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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

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

LOVE

LOVE fundamentals

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