The Lovesac Company (NASDAQ:LOVE), the beanbag chair maker, posted mixed fiscal first-quarter results late Monday that saw an uptick in sales but an earnings miss.
The company said revenue jumped 53% year-over-year to $41 million, topping Street expectations of $38.9 million. Its adjusted loss widened to $0.67 per share from $0.41 per share in the year-ago quarter -- a bigger hit than the consensus estimate of $0.59.
Shares slumped 20% to $31.35 Tuesday morning.
READ: Beanbag chair maker Lovesac shows preliminary 1Q beat, drawing praise from Roth analyst
In the quarter, the Stamford, Connecticut-based company opened five new showrooms and closed two, bringing its total to 78 locations in 30 states.
The company’s margin shrank to 51.3% from 54.7% in the prior-year quarter, a differenance it believes can be attributed to tariffs.
“We are very pleased with our strong start to the year as we delivered sales growth of 53.0%, with an increase in marketing spend of only 22.3%,” COE Shawn Nelson said. “From an operational standpoint, our teams continued to execute and we made good progress against all of our strategic initiatives, which are centered around: traditional, digital and social marketing; investing in our infrastructure; growing and improving our showroom footprint; and expanding our shop in shop presence.”
Roth note
On Monday, analyst Dave King reiterated a Buy rating and $47 price target, a nearly 20% premium over Lovesac's Monday close. King was impressed by the revenue beat and remains optimistic in the face of increasing tariffs.
"[Lovesac] looks poised to significantly disrupt the furniture industry with patent-protected modular couches and other products that are shippable, customizable, sustainable, and proprietary," King wrote.
–Updated to include the Roth note–
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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