The Lovesac Company reported a first-quarter net loss of $11.1 million, or $0.76 per share, narrowing from the $10.8 million loss recorded in the same period last year. Net sales for the quarter ended May 3, 2026, reached $138.2 million, a decrease of 0.1% compared to the prior year. Despite the sales decline, the results topped analyst expectations, though the stock fell as the company narrowed its full-year outlook amid ongoing pressure on lower-priced purchases.

First-Quarter Performance

Showroom sales increased 0.6% to $97.1 million, while internet sales rose 7.1% to $35.7 million. Other sales fell 36.3% to $5.5 million, largely due to the closure of Best Buy shop-in-shop locations. Omni-channel comparable net sales declined 1.0%. Gross profit for the quarter declined 3.2% to $72.0 million, with gross margin decreasing 160 basis points to 52.1%. The contraction was primarily driven by increases in inbound transportation and tariff costs of 380 basis points and outbound transportation and warehousing costs of 110 basis points, partially offset by a 330 basis point increase in product margin from price increases and cost reduction initiatives.

Demand Trends and Financial Position

Management said transactions above $6,000 increased at a mid-double-digit rate during the quarter, with even stronger growth for purchases exceeding $8,000 and $10,000. However, the company continues to see softness in transactions below $6,000 as shoppers delay discretionary purchases. Lovesac ended the quarter with $57.0 million in cash and no outstanding borrowings under its credit facility. During the period, the company repurchased $2.4 million of common stock and had approximately $51.7 million remaining under its share repurchase authorization.

Updated Outlook

Lovesac narrowed its fiscal 2027 guidance, reducing its earnings and sales outlook while maintaining the lower end of both ranges. The company now expects fiscal 2027 net sales in the range of $700 million to $740 million, down from a prior range of $700 million to $750 million. Adjusted EBITDA is projected between $35 million and $46 million, with net income in the range of $5 million to $12 million. For the second quarter of fiscal 2027, the company expects net sales of $157 million to $166 million and a net loss of $3 million to $7 million. The outlook includes $3.6 million in tariff refunds already received, with total accepted refund applications standing at $20.8 million.

Lovesac projects a Q2 GAAP EPS loss of $(0.48)-$(0.20), missing the analyst estimate of a loss of $0.31. The company forecasts sales between $157.000 million and $166.000 million against the $165.765 million analyst estimate. This guidance indicates the company expects to remain unprofitable for the period.

Financial Outlook

The company's outlook for the quarter highlights a projected loss per share compared to analyst expectations. The sales forecast provides a range that brackets the consensus estimate, suggesting performance in line with market projections.

Lovesac trades on the NASDAQ under the ticker symbol LOVE.