Lovesac Company Announces First Quarter Earnings

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Lovesac Company Announces First Quarter Earnings

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The Lovesac Company (Nasdaq: LOVE) announces first-quarter financial results for the first quarter of fiscal 2021. On June 9, the company hosted a conference call at 8:30 a.m.

Shawn Nelson, Chief Executive Officer, said, “Amid the global dislocation caused by the COVID-19 pandemic, the company’s first-quarter results assert the resilience and compassion of the company staff.” The benefit of the company’s diversified channel mix is the fundamental appeal of the Lovesac brand.

All these positive attributes contributed to the quarter’s strong results which are around 33% total the company sales growth. This is including a 255% increase in the company’s e-commerce sales. The company’s operating loss reduced by almost $1 million from the prior year.

KEY HIGHLIGHTS:

Highlights for the First Quarter Ended May 3, 2020:

  • Net Sales: The net sales increase of 32.8% was driven by an increase in internet sales of 255.4%. The increase of 11.0% in “Other” sales (which includes shop in shops and pop-up shops). These are partially offset by a decrease in showroom sales of (32.7%) due to the showroom closures.
  • Gross Profit: The gross profit increase of 30.0% was primarily due to the increase in net sales, partially offset by the impact of tariffs.
  • Selling, General & Administrative: SG&A expense in the first quarter of fiscal 2021 and first quarter of fiscal 2020 included less than $0.2 million of other non-recurring expenses. These expenses are related to financing and executive recruitment fees, respectively.
  • Advertising and marketing expense: Advertising and marketing expense in the first quarter of fiscal 2021 increased approximately 52% over the prior year quarter principally due to increased media and direct-to-consumer program spend which contributed to the first quarter sales increase over the prior year period.
  • Operating loss: Operating loss was $8.4 million in the first quarter of fiscal 2021 compared to $9.3 million in the last year. Operating margin improved to (15.4%) of net sales from (22.8%) of net sales in  the last year period.
  • Net Loss: Net loss was $8.3 million in the first quarter of fiscal 2021, as compared to $9.1 million in the last year.
  • Cash and Cash Equivalents Balance: The cash and cash equivalents balance as of May 3, 2020 was $45.5 million as compared to $35.7 million as of May 5, 2019.
  • Debt: There was no debt outstanding on the Company’s line of credit as of May 3, 2020 and May 5, 2019, respectively. The Company’s availability under the line of credit was $11.4 million as of May 3, 2020 and $12.5 million as of May 5, 2019.
  • Inventory: Total inventory was $33.4 million as of May 3, 2020 as compared to $30.9 million as of May 5, 2019.

Current Valuation

Source: Business Quant   

Stock Outlook

The share of the company holds the 52- week high of 40.50 and a 52-week low of 4.00. The P/E ratio of the share is 3.44. EPS of the share is -1 and EBITA IS -10.65.

On Wednesday, shares of Lovesac traded down by $-1.10. The average trade volume of shares was 670180 but 0 shares of the stock were traded. At the end of the day price of the shares is $21.32. The moving average of the firm’s 50 day is $12.33 and the firm’s 200 day moving average is 13.53. Today LoveSac’s has traded as 23.46 and touched $21.08 as a downward trend. The company stock has undergone multiple analysts ratings. The given are not good for the investors of the company. It has been down many times in the recent past.

About the Company

The Lovesac Company is dealing in direct-to-consumer specialty furniture brand. The company has 91 retail showrooms supported by its e-commerce delivery model. Lovesac’s name originates from its original Durafoam filled beanbags known as Sacs. The Company derives a variety of its current sales from its proprietary platform known as Sactionals. The product is coming with benefits like a washable, changeable, reconfigurable, and FedEx-shippable solution. The company also produces products for large upholstered seating. Shawn Nelson’s (Founder and CEO), applies “Designed for Life” philosophy. According to which the main emphasis is on the sustainable products which are built to last a lifetime. They are designed according to the customer’s needs and providing long-term utility.

Future Outlook

For FY21, under the COVID-19 pandemic, the company is continuously working with landlords to minimize cash outlay for any showrooms. The company is hoping it might still choose to open this year. When conditions allow, the company will resume its showroom expansion leveraging the many learnings generated in the closed showroom environment.

The company opened 18 new showrooms in FY20 or 21% year-over-year growth. The company has a new showroom model with favorable strong returns on investment. The Target net sales of $1.5 to $1.6 million in the first year. The net Investments including floor model inventory, Capex and preopening expenses are $365K. The company is planning for expansion in the near future.

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