26 guidance: $710M-$740M net sales (4%-9% growth), targeting high 50s% gross margin recovery by end of year.

**【President & COO Summary】**
- Snugg soft launch success: 27 showrooms in Q2, expanded to 100+ by end of Q2, with formal marketing campaign launched mid-Q3.
- Digital optimization: homepage redesign improved engagement and conversion rates, leading to highest Q2 digital satisfaction score.
- Physical showrooms: 16 new locations added, supporting Snugg rollout and maintaining in-stock positions.
- Tariff mitigation: 4-point plan (vendor concessions, manufacturing diversification, strategic pricing, cost efficiency) reduced China sourcing to mid-teens (from 30%+ in FY25).

**【CFO Financial Commentary】**
- Q2 gross margin: 56.4% (down 260bps YoY) due to higher inbound/outbound costs and promotional discounting.
- SG&A: 44.9% of sales (down 210bps YoY), benefiting from tighter expense control and Best Buy exit completion.
- FY26 adjusted EBITDA guidance: $42M-$55M (vs. prior $45M-$60M), reflecting tariff and promotional pressures.
- Q3 net sales: $151M-$161M (mid-single-digit growth), with adjusted EBITDA loss of $1M-$7M.

**【Q&A Highlights】**
- **Tariff Impact**: China sourcing now <15% of total, with 20%+ tariffs on key countries offset by price increases and diversification.
- **Promotional Activity**: Q4 lapping of 2025 holiday promotions reduces year-over-year discount pressure, supporting margin recovery.
- **New Product Strategy**: Snugg designed for online/offline flexibility, with future products balancing demo-intensive (Sactionals) and self-serve (Snugg) channels.
- **Long-Term Growth**: Targeting 3M households by 2030 through secular initiatives, with FY26 net sales growth despite category decline.

The Lovesac Company (LOVE) Q2 2026 Earnings Call Transcript

- **Revenue Growth**: Q1 FY26 net sales up 4.3% YoY to $138.4M, driven by 2.8% omnichannel growth and new products.
- **Product Success**: Reclining Seat platform launched successfully, EverCouch early sales exceed expectations.
- **Margin Improvement**: Q1 adjusted EBITDA loss of $8.4M (22.3% YoY improvement), with FY26 guidance for $48M-$60M adjusted EBITDA.
- **Tariff Mitigation**: 13% manufacturing outside China, strategic price increases, and vendor concessions to offset 90%+ of impact.
- **Strategic Moves**: Ended Best Buy partnership, launched resale platform, and expanding Costco pop-ups.

**【CEO Summary Section】**
- Q1 FY26 net sales of $138.4M (+4.3% YoY), driven by 2.8% omnichannel comparable sales growth and new product contributions.
- Reclining Seat platform launched successfully, with strong customer engagement and healthy units per transaction.
- EverCouch platform launched in 27 showrooms, receiving positive feedback and early sales momentum.
- Gross margin expected to improve in FY26 as tariff mitigation strategies (vendor concessions, diversification, price adjustments) take effect.
- FY26 net sales guidance of $700M-$750M reflects confidence in secular growth initiatives despite 5% category decline assumption.

**【Mary Fox - Customer Acquisition Engines】**
- Q1 website traffic increased 25% YoY, driven by Adobe Edge replatforming and SEO improvements.
- Showroom net sales grew 18.2% YoY, benefiting from 21 new locations and product demo enhancements.
- Ended partnership with Best Buy, writing off $2M in Q2, to focus on owned channels (showrooms, Costco pop-ups).
- Launched resale platform in Texas, with plans for trade-in services later in FY26.
- Tariff mitigation progress: 13% manufacturing outside China, vendor concessions, and strategic price increases.

**【Keith Siegner - Financial Commentary】**
- Q1 GAAP net loss of $10.8M (-17.6% YoY), with adjusted EBITDA loss of $8.4M (22.3% improvement).
- Gross margin 53.7% (-60bps YoY) due to promotional discounting, offset by lower inbound/outbound costs.
- SG&A expense rate improved to 44.5% (vs. 51.6% YoY), driven by higher sales and cost control.
- Q2 FY26 net sales guidance of $117M-$166M reflects low single-digit growth, with adjusted EBITDA loss of $2M-$7M.
- Full year FY26 adjusted EBITDA guidance of $48M-$60M assumes 59% gross margin and 12.5% marketing spend as % of sales.

**【Q&A Highlights】**
- Promotional environment remains intense (competitors at 40-45% discounts), but Lovesac maintains 3x price-to-promotion ratio.
- EverCouch early sales exceed internal goals, with 100+ showrooms planned for summer expansion.
- Tariff mitigation levers (vendor concessions, diversification, price increases) expected to offset 90%+ of impact.
- Costco partnership to expand with 15%+ increase in pop-up events, leveraging 120M+ members.
- Supply chain flexibility allows inventory reduction in Q2, offsetting EverCouch build.


The Lovesac Company (LOVE)-12 Jun 25-2026 Q1 Earnings call transcript

- **Q4 2025 Results**: Revenue $680.6M (-3.6% YoY), adj. EBITDA $53.9M (+11.3% YoY). Reclining Seat sold 18,500 units in first 3 months.
- **FY26 Outlook**: $700-750M revenue, $48-60M EBITDA. Q1 2026 adj. EBITDA loss $8-12M, net loss $10-13M.
- **Tariff Mitigation**: 95%+ shipping on fixed rates. 50% sourcing from Vietnam, <13% from China. Moving production out of China "in days".
- **Gross Margin Strength**: 59% FY25 gross margin. Surgical price increases needed <10% to offset tariffs.
- **EverCouch Expansion**: Targeting $14B couch market. 30 showrooms planned, national launch Q2 2026.
- **Customer Loyalty**: 40% of customers don't cross-shop. Recliner repeat purchase rate 40%.


**【CEO Summary Section】**
- **Revenue Growth**: Q4 2025 revenue of $680.6M, down 3.6% YoY, but near high end of guidance. Sactional sales declined 3.8%, offset by 2.7% growth in other categories.
- **Product Innovation**: Reclining Seat launched in Q4 sold 18,500 units, with 50-50 split between new and repeat customers. EverCouch to launch Q2 2026, targeting $14B couch market.
- **Tariff Mitigation**: 50% of sourcing from Vietnam, 28% from Malaysia, <13% from China. Team moving production out of China "in days" to meet 10%+ China reduction target.
- **Gross Margin**: 59% for FY25, up 120bps YoY. Q4 gross margin 60.4%, driven by 90bps reduction in inbound costs.
- **FY26 Outlook**: Net sales $700-750M, EBITDA $48-60M. Q1 2026 adj. EBITDA loss $8-12M, net loss $10-13M.

**【CFO Financial Commentary】**
- **Q4 2025 Results**: Adj. EBITDA $53.9M, up 11.3% YoY. Free cash flow positive, ending with $83.7M cash and $33M undrawn credit.
- **Share Repurchases**: $19.9M in FY25, $20.1M remaining under buyback authorization.
- **Tariff Impact**: $10M+ incremental tariff costs baked into FY26 outlook. Exploring price increases, vendor concessions, promotional intensity adjustments.
- **SG&A Efficiency**: Q4 SG&A as % of sales 28%, down 250bps YoY. Replatforming CRM and digital tools driving repeat purchase rates (recliner AOV 40%).

**【Q&A Highlights】**
- **Consumer Behavior**: Q4 quote conversion improved late Dec-Jan. Q1 2026 showing stable performance vs. tough 2024 comp. 40% of customers don't cross-shop competitors.
- **Promotional Strategy**: Maintaining flash sales (e.g., $30 off) while competitors raise MSRP 5-10%. Recliner launch without national campaign achieved 18,500 units sold.
- **EverCouch Launch**: 30 showrooms planned, national availability Q2 2026. Initial feedback positive, customers asking to be added to waitlist.
- **Tariff Mitigation Progress**: 95%+ of shipping on fixed-rate contracts. Inventory up 26% YoY to $124.3M, providing "wiggle room" for tariff uncertainty.


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